2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-16-2001

Atlantic Limousine v. NLRB

Precedential or Non-Precedential:

Docket 99-5609

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Recommended Citation

"Atlantic Limousine v. NLRB" (2001). 2001 Decisions. Paper 50.

http://digitalcommons.law.villanova.edu/thirdcircuit_2001/50
Filed March 16, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

Nos. 99-5609 and 99-5725 

ATLANTIC LIMOUSINE, INC., 

 Petitioner No. 99-5609 

v. 

NATIONAL LABOR RELATIONS BOARD, 

 Respondent 

NATIONAL LABOR RELATIONS BOARD, 

 Petitioner No. 99-5725 

v. 

ATLANTIC LIMOUSINE, INC., 

 Respondent 

On Petition for Review of an Order of the 

National Labor Relations Board 

and 

Cross-Application for Enforcement 

(NLRB Docket Nos. 4-CA-21505, 4-CA-21552, 

4-CA-21697, and 4-CA-21740) 

Argued December 1, 2000 

Before: BECKER, Chief Judge, RENDELL, 

and MAGILL,* Circuit Judges 

(Opinion Filed: March 16, 2001) 

_________________________________________________________________ 

* Honorable Frank J. Magill, Senior Judge of the United States Court of 

Appeals for the Eighth Circuit, sitting by designation. 
 Angelo J. Genova, Esq. [ARGUED] 

 Brian O. Lipman, Esq. 

 GENOVA, BURNS & VERNOIA 

 354 Eisenhower Parkway 

 Plaza II, Suite 2575 

 Livingston, NJ 07039 

 Counsel for Atlantic Limousine 

 Jeffrey Horowitz, Esq. [ARGUED] 

 Aileen A. Armstrong, Esq. 

 Frederick C. Havard, Esq. 

 Margaret A. Gaines, Esq. 

 Fred B. Jacob, Esq. 

 National Labor Relations Board 

 1099 14th Street N.W. 

 Washington, DC 20570-0001 

 Counsel for NLRB 

OPINION OF THE COURT 

RENDELL, Circuit Judge. 

Atlantic Limousine, a limousine service providing services 

primarily to hotels and casinos in Atlantic City, New Jersey, 

has petitioned this court for review of the Or der of the 

National Labor Relations Board awarding backpay in the 

amount of $22,507.74 plus interest to V ictor Jenkins, and 

$17,296.73 plus interest to Henry Purcell, both of whom 

were limousine drivers for Atlantic. The Boar d has crossapplied for enforcement of the same order . 

Specifically, Atlantic challenges the amount of tips the 

Board determined the two had earned, arguing that: (1) 

federal tax policy requires that the amount of tips Purcell 

and Jenkins declared on their income tax r eturns for those 

periods be dispositive on the issue of their past income; and 

(2) there was a lack of substantial evidence in support of 

the Board's backpay award. In addition, Atlantic contends 

that Jenkins failed to mitigate his damages because he was 

unavailable for work during the seven months between his 

termination and his reinstatement. Because we find both 

that the Board's reliance on the evidence adduced was 

 2 
proper, and that there was substantial evidence to support 

the Board's findings regarding both backpay and 

mitigation, we will deny the petition for review and enforce 

the order of the Board. 

I. Procedural History 

On March 4, 1995, the Board found that Atlantic had

engaged in unfair labor practices in violation of 29 U.S.C. 

158(a)(3) and (4) of the National Labor Relations Act ("Act") 

by discharging four and suspending one of its employees 

for their union activities.1 Once the Board finds that an 

employer has committed an unfair labor practice, it has 

broad discretion under the Act to or der the wrongdoer "to 

take such affirmative action including r einstatement of 

employees with or without backpay, as will ef fectuate the 

policies of [the Act]." 29 U.S.C. S 160(c). The purpose of the 

backpay remedy is to "mak[e] the employees whole for 

losses suffered on account of an unfair labor practice," 

Nathanson v. NLRB, 344 U.S. 25, 27 (1953), by r estoring 

"the situation, as nearly as possible, to that which would 

have [been] obtained but for the illegal discrimination." 

Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941). 

On May 28, 1997, the Board filed a compliance 

specification outlining the amount of backpay that should 

be paid to the aggrieved employees under the Boar d's 

March 4, 1995 remedial order. Atlantic challenged the 

compliance specification, and a hearing was held before an 

Administrative Law Judge ("ALJ"). The ALJ upheld the 

backpay award, and the Board affir med its decision. We 

now review the Board's order. 

