Penasquitos Village, Inc. v. N.L.R.B., 75-2173

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Citation565 F.2d 1074
Docket NumberNo. 75-2173,75-2173
Parties97 L.R.R.M. (BNA) 2244, 82 Lab.Cas. P 10,288 PENASQUITOS VILLAGE, INC., Penasquitos Gardens, Inc., Penasquitos Hills, Inc., and San Diego Leisure Life Village, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
Decision Date30 November 1977

J. Robert O'Connor, III (argued), of Donnelley & Holden, San Diego, Cal., for petitioners.

John D. Burgoyne (argued), Washington, D. C., for respondent.

On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Before DUNIWAY, CHOY and WALLACE, Circuit Judges.

WALLACE, Circuit Judge:

The National Labor Relations Board (the Board), reversing the decision of an administrative law judge, held that Penasquitos Village, Inc. and affiliated companies (Penasquitos) had engaged in coercive interrogation of employees in violation of section 8(a)(1) of the National Labor Relations Act (the Act), 29 U.S.C. § 158(a)(1), and had wrongfully discharged employees in violation of section 8(a)(3) of the Act, 29 U.S.C. § 158(a)(3). 217 NLRB 878 (1975). Penasquitos petitioned us to review and set aside the Board's order, alleging that it was not supported by substantial evidence. The Board cross-petitioned for enforcement. We refuse enforcement and set aside the order.


This case presents no contested or novel legal issues regarding the alleged unfair labor practices. The dispute is basically factual, and the central legal principle requiring clarification concerns the respective and related roles of the administrative law judge, the Board and the Court of Appeals in resolving factual disputes, particularly those turning on the credibility of witnesses. Because of this, it would be more appropriate to first analyze the law before proceeding to a detailed examination of the facts.

We treat as conclusive the factual determinations in a Board decision if they are "supported by substantial evidence on the record considered as a whole." § 10(e)-(f) of the Act, 29 U.S.C. § 160(e)-(f). This statutorily mandated deference to findings of fact runs in favor of the Board, not in favor of the initial trier-of-facts, the administrative law judge. Nevertheless, the administrative law judge's findings of fact constitute a part of that whole record which we must review. We give those initial findings some weight, whether they support or contradict the Board's factual conclusions. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 492-97, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

The most difficult problem facing the reviewing court arises when, as in this case, the Board and the administrative law judge disagree on the facts. The Supreme Court has given the following general guidance to the courts of appeals faced with such a Board-administrative law judge conflict.

We do not require that the examiner's findings be given more weight than in reason and in the light of judicial experience they deserve. The "substantial evidence" standard is not modified in any way when the Board and its examiner disagree. We intend only to recognize that evidence supporting a conclusion may be less substantial when an impartial, experienced examiner who has observed the witnesses and lived with the case has drawn conclusions different from the Board's than when he has reached the same conclusion. The findings of the examiner are to be considered along with the consistency and inherent probability of testimony. The significance of his report, of course, depends largely on the importance of credibility in the particular case.

Id. at 496, 71 S.Ct. at 169.

Although this guidance is assertedly as precise as the nature of the problem permits, 1 an analysis of both the cases, with emphasis on their facts, and basic policy considerations provides additional guidance to judicial review. Turning first to the cases, we have found no decision, nor has one been cited to us, sustaining a finding of fact by the Board which rests solely on testimonial evidence discredited either expressly or by clear implication by the administrative law judge. 2 A typical case demonstrating the need for independent, credited evidence is Amco Electric v. NLRB, 358 F.2d 370 (9th Cir. 1966). There the legality of a discharge turned on a narrow question of fact: Did the discharged employee use the company's car radio to give orders to another employee or merely to contact the union steward? The trial examiner (now referred to as an administrative law judge) discredited the testimony of both the discharged employee and the employee receiving the call. The Board, however, disagreed and accepted the discharged employee's version. In refusing to enforce the Board's order against the company, we stated:

Considering the record as a whole the only evidence which we believe supports the Board's findings is the (discredited) testimony of the (discharged employee). While the Board is not bound by the credibility determinations of the trial examiner, nevertheless the probative weight which may be properly given to testimony is severely reduced when an impartial experienced examiner who has observed the witnesses and lived with the case has drawn different conclusions.

