NLRB v. Clark

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: WISDOM, GODBOLD and RONEY, Circuit
• Citation: NLRB v. Clark, 468 F.2d 459 (5th Cir. 1972)
• Decision Date: 04 October 1972
• Docket Number: No. 71-2541.,71-2541.
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. E. L. CLARK, Owner, Jim H. Pierce, Lessee of the Ashville-Whitney Nursing Home, Respondents.

468 F.2d 459 (1972)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. E. L. CLARK, Owner, Jim H. Pierce, Lessee of the Ashville-Whitney Nursing Home, Respondents.

No. 71-2541.

United States Court of Appeals, Fifth Circuit.

October 4, 1972.

COPYRIGHT MATERIAL OMITTED

Marcel Mallet-Prevost, Asst. Gen. Counsel, N.L.R.B., Washington, D. C., Walter C. Phillips, Director, Region 10, N.L.R.B., Atlanta, Ga., Stuart M. Rosenblum, Washington, D. C., N.L.R.B. for petitioner.

C. V. Stelzenmuller, Birmingham, Ala., for respondents.

Before WISDOM, GODBOLD and RONEY, Circuit Judges.

WISDOM, Circuit Judge:

This cause comes here on application for enforcement of an order of the National Labor Relations Board holding that the respondents refused to hire certain employees in violation of Section 8(a)(1) and (3) of the National Labor Relations Act, as amended, 29 U.S.C. § 151 et seq., and requiring respondents to remedy the alleged violation. We deny enforcement and remand the case for further evidence because the record will not support the Board's assertion of statutory jurisdiction over the enterprise operated by the respondents.

I.

At the outset, we are met with the contention that the proceedings before the trial examiner and the Board are of no effect because preceded by improper service of process on the respondents.

Some factual background is in order. Before September of 1969, one S. P. Robinson owned a nursing home in Ashville, Alabama. The home was operated by Mid-South Convalescent and Medicare Centers, Inc. as Robinson's lessee. Mid-South became embroiled in a dispute with the Retail, Wholesale, and Department Store Union, AFL-CIO. At the end of August 1969, Mid-South ceased to operate the Ashville facility and removed its patients. E. L. Clark bought the home some time in August and took physical possession of the premises about August 31, 1969. Clark employed respondent Jim H. Pierce as his "administrator" (or manager) in accordance with Alabama law. Under Clark's ownership and Pierce's administration, the home did not employ any of the former employees of the home during Mid-South's tenure. The union attributed this failure to the union affiliation of many of the former employees. This failure to hire, allegedly on account of union affiliation, is the substantive conduct at the core of this labor dispute.

After only a few months of operating the home as owner, and after the alleged commission of unfair labor practices, Clark leased the home to Pierce on January 1, 1970. The trial examiner found:

"In September, 1969, Ashville-Whitney Nursing Home was a sole proprietorship of E. L. Clark, an individual with his place of business located at Ashville, Alabama. . . . Respondent Jim H. Pierce was the administrator of the nursing home for Mr. Clark. On January 1, 1970, Mr. Pierce leased the building and equipment from Mr. Clark and since that time has been the lessee-operator of the Ashville-Whitney Nursing Home. Mrs. Pierce became acting administrator until May 11, 1970, when she became the administrator.

. . . I further find, as is self-evident from the record, that on and after January 1, 1970, Respondent, Jim H. Pierce, as the lessee-operator of the Ashville-Whitney Nursing Home, was a successor of Respondent E. L. Clark. . . . Clark operated the Ashville-Whitney Nursing Home from September 22, 1969, to January 1, 1970, when the premises were leased to Pierce who then became the lessee-operator. . . . I have also found that Respondent James sic H. Pierce operated the Ashville-Whitney Nursing Home on and after January 1, 1970, as the successor of Respondent Clark."

On March 6, 1970, the union filed an unfair labor practice charge¹ with the Board, naming the "employer against whom the charge is brought" as "Ashville and Whitney Nursing Home" and "the employer representative to contact" as "Mr. E. L. Clark, Owner" and "Mr. Jim Pierce, Admn." The charge was addressed to "Ashville and Whitney Nursing Home, Route #2, Ashville, Alabama," and there received by Jim Pierce on March 6, 1970. As of March 6, Pierce had leased the home from Clark, but the only public record dealing with ownership and management of the home, the Alabama State license application to operate the home, continued to list Pierce as administrator and Clark as owner. The lease was not filed with the State Board of Licensure until May 11, 1970, two months after service of the charge. So far as the record reveals, neither Clark nor Pierce took any steps to notify the union or the Board of the change in the ownership of the enter-prise after January 1, before or after the charge was received by Pierce on March 6.