II. Background 

The standard formula the Board employs in arriving at a 

compliance specification is based on the ear nings of the 

claimant in a representative period prior to the backpay 

_________________________________________________________________ 

1. Although the proceeding before the Board involved five claimants, after 

the Board's decision, the parties enter ed into negotiations and three of 

those employees settled. This appeal, therefor e, only addresses the 

backpay awards for Purcell and Jenkins. 

 3 
period. The Board then applies the averages of those 

earnings to the backpay period. Atlantic does not challenge 

the formula used. Rather, it contends that the average 

weekly tip earnings used in the formula were incorrect 

because they exceeded the amounts reported on the 

employees' tax returns and were unsupported by the 

evidence. 

Atlantic's drivers can be tipped in a variety of ways. 

Certain corporate and business clients have a contractual 

relationship with Atlantic, and are billed for services with 

charges that include a preset gratuity for the driver, which 

is distributed in the next paycheck. These tips ar e referred 

to as "tips on the bill." The drivers can also receive tips in 

cash or they can be added to a payment by cr edit card. 

Because tips on the bill and credit car d tips are reflected in 

amounts transmitted directly to Atlantic, the only tip 

amounts disputed on appeal are the claimants' cash tips, 

since the drivers receive them directly fr om customers 

without receipts showing the amount given. 

Atlantic requires its drivers to submit weekly time sheets 

indicating the number of hours they worked and the 

specific runs they made. These sheets also have a space at 

the bottom for the drivers to record the amount of cash tips 

they received, though the General Manager for Atlantic, 

Leon Geiger, testified that most drivers do not provide any 

information regarding their cash tips on their time sheets. 

Atlantic processes the timesheets and generates weekly tip 

declarations reflecting credit car d tips, tips on the bill, and 

the cash tips reported on the time sheets. These tip 

declaration reports are then distributed to the drivers for 

their review and signature. The employees are instructed 

not to sign a tip declaration report if the tip amount 

indicated is incorrect. 

Jenkins and Purcell claimed that they ear ned more in 

tips than reported in payroll and tax documents. Jenkins 

testified that he earned approximately $450 per week in 

tips, while Purcell claimed to have ear ned anywhere from 

$300 to $480 per week. Both admitted they had not 

accurately reported these earnings to the Internal Revenue 

Service ("IRS"). Jenkins had reported annual tip income to 

the IRS that reflected an average of $158 per week during 

 4 
this time, and Purcell, $115. Jenkins also testified that he 

would submit only the carbon copy of the time sheet to 

Atlantic, omitting his cash tips, but that he would record 

his cash tips on the original copy in a column listed as 

"Added Tips." He submitted the original copy of the time 

sheet for the last week he had worked for Atlantic in order 

to demonstrate this practice. This original copy r eflected 

cash tip earnings of $430 for that week. That document 

was the only one submitted by Jenkins in support of his 

claim of higher tip levels. Purcell did not pr ovide any 

documentation. 

Jenkins also testified regarding his search for interim 

employment. He indicated that he searched for employment 

during the seven months he was unemployed by applying 

to two limousine companies approximately two weeks after 

he was terminated, answering newspaper ads for jobs at 

three casinos, and sending out many resumes. During

those seven months, he was caring for his mother , who was 

ill. He stated that because his mother was sick and he was 

her caretaker, he was only available for work in the evening 

hours, though he explained that his time restriction did not 

prevent him from being able to work full-time. He also 

emphasized that he searched for employment during the 

entire period in question. He posited that the reason he 

could not find another limousine job right away was

because he was "blackballed." 

Seeking to counter the testimony of Jenkins and Pur cell, 

Atlantic provided payroll recor ds for 1992 and 1993 

reflecting credit card tips, tips on the bill, and any cash tips 

declared by employees to Atlantic. Atlantic ur ged that these 

records, along with the tax retur ns filed by Jenkins and 

Purcell, should form the basis for deter mining its backpay 

liability. 

On February 26, 1998, the ALJ issued its Supplemental 

Decision awarding Jenkins and Purcell $360 and $325 per 

week in backpay, respectively, which wer e the amounts set 

forth in the Board's compliance specification. First, the ALJ 

ruled that claimants may assert tip income that had not 

been reported in their tax returns. While the ALJ 

recognized that both claimants had failed to r eport all of 

their tip earnings to the IRS, he found that an admission of 

 5 
underreporting tips to the IRS does not pr eclude such tips 

from being included in a backpay award. The ALJ also 

determined that "both the employees and the Respondent 

had offsetting interest [sic] in under reporting actual 

income." ALJ Dec. at 4. 

