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Parties Involved:
National Labor Relations Board
Respondent
United Services Automobile Association
Petitioner

Document Text:

Notice: This opinion is subject to formal revision before publication in the

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 4, 2004 Decided November 9, 2004

No. 03-1371

UNITED SERVICES AUTOMOBILE ASSOCIATION,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with

No. 04-1001

On Petition for Review and Cross–Application

for Enforcement of an Order of the

National Labor Relations Board

Andrew M. Kramer argued the cause for petitioner. With

him on the briefs was Michael D. Malfitano.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Joan E. Hoyte, Attorney, National Labor Relations Board,

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

Arthur F. Rosenfeld, General Counsel, John H. Ferguson,

Associate General Counsel, and Aileen A. Armstrong, Deputy

Associate General Counsel. Charles P. Donnelly, Supervisory Attorney, entered an appearance.

Before: ROGERS, TATEL and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: When an employee anonymously

distributed fliers after working hours expressing coworkers’

concerns about the company’s layoffs of long-term employees,

the company interrogated her about who was involved. Fearing retaliation, she was evasive in her responses. When she

later admitted to the general manager of the company that

she had distributed the fliers, she was discharged for lying

during the interrogation. The National Labor Relations

Board ruled that the company violated section 8(a)(1) of the

National Labor Relations Act (‘‘the Act’’), 29 U.S.C.

§ 158(a)(1) (2000), by interrogating the employee about concerted activity protected under section 7 of the Act, id. § 157,

and by terminating the employee for engaging in such activity. The company contends on appeal that the employee’s

concerted activity was not protected under section 7 because

it violated the company’s valid workplace rules, and that even

if the activity was protected, the company did not violate

section 8(a)(1) because it had legitimate business reasons for

questioning the employee about her hours and work. Further, the company contends that it properly discharged the

employee for lying, irrespective of her concerted activity.

We deny the petition for review. The company fails to

show that the Board erred in finding that the workplace rules

were invalid because overly broad or not clearly disseminated

to employees. The company also fails to show that the Board

erred in finding, without relying on the Bourne factors,1

 that

the interrogation was coercive in view of the company’s

admissions and the questions asked. Finally, the company

fails to show that the Board erred in not engaging in the

1 Bourne v. NLRB, 332 F.2d 47 (2d Cir. 1964).

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Wright Line analysis2

 when the evidence showed that the

employee was discharged for a single unlawful purpose. Accordingly, we grant the Board’s cross-application for enforcement of its order.

I.

The United Services Automobile Association, a non-union

business, provides insurance and financial services to the

military community. Headquartered in Texas, the company

has a regional office in Tampa, Florida, consisting of a sixstory gated compound with security guards and cameras

monitoring the entrance. The company employs approximately 1600 employees who work various shifts, normally

between 7:30 a.m. and 6:30 p.m. Because many employees

keep claimants’ confidential information on their desks, it is

common knowledge that employees may not look through the

work files on each other’s desks unless they have a business

need to do so. The company’s employee handbook, issued

March 2001, contained a ‘‘Workplace Solicitation’’ policy that

stated: ‘‘Advertising or distributing any non-[company] printed information including fliers, business cards, brochures, or

catalogs is not permitted at any time in the work area and

only during non-working hours in non-work areas.’’

On July 31, 2001, Loretta Williams, an insurance adjuster

at the company, anonymously distributed approximately 1300

fliers throughout the building between 8 p.m. and 11 p.m.

after normal working hours. This followed several weeks of

discussion with her coworkers regarding their dissatisfaction

with the manner in which the company was laying off longterm employees pursuant to a reorganization plan. The fliers

criticized the company’s layoffs and requested employees

wear a red ribbon in support of their former colleagues.

Williams placed the fliers on employees’ desks, at the ends of

hallways, and in employees’ mailboxes. The following day,

August 1, the Senior Vice President and General Manager of

2 Wright Line, 251 N.L.R.B. 1083 (1980), enforced, 662 F.2d 899

(1st Cir. 1981).

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the company, General Thomas V. Draude, sent an email to

the managers instructing them not to remove the fliers, to let

employees ‘‘grieve’’ the loss of laid-off employees, and to

advise employees that distributing non-company printed information in the workplace violated the no-solicitation policy.

