Opinion ID: 758676
Heading Depth: 4
Heading Rank: 2

Heading: The Propriety of the Restoration Order

Text: 60 We recognize that Coronet committed an unfair labor practice when it abandoned its former transportation department in the circumstances then existing. We do not doubt the Board's authority to order restoration of a department closed for illegal reasons. But while restoration of the status quo is often an appropriate remedy, it is inappropriate if it causes undue hardship. The regulatory scheme established for labor relations by Congress is essentially remedial, and the Board is not authorized to impose penalties solely for the purpose of deterrence or retribution. Republic Steel Corp. v. NLRB, 311 U.S. 7, 10-12, 61 S.Ct. 77, 85 L.Ed. 6 (1940). 61 While we find this a close and difficult case, based upon our review of the record as a whole we do not believe that the Board's restoration order serves the remedial purposes of the NLRA. We conclude that a restoration order under these circumstances would place an undue burden on Coronet and would be punitive rather than remedial. Accordingly, for the reasons that follow, we conclude that the Board abused its discretion in ordering restoration of Coronet's transportation department. 62 In rejecting Coronet's undue burden defense, the ALJ focused exclusively on the costs and benefits, in dollar terms, associated with restoration. The ALJ's cost-benefit approach was far too narrow. While it is certainly true that courts reviewing restoration orders have assessed the financial burdens associated with a resumption of operations, they have also scrutinized the operational problems and other business considerations such orders entail. Thus, for example, the Ninth Circuit in Great Chinese Am. Sewing Co. emphasized the fact that industry trends favored subcontracting sewing work to overseas outfits in refusing to enforce an order restoring a sewing facility. 578 F.2d at 256. The court concluded that forcing the employer to reinstitute its sewing facility would place it at a competitive disadvantage within its industry. Id. Similarly, in Savoy Laundry, the Second Circuit refused to enforce a restoration order in part because the employer had not engaged in the business at issue for three years and had suffered a loss of goodwill in the interim. 327 F.2d at 372. Neither has the Board confined itself solely to a balance sheet approach, considering instead the practicalities of each situation, including whether the closed operation is now outmoded or obsolete. See Roytype, 1990 WL 122434, at  1; Summit Tooling, 1972 WL 4304, at  3. 63 Coronet presented uncontradicted testimony from Jaquith and Padden concerning the practical effects of forcing Coronet back into the trucking business as a private fleet. The uncontradicted record evidence showed that resumption of Coronet's private fleet, which was described by Jaquith as not even mediocre, would not only be a bad business decision, but would also place the company at substantial risk. Without the ability to engage in backhaul business, Jaquith testified, Coronet could not remain competitive in its industry. Thus, the ALJ had before him uncontradicted evidence that a private fleet operation of the type Coronet utilized at the time of the shutdown was an outmoded and inefficient structure for Coronet's business. 64 To retain the significant backhaul revenues, which Jaquith estimated to be approximately a half million dollars per year, Jaquith testified that Coronet would have to operate as a common carrier. To order Coronet to do so, Jaquith and Padden both testified, would essentially force Coronet to enter a business that it had demonstrated no aptitude whatsoever for in the past. Contrary to the ALJ's finding that Coronet did not risk losing any backhaul business during the transition to common carrier status, Jaquith's uncontradicted testimony was that Coronet would likely lose all of that business. And, contrary to the ALJ's finding that Padden had handled virtually all Coronet's backhaul business in the past, Padden's uncontradicted testimony was that he had, for a short period of time, helped broker approximately half of Coronet's backhaul revenues. Padden also testified that after 1989 he spent only five percent of his time on transportation matters, and that if forced to restore the transportation department in any form, he would seek the services of a general manager skilled in sales and marketing to handle the development and maintenance of Coronet's backhaul business. 65 The ALJ's conclusion that restoration was a relatively easy and problem-free alternative was unsupported by any testimony from a transportation expert or other evidence. This is not the simple case where resumption of the former operation is little more than the old employee picking up the broom and starting to sweep where the contractor left off. American Mfg. Co., 351 F.2d at 80. Restoration would require the importation of expertise not now possessed, and the coordination of a host of activities relating to the distribution of Coronet's product and the development of backhaul business that, according to Jaquith and Padden, Coronet lacks the experience and expertise to effectively handle. It would also require that Coronet locate a new terminal to house its considerably larger fleet of trucks. See National Family Opinion, Inc., 246 N.L.R.B. 521 (1979) (holding that reestablishment of printing department would be unduly burdensome where restoration would require either transfer of entire department or leasing of additional space). 66 Although the ALJ credited the testimony of both Padden and Jaquith, the Board concluded that Coronet exaggerated the difficulty of creating an in-house operation. It suggested that people employed by LMI exclusively to serve Coronet at the Wheeling terminal may be rehired by Coronet; that Padden could handle the backhaul business because of his previous experience (which was exaggerated by the ALJ); that Coronet would not lose any of the backhaul revenues currently generated by LMI; and that perhaps even the management needed to direct Coronet-employed drivers could be contracted-for. 14 But this is all speculative and, accordingly, register[s] no weight on the substantial evidence scale. