General Knit of California, Inc.

GENERAL KNIT OF CALIFORNIA, INC General Knit of California, Inc. and United Steel- workers of America, AFL-CIO, Petitioner. Case 31-RC-3952 December 6, 1978 DECISION AND ORDER Pursuant to a Stipulation for Certification Upon Consent Election executed by the parties and ap- proved by the Regional Director for Region 31 of the National Labor Relations Board, an election by se- cret ballot was conducted in the above-entitled pro- ceeding on October 21, 1977, under the direction and supervision of the Acting Regional Director. Upon the conclusion of the election, a tally of ballots was furnished to the parties in accordance with the Board's Rules and Regulations, Series 8, as amended. The tally of the ballots shows that there were ap- proximately 252 eligible voters, and that 238 ballots were cast, of which 134 were cast for, and 104 were cast against, the Petitioner, and no ballots were chal- lenged. On October 28, 1977, the Employer filed timely objections to conduct affecting the results of the election. The Acting Regional Director investi- gated the objections and, thereafter, on November 25, 1977, issued and served on the parties his Report on Objections. In his report, the Acting Regional Di- rector recommended that the Employer's objections be overruled. The Employer filed timely exceptions to the Acting Regional Director's report and a sup- porting brief, and Petitioner filed a brief in response to the exceptions. The Board has duly considered the matter and is of the opinion, for the reasons explained below, that the Employer's objections raise material issues of fact requiring further investigation at the regional level. Accordingly, pursuant to Section 102.69 of the NLRB's Rules and Regulations and Statements of Procedure, Series 8, as amended, we are remanding this proceeding to the Regional Director for a Sup- plemental Report on Objections based, at his discre- tion, on a further investigation or a hearing. The Employer herein filed two objections to con- duct affecting the results of the election. In the first, it alleged generally that Petitioner, during the time the election was being conducted and during the pe- riod immediately preceding the day of the election, had engaged in conduct which destroyed the labora- tory conditions requisite to the employees' free and untrammeled exercise of their Section 7 rights. In the second objection, the Employer alleged that immedi- ately after midnight on the day of the election, and again at 7:15 a.m., the time at which the polls opened,' Petitioner distributed a leaflet which mate- rially misrepresented the financial condition of the Employer. According to the Employer, the leaflet suggested that the Employer. General Knit, had had profits in 1976 of $19.3 million, when, in fact, the Employer had sustained a loss in excess of $5 mil- lion. As found by the Acting Regional Director. the sole issue raised by these objections concerns the proprie- ty of the aforesaid leaflet. Petitioner admits that it distributed a leaflet on the morning of the election which stated, in relevant part: WHO IS FOOLING WHO?.' GENERAI. KNIT (' AN CRY POOR MOUTH It THEY WANT. BUT I ET'S I (()K A\ r THE FACTS IN 1976 (Gi Ni'RAI KNIT HAD SAl ES OE 525 Ml.f.ION GINERAI. KNIT IS OWNED BY ITOH WHO HAS A NE] WORTH IN EXCESS OF $200 MILl ION THIS (COMPANY IIAD AN INCREASE OF 12 57 IN SAI ES FO()R PERIOD ENDING MARCH .L 1977 DL:RING TIIS PERIOD THIS COMPANY HAD A PROf/I Of S I.? IL .IO DON'] BEl EOOI.ED BY GENERAL KNIT AND I HEIR HlI(iH PRI(CE I AWYI RS ITOH W11O OWNS GENERAL KNII IS MAKING II BIG AND ('AN Al FORI) DECENT WAGES FOR I S EMPI OYEES VOTE YES. ]ODAY, AND MAKE IHE COMPANY SHARE SOME Of: THEIR HIGH PROFITS WITH YOU -THE WORK- ER. Petitioner asserts that the leaflet is accurate, and that it states unambiguously that General Knit's par- ent company-ITOH, not General Knit-had profits of $19.3 million. Further, Petitioner claims that the Employer adequately responded with its own leaflet by 8 a.m. on the morning of the election. The Em- ployer claims, however, that it was not until about 10:15 a.m. on election day-after the first voting ses- sion was over-that it was able to respond. The Acting Regional Director found that if the quoted profit figures in the leaflet referred to ITOH, then the leaflet was substantially correct and could not form the basis of objectionable conduct. He made no other factual findings in recommending that the objection be overruled. Rather, he conclud- ed: Assuming, arguendo, the words, "This Com- pany," refer to General Knit, I conclude, under all the circumstances herein, that the alleged material misrepresentation does not constitute an egregious mistake of fact warranting the set- ting aside of an election, and does not otherwise The election was conducted In two se.solns. the first from 7:15 to 8: 4 a m.. and the second frorm 3 to 4 45 p.m 619 DECISIONS OF NATIONAL LABOR RELATIONS BOARD violate the standards of conduct set forth in Shopping Karl Food Market, 228 NLRB 1311 (1977). And, indeed, were the Board to continue to adhere to the principle of Shopping Kart, the Acting Regional Director's conclusion would appear to be correct. Af- ter much deliberation, however, we have decided that the principle expressed in the majority and concur- ring opinions in Shopping Karl is inconsistent with our responsibility to insure fair elections. Accord- ingly, we hereby overrule Shopping Karl Food Mar- ket, Inc.,2 and return to the standard of review for alleged misrepresentations most cogently articulated in Hollywood Ceramics Company, Inc.3 That standard indicates that [Ain election should be set aside only where there has been a misrepresentation or other simi- lar campaign trickery, which involves a substan- tial departure from the truth, at a time which prevents the other party or parties from making an effective reply, so that the misrepresentation, whether deliberate or not, may reasonably be expected to have a significant impact on the election. 4 In Shopping Karl, which itself overruled Hollywood Ceramics, a Board majority determined that elections would no longer be set aside solely because of mis- leading campaign statements, whether oral or writ- ten, unless a party had engaged in deceptive practices which improperly involved the Board and its pro- cesses or the use of forged documents. With the ca- veat in then-Chairman Murphy's concurrence that she would also set aside an election where a party had made "an egregious mistake of fact," 5 the Board majority in Shopping Kart essentially decided that the Board should no longer interest itself in "the truth or falsity of the parties' campaign statements," 6 but would leave it to the employees themselves to divine and sort out the truth or falsity of all the statements made in an election campaign. Interestingly, all three members of the Board ma- jority in Shopping Kart expressed an initial acceptance of the basic premise of Hollywood Ceramics, but nev- ertheless, for a variety of reasons, decided to discard that decision and its underlying principles. Members Penello and Walther stated: Despite the many difficulties in administering 2228 NLRB 1311 (1977)(Members Penello and Walther: then-Chairman Murphy concurring; then-Member Fanning and Member Jenkins dissent- ing) 140 NLRB 221 (1962). 4 Id at 224. '228 NLRB at 1314. 61d at 1311. the Hollywood Ceramics rule, we, too, would nevertheless choose to continue to adhere to it if we shared the belief that employees needed our "protection" from campaign misrepresentations. However, we do not find this to be the case.7 Then-Chairman Murphy, in concurring, added her view that I reach this conclusion [to overrule Hollywood Ceramics] reluctantly because I agree with the basic principles as set forth in that case ... .8 But then-Chairman Murphy joined in overruling Hollywood Ceramics because she believed that the de- cision had been expanded greatly beyond its original intent and because she agreed with Members Penello and Walther that "the Board's rules concerning pree- lection statements must recognize employees as ma- ture adults capable of recognizing and evaluating campaign rhetoric for what it is." 9 The Shopping Kart majority clearly thought the Hollywood Ce- ramics rule failed to take this into account. In this, they were in error. Rather, the principles of Holly- wood Ceramics clearly recognize employee ability to assess the bulk of campaign propaganda. As can be discerned from the general principle in that decision, noted above, the area of the Board's concern involv- ing alleged misrepresentations is truly a circum- scribed one. The parties are left to campaign vigor- ously and aggressively. But, as was also noted in the principal dissent in Shopping Kart, the Hollywood Ce- ramics rule was also meant to embody the . . .firm belief that employees should be afford- ed a degree of protection from overzealous cam- paigners who distort the issues by substantial misstatements of relevant and material facts within the special knowledge of the campaigner, so shortly before the election that there is no effec- tive time for reply.' ° Such a view has nothing to do with an assumption that employees are "naive and unworldly," as the Shopping Kart majority charged. Such a view does have something to do, however, with a conviction that no matter what the ultimate sophistication of a particular electorate, there are certain circumstances where a particular misrepresentation or misrepresen- tations may materially affect an election. In such cir- cumstances, that election should be set aside in order to maintain the integrity of Board elections and thereby protect employee free choice. This is what the Hollywood Ceramics rule was meant to insure. In the past, under Hollywood Ceramics, the Board Id at 1313. 8 1d at 1314. Id id at 1315. 620 GENERAL KNIT OF CALIFORNIA, INC. has successfully established and preserved the integ- rity of its electoral processes, thus assuring employ- ees of the free exercise of their Section 7 rights. Thus, for example, in 1976, the Board conducted 8,899 elections.' In 7,982 of these, or nearly 90 percent, neither side challenged the validity of the result through objections.' Rather, both sides were satis- fied with the integrity of the result. We believe that the direction of a new election, where, under Holly- wood Ceramics, the Board finds that a substantial and material misrepresentation of fact had a reason- able tendency to affect the results of the election, has been a significant factor in the Board's electoral suc- cess, since the parties, knowing the serious conse- quences of their acts, have been deterred from engag- ing in conduct which would tend to interfere improperly with a free election. In addition to acting as a deterrent to deceitful campaign trickery, the existence of the Hollywvood Ceramics standard has provided a means of redress for a party who doubts the validity of the election results because of prejudicial campaigning by the prevailing side. The parties' access to the Board for review further legitimizes the integrity of the elec- toral process." And, because of its deterrent effect, the Hollywood Ceramics standard has been well ac- cepted by the courts and by the parties who have used our election procedure.'4 Indeed, if anything, the courts in certain circumstances have applied Hol- lywood Ceramics more strictly than the Board has done. Is 41 NLRB Ann. Rep. 231 (1976). 13 The need for such a review process is reflected. to an extent. by the degree to which the parties have continued to bring alleged misrepresenta- tions to the Board even after the issuance of Shopping Karl Thus, in the 12 months after Shopping Karl issued, the Board received 180 cases raising objections based on alleged misrepresentations. as contrasted with 307 in 1976. It appears that, despite our clear statement that we would no longer consider mere misrepresentations as grounds for setting aside an election. the parties have nevertheless perceived a need for Board review in this area Our dissenting colleagues argue that the decline in the number of objec- tions based on alleged misrepresentations demonstrates Shopping Karl's suc- cess. In our view, however, a rule which merely eliminates a certain classif- cation of cases, at the expense of an important principle, is not a success Moreover, under their approach. one criterion In ruling on cases is its effect on the caseload. Yet. such a consideration has no place in the administra- tion of the Act. If the Board is overburdened, the solution is more efficient procedures and/or increased staff. not a voluntary abnegation of our statu- 1ory responsibility See, e.g., Abbott Iahboratortes v. V i R B. 540 F 2d 662 (4th Cir 1976). N.L.R.B v Modine Manufacturing Co. 500 F.2d 914 (8th Cir 1974)1 ,1ferco, Incorporated v N I. R.B. 496 F.2d 1342 (5th (Cir. 1974); ( ironeut eitern, a divrision o/ Coroner Industries. Inc v. N.L R.B, 518 F.2d 31 (9th Cir 19751 Member Penello lists the cases in which the courts have denied enforcement of Board Orders in Hollywood Ceramics situations--47 cases in a period of 12 years. While this list is visually impressive, we are more impressed by the number of elections during this same period nearly 100,000 up to the date Shopping Kart issued in which no objections alleging misrepresentations were filed. In our view, the Hollsvood Ceramirt rule, by acting as a deter- rent, made such a statistic possible. 