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Parties Involved:
MacMillan Publishing Co.
Petitioner
National Labor Relations Board
Respondent
Union of Needletrades, Industrial and Textile Employees
Intervenor

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 22, 1999 Decided November 12, 1999

No. 98-1554

Macmillan Publishing Co.,

Petitioner

v.

National Labor Relations Board,

Respondent

Union of Needletrades, Industrial and

Textile Employees, AFL-CIO,

Intervenor

On Petition for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

Gregory J. Utken argued the cause for petitioner. With

him on the briefs was Frank Swain.

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Robert J. Englehart, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the

brief were Linda Sher, Associate General Counsel, Aileen A.

Armstrong, Deputy Associate General Counsel, and Frederick

C. Havard, Supervisory Attorney. John D. Burgoyne, Deputy Associate General Counsel, entered an appearance.

Barry A. Macey was on the brief for intervenor.

Before: Silberman, Randolph, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: Macmillan Publishing, Inc. refused to bargain with, or furnish information to, a union that

won the second of two representation elections. The company defended against the resulting unfair labor practice

charges on the ground that the National Labor Relations

Board had improperly certified the union as the employees'

bargaining representative. The Board ruled against the company and ordered, among other things, that the company

bargain with the union. The company's petition for judicial

review followed. The Board then cross-petitioned for enforcement and the union--the Union of Needletrades, Industrial and Textile Employees--intervened.

The company is engaged in the wholesale distribution and

sale of books and reference materials. It operated two

warehouses in Indianapolis, Indiana. The union filed a petition with the Board seeking to represent "all full and regular

part-time warehouse and distribution center employees" at

the two facilities. The company objected to an election as

premature: in six months, it would be transferring its Indianapolis operations to a new "Customer Center" some 17 miles

away; no formal offers of employment had yet been made to

the current unit employees; additional employees would be

hired to work at the new operation. The Regional Director

overruled the objection and ordered an election, which the

union lost by a vote of 78 to 75. The union filed eight

objections. The Regional Director sustained the union's Objection 2 and ordered a new election, without passing on the

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union's other complaints. The union won the second election

by a vote of 58 to 52.

The union's Objection 2 centered on a campaign leaflet the

company handed to its employees. The leaflet read:

WHAT DO YOU HAVE

TO LOSE?

HOW ABOUT:

$2,522.00 next year!

______________________________________________________________________

$1.10 per hour $1.25 per hour

x 40 hours per week x 40 hours per week

_______________________ _______________________

$44.00 per week $50.00 per week

x 13 weeks = x 39 weeks =

$572.00 in Jan - Mar $1,950.00 Apr - Dec

______________________________________________________________________

For a total of $2,522.00 next year

Without a union, Macmillan will be free to proceed ahead with the

announced wage increases for the Lebanon move.

With a union, since all wages and benefits would be subject to

negotiation, no one can predict what the final wage package would be.

WHY TAKE THE RISK?

VOTE NO!

The "$2,522.00" referred to an across-the-board wage increase the company had announced two days earlier. (One of

the union's objections dealt with the timing of the wage

increase.)

We may quickly dispatch the company's argument that the

first election was premature because of the impending transfer to the Customer Center. As the union rightly points out,

the second election (which the union won), not the first (which

the union lost) led to the Board's bargaining order. By the

time of the second election, the company's move to the new

facility had already taken place. Of the employees eligible to

vote in the second election, 86% had previously worked in the

company's two Indianapolis facilities. The Regional Director's predictive judgment before the first election--that

the work force at the old locations would be a substantial and

representative complement of the work force at the new

location--thus turned out to be accurate. Nothing more is

needed to sustain the Board's order insofar as it rested on the

results of the second election. See NLRB v. AAA Alternator

Rebuilders, Inc., 980 F.2d 1395, 1397-98 (11th Cir. 1993).

The remaining question is whether the Board, through its

Regional Director, properly overturned the first election because of the company's leaflet. For its part the company

relies on its free speech right as recognized in s 8(c) of the

National Labor Relations Act, 29 U.S.C. s 158(c): "The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual

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form, shall not constitute or be evidence of an unfair labor

practice ... if such expression contains no threat of reprisal

or force or promise of benefit." Section 8(c) does not exactly

fit this case. The issue here arose in the context of a

representation election and the consequence of the leaflet was

not an unfair labor practice charge, but a new election.

Nonetheless, the Board admitted at oral argument that its

treatment of employer communications at the election stage is

indistinguishable from how it decides if an employer's "expression" is outside s 8(c)'s protection because it "contains [a]

threat of reprisal or force or promise of benefit."

