Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01241/USCOURTS-caDC-00-01241-0/pdf.json

Parties Involved:
Douglas Foods Corp
Petitioner
National Labor Relations Board
Respondent

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 7, 2001 Decided June 12, 2001

No. 00-1241

Douglas Foods Corp.,

Petitioner

v.

National Labor Relations Board,

Respondent

On Petition for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

Theodore R. Opperwall argued the cause and filed the

briefs for petitioner.

David A. Seid, Attorney, National Labor Relations Board,

argued the cause for respondent. With him on the brief were

Leonard R. Page, General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy AssociUSCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 1 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ate General Counsel, and Peter Winkler, Supervisory Attorney.

Before: Sentelle, Randolph and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Douglas Foods Corporation

("DFC") petitions for review of an order of the National

Labor Relations Board ("NLRB") finding that it committed

several unfair labor practices and ordering substantial relief.

We uphold the bulk of the NLRB's unfair labor practice

findings with the exception of those related to the alleged

"sham" sales of catering trucks and routes. The NLRB's

findings in relation to these transactions are inadequate, and

the accompanying restoration order is beyond the scope of

the Board's remedial authority. We also vacate the NLRB's

bargaining order, and remand to the NLRB for further

proceedings not inconsistent with this opinion.

I. Background

A. Relevant Facts

Petitioner DFC, a mobile food catering business in Garden

City, Michigan, runs a "wholesale" operation that supplies

catering trucks operated by other firms. Throughout much

of its history, DFC also operated as a "retail" caterer, owning

and operating catering trucks which sold prepackaged foods

to employees at local businesses along designated catering

routes.

In mid-1995, DFC operated approximately twelve "hot"

trucks and twelve "cold" trucks. "Hot" trucks serve hot and

cold food and are operated by a driver and a cook. Cold

trucks do not have cooks and sell only cold food. Each truck

services a prearranged route on a regular schedule. At the

time, DFC also supplied several catering trucks run by

independent owner-operators. All of the trucks--DFC's and

those of the owner-operators that operated out of DFC's

facility--sold food prepared by Ezzo's Food, another company

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 2 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

owned by DFC president and founder Douglas George and

his wife.

At the time, DFC's drivers and cooks were divided between

designated employees and lease operators. The former received hourly wages and operated off of a time clock. The

latter payed daily lease fees to DFC and would keep their net

revenues. Lease fees ranged between $0 and $150 per day.

George expressed a preference for lease operators over employees because he believed that they had a greater financial

stake in satisfying their customers. It was difficult to retain

lease operators, however, which prompted DFC to hire more

drivers as employees. Whether drivers were lease operators

or employees, as a general rule their trucks were emblazoned

with the DFC logo and housed at the DFC facility. DFC also

controlled the menus, retail prices, and catering routes, and

imposed a dress code on drivers.

For a variety of reasons, some of which are disputed,

George decided in 1995 to extricate DFC from the "retail"

side of the catering business and expand operations on the

"wholesale" side. Pursuant to this plan, in October 1995

George sold all twelve of DFC's cold trucks to JK Food

Service, LLC, a company established by John Schemanske,

George's brother-in-law and then-General Manager of DFC.

While under new ownership, these trucks maintained the

DFC logo and menu. DFC contends that it also sought

buyers for its twelve hot trucks and routes at this time, but

without any success.

B. The Unionization Effort

In December 1995, DFC hired Debra Beck as a driver.

Shortly thereafter, Beck contacted the Local 876 of the

United Food and Commercial Workers Union ("Union") about

organizing a campaign for representation. Over the next

several months, Beck, her cook Michelle Benkert, and a

handful of other DFC employees distributed union authorization cards and encouraged DFC members to sign them.

In June 1996, George learned of "problems" among his

employees. Around that time, DFC's sales manager, William

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 3 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Tofilski, questioned Beck about union activities. Over the

next month, Tofilski had several conversations with DFC

employees in which he disparaged union organizational efforts, asked who had signed authorization cards, and implied

that George would retaliate in some form were the employees

to unionize because DFC could not afford to meet likely union

demands. Douglas Foods Corp., 330 NLRB No. 124, slip op.

at 7-9 (Mar. 13, 2000). Tofilski recounted that in the 1970s,

when DFC was first unionized, George sold off routes to

prevent unionization, and suggested George would do so

again.

