Source: http://openjurist.org/635/f2d/1255/midwest-stock-exchange-inc-v-national-labor-relations-board
Timestamp: 2015-11-27 19:40:33
Document Index: 378693770

Matched Legal Cases: ['§ 160', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8', '§ 8']

635 F2d 1255 Midwest Stock Exchange Inc v. National Labor Relations Board | OpenJurist
635 F. 2d 1255 - Midwest Stock Exchange Inc v. National Labor Relations Board HomeFederal Reporter, Second Series 635 F.2d.
635 F2d 1255 Midwest Stock Exchange Inc v. National Labor Relations Board 635 F.2d 1255
105 L.R.R.M. (BNA) 3172, 90 Lab.Cas. P 12,361
MIDWEST STOCK EXCHANGE, INC., Midwest Clearing Corporation,Midwest Securities Trust Co., and Midwest StockExchange Service Corp., Petitioners,v.NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 79-2061.
Argued May 9, 1980.Decided Nov. 10, 1980.
Lisa S. Kohn, Chicago, Ill., for petitioners.
Charles P. Donnelly, N.L.R.B., Washington, D. C., for respondent.
Before CUMMINGS, Circuit Judge, NICHOLS, Associate Judge,* and PELL, Circuit Judge.
The question presented in this case is whether there is substantial evidence on the record as a whole to support various findings of the National Labor Relations Board (Board). Because we find there is not substantial evidence to support many of the board's findings, we doubt whether the board would have us enforce the portions that are based on substantial evidence and remand to the board to consider what action it wishes to take on the portions that are based on substantial evidence.
To dispose of this case we must consider an order of the board against Midwest Stock Exchange (Exchange) upon the Exchange's petition for review and the board's cross-petition for enforcement of the order pursuant to Sections 10(e) and (f) of the National Labor Relations Act, as amended, 29 U.S.C. § 160(e), (f) (act). The board adopted as its own a decision by Administrative Law Judge Maloney, including rulings, findings, and conclusion.
The Exchange is a regional stock exchange, located in Chicago, Illinois. Midwest Clearing Corporation (Clearing) and Midwest Securities Trust Corporation (Trust) are wholly owned subsidiaries of the parent Exchange. Clearing is responsible primarily for settling and facilitating securities transactions, while Trust is a custodial depository in which member brokers deposit stock certificates.
On September 12, 1977, the Office and Professional Employees International Union (Union) filed a representation petition with the board seeking certification as the bargaining representative of all Exchange office and clerical workers. On December 15, 1977, the board issued a decision calling for an election. During the election campaign, the Exchange allegedly committed several unfair labor practices which are discussed in part B of this opinion. On January 26, 1978, the Union was victorious in that election, but the final outcome was not official for a month pending the resolution of challenged ballots. On January 27, 1978, the Exchange's vice president, Martin Torosian, determined that a reduction in Trust and Clearing personnel was necessary, allegedly because of mounting losses. He dismissed 11 employees and transferred five. The following Trust and Clearing employees were the ones dismissed: Rochelle Stewart, Mary Hrycaj, Theresa Stewart, Mae Belle Hobby, and Marjorie Ayersman. The board, in adopting the findings of the Administrative Law Judge (ALJ), determined that each of these discharges violated § 8(a)(3) of the act and that certain Exchange actions during the unionization campaign violated § 8(a)(1).
The relevant text of § 8(a)(1), (3), is as follows:
It shall be an unfair labor practice for an employer-
(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization:
In reaching his decision, the ALJ did not accept the Exchange's alleged economic justification for the discharges. The ALJ found the Exchange historically employed the same number of personnel regardless of the securities volume and adjusted employee's overtime up or down to accommodate any change in securities volume. The ALJ placed heavy weight on the Exchange's failure on the occasion of the Union victory to do what it had normally done before. The ALJ also found that the Exchange actually hired 26 new employees during the period of terminations. This factual analysis provided the underpinning of his decision that there was no economic crisis that warranted a reduction in personnel. Finally, the ALJ found specific instances of discriminatory motivation sufficient for him to conclude each termination violated § 8(a)(3). The ALJ stated he used the § 8(a)(1) violations as the backdrop against which he evaluated the discharges of the employees. On the basis of those findings, the ALJ ordered reinstatement with back salary for the five discharged employees.
