N.L.R.B. v. Indianapolis Mack Sales and Service, Inc.

• Decision Date: 25 September 1986
• Docket Number: No. 84-3061,84-3061
• Parties: 123 L.R.R.M. (BNA) 2543, 105 Lab.Cas. P 12,010 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. INDIANAPOLIS MACK SALES AND SERVICE, INC., Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 280

802 F.2d 280

123 L.R.R.M. (BNA) 2543, 105 Lab.Cas. P 12,010

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. INDIANAPOLIS MACK SALES AND SERVICE, INC., Respondent.

No. 84-3061.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 9, 1986.

Decided Sept. 25, 1986.

William Bernstein, N.L.R.B., Washington, D.C., for petitioner.

John J. Myers, Eckert Seamans Cherin & Mellott, Pittsburgh, Pa., for respondent.

Before CUDAHY, COFFEY, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

The primary question we will address in considering this application for enforcement of an order of the National Labor Relations Board ("NLRB" or "Board") is whether the NLRB's determination concerning the appropriateness of the bargaining unit at issue was supported by substantial evidence. For the reasons stated below, we find that it was not and will, therefore, deny the application and remand the action to the Board for further proceedings consistent with this opinion.

I

Mack Truck, Inc. ("Mack Truck"), a factory branch and district office of the national corporation of the same name, was engaged in the business of selling and servicing Mack trucks in Indianapolis and the surrounding area. The company's workforce was divided into four primary categories: service department employees, parts department employees, office clerical workers, and salesmen. Since 1964, the service and parts departments were maintained as two separate bargaining units and both were represented by the International Association of Machinists and Aerospace Workers, District Lodge No. 90 ("Union") and covered by different collective-bargaining agreements.

In June of 1982, the respondent, Indianapolis Mack Sales and Service, Inc. ("Indianapolis Mack"), entered into an agreement with the parent corporation of Mack Truck to acquire the factory branch and to operate it as an independent dealership. Prior to the effective date of the changeover (August 1982), Mack Truck advised the Union of the sale. The Union then sent a letter to the owner of Indianapolis Mack informing him that it represented the service and parts department employees and requesting that he sign the current collective-bargaining agreements.

Mack Truck closed permanently on Saturday, July 31, 1982. On August 2, Indianapolis Mack opened for business. By a letter mailed on August 3, the Union again informed the owner of Indianapolis Mack that it represented the service and parts departments and requested recognition and bargaining. On August 9, the owner rejected the request on the ground that he had a good-faith doubt regarding the Union's majority support.

The Union filed a charge with the NLRB in which it alleged that Indianapolis Mack, as the successor company to Mack Truck, had engaged in an unfair labor practice in violation of Secs. 8(a)(1) and (5) of the National Labor Relations Act ("NLRA" or "Act"), codified as amended at 29 U.S.C. Sec. 158(a)(1) and (5), when it refused to recognize and to bargain with the Union as the duly certified collective bargaining representative of the service department employees of the predecessor company. Indianapolis Mack maintained that it was not the legal successor and, therefore, that it was not required to recognize or bargain with the Union as there was no substantial continuity between its business operations and those of Mack Truck. It also claimed that by the time it had a complete work complement, the employees who were formerly part of the represented service department unit at Mack Truck no longer constituted a majority of the same department in the new company. In addition, Indianapolis Mack denied in its answer to the charge that the bargaining unit was appropriate and refused to enter into a stipulation as to the appropriateness of the unit.

At the subsequent administrative hearing, counsel for Indianapolis Mack stated that there had not been a determination of the appropriateness of the bargaining unit in question. The Administrative Law Judge ("ALJ") concluded--incorrectly--that the appropriateness of the unit was not an issue she could "take cognizance of." Indianapolis Mack again voiced its objection and was assured by the ALJ that the contention had been preserved. No record was made at the hearing on the question of appropriateness. In her order dated May 31, 1983, the ALJ did not analyze in any way the nature of the bargaining unit at issue, but only observed in a footnote that Indianapolis Mack did not "admit the appropriateness of the unit." Although the ALJ had stated at the hearing that she could not reach the question, she nonetheless concluded in her order that, as a matter of law, the "described unit [of service department employees was] appropriate for the purposes of collective-bargaining." She also found that Indianapolis Mack was the successor of Mack Truck and thus had violated Secs. 8(a)(1) and (5) of the Act by refusing to recognize and bargain with the Union as the representative of the described service department bargaining unit.

