Opinion ID: 424730
Heading Depth: 3
Heading Rank: 2

Heading: Change in Remedy for Unfair Labor Practice.

Text: 23 To remedy the Union's commission of the unfair labor practice against Gilson, the ALJ ordered the Union to compensate Gilson for any wages lost as a result of Gilson's discharge for a period commencing with discharge but terminating five days after the Union asked the employer to reinstate Gilson. The Board modified the ALJ's order and held that the Union's back pay liability includes all lost wages suffered until Gilson is either reinstated by his former employer or employed in a substantially similar job. Contending that the Board's modification represents an improper departure from Board precedent, the Union asks us to deny enforcement of the Board's modification to the ALJ's back pay order. We reject the Union's argument. 24 The Board's prior remedy against the union in cases where the union had wrongfully caused an employee's discharge was to require back pay from the date of discharge to a date five days after the union indicated to the employer that it no longer opposed reinstatement. This rule was first established by the Board in Pinkerton's National Detective Agency, Inc., 90 N.L.R.B. 205 (1950), enf'd, 202 F.2d 230 (9th Cir.1953). In that case both the union and the employer were found to have committed unfair labor practices in discharging the employees. The Board ordered the employer to reinstate the discharged employees and held the employer and the union jointly and severally liable for the employees' lost wages. 90 N.L.R.B. at 213. The Board reasoned, however, that it would be inequitable to hold a union that had willingly ceased discriminating responsible for all lost wages where the employer refused to remedy its own unfair labor practices by promptly reinstating the employees. Id. Accordingly, the Board established the five-day tolling rule for the union and held only the employer liable for lost wages accruing after the date five days following the union request for reinstatement. Id. 25 Shortly after the Board's decision in Pinkerton's, the Board extended the Pinkerton's remedy rule to a case in which the union alone was found to have wrongfully caused the discharge. Pen and Pencil Workers Union, Local 19593, 91 N.L.R.B. 883 (1950). Since the employer was not a party in Pen and Pencil Workers, the Board was not able to hold the employer liable for damages or to order it to reinstate the employee. The Board stated that its objective in framing a remedial order in that case was to require [the party] responsible for the discrimination to remedy such discrimination by restoring such employees, as closely as possible, to the employment and financial status they would have occupied if it had not been for the discrimination. Id. at 888. However, without further explanation, the Board limited the back pay order against the union to the period from the date of discharge to the date five days after the union notified the employer that it no longer objected to the employee's reinstatement, id. at 890, even though neither the Board nor the union had any capacity to require the employer to reinstate the employee. By so doing, it cast, perhaps unwittingly, upon the wrongfully discharged employee all remaining damages stemming from the unlawful discharge. 26 The Board acknowledges that since that time it has generally applied the Pinkerton's tolling rule in cases where an employee is wrongfully discharged, regardless of whether the union is only partly or solely responsible for the discharge. See, e.g., Macaulay Foundry, 553 F.2d at 1202 (citing cases). But see, e.g., Chauffeurs, Teamsters & Helpers Local 525, 202 N.L.R.B. 572, 578 (1973) (remedy for union's securing of wrongful discharge of employee held to include all wages lost until the employer reinstated the employee or he found other substantially similar employment). 27 In the instant case, the Board concluded that the remedy applied in Pen and Pencil Workers is inconsistent with the proper and effective realization of the statutory policy which requires that a transgressor should bear the burden of the consequences stemming from its illegal acts. The Board expressly overruled Pen and Pencil Workers and its progeny and held that the Union's liability for lost wages and benefits suffered by the employee includes all wages and benefits lost until the employee either is reinstated or obtains substantially equivalent employment elsewhere. 28 The Union argues that the Board acted outside its authority by applying a new rule against the Union for the first time in this proceeding. The Union contends that, because the Union may have relied on the tolling rule enunciated in Pinkerton's and Pen and Pencil Workers in deciding whether to commit the unfair labor practice, the Board should have established its new rule through the rulemaking procedures contained in the Administrative Procedure Act and not by adjudication. We disagree. 