LaCrescent Constant Care Center, Inc. v. N.L.R.B.
| Decision Date | 19 February 1975 |
| Docket Number | No. 74--1468,74--1468 |
| Citation | 510 F.2d 1319 |
| Parties | 88 L.R.R.M. (BNA) 2849, 76 Lab.Cas. P 10,671 LaCRESCENT CONSTANT CARE CENTER, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. |
| Court | U.S. Court of Appeals — Eighth Circuit |
R. Walter Bachman, Jr., Minneapolis, Minn., for petitioner.
Stephen Quinn, Atty., N.L.R.B., Washington, D.C., for respondent.
Before LAY and BRIGHT, Circuit Judges, and TALBOT SMITH, * Senior District Judge.
This case is before us on the petition of LaCrescent Constant Care Center, Inc. (Company) to set aside an order of the National Labor Relations Board requiring it to bargain with the Minnesota Council #65, American Federation of State, County and Municipal Employees, AFL--CIO (Union). The Board cross-petitions for enforcement of its order. 1 The Company urges that its refusal to bargain is justified because the Board's certification of the Union is invalid. It asserts that the representation election upon which the certification is based was tainted by material misrepresentations made by a Union organizer, Mr. Roth, during the election campaign. We agree and decline enforcement.
The Company is a Minnesota corporation which operates a proprietary nursing home in LaCrescent, Minnesota. On June 5, 1973 the Union won a Board-conducted consent election by a vote of twenty-six to twelve with no void or challenged ballots. 2 The Company filed timely objections to the conduct of the election, asserting that the Union had so misrepresented its financial condition to the employees as to preclude the free choice of a bargaining agent. 3
The Acting Regional Director made an investigation and found evidence that Roth had made misrepresentations to the employees. These pertained to the Company's profit position and hence bore directly upon its repeated assertions to its employees that it could not pay higher wages because it was losing money. The truth was, as the Director found, that 'in fiscal 1972, the employer actually suffered a loss.' He concluded, however, that 4
Again the Company filed exceptions, their principal thrust, as before, was directed towards the 'false statements' made by the Union organizer to the effect that the Company was making a 'substantial, even excessive, profit,' and that a Minnesota court had denied relief to the Company in a welfare lawsuit because
Again the Company filed exceptions; also attacked the Director's conclusion that the employees were in a position to 'independently evaluate' the Union statements.
The Board, however, with Member Kennedy dissenting, rejected the objections made, adopted the Acting Regional Director's Report and found that the Company's exceptions 'raise no material issues of fact or law which would warrant the holding of a hearing or reversing the findings, conclusions, and recommendations of the Acting Regional Director.' It thereupon certified the Union as the bargaining agent. 5
Thereafter, the Company refused to bargain with the Union, and the Board issued a complaint alleging a refusal to bargain in violation of §§ 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and (5). The Company admitted its refusal to bargain, but contended that it was justified in its refusal because the certification was invalid for the reasons urged in its objections to the election. 6 The Company and the Union entered into a stipulation stating that the Board should 'transfer this proceeding to the Board for final determination,' 7 that there were 'no issues of fact which would warrant a hearing,' and that both parties 'waive the right to a hearing before the Administrative Law Judge,' the filing of briefs, and other procedural steps. 8
The cause was thereupon submitted to the Board which granted the General Counsel's motion for summary judgment on the ground that all issues in the case were or could have been litigated in the representation proceeding. 9 This action followed.
We recognize that the Board is vested with a wide discretion in dealing with matters relating to representation proceedings. 10 Within this discretion the Board has adopted the following standard concerning preelection propaganda:
We believe that an election should be set aside only where there has been a misrepresentation or other similar campaign trickery, which involves a substantial departure from the truth, at a time which prevents the other party or parties from making an effective reply, so that the misrepresentation, whether deliberate or not, may reasonably be expected to have a significant impact on the election. * * * (E)ven where a misrepresentation is shown to have been substantial, the Board may still refuse to set aside the election if it finds upon consideration of all the circumstances that the statement would not be likely to have had a real impact on the election. For example, the misrepresentation might have occurred in connection with an unimportant matter so that it could only have had a de minimis effect. * * * Or, the Board may find that the employees possessed independent knowledge with which to evaluate the statements.