The ALJ stated its conclusion: "While the evidence is less 

than overwhelming, under these circumstances, I am not 

persuaded that the compliance figures for weekly tips of 

$360 for Jenkins and $325 for Purcell ar e unreasonable or 

inaccurate." Id. The ALJ further noted that "[t]he reported 

tips, relied upon by [Atlantic], clearly are not an accurate 

reflection of the actual tip income r eceived." Id. The ALJ 

also found the testimony of Jenkins and Purcell to be 

"believable." Id. Finally, the ALJ concluded that there was 

"a sound and reasonable basis for [awar ding] the figures set 

forth in the compliance specification," and that Atlantic had 

not offered convincing evidence that Jenkins and Purcell 

had earned less. Id. 

The ALJ next turned to the issue of the mitigation of 

damages, finding that Jenkins testified cr edibly that he 

began to search for work immediately after his termination. 

The ALJ found that despite the fact that Jenkins had no 

interim earnings, this lack of success did not indicate a 

"willful failure or an unreasonable search for employment." 

Id. In addition, the ALJ rejected Atlantic's contention that 

Jenkins was unavailable for work due to his need to care 

for his mother. 

On April 30, 1999, the Board issued its Supplemental 

Decision and Order affirming the ALJ's conclusion that "the 

gross backpay computations in the backpay specifications 

are the most accurate possible estimates of backpay and 

that [Atlantic] has failed to establish any r easonable 

alternative basis for a diminution of damages." Id. The 

Board agreed that "Victor Jenkins' lack of interim earnings 

for the backpay period of May 31, 1993, through January 

17, 1994, was not indicative of an unreasonable search for 

employment related to his care for his mother . . . . " Supp. 

Dec. at 1. It also held that the ALJ's analysis of the issue 

of whether or not to consider evidence of underr eported tips 

was in accord with Board precedent, and noted that the IRS 

would receive a copy of its decision. Id. at 2. One member 

 6 
of the three member panel dissented because he would not 

have allowed the discriminatees to claim income not

reported to the IRS, and because he believed that Jenkins 

did not make an adequate search for employment during 

the time period in question. 

III. Discussion 

We have appellate jurisdiction pursuant to 29 U.S.C. 

S 160 (e) and (f). The Board's findings of fact in a backpay 

proceeding will be upheld unless the recor d, considered as 

a whole, shows no substantial evidence to support those 

findings. 88 Transit Lines, Inc. v. NLRB , 55 F.3d 823, 825 

(3d Cir. 1995). "While we do not substitute our judgment 

for that of the Board, we may modify an or der to ensure 

that it effectuates the policies of the Act." Tubari Ltd., Inc. 

v. NLRB, 959 F.2d 451, 453 (3d Cir . 1992). With respect to 

legal questions, we exercise plenary review, although we 

give due deference to the Board's expertise in labor matters. 

88 Transit, 55 F.3d at 825. 

A. Backpay Determination 

Atlantic presented the Board with the income tax returns 

of Jenkins and Purcell, and urged that itfind those records 

to be conclusive as to the amount of tips ear ned by each of 

them, because to not do so would be to ignor e federal tax 

policy. The Board rejected this reasoning, and on appeal, 

Atlantic argues that this decision is err oneous. To support 

its argument, Atlantic relies on two Supr eme Court cases, 

our precedent, and its view of the policy implications of the 

Board's ruling.2 

_________________________________________________________________ 

2. By asserting that the discriminatees' testimony should have been 

rejected because their testimony was inconsistent with their sworn tax 

returns, Atlantic may also be claiming, but has never explicitly urged, 

that the discriminatees should be "estopped" from asserting higher 

income, having earlier misreported their true income. While a policy of 

judicial estoppel has evolved that can apply in the event a litigant seeks 

to assert a position inconsistent with one made in connection with a 

previous judicial proceeding, e.g., In re Chambers Dev. Co., 148 F.3d 

214, 229 (3d Cir. 1998), we know of no basis for crafting a theory of 

estoppel based upon sworn statements in a tax return and will not 

explore such a theory sua sponte. 

