### REVISED

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 96-60130

_______________________

TRENCOR, INC.

Petitioner-Cross-Respondent,

versus

NATIONAL LABOR RELATIONS BOARD,

Respondent-Cross-Petitioner.

___________________________________________________________________

Petition for Review and Cross-Application for Enforcement of

an Order of the National Labor Relations Board

___________________________________________________________________ April 8, 1997

Before REYNALDO G. GARZA, JONES, and DeMOSS, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Trencor, Inc., a manufacturer of heavy construction

e quipment petitions for review of the National Labor Relation s

Board (the “Board”) order directing Trencor to bargain with the

United Steelworkers of America ( the “Union”). Trencor contends

because the Union promised “the biggest party in Texas” if it won

the election and dared the company illegally to match union

“guarantees” to workers, the election was tainted. The Board

cross-petitions for enforcement of its order. Although the Board’s

treatment of the “guarantees” was not unreasonable, the Board1 Nine ballots were challenged, but this number was

insufficient to affect the election outcome.

2 failed to analyze the promise of a post-election party consistently

with the Regional Director’s facts and this court’s precedent. We

must therefore deny enforcement of the bargaining order and remand

for further proceedings.

I. Background

On August 3, 1995, Trencor’s maintenance and production

employees voted on whether the Union would serve as their exclusive

collective-bargaining rep resentative. Of 99 eligible voters, 70

voted for representation and 26 voted against

. 1 Trencor filed

objection s to the election, but, after an administrative

investigation without a hearing, the NLRB Regional Director issued

a report recommending that Trencor’s obje ctions be overruled and

that the Union be certified. The Board adopted the Regional

Director’s recommendations and certified the Union as the exclusive

collective bargaining agent for the employees.

After certification, Trencor refused to bargain with the

Union. In November 1995, the Union filed an unfair labor practice

charge and the Regional Director subsequently issued an unfair

labor practice complaint. Trencor’s answer admitted its refusal to

bargain, but alleged that Union misconduct tainted the election and

that the Union’s certification was invalid. In its February 26,

1996 Decision and Order, the Board granted the General Counsel’s

motion for summary judgment, concluding that Trencor’s objections3

were or should have been litigated in the representation proceeding

and tha t no new evidence or special circumstances warranted

reexamination of the representation proceeding. The order

affirmatively requires Trencor to bargain with the Union, post

appropriate notices, and comply with the Union’s requests for

information.

On appeal, Trencor concedes that it has refused to

bargain, but challenges t he Board decision to certify the Union.

Trencor’s challenge centers on three alleged improprieties

committed by the Union on the eve of the election.

II. Standard of Review

The Board’s decision will be upheld by this court if it

is reasonable and supported by substantial evidence in the record.

NLRB v. McCarty Farms, Inc.

, 24 F.3d 725, 728 (5th Cir. 1994). The

Board is given a “wide degree of discretion” in resolving election

disputes. NLRB v. A.J. Tower Co.

, 329 U.S. 324, 330, 67 S.Ct. 324,

328 (1946); NLRB v. New Orleans Bus Travel, Inc.

, 883 F.2d 382, 384

(5th Cir. 1989). An objecting party must demonstrate that any

improprieties “interfered with the employees’ exercis e of free

choice to such an extent that they materially affected the results

of the election.” NLRB v. Golden Age Beverage Co.

, 415 F.2d 26, 30

(5th Cir. 1969). See a lso NLRB v. Rolligon Corp.

, 702 F.2d 589,

592 (5th Cir. 1983) (“the need for a

... new election is judged not

against a standard of perfection, but against the likelihood that

the outcome of the election might have been affected”). Since the4

Board resolved this issue at summary judgment without conducting a

hearing, we must accept all allegations presented by Trencor’s

evidence and all reasonable inferences in a light most favorable to

Trencor. McCarty Farms , 24 F.3d at 729.

III. Alleged Union Improprieties

A. Promise of the “Biggest Party in Texas”

Trencor complains that the Union offered conditional

inducements to win employee support in the election. The day

before the election, Union agent Bill Fears told employees that if

the Union won the election, it would host “the biggest party in the

history of Texas,” and that the Union would buy “all the food and

beer.” Trencor primarily relies on NLRB v. Lou Taylor, Inc. , 564

F.2d 1173 (5th Cir. 1977), and Crestwood Manor

, 234 NLRB 1097

(1978) to argue that such conditional inducements ren der the

election invalid.

In Lou Taylor

, this court enforced a Board order in which

the announcement of a company’s annual Christmas part y in an

employer’s campaign speech the day before the election was found to

be illegal. 564 F.2d at 1175. The company president promised that

there would be a Christmas party and “that the employees would be

paid for the time spent at the party and for the holiday.” Id. An

administrativ e law judge and the Board found, and this court

affirmed, that the announcement improperly influenced the

employees’ choice despite the fact that the employer customarily

gave its empl oyees a Christmas party. I d. The election was2 The Board also relies on several other cases which do not involve parties

conditioned on a Union victory, but rather involve pre-election parties. Because

p re-election parties induce employees to hear the message of the spons or and

5 invalidated notwithstanding the overwhelming rejection of the

union. Lou Taylor, Inc. , 226 NLRB 1024, 1030 n.10 (union received

only 38 of 223 votes cast).

In Crestwood Manor

, the Bo ard invalidated an election

because of a union’s promise to hold a one hu ndred dollar raffle

for employees if the union won the election. 234 NLRB at 1097. The

Board stated that:

The Employer argues that since the

Petitioner’s raffle was conditioned upon

Petitioner’s prevailing in the election, the

Hearing Officer correctly concluded that it

was a promise of benefit which requires

setting aside the results of the election. We

find merit in the Employer’s contention.

... If we were not to so find, we might well

envision future elections in which employers

and unions alike might be t empted to promise

employees all sorts of inducements

-- raffles,

prizes, vacation trips, or whatever

-- if

th eir side won the election. Such an

intrusion into the election process would be

highly undesirable.

