Midwest Stock Exchange, Inc. v. N.L.R.B.
| Decision Date | 10 November 1980 |
| Docket Number | No. 79-2061,79-2061 |
| Citation | 635 F.2d 1255 |
| Parties | 105 L.R.R.M. (BNA) 3172, 90 Lab.Cas. P 12,361 MIDWEST STOCK EXCHANGE, INC., Midwest Clearing Corporation, Midwest Securities Trust Co., and Midwest Stock Exchange Service Corp., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Lisa S. Kohn, Chicago, Ill., for petitioners.
Charles P. Donnelly, N.L.R.B., Washington, D. C., for respondent.
Before CUMMINGS, Circuit Judge, NICHOLS, Associate Judge, * and PELL, Circuit Judge.
The question presented in this case is whether there is substantial evidence on the record as a whole to support various findings of the National Labor Relations Board (Board). Because we find there is not substantial evidence to support many of the board's findings, we doubt whether the board would have us enforce the portions that are based on substantial evidence and remand to the board to consider what action it wishes to take on the portions that are based on substantial evidence.
To dispose of this case we must consider an order of the board against Midwest Stock Exchange (Exchange) upon the Exchange's petition for review and the board's cross-petition for enforcement of the order pursuant to Sections 10(e) and (f) of the National Labor Relations Act, as amended, 29 U.S.C. § 160(e), (f) (act). The board adopted as its own a decision by Administrative Law Judge Maloney, including rulings, findings, and conclusion.
The Exchange is a regional stock exchange, located in Chicago, Illinois. Midwest Clearing Corporation (Clearing) and Midwest Securities Trust Corporation (Trust) are wholly owned subsidiaries of the parent Exchange. Clearing is responsible primarily for settling and facilitating securities transactions, while Trust is a custodial depository in which member brokers deposit stock certificates.
On September 12, 1977, the Office and Professional Employees International Union (Union) filed a representation petition with the board seeking certification as the bargaining representative of all Exchange office and clerical workers. On December 15, 1977, the board issued a decision calling for an election. During the election campaign, the Exchange allegedly committed several unfair labor practices which are discussed in part B of this opinion. On January 26, 1978, the Union was victorious in that election, but the final outcome was not official for a month pending the resolution of challenged ballots. On January 27, 1978, the Exchange's vice president, Martin Torosian, determined that a reduction in Trust and Clearing personnel was necessary, allegedly because of mounting losses. He dismissed 11 employees and transferred five. The following Trust and Clearing employees were the ones dismissed: Rochelle Stewart, Mary Hrycaj, Theresa Stewart, Mae Belle Hobby, and Marjorie Ayersman. The board, in adopting the findings of the Administrative Law Judge (ALJ), determined that each of these discharges violated § 8(a)(3) of the act and that certain Exchange actions during the unionization campaign violated § 8(a)(1).
The relevant text of § 8(a)(1), (3), is as follows:
8. Unfair labor practices
(a) Unfair labor practices by employer
It shall be an unfair labor practice for an employer-
(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;
(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization:
In reaching his decision, the ALJ did not accept the Exchange's alleged economic justification for the discharges. The ALJ found the Exchange historically employed the same number of personnel regardless of the securities volume and adjusted employee's overtime up or down to accommodate any change in securities volume. The ALJ placed heavy weight on the Exchange's failure on the occasion of the Union victory to do what it had normally done before. The ALJ also found that the Exchange actually hired 26 new employees during the period of terminations. This factual analysis provided the underpinning of his decision that there was no economic crisis that warranted a reduction in personnel. Finally, the ALJ found specific instances of discriminatory motivation sufficient for him to conclude each termination violated § 8(a)(3). The ALJ stated he used the § 8(a)(1) violations as the backdrop against which he evaluated the discharges of the employees. On the basis of those findings, the ALJ ordered reinstatement with back salary for the five discharged employees.
Before us the Exchange argued that the ALJ's findings of discriminatory employee terminations were not based on substantial evidence. The Exchange further argued that there was insufficient evidence on the record to merit findings of § 8(a)(1) violations. Finally, the Exchange contended that § 8(a) (1) violations, without more, could not provide the necessary proof of specific antiunion purposes behind an employee discharge.
