Court Opinion

ID: 5519
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:06:44+00
Date Added: 2024-06-11T16:44:46.421647
License: Public Domain

United States Court of Appeals,

                                          Fifth Circuit.

                                          No. 92-4391.

ELECTRONIC DATA SYSTEMS CORPORATION, and its Wholly Owned Subsidiary, Security
Couriers, Inc., Petitioners-Cross-Respondents,

                                                v.

          NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.

                                        March 12, 1993.

Petitions for Review of Order of National Labor Relations Board.

Before REAVLEY, SMITH and DeMOSS, Circuit Judges.

       REAVLEY, Circuit Judge:

       An Administrative Law Judge (ALJ) found that Electronic Data Systems (EDS) violated

sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (NLRA), 29 U.S.C. §§ 158(a)(1)

and 158(a)(3) by: threatening to discharge employees, disciplining an employee, revoking employee

privileges, and ultimately discharging several employees for union organizing activities. The ALJ

recommended, inter alia, that EDS reinstate the employees to their jobs as courier drivers for the

same corporate division of EDS for which the drivers worked at the time EDS discharged them. A

three-member panel of the National Labor Relations Board (NLRB) adopted the ALJ's findings and

recommendation in all relevant respects. In its petition for review, EDS argues that NLRB erred in

its factual determinations and that NLRB ordered an illegal remedy. NLRB cross-petitions for

enforcement of its order. We refuse to disturb NLRB's factual determinations, but we only enforce

part of NLRB's order. NLRA § 10(e), 29 U.S.C. § 160(e). Because the record does not yet support

the exact remedial relief ordered by NLRB, we remand this case to NLRB for reconsideration of the

reinstatement aspect of its order. NLRA § 10(f), 29 U.S.C. § 160(f).

                                       I. BACKGROUND

A. THE CORPORATE ACTORS: EDS, MTECH, AND SCI

       Until April 1988, MTech Corporation was a large data-processing company with one of many

branches in Jacksonville, Texas (MTJ). MTech's business was to collect documents from banks in
the evening, process them, and return them to the banks in the morning, thus performing both

data-processing and courier services. MTech provided these services according to long-term,

lump-sum contracts that it executed with several banks. Neither MTech nor MTJ was licensed as a

common carrier by the Texas Railroad Commission (TRC). Consequently, the transportation part

of the bank customer charges was significantly less than courier service alone at the tariff rate set by

TRC.1

        In February 1988, MTech bought Security Couriers, Inc. (SCI), which has a branch in Tyler,

Texas. Tyler is approximately 30 miles from Jacksonville. MTech purchased SCI from Martin

Coben, who remained Chief Executive Officer of SCI as a wholly-owned subsidiary of MTech. SCI

performs the same courier service for bank documents as MTJ, but SCI performs no data processing

services. SCI holds a TRC common-carrier license and charges its customers TRC rates. SCI had

begun doing some courier work for MTJ by 1987. Coben continuously showed an interest in doing

all of MTJ's courier work. But both before and after MTech purchased SCI, MTJ's management was

unwilling to pay SCI the higher tariff rates that TRC required SCI to charge.

        In April 1988, EDS bought MTech and placed D. Benjamin Sims in charge of integrating

MTech into EDS. Thus, decisions as to how SCI should be integrated into EDS also fell to Sims.

SCI retained its separate name and identity after becoming a wholly-owned subsidiary of EDS. MTJ

did not retain a name and identity separate from EDS, so for clarity we refer to the Jacksonville

data-processing business that EDS bought from MTech as MTJ-EDS.

B. THE ADVENT OF UNION ORGANIZING AND ITS SUPPRESSION

        In late August 1988, Paul Stanwood, an MTJ-EDS driver, contacted a United Auto Workers

(UAW) representative named John Colliflower and inquired about joining UAW. As word spread

of driver unionization, MTJ-EDS's low-level supervisors questioned drivers about union activity,

threatened their jobs if they unionized, and eliminated a 15-minute paid car-inspection allowance

because of the drivers' contacts with UAW. MTJ-EDS's management received a lett er fro m

   1
    If MTJ charged a bank for courier service, MTJ levied a flat rate of $10.00 per stop. A
record exhibit shows that TRC rates vary with weight and distance, but are always greater than
$10.00 per stop for the distances and weights encountered by MTJ.
Colliflower on September 15, 1988, which advised MTJ-EDS that its drivers were in the process of

unionization and that UAW would respond to any managerial restraint of the unionization process

with legal action.