***

Even if it could be said that the raffle was

worth only $1.18 [one in eighty-five chance of

winning one hundred dollars] to each employee,

we could hardly countenance an offer of $1 to

each employee for a union victory or loss.

Id.

The Board argues on appeal that a promise to hold a party

is qualitatively different from a promise to give a monetary

benefit. Relying on the Third Circuit’s decision in NLRB v. L& J

Equipment Co.

, 745 F.2d 224, 231 (3d Cir. 1984), 2 the Board assertsbecause they are not conditioned on the sponsor’s victory, the Board has tended

to allow them. See

, e.g.

, Peachtree City Warehouse, Inc.

, 158 NLRB 1031, 1035-36,

1039-40 (1966) (employer-sponsored dinner with music, dancing, and liquor shortly

before election held proper); Lach-S imkins Dental Laboratories , 186 NLRB 671,

671-672 (1970)(union-sponsored free luncheon at the time and near the place of

polling held proper).

The only two cases, other than L&J Equipment

, that involve promises

of post-election parties or meal and alcohol purchases are Movsovitz & Son, Inc.

, 194 NLRB 444, 78 LRRM 1656 (19 71) and R.H. Osbrink

, 114 NLRB 940 (1955). In

citing Movsovitz

, the Board quotes the part of the decision stating that the

“Board has long since held that the supplying of meals or alcoholic beverages at

a party is not necessarily coercive or destructive of an atmosphere in which a

free choice can be made.” 78 LRRM at 1656. However, the cases cited by

Movsovitz for the quoted proposition all involved pre-election purchases of meals

and beverages. See Lloyd A. Fry Roofing Co.

, 123 NLRB 86, 87 (1959) (union party

held the day prior to the election); Ze ller Corp. , 115 NLRB 762, 764 (1956)

(employer provided dinner for employees on company time without loss of pay three

days prior to election); Ohmite Manuf. Co. , 111 NLRB 888, 888-89 (1955) (union

bought food and drink at tavern the night before the election).

Movsovitz itself did involve a promise that a union employee “would

buy beer and whiskey for the Movsovitz employe es” after the “Union won the

election.” 78 LRRM at 1656. The Board acknowledged that “the fact that such

promise was conditioned on a union victory in the election is troublesome,” but

went on to conclude that the promise involved a “type of minimal gratuity” that

“is not such an emolument as can reasonabl y be expected to influence the

employees’ free choice in the election.” Id. However, once again, the precedent

cited in support of this proposition involved a pre-election gift. See Jacqueline

Cochran, Inc. , 177 NLRB No. 39, 71 LRRM 1395(pre-election gift of a turkey to

employees allowed since the purpose of the gift was to encourage attendance at

pre-election meeting). Furthermore, even though the Board did say in M ovsovitz

that it was assuming the promise was made, the Board tipped its hand in the prior

paragraph, opining that “the only evidence of the alleged promise to purchase

beer and whiskey i s the uncorroborated testimony of one witness, who was

discredited in other aspects o f her testimony. In such circumstances we

question whether such a promise was in fact made.” 78 LRRM at 1656.

The Movsovitz rationale is difficult to square with the Board’s

diligent fight against conditional $1.18 gifts in Crestwood Manor

. In any event,

Movsovitz does not help the Board since neither it nor the Regional Director ever

found that the Union’s promise of the “biggest party in the history of Texas” was

a “minim a l gratuity” that would not influence the employee’s free choice. In

fact, the Regional Director stated that the Union’s promise “may have served as a possible inducement to get employees to vote for the Union... .”

In Osbrink

, the union “distributed a leaflet in which it urged

employees to vote for it and then attend a victory party that evening.” 114 NLRB

at 942. The opinion’s sole analysis of the issue is a recitation that the

Regional Director disagreed with the employer’s interpretation of the leaflet as

a “form of bribe” and “conside red it to be a legitimate form of campaign

propaganda.” I d. The Board adopted the Regional Director’s recommendations. I d.

a t 943. There is no indication in the opinion as to what was involved in the

“victory party,” particularly as to what, if anything, the union was purchasing

for the employees’ benefit. Furthermore, the Regional Director’s determination

in Osbrink that the leaflet was “propaganda” and not a “ form of bribe” is

ambiguous: it could mean that the Regional Director did not believe the union

was actually planning to provide any sort of benefit to employees. The O sbrink

decision is also in tension with the Board’s later decision in Crestwood Manor

. In any event, the Regional Director’s determination in this case that the party

may have affected employee decisions distinguishes Osbrink

.

67

that offering a victory party is not necessarily “inimical to an

a tmosphere in which free choice can be made.” Promising a party

which only lasts one night, the Board alleges, would not

“substantially influence employees in a decision having a major

effect on their working lives.” Id. The Board distinguishes L ou

Taylor on the ground that the employees were to be pa id for

attending the Christmas party, while in this case the victory party

was not coupled with a monetary benefit. Similarly, the Board

distinguishes Crestwood Manor , noting that the raffle represented

a direct financial benefit contingent on the un ion victory, a

notion the Board finds more offensive than the promise of a party.

The Board’s reasoning on appeal might be persuasive if it

comported with the facts administratively found. But the Regional

Director’s recommendations, adopted in full by the Board, admitted

that the Union’s party invitation “may have served as a possible

inducement to get employees to vote for the Union.” The Regional

Director then concluded that “it does not amount to impermissible

coercion [in] the absence of a linkage between the party and either

a pre-election pledge of Union suppor t or an actual vote for the

U nion,” citing N u Skin International, Inc.