By July 3, the Union had nineteen signed authorization

cards and filed a petition with the NLRB seeking to represent the employees of "Douglas Foods/J&K Foods." The

Union sought recognition from DFC, but DFC refused. At a

subsequent NLRB representation hearing, DFC informed the

Union that the unionization efforts would not forestall its

plans to sell the twelve hot trucks and routes. In response to

this and Tofilski's prior remarks, the Union filed unfair labor

practice charges against DFC.

On July 22, before the complaints were filed, DFC agreed

to an election covering all DFC hourly and lease drivers,

cooks, mechanics, maintenance and store employees. Prior to

the election, George held several mandatory-attendance meetings with DFC drivers. At one meeting, George explained

that lease operators would "have a problem" maintaining

their relationship with DFC should the company unionize.

Douglas Foods, 330 NLRB No. 124, slip op. at 11. Prior to

the election George also met with a cook, Ebtisam Kassouma,

said he would raise her salary, and encouraged her to vote

against union representation.

The election was held on August 23. Sixteen employees

voted against the Union, twelve voted in favor with two

challenged ballots. The Union also lost the election at JK

Foods, 11-1. Id. at 12. Upon learning of the results, two

DFC employees who had actively supported the Union quit,

and the Union filed an additional unfair labor practice charge

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 4 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

against DFC and requested that the NLRB issue a bargaining order.

Shortly after the election, George resumed his efforts to

sell DFC hot trucks and routes. According to DFC, George

was now willing to sell trucks and routes individually or in

small groups, rather than in large groups or as a whole (as he

had done with the cold trucks). In September, George

announced that Tofilski and Mary Jo Merollis, Tofilski's sister

and a prior DFC employee, had each agreed to purchase

three hot trucks and routes. George informed his employees

that this did not threaten their jobs, and that they would

likely be retained as were the cold truck workers when they

were sold to JK Food Service. Id. Although the announcement was made in late September, Tofilski and George did

not sign the formal papers (dated October 21, 1996) until

January 1997. Under the agreement, DFC financed the

truck purchases and Tofilski was required to make weekly

payments and sign a security agreement. He also had to

guarantee that he would purchase 75 percent of his food from

DFC. So long as Tofilski's trucks were operated in accordance with DFC guidelines, DFC agreed not to compete with

his new business along its routes. Merollis executed similar

agreements with DFC on January 31, 1997, but was later

excused from the supply agreement.

In early October, DFC revised its time clock policy after it

was fined by the Department of Labor for violating the Fair

Labor Standards Act. Id. at 5. That month, on two separate

occasions, Michelle Benkert punched out late in violation of

the policy. Benkert received a warning after the first violation. After the second she was fired. DFC cited the time

clock violations and other performance issues about which she

also had been warned. Benkert and the NLRB claim that

the time clock violations were a pretext for firing her due to

her union activity.

On November 22, Pam Cummins, an independent operator

of a cold truck route purchased in 1995, purchased the hot

truck and hot truck route driven by Debra Beck. DFC

financed the purchase in much the same manner as the prior

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 5 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

hot truck sales, though Cummins was required to purchase

food exclusively from DFC. That day, George informed Beck

that the truck and route had been sold and that she would be

laid off. George did not inform her that JK Food Service was

advertising for catering route operators. Id. at 14, 16. Cummins hired a new driver for the truck and retained the cook

who worked with Beck. Cummins returned the truck and

route in February 1997 because she was unable to make a

profit on it, but DFC then resold it to another route operator.

By mid-1997, DFC had sold all of its hot trucks and routes

and was completely out of the "retail" catering business.

Most of the trucks were sold to present route drivers with

financing arrangements and supply agreements similar, but

not identical, to those adopted by Tofilski and Cummins.

C. Proceedings Below

On March 6, 1998, an NLRB Administrative Law Judge

("ALJ") ruled on the Union's complaints. The ALJ found

that DFC had committed numerous unfair labor practices in

violation of sections 8(a)(1) and (3), and sections 2(6) and (7)

by:

. creating the impression that DFC was surveilling

employee union activities;

. threatening employees for engaging in union activities;

. interrogating employees about their union activities;

. suggesting that unionization would "be futile";

. threatening to retaliate against employees who testified about unfair labor practices;

. giving an employee a pay raise prior to the election

while suggesting that she should vote against the

Union;

. intimidating, disciplining, retaliating against, and laying off Beck;

. firing Benkert;

. closing/selling off the hot truck operations; and

. terminating the employment of some or all of the hot

truck drivers and cooks.