 7 
First, Atlantic points to Southern Steamship Co. v. NLRB, 

316 U.S. 31 (1942). There, employees engaged in a strike in 

response to the shipowner's unfair labor practices, and the 

shipowner terminated five of the strikers. Id. at 34-35. The 

Board ordered the shipowner to r einstate the five men with 

backpay. Id. at 36. The Supreme Court, however, 

determined that under maritime law, the type of striking 

conduct in which they engaged was illegal,3 and it reversed 

the order of reinstatement. Id. at 40, 48. 

The Supreme Court expressed the need to limit the 

Board's discretion in enforcing the policies of the Act when 

the Board's remedial action contravened important 

Congressional policy. Id. at 46. In r eaching its conclusion 

that the claimants' violation of the maritime laws precluded 

the relief they sought under the Act, the Court made the 

following observation, which Atlantic argues supports its 

position: 

 It is sufficient for this case to observe that the Board 

 has not been commissioned to effectuate the policies of 

 the Labor Relations Act so single-mindedly that it may 

 wholly ignore other and equally important 

 Congressional objectives. Frequently the entire scope of 

 Congressional purpose calls for careful accommodation 

 of one statutory scheme to another, and it is not too 

 much to demand of an administrative body that it 

 undertake this accommodation without excessive 

 emphasis upon its immediate task. 

Id. at 47. 

Essentially, the issue before the Supreme Court was

whether the labor policy prohibiting an employer from firing 

an employee for striking in response to an unfair labor 

_________________________________________________________________ 

3. The Court stated: 

 It may hardly be disputed that each of the strikers resisted the 

 captain and other officers in the free and lawful exercise of their 

 authority and command, within the meaning of S 293, or that they 

 combined and conspired to that end, within the meaning of S 292. 

 Deliberately and persistently they defied dir ect commands to 

 perform their duties in making r eady for the departure from port. 

Id. at 40. 

 8 
practice can apply, let alone prevail, when the strike is 

illegal under a competing federal scheme. In the case before 

us, by contrast, the issue does not involve a competing 

policy that runs counter to an award of backpay. Unlike in 

Southern Steamship, the policies sought to be advanced 

here are not diametrically opposed to one another. In fact, 

the policies, to the extent they do compete, can be

accommodated, and in fact have been accommodated her e. 

The Board's basing its finding on the evidence before it, 

consistent with its procedure for fixing and awarding 

backpay, while at the same time notifying the IRS of its 

decision, recognizes the existence and equal importance of 

both policies -- enforcing our nation's tax laws and making 

the discriminatees' whole. If the Board had chosen to award 

the amount stated on the tax returns for the sole reason 

that the discriminatees would have to "reap what they had 

sown," it would have ignored the remedial underpinnings of 

the law, and rewarded Atlantic, the of fending party. 

Moreover, we submit that while federal tax policy 

discourages underreporting of income, and favors 

punishing those who do, federal tax policy would appear to 

have no interest in limiting a backpay awar d. In fact, it 

could be said that it has the opposite inter est because once 

Jenkins and Purcell receive an awar d (that is not limited by 

reference to reported income), they will have to pay tax on 

what they receive, paying the federal gover nment more than 

if the award had been limited to their r eported income.4 

Here, despite Atlantic's contentions, we conclude that no 

federal policy is relegated to a lesser status. The IRS will 

have the information necessary to prosecute the 

discriminatees if it so chooses, and will reap tax revenue. 

And Atlantic will have to "make whole" two employees 

_________________________________________________________________ 

4. Backpay awards for violations of the Act would appear to be the type 

of non-tort recovery that is taxable. See Commissioner of Internal 

Revenue v. Schleier, 515 U.S. 323, 337 (1995) (holding that settlement 

for backpay in age discrimination case was not excludable from 

taxpayer's reported gross income because"[r]ecovery for back wages does 

not satisfy the critical requirement [of the IRS tax code] of being on 

account of any personal injury," nor is it "based upon tort or tort type 

rights.") 

 9 
against whom it wrongly discriminated, fulfilling the 

purpose of the Act. 

Atlantic also relies on Sure-T an, Inc. v. NLRB, 467 U.S. 

883, 886 (1984), but we do not find this decision 

particularly relevant to the instant situation. There, the 

Board had determined that the employer committed an

unfair labor practice by requesting that the Immigration 

and Naturalization Service investigate certain employees 

who were involved in a union campaign. Id. at 888.