Id. at 373 (emphasis added; footnote omitted).

A similar case is Ward v. NLRB, 462 F.2d 8 (5th Cir. 1972). A discharged non-union, non-local employee brought unfair labor charges against his former employer and a union, alleging that they had caused his discharge because he was not a union member. The determinative factual question was the union's motive for insisting on his discharge either to secure employment for local residents (regardless of their union affiliation) or to secure employment only for union members. The union's evidence consisted solely of the testimony of union officials. By clear implication, the trial examiner discredited that testimony and found against the union. The Board reversed. The Fifth Circuit reinstated the trial examiner's decision, explaining that

when the ultimate determination of motive or purpose hinges entirely upon the degree of credibility to be accorded the testimony of interested witnesses, "the credibility findings of the Trial Examiner are entitled to special weight and are not to be easily ignored." . . . The preeminence of the Examiner's conclusions regarding testimonial probity does not amount to an inflexible rule that either the Board or a reviewing court must invariably defer to his decision, thereby effectively nullifying either administrative or judicial review. But when the Board second-guesses the Examiner and gives credence to testimony which he has found either expressly or by implication to be inherently untrustworthy, the substantiality of that evidence is tenuous at best.

Here the Board's finding that the union's motive in seeking (the non-union employee's) discharge was to secure employment for local residents, rests for the most part, if not entirely, upon such Examiner-discredited testimony. There is no other direct or circumstantial evidence in the record from which that inference could have been drawn.

Id. at 12 (emphasis added; citations & footnotes omitted).

The cases also demonstrate that, even when the record contains independent, credited evidence supportive of the Board's decision, a reviewing court will review more critically the Board's findings of fact if they are contrary to the administrative law judge's factual conclusions. NLRB v. Tom Johnson, Inc., 378 F.2d 342, 344 (9th Cir. 1967). This more rigorous review follows necessarily from the Supreme Court's statement in Universal Camera Corp. v. NLRB, supra, 340 U.S. at 488, 71 S.Ct. at 464, that the "substantiality of evidence (in support of the Board's decision) must take into account whatever in the record fairly detracts from its weight." In response to Universal Camera, the Second Circuit has correctly observed that

the Board's supporting evidence, in cases where it rejects the examiner's findings, must be stronger than would be required in cases where the findings are accepted, since in the former cases the supporting evidence must be deemed substantial when measured against the examiner's contrary findings as well as the opposing evidence.

NLRB v. Interboro Contractors, Inc., 388 F.2d 495, 499 (2d Cir. 1967). Thus, evidence in the record which, when taken alone, may amount to "substantial evidence" and therefore support the Board's decision, will often be insufficient when the trial examiner has, on the basis of the witnesses' demeanor, made credibility determinations contrary to the Board's position. See, e. g., NLRB v. Four Winds Industries, Inc., 530 F.2d 75, 79-80 (9th Cir. 1976); Pittsburgh-Des Moines Steel Co. v. NLRB, 284 F.2d 74 (9th Cir. 1960).

This last point is well illustrated by Pittsburgh-Des Moines Steel Co. v. NLRB, supra, 284 F.2d 74. The controlling factual question centered on the company's motive for giving or withholding Christmas bonuses: Was the purpose to discourage protected concerted activity or to further a compensation scheme based on valid business considerations? The trial examiner credited the company's witness and discredited the opposing testimony of the union's witnesses. The Board reversed "by refusing to accept the Trial Examiner's belief in (the employer's witness's) testimony yet believing the testimony of others whom the Trial Examiner refused to credit." Id. at 87. We reinstated the trial examiner's decision, stating that the Board should not "be permitted either to draw unwarranted inferences to reverse a finding of credibility made by the Trial Examiner or to discard positive findings of credence in favor of inferences drawn from tenuous circumstances." Id. Importantly, the record contained independent, credited (or at least not discredited) evidence from which the Board could and did draw inferences contrary to the trial examiner's findings. Those inferences, unquestionably within the realm...

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