5 See. e.g., NL.RB. v. Snokist Growers. Inc. 532 F.2d 1239 (9th Cir Finally, enforcement of the Holly'wood Ceramics rule has not been administratively burdensome in the past. For example, in 1976, the Board processed 13,184 representation cases 16 and 32,406 unfair labor practice cases.'7 Of the representation cases, only 307 involved Hollywood Ceramics allegations. Thus, the administrative burden is slight in comparison with the substantial benefit to the Board's electoral proce- dure. In disagreeing with the principles of Hollywood Cc- ramics, the Shopping Kart majority, in essence, dis- agreed with the general proposition that misrepresen- tations may, in fact, affect the way employees vote and thereby undermine the integrity of our electoral processes. As support for its view, the Shopping Kart majority relied or certain findings of one empirical study and what that study purported to prove.'8 In that study, its authors attempted to verify empirically certain assumptions which they believed underlay the Board's regulation of election conduct-most im- portantly, the Board's assumption that electioneering by the employer and union affects the employee's decision as to how to cast his or her ballot. They concluded that this assumption was not supported by voter behavior in the 31 elections they studied.' Rather, the authors found, on the basis of interviews with voters both before and after the elections in- volved, that the parties' electioneering had not affect- ed the decision of 81 percent of the voters. Thus, 81 percent voted in accordance with the intent they ex- pressed to interviewers prior to the bulk of the union- management campaign. From this finding, the au- thors concluded that the voters' decisions seemed to be determined by their attitudes toward unions and toward their jobs, both of which had been estab- lished prior to the campaign, and which for 81 per- cent of the voters remained unchanged during the campaign. Of the remaining 19 percent, 6 percent were undecided at the first interview, while 13 per- cent voted contrary to the intent they had expressed to interviewers immediately after the filing of a peti- 1976) In addition. snome courts have added further tests of their ovsn I'hc most common addlllonal test is to consider the closeness of the vote In relation to the magnitude oif the alleged misrepresentation; see e g. Ifendir- iwn Trunmull Suppi (orporation .' 1. RB. Sl01 F.2d 1224 (1d ('lr. 1974} But see .N I R B v I uaul/ l dU om. In orpnoriited 486 F 2d 63') <7th (ir 1973). shere the court enforced the Board's hargaining order even though the union's margin of victors was vers narrow. noting that the allegat.ionln r misrepresentations vsere so vague Ihat iI was unlikely that ans stich mlsrep- resentations had a substantial imp.;ct 1P41 Nl.RB Ann Rep 226t 19761 i1 Id at 225 INGetman and Goldberg .'the Behavioral Assumptions Inderlsiing NLRB Regulation of Campaign M;sreprcsentations: An Fimpirical Evaiua- tion." 28 Stanford I Rev. 263 (1976): see al'o Getman. (ioldberg. anid Herman, "tnion Representation IElections: Iaw and Reailiit'' 1 976), for the authors' final report on the stud,, ' These elections 'were held In five States In the Midwel and Upper Skouth 621 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tion for an election. Interestingly, in attempting to determine how voters in these two groups made their voting decisions, the authors found that the votes of the undecided 6 percent correlated with their "famil- iarity" with the unions' campaigns. Thus, those em- ployees who voted for a union recalled significantly more issues raised by the union than did those who voted against the union.2 0 A similar pattern existed for the 13 percent who switched their votes.21 Finally. the authors found that the votes of the undecided and switchers were determinative in 9 of the 31 elec- tions; that is, in 29 percent of the elections they stud- ied.22 In evaluating the findings summarized above, the authors speculated that the campaign itself had had little effect on voting decisions, but that the extent of familiarity with and reaction to each side's campaign was determined by a voter's initial attitude toward unions in general. However, the study was not de- signed to investigate the actual reasons for the reac- tion of voters to the campaigns, and theirs is by no means the only possible conclusion to be drawn from the data. The results of 43 years of conducting elec- tions, investigating objections, and holding hearings at which employees testify concerning their recollec- tion of campaign tactics convince us that employees are influenced by certain union and employer cam- paign statements. Even the authors acknowledged that, of the 19 percent, those who ultimately voted against the union may have been influenced by the employer's campaign, even though they did not re- call specific issues. The authors' final recommendations, including the suggested deregulation of misrepresentations, were based on their findings vis-a-vis the 81 percent of vot- ers rather than the 19 percent. Such a narrow focus might have been warranted if the authors had con- cluded either that the votes of the 19 percent had not affected the results of a significant number of elec- tions or that the 19 percent, in deciding how to vote, had not based that decision on information provided during the campaign.24 But where, as this stud)y indi- 20 Getman, Goldberg, and Herman, supra at 103. 21 Id 22 Id. 23 Id at 108. 24 Our dissenting colleague, Member Penello, accuses us of erring and of a "fourfold misrepresentation" in our discussion of the undecided and switchers in the study, We object to this characterization, when it is appar- ent that he is merely challenging our interpretation of the study, not the factual data that we cite. He asserts that the study's findings did not support a conclusion that 19 percent of the voters were affected by the campaign information, but rather that, at most, the 5 percent who ultimately voted for the union were affected. His position, in contrast to our view, gives little weight to the study's observation that those who voted for the union had greater exposure to the union's campaign information thanl did those who voted against the union --a finding which suggests that if the others had had similar exposure, they, too, might have voted for the union. Moreover, in cates, not only are a substantial minority of employ- ees influenced by the campaign, but their votes also affected the outcome of over a quarter of the elec- tions, we find this persuasive evidence for maintain- ing reasonable procedures to insure that the employ- ees exercise their franchise in an atmosphere free from substantial and material misrepresentations. Even if this particular study were clearly suppor- tive of all of the authors' conclusions, however, we would still not find it an adequate ground for reject- ing a rule which had been well established for 15 years. While we welcome research from the behav- ioral sciences, I study of only 31 elections in I area of the country-although it may provide food for thought-is simply not sufficient to disprove the as- sumptions upon which the Board has regulated elec- tion conduct, especially since, in our experience, statements made be either side can significantly af- fect voter preference. Nevertheless, as the Board recognized in Modine Manufacturing Company,2" the Hollywood Ceramics rule has not been free from criticism. In this regard, we note in particular the following criticisms which have been heard more frequently than others. These are (1) the lack of predictability as to how the Holly- wood Ceramics factors will be weighed in determining whether an election will or will not be set aside; and (2) the complaint that the Hollywood Ceramics stan- dard is administratively objectionable because it pro- vides a vehicle for delay of the ultimate result through appeals to the Board and the courts, which delay collective bargaining and thereby undermine the employees' chosen bargaining representative. The first criticism is an outgrowth of our applica- tion of our standard to a myriad of factual patterns such that the result is, naturally, not the same in each instance. If there have been any inconsistencies in the results in the cases we have considered, these have stemmed from from judgmental differences as to the reasonable effect of a misrepresentation on the electorate, not from any fundamental difference in standards or from any desire to regulate the conduct of one party more closely than that of another.2 6 In contrast to the majority. he discounts the study's recognition that the mere existence of an employer campaign may have influenced employees, on the grounds that the influence was not from any factual assertions. Yet how could thc employer's campaign have been free of factual assertions? In light of these matters, we view our interpretation as more consistent with the study's findings in regard to the 19 percent who either were undecided or did switch. 2' 203 NLRB 527 (1973). enfd. 500 F.2d 914 (8th Cir. 1974). Member Murphy argues that the majority has been inconsistent by reinstating the Hollywood Ceramics rule in this case, while refusing to set aside an election in Hickory Springs Manufacturing Comnpany, 239 NLRB 641, issued this day, because of a threat of possible picket line vio- lence in the distant future, The existence of a standard of conduct for Board elections. however. does not mean that in each instance the Board would find that that standard had been violated. Just as there are misrepresenta- tions which the Board would not find to be "substantial" within the mean- 622 GENERAL KNIT OF CALIFORNIA, INC. any event, our primary focus is on the future applica- tion of this standard and not on the past. It is our goal to adhere strictly to the standard articulated in Hollywood Ceramics and to apply that standard equally to both sides, while still allowing the parties the opportunity to campaign vigorously for their par- ticular positions. In Hollywood Ceramics, we said that we would not set aside an election merely because a misrepresentation occurred at sometime during the campaign. In Modine Manufacturing, supra, we reiter- ated: We do not wish to have unrealistic standards, or insist upon such improbable purity of word and deed that we will obstruct or delay our ad- ministrative task of conducting elections in so high a number of cases that any hard-fought campaign will almost inevitably result in our elections being invalidated. Nor do we believe it wise to direct hearings as a matter of course in any case in which misrep- resentations are alleged to have been made, and thus regularly delay the intended effect of our elections and substantially divert the resources of this Agency from the host of other pressing matters demanding our attention.2 7 This will also be the standard which we shall use in evaluating campaign statements hereafter. In this way, we can act expeditiously on objections involv- ing alleged misrepresentations and thereby decrease substantially the delay between the election and either the certification of result, the certification of representative, or the direction of a new election. This procedure partially negates the second criticism of opponents to Hollywood Ceramics, discussed above, by making delays less likely. In general, how- ever, it seems that the problem of delay has been greatly exaggerated since in all but a minute number of cases the parties have ceased litigation following the Board's review of the Regional Director's deci- sion with regard to objections. Thus, in 1976, only 9 cases raising Hollywood Ceramics issues were ap- pealed to the circuit courts, while, since 1947, the highest number of such cases to be appealed in any single year was 11, in 1968 and 1975. In any event, ing of Hollywood Ceramics. so are there threats which are so remote as not to be "coercive" and thus do not warrant setting aside the election. 