N.L.R.B. v. Rain-Ware, Inc.

• Decision Date: 27 April 1984
• Docket Number: No. 83-1494,INC,RAIN-WAR,83-1494
• Citation: 732 F.2d 1349
• Parties: 116 L.R.R.M. (BNA) 2261, 101 Lab.Cas. P 11,035 NATIONAL LABOR RELATIONS BOARD, Petitioner, v., Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1349

732 F.2d 1349

116 L.R.R.M. (BNA) 2261, 101 Lab.Cas. P 11,035

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. RAIN-WARE, INC., Respondent.

No. 83-1494.

United States Court of Appeals Seventh Circuit.

Argued Jan. 17, 1984.

Decided April 27, 1984.

Fred Harvard, N.L.R.B., Washington, D.C., for petitioner.

Loren J. Comstock, Abbott, Comstock, Goerges & Lohmeier, Indianapolis, Ind., for respondent.

Before CUMMINGS, Chief Judge, and WOOD and POSNER, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

Rain-Ware, Inc., appeals from a decision of the National Labor Relations Board adopting the recommended order of an administrative law judge, which concluded that Rain-Ware had violated subsections 8(a)(1) and (a)(3) of the National Labor Relations Act, 29 U.S.C. Sec. 158(a)(1), (3) (1976), by laying off certain employees and by coercively interrogating and threatening employees with reprisal for union activity. Rain-Ware also appeals the Board's decision that Mike Jones, one of the laid-off employees, was not a supervisor and thus was subject to the Act's protection. We agree that Jones was not a supervisor, and we enforce the Board's order that Rain-Ware cease and desist from unfair labor practices and offer reinstatement to four employees.

I.

Rain-Ware manufactures and distributes gutters, downspouts, and related products. At the time of concern here, Rain-Ware's facilities consisted of a production plant in one building, and a warehouse and van modification operation (modifying the vans used to install and service gutters) in another building. H.D. Loftiss was Rain-Ware's president and major stockholder, who spent only a few days per week at the Rain-Ware facilities in Indianapolis.

In early September 1980, Loftiss employed a total of nine persons at Rain-Ware. David Farmer was the manager of the Company; on or before September 8, he had given notice of his intention to resign. ¹ The production plant was manned by Phillip Smith, Byron (or Barney) Bose, Jeffrey McGuire, and Richard Rhodes, and managed by Tom Parrish. The warehouse was run by Mike Jones. His brother, Jim Jones, modified the vans. John Cecil was the delivery truck driver; he also spent about one-quarter of his time working in the production plant or the warehouse.

In August 1980, Mike Jones had contacted Local 41 of the Sheet Metal Workers Union. Several Rain-Ware employees met with union representatives on September 4; all employees excluding Company manager Farmer signed union authorization cards. The Sheet Metal Workers' and Teamsters' unions then sent a letter, which Farmer received on September 9, notifying the Company that the unions were authorized to represent its employees and seeking recognition. On that day, Farmer mentioned the letter to the employees on two occasions: (1) Parrish and Rhodes testified that they and Smith were on the loading dock when Farmer approached them waving the letter, and saying that Loftiss would close the business and move to Florida; and (2) Cecil testified that in the lunchroom, Farmer asked him what he knew about the letter. ²

On September 10, Loftiss was at the Company. Farmer testified that Loftiss told Farmer he planned to close the warehouse and lay off some employees. Loftiss inquired of Farmer the minimum number of employees needed to operate the production plant, to which Farmer responded three. Loftiss then directed Farmer to select the three employees to be retained. Farmer chose to lay off McGuire, Parrish, and Rhodes, and Farmer informed the three that they were laid off effective at the end of that workday, due to lack of work.

That same day, Loftiss laid off driver Cecil, citing lack of work. Loftiss told Cecil that he would be contracting out the driving in the future, and asked Cecil if he would be interested in working on that basis. Cecil replied affirmatively, but no such arrangements were made.

Also on September 10, Loftiss went to the warehouse to see Mike Jones. Knowing that Company manager Farmer was resigning, Loftiss two days earlier had offered Jones Farmer's position. Jones then had said he would consider the offer. On September 10, Loftiss reiterated the offer. Jones asked for certain benefits; Loftiss responded with a counteroffer which Jones rejected. Loftiss then told Jones to post notice that the warehouse would be closed. Jones told Loftiss that he would continue in his present job working for a new manager, but Loftiss laid him off the next day, saying that if Jones thought he was worth more money, he should go out and find it.

In all, five employees were laid off: McGuire, Parrish, Rhodes, Cecil, and Mike Jones. Rain-Ware has not called any of these employees back to work.

