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Matched Legal Cases: ['§ 8', '§ 158', '§ 160', '§ 152', '§ 10', '§ 102', '§ 10', '§ 10', '§ 160', '§ 10']

National Labor Relations Board, Petitioner, v. Augusta Bakery Corporation, Respondent, 957 F.2d 1467 (7th Cir. 1992) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1992 › National Labor Relations Board, Petitioner, v. Augusta Bakery Corporation, Respondent
National Labor Relations Board, Petitioner, v. Augusta Bakery Corporation, Respondent, 957 F.2d 1467 (7th Cir. 1992)
US Court of Appeals for the Seventh Circuit - 957 F.2d 1467 (7th Cir. 1992) Argued Nov. 1, 1991. Decided March 24, 1992
The Board, upholding the determination of the Administrative Law Judge (ALJ), held that Augusta had violated § 8(a) (1) and (3) of the National Labor Relations Act (Act), 29 U.S.C. § 158(a) (1), (3), by refusing to reinstate 11 of the 12 striking employees subsequent to the March 24 offer to return, which the Board found to be unconditional. The Board's order requires, among other things, that Augusta offer the 11 employees immediate and full reinstatement, with back pay.2
We have jurisdiction to consider the Board's petition for enforcement pursuant to 29 U.S.C. § 160(e), which also governs our standard of review. We must uphold the Board's determination if its factual findings are supported by substantial evidence in the record as a whole and its legal conclusions have a reasonable basis in the law. Id.; Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456, 464, 95 L. Ed. 456 (1951). Substantial evidence in this context means "such relevant evidence as a reasonable mind might accept as adequate to support" the Board's determination. Roadmaster Corp. v. NLRB, 874 F.2d 448, 452 (7th Cir. 1989) (quoting Universal Camera, 340 U.S. at 477, 71 S. Ct. at 459). This standard of review is well established; it "does not allow us to dabble in factfinding, and we may not displace reasonable determinations simply because we would have come to a different conclusion if we reviewed the case de novo." NLRB v. P*I*E Nationwide, Inc., 923 F.2d 506, 513 (7th Cir. 1991); see also NLRB v. United Ins. Co., 390 U.S. 254, 260, 88 S. Ct. 988, 991, 19 L. Ed. 2d 1083 (1968); U.S. Marine Corp. v. NLRB, 944 F.2d 1305, 1314 (7th Cir. 1991) (Board's application of the law to particular facts also reviewed under substantial evidence standard), petition for cert. filed (Dec. 23, 1991).
The standard "is not modified in any way when the Board and the ALJ disagree as to legal issues or derivative inferences made from the testimony." Weather Shield Mfg., Inc., Millwork Div. v. NLRB, 890 F.2d 52, 57 (7th Cir. 1989). It is the independent validity of the Board's order that is under review. Id. The scope of our review is narrow; we "must uphold the legal conclusions of the Board unless they are irrational or inconsistent with the National Labor Relations Act." Aqua-Chem, Inc., Cleaver-Brooks Div. v. NLRB, 910 F.2d 1487, 1490 (7th Cir. 1990) (citations omitted), cert. denied, --- U.S. ----, 111 S. Ct. 2871, 115 L. Ed. 2d 1037 (1991). Additionally, we may not disturb the Board's remedial order "unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act." Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 216, 85 S. Ct. 398, 405, 13 L. Ed. 2d 233 (1964) (quoting Virginia Elec. & Power Co. v. NLRB, 319 U.S. 533, 540, 63 S. Ct. 1214, 1218, 87 L. Ed. 1568 (1943)).
We have expounded upon the standard of review in some detail, for this is a case in which we must keep in mind, as we previously have acknowledged, that " [t]he faithful application of these principles requires a great deal of judicial restraint." U.S. Marine, 944 F.2d at 1314.
It is well settled that economic strikers retain their status as employees under the Act, and are entitled to full reinstatement at the conclusion of the strike. 29 U.S.C. § 152(3); NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378, 88 S. Ct. 543, 545, 19 L. Ed. 2d 614 (1967). An employer may not retaliate against striking employees by refusing to reinstate them upon their unconditional offers to return to work; such retaliation would discourage employees from exercising their guaranteed rights to organize and strike. Fleetwood Trailer, 389 U.S. at 378, 88 S. Ct. at 546. Accordingly, an employer must reinstate the returning strikers to their former positions unless the employer can show that its action was due to "legitimate and substantial business justifications," in which case it may refuse to reinstate the economic strikers. Id. (quoting NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34, 87 S. Ct. 1792, 1798, 18 L. Ed. 2d 1027 (1967)).