27 Id at 530. i2 Member Penello cites Blackman-Uhler, J. I Case, and Pearless of America. supra, where the Board's Order resulted in further court litigation. as examples of the delay caused by the Hollywood Ceramics rule But, as discussed above, these cases are the exception rather than the rule. and his citation of them vastly exaggerates the magnitude of the delay Moreover. such delay occurs whenever an appeal is taken or enforcement is sought of a Board Order, and is not peculiar to Hollywood Ceramics cases. Yet. Mem- ber Penello would not abandon our duty to process cases under other sec- tions of the Act merely because certain cases will require enforcement in the courts. we would not-as our dissenting colleagues seem to do-place a greater value on expediency of case pro- cessing than on maintaining standards to preserve the integrity of the electoral process. In returning to the rule of Hollywood Ceramics, we are convinced that the rule better enhances employee free choice and the fairness of Board elections than did Shopping Kart. The Hollywood Ceramics rule fur- ther assures the public that the Board will not toler- ate substantial and material misrepresentations made in the final hours of an election campaign and there- by gives stability to any bargaining relationship re- sulting from the election. The aims of insuring em- ployee free choice, fairness of elections, and bargaining stability are high, but they are achievable under Hollywood Ceramics. It is for the foregoing rea- sons that we now return to the rule of that case. Inasmuch as there has been no investigation of the Employer's objections to the election in the instant case under Hollywood Ceramics standards, the Board, having duly considered the matter, is of the opinion that the Employer's objections raise an issue which requires further investigation at the regional level. Accordingly, we shall remand this case to the Re- gional Director for a Supplemental Report on Objec- tions which may, at his discretion, be based on a further investigation or a hearing.2 9 The Supplemen- 29Chairman Fanning and Member Jenkins note that they. unlike their dissenting colleagues, deem It inappropriate to speculate as to the ultimate resolution of the issues raised by the Employer's objections. Member Penel- lo. in rushing to justify his disagreement with the Hollywood Ceramics stan- dard, presumes that the Regional Director, after remand, will find ment in the Employer's objections and further presumes that Chairman Fanning and Member Jenkins will agree with that result. Member Penello opines that such result though not yet reached nor the rationale therefor elucidat- ed--is inconsistent with the position of Chairman Fanning and Member Jenkins in Blackman-Uhler, 239 NLRB 637, issued this day. Chairman Fan- ning and Member Jenkins suggest that any "inconsistencies" found by Member Penello are not caused by them but rather by Member Penello's own premature misapplication of a standard with which he cannot agree. Member Murphy, also eager to apply a standard with which she does not agree, "predicts," contrary to Member Penello, that the majority will ulti- mately find the Employer's objections to be lacking in ment. In remanding this case to the Regional Director. Chairman Fanning and Member Jenkins have indicated their view that the Employer's objections raise matters warranting further insestigation at the regional level. and thereafter, applying the standard of Hollywood Ceramics, a supplemental decision by the Regional Director. Chairman Fanning and Member Jenkins deem the remand to be fully appropriate and totally consistent with those cases, cited by Member Penello, setting forth the requirement that an ob- jecting party make a prima facie showing of substantial and material issues which would warrant setting aside the election in order to be entitled to an evidentiary hearing. See. e.g.. Lnline Corporalion, 201 NLRB 998 (1973). Cases such as I'nihlne insotle, of course, the burden put on an objecting parts to justify. in light of existing principles of law for setting aside elec- tions, the holding of a hearing. Chairman Fanning and Member Jenkins note that they have not voted here to mandate that the Regional Director conduct a hearing. Rather. inasmuch as a majority of the Board has re- versed Shopping Kaur and readopted Holivwood (Ceramics (thereby changing the standard for evaluation campaign misrepresentations) and as they, un- like Member Penello. are uncertain that the facts alleged herein are exactly the same as those found In Blackman-t'hler. Chairman Fanning and Mem- ber Jenkins believe that remanding to the Regional Director is the proce- dure that will best protect the rights of all the parties. Chairman Fanning Continued 623 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tal Report on Objections shall make recommenda- tions concerning whether the alleged material mis- representations constitute a substantial departure from the truth which may reasonably have been ex- pected to have a significant impact on the election under the standard set forth in Hollywood Ceramics. supra. ORDER It is hereby ordered that the above-entitled matter be, and it hereby is, remanded to the Regional Direc- tor for a Supplemental Report on Objections, which may, at his discretion, be based on a further investi- gation or a hearing. Such Supplemental Report on Objections shall contain recommendations concern- ing whether the alleged statements by the Union con- stitute objectionable conduct warranting the setting aside of the election previously conducted herein. IT IS FURTHER ORDERED that the Hearing Officer designated for the purpose of conducting any hearing pursuant to this Order shall prepare and cause to be served on the parties a report containing resolutions of credibility of witnesses, findings of fact, and rec- ommendations to the Board as to the disposition of said objections. Within 10 days from the date of is- suance of such report, either party may file with the Board in Washington, D.C., eight copies of excep- tions thereto. Immediately upon the filing of such exceptions, the party filing the same shall serve a copy thereof on the other party and shall file a copy with the Regional Director. If no exceptions are filed thereto, the Board will adopt the recommendations of the Hearing Officer. IT IS FURTHER ORDERED that the above-entitled mat- ter be, and it hereby is, referred to the Regional Di- rector for Region 31 for the purpose of conducting such further investigation or hearing as he may find necessary, and that the said Regional Director be, and hereby is, authorized to issue notice of any such hearing. MEMBER PENELLO, dissenting: I adhere to the sound principles of Shopping Karl Food Market, Inc., 228 NLRB 1311 (1977). 1 dissent from the majority's hasty reversal of that decision. I would overrule the Employer's objections and certify and Member Jenkins find nothing to be gained by presuming or predicting the ultimate resolution of this case. The procedure adopted by Chairman Fanning and Member Jenkins will permit the parties to present evidence relevant under the Hollywood Ceramics standard in order to allow the Re- gional Director to resolve the issues raised by the Employer's objectiins. Should the merits of the Employer's objections be brought back to the Board by way of exceptions to the Regional Director's supplemental deci- sion, Chairman Fanning and Member Jenkins will render a judgment at that time, when all the facts are in, as to the legal issues before them. the Union so that it could get on with the business of collective bargaining without further delay. 1. My colleagues' decision in the instant case to re- vive the Hollywood Ceramics rule 30 reveals that they have learned nothing from Blackman-Uhler Chemical Division-Synalloy Corporation, 239 NLRB 637, is- sued this day. More than any single case in recent history, the Blackman-Uhler proceeding graphically illustrates how Board application of the Hollywood Ceramics rule operates to prevent the effectuation of the fundamental statutory policy, proclaimed in Sec- tion I, of "encouraging the practice and procedure of collective bargain ng." At first glance, Blackman-Uh- ler appears to be no different from any other case decided under the Hollywood Ceramics approach. All the familiar elements are present: extensive analysis of campaign propaganda, judicial disagreement with the Board's treatment of the alleged misrepresenta- tion, and, as a consequence, a refusal to enforce a Board bargaining order years after a majority of em- ployees have voted for collective representation in a seciet-ballot election. The unique aspect of the Blackman-Uhler proceeding is that it represents the first time a court of appeals has indicated that the doctrine set forth in Shopping Kart might have suc- ceeded in promoting the central policy of the Act where the Hollywood Ceramics rule has failed. Thus, in Blackman-Uhler, the Fourth Circuit en banc held that the Board's bargaining order was not enforce- able under Hollywood Ceramics, but the court did not stop at that point. Instead, the court went on to re- mand the case to this Agency because a decision by the Board to apply the standards of Shopping Kart, rather than those of Hollywood Ceramics, "may well have an impact on the obligation of the employer to engage in collective bargaining negotiations with the representative certified by the Board." Blackman-Uh- ler Chemical Division, Synalloy Corporation v. N.L.R.B., 561 F.2d 1118, 1119 (4th Cir. 1977). Blackman-Uhler had its genesis in an election con- ducted more than 4 years ago on September 12, 1974. Six months later, the Board adopted the Regional Director's report overruling the employer's objec- tions. Blackman-Uhler Chemical Division-Synalloy Corporation, 217 NLRB 38 (1975). Although the em- ployer filed three objections to the election, the only one it pressed before the Board alleged that the union had made a material misrepresentation regard- ing the employer's profits. After the issues relating to certain challenged bal- lots were resolved, it was determined that the union 1 HoIliVwod ( erarmics ( ompran, Inc, 140 NL RB 221 (11962) 624 GENERAL KNIT OF CALIFORNIA. INC. had won the election. On September 17, 1975, a year after the election, the Regional Director certified the union. Seven months thereafter, the Board issued its bargaining order in the summary judgment proceed- ing. Blackman-Uhler Chemical Division--Svnalloy Corporation, 223 NLRB 827 (1976). The employer thereupon filed a petition for review with the Fourth Circuit Court of Appeals, contend- ing solely that the Board erred in overruling its Hol- lywood Ceramics objection. The Board's bargaining order was initially enforced by a majority of a three- judge panel (Judge Winter dissenting). Blackman-Uh- ler Chemical Division, Synalloy Corporation v. N.L.R.B., 558 F.2d 705 (4th Cir. 1977). However, the case was then reargued before the fourth circuit en banc pursuant to the employer's petition for rehear- ing. On September 12, 1977, exactly 3 years to the day after the election, the en banc court held that, if it decided the case in accordance with the Hollywood Ceramics standards, a majority of the court would deny enforcement of the Board's Order for the rea- sons set forth in Judge Winter's previous dissenting opinion. 561 F.2d at 1119. The misrepresentation issue before the Board and the court involved the interpretation of a two-sided leaflet distributed by the Union. One side contained a clearly identified reproduction of the report to stockholders by the employer's parent, Synalloy Cor- poration. The report showed that Synalloy's profits had increased by 250 percent in comparison with the same period the previous year. On the other side, the leaflet asked: WHERE'S YOUR SHARE OF THE BLACK- MAN-UHLER PROFIT BONANZA? What was your wage increase in the same year that Blackman-Uhler hit the profit jackpot? Compare the raise you received . . . to the over 250% increase in Company profits. In fact, while the profits of Synalloy Corporation in- creased by over 250 percent, the employer, Black- man-Uhler, experienced a 50-percent decrease in profits during the relevant reporting penod. The Board rejected the employer's contention that the leaflet contained a material misrepresentation which required setting aside the election because it erroneously implied that the employer's own profits had increased by 250 percent. The Board reasoned that, when the union invited the employee to com- pare his wage increase "to the over 250% increase in Company profits," the union was accurately refer- ring to the profits of Synalloy Corporation, not Blackman-Uhler. Further, the Board found that the union's statements about a Blackman-Uhler profit "bonanza" or "jackpot" could be evaluated by the employees. Viewing the leaflet in a different light, the court of appeals found merit in the employer's argu- ment: The message intended and the message con- veyed are one and the same: The profit "bonan- za" and the "250% increase in Company profits" are attributable to one branch of Synalloy (the Blackman-Uhler plant) rather than the sum of its component parts. [558 F.2d at 708.] The postponement of collective bargaining pend- ing Board and court perusal of campaign puffery is part and parcel of the Hollywood Ceramics approach. If an additional illustration be deemed necessary, it is provided by J. 1. Case Co. v. N.L.R.B., 555 F.2d 202 (8th Cir. 1977). In that proceeding, employees in two voting groups chose the union as their bargaining representative on December 18, 1974. Nine months later, the Board adopted the Hearing Officer's report overruling the employer's Hollywood Ceramics objec- tions, and certified the union. Six more months elapsed before the Board issued its decision in the summary judgment case. On May 18, 1977, 2-1/2 years after the election, the Eighth Circuit denied the Board's petition for enforcement of its bargaining or- der. The court concluded that two statements made by the union concerning benefits it had negotiated for the production and maintenance employees at the plant constituted material misrepresentations. First, the union stated that "the yearly wage of skilled workers exceeds $19,000 and goes up to $20,000 and more." In fact, this statement was literally true be- cause 8 of the 51 skilled workers at the plan: were earning at least $19,000 and I was earning in excess of $20,000. The court, however, noted that the aver- age wage of such workers was only $16,570.12 and added: We do not think this significant disparity can be excused as mere exaggeration or explained away as a vague or ambiguous statement. [555 F.2d at 205.1 The second misrepresentation concerned the claim that union workers had won such benefits "as 95% of wages plus paid insurance in the event of lay-off." Again, this statement was literally true, but the union failed to specify that employees were entitled only to 95 percent of net wages, rather than gross wages, in the event of layoff. The court held that the union's statement was objectionable because the difference between a percentage based on gross wages and one based on net wages "may be substantial." 