, 307 NLRB 223

(overruling employer’s objection to union’s p assing out t-shirts

before the el ection only to employees who signed a pro-union3 Indeed, the Board would be hard pressed to pursue the

argument relied on by the Regional Dire ctor. Although offering

benefits conditioned upon a pre-election demonstration of an

employee’s su pport has certainly been scrutinized by the Board,

Cre stwood Manor and other decisions clearly demonstrate that

offering benefits conditioned upon a union victory is inappropriate

whether or not a pre-election show of support is required.

Furthermore, Nu Skin inv olved a pre-election distribution of tshirts known to be of nominal v alue. 307 NLRB at 223. The Board

relied on the fact that the employees knew the t-shirts had nominal

value and that the Union had a legitimate interest in only

distributing shirts with union insignia to employees who actually

supported the union. Id. at 223-24. In contrast, as far as the

record suggests, the party promised to Trencor employees involved

an unknown, but potentially large, benefit, and the union had no

stated interest in promising the party other than to influence

employees’ votes.

8 petition). On appeal, the Board neither cites Nu Skin nor relies

on the Regional Director’s rationale. 3

Furthermore, Trencor contends that the monetary/nonmonetary distinction drawn by the Board is not meaningful, since

the benefits promised by the Union have some monetary value.

Trencor also poin ts to potential problems with this distinction,

noting that substantial non-monetary benefits could potentially be

more problematic than the $100 raffle in Crestwood Manor

. The

Board itself warned of the temptation to offer “all sorts of

inducements” as a reason for finding the raffle to be illegal. 234

NLRB at 1097.

Ultimately, we are persuaded that the Board can not adopt

the recommendation of the Regional Director, which notes that

offering a party conditioned on the Union victory “may have served

as a possible inducement to get employees to vote for the Union

...” but rests on flawed legal analysis, and then argue on appeal4 Both the dissent and the Board argue that the promise was

minimal and could not be expected to influence the election.

Nothing in the Re gional Director’s findings indicates that the

benefit offered by the Union was “minimal.” Instead, the findings

acknowledge the possible inf luence of the party could have on

employees’ votes. And, although the report concludes that the

offer “does not amount to impermissible coercion

. . . ,” the legal

basis for that conclusion--that there was an “absence of linkage

between the party and either a pre-election pledge of Union support

or an actual vote for the Union ...” is completely abandoned by the

Board on appeal. On appeal, the Board argues that any victory

party, regardless of any “linkage” between the promised benefit and

a Union victory, is permissible. The Board’s appellate lawyers

have not simply added citations to support the legal theory relied

on below, they have clearly changed the theory why the Union

activity was permissible.

5 The Burlington Truck Lines court went on to quote Chenery at length:

A simple but fundamental rule of administrative law ***

is *** that a reviewing court, in dealing with a

determination or judgment which an administrative agency

alone is authorized to make, must judge the propriety of

such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court

is powerle ss to affirm the administrative action ***.

[ Chenery , 332 U.S. at 196, 67 S.Ct. at 1577]

371 U.S. at 168-69, 83 S.Ct. at 246 (ellipses in original).

9 that offering a party could not reasonab ly have been seen as an

i nducement. 4 S ee Burlington Truck Lines, Inc. v. United States

,

371 U.S. 156, 168-69, 83 S.Ct. 239, 246 (1962) (“The courts may not

accept appellate counsel’ s post hoc rationalizations for agency

action; [ Securities & Exchange Comm’n v. ] Chenery [Corp.

, 332 U.S.

194, 196, 67 S.Ct. 1575, 1577 (1947)] requires that an agency’s

discretionary order be upheld, if at all, on the same basis

articulated in the order by the agency itself ...”). 5 See also NLRB

v. Brookshire Grocery Co. , 919 F.2d 359, 367 n.9 (5th Cir. 1990)

(“The Board’s order can be sustained only on the grounds

articulated therein.”)6 A s the Burlington Truck Lines court stated: “[t]he short answer to this

attempted justification is that the Commission did not so find.” 371 U.S. at 168,

83 S.Ct. at 246.

10

The Third Circuit decision in L&J Equipment makes the

salient point that a one day or one night event might not sway an

employee’s decision on a matter as important as whether to support

Union representation. 745 F.2d at 231. However, L &J Equipment

could distinguish the Crestwood Manor raffle since th e Third

C ircuit was presented with a Regional Director and Board

determination, “after viewing all the evidence,” that “the victory

party was truly meant to celebrate any victory and lay the

groundwork for a productive union-employee relationship.” Id. at

231-32. In contrast, the only determination in this case is that

the offer of a party “may have served as a possible inducement to

get employees to vote for the Union

... .” There is no indication

in the record that the offered “biggest par ty in the history of

Texas” had anything to do with laying the “groundwork for a

productive employee-union relationship” or, indeed, was anything

more than an inducement to vote for the Union. Although on appeal

the Board attempts to justify its decision by arguing that offers

of post-election parties categorically do not influence employees,

the record does not contain such a finding at any sta ge of the

proceedings. 67 W e are not, as Judge Garza suggests, indicating that

Crestwood Manor overruled prior Board decisions that have addressed

the circumstances in which parties are perm issible. C restwood

Manor holds that even minor inducements conditioned on a union or

company victory can be improper. The few prior Board decisions

that have addressed parties offered on the condition of a union

victory, as discussed in note 2, supra , rested on case-specific

Board findings that the party offered could not reasonably have

been perceived as an inducement to vote for the Union. There is no

such finding here.

11

Absen t such a finding, this case is not meaningfully

distinct from Lou Taylor or Crestwood Manor

. 7 The Board stated in

Crestwood Manor that “[t]he conditioning of the receipt of benefits

on favorable election results is impermissible conduct for parties

engaged in the election.” 234 NLRB at 1097. Even the potential

benefit of $1.18 per employee was considered impermissible by the

Board. Id. Our court has also agreed with the Board that the offer

of a Christmas party that employees would receive vacation time to

attend, even though the employer had traditionally given its

employees a Christmas party, was an impermissible inducement when

announced the day before the election. Lou Taylor

, 564 F.2d at

1175. It is not unreasonable to infer that the Union’s offer in

this case, also made on the day before the election, represented as

much or more economic benefit per employee than the $1.18 in

Crestwood Manor or possibly even the unspecified amount in Lou

Taylor

. The Regional Director drew this inference. The Board

cannot acknowledge the potential influence of a conditional

i nducement by adopting the Regional Director’s decision and then12

expect this court to affirm because it is supposedly axiomatic that

this type of inducement does not influence employees.

