NLRB v. Hondo Drilling Company, 27943.

• Decision Date: 25 August 1970
• Docket Number: No. 27943.,27943.
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. HONDO DRILLING COMPANY, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

428 F.2d 943 (1970)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. HONDO DRILLING COMPANY, Respondent.

No. 27943.

United States Court of Appeals, Fifth Circuit.

June 16, 1970.

Rehearing Denied August 25, 1970.

Marcel Mallet-Prevost, Asst. Gen. Counsel, Allison W. Brown, Jr., N.L.R.B., Washington, D. C., Elmer P. Davis, Director, Region 16, N.L.R.B., Fort Worth, Tex., for petitioner.

Joseph Connally, Odessa, Tex., for respondent.

Before RIVES, GEWIN and INGRAHAM, Circuit Judges.

GEWIN, Circuit Judge:

The National Labor Relations Board seeks enforcement of an order issued against respondent, Hondo Drilling Company (Hondo). The Board found that Hondo violated section 8(a) (5) and (1) of the National Labor Relations Act¹ by refusing to bargain with Local 826, International Union of Operating Engineers (the Union), the certified representative of a unit of Hondo employees. The refusal to bargain is not denied, and was employed in order to contest the certification of the Union. We enforce the order.

Hondo, a New Mexico corporation with its principal place of business in Midland, Texas, is engaged in the business of drilling oil wells under contracts with major oil companies. Its operations are primarily conducted in the proven fields of the area known as the Permian Basin.² Hondo owns five drilling rigs, two or three of which are in operation on an average day.³ Each rig is operated by a four-man crew consisting of one driller and three "roughnecks." When a rig is in service, three, four-man crews are required daily to permit continuous operation. For each operating drill rig, Hondo's supervisor assigns a "tool pusher" who has direct supervisory control of the rig and the responsibility for hiring the drillers necessary for its operation. The drillers in turn hire their own crews of roughnecks.

It takes eighteen days, on the average, for a rig to complete a well.⁴ When a particular job is finished and there is no available work elsewhere, the rig is taken out of service ("stacked") and the employees are terminated. Hondo experiences a high turnover of employees; during the year preceding the election petition, it employed 224 roughnecks. The average time worked by each was 34 days. Fifty-three of the roughnecks worked on more than one rig during this period and averaged working 88 days per man; seventy-one worked less than 10 days. One hundred four of the roughnecks voluntarily quit before the completion of the job on which they were employed. Hondo attempts to keep complete crews for two rigs, 6 drillers and 18 roughnecks, constantly available. It also appears from the record that drillers consider it desirable to reemploy former crewmen where possible. Hondo considers any roughneck eligible for re-employment, except those who were terminated for cause and those who quit voluntarily before the completion of the former job.

The Union petitioned for a Board election seeking certification as the representative of all of Hondo's drilling employees. Following a hearing, the Board found that an appropriate unit would include:

All derrickmen, motormen, and floorhands, otherwise referred to as roughnecks, employed by the Employer in drilling operations in the area generally known as the Permian Basin, but excluding all tool pushers, drillers, office employees, technical employees, guards, professional employees, and all supervisors as defined in the Act.

Hondo does not contest the unit determination.

In the same proceeding the Union contended that any person who had been employed in the unit for 10 days during the previous fiscal year should be eligible to vote. Hondo urged that voting should be limited to those actually employed at the time of the election, as determined by the payroll list immediately preceding the Direction of Election. The Board rejected both positions and adopted the following eligibility formula:

All roughnecks who have been employed by Hondo for a minimum of 10 working days during the 90 calendarday period preceding the issuance of our Decision and Direction of Election herein, and who have not been terminated for cause or quit voluntarily prior to the completion of the last job for which they were employed, as well as all roughnecks whose names appear on Hondo\'s payroll list immediately preceding the issuance of the Regional Director\'s notice of election. * * *

Under these criteria 33 persons were eligible to vote in the election ordered by the Board. The Union won by a vote of 20 to 6 with 5 challenged ballots.

Hondo timely filed objections to the conduct of the election, which were denied by the Regional Director following a post-election investigation. The Union was then certified. Hondo filed exceptions to the Regional Director's Supplemental Decision and Certification. This was treated as a request for review and was denied by the Board. Subsequently, Hondo refused to recognize the Union or to furnish requested bargaining information, giving rise to the present unfair labor practice charges.