The issue is whether there is sufficient evidence on the record to support the findings of § 8(a)(3) and 8(a)(1) violations. This opinion discusses in Part A the inadequacies of the ALJ's findings of no economic justification and of antiunion discrimination in connection with the discharges. We discuss in Part B the ALJ's findings of other § 8(a)(1) violations, several of which are unsupported in the record.
We approach this problem with a clearly defined role. Congress has given this court the duty of scrutinizing the record as a whole. Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464, 95 L.Ed. 456 (1951). Mindful that it is not our task to assess the facts of this case de novo, neither is it to function as a "judicial echo" or rubber stamp for the conclusions of the board. Id. at 491, 71 S.Ct. at 466; NLRB v. Wire Products Manufacturing Corp., 484 F.2d 760, 765 (7th Cir. 1973). Under Universal Camera Corp. v. NLRB, 340 U.S. at 490, 71 S.Ct. at 465-
* * * The Board's findings are entitled to respect; but they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the Board's decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both.
The well-established rule in § 8(a)(3) cases requires the board to "show affirmatively by substantial evidence that the discharge was discriminatory and motivated by * * * alleged union activities." Portable Electric Tools, Inc. v. NLRB, 309 F.2d 423, 426-27 (7th Cir. 1962). Since motive, which is the determinative factor in finding a violation of § 8(a)(3), is a mental attitude, the board may rely on "circumstantial as well as direct evidence." W.W. Grainger, Inc. v. NLRB, 582 F.2d 1118, 1120 (7th Cir. 1978); McGraw-Edison Co. v. NLRB, 419 F.2d 67, 75 (8th Cir. 1968) (Blackmun, J.). Merely because the board can rely on circumstantial evidence, however, does not excuse it from meeting its affirmative burden. This court will not infer lightly an unlawful purpose nor will it allow the board to base its case on suspicion, especially where, as here, there is no showing of disproportionate treatment in discharges and rehirings. See NLRB v. American Casting Service, Inc., 365 F.2d 168, 172 (7th Cir. 1966). See also, Delco-Remy Division, General Motors Corp. v. NLRB, 596 F.2d 1295, 1306 (5th Cir. 1979).
After a thorough and thoughtful examination of a record that includes 1,058 pages of transcript alone, we must hold that the board did not meet its affirmative duty for the following reasons.
The ALJ's conclusion that there was no economic crisis that warranted a reduction in personnel ignores the great weight of the evidence. The General Counsel did not contest that there was an economic crisis. But the ALJ concluded from the following chart that the Exchange normally adjusted overtime to accommodate fluctuations in security volume and would have followed that practice in the instant case were it not for discriminatory intent.
Number of
Stock Hours of
Week Certificates Overtime Total
Ending Handled Worked Personnel
----------- ------------ ---------- ----------
7/1/77 184,325 184 298
7/8/77 ** 133,957 163 295
7/15/77 194.546 289 294
7/22/77 107,847 387 295
7/29/77 178,992 251 292
* * * * *
1/6/78 84,019 34 294
1/13/78 101,032 56 294
1/20/78 95,064 55 293
1/27/78 75,140 51 293
2/4/78 89,831 42 293
2/11/78 77,900 45 284
2/18/78 ** 78,523 55 285
2/25/78 ** 71,520 42 299
3/4/78 80,900 201 302
3/10/78 93,505 120 290
3/18/78 93,115 106 291
3/25/78 66,494 135 287
4/1/78 84,651 91 284
4/8/78 No figures furnished
4/15/78 101,230 47 285
4/22/78 108,856 68 285
4/29/78 114,147 119 282
** week includes a holiday
The court, however, can find no statistical correlation between the number of stock certificates handled and the hours of overtime worked. For example, on the week ending July 1, 1977, 184 hours of overtime were worked and 184,325 stock certificates were handled. Yet on the week ending July 22, 387 hours of overtime were worked and only 107,847 certificates handled. A doubling in overtime hours with a 40 percent reduction in the number of...
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