Case Name: WAUSAU STEEL CORPORATION, Petitioner, v. The NATIONAL LABOR RELATIONS BOARD, Respondent
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1967-04-11
Citations: 377 F.2d 369
Docket Number: No. 15840
Parties: WAUSAU STEEL CORPORATION, Petitioner, v. The NATIONAL LABOR RELATIONS BOARD, Respondent.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 377
Pages: 369–380

Head Matter:
WAUSAU STEEL CORPORATION, Petitioner, v. The NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 15840.
United States Court of Appeals Seventh Circuit.
April 11, 1967.
Schnackenberg, Circuit Judge, dissented in part.
Richard P. Tinkham, of Smith, Puchner, Tinkham & Smith, Wausau, Wis., for petitioner.
Marcel Mallet-Prevost, Asst. Gen. Counsel, Glen M. Bendixsen, Atty., National Labor Relations Board, Washington, D. C., Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Melvin H. Reifin, Atty., National Labor Relations Board, for respondent.
Before HASTINGS, Chief Judge, and SCHNACKENBERG and KILEY, Circuit Judges.

Opinion:
HASTINGS, Chief Judge.
The Wausau Steel Corporation, a Wisconsin corporation, has petitioned this court to review and set aside an order of the National Labor Relations Board issued against it on August 19, 1966 and reported at 160 NLRB No. 47. The Board has requested enforcement of its order.
The trial examiner found that Wausau violated § 8(a) (1) of the Labor Management Relations Act, 29 U.S.C.A. § 158(a) (1) by promising benefits to its employees and by threatening reprisals and that Wausau violated § 8(a) (5), 29 U.S.C.A. § 158(a) (5) by refusing to bargain in good faith with a majority union. The Board affirmed and generally adopted the report of the trial examiner and ordered Wausau to cease and desist from its unfair labor practice violations and to bargain with the union on request.
Wausau contends that the evidence against it was insufficient to prove that it lacked good faith in refusing to bargain and that the evidence was insufficient to establish that it engaged in unfair labor practices prior to a representation election held at its plant. Wausau urges that even if it did engage in unfair labor practices, it was not precluded by such conduct from asserting a good faith doubt concerning the union's ma jority status. It further contends that the union involved, Shopmen's Local Union No. 811, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, was guilty of misrepresentation or fraud in its card solicitation and electioneering, thus nullifying its claim of bargaining status.
The trial examiner found the following facts. The union received cards from 29 of 38 employees of Wausau authorizing it to act as their bargaining representative. On November 2, 1966, the union wrote Wausau, claiming majority status and requesting recognition. Wausau replied two days later, declining to recognize the union on the ground that the union had supplied no proof of majority status and that Wausau had reason to doubt the union's claim. Shortly thereafter, Wausau and the union agreed to a consent election, which was held on November 22, and which the union lost 21-17.
During the period prior to the election, Theodore Wallach, Wausau's president, communicated with his employees by letters and through speeches. While Wallach was generally guarded in his statements, he did suggest that if the union won the election, overtime work might be reduced or eliminated. He also stated that increased expenses due to unionization might make it necessary to sell trucks, and to close the new steel department, and that if the union obtained a 22 or 22% cent raise for the employees, Wausau would be forced out of business. He noted that certain wage inequities had come to his attention and that he planned to correct them. He further said:
"No union can supply you with overtime or force the company to provide overtime. Our margin of profit is so small that any substantial increase in our costs would mean that we would operate at a loss and be forced to drop major parts of our operations. We don't want this — and you don't either.
"We intend, when this union matter is settled, to make proper adjustments in wages and to establish a reasonable insurance program."
This theme was stressed a number of times in Wallach's various communications.
Wallach made similar statements to employee Larry Hill, an active union organizer, after summoning Hill to his office and inquiring into any complaints Hill and any other employees had and why they wanted a union.
To Kenneth Thomas, another employee Wallach asked to his office on another occasion, Wallach stated that Thomas, who had been employed only a few months, "might have been here long enough to have received [a] raise with the rest of the men." He further said that if the union won the election, he would have to cut working hours to 40 and hire more employees.
Finally, Wallach stated to another employee, Ronald Martin, that if the union came in, Martin would be one of the first to go, evidently because of a lack of seniority. Wallach repeated his suggestion that if the union came in and expenses were too high, Wausau would shut down operations.
The trial examiner found that Wallach's remarks in his letters and speeches exceeded permissible free speech limits, amounting instead to promises of benefits and threats of reprisals violative of the Labor Management Relations Act.
The trial examiner also found § 8(a) (1) violations in Wallach's interviews with employees Hill and Thomas. The interview with Martin was found to be violative of the Act to the extent that Wallach repeated the promises and threats of his speeches.
The trial examiner concluded that Wausau was also guilty of a § 8(a) (5) violation of the Act, that is, failure to bargain in good faith with a majority union. His principal reason for finding this violation was an application of the rule that where a union has obtained authorization cards from a majority of employees and the employer thereafter engaged in unfair labor practices which prevented the holding of a fair election, the employer will not be heard to say that he had a good faith doubt of the union's majority.