Hondo, the Union, and the General Counsel entered an agreement stipulating certain facts, waiving a hearing before a Trial Examiner, and transferring the case directly to the Board for decision. The Board found that the issues raised by Hondo had been considered and rejected in the representation proceeding, and did not merit reconsideration.⁵

I

Hondo's refusal to bargain was calculated to obtain judicial review of the Union's certification. Unless it can now be justified, this conduct violates sections 8(a) (5) and 8(a) (1) of the Act.⁶ Hondo levels its primary attack on the eligibility formula employed in the election. It contends: (1) The Board exceeded its authority in allowing non-employees to vote, and (2) the eligibility formula is a new "rule" promulgated in contravention of the Administrative Procedure Act.⁷

Hondo's objection to the substance of the eligibility formula is without merit. In Shoreline Enterprises of America, Inc. v. N.L.R.B.,⁸ this court stated, "Eligibility to vote depends on whether an employee is sufficiently concerned with the terms and conditions of employment in a unit to warrant his participation in the selection of a collective bargaining agent." In the present case, the Board rejected extreme eligibility proposals offered by both Hondo and the Union.⁹ The Board determined that, in light of the company's operations, the purposes of the Act would best be served by extending voting rights not only to those employees actually on the payroll, but also to those who could reasonably anticipate future employment with the company. This latter group included those individuals who were eligible for re-employment under Hondo's policies and who had a recent history of substantial employment with the company. The standard applied by the Board is similar to that approved in cases involving the analogous situation of laid-off employees. In N.L.R.B. v. Jesse Jones Sausage Co.,¹⁰ the court stated, "Eligibility of laid-off employees is to be determined by inquiring whether the employee had at the time of the election a reasonable expectation of re-employment within a reasonable time in the future." The present formula is also consistent with prior Board practice regarding units containing intermittent employees.¹¹

Hondo's contention that the Board may not extend the franchise to individuals who are not currently employed is mistaken since it assumes a classical definition of "employee" which is not binding on the Board.¹² It is Hondo's obligation to demonstrate that the Board's formula is erroneous,¹³ and we conclude that it has not met this burden. On the record of the present case, the eligibility formula appears reasonably calculated to enfranchise those roughnecks with a legitimate interest in the terms and condition of employment in the bargaining unit.

Relying on N.L.R.B. v. WymanGordon Co.,¹⁴ Hondo argues that the eligibility formula is a departure from prior Board practice,¹⁵ and is, in fact, a rule adopted without satisfying the legislative requisites of the Administrative Procedure Act. It contends that the Board used the Hondo election as a vehicle for the promulgation of a special eligibility rule for application to drilling companies throughout the Permian Basin.

The Board, like most administrative agencies, is authorized to engage in two essential functions: adjudication of particular controversies and legislation — "the power under certain conditions to make rules having the effect of laws."¹⁶ Its exercise of the latter power is governed by the rule-making provisions, including notice and hearing requirements, of the Administrative Procedure Act.¹⁷ These procedures were not followed in the present case, and we must determine whether they were applicable.

In Wyman-Gordon, the Supreme Court considered the validity of the Board's determination in Excelsior Underwear, Inc.,¹⁸ that in future representation elections the employer must file a list of the names and addresses of eligible voters with the Regional Director for use by all parties to the election. The Board had decided that the Excelsior rule should only be given prospective effect and did not apply it in the Excelsior case itself. Wyman-Gordon generated four opinions, with the dispositive coalition differing on the crucial question of whether the Excelsior rule was subject to the rulemaking requirements of the Administrative Procedure Act. As a result its teachings for the present case are less than obvious.

Our augury is considerably aided by the recent decision of this court in American Machinery v. N.L.R.B.¹⁹ There the company had argued that a back pay order of the Board was a departure from prior policy and subject to the rulemaking requirements of the Administrative Procedure Act. In rejecting this argument, the court discussed the Wyman-Gordon decision:

Although no opinion commanded a majority, six Justices agreed that the Board had erred in attempting in an adjudicatory proceeding to

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