NLRB v. Audio Industries, Inc.

• Decision Date: 13 March 1963
• Docket Number: No. 13783.,13783.
• Citation: 313 F.2d 858
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. AUDIO INDUSTRIES, INC., Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

313 F.2d 858 (1963)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. AUDIO INDUSTRIES, INC., Respondent.

No. 13783.

United States Court of Appeals Seventh Circuit.

January 17, 1963.

Rehearing Denied March 13, 1963.

Marcel Mallet-Prevost, Asst. Gen. Counsel, Lee M. Modjeska, Atty., Stuart Rothman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Solomon I. Hirsh, Harold B. Shore, Attys., National Labor Relations Board, Washington, D. C., for petitioner.

Sheldon M. Charone, Walter L. Adams, Chicago, Ill., Warren J. Rommes, Michigan City, Ind., Henry E. Seyfarth, Harvey M. Adelstein, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., for respondent.

Before SCHNACKENBERG and CASTLE, Circuit Judges, and GRUBB, District Judge.

GRUBB, District Judge.

This case is before the court on the petition of the National Labor Relations Board pursuant to Section 10(e) of the National Labor Relations Act, as amended (61 Stat. 136, 29 U.S.C.A. § 151 et seq.), for enforcement of its order issued against respondent, Audio Industries, Inc., on February 16, 1962. This court has jurisdiction under Section 10(e) of the Act, the alleged unfair labor practices having occurred in Michigan City, Indiana, where respondent manufactures electronic products.

The Trial Examiner and Board found that respondent violated Sections 8(a) (3) and (1) of the Act by its failure to recall from layoff status five employees because of their activity on behalf of Local Union No. 298, General Teamsters, Chauffeurs and Helpers. The facts are as follows:

In March 1960, the Union began a campaign to organize the production and maintenance employees at respondent's plant. An "organizing committee" was formed, consisting of sixteen employees of the Company. On March 24, 1960, the Union distributed a leaflet to all of respondent's employees notifying them of the names of their fellow workers who were serving on the committee. Both Roy McClure, general manager, and Edmund Dolembo, vice president and personnel director, saw this leaflet.

On May 25, 1960, a representation election was held, and a majority of the employees voted against the Union. On April 22, 1960, one month before the election, respondent laid off twelve employees for economic reasons. On July 23, 1960, two months after the election, forty-eight more employees were laid off for economic reasons. Among the sixty employees thus affected by this reduction in force were twelve employees who were identified in the Union's leaflet as members of the organizing committee. The other four members of the committee included the chairman, who was never laid off, and three employees who had quit.

In August 1960 and March 1961, thirty-two of the original sixty employees were recalled, including three who had been on the organizing committee. Of the remaining twenty-eight who were not recalled were the five employees involved on this appeal, all of whom had been active as members of the Union's organizing committee — Gertrude Rempala, Mary Ratliff, Janice Reed, Walden Ratliff, and Frances Celebucki.^*

There were two alleged incidents from which the Trial Examiner and the Board found that respondent displayed an antiunion animus or bias. This alleged bias formed the background for the alleged violations herein. First, there was testimony of one Albert Heisler, an employee who was laid off and not recalled. He testified that a few weeks before his layoff in April 1960, he heard McClure, the general manager, state to a group of employees as follows:

"Well, I understood him to say that the union better go through or — but if the union didn\'t go through, there would be a lot of reorganization done there, and they would also find out who\'s running the place. And there would also be a lot of new faces there."

McClure denied making the statement, and no witnesses were called to corroborate the testimony of Heisler regarding this incident.