Accordingly, we cannot uphold th e Board’s decision to

overrule Trencor’s objection on this issue. Trencor has presented

prima facie evidence that the Union conditioned “the receipt of

benefits on favor able election results,” which “is impermissible

conduct for parties engaged in the election.” C restwood Manor

, 234

NLRB at 1097. S ee also Lou Taylor

, 564 F.2d at 1175. We must set

aside the order of the Board and remand for an evidentiary hearing

and analysis consistent with this court’s precedents.

B. Union “Guarantees”

On August 2, 1995, the day before the election was to be

held, th e Union distributed flyers that listed numerous

“guarantees” by the Union. The purported guarantees included

several matters related to Union membership, such as U nion dues

payments, the right of employees to resign from the Union, the

right of employees to file un fair labor practice charges against

the Union, and a pledge to seek employee approval of any negotiated

collective bargaining agreement. The Union also “guaranteed” that

upon its victory, employees’ wages, benefits and working benefits

would not suffer, and that the Union had negotiated improved terms

for employees in every prior first contract negotiation. The Union

representative, Bill Fears, signed his name under each guarantee,

referring to the document as a signed contract between the Union

and employees.8 The Union challenged Trencor officers to sign and date seven

statements:

1. I guarantee the company will never cut wages,

benefit s, or other working conditions now in effect,

unless it is voted on and accepted by a majority of

13 Trencor alleges that by making the guarantees, the Union

offered employees “a financial benefit to which they would

otherwise not be entitled” in the critical period prior to the

election, thereby violating Board rules governing elections. S ee

Mailing Services, Inc. , 293 NLRB 565 (1989). We disagree.

The Boar d decision to overrule this objection was

reasonable. Unions are permitted to promise the extension of

existing membership benefits to employees. D art Container of

California , 277 NLRB 1369 (1985). Unlike Mailing Services , where

free health screening , an existing Union benefit, was actually

given to employees befo re the election, this is merely an

unremarkable promise to extend Union bene fits to employees after

the Union’s election. 293 NLRB 565 (1989). Unions may also promise

to obtain better terms in the future. NLRB v. Golden Age Beverage

,

415 F.2d 26, 30-31 (5th Cir. 1969) (union’s promised improvements

“fell within the category of customary and legally unobjectionable

preelection propaganda”). Trencor’s objection to the Union

“guarantees” is without merit.

C. Union’s “Catch 22" Tactics

Trencor’s better argument relates to the Union’s

challenge to Trencor executives to make guarantees similar to those

offered by the Union. 8 Companies are not allowed to make suchworkers here at our plant. (The same right union members

have).

***

2. I guarantee t he company will not increase the

employees portion or co-pay for insurance costs, and will

not reduce the present benefits under this plan ever.

***

3. I guarantee the company will select all future job

openings by seniority and qualifications, rather than

using the favoritism system we now use. Also if there is

a difference of opinion in the selection process, the

affected party can file a grievance up to and including

arbitration to obtain justice.

***

4. I guarantee the company will end all favoritism in

the plant, and treat all workers fairly and equally and

stop the special treatment of a few favorites.

***

5. I guarantee in the fut ure the company will notify

all workers by Thursday of any weekend overtime, or workers will not be forced to work it, if they choose.

***

6. I guarantee any worker having a grievance on wages,

benefits, or other working conditions, including any disciplinary actions, will have the right to present his

or her grievance to top management and if it is not

resolved to the workers satisfaction, the worker shall

have th e right steelworker members have to present the

grievance to an impartial arbitrator accepted by both

sides, whose decision will be final and binding on the

company and the worker.

***

7. Finally, I guarantee the company wil l allow every

worker a full voice and vote on all matters pertaining to

wages, benefits, and all other working conditions. (The

same right steelworker union members have).

***

If company officials will not sign each a nd every

guarantee, how ca n you protect yourself without having

these basic rights? ...

9 S ee NLRB v. Exchange Parts Co. , 375 U.S. 405, 409 (1964)

(“conduct immediately fav orable to employees which is undertaken

with the express purpose of impinging upon their freedom of choice

for or against unionization” is illegal) and NLRB v. Varo, Inc.

, 425 F.2d 293, 298-99 (5th Cir. 1970) (plant manager’s preelection

14 promises in the period immediately preceding an ele ction, 9 andstatement that “[i]f money is all you people are concerned with,

you don’t have to go through all of this trouble to get it” was an illegal promise of benefits in violation of § 8(a)(1) of the Labor

Management Relations Act).

1 0 The handwritten text was connected by an arrow to the typeset

text of the company’s flier which read:

Please understand this; the company by la w cannot

guarantee or promise you anything to get you to vote

against the Union. What the Union salesman is doing is

trying to get the company to violate the law by

guarantee ing or promising you something so that if it

loses the election it can possibly become your

representative even though you do n’t want it . The

company will not violate the law and will not promise or guarantee anything.

(Emphasis in original).

15 Trencor argues this challenge put the company in the untenable

position of ei ther making illegal promises or appearing to back

down from the Union.

Trencor responded to the challenge by printing its own

leaflet disputing the Union’s guarantees and pointing out that it

was prohibited by law from making any type of similar promises.

