Ad Art, Inc.

AD ART, INC. Ad Art, Incorporated and James H. Wydner. Case 32-CA-227 (formerly 20-CA-2952) 24 June 1986 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS, JOHANSEN, BABSON, AND STEPHENS On 19 July 1982 Administrative Law Judge Richard D. Taplitz issued the attached supplemen- tal decision. The General Counsel filed exceptions and a supporting brief. The Respondent filed an an- swering brief and cross-exceptions and a supporting brief. The Board has considered the supplemental deci- sion and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings,' and conclusions.2 ORDER The amended backpay specification is dismissed. CHAIRMAN DOTSON, concurring. I agree with my colleagues that claimant James Wydner is entitled to no backpay. I disagree, how- ever, with their reaffirmation of the formula estab- lished in American Navigation Co., 268 NLRB 426 (1983). In my view, a claimant who has perpetrated a fraud on the Board's processes is entitled to no backpay in all circumstances. In American Navigation Co., the Board consid- ered the identical issue presented in this case and arrived at a formula awarding backpay to the claimant for all calendar quarters of the backpay i The General Counsel has excepted to some of the judge's credibility findings The Board's established policy is not to overrule an administra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for re- versing the findings 2 Subsequent to the judge's decision, we issued American Navigation Co, 268 NLRB 426 (1983), holding, as a general rule, that the Board should deny backpay only for those calender quarters in which a discri- minatee intentionally concealed interim employment from the Board We further decided in American Navigation, at 468 fn 6, however, consistent with our decisions in Great Plains Beef Co. 255 NLRB 1410 (1981), and M J McCarthy Motor Sales Co, 147 NLRB 605 (1964), that the Board would "continue to deny all backpay to claimants whose intentionally concealed employment cannot be attributed to a specific quarter or quar- ters because of the claimant's deception " The instant facts fall within the foregoing exception to the American Navigation rule regarding intentional concealment of interim earnings The judge found that "Wydner abused the Board's process by withhold- ing relevant evidence, by testifying falsely, by destroying records to cover up his misstatements, and by attempting to prevent a witness from testifying truthfully " The judge further found it impossible to give cre- dence to any information Wydner furnished and therefore concluded it was impossible to calculate backpay, relying upon Great Plains Beef and M. J McCarthy, above We therefore agree with the judge that Wydner should be denied all backpay 985 period except for those purportedly identifiable quarters encompassing the fraudulently concealed earnings. As a result, in American Navigation the Board awarded substantial backpay even though the representations of the claimant in furtherance of his scheme to defraud were found to be "prepos- terous, inherently untrue, and absurd." Ibid. at 426. In striking similarity to the representations of the American Navigation claimant, we are unfortunately once again confronted in this case by a claimant who fraudulently concealed interim earnings and who continued to deny wrongdoing and evasion at the hearing. Upon further consideration of these highly disturbing scenarios, I am now convinced that American Navigation was wrongly decided and that the formula applied in that case neither com- ports with our traditional status quo ante backpay principles nor serves the public interest in ensuring the integrity of our compliance procedures and the encouragement of voluntary compliance. In my view, the American Navigation formula, as reaffirmed today, is seriously flawed because it pre- sumes that a claimant fraudulently concealing inter- im earnings generally has committed an isolated act of deception confined to a readily identifiable period and that interim earnings ordinarily can ac- curately be ascertained for the remainder of the backpay period. The effect of this presumption is that the evidentiary burden is forever placed on the respondent to demonstrate additional acts of willful concealment of interim earnings by the claimant during each and every calendar quarter. As a prac- tical matter, the American Navigation formula pre- sumes that the demonstrable fraud vanishes at the stroke of midnight at the beginning of the next cal- endar quarter and a newly minted claimant reap- pears. I can no longer adhere to such a presump- tion. Once the respondent has demonstrated a claimant's fraudulent concealment of interim earn- ings for any portion of the backpay period, it is in- cumbent on the Board to recognize the reasonable and the practical likelihood of other acts of decep- tion or evasion by the claimant regarding interim earnings. In such circumstances, net backpay cannot be ascertained with any reasonable certainty and any award of backpay is therefore purely spec- ulative. Accordingly, an award of backpay for any calendar quarter is inappropriate and does not con- form with our traditional