Olson Rug Company v. NLRB

• Decision Date: 25 May 1961
• Docket Number: No. 12303.,12303.
• Citation: 291 F.2d 655
• Parties: OLSON RUG COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

291 F.2d 655 (1961)

OLSON RUG COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 12303.

United States Court of Appeals Seventh Circuit.

May 25, 1961.

Frederick W. Turner, Jr., Chicago, Ill., for petitioner.

Thomas J. McDermott, Assoc. Gen. Counsel, Melvin J. Welles, Atty., N. L. R. B., Washington, D. C., for respondent.

Before HASTINGS, Chief Judge, DUFFY and KNOCH, Circuit Judges.

HASTINGS, Chief Judge.

On petition of the National Labor Relations Board, this court on October 24, 1960 appointed a Special Master to determine issues of fact presented by the Board's charge that Olson Rug Company, Inc. be adjudicated in civil contempt of our decree of December 9, 1958. This decree was based upon our decision in Olson Rug Company v. National Labor Relations Board, 7 Cir., 1958, 260 F.2d 255, which held that Olson had committed certain unfair labor practices and granted enforcement of the Board's order.

In the course of the contempt hearing before the Special Master, Olson served two subpoenas duces tecum upon the Board for the production of certain documentary evidence contained in the Board's files. The Master denied the Board's motion to revoke such subpoenas but granted Olson only a limited "Jenckstype" discovery described, infra. Because of the lack of any direct precedent on this important question of forcing production from the Board's files of "confidential" documents, the Master certified his ruling to this court for interlocutory review. Briefs were filed and argument was heard on the Board's motion to reverse in part the ruling of the Special Master.

To appraise fully the Master's rulings on the discovery subpoenas, we must retrace the history of this litigation, commencing with the decree of our court. On December 9, 1958, we ordered Olson to cease and desist from refusing to bargain collectively concerning rates of pay, wages, hours or other conditions of employment with Textile Workers Union of America, AFL-CIO (TWUA), the certified bargaining representative of certain Olson employees in its Chicago plant. We forbade Olson from interfering with the efforts of TWUA in negotiating or representing Olson's employees. Finally, we affirmatively ordered Olson to bargain with TWUA with respect to pay, wages, hours and other conditions of employment.

Bargaining commenced between Olson and TWUA on December 29, 1958; it continued until November 13, 1959. During this period, agreement was reached on certain issues.

While the negotiations were in progress, on July 21, 1959 TWUA filed an unfair labor practice charge against Olson. Administratively, this charge was processed under the title 13-CA-3355. The Board's investigatory file in this case is one of three files subject to Olson's subpoenas.

In this unfair practice charge, TWUA alleged that Olson was engaged in sham bargaining, had granted unilateral wage increases during the period of negotiation, had refused to recognize TWUA in processing grievances, and, through a foreman, had made threats of surveillance of union meetings.

For the next three months, the unfair practice charge, 13-CA-3355, was under investigation by the Board. On October 23, 1959, the Board notified the interested parties that the charge had been dismissed by the Board.

Subsequently, on November 13, 1959, Olson refused to continue bargaining with TWUA and withdrew recognition of that union. On the same day, Olson filed a representation petition with the Board. This petition was titled 13-RM-509, and the Board's investigatory file in this case is the second file subject to Olson's subpoenas.

On November 30, 1959, sixteen of Olson's employees filed a decertification petition with the Board. The administrative file of this case, 13-RD-407, is the third file within the scope of the subpoenas.

From November, 1959 until January 7, 1960, the Board received new and additional evidence relating to Olson's alleged unfair conduct in support of TWUA's charges in 13-CA-3355. On January 7, 1960 the Board revoked its earlier dismissal of the charges in 13-CA-3355 on the grounds of newly discovered evidence and Olson's withdrawal of recognition of TWUA.

On January 29, 1960, the regional director of the Board advised the general counsel to bring contempt charges against Olson. Such contempt charges were filed in our court on June 27, 1960 and led to the appointment of the Special Master who, as above stated, certified the instant question for interlocutory review.