The following week, on August 6, General Draude left a voicemail message for all employees explaining that managers had

begun to collect the fliers because of the no-solicitation policy.

On August 9, Williams’s supervisor, Eileen Hale, asked

Williams to accompany her to the personnel office. There

Williams was introduced to Sheila Christy–Martin, the director of the human resources advisory team, who proceeded

to question Williams for the next hour about safety, overtime,

and a possible breach of security with regard to distribution

of the fliers. Christy–Martin told Williams that she had been

clocked leaving the building at 11 p.m. and asked if she had

been working during that time. Williams responded that she

had been working on her files. When asked if she had seen

anything unusual, Williams said no and that even if she had

she would not say because she was afraid of retaliation.

Upon further interrogation, Williams became upset and said

that she was very uncomfortable with the line of questioning

and did not think the questioning was valid. She also said

that she did not want to answer any questions about the fliers

because she thought she needed an attorney. Christy–Martin then told Williams that the company’s only concern was

that the distribution violated the company’s no-solicitation

policy, and that Williams had been seen on the security

camera entering the building at 7 p.m carrying a large box.

When asked about the contents of the box, which held the

fliers, Williams said it contained ‘‘papers.’’ Williams then

stated that she did not want to answer any more questions,

and she refused to give Hale her July 31 overtime hours as

she had repeatedly explained during the interrogation that

she was not claiming overtime.

Six days later, Williams told General Draude that she was

responsible for distributing the fliers. Although Williams

explained that she was purposefully evasive during the interrogation due to fear of retaliation, General Draude fired her,

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effective immediately, for lying during the interrogation.

Williams subsequently received a check for the overtime on

July 31 that she did not claim. In November 2001, the

company modified its no-solicitation policy, replacing the

words ‘‘working hours’’ with ‘‘working time.’’

The Board, adopting the findings and conclusions of the

Administrative Law Judge (‘‘ALJ’’), concluded that the company violated section 8(a)(1) of the Act by unlawfully interrogating Williams and another employee, Andrew Snyder, regarding concerted activity that was protected under section 7,

and by unlawfully discharging Williams for engaging in that

activity. The Board also found that the company had maintained an unlawful no-solicitation policy that was overly

broad. The Board ordered the company to, among other

things, rescind the policy and to offer Williams full reinstatement. The company petitioned for review, and the Board

filed a cross-application for enforcement of its order.

II.

An employer violates section 8(a)(1) of the Act by coercively interrogating an employee about concerted activity that is

protected under section 7 of the Act. See Perdue Farms,

Inc. v. NLRB, 144 F.3d 830, 835 (D.C. Cir. 1998); Turnbull

Cone Baking Co. v. NLRB, 778 F.2d 292, 296 (6th Cir. 1985),

cert. denied, 476 U.S. 1159 (1986). In deciding whether an

interrogation violates section 8(a)(1), the Board must make

three determinations. First, the Board must determine

whether the employee engaged in concerted activity protected

under section 7 of the Act. Because such a determination

‘‘implicates [the Board’s] expertise in labor relations, a reasonable construction by the Board is entitled to considerable

deference’’ by this court. NLRB v. City Disposal Sys. Inc,

465 U.S. 822, 829 (1984). Second, the Board must determine

whether, ‘‘under all the circumstances,’’ the employer’s interrogation ‘‘reasonably ‘tends to restrain, coerce, or interfere

with rights guaranteed by the Act.’ ’’ Perdue Farms, 144

F.3d at 835 (quoting Rossmore House, 269 N.L.R.B. 1176,

1177 (1984), aff’d sub nom. Hotel Employees & Rest. EmployUSCA Case #03-1371 Document #858763 Filed: 11/09/2004 Page 5 of 13
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ees Union, Local 11 v. NLRB, 760 F.2d 1006 (9th Cir. 1985)).

To reach that conclusion, the Board need not find that the

employer’s ‘‘language or acts were coercive in actual fact,’’

Medeco Sec. Locks, Inc. v. NLRB, 142 F.3d 733, 745 (4th Cir.