status quo ante approach to awarding backpay. Fraud, deception, and willful concealment are not permissible on a quarterly basis. Further, because a claimant's fraudulent conceal- ment renders ascertainment of net backpay impossi- ble, a denial of backpay in all cases of willful con- cealment is neither punitive to the claimant nor a 280 NLRB No. 114 986 DECISIONS OF NATIONAL LABOR RELATIONS BOARD windfall to the respondent. It must be recognized that an award of actual net backpay does not auto- matically flow to a discriminatee and is entirely de- pendent on events occurring after commission of the unfair labor practice. Thus, for example, no actual net backpay will be awarded when gross backpay and expenses are offset fully by substantial interim earnings . Such an offset might well occur in every case of fraudulent concealment but for the claimant's concealment of interim earnings. More- over, a respondent does not escape liability to remedy its unfair labor practices when no actual net backpay is awarded inasmuch as it ordinarily will be required to offer reinstatement to an unlaw- fully discharged employee and to expunge refer- ence to the unlawful discipline from its employ- ment records, will be required to post an appropri- ate notice, and will face contempt sanctions should it commit a like or related unfair labor practice. In sum, an award of net backpay is simply one means by which the Board seeks to restore the status quo ante in the public interest. The denial of backpay to all claimants fraudulently concealing interim earn- ings is fully consistent with that interest. Although I consider the denial of backpay to such claimants to be mandated by the status quo ante principles underlying the Board's remedial processes, I am compelled to note that a denial of backpay in all cases of willful concealment most forcefully and effectively serves to promote the in- tegrity of the Board's compliance processes by dis- couraging claimants from contemplating the con- cealment of interim earnings. While I have no doubt that the vast majority of claimants would never seriously consider the fraudulent conceal- ment of interim earnings, those few who may en- tertain such a notion are far less likely to engage in such misconduct if faced with the certain denial of all backpay on discovery of willful concealment.' Similarly, the achievement of greater public confi- dence in the integrity of our compliance processes and in the accuracy of backpay specifications is far more likely to increase voluntary compliance by respondents short of litigation. In times of budget- ary restraint and limited resources prompt settle- ment of often complex backpay cases can only serve as an aid in carrying out the mission of this Agency.2 i To that end I would urge compliance officers in the Board's Region- al Offices to continue aggressively examining claimants in connection with the ascertainment of interim earnings especially when matters of sus- picion are raised. Further, when willful concealment of interim earnings is revealed to the satisfaction of the Regional Director, I would encour- age our Regional Offices to revise substantially the backpay specification in appropriate circumstances prior to the holding of any hearing 2 It should be noted that the instant backpay case has its origin in a discharge effectuated in December 1976 Although my colleagues reaffirm their adherence to American Navigation, I believe the result we reach today casts doubt on the continued viability of that case. The similarities between the intention- al concealment and scheme to defraud by, the claimants in both the instant case and in American Navigation are striking. Yet, the American Naviga- tion claimant was awarded substantial backpay while claimant Wydner in the instant case has justly received no backpay. In American Navigation, the Board awarded backpay even though the testimony of the claimant was found to be (1) part of a "carefully laid plan to defraud" 268 NLRB at 431 fn. 14, (2) " self-im- peaching due to its absurdity" (268 NLRB at 430), and (3) "preposterous and inherently untrue" (ibid.). In the instant case, the Board awards no backpay because, as found by the judge, the claim- ant "abused the Board's process" by his willful concealment and acts of deception and was "un- worthy of belief." The critical finding of the judge upon which my colleagues rely to distinguish this case from American Navigation is the following: Without giving credence to the information furnished by Wydner which was incorporated in the backpay specification it is impossible to make a determination as to the amount of backpay due. Obviously, in this, as in most backpay proceedings, including American Navigation, the Board must rely heavily on the claimant in determining the amount of backpay needed to make the claimant whole, ini- tially as set forth in the backpay specification. I, therefore, pose the following questions. In view of the credibility resolutions, described above, adverse to the American Navigation claimant, on what basis can it be said that the Board "gave credence" to information furnished by the American Navigation