Lake City Foundry Company v. NLRB

• Decision Date: 12 October 1970
• Docket Number: No. 17354,17429.,17354
• Parties: LAKE CITY FOUNDRY COMPANY, Inc., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. LAKE CITY FOUNDRY EMPLOYEES UNION, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

432 F.2d 1162 (1970)

LAKE CITY FOUNDRY COMPANY, Inc., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. LAKE CITY FOUNDRY EMPLOYEES UNION, Respondent.

Nos. 17354, 17429.

United States Court of Appeals, Seventh Circuit.

October 12, 1970.

COPYRIGHT MATERIAL OMITTED

Edward Kolkey, Lawrence M. Cohen, Fred Sudak, Chicago, Ill., Lederer, Barnhill & Fox, Chicago, Ill., for respondent Lake City Foundry Employees Union; Sudak & Grubman, Chicago, Ill., of counsel.

Marcel Mallet-Prevost, Asst. Gen. Counsel, William H. Carter, Atty., N. L. R. B., Washington, D. C., Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Frank H. Itkin, Atty., N. L. R. B., for N. L. R. B.

Before MAJOR, Senior Circuit Judge, and FAIRCHILD and KERNER, Circuit Judges.

MAJOR, Senior Circuit Judge.

In No. 17354, Lake City Foundry Company, Inc. (the Company) petitions to set aside an order of the National Labor Relations Board (the Board), entered on December 3, 1968, in which the Board found that the Company violated numerous sections of the National Labor Relations Act and entered its order. 173 NLRB No. 159. In response, the Board requests enforcement of its order. The case had its genesis in the efforts of Local 233, International Molders and Allied Workers Union, AFL-CIO (Molders Union), to become the exclusive bargaining representative of the employees. A representation proceeding was initiated by a petition filed by the Molders Union on February 21, 1967. Subsequently, but on this same date, the Molders Union, claiming that it represented a majority of the employees in what was agreed to as an appropriate unit, made demand of the Company for recognition as the bargaining agent, which was refused by the Company, but it agreed to an election.

At the time the Molders Union commenced its organizational effort, certain of the Company's employees started organizing Lake City Foundry Employees Union (Employees Union), which intervened in the representation proceeding. The regional director ordered an election which took place on April 28, 1967, which the Employees Union won by a vote of 33 to 25. The Molders Union objected to the election result and, on September 13, 1967, filed charges against the Employees Union, alleging that it had violated the Act by entering into a bargaining contract with the Company. The Board set aside the election on the ground that the Company had committed certain unfair labor practices.

In No. 17429, the Employees Union requests that the Board's order as it pertains to it be set aside, and the Board requests that it be enforced.

Later in this opinion we shall discuss in some detail the activities of the sponsors of the respective Unions, as well as those of the Company. We think at this point it is sufficient to state that there was a vigorous campaign conducted by each of the Unions in an attempt to win a majority.

The contested issues in abbreviated form, as set forth in the Company's brief, are: (1) whether there is substantial evidence on the record as a whole to support a conclusion that the Company refused to bargain with the Molders Union on February 21, 1967, the date on which it made demand for recognition, in violation of Sec. 8(a) (5) of the Act; (2) whether, notwithstanding the employees' rejection of the Molders Union and selection of the Employees Union in a Board-conducted secret ballot election, the issuance of its order requiring the Company to bargain with the Molders Union is an appropriate remedy for enforcing the policies of the Act; (3) whether there is substantial evidence on the record to support a conclusion that the Company violated Sec. 8 (a) (3) of the Act; (4) whether there is substantial evidence to support a conclusion that the Company violated Sec. 8(a) (2) of the Act, and (5) whether there is substantial evidence to support a conclusion that the Company violated Sec. 8(a) (1) of the Act.

The Employees Union raises the additional issue as to whether there is substantial evidence on the record to support the Board's finding that the Employees Union violated Secs. 8(b) (2) and 8(b) (1) (A) of the Act.

The issue as to whether the Company violated Sec. 8(a) (5) of the Act depends upon whether the Molders Union represented a majority of the appropriate unit at the time it requested recognition. We shall first consider that issue.