       Some time before September 23, 1988, Sims decided to merge MTJ-EDS's courier operations

into SCI. He did this by subcontracting all of MTJ-EDS's courier work to SCI. On October 11,

1988, EDS terminated all of MTJ-EDS's 23 drivers, and 20 SCI drivers from various SCI locations

outside Jacksonville temporarily took over the MTJ-EDS's routes. SCI subsequently hired 23 drivers

to cover MTJ-EDS's former routes and combined four or five of MTJ-EDS's 22 or 23 routes into

extant SCI routes. SCI hired seven of the former MTJ-EDS drivers into its expanded Tyler

operation. This operation requires trips to and from MTJ-EDS in Jacksonville where MTJ-EDS

continues data-processing work for its customers.

C. NLRB'S DECISION AND ORDER

       On October 13, 1988, UAW filed unfair labor practice charges against EDS. EDS now

admits that it violated the NLRA by threats, disciplinary action, and pay reduction, but it continues

to deny that it consolidated MTJ-EDS into SCI to prevent MTJ-EDS's drivers from unionizing.

Coben and Sims both testified that they decided to consolidate MTJ-EDS's courier operations with

those of SCI in July 1988, before the advent of any union activity. They say that they opted for

consolidation to 1) eliminate duplication in employees and equipment, and 2) remedy the illegality of

having MTJ-EDS's courier services performed by an unlicensed entity.

       NLRB disbelieved the testimony of EDS executives as to why they merged MTJ-EDS's

courier operations into SCI. NLRB found that Coben continuously wanted to take MTJ-EDS's

business and made plans for doing so once EDS bought MTech in April 1988, but that Sims did not

accept Coben's plan until after Sims recognized that consolidation would rid EDS of the unionizing

activities at MTJ-EDS. NLRB ordered, inter alia, EDS to revoke the subcontracting arrangement

between MTJ-EDS and SCI, restore the courier operation at Jacksonville with all of the courier work

associated with MTJ-EDS's data-processing business, and offer the terminated MTJ-EDS drivers their
jobs and back pay.2

       EDS filed a petition for review in this court and NLRB filed a cross-application for

enforcement of its order.

                                        II. DISCUSSION

       EDS argues that NLRB erred in determining that union animus was a motivating factor in

EDS' decision to consolidate the courier operations of MTJ-EDS and SCI. EDS also argues that

even if union animus was a motivating factor in its consolidation decision, NLRB's remedy for this

NLRA violation is illegal. Given our review standard, we refuse to disturb NLRB's fact findings. But

because the record does not support all aspects of NLRB's remedy, we remand this case for further

consideration.

A. VIOLATION

        When union animus represents a "substantial or motivating factor" in an employer's decision

to discharge an employee, the employer violates NLRA §§ 8(a)(1) and 8(a)(3).              NLRB v.

Transportation Management Corp., 462 U.S. 393, 401, 103 S. Ct. 2469, 2474, 76 L. Ed. 2d 667

(1983).3 "Since an employer rarely admits that it discharged an employee for engaging in protected

concerted activities, the NLRB may rely on circumstantial evidence in determining an employer's

   2
    The ALJ recommended that NLRB order EDS to take all steps necessary to make the MTJ-
EDS courier operation comply with the Texas Motor Carrier Act (TMCA),
TEX.REV.CIV.STAT.ANN. art. 911b (Vernon 1964 and 1993 Supp.). NLRB decided that the
evidence of MTJ-EDS's illegality under the TMCA was inconclusive, so NLRB adopted the ALJ's
recommended order after deleting its provision that EDS make MTJ-EDS comply with the
TMCA.
   3
    NLRA section 8(a)(1) prohibits employer interference, restraint, and coercion in the exercise
of employees' rights to form, join, or assist labor organizations. 29 U.S.C. § 158(a)(1). NLRA
section 8(a)(3) prohibits discrimination in hiring and tenure based on membership in a labor
organization. 29 U.S.C. § 158(a)(3).