claimant? Is it sensible to give credence to representa- tions made by claimants engaging either in a "care- fully laid plan to defraud" or those who have "abused the Board's process?" My concurring colleague contends that American Navigation is distinguishable because the judge in American Navigation "did not discredit" the testi- mony of the claimant in that case to the extent the judge discredited the testimony of claimant Wydner in the instant case regarding matters that cut across the entire backpay period. I respectfully disagree. First, I have searched in vain for any por- tion of the American Navigation claimant's testimo- ny at the backpay hearing that was specifically credited by the judge or the Board on any matter at issue. Second, information furnished by both claimants necessarily must be relied on, or "given AD ART, INC. credence," to the same extent in compiling the re- spective backpay specifications in both cases. Third, the nature of the judge's credibility resolu- tion against the American Navigation claimant- "self-impeaching due to its absurdity" and "prepos- terous and inherently untrue"-is unusually vigor- ous, even when compared to the judge's finding in the instant case that claimant Wydner is "unworthy of belief." Indeed, as noted, the testimony of the American Navigation claimant not only was discred- ited in the strongest terms but the claimant also was found by the judge to have engaged in a "carefully laid plan to defraud." Fourth, the calen- dar quarters encompassing claimant Wydner's con- cealed earnings with interim employer Wood N Arts Graphics at issue in the instant case are ascer- tainable to the same, or even greater, extent than the period of the concealed interim earnings at issue in American Navigation.3 Accordingly, I fail to discern a reasonable basis to reconcile the con- trasting results reached in these cases based solely on the respective credibility determinations. In view of the factual similarties between Ameri- can Navigation and the instant case, one is left to wonder what little is left of American Navigation. This is particularly true because it is readily appar- ent that the judge's credibility assessment adverse to claimant Wydner, which we adopt, rests virtual- ly entirely on Wydner's abuse of the Board's proc- esses in fraudulently concealing interim earnings. Thus, with regard to other issues raised in this pro- ceeding,4 the judge initially could only express "suspicions" and, indeed, found that the Employer had not "rebutted" or "refuted" Wydner's claims. Only when Wydner's deceptions were revealed re- garding interim earnings did the judge summarily reject Wydner's claims. In reality, therefore, my colleagues' adoption of the judge's rationale for de- nying all backpay tends to support the proposition that backpay can never be ascertained when a claimant fraudulently conceals interim earnings, and calls for rejection of the American Navigation standard. Stated otherwise, once fraudulent con- cealment was revealed in this case, there simply was no need for the judge to independently re- evaluate Wydner's claims regarding other issues S Because of the credited testimony of Dennis Norgard and the docu- mentary evidence produced at the hearing, the precise calendar quarters of Wydner's employment with Wood N Arts Graphics is clear In con- trast, the precise calendar quarter of concealed interim employment in American Navigation could not be established Of course, my concern also is with the remaining calendar quarters of the backpay period of which credible evidence is absent regarding interim earnings in both cases As to those and other interim earnings , American Navigation and the instant case are indistinguishable 4 These issues are (1) the date on which claimant Wydner received a reinstatement offer, (2) Wydner's physical availability for work through- out the backpay period, and (3) the adequacy of his search for work throughout the backpay period 987 raised. This is true because Wydner's fraudulent concealment of interim earnings on its face renders ascertainment of net backpay impossible. Thus, the judge clearly did not undertake an assessment of all the evidence bearing on the remaining issues of which the judge initially was only "suspicious." Indeed, my colleagues simply adopt without com- ment the judge's summary conclusions on those matters. 5 In sum, I would expressly overrule American Navigation and deny all backpay to all claimants fraudulently concealing interim earnings because such misconduct renders adequate and reliable as- certainment of backpay impossible, wastes the Board's resources, and does too little to discourage the practice. MEMBER STEPHENS, concurring. I agree that the judge's denial of backpay in this case can be affirmed as an application of the rule followed in the line of precedents preserved in American Navigation Co., 268 NLRB 426, 428 fn. 6 (1983), under which all backpay may be denied when a discriminatee's willful concealment of inter- im earnings makes ascertainment of his backpay im- possible. I write separately only because I wish to make clear my understanding of the rationale of those cases