1998), but only that it had a ‘‘tendency to coerce’’ employees.

Avecor, Inc. v. NLRB, 931 F.2d 924, 932 (D.C. Cir. 1991);

accord Teamsters Local Union No. 171 v. NLRB, 863 F.2d

946, 954 (D.C. Cir. 1988). Third, the Board must determine

whether the employee’s interests in exercising section 7

rights are outweighed by the employer’s ‘‘substantial and

legitimate business justification[s]’’ for interfering with those

rights. Medeco, 142 F.3d at 745. Because Congress has

vested the Board, and not the courts, with the primary

responsibility ‘‘to strike the proper balance between the asserted business justifications and the invasion of employee

rights in light of the Act and its policy,’’ NLRB v. Fleetwood

Trailer Co., 389 U.S. 375, 378 (1967) (quoting NLRB v. Great

Dane Trailers, 388 U.S. 26, 33–34 (1967)), the court will deny

a petition for review if the Board’s balancing is rational and

consistent with the Act. See Beth Israel Hosp. v. NLRB, 437

U.S. 483, 504 (1978).

The Board’s factual findings, if supported by substantial

evidence in the record as a whole, are conclusive even if a

reviewing court on de novo review would reach a different

result. Universal Camera Corp. v. NLRB, 340 U.S. 474, 487–

88 (1951); Perdue Farms, 144 F.3d at 834–35. The court will

uphold the Board’s adoption of an ALJ’s credibility determinations unless ‘‘those determinations are ‘hopelessly incredible,’ ‘self-contradictory,’ or ‘patently unsupportable.’ ’’ Cadbury Beverages, Inc. v. NLRB, 160 F.3d 24, 28 (D.C. Cir.

1998) (quoting Capital Cleaning Contractors, Inc. v. NLRB,

147 F.3d 999, 1004 (D.C. Cir. 1998); and Elastic Stop Nut

Div. of Harvard Indus., Inc. v. NLRB, 921 F.2d 1275, 1281

(D.C. Cir. 1990)).

As the Board states in its brief, ‘‘all the factors of a classic

independent Section 8(a)(1) unlawful interrogation are present in this case.’’ Resp’t’s Br. at 30. Although the company

admits in its reply brief that Williams engaged in concerted

activity when she distributed the fliers, the company contends

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that such activity was unprotected by the Act. General

Draude’s August 1 email instructed the managers to let the

employees ‘‘grieve,’’ implicitly referencing employees’ concerns about the layoffs. The director of human resources

Christy–Martin nevertheless interrogated Williams about her

after-hours activities on July 31 because the company suspected she was responsible for distributing the fliers addressing the layoffs and wanted to know who else was involved.

We are unpersuaded the interrogation was lawful because

Williams lost the protection afforded by the Act when she

distributed the fliers in violation of valid workplace rules.

A.

The Board’s finding that Williams’s anonymous distribution

of the fliers was concerted activity protected under section 7

of the Act3

 is supported by substantial evidence in the record.

The fliers urged employees to show support for laid-off

colleagues and criticized management’s selection of employees

for layoff. As this court has recognized, concerted activity

includes ‘‘circumstances where individual employees seek to

initiate or to induce or to prepare for group action.’’ Meyers

Indus., 281 N.L.R.B. 882, 887 (1986). Similarly, ‘‘an individual who brings a group complaint to the attention of management is engaged in concerted activity.’’ Prill v. NLRB, 755

F.2d 941, 954 (D.C. Cir. 1985).

The company’s contention that Williams’s concerted activity

was unprotected under section 7 because it violated the

company’s no-solicitation policy is unavailing. It is long

settled that a rule prohibiting employee solicitation and distribution of materials during non-work time and in non-work

3 Section 7 of the Act provides that ‘‘[e]mployees shall have the

right to TTT engage in TTT concerted activities for the purpose of

collective bargaining or other mutual aid or protection.’’ 29 U.S.C.

§ 157. Section 8(a)(1) of the Act enforces section 7 rights by

making it an unfair labor practice for an employer ‘‘to interfere

with, restrain, or coerce employees in the exercise of [those] rights’’

Id. § 158(a)(1); see Am. Postal Workers Union v. NLRB, 370 F.3d

25, 26–27 (D.C. Cir. 2004).