Id. at 24. The ALJ further found that DFC's truck and route

sales were "sham" transactions motivated by anti-union animus. Id.

The ALJ concluded that "[a]t all times since July 3, 1996"

the Union was the exclusive and appropriate representative of

DFC employees because a majority of DFC employees had

signed union authorization cards. Id. The ALJ held that

DFC's unfair labor practices were "so serious and substantial

in nature" that there could not be a fair union election relying

solely on traditional remedies. Id. Based on this conclusion,

the ALJ ordered DFC to cease and desist from its unfair

labor practices, offer to reinstate Beck and Benkert with back

pay, "reestablish" its hot truck operations, offer reinstatement to all hot truck drivers and cooks who were terminated

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 6 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

when their routes were sold, and recognize and bargain with

the Union as the exclusive bargaining representative of DFC

employees. Id. at 24-25.

DFC appealed. The NLRB upheld the ALJ's findings in

all major respects. The Board was unanimous that DFC

engaged in numerous unfair labor practices, including the

intimidation of its employees and other efforts to discourage

unionization. Member Hurtgen dissented with regard to four

findings. First, Hurtgen found "no threat" in George's comment to lease operators that their relationship with DFC

would change upon unionization, as this was based on his

good faith belief that the lease operators were independent

contractors. Id. at 4 (Member Hurtgen, dissenting). Second,

he found nothing unlawful about the "interrogation" of Lisa

Bowman about signing a union authorization card as she

initiated the discussions with management and concluded that

nothing George said was threatening or coercive. Id. Third,

Hurtgen did not find the termination of Benkert to be

unlawful, particularly because she had received warnings and

the new time clock policy was prompted by a Labor Department enforcement action that cost DFC several thousand

dollars. Id. at 4-5. Fourth, Hurtgen did not agree with the

majority of the Board that DFC committed the sort of

"hallmark" violations that would justify a bargaining order

under NLRB v. Gissel Packing Co. Id. at 5. Hurtgen did

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 7 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

not dispute the finding that the hot truck and route sales

were "sham" transactions.

The Board unanimously adopted the bulk of the ALJ's

ordered remedies, including the order that DFC reestablish

its hot truck operations and reinstate the laid-off hot truck

drivers and cooks. The Board was split on the bargaining

order. A majority upheld the order, while Member Hurtgen

dissented, arguing that "traditional remedies" and a cease

and desist order would be sufficient to remedy the situation

and allow for a fair union election to take place. Id.

II. Unfair Labor Practices

Petitioner DFC challenges several of the NLRB's unfair

labor practice findings and other factual determinations.

Specifically, DFC contests the findings that it violated National Labor Relations Act ("NLRA") section 8(a)(3) by firing

Benkert and laying off Beck, and that, through George and

Tofilski, it violated NLRA section 8(a)(1) by monitoring and

investigating employees' union-related activities, making discouraging or threatening statements about the potential impact of unionization, and interfering with the exercise of

NLRA-protected rights by giving an employee a pay raise

just prior to the unionization vote.

Under section 8(a)(1) of the NLRA, 29 U.S.C. s 158(a)(1), it

is an unfair labor practice for an employer "to interfere with,

restrain, or coerce employees in the exercise" of their rights

guaranteed under NLRA section 7, 29 U.S.C. s 157. Under

NLRA section 8(a)(3), 29 U.S.C. s 158(a)(3), it is an unfair

labor practice "to encourage or discourage membership in any

labor organization" through discriminatory employment decisions. As interpreted by the NLRB and federal courts,

section 8(a) prohibits various anti-union conduct including,

among other things, coercively interrogating employees about

union activities, Perdue Farms, Inc. v. NLRB, 144 F.3d 830,

835 (D.C. Cir. 1998), threatening retaliation or other adverse

actions in response to union organizing activity, Allegheny

Ludlum Corp. v. NLRB, 104 F.3d 1354, 1364-66 (D.C. Cir.