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d at 1269. 67 The fact remains, as Jaquith's testimony makes clear, the running of a long-haul trucking operation of this size is a complex process. Padden and Jaquith testified that restoration would both jeopardize service quality in a vital area of Coronet's business, and impose extra burdens upon its management--burdens its management lacks the time and expertise to discharge properly. The ALJ also ignored both Jaquith's and Padden's unequivocal testimony, credited by two ALJs, that, given the availability of contract packages furnished by experienced trucking firms, it made no sense for Coronet to try to construct an in-house program of its own, especially where companies like Coronet were today, for the reasons given by Jaquith, mostly giving up in-house transportation departments. 15 We do not think the Board may take an opposing view of the business realities without having more supporting evidence in the record than it has. 68 We think that Coronet has shown that restoration will result in undue hardship. Restoration will require Coronet to abandon contract trucking arrangements that have satisfactorily served its needs for several years in favor of building, essentially from scratch, a new and--compared to its former in-house department--essentially different, in-house transportation unit. Here the uncontroverted evidence indicates that, at the time of its improper dealings with its workers and the union, Coronet had, in fact, an inadequately structured and performing transportation department. The company's anti-union activities occurred more or less at the time major changes were taking place in the way trucking fleets were being managed, with an apparent trend towards contract carriers replacing private fleets because of the increasing sophistication required. After Coronet entered into contract arrangements, its favorable experience fully supported Padden's judgment; they provided precisely the services Coronet desired to handle its customers. It is undisputed, moreover, that Coronet has experienced a substantial improvement in operating efficiency with LMI. 69 To force Coronet, at this time, to give up an arrangement that has proven itself to be highly successful would be, in our judgment, a serious and undue hardship. It would not, indeed, even constitute a restoration of the status quo, since it is clear that the kind of private fleet operation Coronet once ran is no longer viable. The ALJ referred to the leasing of equipment, tacitly accepting that Coronet would not own its own tractors and trailers, and, by the same token, was unlikely to employ its own mechanics for maintenance. Moreover, the computerized information systems now essential did not formerly exist. It follows that if Coronet is forced to reopen its transportation department, it will not be simply restoring the prior operation but will be obliged to create an entirely restructured department. To compel it to do this, where a total package contract can provide, and is providing, the very services it now wants can only be described as a punitive rather than a remedial order. 70 We also wonder whether and how the employees, who were terminated in 1989, will benefit from the restoration order. If we were to enforce the Board's restoration order, Coronet would be unable to restore its in-house mechanics operation to service and maintain the trucks it would have to lease; Jaquith testified that he knew of no situation in which a lessee in such circumstances would be permitted to service the trucks. It is uncontroverted, moreover, that Coronet has no other facility to which to transfer the displaced mechanics. Consequently, there would be nothing for the former mechanics to do within the new transportation department, or elsewhere within the company. As for the drivers, it may well be, as the ALJ suggested, that Coronet will have to look to LMI or some other contract carrier to find a new cadre of drivers for its new operation. Even if the former drivers are available for employment, Padden's testimony makes clear that there are significant business reasons for contracting out Coronet's transportation services. Consequently Coronet, shortly after being forced to incur substantial expenses and spend significant management time associated with a restoration of its in-house department, likely would decide to once again close down the in-house department for legitimate business reasons. See, e.g., Jays Foods, Inc., 573 F.2d at 447 (concluding that work could be re-contracted for legitimate business reasons, with the effect that discriminatees were placed on an employment merry-go-round). We fail to see how a restoration order would serve the purposes of the NLRA under these circumstances. 71 The traditional deference to the Board's remedial orders is premised upon the appreciation that the Board has brought to bear its careful consideration and special competence in fashioning relief. NLRB v. J. Weingarten, Inc., 420 U.S. 251, 265-66, 95 S.Ct. 959, 43 L.Ed.2d 171 (1975). That traditional deference does not apply to Board speculation concerning business practicalities, especially where, as here, there is substantial uncontroverted evidence that detracts from its findings. As the Supreme Court has explained: 72 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. 73 Universal Camera Corp., 340 U.S. at 490, 71 S.Ct. 456. We conclude that the Board's restoration order is supported by neither a fair estimate of the worth of testimony nor its special competence. We accordingly decline to enforce the Board's order to restore the transportation department.