We first consider whether the offer to return was unconditional. The Board adopted the ALJ's determination that the two letters the Union sent to Arnold on March 24 were unrelated, and that one contained an unconditional offer to return to work. The Board's finding of an unconditional offer is a predominently factual determination, which we must uphold if supported by substantial evidence. Augusta bears the burden of showing that the offer to return was not unconditional. Soule Glass & Glazing Co. v. NLRB, 652 F.2d 1055, 1107 (1st Cir. 1981); NLRB v. Okla-Inn, 488 F.2d 498, 505 (10th Cir. 1973).
In support of its claim that the offer was conditional, Augusta cites International Union, Allied Industrial Workers v. NLRB, 411 F.2d 249 (7th Cir. 1969), in which we enforced a Board determination that strikers' reinstatement requests were conditioned on the employer's agreement to resume bargaining with the union. Id. at 251. In that case, the union had informed the company on July 17 that the strike would be "terminated" on July 20 and, in the same letter, demanded resumption of bargaining--a matter that was subject to a then-pending unfair labor practice charge. On July 20, 61 strikers sent individual but identical letters to the employer which stated, "I make this application for reinstatement with the understanding that [the employer] will continue to recognize and commence bargaining with my duly designated bargaining representative...." We upheld the Board's conclusion that the offer to return was conditional, noting that the company had expressly announced its intent to comply with the determination reached through the administrative processes.3 Id. at 251.
Were we to view the facts as an original matter and with a somewhat cynical eye, we might be sympathetic to Augusta's argument. A creative union might well attempt to circumvent Allied Industrial Workers by separating the tangible link between offer and condition by setting them forth in separate letters. However, the facts do suggest two reasonable (albeit diametrically opposed) inferences, and the substantial evidence standard does not allow us to reject the Board's "choice between two fairly conflicting views." NLRB v. Stor-Rite Metal Prods., Inc., 856 F.2d 957, 964 (7th Cir. 1988) (quoting Stokely-Van Camp, Inc. v. NLRB, 722 F.2d 1324, 1328 (7th Cir. 1983)). Where two inferences are possible, we cannot substitute our own inference for that of the Board, so long as the Board's is supported by substantial evidence in the record as a whole. We cannot say that the Board's determination that the offer was unconditional was not so supported.
Augusta offers three affirmative defenses for its refusal to reinstate the 11 strikers: six, it contends, were permanently replaced; three abandoned their employment by seeking and, in two instances receiving, retirement benefits; and two engaged in misconduct sufficient to warrant refusal to reinstate. The burden of proof on matters which relate to justification for the employer's actions rests with the employer. Fleetwood Trailer, 389 U.S. at 378-79 n. 4, 88 S. Ct. at 545-46 n. 4; Great Dane Trailers, 388 U.S. at 34, 87 S. Ct. at 1797.
As noted earlier, an employer may refuse to reinstate economic strikers if it can show a legitimate and substantial business justification for the refusal. One such justification arises when returning strikers' jobs are occupied by permanent replacements hired during the strike to continue operations. Fleetwood Trailer, 389 U.S. at 379, 88 S. Ct. at 546; see NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333, 345-46, 58 S. Ct. 904, 910-11, 82 L. Ed. 1381 (1938). In this way, "labor law purports to recognize business reality and allows a company that has been struck by its work force to hire permanent replacements as business needs dictate." Aqua-Chem, 910 F.2d at 1487. The replacements must, however, be permanent. "If an employer hires replacements without a commitment or understanding that the job is permanent and also discharges the strikers, the interest in protecting economic strikers by an entitlement to reinstatement is not overcome by a substantial business justification." NLRB v. Mars Sales & Equip. Co., 626 F.2d 567, 573 (7th Cir. 1980); see Mackay, 304 U.S. at 345-46, 58 S. Ct. at 910-11.
The burden of proving that the replacements were hired as permanent employees lies with the employer. Fleetwood Trailer, 389 U.S. at 378, 88 S. Ct. at 546); see Great Dane Trailers, 388 U.S. at 34-35, 87 S. Ct. at 1797-1798. To meet its burden, Augusta was required to show it had a "mutual understanding" with the replacements that they were permanent. Hansen Bros. Enters., 279 N.L.R.B. 741, 741 (1986), enf'd, 812 F.2d 1443 (D.C. Cir. 1987); see Associated Grocers, 253 N.L.R.B. 31, 32 (1980), enf'd, 672 F.2d 897 (D.C. Cir. 1981). Here, the Board adopted the ALJ's finding that the replacement hires were not permanent because no mutual understanding of permanency existed. This is a question of fact, and we review the Board's determination "only ... to see if it is supported by substantial evidence." Mars Sales, 626 F.2d at 573. "It is the primary responsibility of the Board and not of the courts 'to strike the proper balance between the asserted business justifications and the invasion of employee rights in light of the Act and its policy.' " Fleetwood Trailer, 389 U.S. at 378, 88 S. Ct. at 546 (quoting Great Dane Trailers, 388 U.S. at 33-34, 87 S. Ct. at 1797-1798).