1997), and seeking to influence union activities by granting

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 8 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

benefits to employees, General Electric Co. v. NLRB, 117

F.3d 627, 636-37 (D.C. Cir. 1997).

Judicial review of NLRB unfair labor practice findings is

limited. See, e.g., Avecor, Inc. v. NLRB, 931 F.2d 924, 928

(D.C. Cir. 1991). The NLRB's conclusions of fact are conclusive if "supported by substantial evidence on the record

considered as a whole." 29 U.S.C. s 160(e). "If there is

substantial evidence to support the Board's conclusions, we

will uphold the Board's decision even if we would have

reached a different result had we considered the question de

novo." Synergy Gas Corp. v. NLRB, 19 F.3d 649, 651 (D.C.

Cir. 1994). An ALJ's credibility determinations, once

adopted by the Board are due particular deference, and

"must be accepted by this court 'unless they are patently

insupportable.' " Parsippany Hotel Mgmt. Co. v. NLRB, 99

F.3d 413, 425 (D.C. Cir. 1996) (quoting Exxel/Atmos, Inc. v.

NLRB, 28 F.3d 1243, 1246 (D.C. Cir. 1994) ("Exxel/Atmos

I")).

Applying this highly deferential standard of review, we

uphold the bulk of the Board's unfair labor practice findings.

Petitioner raises questions about several of the ALJ's conclusions, and presents evidence that could well justify contrary

conclusions by a finder of fact. Nonetheless, the Board's

unfair labor practice findings are supported by substantial

evidence in the record, which is all that the law requires.

The NLRB's only findings which are notably deficient are

those related to the alleged "sham" sales of catering trucks

and routes discussed below.

III. "Sham" Sales & Reestablishment Order

Petitioner DFC specifically objects to the NLRB's finding

that all of its sales of hot trucks and catering routes were

"sham" sales motivated by an intent to prevent DFC unionization. DFC also challenges the restoration order issued by

the NLRB to redress this alleged unfair labor practice.

While anti-union animus may well have motivated the decision

to sell the hot trucks and routes, there is not substantial

evidence to support the NLRB's conclusion that the sales

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 9 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

were "sham" transactions. The Board's findings are incomplete and there is inadequate attention to aspects of the sales

which cast doubt on the "sham" characterization. Even were

the NLRB's findings adequate in this regard, we have grave

doubts that the restoration order could be upheld. We have

no doubt, however, that this portion of the Board's remedy

cannot be justified on the current record and must be vacated.

This Court generally defers to the factual findings of the

NLRB, as discussed above. See supra Part II. However,

this Court does not "merely rubber-stamp NLRB decisions,"

Avecor, 931 F.2d at 928, as we must "consider not only the

evidence supporting the Board's decision but also 'whatever

in the record fairly detracts from its weight,' " Schaeff, Inc. v.

NLRB, 113 F.3d 264, 266 (D.C. Cir. 1997) (quoting Universal

Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)). Where

the NLRB adopts a conclusion that is without support in the

record, or which conflicts with the record "considered as a

whole," we may reverse. See 29 U.S.C. s 160(e) (Board

conclusions of fact are conclusive if "supported by substantial

evidence on the record considered as a whole").

DFC sold all of the hot trucks and routes between October

1996 and March 1997. Douglas Foods, 330 NLRB No. 124,

slip op. at 16. Although neither the ALJ nor the Board

catalogs all of the sales, the ALJ's decision reports that all of

the trucks were initially sold to former DFC employees or

supervisors. All of the truck drivers and cooks employed on

the trucks at the time of the sales, save for Debra Beck, were

hired by the truck purchasers. Id. The timing of the sales,

DFC management's anti-union sentiments, and "the nature of

the transactions themselves" led the ALJ to conclude that all

of the sales "were not arms-length transactions and were

'shams' motivated in large part by DFC's desire to thwart the

Union's efforts to overturn the results of the August 1996

election and obtain a bargaining order from the NLRB." Id.

On this basis the ALJ ordered DFC to reacquire the sold

trucks and routes, and reinstate those employees who were

terminated from DFC as a result of the sales. Reacquisition

would not be difficult, the ALJ reasoned, because it would

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 10 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

only require "paper transactions." Id. at 25. The Board

adopted this conclusion without comment.