Because some of these employees were undocumented 

aliens, they fled the country to avoid deportation. Id. at 

887. The Board awarded backpay, subject to the employees' 

legal availability to work. Id. at 889. 

On appeal, the Court of Appeals for the Seventh Cir cuit 

modified the backpay award by ordering that the aggrieved 

employees be guaranteed a minimum of six months' 

backpay. Id. at 890. The court reasoned that because some 

of the employees may not have been lawfully available for 

employment, without the backpay minimum, they would

not receive any backpay at all. Id. The Supreme Court 

reversed the backpay modification, stating:"The probable 

unavailability of the Act's more effective remedies in light of 

the practical workings of the immigration laws, however, 

simply cannot justify the judicial arrogation of remedial 

authority not fairly encompassed within the Act." Id. at 

904. The key to the Court's reversal of the modification was 

the Court of Appeals' imposition of a minimum awar d 

"without regard to the employees' actual economic losses or 

legal availability for work . . . . plainly exceed[ing] its limited 

authority under the Act." Id. at 904-05. And, while the 

Board in the instant case surely shar ed the same concern 

as the court of appeals in Sure-T an, that is, providing a 

financial disincentive to the employer against r epetition of 

similar discrimination, id. at 904, her e, unlike in Sure-Tan, 

the award of backpay does reflect the discriminatees' actual 

loss, consistent with the remedial scheme. 

Atlantic also maintains that the Board's decision is 

contrary to our precedent. We do not agr ee. We have 

previously upheld an award of backpay when it was based 

on evidence of income in an amount differ ent from that 

declared by the claimant to the IRS. In NLRB v. Louton, Inc., 

 10 
822 F.2d 412, 414 (3d Cir. 1987), we upheld the Board's 

backpay award where the recor d showed substantial 

evidence to support the tip income awarded. 5 In doing so, 

we rejected the employer's argument that the tip income 

evidence was "of no value" since it dif fered from the amount 

the discriminatees had declared to the IRS. Id. 

Moreover, while we note Atlantic's ar gument that 

awarding backpay based on unreported tips rewards the 

discriminatees for their dishonesty to the IRS, Atlantic fails 

to recognize that we would be rewar ding the employers' tax 

dishonesty if we were to disregard evidence of the 

employees' actual, more substantial reportable income. 

That is, if we rely on reported income that concededly did 

not accurately reflect the employee's ear nings, we would 

actually be rewarding employers who, as noted by the ALJ,6 

have benefitted from paying a lesser amount of 

employment-related taxes as a result of the underreporting. 

This benefit is in addition to the benefit that Atlantic would 

reap, in contravention of backpay policy, by having to pay 

aggrieved employees less in backpay than they actually 

would have earned. 

Lastly, Atlantic contends that if we reject its proposed 

rule that we should disregard evidence that differs from an 

employee's tax returns, we would be guaranteeing that all 

discriminatees seeking backpay will lie about their

earnings. However, Atlantic ignor es the fact that this 

deception will probably be quite costly in other ways. By 

testifying that they had underreported their income to the 

IRS, Purcell and Jenkins subjected themselves to 

prosecution for tax evasion. Therefor e, any incentive that 

they might have to lie to inflate their income is countered 

_________________________________________________________________ 

5. We acknowledge that, as we discuss below, the discriminatees 

provided more documentary support in Louton than in the instant case, 

and we note that it is unclear whether the employer's argument in that 

case was based on policy considerations. However , the distinction is 

immaterial, where, as here, we have nonetheless determined that the 

discriminatees' credible testimony (and supporting document) are 

sufficient to meet the "substantial evidence" standard. 

6. "[T]he lower the reported earnings [of an employee are], the lower the 

employer's payroll tax liability [is]." ALJ Dec. at 4. 

 11 
by the fear, and very real possibility, of criminal charges. 

We noted this in Louton, when we found that the employees' 

claims were actually strengthened by the fact that they had 

maintained the veracity of their tip claims in the face of 

potential prosecution for tax evasion or perjury. 822 F.2d at 

414. 

Accordingly, we reject Atlantic's contention that the 

evidence regarding the discriminatees' unr eported tips in 

the Board's backpay award should be disr egarded because 

it undermines federal tax policy. 