Trencor alleged that Union agent Bill Fears wrote handwritten

responses on the face of Trencor’s leaflets. Trencor produced one

such altered leaflet on which som eone had handwritten in the

margins 10 tha t: “THE COMPANY C AN GIVE IT’S [sic] EMPLOYEES A

CONTRACT WITHOUT A UNION BEING I NVOLVED. IF IT CARED ABOUT ITS

WORKERS & WANTED THEM TREATED FAIRL Y.” (emphasis in original).

Trencor alleges that this alteration of its leaflet occurred on the

morning of the election, denying Trencor the opportunity to respond

to this misrepresenta tion and putting Trencor in a “false light”

because it followed the law. Thus, Trencor argues, the “laboratory16

conditions” necessary for the employees’ free cho ice were

destroyed. See Home Town Foods

, 416 at 396 (5th Cir. 1969)

(“‘laboratory conditions test’ repres ents an ideal atmosphere in

which a free choice may be made by employees, protected from

interference by employer, union, Board agent, or other parties”;

key is “whether the employees were permitted to register a free

choice”).

The Board counters that Trencor’s responsive leaflet

apprised the employees of its views on the Union guarantees and the

legal restrictions keeping the company from making similar

promises, thereby rebutting the notion that it was backing down

from the Union challenge. The Board also argues that there is no

evidence that the handwritten message on Tr encor’s leaflet came

from a Union agent or was widely distributed. Ultimately, the

Board relies on Midland Nat’l Life Ins. Co. , 263 NLRB 127, 131-33

(1982), in which the Board decided that it would “no longer probe

into the truth or falsity of the parties’ campaign statements and

[would not] set elections aside on the basis of misleading campaign

statements.” The Board contends that because the thrust of

Trencor’s complaint about the Union challenge is that it was

misleading, the Midland doctrine applies and the Board will not

invalidate the election on this basis.1 1 The Board argues on appeal that there is no evidence of Union

involvement with the handwritten notes on Trencor’s leaflets. This

borders on the ridiculous. At the top of the same defaced leaflet,

in the same handwriting, is written “TRENCOR, WHY DID YOU CUT OFF

THE TOP PART OF THIS HANDBILL WE PUT OUT? IS IT [sic] ‘ GUARANTEE ’

WAS IN BIG CAPITAL LETTERS?” (emphasis in original). Surely, the

reference to the “HANDBILL WE PUT OUT” supports the inference that

the Union, who put out the prior handbill, also was responsible for

the handwritten messages on Trencor’s leaflet. Even if this was

not patently obvious, the Board is required to take Trencor’s

allegations as true given that the Board entered summary judgment

for the Union without a hearing. McCarty Farms

, 24 F.3d a t 729.

The Regional Director’s report and recommendation, adopted by the

Board, accepted the company’s allegations as true, and the Board

must continue to do so on appeal.

1 2 Three other circuits have adopted the Midland doctrine. See

NLRB v. Semco Printing Ctr., Inc

. , 721 F.2d 886, 892 (2d Cir.

1983); NLRB v. Monark Boat Co.

, 713 F.2d 355, 360 (8th Cir. 1983);

NLRB v. Yellow Transp. Co.

, 709 F.2d 1342 (9th Cir. 1983).

However, two other circuits, while approving the Board’s decision

in a particular case, held that an election might be overturned

where “the misrepresentation is so pervasive and the deception so

artful that employees will be unable to separate truth from untruth

and where their right to a free and fair choice will be affected.”

Van Dorn Plastic Mach. Co. v. NLRB

, 736 F.2d 343, 348 (6th Cir.

1984) (citing NLRB v. New Columbus Nursing Home, Inc.

, 720 F.2d

726, 728 (1st Cir. 1983); See also NLRB v. Hub Plastics, Inc. , 52

F.3d 608 (6th Cir. 1995) (remanding to require NLRB to determine

whether union misrepresentation fell within Van Dorn exception to

Midland ).

17

Accepting Trencor’s allegation that the Union was

responsible for the election day message, 11 we must d ecide if the

Midland doctrine bars a challenge to the election. This circuit

has yet t o approve fully the M idland doctrine. 12 Only one Fifth

Circuit case cites Midland

. See NLRB v. Rolligon Corp.

, 702 F.2d

589, 597 (5th Cir. 1983). In R ollig on , this court overruled an

election challenge where the un ion misused Board subpoenas two

months before the election. Id. at 596-97. Although the court

condemned the union’s actions, the court agreed “with the Board13 The court noted that “both the Board and the courts have

shown a reluctance to ‘censor or police campaign propaganda unless

the misrepresentations are so substantial t hat the uncoerced

desires of the employees cannot be determined.’” Rolligon

, 702 F.2d

at 597 (quoting NLRB v. Muscoge e Lumber Co. , 473 F.2d 1364, 1367

(5th Cir. 1973)).

18 that setting aside an election in which sixty-three percent of the

workers have chosen the union as their representative is not the

proper remedy.” Id

. at 597. The court voiced support for the

rationale of Midland

, not ing that employees are “‘mature

individuals who are capable of recognizing campaign propaganda for

what it is and discounting it.’” NLRB v. Rolligon Corp. , 702 F.2d

589, 597 (5th Cir. 1983) (quoting Midland

, 263 NLRB at 132 (quoting

Shopping Kart Food Market , 228 NLRB 1311 (1977))). However, this

court ultimately based its decision on the impact the

misrepresentation would have on the election, 13 concluding that

there was “substantial evidence in the record to supp ort the

Board’s conclusion that the union’s misco nduct was not likely to

have created the impression that the Board favored one party over

another.” Id

. Important to the court’s conclusion was the fact

that the company had two months to respond to the union misconduct

but failed to do so. Id. at 596.

Trencor urges that Midland is inapplicable because it is

not alleging a simple misrepresentation, but rather is objecting to19

the Union’s challenging Trencor to make illegal promises on the eve

of the election. Trencor contends the illegal challenge falls

outside the category of misrepresentation and within the category

of “campaign conduct, such as threats, promises, or the like, which

interfere with employee free choice” and which the Board is still

pledged to protect against under Midland . 263 NLRB at 131-33. We

disagree.