29 The broad scope of the Board's authority to fashion an appropriate remedy to alleviate the effects of unfair labor practices was set forth by the Supreme Court in NLRB v. J.H. Rutter-Rex Manufacturing Co.: 30 We start with the broad command of Section 10(c) of the National Labor Relations Act ... that upon finding that an unfair labor practice has been committed, the Board shall order the violator to take such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of the Act. This court has stated that the remedial power of the Board is a broad discretionary one, subject to limited judicial review. Fibreboard Corp. v. NLRB, 379 U.S. 203, 216 [85 S.Ct. 398, 405, 13 L.Ed.2d 233] (1964). 31 396 U.S. 258, 262-63, 90 S.Ct. 417, 419-20, 24 L.Ed.2d 405 (1969). 32 The decision whether to proceed by rulemaking or adjudication in the formulation of a remedial rule is within the agency's discretion. 3 NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95, 94 S.Ct. 1757, 1769-72, 40 L.Ed.2d 134 (1974); SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947); NLRB v. St. Francis Hospital of Lynwood, 601 F.2d 404, 414 (9th Cir.1979). In particular, the Board may exercise its discretionary power to mould remedies suited to practical needs and to impose a new remedy for improper conduct in an adjudication before it even if the remedy imposed for the unlawful conduct is different from that imposed previously for similar conduct and even though no rulemaking procedure has been used to gain comments on or to provide notice of the new remedial approach. See NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 351-52, 73 S.Ct. 287, 291-92, 97 L.Ed. 377 (1953) (upholding the Board's application of a back pay remedy different from that previously imposed in similar cases, despite no announcement of new remedial rule in rulemaking proceeding). 33 Although in some situations the Board's reliance on adjudication would amount to an abuse of discretion, Bell Aerospace, 416 U.S. at 294, 94 S.Ct. at 1771, we do not believe that this is such a case. Unlike the recent cases in which this Circuit has found imposition of a new rule by adjudication rather than by rulemaking an abuse of discretion, the rule at issue in the instant case involves not an alteration of pre-existing lawful relationships (rendering unlawful that which had previously been lawful), but rather the imposition of a different remedy for conduct that has long been deemed improper. 4 See Ford Motor Co. v. FTC, 673 F.2d 1008, 1010 (9th Cir.1981) (FTC's promulgation of new rule regarding motor vehicle resale and repossession practices through adjudicative proceedings held abuse of discretion, where new rule changed a standard of substantive liability, making illegal an industry practice that had previously been considered lawful); Ruangswang v. INS, 591 F.2d 39, 46 (9th Cir.1978) (INS's institution of new requirements for acquisition of exemption from requirement of labor certification through adjudicative proceedings held abuse of discretion); Patel v. INS, 638 F.2d 1199, 1205 (9th Cir.1980) (same); see also NLRB v. Majestic Weaving Co., Inc., 355 F.2d 854, 860 (2d Cir.1966) (decision branding as 'unfair' conduct stamped 'fair' at the time a party acted, raises judicial hackles). 34 The Union also argues that even if the remedial rule espoused in Pen and Pencil Workers and its progeny could properly be changed by the Board in this case, the Board's order is invalid because Zinsco was not joined as a party and because the order does not require Zinsco to hire Gilson. We disagree. 35 The fact that Zinsco is not a party in the case does not preclude the Board from imposing a make-whole order on the Union. See Radio Officer's Union v. NLRB, 347 U.S. 17, 54-55, 74 S.Ct. 323, 343-344, 98 L.Ed. 455. The record nowhere indicates that any charge concerning Gilson's discharge was filed against Zinsco. Even if the Board had authority to order joinder of Zinsco, there is no evidence that Zinsco engaged in any conduct that would justify the Board in ordering it to reinstate Gilson. 5 The Union's fear of back pay liability continu[ing] unabated, forever in the absence of a reinstatement order directed at the employer is exaggerated. Under the Board's order, the Union can terminate its back pay liability at any time by finding Gilson a substantially equivalent job. 36 In short, we conclude that the back pay portion of the Board's order is both calculated to effectuate the policies of the Act and appropriate to the circumstances of this case. 37