Reviewing the "sham" sale determinations is difficult, as an

initial matter, due to the ALJ's incomplete treatment of the

subject. The ALJ discusses several of the truck and route

sales at length. Others, the ALJ does not discuss at all.

According to the ALJ, DFC had twelve hot trucks and routes,

and sold all of them as part of "one plan to eliminate the

bargaining unit." Id. at 18. Yet the ALJ does not identify

the basis for this conclusion with respect to all of the truck

sales, leaving us to wonder what it was about "the nature of

the transactions themselves" that led the ALJ to its conclusion that all of the sales were "sham transactions."

The incomplete analysis is significant because, despite their

similarities, the sales were not identical, cookie-cutter transactions. Different trucks and routes were sold on different

terms. As with lease operators, different purchasers paid

different monthly installments. While most purchasers

signed supply agreements with DFC, Sheila Thomas did not,

id. at 18 & n.37, and Merollis was also released from the

supply agreement covering the three trucks she purchased as

well, id. at 18. With further respect to Merollis the ALJ

found and the Board affirmed that she "has her own workers

compensation insurance, product liability insurance, accountant, tax identification number, and other indicia of independence from DFC." Without further reasoning or explanation,

the ALJ proceeded to conclude, and the Board to affirm,

"that the totality of the record indicates that the sale to her

was a sham transaction motivated in large part by DFC's

desire to thwart the Union." Id. We are not required to

rubberstamp a conclusory reference to "totality of the record"

without some further expressed reasoning or other record

support for the otherwise inexplicable conclusion. See Peoples Gas Sys., Inc. v. NLRB, 629 F.2d 35, 42 (D.C. Cir. 1980).

The present case is easily distinguishable from prior instances in which we have upheld NLRB findings of "sham"

transactions motivated by anti-union animus. In Fugazy

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 11 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Continental Corp. v. NLRB, 725 F.2d 1416 (D.C. Cir. 1984)

and O'Dovero v. NLRB, 193 F.3d 532 (D.C. Cir. 1999), we

affirmed NLRB findings of "sham transactions" motivated by

anti-union animus. In each of these cases, the transactions

occurred between the employer and an "alter-ego" that allowed the "disguised continuance" of the employer's operations. Fugazy, 725 F.2d at 1419. Such a finding of "alterego" status can be based upon "substantial identity of management, business purpose, operation, equipment, customers,

supervision and ownership between the old entity and its

successor." Fugazy, 725 F.2d at 1419. While "common

ownership is not an absolute prerequisite to a finding of alter

ego status," id. at 1420, it weighs heavily in the alter ego

determination. In O'Dovero, for example, the employer controlled two companies and closed one to prevent unionization,

while shifting its business to the other.

Neither the ALJ nor the Board found that the trucks and

routes were purchased by an "alter ego" of DFC. On the

present record, such a finding could not be sustained. Several factors point strongly against such a finding. In both

Fugazy and O'Dovero, there was little evident purpose to the

transaction other than to rid the employer of pro-union

employees without altering the employer's underlying business. Here, however, DFC's employees retained their jobs--

albeit with different employers--and DFC altered the nature

of its business, eliminating "retail" functions.

While it is likely that the lack of a record-supported alterego finding would alone render the NLRB's restoration order

reversible, the Board's failure to consider the feasibility and

impact of the remedial order makes it certain. While the

ALJ and NLRB are convinced that the truck and route sales

were no more than paper transactions, a review of the

transactional documents makes clear that ownership and

control of the trucks changed hands. The ALJ notes that

"[o]ne must assume that the purchasers received something

of value in exchange for [their] weekly payments." Douglas

Foods, 330 NLRB No. 124, slip op. at 25. Precisely. It is

called "title." Whatever the motivation for the sales, it is

uncontestable that title has passed to new owners for at least

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 12 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

some of the sold trucks. This alone suggests the sales, or at

least some of them, were not "sham transactions." Cf. Naperville Ready Mix, Inc. v. NLRB, 242 F.3d 744, 753 (7th Cir.

2001) (noting Board did not invoke "sham transaction" doctrine where legal transfer of title was undisputed). It is also

sufficient to require remand of the restoration order.

