NLRB v. Cactus Drilling Corporation

• Decision Date: 31 March 1972
• Docket Number: No. 30767.,30767.
• Citation: 455 F.2d 871
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CACTUS DRILLING CORPORATION, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

455 F.2d 871 (1972)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CACTUS DRILLING CORPORATION, Respondent.

No. 30767.

United States Court of Appeals, Fifth Circuit.

February 9, 1972.

Rehearing and Rehearing Denied March 31, 1972.

Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., John H. Ferguson, Atty., Elmer P. Davis, Director, Region 16, N. L. R. B., Fort Worth, Tex., Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Robert E. Williams, Attys., N. L. R. B., Washington, D. C., for petitioner.

W. A. Thurmond, Scott, Hulse, Marshall & Feuille, and Stephen B. Tatem, Jr., El Paso, Tex., for respondent.

Before TUTTLE, THORNBERRY and INGRAHAM, Circuit Judges.

Rehearing and Rehearing En Banc Denied March 31, 1972.

INGRAHAM, Circuit Judge:

During 1966 the Union¹ began a stepped up drive to organize all oil field roughnecks in the Permian Basin.² Cactus (the employer), an oil drilling company operating in the Basin, was one of thirteen companies whose employees³ were eligible to vote in an NLRB (the Board) conducted certification election on July 14, 1967.⁴

Of 211 voting, the Union carried the election by a margin⁵ of 106 for the Union and 84 against, with the remainder voting challenged ballots.

Cactus filed timely objections to the election and on June 26, 1969, the Board, on consideration of the hearing officer's report, the exceptions taken thereto and the entire record in the case, adopted both the hearing officer's findings and recommendations and certified the Union as representative of the employees in the unit.

Cactus, subsequent to the Board's certification, refused to bargain with the Union. The Union then filed unfair labor charges against the company with the NLRB Regional Director. On October 24, 1969, the Regional Director issued a complaint alleging violations of 8(a) (5) and (1) of the Act.⁶ Cactus answered the complaint by affirmatively stating its refusal to bargain, but asserted the invalidity of the certification election. Because the answer raised no objections to the election which had not previously been raised and rejected by the Board in the representation proceeding, the hearing examiner granted summary judgment against Cactus, and held it in violation of 8(a) (5) and 8(a) (1). Cactus took exception to these proceedings and summary judgment before the Board, which affirmed the trial examiner and issued an order directing Cactus to cease and desist from its unlawful conduct, to bargain with the Union on request and to post the customary notices.⁷

The instant case is before this court on the Board's petition for enforcement of that order.

We have often commented on the tortuous path that certification election cases take to reach judicial review,⁸ and on the scope of that review.⁹ Without belaboring the scope of available review, the present posture of the case compels our consideration of the company's objection to the underlying certification election—a point which was fully explored in the representation proceedings but which was rejected without additional evidentiary development in the unfair labor practice proceedings.¹⁰

Concisely stated, Cactus asserts that the Union, in its pre-election campaign, used arguments which were false and which naturally deceived the eligible voters, thereby destroying the laboratory conditions under which certification elections are to be held. The source of this claim is a letter sent by the Union's business manager, Frank Parker, sometime after July 1, 1967. The challenged portions of this piece of pre-election propaganda were as follows:

"In a recent meeting with drillers, Cactus told them they, the drillers would receive a 40¢ per hour raise if the roughnecks voted against their union on July 14, 1967.

"Cactus told the drillers they would have received this raise sooner had it not been for the effort of employees to organize, because it would have been illegal for them to grant a raise while an organizing campaign was in progress. Gentlemen, this is simply not true. In other words a lie.

* * * * * *

". . . At this late date now Cactus tells drillers, who are not involved at all, that they will give them a 40¢ raise if the roughnecks vote `NO UNion\'.

* * *

"You have seen even smaller raises granted and them taken away, because of refusal of some contractors to go along. Some contractors have already told us they will have to take back the raises already granted if we loose the election on July 14th."

This court, relying on the Board's previous pronouncements, has formulated a test for evaluating questioned campaign communications:

(1) Whether there has been a misrepresentation of a material fact;

(2) Whether the misrepresentation came from a party who was in an authoritative position to know the truth, or who had special knowledge of the facts;

(3) Whether the other party in the election had adequate opportunity to reply and to correct the misrepresentation;

(4) Whether the employees had independent knowledge of the misrepresented fact so that they could effectively evaluate the propaganda.

