NLRB v. Commercial Letter, Inc., 71-1246.

• Decision Date: 11 February 1972
• Docket Number: No. 71-1246.,71-1246.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. COMMERCIAL LETTER, INC., Respondent.

455 F.2d 109 (1972)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. COMMERCIAL LETTER, INC., Respondent.

No. 71-1246.

United States Court of Appeals, Eighth Circuit.

January 18, 1972.

As Amended February 11, 1972.

Arnold Ordman, Gen. Counsel, Stephen C. Yohay, Atty., Eugene G. Goslee, Acting Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Leonard M. Wagman, Atty., N.L.R.B., Washington, D.C., Joseph H. Solien, Director, Region 14, N.L.R.B., St. Louis, Mo., for petitioner.

Jerome Kalishman, Blumenfeld, Kalishman, Marx & Tureen, Bruce S. Feldacker, Schuchat, Cook & Werner, St. Louis, Mo., for respondent.

Before VOGEL, Senior Circuit Judge, and GIBSON and LAY, Circuit Judges.

GIBSON, Circuit Judge.

The National Labor Relations Board seeks enforcement of its bargaining order issued against Commercial Letter, Inc. on March 4, 1971.¹ The Board's decision and order are reported at 188 N.L.R.B. No. 132. Commercial Letter admits the acts charged but denies that these constitute violative acts because of the invalidity of the representation election certification.

The sole issue presented for review is whether the Board properly certified the Union as the bargaining representative.

The Union won the election in a 7 to 5 vote. Commercial Letter filed objections, complaining of Union reimbursement to eight employees for attendance at representation case hearings held prior to the election. The Regional Director conducted an investigation, exonerated the Union and concluded that there was no substantial and material factual issue which would entitle the employer to a hearing under the regulations of 29 C.F.R. § 102.69(c). Commercial Letter filed exceptions to the Regional Director's decision and requested a hearing. The Board denied the request for review on the ground that it raised no substantial issues warranting review and later granted summary judgment on the unfair labor practice complaint on the basis that there were no facts in dispute and Commercial Letter's attack was on the legal conclusion reached by the Regional Director.

The representation case hearings were held on June 5, and June 19, 1970. The Union subpoenaed eight employees to appear at one or both of these hearings. There is nothing in the record to indicate the extent to which these employees testified at the hearing except the ambiguous statement contained in the Regional Director's Supplemental Decision and Certificate of Representation that "some of them testified." This statement could easily be read to mean that not all of them testified. These employees were paid various sums of money by the Union allegedly in reimbursement for wages lost while attending the hearings. Six of the employees were paid on or about July 21, 1970, the seventh was paid on or about July 28, and the eighth was paid on the evening of August 4 (the evening before the scheduled representation election) by a check, postdated to August 5, 1970. The Regional Director found that none of the employees were paid in excess of what they would have earned had they worked instead of attending the hearing; as to the delay in paying the eighth employee, he found no intent to influence the employee's vote by the election eve postdated check in the amount of $54.78.

As a matter of policy, preliminary questions relating to the establishment of the bargaining relationship pursuant to a representation election should be expeditiously resolved, N.L.R.B. v. O.K. Van Storage Inc., 297 F.2d 74 (5th Cir.1961); and the Board will grant a hearing only if the objector to the election raises "substantial and material issues." Board Rules and Regulations 29 C.F.R. § 102.69(c).

The Board has approached the problem of gifts or payments by labor or management on a pragmatic basis, based on the broad standard of whether the payment was intended to or would influence the election and thus impair a free choice on the part of the employees. A union's preelection payment or gift made to prospective voters in a representation election is ground for setting aside the election. General Cable Corp., 170 N.L.R.B. 1682 (1968); Wagner Electric Corp., 167 N.L.R.B. 532 (1967); Teletype Corp., 122 N.L.R.B. 1594 (1959). However reimbursements of employee's out-of-pocket expenses with an express disclaimer of intent to influence votes were found permissible in Federal Silk Mills, 107 N.L.R.B. 876 (1954).²