Neither the ALJ nor the NLRB ever considered whether

reacquisition of the sold trucks and routes is factually possible, nor whether an order for their reacquisition is within the

legal authority of the Board--a proposition which we frankly

doubt. The NLRB's casual treatment of the implications of

its order is startling. Even if the truck sales were motivated

by anti-union animus, title passed to the truck purchasers,

many of whom were among the employees the Board is

purporting to protect. Be that as it may, we return to the

more fundamental question of the Board's lawful authority to

enter the remedy at all.

When the NLRB orders an employee to be reinstated, its

order typically requires that the company offer reinstatement,

as DFC is required to do here for those employees laid off as

a result of the sales. This is the limit of the NLRB's

equitable power--it may order the employer to reinstate a

former employee, but it cannot order the employee to take

back the position and return to work. It seems that the

analogous result here would be for the NLRB at most to

order DFC to offer to repurchase trucks and routes, not to

require restoration of the status quo ante. Here, the NLRB

ordered DFC to "restore and resume [its] hot truck catering

operations as they existed prior to October 1, 1996" within

fourteen days of the order, Douglas Foods, 330 NLRB No.

124, slip op. at 6, without any explanation of its authority to

enter such order or DFC's ability to carry it out.

In its brief, the NLRB argues for the first time that the

contracts contained boiler-plate language excusing either party from obligations due to intervening circumstances, such as

actions or proceedings against one of the parties or the

enactment of regulation. Brief for the NLRB at 58. We do

not consider this argument as it was not relied upon by the

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 13 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Board or ALJ. "We cannot sustain agency action on grounds

other than those adopted by the agency in the administrative

proceedings." MacMillan Publ'g Co. v. NLRB, 194 F.3d 165,

168 (D.C. Cir. 1999). Even were this language referred to in

either the ALJ or NLRB opinion, it would seem insufficient

to allow for the forced sale of trucks and routes to DFC.

Even in its brief, the NLRB cites no authority for this

proposition.

The NLRB portrays this part of its order as a run-of-themill requirement that the employer undo the effects of discriminatorily motivated changes. Yet the NLRB cites no

case in which similar relief was ordered in similar circumstances. In O'Dovero, there was no dispute that the closed

business was never formally dissolved and "could resume a

project 'tomorrow' if it so chose." 193 F.3d at 537. As this

Court concluded, "the Board's order require[d] no more than

a return to the status quo ante with respect to 'work assignment decisions.' " Id. at 539 (citation omitted). This is

hardly analogous to the forced repurchase of independently

owned assets. With the exception of Beck, all of DFC's

former drivers and cooks are now either truck owneroperators or their employees, Douglas Foods, 330 NLRB No.

124, slip op. at 16, and the NLRB has substantial authority to

address DFC's unfair labor practices through more traditional forms of relief. For these reasons, we vacate the Board's

finding that the truck and route sales were "sham" transactions along with the Board's restoration order.

IV. Relief for Beck and Benkert

Petitioner specifically challenges the award of relief to

Beck and Benkert due to their alleged dishonesty during the

unfair labor practice proceedings. In his decision, the ALJ

found that some of Beck and Benkert's testimony was inaccurate and "suspicious." See id. at 13 n.23, 21 n.41. Due to

these findings, DFC maintains that Beck and Benkert should

not be entitled to any relief, let alone reinstatement and

backpay. While we share DFC's concern that NLRB proceedings not be tainted with false or misleading testimony, we

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 14 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

find no basis for vacating the Board-ordered remedies on this

account.

As in ABF Freight Sys., Inc. v. NLRB, the issue presented

by DFC's petition "is not whether the Board might" bar relief

to employees who offer false testimony, "but whether it must

do so." 510 U.S. 317, 323 (1994). In ABF, the Supreme

Court answered in the negative. While the Board may be

under an obligation to consider the veracity of witnesses in an

unfair labor practice proceeding, it is under no obligation to

foreclose relief to all those who offer inaccurate testimony or

otherwise compromise the integrity of Board proceedings.

Whether to penalize a party for such misconduct, rather than

defer to other potential civil and criminal remedies, is a

matter committed to the Board's "broad discretion." Id. at

325. Therefore, this portion of DFC's petition for review is

denied.

