N.L.R.B. v. Lovejoy Industries, Inc.

• Decision Date: 14 June 1990
• Docket Number: No. 89-1074,89-1074
• Citation: 904 F.2d 397
• Parties: 134 L.R.R.M. (BNA) 2599, 116 Lab.Cas. P 10,201 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. LOVEJOY INDUSTRIES, INCORPORATED, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 397

904 F.2d 397

134 L.R.R.M. (BNA) 2599, 116 Lab.Cas. P 10,201

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. LOVEJOY INDUSTRIES, INCORPORATED, Respondent.

No. 89-1074.

United States Court of Appeals Seventh Circuit.

Argued Nov. 7, 1989.

Decided June 14, 1990.

Aileen A. Armstrong, Leizer Goldsmith, N.L.R.B., Appellate Court--Enforcement Litigation, Charles P. Donnelly, Jr., N.L.R.B., Washington, D.C., Harvey A. Roth, N.L.R.B., Chicago, Ill., for petitioner.

Larry G. Hall, Matkov, Salzman, Madoff & Gunn, Chicago, Ill., for respondent.

Before WOOD, Jr., COFFEY, and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

During October 1987 the NLRB conducted an election among production and maintenance employees of a factory at which the Acme Die Casting division of Lovejoy Industries manufactures zinc and aluminum die castings. The union won by a vote of 69 to 39. The employer lodged objections to the union's conduct before the election. After its regional director investigated these and concluded that a hearing was unnecessary, the Board certified the union as the representative of the labor force. Lovejoy refused to bargain with the union; the Board held that the refusal is an unfair labor practice and directed Lovejoy to bargain. The Board asks us to enforce this order. Lovejoy's principal defense is based on 29 C.F.R. Sec. 102.69(d), which states that a hearing "shall be conducted with respect to those objections or challenges which the regional director concludes raise substantial and material factual issues."

Lovejoy's objections to the election fall into four categories: threats by union adherents, vandalism the firm attributes to the union, marking of sample ballots, and a request for concessions. The latter two are of little consequence.

A few days before the vote, the company posted an official notice of election, including a sample ballot. Someone quickly put a blue "X" in the "yes" box. The company replaced it with a fresh notice; it was marked in the same fashion within hours and promptly removed. The third time was the charm, for the next notice went unmarked through the election. As the regional director concluded, such transient (and transparent) conduct had no substantial ability to affect the election. Bank of India v. NLRB, 808 F.2d 526, 540-41 (7th Cir.1986).

The union's request for benefits followed an assembly at which the employer's president told employees that the firm would not dismiss anyone for supporting the union. The next morning several of the union's adherents asked the president to sign a statement "that if the [union] loses the election ... there will not be any layoffs at Acme Die Casting". He refused, on the ground that such a pledge not only would enlarge the promise not to penalize people for supporting the union but also would run afoul of the rule that during a campaign employers may not extend benefits out of the regular course. A no-layoff pledge, most unusual for a manufacturing plant facing cyclical demand, would have gotten the firm in hot water. NLRB v. Exchange Parts Co., 375 U.S. 405, 84 S.Ct. 457, 11 L.Ed.2d 435 (1964). We may assume that the employees' demand was calculated to give the union a talking point: the firm vowed not to use retaliatory layoffs, but it would not put a no-layoff pledge in writing and so was two-faced. Still, employees heard what the president said and could judge for themselves the significance of the refusal to sign the union's broader language; the firm was free to say why it balked. The Board no longer gives close scrutiny to the electioneering tactics of either side. Midland National Life Insurance Co., 263 N.L.R.B. 127 (1982). Petty wrangles of this kind do not justify undoing the outcome of an election.

Lovejoy's first two objections are more substantial. For convenience we shall treat them together. Because the regional director did not hold a hearing, we have only the employer's version of events. Even this may be incomplete, for Lovejoy asserts that some employees, frightened by what happened during the campaign, feared retaliation and so would not furnish statements for public consumption. At a hearing Lovejoy would have had access to compulsory process, and its inability to compel the employees to speak is at the core of its objections to the Board's procedures.

