Nat'l :abor Relations Bd. v. Pepsicola Bottling Co.

• Decision Date: 08 May 2001
• Docket Number: No. 00-1970,00-1970
• Parties: (4th Cir. 2001) NATIONAL LABOR RELATIONS BOARD,Petitioner, v. PEPSI COLA BOTTLING COMPANY OF FAYETTEVILLE, INCORPORATED, Respondent. Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 305

258 F.3d 305 (4th Cir. 2001)

NATIONAL LABOR RELATIONS BOARD,Petitioner, v. PEPSI COLA BOTTLING COMPANY OF FAYETTEVILLE, INCORPORATED, Respondent.

No. 00-1970

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: May 8, 2001

Decided: July 25, 2001

On Application for Enforcement of an Order of the National Labor Relations Board. (11-CA-14889, 11-CA-15034, 11-CA-15181, 11-CA-15281, 11-CA-15383, 11-CA-15556)

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

COUNSEL ARGUED: Scott Matthew Wich, CLIFTON, BUDD & DEMARIA, L.L.P., New York, New York, for Pepsi. William M. Bernstein, NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for Board. ON BRIEF: Thomas W. Budd, CLIFTON, BUDD & DEMARIA, L.L.P., New York, New York, for Pepsi. Leonard R. Page, Acting General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for Board.

Before NIEMEYER, WILLIAMS, and KING, Circuit Judges.

Enforcement denied and case remanded with instructions by published opinion. Judge Williams wrote the opinion, in which Judge Niemeyer and Judge King joined.

OPINION

WILLIAMS, Circuit Judge:

In this case, the Pepsi-Cola Bottling Company of Fayetteville, Inc., (Pepsi), appeals from an order of the National Labor Relations Board (NLRB) ordering the payment of backpay to employees Christopher Hyatt and Robert Munn. Because Pepsi was prevented from introducing relevant evidence at the compliance proceeding which is necessary to evaluate the amount of Pepsi's backpay liability with respect to Hyatt, and because the NLRB has not explained adequately its use of a "representative employee" formula to calculate the amount of backpay due to Munn, we decline to enforce the NLRB's order, instead remanding for further proceedings.

I.

In the underlying unfair labor practices case, the NLRB's order required Pepsi, among other things, to reinstate and pay backpay to employees Hyatt and Munn. Pepsi-Cola Bottling Co. of Fayetteville, 315 NLRB 882 (1994) (NLRB I). This portion of the NLRB's order was enforced by this Court in 1996. NLRB v. Pepsi-Cola Bottling Co. of Fayetteville, No. 95-1924, 1996 U.S. App. LEXIS 23936 (4th Cir. Sept. 10, 1996). On May 29, 1997, the NLRB's Regional Director issued a compliance specification, subsequently amended, setting the amount of backpay owed to Hyatt and Munn. In its answer, Pepsi challenged the compliance specification in several respects.

A hearing on the specification was held before an administrative law judge (ALJ) to resolve the issues presented. On February 9, 1998, the ALJ issued his supplemental decision, affirming the compliance specification for Hyatt, but setting aside the specification for Munn and recalculating the backpay owed to him. On exceptions from the ALJ's decision, the NLRB affirmed the ALJ's findings with respect to Hyatt, but reversed with respect to Munn, finding that the Regional Director's "representative employee" method of calculating the amount Munn would have earned had he remained at Pepsi should have been used and was erroneously rejected by the ALJ in favor of an average percentage pay increase approach. Pepsi-Cola Bottling Co. of Fayetteville, 330 NLRB No. 153 (2000) (NLRB II).

A.

The backpay period for Hyatt began on December 30, 1992, when Hyatt was unlawfully discharged by Pepsi. Hyatt's backpay period, according to the NLRB, ended on May 12, 1997, when Pepsi reinstated him to his former position as a bulk route salesman. Between his discharge and reinstatement, Hyatt worked for several employers, including a Coca-Cola bottler and a firm known as D.K. Taylor. Pepsi asserts that after his reinstatement, Hyatt was terminated by Pepsi for failing a drug test, but the ALJ deemed this information irrelevant and did not permit inquiry into either Pepsi's drug testing policies or Hyatt's alleged failure of a Pepsi drug test.

In determining the amount of earnings Hyatt lost, the NLRB's Regional Director, in a finding upheld by the ALJ and the NLRB, applied a "representative employee" formula. Using information provided by Pepsi, the Regional Director initially identified a group of Pepsi's bulk route salesmen whose earnings approximated Hyatt's at the time of discharge. For each year of the backpay period, the average annual earnings of a representative group were calculated; these earnings were converted to a quarterly basis, and Hyatt was awarded the difference between his quarterly interim earnings during the period between his wrongful termination and reinstatement, and what he "would have" earned had he remained at Pepsi according to the representative employee calculation. (J.A. at 130.)