V. Bargaining Order

The NLRB concurred with the ALJ that a bargaining

order was "appropriate and necessary" to remedy the severe

unfair labor practices committed by DFC. Douglas Foods,

330 NLRB No. 124, slip op. at 3. This Court generally gives

the NLRB a wide berth in determining whether given actions

constitute unfair labor practices or are severe enough to

constitute "hallmark violations" of the Act that would justify

such an order. However, "a bargaining order is not a snakeoil cure for whatever ails the workplace; it is an 'extreme

remedy.' " Avecor, 931 F.2d at 938-39 (citation omitted).

This Court does not--indeed cannot--excuse the Board's

failure to fulfill its legal requirements to consider certain

elements and provide a reasoned explanation for its decision.

See, e.g., Peoples Gas, 629 F.2d at 45. Where the Board fails

to discharge its obligation to consider the proper factors and

provide a reasoned explanation, this Court has no choice but

to remand to the Board for further proceedings, if not simply

invalidate the offending portions of the Board's order. Such

is the case here.

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 15 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Before entering this extreme remedy, the NLRB must

carefully weigh several factors. Specifically,

an affirmative bargaining order ... must be justified by

a reasoned analysis that includes an explicit balancing of

three considerations: (1) the employees' s 7 rights; (2)

whether other purposes of the Act override the rights of

employees to choose their bargaining representatives;

and (3) whether alternative remedies are adequate to

remedy the violations of the Act.

Vincent Indus. Plastics, Inc. v. NLRB, 209 F.3d 727, 738

(D.C. Cir. 2000). Failure to conduct this analysis provides

sufficient grounds to vacate and remand a bargaining order,

regardless of whether substantial evidence supports the

NLRB's conclusions that DFC engaged in "hallmark" unfair

labor practices and a majority of DFC employees indicated

their support of the Union by signing union authorization

cards.

While the NLRB devotes the lion's share of its opinion to

defending the bargaining order, it still fails to conduct the

necessary analysis. Of the three factors the Board must

consider, the Board and ALJ devote a reasonable amount of

space to the third, and some implicit consideration of the

second. The Board provides little else of substance. It

mentions the first factor--whether the bargaining order impinges upon the employees' s 7 rights--and claims to consider it, but nothing resembling consideration follows. Cf. Avecor, 931 F.2d at 938 (a "promising topic sentence" without

more does not constitute reasoned explanation).

In the place of analysis, the NLRB substitutes extensive

quotation from NLRB v. Gissel Packing Co., 395 U.S. 575

(1969). Douglas Foods, 330 NLRB No. 124, slip op. at 3

(quoting Gissel, 395 U.S. at 612-13). Rather than follow this

Court's repeated guidance on the proper analysis, the Board

majority merely asserts that consideration of employees' s 7

rights is inherent in any Gissel-inspired analysis. Id. ("In

sum, the Gissel opinion itself reflects a careful balancing of

the employees' Section 7 rights 'to bargain collectively' and 'to

refrain from' such activity."). This cannot do. The NLRB

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 16 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

cannot discharge its obligation merely by citing the appropriate authority and averring that it gave proper consideration.

It actually must consider the factors as they apply to the

instant case, and explain the basis for its conclusions. In the

instant case the Board may have devoted greater effort to

satisfying this Court's demand for a reasoned explanation

than in prior decisions, but it has yet to clear the bar--it is

not even close.

The Board further errs by failing to account for the

changes at DFC following the 1996 union election. By the

time of the NLRB proceedings, DFC no longer maintained

"retail" operations, and fewer than five of the employees

listed on the voting list for the union election in 1996 were

still in DFC's employ. Some of this turnover was no doubt

due to the truck and route sales. Some also resulted from

other factors unrelated to DFC's unfair labor practices. As

things stand now, we question whether DFC has a labor force

that would allow for the reasonable imposition of such an

order, and the Board's order provides us with no answer.

The law is clear that the Board is not free to disregard

employee turnover when issuing a bargaining order "unless it

finds that the employer's practices are particularly flagrant."

Avecor, 931 F.2d at 937. The alleged abuses must be far

more drastic than those merely required to justify a bargaining order in the first place--so-called "category I" abuses as

opposed to "category II" abuses. In cases, such as this,

where only category II abuses are found, "the Board must

carefully consider employee turnover." Id. (emphasis added).

The mere assertion that DFC should not profit from its own

unfair labor practices does not amount to consideration of

employee turnover, let alone "careful consideration."

