N.L.R.B. v. Advanced Systems, Inc.

• Citation: 681 F.2d 570
• Decision Date: 23 June 1982
• Docket Number: No. 81-7136,81-7136
• Parties: 110 L.R.R.M. (BNA) 2418, 110 L.R.R.M. (BNA) 3089, 95 Lab.Cas. P 13,719 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. ADVANCED SYSTEMS, INC., Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 570

681 F.2d 570

110 L.R.R.M. (BNA) 2418, 110 L.R.R.M. (BNA) 3089,

95 Lab.Cas. P 13,719

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. ADVANCED SYSTEMS, INC., Respondent.

No. 81-7136.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 7, 1982.

Decided April 23, 1982.

As Amended June 23, 1982.

Susan L. Williams, Washington, D. C., for petitioner.

William R. Hayden, Snell & Wilmer, Phoenix, Ariz., for respondent.

Application for Enforcement of an Order of the National Labor Relations Board.

Before CHOY, GOODWIN and FARRIS, Circuit Judges.

CHOY, Circuit Judge:

The NLRB applies for enforcement of its bargaining order. It found that Advanced Systems, Inc., had committed an unfair labor practice when it refused to bargain with the Union after a representation election. The Company asserts that the Board abused its discretion when it: (1) overruled the Company's election objections without reviewing the documentary evidence underlying the Regional Director's reports and without making this evidence part of the agency record for judicial review; and (2) denied the Company an evidentiary hearing on whether threats and vandalism during the election campaign require setting aside the election. We agree. Accordingly, we deny enforcement of the order and remand the case for an evidentiary hearing.

I

After the Union won a consent election on August 10, 1979, the Company objected to the election on the ground that the Union, through its agents, had threatened physical assaults on employees and created an atmosphere of fear that interfered with the election. The Company submitted documentary evidence and a memorandum of points and authorities to substantiate its claim. After an ex parte investigation during which he collected affidavits from employees the Regional Director issued a report denying the Company's request for a hearing and recommending that the Board overrule the Company's objections.

The Company moved for reconsideration on the basis of new evidence consisting of an affidavit of employee Stephen Halpaus. After granting the motion and conducting an additional ex parte investigation, the Regional Director issued a supplemental report, again recommending that the objections be overruled.

The Company then filed exceptions with the Board, attaching an affidavit of employee Lance Hibbert, which had allegedly not been available previously. The Board, without a hearing, adopted the Regional Director's recommendations and certified the Union.

To obtain judicial review of the certification, the Company refused to bargain with the Union. ¹ The Board found that the Company's refusal to bargain violated section 8(a)(1) and (5) of the National Labor Relations Act. It now petitions for enforcement of its bargaining order against the Company.

II

The Company was not required to bargain with the Union if the Board abused its discretion in certifying the Union. Heavenly Valley Ski Area v. NLRB, 552 F.2d 269, 271 (9th Cir. 1977). The Board, however, enjoys wide discretion in conducting and supervising representation elections. Spring City Knitting Co. v. NLRB, 647 F.2d 1011, 1017 (9th Cir. 1981); NLRB v. Masonic Homes, Inc., 624 F.2d 88, 89 (9th Cir. 1980). Its denial of an evidentiary hearing on election objections may be disturbed only for an abuse of discretion. Spring City Knitting Co., 647 F.2d at 1017; Masonic Homes, 624 F.2d at 89. To obtain a hearing, a party must make a prima facie showing of substantial and material factual issues that would, if true, warrant setting aside the election. Spring City Knitting Co., 647 F.2d at 1017; Masonic Homes, 624 F.2d at 89.

The Board is entitled to rely on the Regional Director's report in the absence of specific exceptions supported by offers of proof of facts contrary to the Regional Director's findings. NLRB v. Belcor, Inc., 652 F.2d 856, 859 (9th Cir. 1981). If, however, there are substantial and material factual disputes between the election report and the exceptions, a hearing is required. Id.

