Squillacote, for and on Behalf of N.L.R.B. v. Graphic Arts Intern. Union, AFL-CIO

• Decision Date: 30 June 1976
• Docket Number: AFL-CIO and G,No. 76-1381,76-1381
• Citation: 540 F.2d 853
• Parties: 93 L.R.R.M. (BNA) 2257, 79 Lab.Cas. P 11,573 George SQUILLACOTE, Regional Director of the Thirtieth Region of the National Labor Relations Board for and on behalf of the National Labor Relations Board, Petitioner-Appellee, v. GRAPHIC ARTS INTERNATIONAL UNION,raphic Arts International Union, Local 277, Respondents-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 853

540 F.2d 853

93 L.R.R.M. (BNA) 2257, 79 Lab.Cas. P 11,573

George SQUILLACOTE, Regional Director of the Thirtieth Region of the National Labor Relations Board for and on behalf of the National Labor Relations Board, Petitioner-Appellee, v. GRAPHIC ARTS INTERNATIONAL UNION, AFL-CIO and Graphic Arts International Union, Local 277, Respondents-Appellants.

No. 76-1381.

United States Court of Appeals, Seventh Circuit.

Argued June 18, 1976.

Decided June 30, 1976. ¹

Martin Ganzglass, Washington, D. C., Richard D. Hicks, Milwaukee, Wis., for respondents-appellants.

Elliott Moore, Deputy Assoc. Gen. Counsel, Joseph E. Mayer, Miriam B. Hartley, Attys., N. L. R. B., Washington, D. C., for petitioner-appellee.

Before CUMMINGS, PELL and TONE, Circuit Judges.

TONE, Circuit Judge.

This case is one of a series arising from a continuing labor dispute between Kable Printing Company and Graphic Arts International Union, AFL-CIO, Local 91-P. The local represented a unit of Kable's employees engaged in the production and processing of rotogravure cylinders. Several unfair labor practice proceedings and ancillary injunction actions arising from the dispute have been decided by this court and one is pending undecided at the time of the entry of this order. Squillacote v. Graphic Arts Int'l Union (GAIU) Local 277, 381 F.Supp. 551 (E.D.Wis.1974), rev'd, 513 F.2d 1017 (7th Cir. 1975) (entry of § 10(l ) injunction ordered); Squillacote v. Graphic Arts Int'l Union (GAIU) Local 277, 388 F.Supp. 258 (E.D.Wis.1975), aff'd, 519 F.2d 1405 (7th Cir. 1975) (§ 10(l ) injunction affirmed); Graphic Arts Int'l Union and Local 277 (Kable Printing Co.), 222 N.L.R.B. No. 57 (1976), vacated and remanded sub nom., Kable Printing Co. v. NLRB, No. 76-1038 (unpublished order dated March 25, 1976); Mount Morris Graphic Arts Int'l Union, Local 91-P (GAIU) (Blackhawk Engraving Co.), 219 N.L.R.B. No. 169 (1975), Graphic Arts Int'l Union (GAIU) Local 277 (S & M Rotogravure Service, Inc.), 219 N.L.R.B. No. 171 (1975), and Local 245, Graphic Arts Int'l Union (GAIU) (Graphicscans Corp.), 220 N.L.R.B. No. 75 (1975), pending review by this court, Nos. 75-1758, 75-1853, 75-1852, consolidated hearing held April 16, 1976. ² We shall not attempt to recapitulate here the facts of the dispute or the procedural history that may be gleaned from earlier opinions and orders of the Board and the courts.

The case now before is a sequel to No. 76-1038 (S & M (I) ), in which we vacated the Board's order dismissing charges under § 8(b)(4)(i) and (ii)(B) of the Labor Management Relations Act, 29 U.S.C. § 158(b)(4)(i), (ii)(B). The consolidated complaint before the Board in that case, based on complaints filed by Kable in August and October 1974, had alleged that another local, Local 277 of Graphic Arts International Union, and the International Union had violated the above-mentioned sections of the Act by inducing and encouraging employees of S & M Rotogravure Service, Inc. and Mueller Colorplate Company to engage in a secondary boycott in furtherance of the strike against Kable by Local 91-P. It was alleged that the unions had induced employees of S & M and Mueller, who were neutrals to the labor dispute between Kable and Local 91-P, not to perform rotogravure-cylinder processing work ordered by Kable from S & M and Mueller after Kable had decided, for economic reasons, permanently to close down its own rotogravure-processing department. The unions' position was that the work Kable had placed with S & M and Mueller was "struck work" of the Kable photoengravers, i. e., work which would have been performed by those employees but for the strike, and that S & M and Mueller were therefore "allies" of Kable in Kable's dispute with Local 91-P, which made it lawful for the unions to put economic pressure on those companies. After hearing, the Administrative Law Judge issued a decision and order finding that the unions had violated the Act as alleged and ordering them to cease and desist. The Board reversed, two members of the panel ruling that the General Counsel had failed to prove that Kable permanently ceased its rotogravure-processing operations and that, at least in the absence of such proof, an ally relationship existed between Kable and its suppliers, S & M and Mueller, and one member dissenting urging the adoption of the ALJ's decision and order. The Board's decision on January 14, 1976 resulted in the vacating by the district court, Judge Warren, of a § 10(l ) injunction order which had been entered on January 7, 1975, based on the complaints in that case (Squillacote v. Graphic Arts Int'l Union (GAIU), Local 277, supra, 388 F.Supp. 258), which order had been affirmed by this court. 519 F.2d 1405 (1975). The International Union thereupon ordered Local 277 members to stop their work as employees of S & M and Mueller on Kable cylinders, and the work stopped.