The NLRB attempts to justify its failure to consider the

changed circumstances on the grounds that many of the

changes resulted from the unfair labor practices at issue in

this case. The NLRB opposes taking such changes into

account because an employer should not be able to rely upon

unlawful, anti-union acts to defeat a bargaining order.

NLRB v. Gordon, 792 F.2d 29, 34 (2nd Cir. 1986) ("It would

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 17 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

defy reason to permit an employer to deflect a Gissel bargaining order on the ground of employee turnover when that

turnover has resulted from the employer's unlawful discharge[s]"). Be this as it may, the NLRB was required to

consider changed circumstances no matter what their cause.

As Gissel instructs, "effectuating ascertainable employee free

choice [is] as important a goal as deterring employer misbehavior." Gissel, 395 U.S. at 614. Moreover, in selecting a

remedy for NLRA violations, the NLRB must select "a

course that is remedial rather than punitive, and [choose] a

remedy which can fairly be said to effectuate the purposes of

the Act." Caterair Int'l v. NLRB, 22 F.3d 1114, 1120 (D.C.

Cir. 1994) (quoting Peoples Gas, 629 F.2d at 42). The Board

cannot allow its desire to stop a company from profiting from

an unfair labor practice to eclipse a concern for effectuating

employees' right to choose their representation.

In remanding the NLRB's decision to impose a bargaining

order, we cannot help but feel a sense of dEjA vu.

The Board, inexplicably, has once again defied the law of

this circuit and failed to offer an adequate justification

for the bargaining order sanction imposed against [DFC].

We therefore find ourselves in the all-too-familiar position of having to remand this case to the Board for

adequate justification of the proposed affirmative bargaining order, thus further delaying relief for the employees the Board purports to protect.

Vincent Indus. Plastics, 209 F.3d at 731. On no fewer than

seven occasions in the past seven years alone we have remanded inadequately justified bargaining orders. Id.; Flamingo Hilton-Laughlin v. NLRB, 148 F.3d 1166 (D.C. Cir.

1998); Exxel/Atmos, Inc. v. NLRB, 147 F.3d 972 (D.C. Cir.

1998) ("Exxel/Atmos II"); Lee Lumber & Building Material

Corp. v. NLRB, 117 F.3d 1454 (D.C. Cir. 1997) (per curiam);

Skyline Distrib. v. NLRB, 99 F.3d 403 (D.C. Cir. 1996);

Charlotte Ampitheater Corp. v. NLRB, 82 F.3d 1074 (D.C.

Cir. 1996); Exxel/Atmos I, 28 F.3d at 1243. "Eight is

enough." Exxel/Atmos II, 147 F.3d at 979 (Sentelle, J., concurring). See also Caterair, 22 F.3d at 1123 ("Five times in

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 18 of 19
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

the past fourteen years this court has remanded such orders

to the Board with a request for explanation as to why....

This case makes it an even half-dozen. We must assume the

Board will deign to provide the necessary explanation at some

point in order to obtain enforcement.").

Time and again this Court has been required to overturn

NLRB orders that violate the explicit requirements of our

precedent. "Case law in our circuit is as clear as it could be

on this question. The Board, however, continues to ignore

us. We continue to reverse." Lee Lumber, 117 F.3d at 1462.

"We persist not out of pique but from a sense that it is our

duty to ensure that the Board adheres to its statutory

mandate." Caterair, 22 F.3d at 1123. The Board's consistent refusal to fulfill its legal obligation to provide sufficient

justification for its bargaining orders will not prevent us from

fulfilling our obligation to apply the law. So long as the

Board persists on its current course we have no choice but to

remand each offending order. "We reiterate [this] sentiment

here, hopefully for the final time." Exxel/Atmos I, 28 F.3d at

1249.

VI. Conclusion

For the reasons above, we grant the petition for review in

part, and deny in part. We vacate the Board's conclusion

that DFC committed unfair labor practices by selling catering

trucks and routes. We also vacate the accompanying restoration order and bargaining order, and remand to the Board for

further proceedings not inconsistent with this opinion. With

respect to all other issues, including those not discussed

expressly herein, the petition for review is denied and the

cross-petition for enforcement is granted.

USCA Case #00-1241 Document #602701 Filed: 06/12/2001 Page 19 of 19