III

Our review of the Board's decision in this case is hampered by the incompleteness of the record on appeal. In transmitting the original and supplemental election reports to the Board, the Regional Director did not send any of the underlying documentation relied on in the reports. Thus, the only evidentiary material before the Board was the Hibbert affidavit that the Company attached to its exceptions. Missing from the record are the Halpaus affidavit submitted by the Company, the additional affidavits obtained by the Regional Director, other documentary evidence (such as campaign literature) submitted by the Company, and a memorandum of points and authorities that the Company attached to its election objections. It is unclear how many affidavits the Regional Director obtained through his own investigation because the election reports do not identify any of the affiants they refer to. However, the Company asserts that it presented four employees to the Regional Director for affidavits. The Regional Director apparently took affidavits from these four employees and discussed the affidavits in his reports.

The Company argues that the Board abused its discretion when it: (1) adopted the Regional Director's reports without reviewing the underlying documentation; and (2) failed to include this documentation in the record transmitted to the court. The Board interprets its rule, set forth in 29 C.F.R. § 102.69(g), to provide that the Regional Director need not transmit the entire record to the Board in cases in which no hearing was held. This interpretation was rejected in NLRB v. Consolidated Liberty, Inc., 672 F.2d 788, 790 (9th Cir. 1982). There we held that section 102.69(g) requires the Regional Director to forward to the Board all the relevant evidence underlying the Regional Director's report, and that the Board abdicates its statutory responsibilities when it adopts the report without reviewing the underlying evidence. Id.

In Consolidated Liberty, however, none of the items missing from the record were evidence that the objecting party itself submitted to the Regional Director. Here, at least one of the missing items is an affidavit that the Company submitted (the Halpaus affidavit). It could be argued that section 102.69(g) requires the objecting party to transmit to the Board the documents it submitted to the Regional Director. The rule at the relevant time period provided:

The notice of hearing, motions, rulings, orders, stenographic report of the hearing, stipulations, exceptions, documentary evidence, together with the objections to the conduct of the election or conduct affecting the results of the election, any report on such objections, any report on challenged ballots, exceptions to any such report, any briefs or other legal memoranda submitted by the parties, the decision of the regional director, if any, and the record previously made as described in § 102.68, shall constitute the record in the case. Materials other than those set out above shall not be a part of the record; except that in a proceeding in which no hearing is held, a party filing exceptions to a regional director's report on objections or challenges, a request for review of a regional director's decision on objections or challenges, or any opposition thereto, may append to its submission to the Board copies of documents it has timely submitted to the regional director and which were not included in the report or decision. Immediately upon issuance of a report on objections or challenges, or both, upon issuance by the regional director of an order transferring the case to the Board, or upon issuance of an order granting a request for review by the Board, the regional director shall transmit the record to the Board.

29 C.F.R. § 102.69(g) (1981). ²

In Consolidated Liberty, the Board argued that the second sentence of the rule would be meaningless if the Regional Director were required to transmit the entire record in a nonhearing case. Although the court rejected this argument, it did not decide how the second sentence should be interpreted. 672 F.2d at 790. Thus, Consolidated Liberty leaves open the possibility of interpreting the second sentence to require the objecting party to transmit the documents it submitted, even though the Regional Director must transmit the other documents. The sentence could also be construed, however, as merely creating an exceptional means of placing before the Board documents submitted to the Regional Director but excluded from the record and not considered by him (for example, documents that the Regional Director treated as irrelevant or untimely). See NLRB v. Klingler Electric Corp., 656 F.2d 76, 83 (5th Cir. 1981). Under this interpretation, the Regional Director would be required to transmit any materials he relied on in his report, regardless of who submitted the materials.

The latter interpretation is more consistent with the language of the rule, which provides that the objecting party "may append" to its exceptions copies of documents "not included in the (Regional Director's) report." It also avoids the cumbersome procedure of requiring the objecting party to assemble and transmit part of the record. The Regional Director has all the evidence in his possession and can easily transmit it. See Prestolite Wire Division v. NLRB, 592 F.2d 302, 305 (6th Cir. 1979). Furthermore, to interpret the rule to allow the Regional Director to exclude from the record evidence that he relied on would frustrate meaningful review by the Board and the court of appeals. See NLRB v. Klingler Electric Corp., 656 F.2d at 84; NLRB v. North Electric Co., 644 F.2d 580, 583-84 (6th Cir. 1981).

The difficulty of performing meaningful judicial review in this case illustrates the speciousness of the Board's argument that it need not review the evidence relied on by the Regional Director. The Board correctly points out that its role in reviewing...