               NLRB's General Counsel bears the initial burden of establishing violations of §§
       8(a)(1) and 8(a)(3). Under Transportation Management and NLRA § 10(c), 29 U.S.C. §
       160(c), NLRB's General Counsel must prove by a preponderance of the evidence that
       union animus was a substantial or motivating factor in adverse actions taken by the
       employer. NLRB's General Counsel establishes a violation by meeting this burden unless
       the employer proves by a preponderance of the evidence that it would have taken the same
       adverse action even if, hypothetically, the employer had not been motivated by union
       animus. Id. 462 U.S. at 400-403, 103 S. Ct. at 2474-75.
actual motive." NLRB v. Delta Gas, Inc., 840 F.2d 309, 313 (5th Cir.1988). Here, NLRB inferred

violative motivation in EDS' discharge decision from evidence of 1) collateral acts that were

admittedly motivated by union animus and 2) the timing of Sims' decision to consolidate MTJ-EDS

and SCI. EDS asserts that NLRB erred in finding that EDS harbored a violative motivation in

discharging MTJ-EDS's couriers.

       Congress commands us to uphold NLRB's fact findings if they are "supported by substantial

evidence on the record considered as a whole." 29 U.S.C. § 160(e). This standard is not

       intended to negative the function of [NLRB] as one of those agencies presumably equipped
       or informed by experience to deal with a specialized field of knowledge, whose findings
       within that field carry the authority of an expertness which courts do not possess and
       therefore must respect. Nor does it mean that even as to matters not requiring expertise a
       court may displace [NLRB's] choice between two fairly conflicting views, even though the
       court would justifiably have made a different choice had the matter been before it de novo.
       Congress has merely made it clear that a reviewing court is not barred from setting aside [an
       NLRB] decision when it cannot conscientiously find that the evidence supporting that
       decision is substantial, when viewed in the light that the record in its entirety furnishes,
       including the body of evidence opposed to [NLRB's] view.

Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456, 465, 95 L. Ed. 456 (1951). We

find substantial evidence in the record to support NLRB's decision that union animus was a

motivating factor in EDS' decision to discharge MTJ-EDS's couriers.

       EDS does not dispute the fact that its low-level supervisors used threats, discipline, and

privilege removal to discourage MTJ-EDS's drivers from voting for UAW affiliation. And EDS does

not dispute the fact that it discharged MTJ-EDS's couriers within one month after learning of the

couriers' organizing efforts. We have previously held that "[w]hile the record does permit a

competing, perhaps even equal, inference of a legitimate basis for discipline, [NLRB] could

reasonably infer an improper motivation given the timing of the discipline and the circumstances of

the employer's antiunion campaign." NLRB v. Brookwood Furniture, Div. of U.S. Industr., 701 F.2d
452, 467 (5th Cir.1983) (emphasis added).

       EDS argues that timing and collateral union activity cannot control in this case because the

record overwhelmingly demonstrates that EDS decided to consolidate MTJ-EDS's courier operations

with SCI in July 1988, well before the advent of union activity at MTJ-EDS. We disagree with EDS'

assessment of what the record demonstrates. Sims testified that he decided to consolidate MTJ-
EDS's courier operation into SCI in July 1988 and that he communicated this decision to Coben.

However, NLRB discredited Sims' testimony. EDS also relies on an August 3, 1988 memorandum

from Coben to Sims in which Coben reports that he "assigned Tom Harenchar the duties of

converting [the MTJ-EDS] operat ion to [SCI's] format...." But nothing else in the August 3

memorandum unambiguously establishes the meaning of a "format conversion." Also, this language

does not necessarily represent evidence of a prior consolidation decision by Sims, who testified that

he was ultimately responsible for making any consolidation decision.

       Moreover, Harenchar himself testified that the financial details of any consolidation had not

been resolved between SCI and MTJ-EDS by September 15, 1988. And Al Albritton, the SCI

subordinate to whom Harenchar delegated the responsibility of investigating MTJ-EDS's courier

operations, did not even provide Harenchar with the most basic information about MTJ-EDS's courier

operations (number of couriers and cars) until August 18, 1988. Albritton's August 18 memorandum

unequivocally states that Albritton believed that a final decision to consolidate was yet to be made.

Thus, the record contains ample evidence that contravenes Sims' testimony that he finally decided to

consolidate MTJ-EDS and SCI in July 1988.

       Besides containing this contradicting evidence, the record does not bear out the two reasons

that EDS gives for having finally decided to consolidate in July 1988. First, EDS explains that it

wanted to consolidate to save the costs of duplicitous courier operations. But the record does not

contain any reference to an analysis of the most economically efficient way for EDS to provide

courier service to the customers of both SCI and MTJ-EDS. Indeed, the record does not show that

the executives in charge of any consolidation efforts even knew rudimentary details about MTJ-EDS's

courier operation until Albritton submitted his memorandum on August 18. NLRB may legitimately

question EDS' economic explanation for consolidation when there is scant evidence that EDS studied

the economic impact of consolidation before purportedly deciding to consolidate.