In addition to a cease and desist order based on the § 8(a) (1) and § 8(a) (5) violations, the trial examiner recommended that Wausau be required to bargain with the union on request.
We find no merit in Wausau's attack upon the union's authorization cards. Wausau introduced evidence tending to show that six authorization cards were solicited through the union's misrepresentations. Even if all six authorization cards were not counted, the union yet had a majority of Wausau's employees who had authorized it to act as their bargaining representative. Such evidence as Wausau did present, when coupled with the fact that no other cards were attacked, did not demonstrate a pervasive misrepresentation by the union sufficient to cast doubt upon the validity of the remaining cards. On this point, Wausau failed to meet its burden of proof, and the Board's judgment has not been shown to be erroneous.
While we do not doubt that Wallach proceeded carefully in attempting to limit his communications to his .employees to the legally permissible, his words must be judged by their likely import to his employees. As the trial examiner suggested, one who engages in "brinksmanship" may easily overstep and tumble into the brink. It is well set-fled that an employer has violated § 8 (a) (1) of the Act if, in communicating to his employees during a union organizational drive preceding an election, he makes promises of benefit or threats of loss or reprisal for their vote. N. L. R. B. v. Realist, Inc., 7 Cir., 328 F.2d 840 (1964), cert. den., 377 U.S. 994, 84 S.Ct. 1921, 12 L.Ed.2d 1046 (1964); N. L. R. B. v. Marsh Supermarkets, Inc., 7 Cir., 327 F.2d 109 (1963), cert. den., 377 U. S. 944, 84 S.Ct. 1351, 12 L.Ed.2d 307 (1964); N. L. R. B. v. Imperial-Eastman Corporation, 7 Cir., 322 F.2d 679 (1963). A fortiori, such promises or threats, directed to specific employees and coupled with interrogation, also violate § 8(a) (1).
We are not convinced, however, that substantial evidence supports the finding of a § 8(a) (5) violation. There is some indication in the record that Wausau may have begun engaging in conduct violative of § 8(a) (1) prior to the union's demand for recognition, but it is not possible to draw from this the sole inference that Wausau had no good faith doubt of the union's majority. It is equally inferable that Wausau was simply concerned and did not like the union organizational drive, perhaps fearing the development of a union majority.
In some cases, a § 8(a) (5) violation could be permissibly inferred from evidence of § 8(a) (1) violations. See Furr's, Inc. v. N. L. R. B., 10 Cir., (No. 8686, 1967); Colson Corporation v. N. L. R. B., 8 Cir., 347 F.2d 128 (1965), cert. den., 382 U.S. 904, 86 S.Ct. 240, 15 L.Ed.2d 157 (1965). However, when evidence of § 8(a) (1) violations cannot be said to be probative of a lack of good faith and, therefore, that bad faith is not, on the record, a reasonable inference, then there is no basis to infer a violation of § 8(a) (5).
Good faith or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of credibility. N. L. R. B. v. Economy Food Center, Inc., 7 Cir., 333 F.2d 468 (1964); N. L. R. B. v. Crean, 7 Cir., 326 F.2d 391 (1964). Credibility, of course, is an issue for the trial examiner. In the instant case, however, the trial examiner did not rely upon credibility to find bad faith. He stated:
" the Company contends that the Union never proffered the authorization cards as proof of its majority, and that this circumstance, particularly when coupled with the Union's tender of similar cards on an earlier occasion, led the Company to doubt the Union's claim. This defense might well have been available had the Company refrained from unfair labor practices, but on this record the Company's illegal conduct precludes its assertion of a good-faith doubt."
The "earlier occasion" the trial examiner referred to relates to the fact that in 1964, the same union involved in this case had attempted to organize Wausau's employees and apparently failed. The union had a number of signed authorization cards, showed them to Wallach and demanded recognition. Nothing came of this, either by way of an election or an unfair labor practice charge, and the union made no subsequent demand. Wallach stated this was because his employees had definitely decided against the union.
This history, through which, no doubt, Wallach viewed the subsequent union attempt to organize his employees, together with the facts that the union failed to show its cards to Wallach, that Wausau readily entered a consent election agreement with the union, and that Wallach was evidently attempting to follow his counsel's advice with respect to what he might permissibly do, more than overweighs an inference from the § 8(a) (1) conduct that Wausau was in bad faith in refusing to recognize the union. We hold the inference of bad faith to be unreasonable from the facts of record taken as a whole.
Although we hold that Wausau did not refuse to bargain in bad faith, we must yet consider an alternative ground asserted by the Board in support of the bargaining order issued in this case. As the trial examiner put it:
" the Company having foreclosed by illegal conduct the customary means of resolving majority, the proof of majority status may be made by cards, and in the light of such proof a bargaining order is appropriate to restore the status existing prior to the violation of Section 8(a) (1), even assuming arguendo that the record did not warrant a finding of unlawful refusal to bargain."
