Schmerler Ford, Inc. v. NLRB

• Decision Date: 08 April 1970
• Docket Number: No. 17659.,17659.
• Citation: 424 F.2d 1335
• Parties: SCHMERLER FORD, INC., et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

424 F.2d 1335 (1970)

SCHMERLER FORD, INC., et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 17659.

United States Court of Appeals, Seventh Circuit.

April 8, 1970.

George B. Christensen, Richard F. Vitkus, Ronald R. Baird, Chicago, Ill., for petitioners; Winston, Strawn, Smith & Patterson, Chicago, Ill., of counsel.

Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, John D. Burgoyne, Janet C. McCaa, Attys., National Labor Relations Board, Washington, D. C., for respondent.

Before HASTINGS, Senior Circuit Judge, and FAIRCHILD and CUMMINGS, Circuit Judges.

CUMMINGS, Circuit Judge.

This petition is to review an order of the National Labor Relations Board concluding that petitioners each committed an unfair labor practice by refusing to bargain collectively with the American Federation of Professional Salesmen (the "Union"), in violation of Sections 8(a) (1) and 8(a) (5) of the National Labor Relations Act (29 U.S.C. §§ 158(a) (1) and 158(a) (5)).

Petitioners are 24 automobile dealers in the metropolitan Chicago area. In 1968, pursuant to Section 9(c) of the Act (29 U.S.C. § 159(c)), the Union filed petitions seeking to represent the salesmen at each of these automobile dealers. In April and May 1968, following hearings before a hearing officer of the Board, the Regional Director ordered elections to be held among the employees after finding that the Union was a labor organization within the meaning of Section 2(5) of the Act (29 U.S.C. § 152(5)).

Petitioner automobile dealers requested the Regional Director to dismiss the Union's petitions for representation on the ground that the Union was conspiring to violate the Sherman Act. The dealers showed that they had received letters of demand for recognition from the Union in January and February 1968, in which the Union stated that its proposed collective bargaining agreement "could guarantee you, and all the dealers in the area, a minimum net profit (I repeat NET) equal to 3% of the list price of the unit automobile." This language was omitted from subsequent demand letters. In literature distributed to various automobile salesmen, the Union stated they should join "to put your employer back into the retail business by guaranteeing him a net profit, after all expenses are paid, equal to 3% of the list price." The Union discussed its possible pricing formula at an organizing meeting on January 28, 1968, giving the following example for a car invoiced by the factory to the dealer at $3,120:

"To this invoice of $3120 we would add one quarter of one per cent for our health and welfare program, which is $10. We would add another one quarter of one per cent for our retirement program, which is another $10. We would add 4½ per cent as the sales commission, which is $180. We would add 2 per cent for the service, get-ready, advertising, and office expense of the dealer, which is $80. We could then guarantee the dealer a minimum profit equal to 3 per cent of the list price of the car, which is $120.

"We could guarantee this and we would guarantee it by Article 8, which is the one I didn\'t read before.

"Article 8 of our collective bargaining agreement would read as follows:

`Salesmen will not be required to sell a new motor vehicle at a price less than 12 per cent off the list price less transportation and delivery of the motor vehicle. We take the 12 per cent off and we are right down to this figure of $3520\'."

In denying the dealers' motions to dismiss the petitions for representation, the Regional Director stated that it was speculative whether the Union, if selected as the salesmen's bargaining representative, would actually seek to incorporate this pricing formula into a collective bargaining agreement. He concluded that since the Union qualified as a labor organization within the meaning of Section 2(5) of the Act, the Board should process the representation petitions. He did not indicate, however, that the Union's proposal was valid under the Sherman Act.

The antitrust issue was again raised in the dealers' petitions to review the Regional Director's order, but the Board concluded that these petitions raised no substantial issues warranting review and therefore denied them. In the ensuing elections, the Union received a majority of the ballots counted and was certified as the exclusive bargaining representative of petitioners' salesmen.

