NLRB v. QT Shoe Manufacturing Co.

• Decision Date: 11 April 1969
• Docket Number: No. 17203.,17203.
• Citation: 409 F.2d 1247
• Parties: NATIONAL LABOR RELATIONS BOARD, Appellant, v. Q-T SHOE MANUFACTURING CO., Inc., and Martin S. Nadler as President of Q-T Shoe Manufacturing Company, Inc.
• Court: U.S. Court of Appeals — Third Circuit

409 F.2d 1247 (1969)

NATIONAL LABOR RELATIONS BOARD, Appellant, v. Q-T SHOE MANUFACTURING CO., Inc., and Martin S. Nadler as President of Q-T Shoe Manufacturing Company, Inc.

No. 17203.

United States Court of Appeals Third Circuit.

Argued January 10, 1969.

Decided April 11, 1969.

Solomon I. Hirsh, N. L. R. B., Washington, D. C., for appellant (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Robert M. Lieber, N. L. R. B., on the brief).

Thomas Sheehan, Murphy & Sheehan, Mineola, N. Y., for appellee.

Before BIGGS, FORMAN and FREEDMAN, Circuit Judges.

OPINION OF THE COURT

FORMAN, Circuit Judge.

This is an appeal from an order of the United States District Court for the District of New Jersey¹ dismissing the action of the appellant National Labor Relations Board against appellees Q-T Shoe Manufacturing Company, Inc. ("Company") and Martin S. Nadler, president of the Company. The Board had sought enforcement of a subpoena duces tecum or, alternatively, the issuance of a mandatory injunction to compel production of certain information hereinafter specified.

On September 20, 1966, Joint Council No. 13, United Shoe Workers of America, AFL-CIO ("Union") filed a petition with the Board's regional office in Newark, New Jersey, seeking a representation election and certification as the collective bargaining representative of the Company's production and maintenance employees at its plant in Paterson, New Jersey. Following a hearing, the Board's Regional Director on November 25, 1966 issued a Decision and Direction of Election pursuant to Section 9(c) (1) of the National Labor Relations Act² ("Act"), directing that an election be held for the unit of approximately 250 employees. Additionally, the Company was directed to file with the Regional Director a list of the names and addresses of all employees eligible to vote in the election within seven days after issuance of the Decision and Direction of Election, in accordance with the Board's rule announced in Excelsior Underwear, Inc.³

On December 2, 1966 the Company informed the Regional Director that it would not supply employee addresses, although a list of names was furnished. Since the Union did not wish to proceed with the election in the absence of full compliance with the Excelsior rule, the Regional Director postponed the election and on December 19, 1966 issued a subpoena duces tecum, pursuant to Section 11(1) of the Act,⁴ directing appellee Nadler to produce at the Board's regional office the Company's books and records containing the names and addresses of all employees or, in lieu thereof, a list containing this information to be verified by Board agents. Mr. Nadler did not appear on the return date of the subpoena and persisted in his refusal to disclose the material in question, whereupon the Board sought judicial relief in the District Court.

It was the conclusion of the District Court that it was without jurisdiction either to enforce the subpoena under Section 11(2)⁵ of the Act or to issue a mandatory injunction compelling production under 28 U.S.C. § 1337.⁶ Essentially, the court held that if it were to grant the requested relief, it would actually be enforcing the Excelsior rule itself; such enforcement would be authorized only

"after it has been properly determined by the Board that the refusal by the defendant to provide the Union with a list of its employees\' names and addresses constitutes an unfair labor practice under Section 8(a) (1) of the Act, 29 U.S.C. § 158(a) (1)."⁷

On appeal, it is contended by the appellees that the substantive validity of the Excelsior rule was not in dispute before the District Court, and consequently is not an issue here. While it is true that the court did not explicitly decide whether disclosure of the employees' names and addresses would constitute an invasion of their right to privacy,⁸ it is apparent that a definitive decision thereon was considered unnecessary in the light of the court's ultimate determination that it was in any event without jurisdiction to grant the relief sought by the Board. A perusal of the appellees' answer in the District Court reveals that they did in fact assert, as their second affirmative defense, that their employees' right to privacy would be infringed by compliance with the Excelsior rule.