On July 27, 1960 and August 17, 1960, respectively, the Board dismissed the representation petition, 13-RM-509, and the decertification petition, 13-RD-407, consistent with its administrative practice of dismissal of such petitions while unfair labor practice charges are pending.

The Board's contempt petition charged Olson with the following conduct contemptuous of our decree of December 9, 1958:

(a) Olson instituted unilateral changes in its wage structure without consulting TWUA;

(b) Olson employed undercover operatives to observe and report on union attitudes and the activities of its employees (c) Olson employed undercover operatives to learn and report TWUA\'s bargaining strategy;

(d) Olson withdrew recognition from TWUA and refused to bargain further in the absence of a good faith doubt of the union\'s majority status.

Our order of reference of December 5, 1960 to the Special Master granted him the power to "require the production before him of admissible evidence upon all matters relevant and material to the issues, including the production of all books, papers, vouchers, documents and writings."

In the course of the hearings before the Master, on January 27 and February 9, 1961 Olson served the subpoenas duces tecum in question upon the Board to force production, inspection and discovery of Board files 13-CA-3355, 13-RD-407, and 13-RM-509.

The Board moved to revoke the subpoenas, citing its administrative rules and regulations suppressing documents in its files, contending that there was no showing that any documents in its possession were "relevant to any issue in the Company's defense," and arguing that Olson was seeking "unlimited discovery" of Board files.

The Master, in his certification of the instant question for interlocutory review, indicates the present procedural posture of the case before the Master. The Board has presented its case-in-chief, then over Olson's objection it was allowed to reopen to present newly discovered evidence. Olson stated that it could not properly go forward with its defense until the Board had produced the documents called for by the subpoenas. The Board has produced direct evidence on the charge of the unilateral wage increases and the two charges of surveillance. On its fourth charge of Olson's lack of good faith, it is relying on the inferences from all the evidence in support of the other three charges and all the circumstances of the case, plus evidence that Olson had no discussions with TWUA as to the union's majority status prior to the withdrawal of recognition.

In his certification the Master granted limited discovery to Olson. Of the four charges made by the Board, the Master "deems it relevant" to Olson's defense against the charge of withdrawal of recognition and refusal to bargain that the three files in question "be examined to determine whether such files contain admissible evidence or sources of admissible evidence" bearing upon these issues. Such examination by Olson of relevant documents, if any exist, is "necessary * * * in order for it to prepare its defense to the quoted charge." The Master expressly found that discovery was not necessary as to the other three charges — unilateral wage increases and company surveillance. As to these three charges, the Master said:

"The Board has adduced evidence on the other specifications of contemptuous acts, both prior and subsequent to July 21, 1959, sufficient to permit the Company to meet such evidence with contradictory oral testimony or to specify precisely the documents or statements needed to prepare its defense. In this connection, the Board furnished statements of witnesses called by it when requested by counsel for the Company prior to counsel\'s cross examination of such witnesses."

The discovery the Master found necessary was not pretrial; it was ordered during the course of the hearing. Further, it was not merely for the purpose of impeachment, but it was designed broadly to aid Olson to "prepare its defense" to the one charge of contempt.

Rather than provide for the direct production that Olson requested, the Master determined that the proper procedure would be for the Board to submit to him the three files for his examination in camera. The Master would then make available to Olson only such documents that bore upon the issue of Olson's good faith withdrawal of recognition and refusal to bargain.

The many varied arguments in this case advanced by Olson and the Board can be distilled into these five central issues:

(1) Does the court in contempt proceedings possess discovery power and can such power be referred to its Master?

(2) Assuming such power to subpoena for discovery any "relevant and material" documents, could the investigatory files in question possibly contain documents of that character?

(3) Assuming that such documents exist and are relevant, does some "executive privilege" preclude discovery in this contempt proceeding?

(4) Again, assuming the existence of relevant documents in Board files, does the "work product" doctrine preclude discovery?

(5) Assuming that some sort of discovery can be ordered, is the "Jencks" method adopted by the Master a proper one to safeguard the interests of all parties?

The present case stands for the proposition that the court has the power in a contempt proceeding to order production of documents for discovery. The Board itself attached to its contempt petition a motion for discovery of documents in Olson's possession. Our order of ...