555 F.2d at 206. The decisions of the courts in Blackman-Uhler and J. I. Case cannot be faulted on legal grounds, for they turned on an application of the Board's own 625 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Hollywood Ceramics criteria. Why did the Board and the courts reach opposite results if they were ap- plying the same test? To a large degree, the explana- tion lies in the very nature of the standards formulat- ed by the Board. Thus, the Hollywood Ceramics rule requires the decisionmaker to answer such questions as: When does a departure from the "truth" become "substantial"? What issues in an election campaign are "material"? How much time is necessary for an "effective reply"? With standards as vague and flexi- ble as these to apply, it is not surprising that the Board and the courts often disagree on the treatment of misrepresentation objections, or that the election loser frequently chooses to litigate rather than negoti- ate. For an employer, the possibility of success before the courts is a real one. In stark contrast to the Board's overall "set aside" rate of only 15 percent,3' in misrepresentation cases the Board loses before the courts approximately 50 percent of the time. Under the Hollywood Ceramics approach, courts have de- nied enforcement of Board bargaining orders in the following cases during the past dozen or so years: N.L.R.B. v. The Lord Baltimore Press, Inc., 370 F.2d 397 (8th Cir. 1966); United States Rubber Company v. N.L.R.B., 373 F.2d 602 (5th Cir. 1967); N.L.R.B. v. Bata Shoe Company, Inc., 377 F.2d 821 (4th Cir. 1967), cert. denied 389 U.S. 917; Graphic Arts Finish- ing Co., Inc. v. N.L.R.B., 380 F.2d 893 (4th Cir. 1967); Collins & Aikman Corporation v. N.L.R.B., 383 F.2d 722 (4th Cir. 1967); Schneider Mills, Inc. and Jimmy Josh, Inc. v. N.L.R.B., 390 F.2d 374 (4th Cir. 1968); United States Fidelity and Guaranty Company v. N.L.R.B., 393 F.2d 239 (Ist Cir. 1968); Gallenkamp Stores Co., et al. v. N.L.R.B., 402 F.2d 525 (9th Cir. 1968); N.L.R.B. v. Smith Industries, Inc., 403 F.2d 889 (5th Cir. 1968); Tyler Pipe and Foundry Company v. N.LR.B., 406 F.2d 1272 (5th Cir. 1969); Electra Manufacturing Co. v. N.L.R.B., 408 F.2d 570 (5th Cir. 1969); National Cash Register Company v. N.L.R.B., 415 F.2d 1012 (5th Cir. 1969); N.L.R.B. v. Bill's Insti- tutional Commissary Corporation, 418 F.2d 405 (5th Cir. 1969); N.L.R.B. v. Maine Sugar Industries, Inc., 425 F.2d 942 (lst Cir. 1970); S. H. Kress & Company v. N.L.R.B., 430 F.2d 1234 (5th Cir. 1970); N.L.R.B. v. Southern Foods, Inc., 434 F.2d 717 (5th Cir. 1970); N.L.R.B. v. W. R. Ames Company, 450 F.2d 1209 (9th Cir. 1971); N.L.R.B. v. Winchell Processing Cor- poration and Winchell Donut House, Inc., 451 F.2d 306 (9th Cir. 1971); Cross Baking Company, Inc. v. N.L.R.B., 453 F.2d 1346 (Ist Cir. 1971); N.L.R.B. v. Janler Plastic Mold Corporation, 82 LRRM 2174, 70 LC 113307 (7th Cir. 1972); N. L. R. B. v. Cactus Drilling 3142 NLRB Ann. Rep. 261 (1977). Corporation, 455 F.2d 871 (5th Cir. 1972); N.L.R.B. v. G. K. Turner Associates, 457 F.2d 484 (9th Cir. 1972); N.LR.B. v. Producers Cooperative Association, 457 F.2d 1121 (10th Cir. 1972); Cascade Corp. v. N.L.R.B., 466 F.2d 748 (6th Cir. 1972); Luminator Division of Gulton Industries, Inc. v. N.L.R.B., 469 F.2d 1371 (5th Cir. 1972); N.L.R.B. v. Millard Metal Service Center, Inc., 472 F.2d 647 (Ist Cir. 1973); Walled Lake Door Company v. N.L.R.B., 472 F.2d 1010 (5th Cir. 1973); N.L.R.B. v. Southern Paper Box Company, 473 F.2d 208 (8th Cir. 1973); N.L.R.B. v. Skelly Oil Co. (Kansas City, Missouri, Skelgas Direct Marketing Branch), 473 F.2d 1079 (8th Cir. 1973); N.L.R.B. v. Medical Ancillary Services, Inc., 478 F.2d 96 (6th Cir. 1973): Thiem Industries, Inc. v. N.L.R.B., 489 F.2d 788 (9th Cir. 1973); N.L.R.B. v. Carlton Mc- Lendon Furniture Co., Inc., 488 F.2d 58 (5th Cir. 1974); Henderson Trumbull Supply Corp. v. N.L.R.B., 501 F.2d 1224 (2d Cir. 1974); LaCrescent Constant Care Center, Inc. v. N.L.R.B., 510 F.2d 1319 (8th Cir. 1975); Lake Odessa Machine Products, Inc., a wholly- owned subsidiary of Spartan Corporation v. N. L.R. B., 512 F.2d 762 (6th Cir. 1975); Argus Optics, a Division of Argus, Inc. v. N.L.R.B., 515 F.2d 939 (6th Cir. 1975); N.L.R.B. v. Mr. Fine, Inc., 516 F.2d 60 (5th Cir. 1975); Aircraft Radio Corporation (Division of the Cessna Aircraft Co.) v. N.L.R.B., 519 F.2d 590 (3d Cir. 1975); Alson Mfg. Aerospace Div. of Alson Indus- tries, Inc. v. N.L.R.B., 523 F.2d 470 (9th Cir. 1975); N.L.R.B. v. Snokist Growers, Inc., 532 F.2d 1239 (9th Cir. 1976); The Firestone Tire and Rubber Company v. N.L.R.B., 533 F.2d 336 (6th Cir. 1976); N.L.R.B. v. Santee River Wool Combing Company, Inc., 537 F.2d 1208 (4th Cir. 1976); J. 1. Case Co. v. N.L.R.B., su- pra; Blackman-Uhler Chemical Division, Synalloy Cor- poration v. N.L. R.B., supra; Diamond Electronics Divi- sion of Arvin Systems, Inc. v. N.L.R.B., 570 F.2d 156 (6th Cir. 1978); Beaird-Poulan Division, Emerson Electric Company v. N.L.R.B., 571 F.2d 432 (8th Cir. 1978); Peerless of America, Inc. v. N.L.R.B., 576 F.2d 119 (7th Cir. 1978). In all these cases, collective bargaining was effec- tively frustrated by the Board's Hollywood Ceramics rule. Under the Hollywood Ceramics approach, how- ever, an employer determined to defeat the desires of its employees for collective representation need not prevail before a court of appeals in order to attain its goal. In fact, it need only file an objection, alleging that some union statement or document was mislead- ing. By doing so, an employer can set into motion the Board's postelection machinery and demand a pains- taking analysis of all that was said during the cam- paign. The period of delay afforded employers under Hollywood Ceramics is very substantial indeed. The 626 GENERAL KNIT OF CALIFORNIA, INC. median time from the date of election to the date of issuance of a decision by the Regional Director on objections is approximately 2 months.3 2 After the Re- gional Director's decision issues, an employer can still appeal to the Board, either by way of exceptions or by a request for review, a procedure which would guarantee an additional 3 months, and then rest as- sured that 9-1/2 more months would elapse while a refusal-to-bargain charge is initiated and processed to Board decision. The time lag during the final pe- riod, which begins with the issuance of the Board's bargaining order and ends with a decision by a court of appeals, is 7-1/2 months. To summarize, these sta- tistics reveal that the entire process-from Board election to circuit court opinion-takes 22 months or almost 2 years. Thus, an employer is guaranteed this much time by simply filing a Hollywood Ceramics objection, re- gardless of its merits. The practical effect is that of- ten by the time of the Board's bargaining order, and certainly by the time of the court's decision, the union's following is dissipated and its strength at the bargaining table is minimal. Now that the employer has achieved its objective, it can well afford to com- ply with the decision of the Board or court. Through the medium of delay, even an adverse Board or court ruling is transformed into a victory for an employer intent on thwarting the purposes and policies of the Act. Shopping Kart sought to eliminate obstructionist tactics and promote the prompt commencement of meaningful collective bargaining. As stated above, the fourth circuit's Blackman-Uhler opinion strongly suggests that Shopping Karl would have accom- plished its mission. The court held that, while the Board's bargaining order was not enforceable under the Hollywood Ceramics standards, the result reached by the court under the Shopping Kart standards "might well be different": We were advised . . . during oral argument be- fore the in banc court and in supplemental mem- oranda submitted after argument was heard, that the Board has made a major shift in its approach to the effect of misleading election campaign rhetoric on the validity of an election. The shift, if applicable to the instant case, may well have an impact on the obligation of the employer to engage in collective bargaining negotiations with the representative certified by the Board. At the time that this case was decided by the Board and the panel of this court, the underly- ing standards with respect to the effect of mis- 32 This figure represents an average of cases in which hearings have and have not been held. leading campaign statements were those ex- pressed in Hollywood Ceramics Co., Inc., 140 NLRB 221 (1962). See also N.L.R.B. v. Santee River Wool Combing Co., 537 F.2d 1208 (4th Cir. 1976). Succinctly stated, Hollywood Ceramics held that a misleading campaign statement, made at a time which prevents the other party or parties from making an effective reply and which, from its nature, may reasonably be ex- pected to have a significant impact on the elec- tion, may be a proper basis for invalidating an election. However, in Shopping Karl Food Mar- ket, Inc., 228 NLRB 1311 (1977), the Board over- ruled Hollywood Ceramics, holding that the Board will no longer set elections aside on the basis of misleading campaign statements except in certain limited circumstances. While we do not pass upon the validity or the correctness of the decision in Shopping Karl, we nevertheless recognize that if we decide the in- stant case under the rules in Shopping Kart, the views of the majority of the in banc court might well be different from those they hold if the case is decided under the rules in Hollywood Ce- ramics. The election in the instant case was held September 12, 1974. In deciding Shopping Kart, the Board did not discuss whether the new rule articulated therein would be given retroactive ef- fect and applied to elections held before that de- cision. * * * * * Accordingly, we decline enforcement of the Board's order, without prejudice to a renewed application for enforcement after the additional proceedings that we direct. We remand the case to the Board for a determination of whether the rule in Shopping Kart is applicable to the instant case, and if so, whether the employer should be ordered to bargain. [561 F.2d at 1119.] 33 This opinion is most significant because it specifical- ly recognizes that (1) the responsibility for selecting the election standard lies with the Board, not the courts, and (2) on the basis of the same facts, a court might reach totally different results depending on whether the Board chooses to rely on Hollywood Ce- ramics or Shopping Karl. The Seventh Circuit's very recent decision in Peer- less of America, Inc. v. N.L.R.B., 576 F.2d 119 (1978), indicates that its views are in accord with those of the Fourth Circuit. The facts of Peerless reveal that the election was held approximately a year before Shop- 1 In the Board's Supplemental Decision In Blacklman-Uhler, 239 NLRB 637 issued this day, the majority declined the court's invitation to apply Shopping Kart retroactively. See my dissenting opinion therein. 627 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ping Karl was decided. Although the Board's decision in the summary judgment proceeding issued after Shopping Karl, that decision did not advert to Shop- ping Kart. In addition, the Board's brief and oral ar- gument did not contend that the Shopping Karl stan- dard was applicable. Under these circumstances, the court, citing the Fourth Circuit's Blackman-Uhler opinion, decided to "apply the Hollywood Ceramics test and save for another day our views of the new [Shopping Karl] standard." 