Hollywood Ceramics, Inc., 140 NLRB 221, 224 (1962) (footnotes omitted). 11
In the instant case the Board and the Acting Regional Director (whose findings and conclusions the Board adopted) focused on the last part of this test, whether 'the statement would * * * be likely to have had a real impact on the election.' In this regard the Board found that the Company's memoranda and letters to its employees 12 gave them sufficient independent knowldedge to evaluate Roth's misrepresentations, which thus, presumably, had no impact on the election. 13 The Board noted that the Union was not in a special position to know more than the employees about the Company's lawsuit against the Department of Social Welfare. 14 Finally, the Board found that the employees were likely to have sufficient 'common judgment' to be able to evaluate Roth's statement to the effect that a subtraction of the Company's out-of-state purchases from gross sales shows sufficient funds left over to pay a wage increase. 15
The Company does not challenge the Hollywood Ceramics standard. 16 Rather, it challenges whether the conclusions reached by the Board in applying its chosen standard are supported by substantial evidence on the record considered as a whole. 17
Our point of departure is clear: the Board does not, generally speaking, police the utterances of the parties to a Union election. It does not insist on the niceties of phraseology one would demand in a deed, and it is not unaware that within the limits of fair electioneering it must expect the voters to be exposed to a puffing of the merits of a proponent's position accompanied by derogation of that of the opponent. See Bok, The Regulation of Campaign Tactics in Representation Elections Under the National Labor Relations Act, 78 Harv.L.Rev. 38, 82--91 (1964); Fuchs, Pre-election Campaign Propaganda and Activities Before the National Labor Relations Board, 4 B.C.Ind. & Com.L.Rev. 485, 488--89 (1963).
However, a point may be reached where the pre-election propagandizing has created an atmosphere rendering the free choice of a bargaining agent by the employees highly improbable. In such event the election must be invalidated. Here it is conceded that the Union organizer made misstatements of fact. They pertained to wages, 'the stuff of life for Unions and members, the self-same subjects concerning which men organize and elect their representatives to bargain.' 18 In this situation, where the vigorously contested ability of the Company to pay higher wages assumed primary importance in the pre-election campaigning, the misrepresentation found to have been made cannot be regarded as other than material. Under these circumstances our holding in NLRB v. Lord Baltimore Press, Inc., 370 F.2d 397, 402 (8th Cir. 1966) is pertinent to the problem presented:
(A) resort to deliberate falsehood or intentional fraud, as is alleged to have existed here, will generally be a matter of significance in a representation election, for * * * 'No one is in a better position than the union to know what the voters need to be told'.
The misrepresentations as to the Company's profit position had two aspects, not unrelated, but with a somewhat different emphasis. The first concerned the general charge that the Company had the money with which to pay a wage increase as shown by the Stipulation for Certification Upon Consent Election. This showed gross sales by the Company of $323,902 and purchases outside of the State of Minnesota in excess of $50,000. 19 Subtracting the jurisdictional figure from the gross, Roth argued that the Company 'had over $200,000 to meet additional expenses and must surely have some money left over to pay at least a minimal wage increase.' Actually the Company was losing money during this fiscal period, and it charges that Roth's statement amounted to a misrepresentation by the Union of its financial standing. The Board's position was that the "nurses aides, housekeeping employees, and laundry employees' (were not) so bereft of common judgment as to be unable to evaluate statements to the effect that by subtracting out-of-state purchases from gross sales shows that sufficient money was left over to pay a minimal wage increase,' and that 'the employees were well able to determine that the Employer's expenses of operation included more than out-of-state purchases * * *;' in short, that the employees' common sense would warn them that the Roth statement was misleading. 208 NLRB No....
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