Although we conclude that the question is properly before us, little comment is merited in its resolution. Even on the dubious assumption that the Company has standing to raise its employees' rights in this context, it is clear that none of their rights is infringed by the mere opportunity afforded a union to solicit their support. The primary stated purpose of the rule announced in the Excelsior case was to insure that the electorate in any Board representation proceeding would be fully informed and have access to the views of all parties involved. If there is any abuse of the rule in a given situation, it is readily apparent that the employee retains the right to insulate himself against offensive solicitation.⁹ The mere possibility of such harassment is surely not a sufficient ground for invalidating a rule designed to achieve greater enlightenment with respect to labor election issues, and it is noteworthy that every court which has passed on the issue has held the Excelsior rule to be a legitimate exercise of the Board's jurisdiction over representation proceedings.¹⁰

While it is not strenuously urged on this appeal, appellees raise as an alternative ground for the affirmance of the District Court's decision the alleged lack of compliance with Sections 3(a) (3) and (4) of the Administrative Procedure Act¹¹ in the adoption of the Excelsior rule. The argument is that since the rule was not applied to the parties in the cases which gave rise to its formulation, and would only become effective 30 days from the date of the decision, the Board in Excelsior was not engaging in actual "adjudication" but rather was proceeding by way of rule-making. This being the case, it is contended, the Board was obligated to comply with the notice and publication requirements of Section 4, and the failure to do so renders the Excelsior rule a nullity not capable of enforcement by a federal court.

The District Court gave short shrift to this argument,¹² but it has assumed substantially more significance in the light of the subsequent First Circuit decision in Wyman-Gordon Company v. NLRB,¹³ holding the Excelsior rule to have been improperly promulgated. A divided court there reasoned:

"In Excelsior, however, the Board did not decide a case between party and party, or, more exactly, it decided a case one way, and took occasion to lay down a future rule the other way. Chenery SEC v. Chenery Corporation, 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947) in no fashion suggests approval of this. On the contrary, to the extent the Board was not deciding a case, this is precisely where Congress had instructed it as to the procedure it should adopt. The Board has chosen to disregard Congress."¹⁴

Other courts have explicitly rejected the Wyman-Gordon rationale,¹⁵ and notable among these decisions is that of the Court of Appeals of the Second Circuit in NLRB v. Beech-Nut Life Savers, Inc.¹⁶

In the course of its opinion the Second Circuit stated that it would have followed the Wyman-Gordon decision if the Excelsior rule had been announced in an opinion where the facts and issues in dispute were totally unrelated to the new statement of policy. In the absence of such circumstances, the court concluded that administrative agencies such as the Board were empowered to determine for themselves whether to proceed by rule-making or adjudication. The fact that the Excelsior rule was to have only prospective application was not regarded as having any effect on the judicial nature of the Board's proceedings, for the court reasoned that fairness to the parties might well entail the allowance of sufficient time to alter their conduct to accord with the new standard.¹⁷

This court considers the reasoning of the Second Circuit to be more persuasive in this respect. It is to be noted that the Administrative Procedure Act defines "adjudication" simply as "agency process for the formulation of an order."¹⁸ Clearly, the Board's decision in Excelsior was in conformance with this broad definition, and no case has been found which invalidates agency action on the ground that a new rule is to have only a prospective application.¹⁹ Traditionally, the courts have been more concerned with agency decisions having a retroactive effect, although these have generally been sustained.²⁰ Implicit in each of these cases, however, has been the idea that a ruling having only an in futuro impact would merit judicial enforcement, since the possibilities of unfairness to the parties and lack of adequate notice would then be removed.

The overriding principle to be followed in cases of this nature was established by the Supreme Court in SEC v. Chenery Corporation.²¹ It was there held that "the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency."²² Since the Court also concluded that it was generally within the discretion of the agency whether to apply its rules retroactively, it necessarily follows that in a given factual context prospective application, especially where the equitable consideration of fairness to the parties is involved, is permissible. The circumstances surrounding the adoption of the Excelsior rule certainly do not constitute grounds for holding otherwise in this case.²³

The final issue to be considered is that which largely forms the basis for the District Court's decision, namely, whether a subpoena duces tecum compelling production of an Excelsior list of names and addresses is capable of judicial enforcement. Section 11(2) of the National Labor...