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areas is presumptively invalid ‘‘absent a showing by the

employer that a ban is necessary to maintain plant discipline

or production.’’ Eastex, Inc. v. NLRB, 437 U.S. 556, 571

(1978) (citing Republic Aviation Corp. v. NLRB, 324 U.S. 793,

798–99 (1945)); Rest. Corp. of Am. v. NLRB, 827 F.2d 799,

806 (D.C. Cir. 1987). The company’s employee handbook of

March 2001 contains a written policy prohibiting solicitation

and distribution of non-company materials ‘‘at any time in the

work area and only during non-working hours in non-work

areas.’’ Under Board precedent, a no-distribution rule using

the term ‘‘working hours’’ (as opposed to ‘‘working time’’) is

presumptively invalid. Our Way, Inc., 268 N.L.R.B. 394

(1983). As interpreted and explained by General Draude in

his August 1 email to the managers, the policy prohibits

‘‘distributing non-[company] printed information in the workplace’’ (emphasis added) (internal quotation marks omitted)—

meaning in both work and non-work areas during work and

non-work time. One manager, David Huffman, sent excerpts

of that email to his employees, noting that the no-solicitation

policy banned distribution of non-company materials ‘‘in the

workplace.’’ General Draude’s company-wide voice mail of

August 6 likewise advised employees that managers picked up

the fliers ‘‘because the company’s non-solicitation policy says

you can’t distribute non-[company] material in the building’’

(emphasis added). Thus, there was substantial evidence from

which the Board could properly conclude that the policy, as

interpreted and communicated by the management to the

employees, is presumptively unlawful because it operates as a

blanket prohibition of employee solicitation and distribution of

non-company materials, even during non-work time, such as

during breaks and mealtimes, and in non-work areas, such as

in lunchrooms and lounge areas. See Mercury Marine–Div.

of Brunswick Corp., 282 N.L.R.B 794, 794–95 (1987).

Rather than offer evidence of special business circumstances related to production, efficiency, or discipline to justify the management’s interpretation of the no-solicitation policy, the company contends that the Board erred in finding the

entire policy invalid, as the written policy has a valid component restricting solicitation and distribution in ‘‘work areas.’’

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This contention defends the legality of the company’s written

policy, rather than the policy as explained to employees by

management. The Board correctly noted that the company

did not except to the ALJ’s failure to rule expressly on the

legality of the written policy in the March 2001 handbook, and

hence that issue was not before it. While the company may

nevertheless rebut the presumptive invalidity of its policy by

showing that it applied or communicated the policy ‘‘in such a

way as to convey an intent to permit solicitation during

nonworking time,’’ Our Way, Inc., 268 N.L.R.B. at 411, or in

non-work areas, General Draude’s email and voice mail, as

well as Huffman’s email excerpting General Draude’s email,

make clear that the ban is not limited to work areas. The

existence of a revised written policy does not moot the

Board’s remedial order directing the company to rescind its

unlawful policy. Although the Board noted that the company

admitted in its brief to the Board that its written policy in the

March 2001 handbook ‘‘may have been overly broad,’’ by

challenging the Board’s decision, the company has failed to

show that it has repudiated its former policy, much less

assured employees that it will not apply the policy in the

future to interfere with their protected rights. See Ark Las

Vegas Rest. Corp. v. NLRB, 334 F.3d 99, 108 (D.C. Cir. 2003).

