Blackman-Uhler Chemical Division

BLACKMAN-UHLER CHEMICAL DIVISION Blackman-Uhler Chemical Division-Synalloy Corpo- ration and International Molders & Allied Workers Union, AFL-CIO. Cases 1-CA-6300 and I -RC- 3936 December 6, 1978 SUPPLEMENTAL DECISION, ORDER. AND DIRECTION OF SECOND ELECTION On April 9, 1976, the National Labor Relations Board issued its Decision and Order in the above- entitled proceeding,' finding that Respondent had violated Section 8(a)(5) and (I) of the Act by refusing to bargain wvith the Union which was certified by the Board 2 as the exclusive bargaining representative of Respondent's production and maintenance employ- ees following a Board election. Respondent filed a petition to review and set aside the Order of the National Labor Relations Board and the Board cross-applied for enforcement of its Order. A split panel of the United States Court of Appeals for the Fourth Circuit on February 28, 1977, granted enforcement of the Board's Order on the grounds that a union campaign leaflet contained no material misrepresentation of Respondent's profits warranting invalidation of the representation elec- tion.3 Respondent petitioned for review of the Board's Order and the court granted a rehearing en banc. In its September 12, 1977, per curiam decision, 4 the en bane court indicated that, if it were to decide the case in accordance with the law in effect at the time the case was decided by the Board and the panel decision, the en banc court, by a split vote, would deny enforcement of the Board's Order for the reasons set forth in the dissenting panel opinion. However, noting the Board's April 8, 1977, decision in Shopping Kart Food Market, Inc., 228 NLRB 131 1, the court declined enforcement of the Board's Order without prejudice to a renewed application for enforce- mentand remanded the case to the Board for a determi- nation whether the rule in Shopping Kart is applica- ble to the instant case and, if so, whether the Employer should be ordered to bargain. The Board, having accepted the remand, issued a notice advising the parties that they may file a state- 223 NLRB 827. 2 In the underlying representation proceeding, Respondent contended that a union campaign leaflet matenally misrepresented its profits. The Board at 217 NLRB 38 (1975), Member Kennedy dissenting. adopted the Regional Director's recommendation that the objection be overruled. find- ing that the leaflet contained no mreenal misrepresentation which would warrant setting the election aside. 3 Blackman-Uhler Chemica. Di:tsion, Synallov Corporation v. N. LR.B., 588 F.2d 705 (Judge Winter dissentng). Blackman-Uhler Chemical Division, Synallo' Corporation v. N lR.B., 561 F.2d I 1s8. ment of position or a brief with respect to the issues raised by the court's remand. Thereafter, Respon- dent filed a response to the Board's notice. The Board, having reviewed the case in light of the entire record, the court's opinions, and Respondent's response to the Board's notice, is of the opinion that it would not effectuate the policies and purposes of the Act to apply Shopping Karl in this case. The prac- tice of applying a pronouncement of a new rule of law retroactively, that is, to the case in which it arises and to all pending cases, is traditional and, we be- lieve, the proper course to follow.5 However, the case before us is one in which the Board has not only decided the representation case but has also rendered a bargaining order under the law as it then existed (Holhlwood Ceranics Company, Inc., 140 NLRB 221 (1962) ); in these circumstances we decline to reopen this matter which we have finally decided. 6 Considering all the circumstances in this case, and with all due respect to the U.S. Court of Appeals for the Fourth Circuit, we are satisfied that, for the rea- sons set forth in our decision in the repesentation proceeding (217 NLRB 38), the union leaflet did not constitute a material misrepresentation, under the standards of Hollywood Ceramics, which would war- rant setting aside the election. However, as the Fourth Circuit has already indicated it would not en- force the Board's bargaining order under the Holly- wood Ceramics standards, we shall accept the Fourth Circuit's opinion to be the law of the case and set aside the election. Accordingly, we shall remand this case to the Regional Director for the purposes of conducting a second election at a time he deems ap- propriate. ORDER It is hereby ordered that the complaint in Case 11- CA-6300 be, and it hereby is, dismissed. I' Is FURTHER ORDERED that the certification issued in Case 1 -RC 3936 be, and it hereby is, vacated. IT IS FURTHER ORDERED that the election conducted in Case I 1-RC-3936 on September 12, 1974, be, and it hereby is, set aside. IT IS FURTHER ORDERED that Case I I-RC-3936 be, Thus. Shopping Karl was applied to cases pending at the time Shopping Karl issued: Thomas E. Gates & Sons, Inc., 229 NLRB 705 (1977}(Chairman Fanning dissenting); Alson Manufacturing Aerospace Division of Alson Indus- tries, Inc.. 230 NLRB 735 (1977); National Council of Young Israel dbh/a Shalom Nursing Home, 230 NLRB 980 (1977) (Chairman Fanning dissent- in§) Additionally, Chairman Fanning and Member Jenkins, in accordance with their Shopping Kart dissent, would not apply Shopping Karl in any event. They further note that, in General Knit of CaliJormia, Inc., 239 NLRB 619. Issued this day, a majority of the Board has readopted the Hollywood Ceramics standard for evaluating campaign misrepresentation. in light of our acceptance of the court's opinion as the law of the case, we have consolidated the representation case with the unfair labor practice proceeding and shall dismiss the complaint and remand the representation case to the Regional Director. 