       Second, EDS explains that it decided to remove courier operations from MTJ-EDS almost

immediately upon purchasing MTech because TRC never licensed MTJ-EDS as a common carrier.

EDS' executives testified that they consolidated MTJ-EDS's courier operat ions with SCI in strict
obedience to the TMCA, which forbids unlicensed businesses from transporting goods for hire

without a license. See TEX.REV.CIV.STAT.ANN. art. 911b § 3. Assuming arguendo that MTJ-EDS'

courier operation was illegal under Texas law, this explanation for EDS' consolidation decision is

highly suspicious, and we could not fault NLRB for considering the explanation a pretext.

       We understand that SCI is a licensed common carrier and MTJ-EDS is not, and that some of

the policies furthered by t he TMCA are safety promotion and money savings through restrictive

licensure. See id. at § 22b. But if EDS transferred MTJ-EDS' courier responsibilities to SCI out of

respect for the TMCA, it unlikely would have ignored a coequal TMCA policy: "that discrimination

in rates charged may be eliminated." Id. To implement this policy, Texas accords TRC authority to

establish mandatory rates that common carriers must charge their customers. Id. at § 4(a)(1) (Vernon

Supp.1993). EDS' executives acknowledge that both before and after EDS purchased MTech, SCI

charged its customers rates specified by TRC and MTJ-EDS charged its customers significantly less

than TRC-specified rates. MTJ-EDS operated pursuant to several long-term contracts with banks,

under which the banks paid MTJ-EDS a lump sum for both data-processing and courier services.

When EDS transferred MTJ-EDS's courier responsibilities under these contracts to SCI, ostensibly

to comply with the TMCA, it made no effort to comply with the rate requirements of the TMCA by

asking MTJ-EDS's contract banks for the money required to be paid for courier services. Instead,

EDS permitted SCI to show that it had charged the required rates on SCI's books by an accounting

transfer fro m the monies received on MTJ-EDS's contracts with East Texas banks. Thus, EDS

simply earned less on the data-processing part of the MTJ-EDS contracts so that SCI could show that

it charged the required rates on its books. But this accounting maneuver between sister corporations

is obviously not what Texas law contemplates when it requires couriers to charge customers certain

rates.4 See generally id. at § 4(a)(1) (according TRC authority to fix "maximum and minimum rates,

fares and charges" for all regulated motor carriers). If, as EDS claims, it was convinced that

companies which provide courier services in connection with other services are regulated by the

   4
    Of course, we do not advance an opinion on whether the TMCA governs MTJ-EDS' courier
operations. We only think that if the TMCA governs, EDS does not satisfy the requirements of
the TMCA unless it charges its customers TRC rates.
TMCA, we believe that EDS would have recognized that a simple transfer of MTJ-EDS's courier

responsibilities to SCI would not necessarily eliminate legal problems with MTJ-EDS's courier

contracts.

       We therefore disagree with EDS' assessment of what the record demonstrates, and find that

substantial record evidence supports NLRB's findings. The record contains evidence that some EDS

officials considered consolidating MTJ-EDS's courier operation into SCI well before union organizing

began at MTJ-EDS, but the record also supports NLRB's decision that union animus was a

motivating factor when EDS finally decided to consolidate. Substantial record evidence also supports

NLRB's finding that EDS did not establish by a preponderance of the evidence that, even if EDS

hypothetically harbored no union animus, it would still have discharged the Jacksonville couriers on

October 11, 1988.

B. REMEDY

        As remedy for EDS' improper consolidation, NLRB ordered EDS to, inter alia, sever the

contractual relationship that permitted SCI to perform the MTJ-EDS courier work, restore the MTJ-

EDS courier operation, and offer to reinstate the MTJ-EDS drivers with back pay. In Sure-Tan, Inc.

v. NLRB, 467 U.S. 883, 104 S. Ct. 2803 (1984), the Court held that, although Congress grants NLRB

broad remedial authority to counter unfair labor practices, NLRB must respect "equally important

Congressional objectiv[es]" in fashioning remedies. Id. at 903, 104 S.Ct. at 2814-15 (citations

omitted). EDS reads Sure-Tan to prohibit NLRB's remedy in this case because, according to EDS,

the order requires the reinstatement of a courier operation that is illegal under Texas law.