34 576 F.2d at 123, fn. 4. Analyzing the facts in light of the Hollywood Ce- ramics criteria, the court disagreed with the Board's treatment of the misrepresentation objection and, 2 years after the election, remanded the proceeding to the Board for a hearing. Actually, it comes as no surprise that the Seventh Circuit in Peerless placed great importance on de- termining which of the two Board standards was controlling for the purposes of its decision. Seventeen years earlier, the court had concluded that the pri- mary function of the courts is limited to reviewing the application of the election standard chosen by the Board. Thus, in Celanese Corporation of America v. N.L.R.B., 291 F.2d 224, 225 (7th Cir. 1961), cert. denied 368 U.S. 925, the Seventh Circuit stated that there is no inconsistency between the substantial evi- dence rule of Universal Camera Corporation v. N.L.R.B., 340 U.S. 474 (1951), and the principle of N.LR.B. v. A. J. Tower Company, 329 U.S. 324 (1946), that the Board enjoys a wide degree of discre- tion in establishing policies to safeguard the conduct of representation elections: These rules do not conflict because they affect differing spheres of activity. The Board's wide discretion lies in the initial promulgation of rules and regulations, while the court exercises its du- ties in reviewing decisions involving application of the Board's rules. Judicial review in these cases is not concerned with the wisdom of the Board's policy but must determine whether the record as a whole supports the findings and con- clusions respecting compliance with the policies, rules, and regulations promulgated by the Board. There is reason to believe that in a subsequent case the court would have found Shopping Karl to be a permissible exercise of Board discretion After noting in Peerless that the Board "has been entrusted with broad discretion in determining the nature and extent of pre-election campaign propaganda that will be allowed." the court added in a footnote that "Board members themselves have questioned the propriety of the standard applied in this area," citing, inter alia, my dissent in Medical Ancillar, Services, Inc., 212 NLRB 582, 583 (1974), at 576 F.2d at 122 and fn. 3. In my opinion, the court in Peerless clearly implied that the Board's discretion in regulating election conduct is broad enough to embrace my position on campaign rmsrepresentations. 35 Home Town Foods, Inc. d/b/a Foremost Dairies of the South v. N.L.RB., 416 F.2d 392, 399 (Sth Cir. 1969). Similarly, in the Foremost Dairies case,35 where the Fifth Circuit denied enforcement of a Board Order, the court stated that it was merely applying the Board's own "laboratory conditions" standard. That standard, the court emphasized, is controlling only "until the Board announces a change and its reasons for the change." On the basis of the decisions in Blackman-Uhler, Peerless, Celanese, and Foremost Dairies, it is clear that the responsibility for the ill effects of the Holly- wood Ceramics approach lies not with the courts, but with the Board, the body that promulgated the rule in the first instance. These opinions also establish that the authority to remedy those ills is likewise vest- ed in the Board. In Shopping K'rlt, the Board, after reviewing the adverse consequences of the Hollywood Ceramics rule and the dubious assumptions on which it is based, 6 36 The pnmary assumption underlying the Hollywood Ceramics rule Is that employees cast their ballots in reliance upon the factual assertions made by the parties during an election campaign. Prior to Shopping Karl, the courts recognized that this assumption was totally unverified and that reexamina- tion of it would be warranted in light of a then pending voting study. Ge- man v. N.L.R.B. 450 F.2d 670, 675-676 (D.C. Cir. 1971); Harlan :#4 Coal Company v. N.L.R.B., 490 F.2d 117, 122-123, fn. 5 (6th Cir. 1974). In the latter case, the court said that the Board, in deciding to set aside an election, .. basels] its findings concerning the impact of various campaign tactics largely on its own speculation .... Recently however, some empirical research has been conducted. The preliminary results of this research indicate that campaigns have little impact on voting behavior and that the impact they may have is often just the opposite of that which the Board has assumed they would have. [Citing Getman, Gold- berg. and Herman, "The National Labor Relations Board Voting Study: A Preliminary Report," I J. Legal Studies 233 (1972).] In Shopping Karl, the results of the voting sutdy were analyzed as offering some support for the view that employees are "mature individuals who are capable of recognizing campaign propaganda for what it is and discounting it." 228 NLRB at 1313. My colleagues correctly report the study's finding that 81 percent of the employees voted in accord with their precampaign intent and thus were unaffected by the parties' electioneering. However, the majority errs in as- serting that the study found that the votes of the remaining 19 percent (13 percent who voted contrary to their precampaign intent (switchers) and 6 percent who were undecided) were based on information provided by the campaign The study made no such finding. What the study found was that only the 5 percent of the total sample who either switched to the union or were originally undecided and ultimately voted for the union could be said to have been influenced by the content of the campaign of the party for which the) voted. Getman and Goldberg, "The Behavioral Assumptions Underlying NLRB Regulation of Campaign Misrepresentations: An Empir- ical Evaluation," 28 Stanford L. Rev. 263, 282 (1926). Thus, in contrast, "there was . . no evidence that familiarity with the content of the compa- ny campaign sas associated with switching to the company" or voting for the company after initially being undecided. Id at 281. 282. To summarize, the majority has made a fourfold misrepresentation of the number of em- ployees who were found to have been affected by campaign literature In casting their ballots. In their subsequent book on the voting study, the authors reiterated that the undecided and the switchers who voted against the union did not rely on information provided by the company. Getman, Goldberg, and Herman. "Union Representation Elections: Law and Reality" (1976) at pp. 103 104. 107 108 The authors hypothesized that the vote of these employees may be a product not of the content of the company campaign, but of the mere existence of the campaign itself, which may lead employees to believe that the employer is now aware of the disstisfaction that caused the organizing effort and therefore should be given an opportunity to improve working conditions without the presence of the un:on. It is in this sense only that the authors suggested that these voters may be "influenced by the employer's 628 GENERAL KNIT OF CALIFORNIA, INC. overruled the case, and returned to the policy that was in effect during the first 20 years of the Act's administration of not inquiring into the truth or falsi- ty of campaign material. Specifically, the Board stat- ed that intervention would be limited to "instances where a party has engaged in such deceptive cam- paign practices as . . . the use of forged documents which render the voters unable to recognize the pro- paganda for what it is." 228 NLRB at 1313. Unlike the Hollywood Ceramics rule, the Shopping Karl standard draws a clear line between what is and what is not objectionable. Under Shopping Karl, elec- tions will be set aside "not on the basis of the sub- stance of the representation, but the deceptive man- ner in which it was made." 228 NLRB at 1314. As long as the campaign material is what it purports to be, i.e., mere propaganda of a particular party, the Board would leave the task of evaluating its contents solely to the employees. In contrast, no voter could recognize a forged document "for what it is" because the deception goes to its very essence. Since the application of Shopping Karr yields high- ly predictable results, it greatly reduces the incentive for protracted litigation and the possibility of dis- agreements between the Board and the courts. The opportunity for delay under Shopping Karl is virtual- ly nonexistent, as objections merely alleging false or inaccurate statements can be summarily overruled. Shopping Kart also furthers the goal of consistent and equitable adjudications. In subsequent cases, Shop- ping Kart has been applied with an even hand to overrule both union 37 and employer 38 misrepresen- tation objections. The majority cites certain statistics in footnote 13 of their opinion which indicate that "in the 12 months after Shopping Kart issued, the Board re- ceived 180 cases raising objections based on alleged misrepresentations, as contrasted with 307 in 1976." In my opinion, a 41-percent decline in the number of misrepresentation cases after just 1 year of Shopping Karl is a stunning tribute to the effectiveness of that decision. According to my colleagues, the filing of the 180 misrepresentation cases justified reinstating the Hollywood Ceramics rule because, despite the is- suance of Shopping Karl, "the parties have neverthe- less perceived a need for Board review in this area." That argument is simply astonishing. As discussed above, it is the parties who wish to delay collective bargaining that "perceive a need for Board review in this area." I submit that they are the ones responsible campaign." Id at 108. Inasmuch as this suspected influence does not result from factual assertions made by the company, it lends no support for the assumption which forms the basis of the Hollywood Ceramics rule. Thomas E. Gates & Sons, Inc. 229 NLRB 705 (1977). 18 Cormner Hosiery Mills, Inc. and Central New Hampshire Dye, Inc., 230 NLRB 1052 (1977). for filing most of the 180 objection cases. Despite the overruling of Hollywood Ceramics, they have clung tenaciously to that decision in the hope that the Board, with the appointment of a new Member, might someday reverse Shopping Karl. No doubt these parties will be delighted to learn that their per- sistent desire to preserve the opportunity for delay which the Hollywood Ceramics rule affords contribut- ed to its resurrection by a majority of this Board. 11. Certain of my colleagues in the majority appar- ently believe that they can place one meaning on the word "misrepresentation" in General Knit, and quite another meaning on the word in Blackman-Uhler. In my opinion, the results reached by Chairman Fan- ning and Member Jenkins in the two cases are totally inconsistent. Member Truesdale seems to share my view of the facts, as he has declined to join the Fan- ning-Jenkins opinion in Blackman-Uhler.39 The facts of Blackman-Uhler have been set forth above. In sum, the issue presented there was whether the union erroneously implied that the employer's profits had increased by 250 percent, whereas, in fact, the employer's profits had declined by 50 per- cent and it was the profits of the parent company, Synalloy Corporation, that had increased by 250 per- cent. The case centered on the interpretation of a two-sided union leaflet. On one side, the union asked: "What was your wage increase in the same year that Blackman-Uhler hit the profit jackpot? Compare the raise you received ... to the over 250% increase in Company profits." On the other side of the leaflet, the union reproduced the report to stock- holders of the employer's parent company which showed the 250-percent increase in profits. The Board (then-Member Fanning and Member Jenkins, with former Member Kennedy dissenting) found no material misrepresentation, reasoning that the phrase "Company profits" referred to the profits of the par- ent company and therefore was accurate. 217 NLRB 38. In the Supplemental Decision in Blackman-Uhler, issued this day, Chairman Fanning and Member Jen- kins specifically reaffirm their earlier decision in the representation proceeding, while Member Truesdale 39 As discussed above. the Fourth Circuit held in Blackman-Uhler that the Board's bargaining order was not enforceable under the Hollywood Ce- ramics standards. In the Board's supplemental Decision in Blackman-Uhler, 239 NLRB issued this day. Chairman Fanning and Member Jenkins accept the court's opinion only as "the law of the case" and do not ac- quiesce therein. Since they specifically state that they are continuing to adhere to their finding in the underlying representation proceeding that the union leaflet did not constitute a matenal misrepresentation under the stan- dards of Hollywood Ceramics. I shall proceed to discuss why that result is inconsistent with the one reached in General Knitr. 