Wausau, citing N. L. R. B. v. Flomatic Corporation, 2 Cir., 347 F.2d 74 (1965), has suggested, assuming that we failed to find it had refused to bargain improperly, that rather than enforce the Board's bargaining order, we require the Board to conduct another election.
There is no doubt that a bargaining order is at times appropriate where a union majority has been dissipated by employer unfair labor practices. In Flomatic, however, it was held by a divided court that a minor or borderline § 8(a) (1) violation which resulted in a moderate unbalancing of an election does not, standing alone, warrant a bargaining order, rather than a new election. Flomatic, supra at 80. In such circumstances, the court stated, a bargaining order may vitiate the freedom of choice guaranteed the employees by the Act by requiring the employees to-utilize a minority union as their bargaining representative.
While most recent, Flomatic is not unique in directing the Board to conduct a new election, rather than require the employer to bargain with a union na longer having a majority. In the following cases, the courts have either directed a new election or considered the possibility of doing so and rejected it. N. L. R. B. v. Delight Bakery, Inc., 6 Cir., 353 F.2d 344 (1965); National Labor Rel. Bd. v. Inter-City Advertising Co., 4 Cir., 154 F.2d 244 (1946); Oughton v. National Labor Relations Board, 3 Cir., 118 F.2d 486 (1940); National Labor Relations Board v. P. Lorillard Co., 6 Cir., 117 F.2d 921 (1941), rev'd, 314 U.S 512, 62 S.Ct. 397, 86 L.Ed. 380 (1942); Hamilton-Brown Shoe Co. v. National Labor R. Board, 8 Cir., 104 F.2d 49 (1939); National Labor Relations Bd. v. National Licorice Co., 2 Cir., 104 F.2d 655 (1939).
In view of the policy of the Act to protect the rights of employees, the concern of appellate courts to protect employees' freedom of choice by assessing the effect of Board orders is not misplaced. An examination of the cases cited, supra, however, readily reveals that appellate courts have been divided over the appropriateness of refusing to enforce a Board order to bargain and instead directing the Board to conduct a new election.
In those cases in which the Board was directed to conduct a new election, the courts sought and generally relied on record evidence, independent of the election results and untainted by unfair labor practices, which in some way indicated that the union in fact lacked a majority at the time of the bargaining order, and that it was a reasonable inference that the union's lack of majority was not due to the employer's conduct.
On the other hand, in cases in which a bargaining order has been enforced, the evidence has been strong that the union had majority status prior to the unfair labor practice conduct and the representation election, thus strengthening the inference that the unfair conduct was a substantial cause of the union's loss of majority.
In the instant case, the only evidence of majority was the union's authorization cards, and the only evidence of the union's lack of an actual majority was the election result. From the record, it is impossible to say whether the union had an actual majority which the employer's conduct dissipated. Similarly, because of a dearth of evidence, it is not possible to determine the effect of the particular unfair conduct upon the employees' freedom of choice.
Thus, we cannot conclude, as did the court in Flomatic, supra, that the § 8(a) (1) violations here were minor or borderline or had only a moderate unbalancing effect upon the election. To so find would be merely to indulge a presumption, unrelated to any record evidence, that the effect of promises and threats in a certain plant was not substantial and that the election influenced by such conduct was nevertheless some indication of the actual sentiment of the employees.
Similarly, a suspicion of the validity of union authorization cards cannot justify the assertion in this case that the union, while having a card majority, was unlikely to have had a real majority. The union's card majority, not discredited at the unfair labor practice hearing, is the only unblemished record fact relating to the union's actual majority.
There is no evidence upon which to base a conclusion impugning the Board's inference that Wallach's unfair conduct dissipated an actual union majority. Cf. National Labor Rel. Bd. v. Stow Manufacturing Co., 2 Cir., 217 F.2d 900 (1954), cert. den., 348 U.S. 964, 75 S.Ct. 524, 99 L.Ed. 751 (1955). Assuming, without deciding, that we have the authority under certain circumstances to order the Board to direct a new election we do not find this case appropriate for such an order.
We cannot say where the evidence does not disclose the inappropriateness of the Board's bargaining order that the Board has exceeded the statutory discretion given it. To devise appropriate remedies and to gauge when the labor atmosphere has been cleared so that a new election may be held are within the Board's discretion. Franks Bros. Co. v. National Labor Relations Board, 321 U.S. 702, 64 S.Ct. 817, 88 L.Ed. 1020 (1944); Intern. Ass'n of Mach. etc. v. National Labor Relations Board, 311 U.S. 72, 61 S.Ct. 83, 85 L.Ed. 50 (1940); Delight Bakery, supra; Stow Manufacturing Co., supra; Oughton, supra.
For the foregoing reasons the petition to set aside the order of the Board under review in this case is denied the cross-petition of the Board for enforcement of its order is granted, and an appropriate decree shall issue.
Review denied and enforcement ordered.