B. Substantial Evidence Determination 

As noted above, the Board's findings of fact in a backpay 

proceeding will be upheld unless the recor d, considered as 

a whole, shows no substantial evidence to support those 

findings. 88 Transit, 55 F.3d at 825. Substantial evidence 

has been defined as evidence that a reasonable mind would 

accept as adequate to support an agency's conclusion. 

Broome v. U.S. Dept. of Labor, 870 F .2d 95, 102 (3d Cir. 

1989). We will not disturb a backpay or der "unless it can be 

shown that the order is a patent attempt to achieve ends 

other than those which can be fairly said to ef fectuate the 

policies of the Act." 88 Transit, 55 F.3d at 825. 

In Louton, we held that "the recor d, when considered as 

a whole, shows substantial evidence to support the Board's 

findings." 822 F.2d at 414. In that case, the Board's 

decision was based on documented tip evidence of the 

discriminatees, the ALJ's determination that the 

discriminatees were credible, the fact that the 

discriminatees' testimony was bolstered by their facing 

prosecution for perjury or tax evasion due to their

admission that they had underreported their tips to the 

IRS, and the employer's failure to submit gr oss receipts in 

order to demonstrate that the tips being claimed were 

reasonable. Id. 

In the instant case, the discriminatees' claims wer e 

proven, for the most part, through their own testimony, and 

accordingly, the outcome was affected by their credibility. 

In Louton, we stressed the importance of the ALJ's reliance 

on the demeanor of the discriminatees during their 

 12 
testimony regarding their tip income, noting that where 

credibility determinations are based on the ALJ's 

assessment of demeanor, those determinations are entitled 

to great deference as long as relevant factors are considered 

and resolutions explained. Id.; see also NLRB v. Lee Hotel 

Corp., 13 F.3d 1347, 1351 (9th Cir . 1994) (enforcing 

Board's order basing backpay award on amount of tip

income which differed from amount r eported on income tax 

returns where ALJ found employees' testimony credible 

based on both corroborative evidence and potential 

ramifications of the discriminatees' testimony). In the 

instant case, while the documentary evidence was not 

comparable to the submissions in Louton, the ALJ credited 

the discriminatees' testimony, harkening back to our stated 

view in Louton regarding the importance of credibility and 

the deference we should afford the ALJ's determinations in 

the absence of any evidence indicating otherwise. 822 F.2d 

at 414; Lee Hotel, 13 F.3d at 1351 ("The ALJ's credibility 

determinations should not be reversed unless inherently 

incredible or patently unreasonable"). 

In addition, Jenkins presented the original copy of the 

time sheet he had submitted for the week of May 19, 1993, 

which indicated he had made $430 in cash tips that week. 

He acknowledged that the carbon copy of that time sheet, 

which was submitted to Atlantic, did not reflect any cash 

tips. Thus, he asserted that this document corr oborates his 

testimony that he would leave the space for cash tips blank 

on the copy of the time sheet he gave to his employer, while 

keeping another for himself where he recor ded his tips. 

This document is the only written proof of the unreported 

tips earned. As we have noted, the ALJ concluded that 

while the evidence was not "overwhelming," the Board had 

"established a sound and reasonable basis for the figures 

set forth in the compliance specification . . . ." and he was 

not persuaded that the figures were"unreasonable or

inaccurate." ALJ Dec. at 4. 

In a backpay proceeding, once the Board's General 

Counsel demonstrates the gross amount of backpay that 

the claimant is due, the burden shifts to the employer to 

demonstrate that no backpay is due or that the amount 

due had been improperly determined. 88 Transit Lines, 55 

 13 
F.3d at 827; Angle v. NLRB, 683 F .2d 1296, 1301 (10th Cir. 

1982); NLRB v. United Bhd. of Carpenters & Joiners of Am., 

Local 1913, 531 F.2d 424, 426 (9th Cir . 1976). If there is 

substantial evidence supporting the Board's conclusion that 

Atlantic has not met its burden "to establish facts which 

would negative the existence of liability . . . . or which 

would mitigate that liability," we must uphold the Board's 

conclusion. 88 Transit Lines, 55 F .3d at 827; see also 

Angle, 683 F.2d at 1302 (granting the Board's order for 

enforcement where employer did not pr esent necessary 

"sufficient credible evidence" to support assertions that 

Board's calculations were wrong); Carpenters, 531 F.2d at 

426 (upholding Board's conclusion where employer had 

"not met its burden of negativing the General Counsel's 

findings"). 