       We reject EDS' contention for several reasons. The record contains insufficient evidence that

MTJ-EDS's courier o peration was illegal. Also, NLRB stated that it would address any legality

problems at compliance proceedings. See id. at 902, 104 S.Ct. at 2814 ("This Court and ... lower

courts have long recognized [NLRB's] normal policy of modifying its general reinstatement and back

pay remedy in subsequent compliance proceedings as a means of tailoring the remedy to suit the

individual circumstances of each discriminatory discharge."). Moreover, this case is distinguishable

from Sure-Tan because, if MTJ-EDS's courier operation was illegal, the illegality in rate-charges
persists even after consolidation with SCI. In Sure-Tan, NLRB ordered an employer to change from

an indisputably legal employer status to a status that violated the Immigration and Nationality Act.

See id. at 903, 104 S. Ct. at 2814-15.

        Though we disagree with EDS' specific arguments regarding NLRA violation and remedy,

we believe that the record does not yet support the remedy ordered by NLRB. Throughout this case,

EDS' general position has been that it intended to consolidate MTJ-EDS's courier operations with

those of SCI for reasons having nothing to do with labor organization. While the record supports

NLRB's finding that union animus was a motivating factor in EDS' decision to consolidate on October

11, 1988, it does not yet support an inference that, but for UAW involvement, EDS would never have

consolidated MTJ-EDS's courier operations with those of SCI.

        "Under [NLRA] § 10(c), [NLRB's] authority to remedy unfair labor practices is expressly

limited by the requirement that its orders "effectuate the policies of the Act.' " Id. at 900, 104 S.Ct.

at 2813. At a minimum, section 10(c) "encompasses the requirement that a proposed remedy be

tailored to the unfair labor practice it is intended to redress." Id. On the present record, NLRB's

remedy is not tailored to the union animus found at EDS because it does not consider whether, when,

or how EDS would have eventually consolidated its courier business in the Tyler/Jacksonville area.

We also note that NLRB could create a remedy that makes MTJ-EDS's former couriers whole with

back pay and reinstatement and still avoid restricting EDS in its development of its courier business

in Tyler and Jacksonville.5

        This case closely resembles Baker Mfg. Co. v. NLRB, 759 F.2d 1219 (5th Cir.1985). The

Baker court found that the record supported NLRB's determination that the employer violated the

NLRA by terminating the employment of several employees for their union activities. Id. at 1223.

The court then turned to the question of whether NLRB exceeded its authority in fashioning a remedy

for the violation when NLRB ordered the reinstatement of two employees to positions that the

employer had discontinued. Id. The court explained:

   5
    For example, NLRB could order that MTJ-EDS's former couriers be offered jobs in
Jacksonville working for EDS in another capacity or as drivers for SCI.
       The basic purpose of a reinstatement order is to restore the economic status quo that would
       have existed but for the employer's illegal activities. However, it is not intended to lock the
       employer into maintaining that status quo without due consideration of economic realities at
       the time the remedy is effectuated. [In Baker, the employer] has alleged that these [two]
       positions are not economically justifiable. The record supports the conclusion that these jobs
       were abolished as part of the [employer's] scheme to eliminate the union activists. [Although]
       there is no substantial evidence that [the employer] ever seriously considered the economic
       factors affecting these jobs prior to terminating [the employees,] it might well be true that
       these positions are superfluous today. If so, the [employer] should not be compelled to
       re-create and maintain unnecessary positions for an indeterminate period if less extreme and
       equally effective remedies are available.

Id. at 1223-24 (citations omitted).

       "The proper course for a reviewing court that believes an [NLRB] remedy to be inadequate

is to remand the case to [NLRB] for further consideration." Sure-Tan, 467 U.S. at 900 n. 10, 104
S. Ct. at 2813 n. 10; accord Baker, 759 F.2d at 1224. Like the Baker court, we think that, in

fashioning a remedy, NLRB should account for what EDS eventually would have done regarding

consolidation absent its antiunion motivation.

                                       III. CONCLUSION

       EDS only petitioned for review of NLRB's findings and order as they pertain to EDS'

discharge of MTJ-EDS's drivers. NLRB cross-petitioned for enforcement of its entire order. We

thus enforce NLRB's order except as that order specifies affirmative actions that EDS must take both

to sever business relationships between EDS and SCI and to reinstate the MTJ-EDS couriers. For

treatment of that excepted part of the order, we remand this case to NLRB for reconsideration of an

appropriate remedy.

       ENFORCED IN PART AND REMANDED.