As a general matter, where the Board does not accept the ALJ's findings we do not abandon the substantial evidence standard, but "the evidence supporting the Board's conclusion may be viewed as less substantial than it would be if the Board and the ALJ had reached the same conclusion." Lapham-Hickey Steel Corp. v. NLRB, 904 F.2d 1180, 1186 (7th Cir. 1990) (quoting NLRB v. Stor-Rite Metal Prods., 856 F.2d 957, 964 (7th Cir. 1988)). However, the significance of the ALJ's findings depends largely upon the role credibility determinations played in the outcome of the case. Universal Camera, 340 U.S. at 496, 71 S. Ct. at 468. " 'Credibility,' in this context, refers primarily to 'testimonial inferences'--those that rest on direct observations of the demeanor of witnesses--rather than 'derivative inferences'--those that are drawn from the substance of the evidence." Stor-Rite Metal, 856 F.2d at 965 (citing Kopack v. NLRB, 668 F.2d 946, 953 (7th Cir.), cert. denied, 456 U.S. 994, 102 S. Ct. 2278, 73 L. Ed. 2d 1290 (1982)). As we previously mentioned, our standard is not modified when the Board's disagreement with the ALJ is grounded upon derivative inferences. See Weather Shield Mfg., 890 F.2d at 57. That is the situation here. The ALJ found a "clear inference that [Augusta's] conduct toward the three 'retirees' was based upon an unlawful motive." App. at 16. Although this determination "embodies the inferences [the ALJ] drew from the facts," Kopack, 668 F.2d at 955, the ALJ's decision did not turn solely on credibility as we have construed the term. The ALJ did "not depend on an assessment of demeanor," id., and therefore, "the Board, in the exercise of its own expertise, can effectively draw its own inferences from the record." Id. Our task, then, is limited to determining whether substantial evidence supports the Board's conclusion. Id. at 956.
Augusta dismissed two of the strikers following the March 24 offer letter on the ground that they had participated in strike misconduct warranting termination. The Act does not protect striking employees who commit acts of vandalism or sabotage against their employer. See Clear Pine Mouldings, Inc., 268 N.L.R.B. 1044, 1045 (1984), enf'd, 765 F.2d 148 (9th Cir. 1985), cert. denied, 474 U.S. 1105, 106 S. Ct. 893, 88 L. Ed. 2d 926 (1986). To lawfully deny an employee reinstatement at the conclusion of a strike on this ground, an employer must produce evidence connecting the discharged employees to specific strike misconduct. See General Telephone Co., 251 N.L.R.B. 737, 739 (1980), enf'd, 672 F.2d 894 (D.C. Cir. 1981). Such conduct "must have had a tendency to coerce other employees in the exercise of their protected rights." Richmond Recording Corp. v. NLRB, 836 F.2d 289, 295 (7th Cir. 1987). Additionally, " [t]he honest belief of an employer that striking employees have engaged in misconduct provides an adequate defense to a charge of discrimination in refusing to reinstate such employees, unless it affirmatively appears that such misconduct did not in fact occur." Rubin Bros. Footwear, Inc., 99 N.L.R.B. 610, 611 (1952). The discharge is therefore unlawful if the evidence supports a finding that no misconduct occurred, notwithstanding the employer's good faith belief that it did occur.
