Peerless of America, Inc. v. N.L.R.B.

• Citation: 576 F.2d 119
• Decision Date: 17 May 1978
• Docket Number: No. 77-1646,77-1646
• Parties: 98 L.R.R.M. (BNA) 2471, 17 Fair Empl.Prac.Cas. 838, 83 Lab.Cas. P 10,623 PEERLESS OF AMERICA, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 119

576 F.2d 119

98 L.R.R.M. (BNA) 2471, 17 Fair Empl.Prac.Cas. 838,

83 Lab.Cas. P 10,623

PEERLESS OF AMERICA, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 77-1646.

United States Court of Appeals Seventh Circuit.

Argued March 1, 1978.

Decided May 17, 1978.

Lawrence M. Cohen, Chicago, Ill., for petitioner.

Elliott Moore, Deputy Assoc. Gen. Counsel, Robert Sewell, N. L. R. B., Washington, D.C., for respondent.

Before PELL and WOOD, Circuit Judges, and FLAUM, District Judge. ^*

PELL, Circuit Judge.

This is a petition for review and cross-application for enforcement of a National Labor Relations Board order holding Peerless of America, Inc., (Company) in violation of §§ 8(a)(1) and 8(a)(5) ¹ of the National Labor Relations Act for refusing to bargain with Local 1031, International Brotherhood of Electrical Workers (Union), the certified exclusive bargaining representative of the Company's employees.

The Company admits that it has refused to bargain with the Union, but alleges that the Union was improperly certified. The Company argues that the certification election was preceded by union campaign misconduct sufficient to require that the election be set aside. As there is no direct review of a Board decision regarding representation elections, ² review typically occurs when an employer subsequently refuses to bargain with the newly certified union and, after the Board finds the employer in violation of § 8(a)(5), the employer petitions for review of the Board's unfair labor practice decision. Magnesium Casting Co. v. N. L. R. B., 401 U.S. 137, 91 S.Ct. 599, 27 L.Ed.2d 735 (1971); Hecla Mining Co. v. N. L. R. B., 564 F.2d 309, 313 (9th Cir. 1977). That is the procedural posture of the present case.

On May 27, 1976, the Board conducted an election in which 137 votes were cast for and 121 against the Union. There were three void and ten challenged ballots which did not affect the results of the election. The Company filed timely objections to the election which were overruled by the Regional Director of the Board on July 20, 1976, at which time the Union was certified. The Company then filed a Request for Review with the Board on August 9, 1976, seeking a new election or at least a hearing on its election objections, both of which were denied on October 1, 1976. After the Company refused to bargain with the Union, the General Counsel issued a complaint charging the Company with violations of §§ 8(a)(1) and 8(a)(5). The Board granted summary judgment against the Company on the ground that all issues raised in defense by the Company were or could have been litigated in the prior representation proceeding.

Before proceeding to the merits, we note that the Board has been entrusted with broad discretion in determining the nature and extent of pre-election campaign propaganda that will be allowed, and thus considerable deference must be given to the Board's expertise ³ in this area. Henderson Trumbull Supply Corp. v. N.L.R.B., 501 F.2d 1224, 1228 (2d Cir. 1974); Follett Corp. v. N.L.R.B., 397 F.2d 91, 94 (7th Cir. 1968). We will not upset the Board's decision unless we find that it abused its discretion; however, the Board's findings of fact are conclusive if supported by substantial evidence. Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951); Hecla Mining Co. v. N.L.R.B., supra.

The Company's argument that the election should have been set aside or at least that a hearing on the Union's campaign misrepresentations should have been held is based on alleged misrepresentations in three handbills which the Union distributed to the employees on May 24, 25, and 26, the three days preceding the day of the election. The allegations of misrepresentation in the May 24 handbill involve a comparison between the Company's wage scale and that of another, unidentified company represented by the Union. The May 25 and 26 handbills involved alleged misrepresentations regarding the Company's discrimination on the basis of race, sex, and national origin. The Company argues that the Union's conduct, either separately, or in its totality, precluded a fair election. Although we will consider the totality of the Union's conduct, we will segment our analysis in conformity with Board law and thus will address the wage-related misrepresentation in the May 24 handbill separately from the discrimination-related misrepresentation in the other two handbills.