Pepperell Manufacturing Company v. N. L. R. B., 403 F.2d 520 (5th Cir., 1968), cert. den. 395 U.S. 922, 89 S.Ct. 1774, 23 L.Ed.2d 238; National Cash Register v. N. L. R. B., 415 F.2d 1012 (5th Cir., 1969); S. H. Kress v. N. L. R. B., 430 F.2d 1234 (5th Cir., 1970).

Here, the Union's statements about the 40¢ per hour wage hike for drillers (supervisors) if the Union lost the election meets the first test of material misrepresentation. This test, while stated as a single standard, requires a two step finding of (a) a misrepresentation and (b) the materiality of that misrepresentation to the electorate. In this regard there was finding of a misrepresentation—for as the hearing officer found—"it is obvious from the testimony that the petitioner (Union) based its propaganda statement on rumor and the truth of the statement is unsupported by the evidence." Secondly, whether this misrepresentation was material was disputed before the hearing officer who concluded: "However the statement related to the drillers and not to the electorate." In our view this conclusion is unsupported by substantial evidence or by the record taken as a whole, which affirmatively demonstrates that at the time in question Cactus, as a matter of policy, gave its roughnecks raises which were substantially coterminous with those given the drillers. The wage statements, therefore, were material and "`not mere prattle'—or puffery; `they are the stuff of life for Unions and members, the selfsame subjects concerning which men organize and elect their representatives to bargain.'" N. L. R. B. v. Southern Foods, Inc., 434 F.2d 717, 720 (5th Cir., 1970), quoting with approval National Cash Register Co. v. N. L. R. B., 415 F.2d 1012 (5th Cir. 1969). The same analysis, however, reveals that this piece of election propaganda would be a subject of interest to the electorate and would constitute material of which they would have had independent knowledge so that they could effectively evaluate the propaganda. Compare S. H. Kress v. N. L. R. B., supra.

The Union's other statement concerning wage rollbacks, however, meets all four tests. First, it was a misrepresentation: for, as the hearing officer found, the thrust of whatever it was that other unnamed companies had told Parker was not that their actions would come whether the Union won or lost at Cactus, but whether Cactus would continue to underprice them by refusing to grant a wage increase as the Union had requested and as most of the other drilling contractors in the Basin had done.¹¹ That the statement was material can be readily seen and becomes immediately apparent when it is remembered that the statement comes from a letter addressed to all eligible Cactus voters. Those eligible to vote included not only those employed by Cactus, but under the Hondo¹² eligibility formula also included all roughnecks who had been employed for a minimum of ten working days during the ninety calendar day period preceding the issuance of the notice of election and who had not been terminated for cause or quit voluntarily prior to completion of the last job for which they had been employed—a total of 131 voters.

The statement ". . . Some contractors have already told us they will have to take back raises already granted if we lose the election on July 14," was thus directed to those 131 voters who were working for some other Permian Basin driller and called upon them to protect their present wage rates by electing the Union as sole bargaining agent for Cactus' roughnecks.

Second, Parker was certainly in an authoritative position to know whether the representative(s) of unnamed company(ies) had approached the Union and what they had said to him.

Third, while the company may have had time to frame a reply,¹³ there was no effective opportunity to correct the misrepresentation. When this point was presented initially to the hearing officer, it was rejected. The hearing officer, relying on Hollywood Ceramics, Company, Inc., 140 N.L.R.B. 221 (1962), stressed that the statements were not made at the last minute and that the employer had had ample time to reply. The principle of ample time for rebuttal grows out of the Board's proper reluctance to police and censor the statements of parties to a certification election.¹⁴ The operation of the principle, however, is limited by the overriding consideration that the employees' freedom to make an unfettered choice between the competing factions has not been destroyed. N. L. R. B. v. Houston Chronicle Publishing Co., 300 F.2d 273 (5th Cir., 1962); N. L. R. B. v. Trinity Steel Co., 214 F.2d 120 (5th Cir., 1954); General Shoe Corp., 77 N.L.R.B. 18, 21 LRRM 1337 (1948).

In the factual setting of this case the Board seeks to justify its reliance on the Hollywood Ceramics rationale of employer opportunity to reply by calling for a balancing of interests. This argument...