The Board’s decision to uphold the election on this basis

is supported by substantial evidence in the record. Although it is

unnecessary to decide the full scope of this court’s support of the

Midland doctrine, we rely on the overarching principle, recognized

in Rolligon , that employees must generally be trusted to sort

through election propaganda and posturing in deciding how to vote.

Contrary to Trencor’s protestations, the gravamen of its complaint

is that the Union challenge was misleading, i.e., it put Trencor in

a “false light.” Trencor’s efforts to place the Union conduct

outside the “misrepresentation” framework fail because,

i rrespective of the outer bound of the M idland doctrine, Trencor

has not demonstrated that the Union conduct was so deceptive that

it inhibited employee free choice. Accordingly, the Board’s

application of the Midland doctrine to this case was within the

wide discretion granted to the Board by Congress. The Union’s

attempt to challenge Trencor to do something that the Union surely

knew the company could not do, on the eve of the election, is not1 4 Trencor also contends that it not so much the misleading

Union challenge as its last-minute timing that is objecti onable.

The company rel ies on the K alen Construction Company, Inc.

, 321

NL RB No. 94, 1996 WL 387382 (1996), in which the Board recently

prohibited companies from changing their paycheck po licies as a

campaign tactic within 24 hours of a union election. While Kalen

imposes a restraint on this particular type of electioneering

“speech,” and could be vulnerable for that reason, the decision

specifically does not apply to “the circulatio n of campaign

literature at any time prior to an election.”

1 5 The handwritten response to Trencor’s statement that the law

barred the company from making promises in the period before an

election, when read critica l ly, acknowledges by omission that

Trencor’s statement was accurate. The Union response only states

that Trencor could make the request ed promises “without a union

being involved.” See supra

, note 10. Although suggesting that

Trencor c ould make the disputed promises, the response does not

actually dispute the substance of Trencor’s statement. This is not

to say that the handwritten response is completely truthful, but we assume that employees can recognize the slanted rhetoric.

20 an honest tactic a nd certainly not one that should be condoned. 1 4

However, in this case, Trencor was able to respond to the Union’s

challenge with its own leaflets outlining the company’s position.

The fact that the Union placed handwritten messages on some or all

of the company’s leaflets did not prevent emp loyees from reading

the claims of both sides and making their own determinations. 15 We

cannot conclude that “the misrepresentation is so pervasive and the

deception so artful that employees will be unable to separate truth

from untruth and

... their right to a free and fair choice will be

affected.” See Van Dorn Plastic , 736 F.2d at 348.21 CONCLUSION

For the foregoing reasons, DENY t he Board’s crosspetition for enforcement of its barga ining order, and R EMAND for

further proceedings as described above.

ENFORCEMENT OF BOARD ORDER DENIED; CASE REMANDED

.22

REYNALDO G. GARZA, Circuit Judge, dissenting.

While I concur with the majori ty’s treatment of the union’s

guarantees and its alleged “Catch-22" campaig n tactics, I cannot

concur with its treatment of the all eged promise of a party and

therefore res pectfully dissent from its refusal to grant the

Board’s petition for enforcement. My disagreement extends to

several points, as I explain below.

In his re port on Trencor’s objections to the election, the

Regional Director for Region 16 stated as follows with respect to

the issue of the party:

In support of this object ion the Employer provided an

employee witness who testified that a Union r epresentative

told an employee, a Union supporter, that when the Union won

the election they were going to have the biggest party in the

history of Texas and that he would buy all the food and beer

for them. The Union employee supporter then, on or about

August 2, 1995, told the Employer witness about the party.

Assuming the Union representative made the above

statements at some point prior to the election about a prospective party and even assuming the employee who told of

this party was an agent of the Union, such would not be a

basis for setting the election aside.

While the party referred to may have served as a possible

inducement to get employees to vote for the Union

, it does not

amount to an impermissible coercion of the absence [ sic ] of a linkage between the party and either a pre-election pledge of

Union support or an actual vote for the Union. Accordingly,

the alleged prospective party cannot be a basis for setting

the election aside. See N u Skin International, Inc.

, 307 NLRB

No. 46. Accordingly, it is recommended this objection be

overruled.23

(emphasis add ed). The Board adopted the Regional Director’s

findings and recommendations and overruled Trencor’s objections to

the election.

The majority states that the Board’s legal analysis is flawed,

and estops the Board from supplementing its legal citation with

additional cases to demonstrate the consistency with which it has

treated this issue. The majority also relies upon language in the

Board’s decision that the party “may have served as a possible

inducement.” The majority states: “Ultimately, we are persuaded

that the Board cannot adopt the recommendation of the Regional

Director, which notes that offering a party conditioned on a Union

victory ‘may have served as a possible inducement’ but rests on a

flawed legal analysis, and then argue on appeal that offering a

party could not reasonably have been seen as an inducement.” Maj.

op. at 8-9. The majority goes on to reject the Board’s legal

argument by stating that “[t]he Board’s reasoning on appeal might

be more persuasive if it comported with the facts administratively

found.” Maj. op. at 7.

The majority errs in its treatment of t he Board’s opinion.

First, the language the majority alludes to is not a finding of

fact on this issue. Even if it was, it is of no legal import

because the Board determined that even if true, Trencor’s objection

faile d as a matter of policy because the alleged

inducement—offering a victory party—was not an improper inducement,

i.e. o ne that would serve as a ground for setting aside the24

election. Second, the majority finds error in the Board’s adoption

of the report when legal authority cited within it is not exactly

on point. Essentially, the majority holds that the Board is

estopped from not relying specifically on the Nu Skin case and the

Board’s analysis therein. What the majority overlooks is that the

Board’s opinion in Nu Skin did nothing more than discuss the topic

of unlawful i nducements in light of guidance provided by the

Supreme Court in NLRB v. Savair Mfg. Co., 414 U.S. 270 (1973), the

Court’s only decision in this area. Moreover, the Board’s task in

an election challenge is not a quest for on-point precedent, but to

make an ad hoc determination based on the facts presented or, as

here, alleged. S ee Lach Simkins Dental L abs. , 186 NLRB 671, 672

(1972) (Board will approach the question of whether “laboratory

conditions” have been upset on a case-by-case basis).