As to one of the two strikers involved, Tadeusz Dlugolecki, we have relatively little difficulty in upholding the Board's conclusion. The Board credited Dlugolecki's denial that he had damaged windows at the company's facility during the strike. As the Board acknowledged, the testimony of Augusta's witnesses--a supervisor, who stated that he saw the broken windows and Dlugolecki nearby, and a nonstriking employee, who stated he saw Dlugolecki standing near the broken windows but that he did not see who broke the window--does not preclude a finding by the ALJ of no strike misconduct. The ALJ credited Dlugolecki's testimony over Augusta's witnesses. We again emphasize that "credibility determinations are to be made by the ALJ and the Board and will not be overturned by a reviewing court absent extraordinary circumstances." NLRB v. Illinois-American Water Co., S. Div., 933 F.2d 1368, 1374 (7th Cir. 1991) (quoting NLRB v. Berger Transfer & Storage Co., 678 F.2d 679, 687 (7th Cir. 1982)); see also NLRB v. Rich's Precision Foundry, Inc., 667 F.2d 613, 622 (7th Cir. 1981). " 'Extraordinary circumstances' include bias by the ALJ or the ALJ's disregard for sworn testimony." Berger, 678 F.2d at 679. Such circumstances do not exist here. Just because the ALJ credited the testimony of the striker over that of the witnesses for Augusta does not provide a grounds for reversal. See NLRB v. Del Rey Tortilleria, Inc., 787 F.2d 1118, 1121 (7th Cir. 1986). An ALJ's credibility resolutions are entitled to deference when a choice must be made between competing versions of the same incident. Richmond Recording, 836 F.2d at 295. Sufficient evidence exists on the record to determine that Dlugolecki did not engage in strike misconduct.
A more difficult task faces us with regard to Miroslaw Browarski, the other striker discharged for misconduct. Augusta attempted to introduce into evidence the affidavit of nonstriking employee Frank Acevedo, whose statement was taken by a Board agent in January 1986, which indicated that Acevedo saw Browarski throw a board at one of Augusta's windows. The ALJ ruled that Acevedo's testimony, whether in person or through the affidavit, was inappropriate surrebuttal and should have been presented during Augusta's case in chief regarding its good faith belief of strike misconduct.10 The Board affirmed the ALJ's refusal to admit the affidavit, but solely on the basis that it did not fall within the unavailable declarant exception to the hearsay rule, see Fed.R.Evid. 804(a) (5), because Augusta had not shown that it was unable to procure Acevedo's presence at the hearing by process or other reasonable means.
The Board raises two primary arguments to support its determination--one threshold, the other substantive. First, the Board asserts that Augusta is barred from seeking review here because it failed, under § 10(e) of the Act, to request reconsideration before the Board. See Pet'r Br. at 27. Section 10(e) provides that, absent extraordinary circumstances, we may not consider objections that were not presented to the ALJ or Board.11 The provision serves two purposes. First, it has a notice function that ensures that the Board has the first opportunity to resolve all issues properly before it. NLRB v. Wayne Transp., Div. of Wayne Corp., 776 F.2d 745, 749 (7th Cir. 1985). Second, "it ensures against repetitive appeals to the courts." Id.; see also U.S. Marine Corp., 944 F.2d at 1319 n. 17. The Board has implemented this statutory policy by adopting regulations providing that " [a]ny exception to a ruling, finding, conclusion, or recommendation which is not specifically urged shall be deemed to have been waived," 29 C.F.R. 102.46(b), and that " [n]o matter not included in exceptions or cross-exceptions may thereafter be urged before the Board, or in any further proceeding." Id. § 102.46(h). In interpreting § 10(e), the notice function is paramount: we determine "whether a party's exceptions are sufficiently specific to apprise the Board that an issue might be pursued on appeal." Consolidated Freightways v. NLRB, 669 F.2d 790, 793 (D.C. Cir. 1981). "In short, the statute requires notice of objection." Local 900, Int'l Union of Elec., Radio and Machine Workers, AFL-CIO v. NLRB, 727 F.2d 1184, 1192 (D.C. Cir. 1984).
Here, Augusta filed numerous exceptions to the ALJ's recommendations. One of those specifically objected to the exclusion of the affidavit: "The [ALJ] erred in rejecting Respondent's offer of proof proffering the testimony of Frank Acevedo as direct evidence of strike misconduct by striker Mirolsaw Browarski." Resp't Employer's Exceptions to the Administrative Law Judge's Decision and Recommended Order at 1. The Board argues that Augusta nevertheless was obliged to seek reconsideration of the Board's decision. We disagree. Augusta's exception to the ALJ's decision to exclude the affidavit and accompanying brief were adequate to apprise the Board that Augusta intended to press the issue now on appeal. Although Augusta did not object specifically to the Board's evidentiary determination through a motion for reconsideration, our inquiry "must be guided by the purposes of section 10(e)." Local 900, 727 F.2d at 1192. Here, Augusta's argument was considerably more focused than the general pro forma objections found to be impermissibly vague in other cases finding a § 10(e) bar, see NLRB v. Blake Constr. Co., 663 F.2d 272, 284 (D.C. Cir. 1981), and its objection to the exclusion of the affidavit was specific enough to alert the Board that its exclusion on any grounds would be an issue on appeal.