Atlantic submitted evidence that it contends was pr oof of 

the discriminatees' income. It relied on the tax return 

evidence, which, as we have mentioned, could be said to 

cut both ways. Even though the tax retur ns contradict the 

discriminatees' claims, the fact that their swor n testimony 

that they underreported their income exposed them to tax 

evasion and perjury charges actually bolsters their

credibility. Louton, 822 F.2d at 414. Aside from its assertion 

that disregarding tax evidence under mines an important 

congressional policy, which we have rejected, Atlantic 

presented no basis for concluding that the employees' tax 

returns, rather than their testimony, r eflected the actual 

amount of their income. Atlantic also submitted the weekly 

signed tip declarations, urging that these for ms were the 

employees' "oaths" that they had declar ed all the cash tips 

they had earned, and that they should have to stand by 

what they declared. However, the evidence in this regard 

was conflicting. Jenkins testified that David Geiger, one of 

Atlantic's owners, had actually instructed him not to enter 

his cash tips on the carbon copy of the time sheet that he 

submitted. Jenkins stated that the time sheet was even 

returned to him once when he mistakenly wrote his cash 

tips on that form. Further, Leon Geiger testified, and 

Atlantic does not dispute, that most workers did not write 

in any cash tips on their time sheets. It seems obvious that 

Atlantic was aware that most employees wer e earning, but 

simply not declaring, their cash tips. Hence, we do not take 

 14 
issue with the ALJ's finding that Atlantic's position that the 

time sheets actually reflected total tips was nothing more 

than a "fiction." ALJ Dec. at 3. 

Atlantic also attacks the quality of the evidence that 

Jenkins and Purcell have produced to support their claims 

of tips earned, contending that they lack corr oboration. 

However, we do not regard that as dispositive. Rather, we 

deem it fairly common for employees not to keep r ecords of 

the tips they earn. Further, as a practical matter, it would 

probably be difficult for Purcell and Jenkins to bring 

forward witnesses to corroborate their actual tip income 

and earnings, given the fact that if their co-workers testified 

that they too had declared lower cash tips than what they 

actually had earned and reported, they would be subjecting 

themselves to prosecution for tax fraud. And, the issue 

before us under the substantial evidence standard is 

whether a reasonable mind would accept the evidence as 

adequate, not whether it could have been bolster ed through 

corroboration or additional testimony. 

Atlantic complains that there really is no defense an 

employer can present to overcome the discriminatees' 

assertions, but we disagree. Atlantic could have leveled 

further attacks on the employees' credibility, kept the type 

of records that would have rebutted these types of claims, 

or produced witnesses to attack the claimants' stories. 

Atlantic did not submit other evidence which would tend to 

disprove the discriminatees' claims. As in Louton, where we 

noted the company's failure to produce gr oss receipts which 

would have allowed the ALJ to ascertain whether the tips 

asserted by the discriminatees were reasonable, 822 F.2d at 

414, here, Atlantic did not introduce r eceipts of total sales 

from which we could glean how much the drivers should 

have earned in tips. Atlantic's urging that the 

discriminatees should be foreclosed based on their tax 

returns and purported tip declarations does not convince 

us that the Board's decision lacks substantial evidentiary 

support. 

Atlantic's attacks on the employees' proof, and its

excuses for lack of evidence, cannot distract us fr om the 

fact that the burden of proof is on the employer, as the 

wrongdoer, to establish facts to dispute the claim of the 

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aggrieved employee. NLRB v. Brown & Root, Inc., 311 F.2d 

447, 454 (8th Cir. 1963). Once Jenkins and Purcell had 

presented their case, the onus for the pr oduction of 

witnesses was not on the claimant, but rather , on Atlantic. 

In Hacienda Hotel and Casino v. Willow Bowe , 279 N.L.R.B. 

601, 602 (1986), the ALJ had the benefit of the testimony 

of the discriminatee's co-workers, and yet these witnesses 

were produced not by the discriminatee, but by her 

employer, who submitted the conflicting testimony in an 

effort to at least limit the discriminatee's backpay to the 

lesser amount testified to by the plaintiff 's fellow waitresses.7 

Id. at 604. Here, Atlantic did not pr oduce similar testimony, 

and, as we have explained, the evidence it did intr oduce 

was not really persuasive on the issue. 