As to the leaflet, the company insists that it was literally

true, and as such did not constitute a threat to employees. We

are not sure the last proposition follows from the first. The

statement "If you vote for the union, the company will do

everything it can to reduce your wages," may be truthful,

depending on the company's intentions, but it is certainly a

threat. See NLRB v. Gissel Packing Co., 395 U.S. 575, 617-

18 (1969). The leaflet was, so the company tells us, not only

truthful but also non-threatening because it did not say the

employees would lose their recently-announced pay raise. It

said instead that with a union, the employees would risk

losing the raise because "all wages and benefits would be

subject to negotiation," which is true, whereas without a

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union the company "will be free to proceed ahead" with the

raise, which is also true. Compare General Elec. Co. v.

NLRB, 117 F.3d 627, 635-36 (D.C. Cir. 1997). The Board

counters with this argument: the "test" is whether the employer's communication had a "reasonable tendency" to

coerce employees; this depends on the particular labor relations setting; here the wage increase announced on the eve of

the election heightened employee awareness of their economic

dependence on the employer; the Board is expert in assessing the impact; and courts should recognize the Board's wide

discretion in such matters. In support, the Board cites many

of its decisions and the decisions of federal courts.

The trouble is that the Regional Director, whose decision

the Board refused to review, cited none of the authorities the

Board relies upon in its brief. Here is the sum and substance

of his reasoning:

It is well settled that, during a union organizing campaign, an employer should decide the question of granting or withholding benefits as it would if a union were

not in the picture. Stumpf Motor Company, 208 NLRB

431 (1974); The Gates Rubber Company, 182 NLRB 95

(1970); The May Department Stores Company d/b/a

Famous-Barr Company, 174 NLRB 770 (1969). Exhibit

1 herein violates this principle by leaving it in the minds

of the employees that they will lose the previously announced raise, amounting to $2,522.00 projected over the

next year, if the union is voted in. The Employer's

mention, later in the document, (in much smaller print)

that all wages and benefits are subject to negotiation

does not cure the clear implication that the employees

will not get their promised raise if the union is voted in.

Accordingly, I find that the issuance and distribution of

Exhibit 1 by the Employer constitutes objectionable conduct and Petitioner's Objection 2 is sustained.

The Regional Director's first sentence is inscrutable. It deals

with the timing of the wage increase. Each of the Board

cases cited in support of that sentence dealt with the same

subject. See Stumpf Motor Co., 208 N.L.R.B. at 433 (regardUSCA Case #98-1554 Document #476447 Filed: 11/12/1999 Page 5 of 7
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ing raise announcements, "an employer's legal duty during

the pendency of a representation petition 'is to proceed as he

would have done had the union not been on the scene' ")

(quoting Gates Rubber Co., 182 N.L.R.B. at 95); May Dep't

Stores, 174 N.L.R.B. at 770 (during election campaign, employer "should decide the question of granting or withholding

benefits as he would if a union were not in the picture"). But

the often perplexing issues regarding the timing of a raise

were not what the Regional Director was addressing. See

Perdue Farms, Inc. v. NLRB, 144 F.3d 830, 836-37 (D.C. Cir.

1998); id. at 839-40 (Randolph, J., dissenting). Although the

union had interposed an objection on this ground, the Regional Director adjudicated only the union's second objection,

which dealt with the alleged threat in Exhibit 1--the leaflet.

The Regional Director's second sentence therefore makes no

sense. Exhibit 1 could not have violated the "principle" that

an employer should act as "if a union were not in the picture."

There is no such principle governing employer communications during election campaigns, and we doubt that there

could be in light of the First Amendment. See US Airways,

Inc. v. National Mediation Bd., 177 F.3d 985 (D.C. Cir. 1999).

In any event, the Board does not defend the ordering of a

new election on such a ground.

Despite the Board's discretion in regulating representation

elections, see Timsco Inc. v. NLRB, 819 F.2d 1173, 1175-76

(D.C. Cir. 1987), we must set aside its order in this case. To

borrow from Chief Justice Marshall, an agency's discretionary choices are not left to its "inclination, but to its judgment;

and its judgment is to be guided by sound legal principles."

United States v. Burr, 25 F.Cas. 30, 35 (C.C. Va. 1807) (No.

14,692d). The Regional Director's judgment rested on no

sound principle. His rationale was the antithesis of reasoned

decisionmaking, and as such was arbitrary and capricious.

See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins.

Co., 463 U.S. 29, 43 (1983). Counsel for the Board has

offered different reasons to support the ordering of a second

election. We express no view on their validity. We cannot

sustain agency action on grounds other than those adopted by

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the agency in the administrative proceedings. See SEC v.

Chenery Corp., 318 U.S. 80 (1943).

The petition for judicial review is granted. The crosspetition for enforcement is denied. The case is remanded to

the Board for further proceedings.

So ordered.

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