Before us the Exchange argued that the ALJ's findings of discriminatory employee terminations were not based on substantial evidence. The Exchange further argued that there was insufficient evidence on the record to merit findings of § 8(a)(1) violations. Finally, the Exchange contended that § 8(a) (1) violations, without more, could not provide the necessary proof of specific antiunion purposes behind an employee discharge.
The issue is whether there is sufficient evidence on the record to support the findings of § 8(a)(3) and 8(a)(1) violations. This opinion discusses in Part A the inadequacies of the ALJ's findings of no economic justification and of antiunion discrimination in connection with the discharges. We discuss in Part B the ALJ's findings of other § 8(a)(1) violations, several of which are unsupported in the record.
A. Discriminatory Discharges
We approach this problem with a clearly defined role. Congress has given this court the duty of scrutinizing the record as a whole. Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464, 95 L.Ed. 456 (1951). Mindful that it is not our task to assess the facts of this case de novo, neither is it to function as a "judicial echo" or rubber stamp for the conclusions of the board. Id. at 491, 71 S.Ct. at 466; NLRB v. Wire Products Manufacturing Corp., 484 F.2d 760, 765 (7th Cir. 1973). Under Universal Camera Corp. v. NLRB, 340 U.S. at 490, 71 S.Ct. at 465-
* * * The Board's findings are entitled to respect; but they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the Board's decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both.
The well-established rule in § 8(a)(3) cases requires the board to "show affirmatively by substantial evidence that the discharge was discriminatory and motivated by * * * alleged union activities." Portable Electric Tools, Inc. v. NLRB, 309 F.2d 423, 426-27 (7th Cir. 1962). Since motive, which is the determinative factor in finding a violation of § 8(a)(3), is a mental attitude, the board may rely on "circumstantial as well as direct evidence." W.W. Grainger, Inc. v. NLRB, 582 F.2d 1118, 1120 (7th Cir. 1978); McGraw-Edison Co. v. NLRB, 419 F.2d 67, 75 (8th Cir. 1968) (Blackmun, J.). Merely because the board can rely on circumstantial evidence, however, does not excuse it from meeting its affirmative burden. This court will not infer lightly an unlawful purpose nor will it allow the board to base its case on suspicion, especially where, as here, there is no showing of disproportionate treatment in discharges and rehirings. See NLRB v. American Casting Service, Inc., 365 F.2d 168, 172 (7th Cir. 1966). See also, Delco-Remy Division, General Motors Corp. v. NLRB, 596 F.2d 1295, 1306 (5th Cir. 1979).
After a thorough and thoughtful examination of a record that includes 1,058 pages of transcript alone, we must hold that the board did not meet its affirmative duty for the following reasons.
1. Economic Justification
The ALJ's conclusion that there was no economic crisis that warranted a reduction in personnel ignores the great weight of the evidence. The General Counsel did not contest that there was an economic crisis. But the ALJ concluded from the following chart that the Exchange normally adjusted overtime to accommodate fluctuations in security volume and would have followed that practice in the instant case were it not for discriminatory intent.
Stock       Hours of
Week      Certificates   Overtime     Total
Ending       Handled       Worked    Personnel
-----------  ------------  ----------  ----------
7/1/77            184,325         184     298
7/8/77 **         133,957         163     295
7/15/77           194.546         289     294
7/22/77           107,847         387     295
7/29/77           178,992         251     292
*        *         *         *         *
1/6/78             84,019          34     294
1/13/78           101,032          56     294
1/20/78            95,064          55     293
1/27/78            75,140          51     293
2/4/78             89,831          42     293
2/11/78            77,900          45     284
2/18/78 **         78,523          55     285
2/25/78 **         71,520          42     299
3/4/78             80,900         201     302
3/10/78            93,505         120     290
3/18/78            93,115         106     291
3/25/78            66,494         135     287
4/1/78             84,651          91     284
4/8/78           No figures furnished
4/15/78           101,230          47     285
4/22/78           108,856          68     285
4/29/78           114,147         119     282
** week includes a holiday
The court, however, can find no statistical correlation between the number of stock certificates handled and the hours of overtime worked. For example, on the week ending July 1, 1977, 184 hours of overtime were worked and 184,325 stock certificates were handled. Yet on the week ending July 22, 387 hours of overtime were worked and only 107,847 certificates handled. A doubling in overtime hours with a 40 percent reduction in the number of stock certificates handled does not demonstrate an Exchange business practice of adjusting overtime according to volume handled. Also, the chart would seem to show that overtime was not related to the volume of securities transactions since the maximum amount of overtime for any period shown remained always well under 1 hour per week per employee; thus employees worked always on the average between 40 to 41 hours, while variations in securities volume reached two and one-half to one.