According to employee Alfred McCann, Sacramento Olivaros learned that McCann did not support the union and told McCann that he had better "watch out" and "look out". A few days later, someone scratched the side of McCann's car, parked in the company's lot. McCann also related that "[s]hortly before the election Miguel [Aguilar] told me that the radiator in his car had been punched in at least three times while the car was parked in the Acme parking lot." Aguilar refused to give the company a sworn statement confirming McCann's story or revealing the circumstances that led Aguilar to link the damage to the union. Lovejoy finds these two episodes of vandalism especially significant because (a) neither before nor since the organizing campaign has a car been damaged in its lot, and (b) McCann says that he informed other employees what happened.

An unidentified union supporter called employee Florentino Olivares a "chicken" for refusing to sign a card authorizing the union to represent him. Olivares states that he signed a card to stop the name-calling. James Scott, one of the firm's supervisors, told the regional director that employee Francesco Mombela told Scott that Mombela had signed an authorization card "out of fear of damage to his property and injury to his family". Scott did not recount what, if anything, gave Mombela cause for fear. Scott said that Mombela would not give the company an affidavit to present to the Board because he feared the union and that Olivares, who did supply an affidavit, expressed concern that union men would "take action against him" if they found out he had helped the company.

After Lovejoy presented this evidence, the regional director interviewed some of its employees off the record. The regional director concluded that there had been no threats of violence and that the name-calling and implied threats of ostracism were "isolated and not coercive". Olivaros's language was "vague", and in the regional director's view the absence of "overt threats", when coupled with the sporadic property damage, was not enough to call the election into question--at least when neither the veiled threats nor the vandalism could be linked directly to the union. The regional director recommended that the Board certify the union as the victor, which it did. The unfair labor practice case was perfunctory and serves only to allow judicial review of the decision to accept the results of the election.

If the regional director thought he could resolve disputes and draw inferences on the basis of ex parte interviews with a few of Lovejoy's employees, without offering the employer either a hearing or compulsory process to obtain evidence, he was mistaken. Section 102.69(d) requires the regional director to hold a hearing when there are "substantial and material factual issues". Although the interpretation of these words has produced disagreement both within and without this circuit, our most recent assessment is that the regional director must hold a hearing when the employer presents facts "sufficient to support a prima facie showing of objectionable conduct", that is, of "misconduct sufficient to set aside the election under the substantive law of representation elections". NLRB v. Service American Corp., 841 F.2d 191, 195 (7th Cir.1988). This is functionally the approach a district court uses when evaluating a motion for summary judgment. Accord, Scintilla Power Corp. v. NLRB, 707 F.2d 419, 421 (9th Cir.1983) (Kennedy, J.). Although at least the First and Third Circuits give the regional director more leeway, NLRB v. Newly Weds Foods, Inc., 758 F.2d 4, 12 (1st Cir.1985) (Breyer, J.); NLRB v. ARA Services, Inc., 717 F.2d 57, 63-69 (3rd Cir.1983) (en banc), the parties have not asked us to revisit the subject.

Although the regional director is supposed to use the summary judgment standard, courts review the Board's decisions--including its decisions not to hold hearings--deferentially. Van Leer Containers, Inc. v. NLRB, 841 F.2d 779, 784 (7th Cir.1988); NLRB v. Chicago Marine Containers, Inc., 745 F.2d 493, 496 n. 2 (7th Cir.1984). At first this seems inconsistent. What is the point of deference when the existence of a prima facie case is a question of law? Courts of appeals review de novo decisions by district judges granting or denying summary judgment. If the regional director plays the role of the district judge, why does not the court of appeals play its traditional role in reviewing such decisions and deciding whether a hearing should be held? Four judges, dissenting in ARA Services, 717 F.2d at 72-78 (Garth, J., joined by Hunter, Weis & Becker, JJ.), argued that equivalence in the factfinders' roles implies equivalent appellate review.

Equivalence between regional director and district judge breaks down because in labor law the court of appeals is neither the first tier of review nor the author of the rules of decision. The Board rather than the court reviews the regional director's performance. Disappointed parties do not "appeal" the Board's decision to the court; they obtain review under 29 U.S.C. Secs. 160(e) and (f), which direct courts to accept those findings supported by "substantial evidence". The statutory language applies not to findings of fact alone (which do not exist until after a hearing) but to "the findings of the Board with respect to questions of fact". If the Board holds hearings and makes findings in election contests, the "substantial evidence" test applies. Mosey Manufacturing Co. v. NLRB, 701 F.2d 610, 614-15 (7th Cir.1983) (en banc). When deciding that a hearing is unnecessary, the Board also makes...