The company’s contention that Williams’s activity lost section 7 protection because it violated the company’s unwritten

no-access policy also fails. The Board found that the company had not shown that its no-access policy was ‘‘clearly

disseminated’’ to employees, and its finding is supported by

substantial evidence in the record. Id. at 109 (quoting Tri–

County Med. Ctr., Inc., 222 N.L.R.B. 1089, 1089 (1976)). The

ALJ dismissed the company’s evidence that its supervisors

had met with and notified employees about restrictions on

building access because the only supervisor at the hearing,

Hale, could not explain how or when this policy had been

disseminated to employees. The ALJ credited Williams’s

testimony, and that of another employee, Valerie Toloday,

that they had previously accessed the work areas of other

employees to distribute non-company materials and had never

been questioned. Other evidence indicated that employees

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routinely accessed each other’s desks, break rooms, and

restrooms throughout the building, distributing invitations,

magazine articles, Avon catalogs, and the like. To overcome

this damaging evidence, the company takes out of context

Williams’s testimony that she understood she was not to rifle

through confidential matters on other employees’ desks,

which the company makes no claim she did. In sum, the

Board properly found that the company failed to demonstrate

that the no-access policy had been clearly disseminated to

employees or enforced by the company.

B.

Because the company interrogated Williams to identify the

employees involved in section 7 concerted activity, the Board

reasonably concluded that the interrogation was unlawful.

Cf. TRW–United Greenfield Div. v. NLRB, 637 F.2d 410, 418

(5th Cir. 1981); NLRB v. Solboro Knitting Mills, Inc., 572

F.2d 936, 939–40 (2d Cir. 1978). The unlawful nature of the

interrogation is evidenced by General Draude’s testimony

that the company had already concluded that an employee

had written the fliers, and that Williams was the ‘‘strongest

candidate’’ for having distributed the fliers because the July

31 security records showed Williams entering the building

with a large box and leaving after authorized work hours.

General Draude admitted that Williams was questioned because the company wanted to know who else was involved in

distributing the fliers. Christy–Martin, the director of human resources who conducted the interrogation, testified

similarly that, because the fliers were in the work area, the

company wanted to know who had handed them out. There

is, then, substantial evidence in the record to support the

Board’s finding that the employees could reasonably believe

that the company had only one objective in questioning

Williams and the other employee:4

 to identify, with certainty,

4 Although the company may not have preserved its challenge

regarding Snyder because the company raises the issue only in a

footnote to its brief, see Hobson v. Wilson, 737 F.2d 1, 50 n.144

(D.C. Cir. 1984); cf. Cal. Dep’t of Water Res. v. FERC, 306 F.3d

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who had engaged in the protected concerted activity. See

Allegheny Ludlam Corp. v. NLRB, 104 F.3d 1354, 1359 (D.C.

Cir. 1997).

Contrary to the company’s contention, the Board did not

err by failing to apply the five-factor test set forth in Bourne

v. NLRB, 332 F.2d 47 (2d Cir. 1964), in evaluating whether

the interrogation of Williams was coercive. As the court has

stated, the ‘‘flexibility and deliberately broad focus of this test

make clear that the Bourne criteria are not prerequisites to a

finding of coercive questioning, but rather useful indicia that

serve as a starting point for assessing the ‘totality of the

circumstance.’ ’’ Perdue Farms, 144 F.3d at 835 (quoting

Timsco Inc. v. NLRB, 819 F.2d 1173, 1178 (D.C. Cir. 1987)).

Requiring the Board to address each of the Bourne factors

where the employer has admitted an unlawful motive for the

interrogation would transform a flexible tool for organizing

section 8(a)(1) analysis into a rigid hurdle divorced from its

purpose of ensuring that non-threatening interrogation is not

deemed an unfair labor practice. See Bourne, 332 F.2d at 48;

see also NLRB v. Milco, Inc., 388 F.2d 133, 137 (2d Cir.

1968).

The company’s admission of its unlawful motive for inquiring into its employees’ concerted activity belies its contention

that it interrogated Williams for legitimate business reasons.

See NLRB v. Hale Container Line, Inc., 943 F.2d 394, 401 &

n.50 (4th Cir. 1991) (citing L’Eggs Prod., Inc. v. NLRB, 619

F.2d 1337, 1343 (9th Cir. 1980)). The Board did not fail, as

the company contends, to strike an appropriate balance between the company’s asserted business justifications and its

1121, 1126 (D.C. Cir. 2002) (citing Carducci v. Regan, 714 F.2d 171,

177 (D.C. Cir. 1983)), we need not address that question. The

company states in its brief that it is challenging the Board’s finding

that it unlawfully interrogated Snyder on the same grounds as it

challenges the finding regarding Williams’s interrogation. Petitioner’s Br. at 39 n.9. Based on the reasoning underlying our disposition of the company’s challenge to the Board’s finding regarding

Williams, we affirm the Board’s finding that the company unlawfully

interrogated Snyder.