The second incident upon which the Board relied in finding an antiunion bias on the part of the respondent occurred in March 1961. At that time vice president Edmund Dolembo telephoned the Indiana State Employment Service and requested that job applicants be referred to the Company. On the face of the requisition form made out by the Employment Service is the notation: "Do not refer any former employee of Audio or Elco." Elco Electronics was one of respondent's three local competitors and was the only competitor whose employees were organized. The Trial Examiner and the Board concluded that Dolembo manifested a predilection against hiring union members by his direction that no former Elco and Audio employees be referred to the Company. The reasons he gave for this instruction, which the Trial Examiner rejected, were three-fold:

1. In the past, certain trade secrets involving the design of new products had "leaked out" to Elco. To eliminate the possibility of such leaks in the future, respondent did not want employees who were probably friendly with Elco's employees and might divulge these trade secrets.

2. Respondent wished to eliminate "job skipping" between respondent and Elco.

3. Employees who were not satisfactory to Elco would not be satisfactory to respondent.

In rejecting this explanation, the Trial Examiner felt that logically the same considerations should apply to former employees of the two other nonunion competitors, yet no similar restrictions were adopted as to them. He improperly disregarded the testimony of Dolembo that Dolembo requested the Employment Service by telephone not to refer former employees of Elco or of any other competitor.

The Trial Examiner's inferences of antiunion animus on the part of respondent based on these incidents cannot be sustained. Although it is a general rule that questions of credibility are for the Trial Examiner and the Board — N. L. R. B. v. Walton Manufacturing Co., 369 U.S. 404, 82 S.Ct. 853, 7 L.Ed.2d 829 (1962); Sunshine Biscuits, Inc. v. N. L. R. B., 274 F.2d 738 (7th Cir., 1960) — inferences contrary to direct testimony are not sufficient to support a finding of antiunion animus. N. L. R. B. v. Kaye, 272 F.2d 112 (7th Cir., 1959); N. L. R. B. v. Ray Smith Transport Co., 193 F.2d 142 (5th Cir., 1951).

In reviewing the order of the Board, we must apply the standards laid down by the Supreme Court in Universal Camera Corp. v. N. L. R. B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). The court in that decision said at pages 490-491, 71 S.Ct. at page 466 as follows:

"* * * The Board\'s findings are entitled to respect; but they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the Board\'s decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both.

* * * * * *

"* * * Whether on the record as a whole there is substantial evidence to support agency findings is a question which Congress has placed in the keeping of the Courts of Appeals. * * *"

In Consolidated Edison Co. of New York v. N. L. R. B., 305 U.S. 197 at page 229, 59 S.Ct. 206, at page 217, 83 L.Ed. 126, (1938), the court stated:

"* * * Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."

There is no substantial evidence in the record to support the Trial Examiner's conclusion that respondent's sole reason for instructing the State Employment Service as to referrals was to preclude the hiring of prounion employees. The testimony of respondent's witnesses as to the circumstances surrounding the instructions to the State Employment Service is uncontroverted. Respondent's policy of not employing former employees of at least one competitor, Elco, may not have been effective to protect its interests, but the fact that more feasible methods were available is immaterial. The Board may not substitute its judgment for that of the employer as to the selection and discharge of employees. The Act proscribes the exercise of the right to hire and fire only when it is employed as a discriminatory device. N. L. R. B. v. Wagner Iron Works, 220 F.2d 126 (7th Cir., 1955).

As to the alleged antiunion statement by McClure to a group of employees, this court cannot say that the Trial Examiner erred in crediting the testimony of Heisler that such a statement was made, although this testimony is highly doubtful in view of the lack of corroborating testimony by anyone from the group of employees who allegedly heard the statement. Such an isolated statement can scarcely be considered substantial evidence to support the unfair labor practice charges here. It is necessary, therefore, to consider the testimony and evidence as to the individual employees and the respondent's alleged reasons for its failure to recall them from layoff status.

Before turning to the specific findings with respect to the five employees here involved, the background of the layoff procedure at respondent's plant should be summarized.

The uncontradicted testimony of Roy McClure indicates that the quality control aspects of respondent's operations were in need of correction at the time he assumed his duties as general manager in the fall of 1959. In order to reduce the great number of rejects which were being produced, it was necessary to introduce a new system of assembling parts as well as to establish...