and why they apply here. The rule of the cases cited in footnote 6 of American Navigation is not logically limited to concealment of interim earnings, but would apply to willful misrepresenta- tions concerning any category of information bear- ing on backpay that affects the backpay calculation in all backpay quarters. As explained below, the judge ultimately discredited not only discriminatee Wydner's testimony on interim earnings but also his testimony on other issues that affected determi- 5 Member Stephens asserts that a denial of all backpay is Impermissia- ble if based solely on an adverse credibility finding , in the absence of an assessment of all of the evidence on issues affecting the entire backpay period My concurring colleague states further that a denial of all back- pay is not necessarily warranted even when a claimant is "generally un- worthy of belief' because such an approach "would effectively negate the rule of American Navigation " Nevertheless, this appears to be the ap- proach actually embraced by my colleagues Otherwise, consistent with Member Stephens' concerns they would undertake an assessment of all the evidence bearing on issues affecting the entire backpay period. For example, my colleagues summarily adopt the judge's "suspicions" that Wydner was physically unavailable to work during each and every quar- ter of the 4-1/2 years of the backpay period, including several quarters when he performed work comparable to that he performed with the Em- ployer Further, they conclude that Wydner did not adequately search for work during each and every quarter of the backpay period, including those quarters when Wydner worked and received substantial interim earnings Finally, my colleagues find that Wydner received a letter offer- ing him reinstatement effective 4 February 1981 even though the letter was sent to the wrong address, the union steward who normally would receive a copy of such a letter testified that he did not receive a copy, and the Employer admits in its brief that the evidence is not sufficient "in itself to establish the conclusion of Wydner having knowledge of the offer of reinstatement " 988 DECISIONS OF NATIONAL LABOR RELATIONS BOARD nation of his backpay, and these issues cut across all of the quarters for which Wydner sought back- pay. As the judge correctly concluded, Wydner's conduct thus made a calculation of his backpay im- possible, and denial of all backpay was appropriate. American Navigation, which I join the majority in reaffirming, is essentially a decision based on policy grounds. Balancing the interest in seeing to it that backpay proceedings are conducted in a manner that deters deceit by discriminatees against the interest in seeing to it that a respondent reme- dies unfair labor practices it has committed, the Board devised a reasonable formula under which all backpay would be denied for any particular quarter or quarters in which willfully concealed employment occurred, but which would allow backpay for other quarters. 268 NLRB at 428.1 Re- lying in part on a recent court opinion that was critical of the Board for failing to take adequate ac- count of a discriminatee's dishonesty, the Board ex- plained that this rule did not amount to the imposi- tion of a "penalty," but simply represented a judg- ment of what kind of remedy would best effectuate the policies of the Act. 268 NLRB at 427, citing NLRB v. Flite Chief, Inc., 640 F.2d 989, 992-993 (9th Cir. 1981). The Board, however, expressly preserved an- other line of cases predicated on what is primarily an evidentiary rule. In two of those cases, the evi- dence showed a course of concealed profit-making activities engaged in by the discriminatee and per- mitted the inference that these activities had prob- ably occurred throughout the backpay period. M. J. McCarthy Motor Sales Co., 147 NLRB 605, 615- 618 (1964) (concealed sales of automobiles under fictitious names); Robinson Freight Lines, 129 NLRB 1040, 1043 (1960) (concealed liquor sales). In Great Plains Beef Co., 255 NLRB 1410 (1981), the discriminatee concealed certain interim employ- ment and then, when pressed at trial concerning earnings not originally disclosed to the Board, ad- mitted that he could not "recall" whether he had also engaged in, and concealed, other employment. Id. at 1410 fn. 1, 1412, 1414-1415. In each of these cases, the discriminatee's dishonesty made it impos- sible to calculate an accurate figure for the back- pay due him, and all backpay was accordingly denied. It should be acknowledged, however, that although this rule is essentially evidentiary, it is im- I Where concealed employment may have occurred in more than one quarter, the Board will deny backpay for any quarter in which it may have occurred Thus in American Navigation, where, under the Board's assessment of the evidence, it was possible that the concealed employ- ment had occurred either in the third quarter, the fourth quarter, or both, the Board denied backpay for both the third and fourth quarters (The judge denied backpay only for the third quarter because he considered it "likely," although not certain, that the concealed employment occurred