The Board ’s opinion states that the promise was minimal and

could not have been expected to influence the election. In this

court, the Board argues that the promise was minimal and could not

be expected to influence the election. The Board’s appellate brief

certainly expresses its position much better than does its opinion

in this case, but there is no requirement that the two documents be

identical. In its petition for review, the Board provides a number

of cases setting forth the Board’s long-held position that an

employer or union’s simple promise to have a party is not improper,

to bolster its argument here that it properly determined the

promise of the party was an inducement of de minimis proportions.25

This is not a case where a new legal argument is being introduced

into the mix. Rather, the NLRB General Counsel has done additional

research for this court and supplied the on-point legal citations.

The majority is quite correct that agencies are not permitted

to justify their actions in a judicial review proceeding on

different grounds than those they relied upon at the time of that

action. For us to sanction this sort of post hoc rationalization

would allow agencies to engage in unprincipled decision making and

would make us their accomplice. But this is not the type of

situation the Court had in mind when it decided Chenery and

Burlington Truck Lines

. The Court has stated that “[w]hile we may

not supply a reasoned basis for the agency’s action that the agency

itself has not given, we will uphold a decision of less than ideal

clarity if the agency’s path may reasonably be discerned.” B owman

Transp. v. Arkansas-Best Freight Sys.

, 419 U.S. 281, 285-86 (1974);

see also State of Texas v. United States

, 756 F.2d 419, 4 27 (5th

Cir.), cert. denied , 474 U.S. 843 (1985). Because I believe “the

agency’s path may be reasonably discerned,” I would rej ect

Trencor’s arg ument that the Board’s appellate argument does not

match the reasons guiding its opinion.

In addition to its Chenery argument, the majority goes further

and states that the Board’s decision is foreclosed by the decision

of our court in NLRB v. Lou Taylor, Inc. , 564 F.2d 1173 (5th Cir.

1977). In that case, the Board sought enforcement of an order

finding that an employer violated section 8(a)(1) of the Act and1 6 The majority’s misinterpretation of this case carries over

to its refusal to force Trencor to meet its burden of demonstrating

that the alleged impropriety by the union influenced the outcome of

26 r equiring a new election where an employer told its employees

before the election that it would pay them to attend its Christmas

party and would also pay them for the holiday. The Board ordered

the new election “despite the Company’s contention that Christmas

parties were not new benefits and there were valid reasons for the

absence of Christmas parties in the preceding years.” I d. at 1175.

If the employer’s argument that the party itself was not improper

was of no concern to the Board or to us in our review of its

decision, it is abundantly clear that our decision rested on the

fact that a monetary benefit was conferred to the employees. The

Board has consistently held that parties may not buy votes. See,

e.g.

, NLRB v. Exchange Parts Co. , 375 U.S. 405 (1964) (employer’s

conferral of benefit violated section 8(a)(1)); C restwood Manor

,

234 NLRB 1097 (1978) (“laboratory conditions” case holding union’s

promise to hold $100 raffle to be an improper induceme nt). The

Board has also consistently held that it can be an unfair labor

practice for an employer to withhold an ordinarily granted benefit,

such as hosting a Christmas party, during the pendency of a

campaign. An employer’s assertion that the benefit conferred is

one it ha s always given operates as an affirmative defense to an

8(a)(1) charge. That the Board still found a violation makes it

plain that the objectionable activity in that case was the promise

of a paid holiday and paid attendance. 16the election, a requirement in “laboratory conditions” cases such

as this one. S ee, e.g.

, NLRB v. McCarty Farms

, 24 F.3d 725, 728-30

(5th Cir. 1994); Vicksburg Hosp. v. NLRB

, 653 F.2d 1070, 1075 (5th

Cir. Unit A 1981) (“[e]st ablishing that the objectionable

act ivities ‘either tended to or did influence the outcome of

election’ is especially difficult where, as in the case of the

Vicksburg Hospital election, the union won by a wide [148-66]

margin.”) (citations omitted). As L ou Taylor is a section 8(a)(1)

case, the remedy ordered there cannot be transplanted to a

“laboratory conditions” case because a different standard applies.

The Board almost invariably overturns an election where it finds

unfai r labor practices were committed during the pre-election

period. Dal-Tex Optical Co. , 137 NLRB 1782 (1962). See Sinclair

Co. , 164 NLRB 261 (1967), enforced , 397 F.2d 157 (1st Cir. 1968),

aff’d sub nom. NLRB v. Gissel Packing Co. 395 U.S. 575 (1969), for

a discussion by the Board which separates the two standards within

a particular case.

27 The majority does not find it sufficient, however, to rest on

the arguments discussed above, and proceeds to reject the Board’s

position on this issue. It essentially determines that the Board’s

Crestwood Manor decision overruled, by implication, all previous

Board decisions in which an inducement of $1.18 or more was found

to be unobjectionable. Maj op. at 4-11 & nn.2-3. As a consequence

of this, the majority must be arguing (although it does not state

tha t it is) that this has caused the Board to be acting

inconsistent with its own precedent, a basis for us to approach its

present position with skepticism. See I.N.S. v. Cardoza Fonseca

,

480 U.S. 421, 446 n.30 (1987) (“An additional reason for rejecting

the INS’s request for heightened deference to its position is the

inconsistency of the positions the BIA has taken through the

years.”); Shaw Supermarkets v. NLRB

, 884 F.2d 34 (1st Cir. 1989)

(Board must explain departure from precedent). Even were this

argument valid, the Board must have in turn overruled the Crestwood1 7 The majority’s attempt to distinguish N u Skin by noting it

was a pre- election benefit is unpersuasive, as is the extended

footnote in which it a ttempts to cast doubt upon forty years of

Board precedent because of a difference between pre- and postelection benefits that it believes renders su spect the Board’s

citation of one in the context of the other. Maj. op. at 6-7 nn.