The ALJ also noted that the Exchange's overtime payments during the week of March 4, the last week on which a discriminatory discharge was alleged to have occurred, "shot up" from an average of about 50 hours per week for the preceding two months to a "whopping" 201 hours. If "whopping" means large, it is difficult to characterize 201 as a "whopping" increase when a total number of 302 employees is considered, and how it was divided among them is not given. The word "whopping" is more often found in journalism than in legal writing. Placed before a monetary figure it somehow denotes a hugeness that the figure itself unadorned would not convey, and it substitutes for any comparisons that factually might establish the figure to be out of line. Here we have a number of overtime hours called "whopping" that is less than 1 hour per employee per week, nor is there anything to show that even this trifling overtime was worked by persons whose workload was directly affected by changes in the volume of security transactions. The word "whopping" thus has become a meaningless cliche and we suggest its replacement be "lumping," which means even less.
Therefore, the court holds that the ALJ's use of the various overtime figures to conclude that the Exchange was not suffering from economic problems (or if it did, that they were not the reason for the firings) to be unsupported and unreasonable. There is not even a scintilla of evidence to support such a conclusion. See Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938). Given the history of the erratic fluctuations in overtime, its use as an indicator is useless. Furthermore, the ALJ did not demonstrate a causal nexus between the discharge of some employees and a corresponding increase in overtime to the remaining employees within the relevant department. Without such a nexus, the court is confronted with a speculative inference that overtime was increased to compensate for the allegedly discriminatory discharges. Such an inference is without support.
Another misuse of raw numerical data is illustrated by the ALJ's finding that a total increase in the Exchange's work force evidenced an absence of economic curtailment. The Exchange's vice president, Torosian, however, testified without contradiction that he cut personnel only in six departments where the volume of work had decreased and that personnel increased in departments where there was an increase in activity. The ALJ did not refer to this testimony.
In addition, we find a myriad of other failures of the ALJ to refer to uncontradicted testimony that detracted from his finding that the Exchange's economic justification for the employee terminations was only a sham and that the actual reason for the terminations was an antiunion animus. It is undisputed on the record that in 1978 there was a long term decline in the securities and national stock exchange industries. This decline caused a drop in the number of Exchange customers and in the volume of securities handled. As a result, revenues concomitantly decreased, and Trust and Clearing suffered an $860,000 loss in 1977. The ALJ, however, concluded that the claimed loss was immaterial and merely meant the Exchange's shareholders were charging themselves less for services rendered at the Exchange than it cost to process their security transactions. If the Exchange was indifferent to its recovery of operating costs, as the ALJ seemed to believe, it lacked any economic motive to object to the unionization of its members. We may take notice that a regional stock exchange, like any business, must control its costs. Its costs in handling any widely held security must compare with the cost to the national stock exchange at New York handling the same security. In fact, there was uncontroverted testimony in the record that the goal of the Exchange was to be cost effective. Thus, the ALJ's discrediting without explanation of Torosian's statement that the Exchange had to control its costs is unreasonable.
It is also undisputed that the Exchange took various measures to combat the declining economic trend. In December 1976 the Exchange cut the night shift in Trust's Security Processing Department from 50 employees to nine. In September 1977, when Service was losing money and required a loan of $6 million, the Exchange curtailed various operations performed by Service. In May 1977 the Exchange instituted an austerity program designed to reduce Clearing and Trust costs by $45,000 per month. Therefore, as of January 1978, the Exchange had made several unsuccessful attempts at reducing costs. By the middle of January, Torosian predicted that January 1978 would be financially disastrous. During January 1978, the operating loss of Trust and Clearing amounted to $105,000 or $1.25 million at a yearly rate. Without commenting on most of this evidence, the ALJ somehow was able to conclude that the Exchange's job terminations were not economically motivated and suddenly were imposed because of the union's electoral victory.
Throughout its analysis of the economic justification issue, the ALJ's opinion often reads more like an advocate's than a judge's, but even an advocate must use statistics with respect. The ALJ also drew conclusions without any support in the record and contrary to uncontradicted testimony. Although an ALJ may reject uncontradicted testimony, the ninth circuit has held he may not re