then ) plicitly predicated on a policy judgment that a dis- criminatee's dishonesty on matters affecting the cal- culation of backpay in all quarters is warrant for modifying the usual burden of proof rule in back- pay proceedings. Ordinarily a respondent has the burden of establishing facts that would limit its backpay liability, such as a discriminatee's failure to make an adequate search for other work. Wayne Trophy Corp., 254 NLRB 881, 882 (1981); Manda- rin, 238 NLRB 1575, 1576 (1978), enfd. 621 F.2d 336, 338 (9th Cir. 1980). To the extent that the Board has permitted uncertainty created by a dis- criminatee's dishonesty to bar backpay, it has not strictly followed, in my view, that rule as to bur- dens. In the present case, Wydner's testimony about his interim earnings was initially put in doubt by his admission, under examination by the Respond- ent's counsel, that during 1977, when he reported some earnings from Channel Lite, he might have occasionally worked on small jobs for other sign shops (such as helping load a truck) without actual- ly being a formal employee.2 In addition, as the judge expressly noted, Wydner testified concerning (1) the date on which he received the Respondent's reinstatement offer, (2) the periods during which he was physically available for work notwithstanding a back injury that prompted him to file for disab- lity payments during the backpay period, and (3) his search for work, which was suprisingly unsuc- cessful in light of his many marketable skills. Al- though the judge was initially suspicious of Wydner's testimony on these matters, he did not totally discredit it until later in the hearing, when it was revealed that Wydner had not only concealed his earnings in the Wydner-Norgard account, but had also destroyed records, attempted to suborn perjury, and perjured himself on the witness stand concerning that matter. The judge finally conclud- ed that none of Wydner's testimony-even some of it that was unrebutted-was worthy of belief.3 Be- cause he could give no "credence to information furnished by Wydner" that was "incorporated in the backpay specification" and because the matters in doubt were not confined to any particular quar- ter, the judge properly denied backpay under the rule of Great Plains Beef Co., supra, M J. McCar- thy Motor Sales Co., supra, and Robinson Freight Lines, supra.4 2 Thus, as to the two quarters when Wydner was working the entire time for Sign Systems, the judge apparently discredited Wydner's denial that he performed any other work during that period. S It is clearly the prerogative of a judge in any type of Board proceed- ing to refuse to credit testimony that is uncontradicted . NLRB v. Ayer Lar Sanitarium, 436 F 2d 45, 49 (9th Cir 1970). 4 Because the issue of Wydner's physical availability for work puts in doubt the proposition that he would have been earning pension credits Continued AD ART, INC It must be emphasized, however, that these cases would not license a judge-or the Board-to deny all backpay to a discriminatee simply because he lied about a particular matter or even was general- ly unworthy of belief. Such a reading of those cases would effectively negate the rule of American Navigation,5 and would not accord with rational standards of adjudication. We properly do not dis- miss complaints or conclude that respondents have committed all unfair labor practices alleged against them simply because a principal witness for one side or the other is discredited on some matter. In- stead, all of the evidence bearing on an issue is ex- amined before the issue is resolved, and the resolu- tion of one issue against a party is not taken as an automatic warrant to resolve other issues against it. Thus, if a discriminatee's dishonesty does not con- cern issues that cut across all backpay quarters and does not make it impossible to calculate a reliable figure for any quarter, then, under American Navi- gation, backpay may be owing for any quarter in which no willfully concealed employment oc- curred. American Navigation, together with the prece- dents it preserves, adequately balances relevant policy interests and allows for the latitude in credi- bility resolutions properly enjoyed by triers of fact. The problem with my concurring colleague's pro- posed rule is not only that it fails to take adequate account of the need to hold respondents accounta- ble for their unfair labor practices but also that it is premised on a questionable presumption. While criticizing the American Navigation rule as based on an improper presumption "that the demonstrable fraud vanishes at the stroke of midnight at the be- ginning of the next calendar quarter," the concur- rence presumes the contrary-that a discriminatee shown to have lied about one particular matter must be presumed to have lied about everything. This presumption is just as objectionable as the one criticized by the concurrence, since either one im- properly constrains the authority of an administra- tive law judge to make precise credibility resolu- tions, including assessments that a witness is lying in some parts of his testimony and telling the truth in others. See NLRB