637 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and it hereby is, remanded to the Regional Director for Region 11 for the purpose of conducting a second election at such time as the Regional Director deems appropriate. [Direction of Second Election omitted from publi- cation.] I MEMBER MURPHY. concurring: Although I was on the majority which overruled Hollywood Ceramics in the Shopping Kart decision, I was also on the panel which granted summary judg- ment in the instant case under the law as it then ex- isted. The Board thus having applied Hollywood Ce- ramics in both the representation case and the unfair labor practice case, I agree with the majority here that it would not be appropriate to apply Shopping Kart retroactively upon reconsideration now. MEMBER TRUESDALE, concurring in part and dissent- ing in part: I agree with Chairman Fanning and Member Jen- kins, for the reasons stated by them, that the stan- dards of Hollywood Ceramics Company, Inc., 140 NLRB 221 (1962), and not those of Shopping Kart Food Market, Inc., 228 NLRB 1311 (1977), govern this proceeding. It should be noted, however, that I was not a member of the Board when the underlying decision in the representation case was issued (217 NLRB 38 (1975). Had I participated in the represen- tation case and applied the then prevailing rule of Hollywood Ceramics, I would have found that the Union substantially misrepresented the Employer's earnings at a time (the morning of the election) which prevented the Employer from making an ef- fective reply, and that the misrepresentation may rea- sonably have been expected to have had a significant impact on the election. I would therefore have voted to set the election aside and direct a second election. Accordingly, I join my colleagues-Chairman Fan- ning and Member Jenkins-in directing a second election at this time. MEMBER PENELLO. dissenting: On September 12, 1977, the United States Court of Appeals for the Fourth Circuit, sitting en banc, issued an opinion in this proceeding in which it concluded that if it decided the case under Hollywood Ceramics Company, Inc., 140 NLRB 221 (1962), the court "would deny enforcement of the Board's [bargaining] order." Blackman-Uhler Chemical Division, Synalloy Corporation v. N.L.R.B., 561 F.2d 1118, 1119. How- ever, the court also stated that, if it decided the case under Shopping Kart Food Market, Inc., 228 NLRB 1311 (1977), "the views of the majority of the in banc court might well be different." Since the Board in the first instance should determine whether Shopping Kart is to be given retroactive effect and applied where, as here, the election was held before that deci- sion issued, the court remanded the case to this Agency. In so doing, the court emphasized that Board application of Shopping Kart to this proceed- ing "may well have an impact on the obligation of the employer to engage in collective bargaining nego- tiations." In a companion case issued this day, General Knit of California, Inc., 239 NLRB 619, a majority of the Board, with Member Murphy and myself dissenting, has decided to overrule Shopping Kart and revive the Hollywood Ceramics rule. Therefore, it is not surpris- ing that the majority has voted here not to apply Shopping Kart retroactively.9 Regrettably, the result of this decision is to eliminate the possibility ex- plicitly left open by the Fourth Circuit of presently issuing an enforceable bargaining order. Contrary to my colleagues, I would give full effect to the employees' secret-ballot choice for collective repre- sentation by applying the Shopping Kart decision ret- roactively and directing this Employer to the bar- gaining table. If Shopping Kart were applied retroactively to this case, it is clear that the election would be upheld because the union campaign leaflet in issue con- tained nothing more than a misleading statement.1 0In determining whether to do so, it is necessary to bal- ance the adverse consequences of retroactivity, if any, against "the mischief of producing a result which is contrary to a statutory design or to legal and equitable principles." Securities & Exchange Commis- sion v. Chenery Corporation, 332 U.S. 194, 203 (1947). Citing the Supreme Court's decision in Chenery, the Second Circuit has phrased the test in terms of "whether the practical operation of the Board's change of policy . . . [will] work hardship upon re- spondent altogether out of proportion to the public ends to be accomplished." N. L R.B. v. National Con- tainer Corp., 211 F.2d 525, 534, (2d Cir. 1954). Retroactive application of Shopping Kart would impose no "hardship" upon the Employer. This is not a case involving the proscription of conduct which was lawful at the time a party acted. Nor is any kind of monetary award involved here. The most that can be said is that the Employer, in reliance upon the Hollywood Ceramics rule, refrained from I [Excelsior footnote omitted from publication.) 9 As indicated in her separate opinion, Member Murphy agrees with the General Knit majority that Shopping Kart should not be applied retroactively here apparently because she was on the panel which granted summary judg- ment in the instant case under the law as it then existed. 10 The facts of the instant case are fully set forth in my dissenting opinion in General Knit, supra. and there is no need to repeat them here. Suffice it to say that the Employer's objection alleges that the Union violated the Holly- wood Ceramics rule by distributing a leaflet which materially misrepresented the Employer's profits. In its statement of position on remand, the Em- ployer does not contend that the leaflet is objectionable under Shopping Karln. 