The Board's dissent also questioned the ALJ's 

calculations because both the ALJ's award and the 

compliance specification concluded that backpay should be 

in an amount that differed from both what Atlantic alleged 

the discriminatees earned, and what the discriminatees 

themselves claimed to have earned. Yet, as observed by the 

Board, the tip amounts for Jenkins and Pur cell used in the 

compliance specification and adopted by the ALJ ar e only 

approximations that "fall within the middle range of the tip 

income claimed by the discriminatees in their testimony." 

Supp. Dec. at 2. This methodology, while a bit impr ecise, 

does not render the award invalid. See Buncher v. NLRB, 

405 F.2d 787, 790 (3d Cir. 1968) (en banc) (stating that 

Board seeks only "approximation" of backpay owed and 

thus specification was not objectionable on gr ound of 

inconsistencies with work histories of some employees). 

Also, in Hacienda Hotel, 279 N.L.R.B. at 605, when 

quantifying the amount of backpay, the Board attempted to 

resolve significant testimonial conflict over the amount of 

tips cocktail waitresses received, and arrived at a

reasonable approximation based on the evidence before it. 

_________________________________________________________________ 

7. We note that while conflicting testimony lends support to an 

employer's assertion that an employee is lying about the amount of tips 

earned, this type of evidence is also not dispositive. In Hacienda Hotel, 

the Board upheld the backpay award even though it exceeded both the 

discriminatee's tax returns and the amounts testified to by the other 

witnesses. 

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In doing so, the Board noted that "exactitude is not 

possible . . . ." Id. We agr ee that such approximations are 

not improper. 

We therefore find that, viewing the record as a whole, the 

Board's order of backpay was supported by substantial 

evidence. 

C. Substantial Evidence of Mitigated Damages 

Atlantic also contends that by failing to make r easonable 

efforts to obtain interim employment, Jenkins did not 

mitigate his damages and Atlantic is, therefor e, not 

obligated to pay Jenkins back wages. See Tubari , 959 F.2d 

at 454 (holding that where employee has not exercised 

reasonable diligence in efforts to secur e employment, 

employer has established that employee did not pr operly 

mitigate damages). Once the amount of backpay has been 

established, the burden to produce evidence of a failure to 

mitigate is on the employer. Id. at 453. This burden is 

heavy: "A discharged worker is not held to the highest 

standard of diligence in his or her efforts to secure 

comparable employment; reasonable exertions ar e 

sufficient." NLRB v. Mercy Peninsula Ambulance Serv., 589 

F.2d 1014, 1018 (9th Cir. 1979); see also NLRB v. Westin 

Hotel, 758 F.2d 1126, 1130 (6th Cir . 1985) ("[A] wrongfullydischarged employee is only requir ed to make a reasonable 

effort to mitigate damages, and is not held to the highest 

standard of diligence"); Fabi Fashions, Inc. v. Local 107, 291 

N.L.R.B. 586, 587 (1988) ("[I]n seeking to mitigate loss of 

income a backpay claimant is held . . . only to`reasonable 

exertions in this regard, not the highest standard of 

diligence' . . . . The principle of mitigation of damages does 

not require success, it only requir es an honest good faith 

effort . . . .") (quoting NLRB v. Ar duini Mfg. Corp., 394 F.2d 

420, 423 (1st Cir. 1968)). Once again, we r eview the factual 

determination of the Board regar ding Jenkins' due diligence 

in seeking interim employment under the standar d of 

substantial evidence. Westin Hotel, 758 F.2d at 1130. 

We find that Jenkins' testimony supports the Board's 

determination that his search for employment was not 

unreasonable. Jenkins did testify that during the seven 

 17 
month period in question, he was caring for his mother, 

who was ill. Atlantic argues that this r esponsibility made 

him unavailable for work. However, Jenkins testified on 

redirect examination that during the entir e seven months, 

he continued to seek employment in a variety of ways. 

Jenkins also noted that he was still caring for his mother 

when he did find a position, which supports his ar gument 

that would have accepted full-time work throughout the 

seven month period in question. Based on his testimony as 

a whole, we agree with the Board that ther e is substantial 

evidence that Atlantic has not met its burden of 

establishing that Jenkins' lack of interim ear nings was 

indicative of an unreasonable search for employment, and 

therefore, we find that Atlantic has not established the 

affirmative defense of failure to mitigate his damages. 

IV. Conclusion 

For the foregoing reasons we will deny the Petition for 

Review of the Order of the National Labor Relations Board 

and grant the Cross-Application for Enfor cement of the 

Order of the National Labor Relations Boar d. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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