After his initial, wrongful termination from Pepsi, Hyatt took a job at Coca-Cola. In November of 1995, Hyatt resigned from his position at Coca-Cola after he failed a drug test. The NLRB asserts that Hyatt was, in fact, discharged, because, it posits, the only alternative to resignation was discharge. NLRB compliance officer Bradshaw stated that it "was [his] understanding" that Hyatt resigned involuntarily because he faced termination after failing a drug test. (S.A. at 46.) Bradshaw then stated that he was not competent to testify as to the circumstances surrounding Hyatt's separation from Coca-Cola and apologized for giving testimony regarding this issue. Hyatt himself was asked by Pepsi's attorney why he was "fired by Coke," and responded, "I failed a drug test." (J.A. at 58.) Then Hyatt clarified his testimony, stating that he did not supply the unemployment authorities with information regarding his separation from Coca-Cola "because actually I felt I wasn't terminated from any job that I left." (J.A. at 62.) After the ALJ summarized his testimony as being "that he wasn't terminated from any job, that he voluntarily quit," Hyatt responded, "Yes, sir." (J.A. at 62.) Asked again whether he voluntarily quit his Coca-Cola job, he again said, "Yes, sir." (J.A. at 61-62.)

After his departure from Coca-Cola, Hyatt was unemployed for approximately two weeks before accepting employment at a company known as D.K. Taylor at a lower pay rate than he earned at Coca-Cola but with more job responsibilities. The NLRB, in its backpay calculation, treated Hyatt as receiving earnings during his two-week period of unemployment at the rate he would have received had he remained at Coca-Cola. Beginning from Hyatt's start date at D.K. Taylor, however, the NLRB included as interim earnings only the actual earnings from Hyatt's lower-paying D.K. Taylor job. Thus, Pepsi's backpay liability reflects the reduction in earnings Hyatt suffered when he left Coca-Cola. Under the NLRB's calculation, the backpay owed Hyatt is $60,905.

B.

Robert Munn's backpay period began on November 22, 1991, when he was unlawfully discharged while he was still in his probationary period and earning $7.50 an hour as a mechanic. His backpay period ended on November 28, 1996, when Pepsi offered him reinstatement. As with Hyatt, the Regional Director, in an approach rejected by the ALJ but reinstated by the NLRB, applied a "representative employee" formula to determine the backpay owed Munn. The representative employee formula involved examining, on a quarterly basis, the earnings of mechanics considered comparable to Munn in terms of earnings at the time of their discharge; each quarter, the earnings of a pool of representative employees were averaged and the result was deemed to reflect what Munn would have earned had he remained at Pepsi. The NLRB determined that Munn was owed backpay of $18,871.64.

II.

The NLRB's interpretations of the Act are entitled to deference if they are reasonable, even if the NLRB's reading of the Act is not "the best way to read the statute." Holly Farms Corp. v. NLRB, 517 U.S. 392, 409 (1996) (emphasis omitted). "If the [NLRB's] legal interpretations are `rational and consistent with the Act,' they will be upheld by reviewing courts." Sam's Club v. NLRB, 173 F.3d 233, 239 (4th Cir. 1999) (quoting Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 42 (1987)) (internal citation omitted)."When we review mixed questions [of fact and law], the [NLRB's] application of legitimate legal interpretations to the facts of a particular case should be upheld if they are supported by substantial evidence based upon the record as a whole." Sam's Club, 173 F.3d at 239. Substantial evidence review must consider evidence that detracts from as well as supports the NLRB's findings, and substantial evidence is"such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Id. (internal quotation marks omitted). A reviewing court engaged in substantial evidence review may not "displace the [NLRB's] choice between two fairly conflicting views" of the evidence, "even though the court would justifiably have made a different choice had the matter been before it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951).

The Supreme Court has read 29 U.S.C.A. S 160(c) (West 1998) to "vest[ ] in the [NLRB] the primary responsibility and broad discretion to devise remedies that effectuate the policies of the Act, subject only to limited judicial review." Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 898-99 (1984). "In fashioning its remedies under[the Act], . . . the [NLRB] draws on a fund of knowledge all its own, and its choice of remedy must therefore be given special respect by reviewing courts." NLRB v. Gissell Packing Co., 395 U.S. 575, 612 n.32 (1969). The NLRB's chosen remedy in a backpay case must be enforced "unless it is arbitrary, capricious, or manifestly contrary to the statute." Coronet Foods, Inc. v. NLRB, 158 F.3d 782, 788 (4th Cir. 1998) (internal quotation marks omitted). However, the findings of the NLRB are not to be "mechanically accepted" by the courts; instead, this Court is "obligated to scrutinize the whole record, taking into...