On December 28, 1981, an administrative law judge (ALJ) found that the five layoffs and Farmer's September 9 contacts with employees violated subsections 8(a)(1) and (a)(3) of the Act. The Board affirmed the findings and conclusions of the ALJ and adopted his recommended order, except as to Parrish, whose discharge was held lawful due to his supervisory status. ³ See Rain-Ware, Inc., 263 N.L.R.B. 50 (1982).

II.

Rain-Ware objects that the substantial evidence on the record as a whole does not establish that the layoffs were motivated solely by discrimination to discourage union activity in violation of subsection 8(a)(3). The Company attributes the layoffs to economic necessity, caused by a decline in business. The Board argues that it has proved that anti-union animus was a substantial or motivating factor in the layoffs, and that the Company has failed to prove its affirmative defense that the layoffs would have occurred in any event for valid reasons.

The Supreme Court recently approved the Board's reformulation of the test for motivation in unlawful discharge cases. ⁴ See NLRB v. Transportation Management Corp., --- U.S. ----, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983). Under the current test, the General Counsel has the burden of proving that the employee's protected conduct was a substantial or motivating factor in the discharge. Even if the employer fails to rebut the General Counsel's proof, the employer could avoid being held in violation of section 8 "by proving by a preponderance of the evidence that the discharge rested on the employee's unprotected conduct as well and that the employee would have lost his job in any event." Id. at 2473.

The Board has sustained its burden of proving that protected conduct was a motivating factor in the layoffs. The timing of the layoffs and warehouse closing provides the strongest support for connecting anti-union sentiment with the layoffs. The Company received the union demand letter on September 9; the Company laid off three employees (excluding Parrish) on September 10 and one on September 11. Timing alone may suggest anti-union animus as a motivating factor in an employer's action. See NLRB v. Industrial Erectors, Inc., 712 F.2d 1131, 1137 (7th Cir.1983); NLRB v. Gogin, 575 F.2d 596, 601-02 (7th Cir.1978).

Furthermore, Farmer's encounters with employees revealed his perception of the probable Company reaction to the union activity. As we hold that Farmer, although he already had tendered his resignation, either was speaking directly for management or was relating his knowledge of Loftiss' position, Farmer's statements corroborate the suggestion that anti-union sentiment was a motivating factor for the layoffs.

The Company asserts that legitimate economic reasons rather than union activity prompted the layoffs and the closing of the warehouse. We are not convinced that the business decline cited by the Company was so drastic or so markedly different from prior declines as to compel an inference that the decline was the actual motive for the mass layoffs and warehouse closing. The Company's documentary evidence of its economic situation was not particularly enlightening. The ALJ, carefully analyzing the Company's gross sales figures from June 1979 and its unaudited monthly income statements from December 1979, found no particular trend. The Company's sales had suffered declines in the past, with no layoffs resulting. Inconsistent responses to two periods of decline provide evidence of a Sec. 8(a)(3) violation. See Industrial Erectors, 712 F.2d at 1139-40; NLRB v. Teknor-Apex Co., 468 F.2d 692, 694 (1st Cir.1972) (per curiam); NLRB v. Lively Service Co., 290 F.2d 205, 207-08 (10th Cir.1961).

Loftiss testified that he had made plans to close the warehouse and cut the work force prior to receipt of the union demand letter on September 9. ⁵ Much of Loftiss' testimony either directly contradicted or was not supported by other testimony. The ALJ expressly found much of Loftiss' testimony "unreliable," and concluded that "none of Loftiss' testimony on any crucial point in this case is believable." ⁶ The presentation of implausible or shifting explanations for the alleged violation is a factor suggesting discrimination against union activity. Industrial Erectors, 712 F.2d at 1137; NLRB v. Rich's Precision Foundry, Inc., 667 F.2d 613, 626 (7th Cir.1981).

The Company argues, as further evidence of a lawful motivation for laying off employees due to economic necessity, that it did not replace the laid-off production employees, ⁷ and that the remaining employees testified that they were not busy after the layoffs. The post-termination evidence does not establish an economic justification for the layoffs. The economic situation prior to and at the time of the layoffs is critical, rather than that subsequent to the layoffs. While the ALJ found that "[p]erhaps there was some fat in the work force prior to the layoffs," the employees did testify that they were busy prior to the layoffs.

The Company argues further that the retained employees also had supported the union. It is irrelevant that some union sympathizers were not laid off, when the layoffs were meant to chill union activity. Majestic Molded Products, Inc. v. NLRB, 330 F.2d 603, 606 ...