629 DECISIONS OF NATIONAL LABOR RELATIONS BOARD states that had he participated in that proceeding, he, like former Member Kennedy, would have set the election aside. The circumstances of this case are strikingly simi- lar to those of Blackman-Uhler. Here, the union leaf- let stated in pertinent part: WHO IS FOOLING WHO??? GENERAL KNIT CAN CRY POOR MOUTH IF THEY WANT, BUT LET'S LOOK AT THE FACTS. IN 1976, GENERAL KNIT HAD SALES OF $25 MIILLION GENERAL KNIT IS OWNED BY ITOH WHO HAS A NET WORTH IN EXCESS OF $200 MILLION. THIS COMPANY HAD AN INCREASE OF 12.5% IN SALES FOR PERIOD ENDING MARCH 31, 1977. DURING THIS PERIOD THIS COMPANY HAD A PROFIT OF $19.3 MILLION. DON'T BE FOOLED BY GENERAL KNIT AND THEIR HIGH PRICE LAWYERS. ITOH WHO OWNS GENERAL KNIT IS MAKING IT BIG AND CAN AFFORD DECENT WAGES FOR ITS EMPLOYEES. VOTE YES. TODAY, AND MAKE THE COMPANY SHARE SOME OF THEIR HIGH PROFITS WITH YOU-THE WORK- ER. The facts show that the Employer, General Knit, sus- tained a $5 million loss during 1976, while ITOH, the parent company, experienced the $19.3 million profit referred to in the union leaflet. In this case, unlike Blackman-Uhler, Chairman Fanning and Members Jenkins and Truesdale are in agreement that the Em- ployer's misrepresentation objections raise "material issues of fact," and they remand the case to the Re- gional Director for further investigation and possibly a hearing. Presumably, if the Employer is correct in its claim (disputed by the Petitioner) that there was no opportunity to make an effective reply, the elec- tion will be set aside. "It is only when the moving party presents aprima facie showing of 'substantial and material issues' which would warrant setting aside the election that he is entitled to an evidentiary hearing." Uniline Cor- poration, 201 NLRB 998, 999 (1973) (then-Member Fanning and Member Jenkins participating). Ac- cord: Modine Manufacturing Company, 203 NLRB 527 (1973) (then-Member Fanning and Member Jen- kins participating); Newport News Shipbuilding and Dry Dock Company, 239 NLRB 82 (1978) (Chairman Fanning participating), citing Section 102.69(f) of the Board's Rules and Regulations. Since the majority does remand this case for further devel- opment of the facts, it follows that the facts alleged by the Employer, if true, are sufficient as a matter of law to warrant setting aside the election. Thus, con- trary to the statement by Chairman Fanning and Member Jenkins in footnote 29, 1 am not "presum- [ing] that the Regional Director, after remand, will find merit in the Employer's objections." Rather, what I am "presuming" is what they have attempted to avoid acknowledging in that footnote; namely, that under well-established Board law this case would not be remanded for further factual findings unless the majority believed that the facts alleged by the objecting party, if established, would justify set- ting aside the election. In light of Chairman Fanning's and Member Jen- kins' comments in footnote 29, 1 ask them directly whether their decision today is in accord with Uni- line, Modine, and Newport News, and therefore tanta- mount to a legal conclusion that the facts alleged by the Employer, if true, warrant sustaining the objec- tions. If Chairman Fanning and Member Jenkins are not adhering to these Board cases in this regard and are not directing that this election be set aside if the subsequent proceedings reveal that the Employer's objections are supported by the facts, then I think they have an obligation to explain why they are de- parting from Board law and why they are voting to remand this case. Assuming that their decision does follow the above-cited precedent and does signify that the Em- ployer has made a prima facie showing that the elec- tion should be set aside, I do not see how the result reached in Blackman-Uher can be reconciled with the one reached here. In Blackman-Uhler, where the profits of the employing company decreased by 50 percent, and the profits of the parent company in- creased by 250 percent, an ambiguous reference to "the over 2501% increase in Company profits" is not considered to be a material misrepresentation. In General Knit, where the employing company sus- tained a loss of $5 million, and the parent company experienced a profit of $19.3 million, an ambiguous reference to the $19.3 million profits of "this Compa- ny" is considered to be a material misrepresentation. What are the parties, the courts, and our Regional Directors to conclude from the simultaneous is- suance of these cases? How can Chairman Fanning and Member Jenkins state in General Knit that their "goal" is "to adhere strictly to the standard articulat- ed in Hollywood Ceramics," and yet, at the same time, find no objectionable conduct in Blackman-Uhler? In General Knit, Chairman Fanning and Member Jen- kins dismiss the claim that they have applied the Hol- lywood Ceramics decision inconsistently in the past by saying that their "primary focus is on the future application of this standard." I submit that they should zoom in on their present application of the standard. The inability of the General Knit majority to agree 630 GENERAL KNIT OF CALIFORNIA, INC. amongst themselves on the treatment of the misrep- resentation objection in Blackman-Uhler dramatical- ly demonstrates the point that I have been trying to impress upon my colleagues for more than 4 years: the Hollywood Ceramics standards are so flexible that opposite conclusions can almost always be reached on the same or similar facts. The result is "vague and inconsistent rulings which baffle the parties and pro- voke litigation." Shopping Kart, 228 NLRB at 1312 (citation omitted); see my dissenting opinions in Medical Ancillary Services, Inc., 212 NLRB 582, 586 (1974) ("It would be difficult for any tribunal ... to reach uniform and consistent results in the applica- tion of such standards.") (citation omitted), and Ere- no Lewis, 217 NLRB 239, 242 (1975) ("My colleagues hold only that the election must be set aside and are unable to agree on exactly which of two statements misled the employees."). See also my article entitled "Shopping Karl Food Market, Inc.: The Cure for the Hollywood Ceramics Malaise," 46 Univ. of Cincinnati L. Rev. 464, 465 (1977)("The Board's difficulties were caused substantially by the vague and flexible nature of the Hollywood Ceramics standards."). III. My colleagues themselves highlight the extent to which the Hollywood Ceramics standards are capable of varying interpretations when they state that their "goal" is "to adhere strictly" to them. More impor- tantly, that statement marks a radical departure from the most recent Board interpretation of the Holly- wood Ceramics decision. Four years before Shopping Kart was decided, the Board reconsidered the Hollywood Ceramics rule in Modine Manufacturing Company and concluded that it should be applied in a less restrictive fashion. In Modine, the Board began its analysis by taking note of "several recent cases in which certain courts of appeals have held that we have erred in failing to direct hearings where alleged misrepresentations were asserted by respondents as raising a Hollywood Ceramics issue." "4 Much of the remainder of the de- cision consisted of an articulation of the reasons why the "reviewing judiciary" should grant the Board "a reasonably flexible and not too constrained or rigidly controlled area [for the exercise of] administrative ex- pertise in determining. . . what circumstances justi- fy either invalidating an election or holding a hearing on misrepresentation issues." 42 The facts of this case confirm that the Board has abandoned Modine and its plea to the courts for " 203 NLRB 527 (1973), enfd. 500 F.2d 914 (8th Cir. 1974). " Id at 528. 42 Id at 530. greater deference to the Board's administrative ex- pertise in these matters. Under the Modine interpre- tation of the Hollywood Ceramics rule, the Board's position on alleged union misrepresentations of an employer's profits was well settled and directly con- trary to that of the courts. Thus, in seven post-Mod- ine cases raising this issue, courts denied enforcement of Board bargaining orders.43 In each of the seven cases, the Board had overruled the employer's objec- tions without holding a hearing. Similarly, in two other recently decided cases, the Board held that, un- der Hollywood Ceramics, the alleged misrepresenta- tions of the employers' profits did not warrant invali- dating the elections or holding hearings." Today, my colleagues depart from the thrust of these Board cases, apparently adopt the approach of the courts, and implicitly find, for the first time in 14 years, 45 that a union statement of company profitability constitues a material misrepresentation which would justify setting aside the election if the employer did not have an adequate opportunity to reply. The restrictive interpretation that my colleagues place upon the Hollywood Ceramics rule is further illustrated by an examination of the precise state- ment that is regarded as objectionable. It will be re- called that the union leaflet referred to the $19.3 mil- lion profits of "this company" without specifying whether the profits were those of ITOH or General Knit. Inasmuch as the immediate antecedent in the leaflet of the phrase "this company" is ITOH, and as ITOH did report profits of $19.3 million, the Union's statement is technically correct. By refusing to over- rule the Employer's objections, the majority must be holding that parties have not only a duty under Hol- lywood Ceramics to refrain from an outright falsifica- tion, but also a duty to avoid statements which, when read in isolation, are ambiguous. In this regard, my colleagues' interpretation of the Hollywood Ceramics rule is now in accord with that of the eighth circuit in J. 1. Case Company, supra. As discussed earlier, in that decision the court held, inter alia, that the union made a material misrepresentation when it stated that union workers are paid "95% of wages . . . in the event of lay-off," because the union failed to specify that employees were entitled only to 95 per- cent of net wages, rather than gross wages, in the event of layoff. Notwithstanding their intention to police the Hol- 43 Blackman-Uhler Chemical Division, Synalloy Corporation, supra, Alson Mfg. Aerospace Division ojAlson Industries, Inc., supra; Aircraft Radio Corpo- ration (Division of the Cessna Aircraft Co.), supra; Argus Optics, A Division of Argus, Inc., supra, Lake Odessa Machine Products, Inc., supra, LaCrescent Constant Care Center, Inc., supra, Henderson Trumbull Supply Corporation. "pram aElectronic Components Corporation of North Carolina, 215 NLRB 829 (1974); Cumberland Wood and Chair Corp., 211 NLRB 312 (1974). 43 See The Halsey W TaYlor Companyv 147 NLRB 16 (1964). 631 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Ivwood Ceramics rule "strictly," my colleagues state that parties will be allowed "to campaign vigorously for their particular positions." Precisely how these dual objectives will be simultaneously realized is left unsaid. Even more perplexing is the majority's quota- tion of the liberalized Modine standard immediately after saying that the Hollywood Ceramics rule will be applied "strictly." Finally, the majority concludes this baffling paragraph with the following pro- nouncement: "In this way, we can act expeditiously on objections involving alleged misrepresentations and thereby decrease substantially the delay between the election and either the certification of result, the certification of representative, or the direction of a new election." Exactly what "way" are my colleagues referring to? Is there some new avenue or boulevard of review in these cases which will obviate the delay inherent in the Hollywood Ceramics approach? Contrary to my colleagues, I fear that their deci- sion will result in delays in the processing of objec- tions cases far beyond those experienced under prior interpretations of the Hollywood Ceramics rule. From today forward, our Regional Directors and the Board itself must "strictly" scrutinize campaign liter- ature, attempting to track down half-truths and ferret out latent ambiguities. As Professor Bok has ob- served, a standard such as the majority's which pro- scribes ambiguous statements "transform[s] the task of separating truth from falsehood into an effort to decide how much each side will be required to dis- close affirmatively in order to make its declarations sufficiently accurate and clear. This is hardly an easy task, for almost every partisan speech in an election campaign bristles with assertions that require qualifi- cations and additions in order to present a fully accu- rate picture of the facts." 6 Not only have my col- leagues made the job of the decisionmaker exceedingly more difficult, but also they have in- creased the "opportunities for legal maneuvering to post-pone bargaining rights," as the election loser now need only discover "some litigable ambiguity" in the opposing party's literature.4 IV. Today, 2 years after Shopping Karl was decided, not one of the apocalyptic predictions of the dissen- ters in that case has come to pass. What we have observed during that brief period is a precipitous drop in the number of misrepresentation objection cases and the first signs of judicial acceptance of the Shopping Kart decision. While I do not question the "The Regulation of Campaign Tactics in Representation Elections Un- der the National Labor Relations Act," 78 Harv. L. Rev. 38, 86 (1964). 