v. Universal Camera Corp., 179 F.2d 749, 754 (2d Cir. 1950) (Hand, J.), vacat- but for his unlawful discharge, the judge also properly denied contribu- tions to the pension fund Compare American Navigation, supra, 268 NLRB at 428 5 Backpay was not denied for all quarters in American Navigation since, even though part of discnminatee Adams' testimony concerning a par- ticular job was deemed "preposterous, inherently untrue, and absurd," the judge did not discredit testimony by Adams affecting other quarters or find an insufficient basis for calculating backpay for quarters in which earnings from that job were not received 989 ed and remanded on other grounds 340 U.S. 474 (1951). In sum, I concur in affirming the administrative law judge because his recommendation to deny backpay in this case is consistent with American Navigation and the prior Board law that it pre- serves and because it is supported by the evidence as he has assessed it on the basis on his evaluation of the veracity of the witnesses. Elaine D. Chmpson, Esq., for the General Counsel. Donald R. Johnson, Esq., of Stockton California, for the Respondent. SUPPLEMENTAL DECISION STATEMENT OF THE CASE RICHARD D. TAPLITZ, Administrative Law Judge. This supplemental proceeding was heard at Stockton, California, on December 21, 1981, and January 12 and 13 and March 2, 1982. A second amended backpay specifi- cation which was further amended at the end of the hearing was predicated on the Decision and Order of the Board dated September 29, 1978 (238 NLRB 1124). The Board's Order was enforced by the Ninth Circuit Court of Appeals (645 F.2d 669 (9th Cir. 1980)). In the its Decision and Order, the Board inter alia, found that Ad Art, Incorporated (Respondent) violated Section 8(a)(1) of the Act and ordered the Respondent to reinstate James H. Wydner with backpay.1 The backpay specification as amended sets forth a number of facts and calculations and alleges that the ob- ligation of Respondent to make Wydner whole under the Board's Order will be discharged by payment to him or approximately $80,000 plus interest.2 Respondent in its 1 The administrative law judge in his decision found that Wydner's conduct in the underlying case approached but did not reach the point that he was harassing the Company to such an extent to deprive him of the protection of Sec 7 and that Respondent discharged him in large part because it disapproved of his filing grievances. A two-member majority of a three-member panel adopted the judge's decision . The third member dissented on the ground that he would defer to an arbitrator's determina- tion that Wydner had so abused the grievance process that his pursuit of those activities interfered with his own work and the work of others In enforcing the Board Order, the Ninth Circuit Court of Appeals held at 679 We agree with the ALJ that Wydner's behavior was troubling 11 Nonetheless, "the fact that the Board's choice is one of two conflict- ing alternatives and that evidence and inferences exist to support the rejected choice is not a sufficient ground for refusing to order en- forcement " NLRB P. Holly Bra of California, Inc, 405 F 2d 870, 872 (9th Cir 1969) We find, therefore, that there is substantial evidence in the record taken as a whole to support the Board's finding that Wydner was discharged "in large measure" for exercising protected activities 11 The ALJ found that Wydner sometimes displayed a bad work attitude Wydner falsely accused management of harassment and the union of failing adequately to represent his interests He grudgingly worked overtime, made several careless work errors and "displayed uncommonly bad manners and judgment in ignoring his steward's advice" in confronting Papais to obtain a signature on the grievance reply Nevertheless, the ALJ found that although Wydner's conduct approached the point of not being protected, it did not reach it The original backpay specification issued on June 18, 1981 An amended backpay specification issued on July 1, 1981 During the hearing Continued 990 DECISIONS OF NATIONAL LABOR RELATIONS BOARD answer as amended admitted some and denied other paragraphs of the backpay specification. Narrow issues were drawn with regard to such matters as the date for ending the backpay period, the accuracy of the items re- lating to interim employment, the obligation to pay back- pay during a period when the Company's entire produc- tion department was closed because of a strike, the avail- ability of the discriminatee for work because of injury, and the status of unemployment insurance. However the overriding question that must be answered before any of those issues are reached is whether Wydner's conduct with regard to the backpay proceeding was such to dis- qualify him from any backpay award. Consideration must be given to the assertion that Wydner withheld data on interim earnings from the General Counsel, that he gave false statements under oath concerning interim earnings, that he destroyed records in an attempt to pre- vent the Board from ascertaining the facts, and that he attempted to induce a witness called by Respondent to either withhold or misrepresent material