638 BLACKMAN-UHLER CHEMICAL DIVISION making any misrepresentation of its own during the election campaign. Further, inasmuch as Shopping Kart rejected the assumption that misleading state- ments influence the employees' election choices, the Employer cannot be said to have been prejudiced by the fact that its conduct conformed to the require- ments of the Hollywood Ceramics rule. Turning to the other side of the Chenery scale, fail- ure to apply Shopping Kart retroactively would in- deed be contrary to the "statutory design" and "legal equitable principles." Unless the Employer is now or- dered to bargain, the employees' free choice of a bar- gaining representative 4 years ago will have been nul- lified, and the effectuation of their statutory right to collective representation will be subject to yet further delays. Such a result hardly comports with the Act's central policy of promoting collective bargaining. Under these circumstances, and inasmuch as no ad- verse consequences ensued from the Employer's reli- ance on the Hollywood Ceramics rule, the conclusion is inescapable that the balance should be struck in favor of immediate vindication of employee rights by applying Shopping Karl retroactively. In analogous cases, the Board, with court ap- proval, has given retroactive effect to policy changes. Thus, in Pacific Coast Association of Pulp and Paper Manufacturers, 121 NLRB 990 (1958), the Board shortened the period during which a collective-bar- gaining agreement would bar an election and stated that the new rule would be applied retroactively for the reasons set forth in the companion case of Deluxe Metal Furniture Company, 121 NLRB 995 (1958). In Deluxe Metal the Board rejected the petitioner's re- quest that any new policy apply in futuro, stating: [I]n establishing revisions of precedent there is always the likelihood that such revisions will bring about a different result in some pending proceeding than would have obtained under a prior policy or procedure. This is true not only of the case in which such revisions are first an- nounced and applied, but also with respect to any other case which has not yet been decided, because it has not reached the Board's level or is at one of the other stages of the administrative process such as the hearing. Thus, to adopt these revisions of contract-bar policy and then allow the instant proceeding as an exception without permitting a similar exception to all pending cases would be inequitable. To establish an in futuro rule for all pending cases would create an adminstrative monstrosity. The judicial practice of applying each pronouncement of a rule of law to the case in which the issue arises and to all pending cases in whatever stage is traditional and, we believe, the wiser course to follow. [121 NLRB at 1006-07.1 The retroactive application of the new contract- bar rule of Pacific Coast was subsequently reviewd by the District of Columbia Circuit in Leedom v. In- ternational Brotherhood of Electrical Workers, Local Union No. 108, AFL-CIO [General Cable Corp.]., 278 F.2d 237 (1960). The court accepted the union's con- tentions that it relied on the former bar rule in nego- tiating its existing contract and that applying the new rule retroactively threatened to deprive it of its repre- sentation rights. The court nevertheless sustained the Board's action, noting that this was not a case where "the Board made conduct actionable which thereto- fore had not been actionable." 278 F.2d at 243. In The Laidlaw Corporation v. N.L.R.B., 414 F.2d 99 (7th Cir. 1969), cert. denied 397 U.S. 920 (1970), the court held that the employer's reliance on prior Board law did not preclude retroactive application of a new rule or enforcement of a backpay order esti- mated at oral argument to be $450,000. The Board's brief to the court acknowledged that the Board had overruled previous decisions, relying instead on N.L.R.B. v. Fleetwood Trailer Co., Inc., 389 U.S. 375 (1967), which issued after the conduct in question. Citing the Chenery formula, the court concluded that "complete vindication of employee rights should take precedence over the employer's reliance on prior Board law." 414 F.2d at 107. Similarly, in H. & F Binch Co. v. N.L.R.B., 456 F.2d 357, 365 (2d Cir. 1972), the Second Circuit up- held retroactive application of the Board's Laidlaw doctrine, even though it "established a new norm of employer conduct." In reaching its conclusion, the court "weigh[ed] the hardship in imposing liability on the company for conduct conforming to what it may reasonably have thought the limit of its duties against the hardship to the employees in being denied impor- tant rights that are now recognized to have been properly theirs." Here, the case for giving the change in policy ret- roactive effect is even more compelling than in the decisions discussed above. Applying Shopping Kart retroactively would not upset justifiable expectations (as in Leedom) or subject the party who relied on prior law to financial liability (as in Laidlaw and Binch). Applying Shopping Kart prospectively, how- ever, would deny employees their Section 7 right to the collective representation for which they voted 4 years ago, and would be contrary to the fundamental policy of the Act of promoting collective bargaining. With the Chenery scale so clearly tipped in favor of applying Shopping Kart retroactively, I am confident that a Board bargaining order explicitly based on that decision would have been sustained by the 639 DECISIONS OF NATIONAL LABOR RELATIONS BOARD court. The majority's refusal to issue such an order represents one more triumph for the Hollywood Ce- ramics rule which will continue to frustrate employee free choice in untold numbers of future cases now that it has teer granted renewed vitality. By its deci- sion today, the majority has carved the name Black- man-Uhler on a tombstone and has added it to the graveyard that has been the final resting place of so many other Board certifications infected by the fatal Hollywood Ceramics virus." " See the cases listed in sec. I of my dissenting opinion in General Knit, suprd. 640