47 Id at 87. authority of this Board to revise established prece- dent after a change in its membership, I believe that a novel legal doctrine, like a new bargaining relation- ship, should "be permitted to exist and function for a reasonable period in which it can be given a fair chance to succeed." Franks Bros. Company v. N.L.R.B., 321 U.S. 702, 705 (1944). Had Shopping Kart been given that "fair chance," I am confident that it would have succeeded in promoting the pri- mary purpose of the Act of encouraging the practice and procedure of collective bargaining. MEMBER MURPHY, dissenting: In Shopping Karl Food Market, Inc.,48 a Board ma- jority, with me concurring, overruled Hollywood Ce- ramics Company, Inc.,4 9 and held that the Board would no "longer probe into the truth or falsity of the parties' campaign statements." 5o My colleagues in a new majority have today overruled Shopping Kart and thus have restored a proven dela)y;ng tactic to the arsenal of those who would forestall the certifi- cation of election results. My disagreement with the rule of Hollywood Ce- ramics, to which the new majority now returns, in- volves both practical and policy grounds. As I stated in my concurrence in Shopping Kart,5" although I cer- tainly agree with the announced policy goal of Hollv- wood Ceramics-i.e., assuring employee free choice- the rule of that case, as often happens, had been so expanded and misapplied at to have been extended far from the original intent of the Board.5 Further- more, I agreed with my colleagues in the Shopping Kart majority that employees are just as mature adults as are citizens who vote in national elections, capable of recognizing and evaluating campaign rhetoric for what it is. Accordingly, although with some reluctance, I joined in overruling Hollywood Ceramics and in holding that the Board would no longer set aside an election solely on the basis of misleading campaign statements. Our decision did not, however, preclude Board consideration of all forms of verbal misconduct, in- cluding certain forms of campaign deception. As I made clear in my concurrence, I would continue to set aside an election where a party engaged in cam- paign practices involving: the Board and its pro- cesses;5" the use of forged documents which render the voters unable to recognize the propaganda for ' 4 228 NLRB 1311 (1977). 49 140 NLRB 221 (1962). 5°228 at 1311. 1 228 at 1314. 52 See, e.g., Medical Ancillary Services. Inc.. 2!2 NLRB 582 (1974): G TE Lenkurt, Incorporated, 209 NLRB 473 (1974); Aldon, Inc.. 201 NLRB 579. 587-588 (1973); Bausch d Lomb, Incorporaled, 185 NLRB 262 (1970), enfd. 451 F.2d 873 (2d Cir. 1971). 53 See, e.g., Formco, Inc., 233 NLRB 61 (1977). 632 GENERAL KNIT OF CALIFORNIA, INC. what it is;54 threats;5 5 promises or announcements of benefits;5 6 and similar improprieties not specified there. Finally, in a departure from my colleagues in the Shopping Karl majority, I made it clear that I would also set aside an election where a party makes an egregious mistake of fact. I would find such a mis- take to constitute interference with an election only in extreme situations. In doing so, however, I would not look either to mere truth or falsity or to employee reliance on such statements. Thus, where a union's representative allegedly told employees that the company made over $1 million, which was construed to represent profits, whereas in fact its gross profits were $260,371 and its net income for the year was $11,669, and the union won the elec- tion, I would not and did not direct a new election.5 7 Similarly, I would not and did not find interference with an election which the union won where a union allegedly misrepresented the amount of employee earnings at plants of a company which was the em- ployer's largest customer. 8 I find it interesting that Member Jenkins, part of the new majority here, joined me and Member Penello in deciding both cases, i.e., Henderson Trumbull and Contract Knitter. In the instant case, of course, we have what is at most an ambiguously worded statement by the Union regarding the Employer's profits: WHO IS FOOLING WHO??? GENERAL KNIT CAN CRY POOR MOUTH IF THEY WANT, BUT LET'S LOOK AT THE FACTS. IN 1976. GENERAL KNIT HAD SALES OF $25 MILLION. GENERAL KNIT IS OWNED BY ITOH WHO HAS A NET WORTH IN EXCESS OF S200 MILLION. THIS COMPANY HAD AN INCREASE OF 12.5% IN SALES FOR PERIOD ENDING MARCH 31, 1977. DURING THIS PERIOD THIS COMPANY HAD A PROFIT OF $19. MILLION. DON'T BE FOOLED BY GENERAL KNIT AND THEIR HIGH PRICE LAWYERS. ITOH WHO OWNS GENERAL KNIT IS MAKING IT BIG AND CAN AFFORD DECENT WAGES FOR ITS EMPLOYEES. VOTE YES, TODAY, AND MAKE THE COMPANY SHARE SOME OF THEIR HIGH PROFITS WITH YOU-THE WORK- ER. The Acting Regional Director found, and I agree, that the statement did not constitute an egregious 54 See, e.g., United Aircraft Corporation, Pratt d Whitney Aircraft Division, 103 NLRB 102 (1953). 55See, e.g.. Professional Research, Inc., d/b/a Westside Hospital. 218 NLRB 96 (1975). 56 See, e.g., Union Hospital of Cecil County, 229 NLRB 91 (1977) 57 Henderson Trumbull Suppli Corporation, 220 NLRB 2:0 (1975). S8 The Contract Knitter, Inc., 220 NLRB 579 (1975). mistake of fact. At most this alleged "misrepresenta- tion"-which the new majority finds warrants re- mand and possible hearing-consists of an accurate statement of the profits of ITOH, the Employer's parent, and the somewhat ambiguous use thereafter of the words "this company" which might be con- strued as meaning General Knit was "making it big" rather than ITOH. In fact, there is no question warranting remand. The Acting Regional Director found that the pam- phlet accurately reflected ITOH's profits and that if "the company" referred to General Knit "the alleged material misrepresentation does not constitute an egregious mistake of fact warranting the setting aside of an election." The sole issue is whether an accurate statement which is slightly ambiguous warrants re- mand. I submit that it does not. Naturally, I agree with the new majority here that the Board has a responsibility to insure fair elections. But I view this responsibility as being derivative of the Board's more fundamental duty under the Act- to protect the employees' rights to decide whether to organize and engage in collective bargaining. In this regard, while I do not deny that improper preelection conduct can taint the bargaining function, I believe that the practical effect of the majority attempt to fulfill the subsidiary duty, by returning to the rule of Hollywood Ceramics, will be a simultaneous abroga- tion of the more fundamental duty-speedy elec- tions. Thus, the new majority's position is analogous to the surgical removal of a nonmalignant growth by means of a procedure which guarantees the death of the patient. The Chairman's Task Force on the National La- bor Relations Board, established in 1975 and dis- banded in 1977, was composed of distinguished members of the labor bar, including well-recognized union and management representatives, as well as eminent legal scholars in the field. These labor law practitioners spent a great deal of time and effort to present the Board and the General Counsel with the benefits of their years of experience. I cannot envi- sion a more qualified or more devoted group of law- yers than those who served without compensation on the Chairman's Task Force, working together for the common good.59 The Task Force evaluated and made recommendations regarding the Board's case- 9 These outside practitioners were: Committee I (Representa- tton)--Chairman: Professor William P. Murphy, University of North Caro- lina: Members: Vincent J Apruzzese, Esq., Apruzzese and McDermott; Lawrence Gold. Esq., Special Counsel, AFL CIO; Stephen I Schlossherg, General Counsel, United Automobile. Aerospace and Agricultural Imple- ment Workers of America. George J. Zazas. Esq., Barnes, Hickman. Pant- zer and Boyd Committe II (Unfair Labor Practices From Charge Through Heanng)--Chairman: Dean Theodore St. Antoine, University of Michigan School of Law; Members: Cosimo C. Abato. Esq., Abato and Abato: Thomas F. Hilbert. Esq.. Labor Relations Counsel. General Electric Com- pany; Theodore W Kheel. Esq., Battle, Fowler. I.ldstone Jaffin. Pierce & ( onornued 633 DECISIONS OF NATIONAL LABOR RELATIONS BOARD handling practices and procedures, 60 as well as all aspects of the General Counsel's operations.6 ' Al- though my praise for the Task Force and its contri- butions to encourage industrial democracy under law is very high, I will limit my comments here to the issue in this case. In part I, section V, of its Interim Report (submit- ted November 5, 1976), the Task Force expressed concern that the postelection objection procedures delay the "[p]rompt and final outcome of an elec- tion." As the Task Force stated in its report: . . . It is evident that the present procedure has built-in opportunities for delay which, when invoked, require the Regional Office and/or the Board to expend their resources determining Kheel; Patrick C. O'Donoghue, Esq., O'Donoghue & O'Donoghue; David Previant, General Counsel, International Brotherhood of Teamsters; Robert T. Thompson. Esq., Thompson. Mann & Hutson, Philip J. larter, Esq., Administrative Conference of the United States. Committee Ill (Unfair La- bor Practices From Post-Heanng Through Compliance)- Chairman: Pro- fessor Thomas G. Chnstensen, New York University School of Law; Mem- bers: Joseph Barbash, Esq., Debevoise, Plimpton, Lyons and Gates; Seymour G. Clark. Jr.. Esq.. U S. Steel Corporation; Louis Sherman, Gener- al Counsel, Building and Construction Trades Department, AFL-CIO; L.N.D. Wells, Jr., Esq., Mullinax and Wells. These outstanding lawyers served on the Task Force as representatives of the following organizations: Administrative Law and Labor Law Sections of the American Bar Association; Labor Law Section of the Federal Bar Association; American Federation of Labor -Congress of Industrial Orga- mzations: United Automobile. Aerospace and Agricultural Impement Workers of America; International Brotherhood of Teamsters: Chamber of Commerce of the United States; National Association of Manufacturers; Business Roundtable: Institute of Collective Bargaining and Group Rela- tions, Inc.: and Administrative Conference of the United States An equally distinguished group of NL.RB employees served as nonvoting members of the Task Force. 6o The charter of the -l sk F'orce provided: B. The objectives of the task force are as follows: (I) review and evaluate existing structure, practices, procedures, rules, and regulations for the investigation. prosecution, hearing, decision. and enforcement of cases filed with the Agency: (2) advise the Board or the General Counsel, where appropriate, of its recommendations on the means and methods of improving the Agency's processes; (3) make recommendations to the Board on the recruitment and productivity of administrative law judges; (4) serve as a forum for exchange of ideas and opinions of interested persons. The scope of the activities of the task force will encompass the structure and processes of the NLRB. 61 General Counsel John S. Iring is to be complimented for implement- ing all of the recommendations of the Task Force directed towards his area of responsibility which he found appropriate. See, e.g., General Counsel memorandums to the field: G.C. Memorandum 77-93, Trial Training Vid- eotapes, re Recommendation 20; G.C. Memorandum 77 36, Regional Of- fice Training Programs and Conferences- Inclusion of Sessions Conducted by Non-NLRB Personnel. re Recommendation 21; <iC. Memoradum 76 47. Pleadings Manual, re Recommendation 31: G.C Memorandum 77-67. Posting and Distrbution of Revised Pamphlet. "Your Government Con- ducts an Election," re Recominendation 1: G ( Memoradum 77 120, Sche- duling of C & R Case Hearings: Authoity of Hearing Officers to Close Representation Case Heanngs, re Recommendation 5: G.C. Memorandum 77-84, Amendment of the Board's Rules and Regulations---Section 102.67(bXdXg) and (j). re Recommendation 8; G.C. Memorandum 77-79, Procedure for Secunng Determinative Challenged Ballots and Impounded Ballots-Revision of Manual Section 11344, re Recommendation 9: G.C. Memorandum 77 71. Modification of R Case Manual Necessitated by what frequently turn out to be non-meritorious and even frivolous objections. . . . Union members of the Task Force point out that in many instances the process of decid- ing objections has taken nearly as long as a year, which under the statute is when the union could get a second election in any event. They assert that such a prolonged delay in passing upon ob- jections makes a mockery of the election pro- cess. It is recognized that there are instances in which either party may file unsubstantiated ob- jections in the hope that the Regional Office in- vestigation will turn up something substantial. ... Although the percentages are not large, the union members assert that contested election cases are of unusual significance in the represen- tation area since they frequently reflect the "cut- ting edge" of union organizational activity in particular areas of the economy and the deci- sions in contested cases have a substantial effect on subsequent success or lack of it. With particular regard to objections concerning various forms of speech in the preelection period, the Task Force emphasized: Under the doctrine of General Shoe Corp., 77 NLRB 124, as applied in such cases as Sewell Mfg. Co. (1962 CCH NLRB par. 11,504), 138 NLRB 66, and Hollywood Ceramics, 140 NLRB 221, the exercise of speech by a party may be the basis of a valid objection to an election, if it violates "laboratory conditions" even though the speech does not constitute an unfair labor practice. Many objections would be precluded if this Section 9 rule were abandoned.... Shopping Kart and my concurrence therein was the then-Board's answer to the Task Force's concern. I still think that the concerns expressed by the Task Force, coming, as they do, from the front lines of those who actually litigate cases before the Board, should be paid special heed. My colleagues in the new majority, however, have chosen to ignore the voices of experience and have instead pursued an im- practical and quixotic dream of purity at the expense Memorandum 77-35 on Increasing the Rate of Election Agreements, re Recommendation 12; G.C. Memo.andum 77-123. Waiver of Right to Re- view Post-Election Cases Form NLRB-4880, re Recommendation 13: G.C. Memorandum 77-96, Settlements, re Recommendation 40; G.C. Memoran- dum 76-10. Program to Improve Settlements and Election Agreements, re Recommendations 41 and 42; G.C. Memorandum 76-19, Cases in which Section 10() Relief is Requested--Submission to Washington, re Recom- mendation 45: G.C. Memorandum 76-63, Case Handling Procedures for 10(j) Cases, re Recommendation 45. See also "Remedies and Compliance - Putting More Teeth in the Act," John S. Irving before the South West Legal Foundation 1976 proceedings, pp. 36-37. 