We remanded S & M (I) for two reasons. The first was that the Board majority sustained the "struck-work" defense on the ground that "the General Counsel's evidence falls far short of clear and convincing proof as to the permanency of Kable's announced closing down of rotogravure preparatory operations," thus erroneously applying a more stringent standard of proof than the "preponderance of the testimony taken" standard prescribed by § 10(c) of the Act, 29 U.S.C. § 160(c). The second reason was that, although the Board's practice is to reject an ALJ's credibility findings only when they are contrary to the "clear preponderance" of the evidence, the Board ignored the ALJ's findings as to Kable's intent, which were based on the testimony of Kable officials, without making any finding of its own and without an explanation.

We are advised that the Board has accepted the remand in S & M (I) but has not yet decided the case. The General Counsel has moved to consolidate that case and the unfair labor proceedings on which the injunction in the case at bar was based. The union respondents have opposed consolidation. The Board has the consolidation issue under advisement.

In the Board proceeding which is the basis for the injunction under review, the General Counsel makes essentially the same allegations as those made in S & M (I). Again the targets of the alleged secondary boycott were S & M and Mueller. When the new unfair labor practice charges were filed, the Regional Director again applied to the District Court for a preliminary injunction, based upon the new proceedings before the Board, and the court issued a temporary restraining order and subsequently a preliminary injunction enjoining the refusal to perform work on jobs placed by Kable with S & M and Mueller.

The new unfair labor practice charges which are the predicate for the injunction under review are based upon events subsequent to the evidentiary hearing before the ALJ in S & M (I). These subsequent events which the Regional Director contends now establish, and will convince the Board, that Kable has permanently closed down its rotogravure-processing department may be summarized as follows:

Kable has sold virtually all of its remaining rotogravure-processing equipment, principally to Progressive Graphics Co. of Oregon, Illinois. This includes a laydown machine essential to cylinder production, which was sold for $76,100 by a contract providing for a sliding scale of increasing monthly payments commencing in April 1976. Kable had previously delivered its other laydown machine to Mueller, and, although a final price had not been determined at the time of the prior hearing, in January 1976 the companies agreed upon a price of $5500, which sum is to be deducted from current invoices owed Mueller by Kable. Kable retains only a few pieces of equipment which do not provide it with the capacity to produce any type of rotogravure cylinder.

Kable has not produced any cylinders with its own employees and equipment since January 20, 1975. It would require a minimum of approximately five months and a capital investment of approximately $300,000 for Kable to acquire and install and new equipment necessary to re-establish a rotogravure-processing operation.

Since January 1975 Kable has obtained all of its rotogravure cylinders from independent subcontractors. On October 31, 1975, Kable contracted with S & M for the production of from about 200 to 600 cylinders a year for a three-year period beginning August 1, 1975. Kable also entered into a five-year contract with Progressive on September 19, 1975, pursuant to which Progressive is to produce a minimum of 400 cylinders for Kable during the first year, and Kable agreed to make reasonable increases and production requirements for the four succeeding years covered by the agreement.

The Regional Director acknowledges that some ancillary cylinder-maintenance work is still being performed by Kable, which organized a Quality Assurance Department following its decision to cease producing cylinders. The new department assures overall product quality as well as the quality of cylinders received from outside suppliers and performs minor, in-house maintenance work on these cylinders. Kable also does some copper and chrome plating for Progressive. The other suppliers, including S & M and Mueller, do their own plating work. When a cylinder becomes worn or scratched while it is on the press for printing, it is necessary that de-chroming and re-chroming of the cylinder be done, which Kable does. Correction work also becomes necessary while the cylinders are on the presses, and Kable must do that. Kable also proofs and marks up for correction the cylinders produced by its suppliers. Kable, however, does not make the corrections but returns the cylinders to the suppliers for correction. All of this remaining work is performed by approximately seven Kable employees. The number of employees in Kable's rotogravure-processing department prior to the time it closed down that operation was many times the seven now performing the...