EARL, KARL AND CARL LUNDQUIST

It was stipulated that these persons were employees of the Company on February 21, 1967, and worked in the classifications covered by the bargaining unit. It is not disputed but that they worked the same hours, received the same wages and were subject to the same working conditions as other unit employees; voted, without challenge, pursuant to a Board-approved agreement between the Molders Union and all other parties, in the subsequent Board election, and enjoyed no special status as the result of their being the sons of the stockholders of a closely held corporation.

As to these employees, the examiner in his decision stated:

"According to Arnold Lundquist, they voted, notwithstanding an agreement between the Union and Respondent-Employer that they were ineligible to vote. It is true that to include them in the unit, at that time, would not have been inconsistent with Board precedent, notwithstanding the fact that Karl and Earl Lundquist are the sons of Elmer Lundquist, and Carl Lundquist is the son of Arnold Lundquist and the further fact that Elmer and Arnold Lundquist are the principal stockholders of Respondent-Employer. However, since the election herein, the Board has modified existing policy `so as to exclude from bargaining units the children of individuals who have substantial stock interests in closely held corporations\' and has overruled prior cases to the extent inconsistent therewith. In these circumstances, and notwithstanding the fact that the three individuals voted without challenge in the election, I deem myself bound to apply this modified policy and to hold, consistently therewith, that these three individuals should be excluded from the unit." (Italics supplied.)

The Board on brief states:

"The Board, in excluding these three persons relied upon its decision in Foam Rubber City No. 2 of Florida d/b/a Scandia, 167 NLRB No. 81, 66 LRRM 1096 (September 18, 1967), where it had modified prior holdings `so as to exclude from bargaining units the children of individuals who have substantial stock interests in closely held corporations.\'"

The reasoning of the trial examiner by which these three employees were excluded from the unit, approved by the Board on brief, must be rejected. In the first place, the statement attributed to Arnold Lundquist that "they voted, notwithstanding an agreement between the Union and Respondent-Employer that they were ineligible to vote," appears to be a distortion of the record; in fact, the record demonstrates to the contrary.¹

That they voted without challenge in a closely supervised election in itself strongly negates the finding that there was an agreement that "they were ineligible to vote." The Board on brief does not even mention, much less explain or retract, this erroneous statement by its trial examiner. Neither does either mention Sec. 2(3) of the Act which defines the term "employee" and designates the persons and classes which are excluded therefrom. The sole exclusion on the basis of family relationship is "any individual employed by his parent or spouse."

In National Labor Relations Board v. Sexton, 203 F.2d 940 (CA-6), the court in deciding the precise issue contrary to the Board's contention stated:

"Section 2(3) of the National Labor Relations Act, as amended, 29 U.S.C.A. Sec. 152(3), sets forth what the term `employee\' shall include, and specifically excludes a spouse or child of an individual employer as such an employee, but provides for no other exclusion on the basis of family relationship. The Act, therefore, having expressly set forth the individuals who are excluded from the term `employee\' on the basis of family relationship, we find no justification for the exercise of discretion on the part of the Board, by virtue of Section 9 of the Act, to exclude from the appropriate bargaining unit and from participation in the election for the selection of a bargaining agent any persons on the basis of family relationship other than those specifically excluded under Section 2 (3)."

The same court in Cherrin Corp. v. National Labor Relations Board, 349 F. 2d 1001 (CA-6), reaffirmed its holding in Sexton, and stated (page 1006):

"When the Union challenged Miss Cherrin\'s ballot, it was challenged on the ground that she was a daughter of the owner. This would have been sufficient to exclude the ballot under the rule followed by the Board before the decision of this court in N.L.R.B. v. Sexton, 203 F.2d 940, but it is not sufficient ground for exclusion since that decision. It was not until the investigation conducted by the Acting Regional Director, after the election for a bargaining agent, that the reasons for sustaining the challenge were based, not upon the fact that Miss Cherrin was a daughter of the owner, but, also, probably as an afterthought, on the ground that, as a result of such relationship, she occupied a special status."

The examiner concedes that it "would not have been inconsistent with Board precedent" to hold that they were eligible to vote. He might further have stated that it would have been in compliance with Sec. 2(3) of the Act and in conformity with the court decisions above noted. However, without mentioning the statutory provision, the Board on brief, in excluding the three persons under discussion, relies on its Foam Rubber decision, supra, rendered almost five months after the April 28, 1967 election.

In that case it held that it would "exclude from bargaining units the children of individuals who have substantial stock interests in closely...