634 GENERAL KNIT OF CALIFORNIA, INC. of employees' most basic right: the right to a speedy election. In his dissent, Member Penello, who spent most of his professional life working in various NLRB Re- gional Offices, has shown the vagueness of the stan- dards to be applied via Hollywood Ceramics, the in- herent susceptibility of that rule to unpredictable and contradictory application, and its inevitable effect of frustrating rather than furthering collective bargain- ing. As he also illustrates, the approach set forth in Shopping Kart has proved to be predictably applica- ble and has reduced the incentive for protracted liti- gation and delay. Thus, contrary to the assertions of the majority (at fn. 13), Shopping Kart has resulted in a substantial reduction in objections alleging campaign misrepre- sentation,6 2 and has thus had the desired effect of eliminating an important delaying tactic. Accord- ingly, from a purely practical viewpoint, the Shopping Kart approach has-even in its short lifetime- proven to be a useful and effective tool in effectuat- ing one of the major purposes of the Act-speedy elections. Its demise today is, therefore, all the more regrettable and puzzling. But even if the issue of the best approach to pre- election misrepresentations is viewed purely in policy terms-as opposed to practical experience-I disagree with the majority's decision to abandon Shopping Karl. When the Board considers preelection conduct with an eye to determining whether or not such con- duct warrants setting aside an election, it attempts to assess whether such conduct may reasonably be said to have disturbed the required laboratory condi- tions 63 and thus improperly influenced the outcome of the election. More specifically, with regard to the parties' oral or written communications to employ- 62 In fact, analysis of the objections statistics for the Board's fiscal year ending September 30, 1977, makes clear the significant decline in allegations of misrepresentation after Shopping Karl. Fiscal year 1977 embraced the 12-month penod ending September 30, 1977: of that almost 6 full months came after the April 8, 1977, issuance of Shopping Karr. In fiscal year 1977, there were 1,132 objections filed in 9,795 elections. Of these, 519 (or 18.9 percent) were misrepresentation objections, a rise of 69 percent over the previous fiscal year's 307. However. since approximately one-half of the I year post-Shopping Kart period discussed by the majority fell within fiscal year 1977, it is safe to assume that a significant number of the 519 occurred durinng that 6-month period. If even 35 percent of the 519 occurred within the latter half of fiscal year 1977, all of the 180 post-Shopping Karn misrepre- sentation cases referred to in fn. 13 of the majority opinion would be ac- counted for, and there would have been no such allegations after the first 6 months following the issuance of Shopping Karr. Whether or not all such misrepresentation allegations were raised in the first 6 months after Shopping Karl, it is clear that objections based on such allegations declined very significantly. While I am not interested in ascer- taining with any exactness how many misrepresentation allegations were raised in any given set of months, I want to emphasize the point the majori- ty has missed-that so-called "misrepresentations" were rising significantly in fiscal year 1977, and Shopping Karl reversed that trend 63 See General Shoe Corporalion, 77 NLRB 124 (1948). ees, the purpose of such scrutiny is to insure that employees are not coerced or influenced improperly into voting for either party. If the Board finds that a party's conduct has violated "laboratory conditions," it will set the election aside and order anothei or, in an especially egregious case of employer misconduct, may (in an appropriate unfair labor practice pro- ceeding) order that the employer bargain, without holding another election. While no Member of the current Board disagrees with this general principle in the realm of verbal, as opposed to physical, misconduct, the kinds and de- grees of statements upon which Board Members would set aside an election vary considerably. Since the Board has neither the qualifications, the practical experience, nor the resources to make valid psychological assessments of the actual effects of a given statement on the behavior of a given set (or group of subsets) of employees, our criteria in such cases are based on assumptions about the likely ef- fect on employees of various kinds of statements. As- sumptions regarding reasonably predictable effects necessarily imply assumptions regarding the suscepti- bilities of the employees who are the "targets" of the statement in issue. At the outset, it is reasonably pre- dictable that certain kinds of statements made to em- ployees (e.g., threats of violence, discharge, reprisal. etc.) are likely to have much more impact and effect on the employees and their exercise of free choice than other kinds of statements (e.g., misrepresenta- tions regarding financial issues). In other words, it is reasonable to assume that an employee who has been threatened is likely to act (or at least consider acting) in a way which will avoid the perceived consequences of the threat. This is especially true if the employee considers the person making the threat to be capable of carrying it out. Coercion is the antithesis of free- dom, and this is nowhere more than in the "political" milieu of an organizational campaign. On the other hand, most "misrepresentation" in the preelection period takes the form of what may be termed campaign propaganda. And while it may be that employees have not always been able to de- termine the truth or falsity of such statements, it is also apparent that campaign misrepresentations do not in themselves create an atmosphere of fear and coercion, as do threats. Rather, they merely require (if anything) an evaluation by the employees to whom they are addressed. Accordingly, it may be said that such statements do not inspire the kind of "behavioral imperative" that threats engender. Moreover, it is, I think, reasonable to assume that most employees view statements made by either par- ty in a campaign as inevitably tinged with self-inter- est; regard such rhetoric therefore with a degree of 635 DECISIONS OF NATIONAL LABOR RELATIONS BOARD cynicism; and then vote primarily on the basis of their own desires, prejudices, or expectations. It is worth examining, in this light, the rule of Hol- lywood Ceramics, to which my colleagues in the new majority assert they are now returning. In Hollywood Ceramics, the Board stated that: [A]n election should be set aside only where there has been a misrepresentation or other similar cam- paign trickery, which involves a substantial depar- ture from the truth, at a time which prevents the other party or parties from making an effective re- ply, so that the misrepresentation, whether deliber- ate or not, may reasonably be expected to have a significant impact on the election.4 However, the Board there went on to say that it would not set aside an election if "consideration of all the circumstances" indicated that "the statement would not be likely to have a real impact on the elec- tion." The Board cited, as examples of such circum- stances: (1) a misrepresentation regarding "an unim- portant matter so that it could only have had a de minimis effect; (2) a statement "so extreme as to put employees on notice of its lack of truth"; (3) where "the employees possessed independent knowledge with which to evaluate the statements"; and (4) where ' the party making the statement possesses in- timate knowledge of the subject matter so that the employees . . . may be expected to attach added sig- nificance to its assertion." 65 If the above-quoted language of Hollywood Ce- ramics is any guidance, the Board would expect em- ployees to discount a misrepresentation if, inter alia, the statement were sufficiently "extreme" or if the party making the statement did not have "intimate knowledge of the subject matter." In other words, where one party grossly distorts some aspect of the other party's assets, profits, likely behavior, pay rates, dues structure, etc., employees in the view of the Hollywood Ceramics Board may be expected to see such statements for what they are: campaign rhetoric by a party not necessarily possessed of the relevant information. However, in spite of this implicit assumption that employees can be expected to evaluate campaign claptrap, Hollywood Ceramics has been applied in 64 140 NLRB at 224. 65 Ibid what could only be termed a condescending manner: the Board has repeatedly stepped in to protect em- ployees from their-presumed-inability to place in perspective a party's exaggeration, rhetoric, or mis- representations. If presidential elections were super- vised by the Board's new majority here, democracy in the United States would be long dead or at least long denied. Furthermore, aside from the condescending and inconsistent application of the Hollywood Ceramics standard in the misrepresentation context, the new majority's willingness to find no coercive effects of preelection threats 66 makes even more glaring the in- herently whimsical nature of the majority's approach to preelection speech. In sum, it is clear that my concurrence in Shopping Kart gave the Board a logical, realistic, predictable, and workable approach to campaign misrepresenta- tions. The rule set forth in my concurrence succeeded in effecting a significant reduction of misrepresenta- tion objections. I am, accordingly, dismayed by the majority's shortsighted willingness to tamper with success, as well as with their implicitly paternalistic assumptions regarding employees. Finally, I predict that after the hearing which the majority has ordered here has been held, after a deci- sion is written, briefs filed, and all the rest of the laborious process completed, the same majority will find that the "misrepresentations" here do not war- rant setting the election aside and they will then- after another year has passed--certify the Union. Meanwhile, the employees who cast their votes on October 21, 1977, have been waiting and waiting for the results while this case has been winding its way through the Board's procedural maze. And these em- ployees are still being denied their rights under the National Labor Relations Act under the new majority's delaying decision today. I find this inex- cusable. I would certify the Union now. See, for example. Hfickorv Springs Manufacturing Company, 239 NLRB 641, issued this day, wherein the same Board majority finds unob- jectionable union threats during the preelection period. The majority rea- soned that, since the threats referred to possible violent reprisals related to "some unspecified time in the future after the Petitioner became the employ- ees' bargaining representative," such threats would not have a coercive ef- fect on the employees vis-a-vis the upcoming election. As I pointed out in my dissent there, a threat of picket line violence in an election campaign signifies the union's willingness to physically abuse employees who oppose it. I remain convinced that the "timed-release" nature of such threats in no ,as detracts from the atmosphere of fear the) engender. My colleagues' implications in their fn. 26 that these statements were remote as to that election is clearly unwarranted 636