Indianapolis Mack sought review before the NLRB. It took exception to, among other things, the ALJ's finding of appropriateness and requested that the record be reopened for submission of evidence on that issue. The NLRB (which had delegated its authority to a three-member panel) denied the request, apparently on the ground that Indianapolis Mack had not adequately objected and had failed to introduce evidence on the question at the hearing. In addition, the Board stated that the unit was appropriate "[i]n light of the employees' common work interests and their history of separate representation." The Board adopted the recommended order of the ALJ. One member of the panel, however, dissented on the ground that the record failed to support the finding that the bargaining unit was appropriate. He noted that the Board had long held that automobile service departments should not be fragmented into multiple units. Implicit in his reasoning was the conclusion that only the bargaining history of the predecessor, not the common work interest of the employees, was described in the record and that this history, standing alone, should not control the issue of a bargaining unit's appropriateness. This application for enforcement followed.

II

Section 9(b) of the NLRA, codified as amended at 29 U.S.C. Sec. 159(b), provides in relevant part:

The Board shall decide in each case whether, in order to assure employees the fullest freedom in exercising the rights guaranteed by this [Act], the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof.

(emphasis added.)

Although the Board exercises broad discretion in determining the appropriateness of a unit, Sec. 9(b) nonetheless imposes a nondelegable obligation on that agency to make such a determination "in each case." Thus, the NLRB fails to perform its statutory duty when it does not exercise its discretion under that section. See NLRB v. Metropolitan Life Insurance Co., 380 U.S. 438, 85 S.Ct. 1061, 13 L.Ed.2d 951 (1965); NLRB v. Cardox Division, 699 F.2d 148 (3d Cir.1983).

In its brief to this court, the Board acknowledges that an appropriateness determination must be made in a successorship dispute. We, of course, must verify that any determination the Board makes is supported by substantial evidence. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951); NLRB v. Manley Truck Line, Inc., 779 F.2d 1327, 1330 (7th Cir.1985); Cardox, 699 F.2d at 156; NLRB v. Chicago Health & Tennis Clubs, Inc., 567 F.2d 331, 334-35 (7th Cir.1977), cert. denied, 437 U.S. 904, 98 S.Ct. 3089, 57 L.Ed.2d 1133 (1978). Although this standard of review accords the Board considerable discretion, it does not mean that we will simply rubber-stamp its decisions, thereby substituting judicial abdication for judicial review. See NLRB v. Harvstone Mfg. Co., 785 F.2d 570, 574 (7th Cir.1986). After a thorough review of the evidence presented to the Board, we find in the instant case that the NLRB failed to discharge its obligation under Sec. 9(b).

As noted above, the Board is required, with or without arguments from the parties, to determine the appropriateness of a bargaining unit. In addition, there is no question in this case that Indianapolis Mack expressly contested the appropriateness in its pleadings and at the hearing. The ALJ, however, concluded incorrectly at the hearing that the question was not before her and did not allow the introduction of any evidence on the matter. In addition, she expressly assured Indianapolis Mack that it had not waived its objection. Despite these rulings, the ALJ decided in her order that the unit was appropriate. The Board subsequently denied Indianapolis Mack's request to reopen the record, but relying on the same record that was before the ALJ concluded that the unit was appropriate, both in view of the "bargaining history" and the "community of interest" of the employees.

This is a troubling conclusion from the NLRB for three reasons. First, the Board has a long-standing rule that employees in a dealership's parts and service departments should be in the same bargaining unit, unless there is an affirmative showing that there is no substantial community of interest between the two groups of employees. See Jensen's Motorcycle, Inc. d/b/a Honda of San Diego, 254 N.L.R.B. 1248, 1263 (1981); see also Gregory Chevrolet, 258 N.L.R.B. 233, 238 (1981); Graneto-Datsun, 203 N.L.R.B. 550, 550 (1973); Harry Brown Motor Co., 86 N.L.R.B. 652, 654 (1949). When an agency changes course, a reviewing court must be satisfied that the agency was aware of, and has given sound reasons for, the change, and that it has shown that the new rule is consistent with the agency's statutory duties. See New York Council, Association of Civilian Technicians v. FLRA, 757 F.2d 502, 508 (2d Cir.), cert. denied, ---...