The May 24 Handbill

The Union distributed a handbill on May 24 which stated in relevant part as follows:

Your employer thinks he can mislead you by quoting from the contract of a company making television sets instead of a company making the same products that you make at Peerless.

Now let's compare your benefits against a Local 1031 company which produces the same product you make at Peerless!!

The highest rate we know of for a machine operator at your company is $4.23 per hour and most of you employees make considerably less. Under our contract with a company making the same product and doing the same work, all employees are paid more than $4.23 per hour.

(Emphasis in original.) The handbill did not identify the company it compared to Peerless, and Peerless was unable to discover before the election the identity of the other company. The identity of the other company, Square D, emerged for the first time in the Regional Director's decision overruling the Company's election objections and certifying the Union. In its August 9, 1976, Request for Review of the Regional Director's certification decision, the Company alleged that Square D did not, contrary to the May 24 handbill, produce the same product as did the Company. It attached, as Exhibit E to its Request for Review, Dun & Bradstreet and Standard & Poor's reports which show that the Union has a contract with Square D at only the Schiller Park, Illinois plant which manufactures, among other things, panelboards switchboards, unit sub-stations, bolted pressure contract switches, and motor control centers. Peerless, on the other hand, manufactures air conditioning and heating coils. The Company alleged that Square D's manufacturing process was more complex and required a significantly more skilled workforce than does the Company, and therefore, that the wage comparison was inaccurate and highly misleading. The Company did not challenge the accuracy of the Union's statement of Square D's wage scale, but argued simply that the difference in product lines and accordingly the degree of skill of the workers at Square D rendered the comparison a substantial misrepresentation.

This case was argued by the parties to us, and we reach our decision, on the basis that the appropriate guidelines for determining whether misrepresentations during a campaign constitute grounds for setting aside the election are the guidelines first set forth by the Board in Hollywood Ceramics Co., 140 NLRB 221 (1962). ⁴ Under this test, an election should be set aside if there is (1) a misrepresentation of a material fact involving a substantial departure from the truth, (2) made by a party with special knowledge of the truth, (3) communicated so shortly before the election that the other party has insufficient time to correct it, and (4) involving facts about which the employees are not in a position to know the truth. The misrepresentation need not be deliberate so long as it may reasonably be expected to have significant impact on the election.

In the present case, the Union's wage comparison was made by a party with special knowledge of the truth; the Union surely knew the employee skill levels and wage scale at the unidentified company with which it had a contract. The wage comparison was communicated less than three days before the election which left the Company insufficient time to respond, especially in light of the fact that the Company did not know the identity of the company with which it was compared. Furthermore, the employees were not in a position to know the truth regarding the wage comparison because the handbill failed to identify the company. The Board makes the specious argument that the employees were in a position to evaluate the truth of the Union's wage comparison because the comparison was made in the context of a broad exchange between the Union and the Company over the Union's effectiveness in securing wage-benefit improvements for its members. We are unable to perceive how the context of the exchange could place the employees in a better position to know the truth regarding the wage comparison when a quite obvious prerequisite to this knowledge is the identity of the other company. The remaining prong of the Hollywood Ceramics test for setting aside an election is whether there was a misrepresentation of a material fact involving a substantial departure from the truth. It is to this issue that we now turn.

The Board argues that the Union's failure to identify the other company and the fact that the other company did not, as stated in the handbill, manufacture the same product did not constitute a material misrepresentation. Without more evidence, we are of the opinion that the Board abused its discretion in reaching that conclusion. The alleged misrepresentation concerned a wage comparison, and although the actual distortion was allegedly of the comparability of the product line, such a distortion could translate directly to a distortion regarding wages. If the different product line requires higher-skilled employees, a wage comparison with the lower-skilled employees, absent an explanation of the skill differential, results in a clear distortion regarding wages.

Further, the persuasive effect of the particular misrepresentation upon the Company's unit employees was intensified by virtue of being couched in the context that the Company's thought was to mislead the employees by quoting from a contract of a company not making the same products.

Among the various...