LCF, Inc. v. N.L.R.B.
| Decision Date | 25 November 1997 |
| Docket Number | No. 96-1500,96-1500 |
| Citation | 129 F.3d 1276 |
| Parties | 156 L.R.R.M. (BNA) 2963, 327 U.S.App.D.C. 164, 134 Lab.Cas. P 10,085 LCF, INC. d/b/a La Conexion Familiar, and Sprint Corporation, Petitioners/Cross-Respondents v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner Communications Workers of America, Intervenor District of Columbia Circuit |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.
Thomas J. Piskorski argued the cause for petitioners/cross-respondents, with whom Staci S. Beck, Chicago, IL, and Stanley E. Craven, Kansas City, MO, were on the briefs.
David A. Fleischer, Senior Attorney, National Labor Relations Board, Pickerington, OH, argued the cause for respondent/cross-petitioner, with whom Linda R. Sher, Associate General Counsel, South Euclid, OH, and Aileen A. Armstrong, Deputy Associate General Counsel, Washington, DC, were on the brief. Margaret G. Neigus, Supervisory Attorney, entered an appearance.
James B. Coppess, Washington, DC, argued the cause for intervenor Communications Workers of America, with whom Laurence Gold was on the brief.
Before: WALD, GINSBURG and HENDERSON, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
This case arises out of Sprint's decision to terminate its "La Conexion Familiar" long-distance program and dismiss all program employees. Sprint argues that this decision was based on the program's substantial financial losses and a continuing decline in its customer base. The National Labor Relations Board ("NLRB"), however, found that Sprint acted because program employees were about to unionize. It ordered Sprint to reinstate each terminated employee as a substantially equivalent position becomes available and to pay each employee the difference between what the employee would have earned if never terminated and what the employee actually earned during the period before Sprint offered the employee reinstatement. This case is before the court on Sprint's petition to review the NLRB's order and on the NLRB's cross-application for enforcement of its order.
The NLRB's conclusion that union activity motivated Sprint's closure decision lacks substantial evidence in the record. Accordingly, we set the NLRB's order aside.
Sprint created a wholly-owned subsidiary, LCF, Inc. ("LCF"), solely to acquire the La Conexion Familiar company ("La Conexion") in 1992. La Conexion specialized in selling long-distance services to the Latino residential market, particularly to people who primarily spoke Spanish. Rather than competing on the basis of price, its strategy was to develop customer loyalty based on common culture and language.
Shortly after acquiring La Conexion, Sprint discovered that the majority of its telemarketers were undocumented aliens and sued La Conexion's sellers to rescind the purchase agreement. Under a settlement reached in January 1994, however, Sprint retained La Conexion for a reduced purchase price.
During the course of this rescission suit, Sprint did not invest significant additional time or money in LCF. After the settlement, Sprint set out in early February 1994 to determine LCF's true financial condition and soon discovered that LCF was in serious financial difficulty. Sprint instituted some changes, including a new discount program, but LCF's financial condition remained poor. In particular, LCF was losing more customers than it was acquiring. By March 1994, Sprint's economic analysis indicated that LCF, which Sprint had originally expected would generate a profit of nearly $8 million in 1994, was now projected to lose almost $4 million that year. Sprint Consumer Services Group ("CSG") Vice President Wallace Meyer, the officer ultimately in charge of LCF but based in Kansas City, began spending at least one day a week at LCF in San Francisco.
Union organizing activity at LCF also commenced in early February 1994. In response to employee complaints about working conditions, the Communications Workers of America ("CWA") began an organizational campaign that quickly gained momentum. By February 14, the on-site LCF managers had learned that telemarketing employees were attending union meetings and engaging in other union activities. The Administrative Law Judge ("ALJ") and the NLRB both found, on the basis of undisputed testimony, that some of these on-site managers illegally interrogated employees about the union and threatened them with plant closure if the employees unionized. The LCF managers also kept Sprint officials informed about the union activity at LCF.