2-3.

28 Manor decision and abandoned this “$1.18 rule” (again by

implication), because it held fourteen years later in Nu Skin that

the promise of t-shirts (costing from $4 to $5) was

unobjectionable. 17

The Supreme Court has long emphasized that, because the Board

is the expert body in the field of labor relations, we are to give

“considerable deference” to the Board’s position on policy

determinations and are not to disturb it “as long as it is rational

and consistent with the Act.” N LRB v. Curtin Matheson Scientific

,

494 U.S. 775, 786-87 (1990). Stated another way, as an

administrative agency, the NLRB is entitled to the de ference

ann ounced by the Court in C hevron U.S.A. v. Natural Resources

Defense Council

, 467 U.S. 837, 844 (1984). S ee ABF Freight Sys. v.

NLRB

, 114 S. Ct. 835 (1994) (“When Congress expressly delegates to

an administrative agency the authority to make specific policy

determinations, courts must give the agency’s decision controlling

weight unless it is ‘arbitrary, capricious, or manifestly contrary

to the statute.’); Stardyne, Inc. v. NLRB

, 41 F.3d 141, 147-48 (3d

Cir. 1994) (Board’s case-by-case adjudications to fill gaps in Act

are analyzed under Chevron ). We also look to the consistency with

which the Board has acted as a factor in deciding whether the29

agency’s action should stand. C ardoza Fonseca

, 480 U.S. at 446;

NLRB v. New Jersey Bell Tel ., 936 F.2d 144, 147 (3d Cir. 1991).

Nowhere, perhaps, is this deference greater than when the

issue is whether the “laboratory conditions” of the election are

alleged to have been upset. Section 9 of the Act gives the Board

“the broad duty of providing election procedures and safeguards for

elections and a wide discretion in determining when conduct did or

did not jeopardize the untrammeled expression of employee free

choice.” N

LRB v. Sanitary Laundry

, 441 F.2d 1368, 1369 (10th Cir.

1971). The issue before us today, whether the promise of a party

is the type of benefit that could reasonably have tended to

influence the employees’ decision, represents “precisely the type

of minor, detailed, interstitial question of labor election policy

that Congress asked the Labor Board, not the courts, to decide.”

NLRB v. Labor Services, Inc. , 721 F.2d 13, 18 (1st Cir. 1983)

(Breyer, J., dissenting).

In rejecting the Board’s determination here, the majority

p laces this court at odds with the positions taken by our sister

courts. The Third Circuit considered this precise issue in NLRB

v. L&J Equipment Co.

, 745 F.2d 224 (1984), and, despite the

majority’s attempt to distinguish it, found the policy to represent

a reasonable exercise of its powers. The majority states that the

crucial difference between that case and the one before us today is

that the Board there made a fact finding that the purpose of the

election was to celebrate victory and “lay the groundwork for a30

productive employee-union relationship.” In so distinguishing it,

however , the majority by-passes precedent of our court that

specifically rejects the “intent to influence” test in favor of the

“tendency to influence” test that the Board argues before us today.

See NLRB v. McCarty Farms

, 24 F.3d 725, 731 n.5 (5th Cir. 1994)

(discussing the s tandard). The Third Circuit, incidentally uses

the same standard we use, NLRB v. Clearfield Cheese Co. , 322 F.2d

89, 93-94 (3d Cir. 1963), making it rather difficult to distinguish

its opinion there on the basis that it relied upon the “purpose” as

being a satisfactory one. B ecause the Third Circuit’s decision is,

therefore, indistinguishable from the situation here, the

majority’s opinion creates a split with our colleagues on that

court. The majority’s conclusion also conflicts with favorable

commentary on the Board’s position on this issue from the First

Circuit. L abor Services

, 721 F.2d at 17 (Board “properly held” in

Movsovitz that promise to buy beer and wine after election “could

not reasonably be expected to have influenced the employees’ free

choice.”)

Reviewed under the proper standard, the Board’s policy must

stand. Its position has been uniform for decades, as the majority

opinion clearly demonstrates. Maj. op. at 6-7 n.2. Because

Congress did not mandate an outcome here but expressly left it to

the Board to decide, it cannot be said that its deter mination is

“manifestly contrary to the statute.” Its determination is neither

arbitrary nor capricious. We have previously recognized “that31

clinical asepsis is an unattainable goal in the real world of union

organizational efforts,” an d accordingly are “conscious of the

‘realities of industrial life’ in our application of the

controlling standard.’” McCarty Farms

, 24 F.3d at 728 n.2

(citations omitted). The Board has distinguished money payments

from parties on the ground that the former closely resembles a

bribe, while it is highly unlikely employees will vote against

their better interests me rely on the promise of a party. As the

majority recognizes in its discus sion of the Board’s M idland

decision, employees must be viewed as mature individuals. Maj. op.

at 16-19. As such, the union organizer’s Texas-sized boasts about

the party aside, the Board’s determination that the promise of the

party was not one that destroyed the laboratory conditions of the

election is entirely reasonable and should be upheld.

In sum, I believe that the Board’s opinion reflects the same

argument it advances on judicial review, that its position is not

foreclosed by any precedent of our court, and that the Board’s

position is not “arbitrary, capricious, or manifestly contrary” to

the Act. The employees’ 70-26 vote in favor of union

representation should be upheld. Accordingly, I would deny

Trencor’s petition for review and would grant the Board’s crosspetition for enforcement of its order.