On June 10, 1970, the Board issued a complaint, naming "Ashville-Whitney Nursing Home" as respondent and, in paragraph 2, stating that "Respondent is and has been at all times material herein, a sole proprietorship of E. L. Clark." The complaint stated that Pierce "is and has been at all times material herein, the administrator of Respondent's operations at Ashville, Alabama." Copies of the complaint were sent by registered mail to Ashville-Whitney Nursing Home and to Gerald Swann, attorney for Pierce. During the course of the hearing, the caption on the complaint was amended to read "Ashville-Whitney Nursing Home and J. H. Pierce, Lessee", with the consent of Swann on Pierce's behalf. The trial examiner found Clark and Pierce jointly liable for the restitutional remedies it imposed.

On the basis of these facts, the respondents argue that there was no proper service of the charge or the complaint on Clark or on any authorized agent for service of process on Clark. They argue that the charge was made against Clark but was served only on Pierce, at the home, and on Pierce's lawyer, Swann. Further, respondents argue that the complaint was not properly served on Clark through Pierce when the complaint was served at the home on June 10, 1970.

These contentions were advanced before the Board. The Board held that "for the purposes of service of process Clark held Pierce out to be his apparent agent until May 11, 1970, so that the charge filed on March 5, 1970, and received by Pierce on March 6, 1970, constituted valid service on Clark." The Board reasoned that the lease agreement, though purportedly executed on January 1, 1970, was not a matter of public record until May 11 of that same year.

II.

Under Rule 4(d) of the Federal Rules of Civil Procedure, service upon "an individual other than an infant or an incompetent person" is proper if served "in the manner prescribed by any statute of the United States." Rule 4(d)(7).² The NLRA provides, in section 10(b), that both the charge and the complaint must be served upon "the person against whom such charge is made."³ Section 11(4) adds that "complaints . . . and other process and papers of the Board . . . may be served . . . by registered mail or . . . by leaving a copy at the principal office or place of business of the person required to be served."⁴ A Board charge constitutes "other process and paper" within the meaning of section 11(4). NLRB v. Columbus Marble Works, 5 Cir. 1956, 233 F.2d 406.

In considering service of the charge on Clark, we must decide whether service was accomplished on the facts of this case "by leaving a copy at the principal office or place of business" of Clark. A threshold question is whether "principal" modifies "place of business" as well as "office". For purposes of argument and no more, we assume that the correct reading is "principal office or principal place of business."

Even this reading of the statute does not imply, as the respondents suggest, that if process is to be served upon an employer engaged in several enterprises, the server must determine the employer's most important or "principal" site of financial endeavor. Such a determination would be exceedingly precarious and far more technical than fair notice requires. Rather, service is appropriate at the principal place of business of that particular business giving rise to the labor dispute with the person required to be served. We may assume respondent Clark to have been engaged in several enterprises. Still, for the purposes of section 11(4) he could be served at the principal place of business of his nursing home operation, provided that the process and papers sought to be served related to labor relations of the nursing home operation. Whatever Clark's other places of business, his principal place of business for the Ashville-Whitney Nursing Home operation was the home itself. Even assuming that section 11(4) requires service at the principal place of business, then, we have no trouble concluding that service on Clark would have been appropriate at the home until January 1, 1970.

Turning now to service on Clark at the home after January 1, 1970, we agree with the Board that the undisclosed lease arrangement between Clark and Pierce did not invalidate the service of the charge on Clark at the home on March 6, 1970. The Board concluded that Pierce was Clark's apparent agent at the time the charge was served. Section 11(4) of the NLRA makes no reference to service on agents, however, and accordingly we base our conclusion that service was properly effected under section 11(4) on different reasoning. Service of the charge on Clark at the home was valid because, to all possible outward appearances, the home on March 6 was still Clark's "principal place of business" within the meaning of section 11(4). This was, substantially, Clark's own doing. Not only did Pierce operate the home as the successor of Clark, as the trial examiner found, but there was also a total continuity between the Pierce and Clark operations. Pierce continued to manage the home, as he had in his former capacity as Clark's administrator. Clark continued to derive substantial rental income from the home. The Alabama state license application, the only available public record dealing with the home's ownership, still showed...