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interference with Williams’s exercise of her section 7 rights.

It found that the company’s justifications were pretextual,

and its finding is supported by substantial evidence in the

record. The ALJ discredited as ‘‘not believable’’ General

Draude’s testimony that concerns about building security and

overtime pay prompted the interrogation of Williams. The

Board reasonably came to the ‘‘inescapable’’ conclusion that

the security concern was pretextual ‘‘because, from [the company’s] own security records, the [company] already knew the

employees who were in the building that evening.’’ As for

overtime pay, the company cites federal regulations precluding an employer from accepting the benefits of an employee’s

work without paying for it, 29 C.F.R. §§ 785.11, 785.13 (2004),

but the regulations do not authorize an employer to coercively

interrogate an employee. Furthermore, the company fails to

show that it ever questioned another employee about failing

to claim overtime for remaining in the building after a shift,

or forced an employee over objection to claim overtime.

C.

The company’s contention that it could lawfully terminate

Williams for lying during the interrogation, even if her discharge was also motivated by retaliation against her for

distributing the fliers, is without merit. See Spartan Plastics, 269 N.L.R.B. 546, 552 (1984). There was substantial

evidence in the record to support the Board’s finding that

Williams had responded evasively during the interrogation

because she feared retaliation against her for engaging in

protected concerted activity. The Board was thus warranted

in concluding that Williams had no obligation to respond to

the questions in any particular manner and that her dishonesty about her protected concerted activity did not constitute a

lawful reason to discharge her. See id.; Jay Foods, Inc. v.

NLRB, 573 F.2d 438, 444 (7th Cir.), cert. denied, 439 U.S. 859

(1978). The cases on which the company relies—Aroostook

County Regional Ophthalmology Center v. NLRB, 81 F.3d

209 (D.C. Cir. 1996), and Earle Industries, Inc. v. NLRB, 75

F.3d 400 (8th Cir. 1996)—are inapplicable because they involved employees who violated their employers’ lawful poliUSCA Case #03-1371 Document #858763 Filed: 11/09/2004 Page 12 of 13
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cies. While the Eighth Circuit in Earle stated that the

Board’s ‘‘leeway’’ for misconduct connected to protected concerted activity was ‘‘too blunt an instrument when applied

without regard to the situation in which the misconduct took

place,’’ in that case the employee had engaged in ‘‘flagrant’’

misconduct, disrupting operations at the employer’s plant and

defying the personnel manager in front of a crowd of employees, in the course of asserting her section 7 rights. Id. at

405, 407; Spartan Plastics, 269 N.L.R.B. at 551. Here, by

contrast, Williams’s section 7 activity did not violate any

lawful company policy, and the company does not contend her

conduct was flagrant. Because there was substantial evidence in the record to show that the company had a single

unlawful motive for questioning Williams, the Wright Line

analysis is inapplicable. Felix Indus., 331 N.L.R.B. 144, 146

(2000), rev’d on other grounds, 251 F.3d 1051 (D.C. Cir. 2001).

Further, the Board reasonably rejected the company’s

contention that it would have discharged Williams even if she

had not distributed the fliers, because of its core value of

honesty. Although the company had previously terminated

employees for falsifying time and attendance records and for

petty theft, none of those employees were engaged in protected activity, and their outright dishonesty was not comparable

to Williams’s failure to volunteer information during an unlawful interrogation. The ALJ credited evidence, moreover,

that the company’s core value was malleable, including a

former manager’s testimony that the company had urged him

to turn a blind eye to charges of sexual harassment. The

ALJ therefore concluded that the company’s asserted business justifications for discharging Williams were pretextual.

As the Board explained, quoting Spartan Plastics, 269

N.L.R.B. at 552, ‘‘it can be no defense to [the company] to

recite a wrong [by Williams] in responding to an action of [the

company] which itself constituted a violation of law.’’

Accordingly, we deny the petition for review and grant the

Board’s cross-application for enforcement of its order.

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