The questions raised here are obvious. Did the employees actually attend the hearing? How long were they at the hearing each day? Did they receive compensation from any other source during that period of time? Were their witness fees and expenses also paid by the Union as the summoning party as required by the National Labor Relations Act, and the regulations?³ What did the employees think was the purpose of the payments? Perhaps the most relevant question would be why did the Union subpoena eight employees, a number that would give them a majority in the unit of 12 and how did it choose the employees it wished to attend? The answers to all these questions have relevance to the intent of the Union in making the payments as well as to the effect that the payments might have on the employees' free choice and the election process. If the payments were grossly disproportionate to the time spent, it seems clear that the payments would have a tendency to influence the election results. Collins & Aikman Corp. v. N.L.R.B., 383 F.2d 722, 729 (4th Cir.1967).⁴ "There can be no question but that freedom of choice may be seriously interfered with by economic inducements." N.L.R.B. v. Gilmore Industries, Inc., 341 F.2d 240, 241 (6th Cir.1965).

Here the circumstances in which the payments, ostensibly reimbursement for expenses, were made are obviously of vital importance in determining whether or not they were made for the purpose or with the intent to influence the election. These payments on their face are questionable. They raise substantial factual issues that should be further investigated, calling for an adversary hearing. There is no showing who testified, the necessity for that testimony, the time taken in testifying, and whether the employees spent full time at the hearings or used the occasion for a limited vacation. This practice of subpoenaing a majority of employees in a representation unit and paying them in excess of a nominal amount is insidiously harmful, subject to potential abuse and should not be encouraged. See Federal Silk Mills, supra, n. 2.

This court has also held that "the timing and the proportionate impact of the objectionable activity on the outcome of the election weigh heavily." N.L.R.B. v. Blades Mfg. Co., 344 F.2d 998, 1003 (8th Cir.1965). Thus the timing of the final payment to the eighth employee is critical and needs to be explored in greater depth than the Regional Director's investigation provided.

These facts in the instant case warranted a hearing. One function which the courts of appeals must serve in the enforcement of N.L.R.B. orders is set out in N.L.R.B. v. Indiana & Michigan Electric Co., 318 U.S. 9, 28, 63 S.Ct. 394, 405, 87 L.Ed. 579 (1943).

"Courts which are required upon a limited review to lend their enforcement powers to the Board\'s orders are granted some discretion to see that the hearings out of which the conclusive findings emanate do not shut off a party\'s right to produce evidence or conduct cross-examination material to the issue."

We believe that the term "hearings", used where that was the issue in the case, may be properly expanded to "proceedings" where the Board seeks to cut off a party's right to produce evidence without a hearing. The duty of this court then is to see that the procedure followed by the Board did not "shut off a party's right to produce evidence or conduct cross-examination material to the issue." The Board's procedure here effectively denied a hearing, confrontation and right of cross-examination, substituting therefore an ex parte administrative fiat that provided no answers to the material questions raised by the Union's payment to a majority of the employees in the unit.

The Board maintains that the issue of the effect of the payments on the election has been litigated at some prior point in the election proceedings and that the employer is not entitled to relitigate this issue in the unfair labor practices proceeding, citing Magnesium Casting Co. v. N.L.R.B., 401 U.S. 137, 91 S.Ct. 599, 27 L.Ed.2d 735 (1971); Pittsburg Plate Glass Co. v. N.L.R.B., 313 U.S. 146, 61 S.Ct. 908, 85 L.Ed. 1251 (1941); and N.L.R.B. v. Parkhurst Manufacturing Co., 317 F.2d 513 (8th Cir.1963). We do not think these cases are in point. Parkhurst involved a consent election and the court made it clear that the results reached on the election objections were based on the agreement between the parties. Both Magnesium Casting and Pittsburg Plate Glass involved a question relating to the determination of the bargaining unit for collective bargaining. The employer sought to have the correctness of the determination reviewed in the unfair labor practices hearing, which review was denied.

The National Labor Relations Act, 29 U.S.C. § 141 et seq., provides for a hearing and a Board review of the bargaining unit issue prior to an election being ordered. 29 U.S.C. § 159(c). These hearings may be waived by consent of the parties, § 159(c) (4), but are otherwise mandatory. 29 C.F.R. § 102.63. When there is a petition for enforcement or review of a Board order which is based in whole or part on facts certified following this representation proceeding, the record of this proceeding is part of the record which must be filed with the reviewing court and the decree of the reviewing court is made on the whole record, including the record of the representation proceeding. § 159(d). Having once heard the evidence and determined the appropriateness of a bargaining unit, the Board need not reconsider the question in the...