In April, Dave Sapenoff, Sprint's group manager for corporate labor relations, visited the LCF facility. Mr. Sapenoff met with the LCF supervisors, collected the names of employees who supported the union, and instructed the supervisors to try to convince these employees to change their minds. However, he also told both the LCF employees and their supervisors that LCF would not close if the employees unionized. Upon his return to Sprint headquarters, Mr. Sapenoff reported the union activity to Dave Schmieg, the Sprint CSG President, and to Carl Doerr, the vice president for labor relations and fair employment practices. After receiving this information, Mr. Doerr told Mr. Schmieg that there was a significant possibility that CWA would file a representation petition. Mr. Schmieg responded by reiterating a remark that he had previously made to Mr. Doerr. He told Mr. Doerr that it was his intent to close LCF because he did not believe that Sprint " 'had any business being in that business.' " Mr. Doerr then stated that, given the likelihood of CWA filing a petition, Mr. Schmieg should " 'create a paper trail' " if he intended to close LCF. LCF, Inc., d/b/a La Conexion Familiar, Sprint Corporation and Communications Workers of America, District Nine and Local 9410, AFL-CIO, 322 N.L.R.B. No. 137 at 4, 1996 WL 742383 (Dec. 27, 1996) (hereinafter "NLRB Decision").
Meanwhile, Mr. Meyer's concerns about LCF's finances continued throughout April. These concerns led him to convene a meeting of LCF's board of directors on May 6, just three months after LCF had been placed under his jurisdiction. At this meeting, Mr. Meyer presented his projection that LCF would lose almost $4 million in 1994, instead of earning the nearly $8 million profit that Sprint had anticipated in early 1994. He further outlined two managerial options in light of LCF's financial difficulties. The first, which Mr. Meyer supported, was to cease LCF operations immediately. The other option was to continue operations through December 1994. After some discussion, the LCF board took neither option; it voted against closing LCF immediately and decided to reconvene in sixty days in order to review LCF's financial performance and discuss six options for LCF's future. The meeting minutes summarize this decision as follows:
The LCF board also decided at the May 6 meeting to hire Maury Rosas as president of LCF. Mr. Rosas signed a one-year employment contract on May 13. He was not told that LCF might close in light of its financial situation and, upon assuming his position on June 1, Mr. Rosas operated LCF on the assumption that the enterprise would remain in business. LCF continued hiring and training employees and proceeded with plans for extensive office renovations. Mr. Meyer testified that he planned to use Mr. Rosas elsewhere within Sprint if LCF closed.
On June 3, CWA filed a petition to represent the LCF employees. To show their support for this filing, over 100 of the approximately 177 bargaining-unit employees wore, or displayed, union T-shirts on June 3. LCF's management was aware of the T-shirt demonstration, and supervisors were instructed to report the number of employees wearing the shirts. Mr. Rosas and other LCF officials conferred with Sprint headquarters about the matter. On June 22, LCF and CWA entered into a stipulated election agreement and scheduled a representation election for July 22.
After learning that CWA had filed this petition, Labor Relations Vice President Doerr received materials relating to the May 6 board meeting. 1 Mr. Doerr became concerned that these materials did not sufficiently reflect an intent to retain the closing of LCF as an option. He therefore decided to create a paper trail showing that Sprint's intent to close LCF existed prior to the filing of the petition. Mr. Doerr accomplished this by soliciting a backdated letter from an outplacement service. This letter was falsely dated April 7 and discussed a prior request by Mr. Doerr for outplacement services for the LCF employees. Mr. Doerr admittedly sought this backdated letter to counter any contention that Sprint decided to close LCF in response to the union activity.
As the LCF board had agreed on May 6, the next meeting of the LCF board was scheduled for July 6 in Kansas City. Before this meeting took place, Mr. Meyer, anticipating that the board would vote...
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