On to the substantive issue. Section 10(b) of the Act provides that the Board shall, "so far as practicable," conduct unfair labor practice hearings in accordance with the Federal Rules of Evidence. 29 U.S.C. § 160(b). The Board is not bound absolutely to apply the Federal Rules of Evidence under this provision, NLRB v. Maywood Do-Nut Co., 659 F.2d 108, 110 (9th Cir. 1981), and it may, where appropriate, fashion its own particular rule of evidence--for example, where a rule will facilitate the bargaining process. See id. (within Board's discretion under § 10(b) to establish rule excluding surreptitiously prepared tape recordings of negotiations in light of chilling effect such evidence would have on bargaining process) (citing Carpenter Sprinkler Corp. v. NLRB, 605 F.2d 60, 66 (2d Cir. 1979)). However, this does not necessarily "justify the exclusion of evidence ... which it would be error to exclude ... in a federal district court." Maywood Do-Nut, 659 F.2d at 110 (quoting General Eng'g, Inc. v. NLRB, 341 F.2d 367, 374 (9th Cir. 1965)). Here, the Board cites to Fed.R.Evid. 804(a) (5), and explicitly acknowledges that it "relied solely on the rules governing hearsay" in excluding the affidavit. Pet'r Br. at 26. The "as far as practicable" provision is therefore inapplicable here, and we must determine whether the Board correctly applied the federal evidentiary rules in excluding Acevedo's affidavit based on Augusta's failure to show unavailability. See NLRB v. Bakers of Paris, Inc., 929 F.2d 1427, 1434 (9th Cir. 1991) (court ordinarily determines whether the Board properly applied Federal Rules of Evidence).
The Board and Augusta agree that the affidavit was hearsay. The Board determined that the affidavit was inadmissible under the unavailable declarant exception to the hearsay rule because Augusta had not shown that it was unable to procure Acevedo's presence at the hearing by process or other reasonable means.12 Augusta had the burden of demonstrating that Acevedo was unavailable. See Moore v. Mississippi Valley State Univ., 871 F.2d 545, 552 (5th Cir. 1989).
Augusta does not dispute that it did not demonstrate Acevedo's unavailability; rather, it maintains that the ALJ prevented it from doing so. According to Augusta, when the ALJ rejected the affidavit on the ground that it should have been offered in Augusta's case-in-chief, the ALJ refused to allow Augusta to include in the offer of proof the necessary information to establish Acevedo's unavailability. Augusta argues that " [t]he Board transmutes the ALJ's refusal to accept unavailability information into a failure by Augusta to make a showing that it was unable to procure his attendance...." Reply Br. at 17.
Tr. at 853. Augusta's conclusory offer of proof offered nothing except the plain assertion that Acevedo was unavailable. See Moore, 871 F.2d at 552. Augusta failed to explain why Acevedo was unavailable, or to show that it had attempted to procure Acevedo's presence. Accordingly, we uphold the Board's ruling that the affidavit was inadmissible pursuant to Fed.R.Evid. 804(a) (5).
Augusta maintains that the "chain of conditions" surrounding the letter also supports this reading. It contends that the picketing employees had carried signs the substance of which read " [t]his plant on strike," until approximately March 31--that is, until following the receipt of Augusta's March 27 letter--at which time the signs were altered to read, "Augusta-Heck's Bakeries is unfair to organized labor. They refuse to bargain...." Says Augusta, "The timing here is simply too perfect to be coincidence." The crux of the contention is this: The letters were sent together, at the same time through the same courier. The "offer letter" made an offer to return on behalf of the employees "and the Union." When Augusta asked whether the offer was conditioned upon bargaining, the Union did not clarify the offer, but rather, changed its picket signs--deleting the references to the strike and replacing them with references to bargaining. This, says Augusta, clearly indicates that the Union's prime concern was its own return, not the return of the employees, and that the offer was therefore conditioned on bargaining
Laidlaw Corp., 171 N.L.R.B. 1366 (1968), enf'd, 414 F.2d 99 (7th Cir. 1969), cert. denied, 397 U.S. 920, 90 S. Ct. 928, 25 L. Ed. 2d 100 (1970). See Aqua-Chem, Inc., 910 F.2d at 1489 (emphasis omitted) (observing that Laidlaw preferential hiring strikes a balance between the rights of organized workers and business "by allowing replacement workers to be kept on permanently (in order to give the replacement workers adequate incentive to take replacement jobs), but by requiring genuine vacancies in the workforce to be given, in line of seniority, to the striking workers after the strike is over.")
Fed.R.Evid. 804(a) (5) defines a witness as "unavailable" where the declarant "is absent from the hearing and the proponent of a statement has been unable to procure the declarant's attendance ... by process or other reasonable means."