As the certifications issued, the Union requested the dealers to commence negotiations for a collective bargaining contract, but its communications were unanswered. Therefore, the Union filed charges with the Board alleging that petitioners each committed an unfair labor practice by refusing to recognize it and bargain collectively with it. In November 1968, a trial examiner conducted a hearing with respect to the unfair labor practice alleged in the complaints filed by the Board's general counsel. In their answers the petitioners denied that the Union was a labor organization within the meaning of Section 2(5) of the Act and asserted that its certification was invalid, primarily because of its price-fixing program. The trial examiner rejected these contentions. As to whatever collective bargaining agreement the Union might propose, the trial examiner stated "the Employer could dispose by saying nay to price fixing and aye to working terms and conditions." He also noted that the Board had already rejected the dealers' price-fixing contention in the representation proceedings. The findings, conclusions and recommendations of the trial examiner were adopted by the Board, and it simultaneously overruled the dealers' exceptions. Consequently, the dealers were ordered to cease and desist from the unfair labor practices found, to bargain collectively with the Union and to post the customary notices. 175 NLRB No. 90 (1969).

Absent an affirmative defense, petitioners' adamant refusal to bargain collectively with the certified representative of their employees clearly violates Sections 8(a) (1) and 8(a) (5) (29 U. S.C. §§ 158(a) (1) and 158(a) (5)). Petitioners no longer contend that the Union is not a labor organization within the purview of Section 2(5) of the Act (29 U.S.C. § 152(5)). Rather, they present a dual attack — first against the validity of the Union's election and then the propriety of granting recognition to the Union as bargaining representative in light of the proposed price-fixing scheme.

Initially, the Board objects that petitioners should be barred from challenging the election results because of their failure to file objections thereto within the five-day period required by the Board's Rules and Regulations (Series 8, Section 102.69(a)). National Labor Relations Board v. Conlon Bros. Mfg. Co., 187 F.2d 329, 332-333 (7th Cir. 1951). In exceptional circumstances, however, this Court has considered objections to elections lodged after expiration of that period. National Labor Relations Board v. Fresh'nd-Aire Company, 226 F.2d 737, 741-742 (7th Cir. 1955). In this case, the dealers presented objections to the Regional Director and the Board prior to the representation election. Their failure to reassert their antitrust point in post-election proceedings until their answers to the unfair labor practice complaints should not preclude them from raising the same point in the unfair labor practice proceedings or before this Court. They may not, however, go beyond the issues thus raised and advance additional allegations and evidence pertinent to the representation proceedings. Rockwell Mfg. Co., Kearney Div. v. National Labor Relations Board, 330 F.2d 795, 797-798 (7th Cir. 1964), certiorari denied, 379 U.S. 890, 85 S.Ct. 161, 13 L.Ed.2d 94; see National Labor Relations Board v. Golden Age Beverage Company, 415 F.2d 26, 32-33 (5th Cir. 1969).

Within these confines we turn to consider the dealers' arguments. They first contend that the election was invalid because the Union's campaign propaganda contained descriptions of the pricing proposals which allegedly misled the employees and prevented a fair election. Even assuming that the proposals were actually illegal and persisted after the Union filed its request for an election, nothing in these proposals warrants setting aside the certification election as unfair as a matter of law.

The Board is not a censor over the campaign propaganda circulated by either union or management during a representation election. Linn v. United Plant Guard Workers, 383 U.S. 53, 60-61, 86 S.Ct. 657, 15 L.Ed.2d 582. Correction of deceptive or untruthful statements is left primarily to the participants themselves and the good sense of the voters. National Labor Relations Board v. Red Bird Foods, Inc., 399 F.2d 600, 602-603 (7th Cir. 1968); National Labor Relations Board v. Golden Age Beverage Company, 415 F.2d 26, 31 (5th Cir. 1969). The Board intercedes to set aside elections only when improper campaign tactics touch material matters and create a climate which thwarts the employees' free choice and distorts the electoral process. Gallenkamp Stores Co. v. National Labor Relations Board, 402 F.2d 525, 533 (9th Cir. 1968); Aerovox Corp. of Myrtle Beach, S. C. v. National Labor Relations Board, 409 F. 2d 1004, 1007 (4th Cir. 1969); Southwest Portland Cement Company v. National Labor Relations Board, 407 F.2d 131, 134-135 (5th Cir. 1969).

In determining whether an election has been unfair, the accused conduct must be considered with reference to the "timing, proportion of employees affected, and the character" of the claimed coercive or misleading action. Rockwell Mfg. Co., Kearney Div. v. National Labor Relations Board, 330 F.2d 795, 797 (7th Cir. 1964), certiorari denied, 379 U.S. 890, 85 S.Ct. 161, 13 L. Ed.2d 94. In this case, the dealers have not objected to a misrepresentation of fact or even of law. Their contentions pertain to certain of the Union's proposals, assertedly illegal, which were...