information. All parties were given full opportunity to participate, to introduce relevant evidence, to examine and cross-ex- amine witnesses, to argue orally, and to file briefs. Briefs, which have been carefully considered, were filed on behalf of the General Counsel and Respondent. On the entire record of the case and from my observa- tion of the witnesses and their demeanor, I make the fol- lowing FINDINGS OF FACT 1. THE APPLICABLE PRINCIPLES OF LAW When loss of employment is caused by a violation of the Act, the finding by the Board that an unfair labor practice was committed is presumptive proof that some backpay is owed. NLRB v. Mastro Plastics Corp., 354 F.2d 170, 175-176 (2d Cir. 1965), cert. denied 384 U.S. 972 (1966). The General Counsel's burden for the back- pay proceeding is "to show the gross backpay due each claimant." J. H. Rutter-Rex Mfg. Co. v. NLRB, 473 F.2d 223, 230 (5th Cir. 1973), cert. denied 414 U.S. 822 (1973). Once the General Counsel has established gross backpay, the burden is on respondent to establish affirmative de- fenses that would mitigate its liability. NLRB v. Brown & Root, 311 F.2d 447, 454 (8th Cir. 1963). Respondent has the burden of establishing such matters as unavailability of jobs, willful loss of earnings, and interim earnings to be deducted from the backpay award. NLRB v. Mooney Aircraft, 366 F.2d 809, 812-813 (5th Cir. 1966). When there are uncertainties or ambiguities, doubt should be resolved in favor the wronged party rather than the wrongdoer. United Aircraft Corp., 204 NLRB 1068 (1973). Self-employment is a proper and adequate way for the discriminatee to attempt to mitigate his loss, and full-time self-employment cannot be construed as a with- drawal from the labor market or be equated with a will- ful loss of earnings. Heinrich Motors, 166 NLRB 783 (1967), enfd. 403 F.2d 145, 148 (2d Cir. 1968). If the self- a second amended backpay specification dated January 7, 1982, was sub- stituted for the prior backpay specification . The second amended backpay specification was further amended at the close of the hearing employment is undertaken in an honest, good-faith effort to mitigate loss, it does not matter whether that effort is successful. NLRB v. Cashman Auto Co., 223 F.2d 832, 836 (1st Cir. 1955); Lloyd's Ornamental & Steel Fabrica- tors, 211 NLRB 217 (1974). By necessity, much of the material contained in a backpay specification is based on the assertions of the discriminatee. Though there is some countercheck with regard to social security payments, only the discrimina- tee is in the position to have information with regard to "off the record" interim earnings. A discriminatee can go through the motions of seeking to mitigate his loss while assiduously avoiding work. The General Counsel must rely heavily on the discriminatee's representations. In a normal case that reliance is well-founded. The discrimin- atee is the innocent wronged party and his representa- tions are quite properly relied on. As indicated by the above cases, it is up to Respondent to come forward with evidence to refute the representations of the discri- minatee that are contained in the backpay specification. Respondent is, after all, the adjudicated wrongdoer and the only issue in a backpay hearing is the amount of money that is required to make the wronged party whole. If a respondent can prove at a hearing that the discriminatee is totally unworthy of belief with regard to his assertions relating to such matters as interim earnings, it becomes impossible to rely on the discriminatee's asser- tions that were incorporated in the backpay specification. In such a situation the discriminatee's own misconduct makes it impossible to ascertain the amount of backpay due. Moreover when a discriminatee attempts to abuse the Board's process by withholding relevant information, by testifying falsely, by destroying records to cover up his misstatements, and by attempting to prevent a witness from testifying truthfully, it is necessary for the Board to protect itself against such abuse. In such circumstances it would be quite appropriate for the Board to deny back- pay to a discriminatee. Section 10(c) of the Act gives the Board authority in remedying unfair labor practices: "to take such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of this Act." Backpay should not be awarded where it would not effectuate the policies of the Act be- cause of the abuse of the Board's process by the discri- minatee. As the Supreme Court held in NLRB v. Indiana & Michigan Electric Co., 318 U.S. 9 (1943), misconduct by a charging party does not deprive the Board of juris- diction, but the Board need not move on every charge and can decline to be imposed on or to submit its process to abuse. In a situation when a discriminatee simply con- ceals interim employment from the Board's compliance officer with an intent to fraudulently increase the amount of backpay, it may be appropriate to deny backpay from the time that employee first worked for an employer whose earnings he concealed until the time that he dis- closed the concealed information to Board representa- tives. In Flight Chief, 246 NLRB 407 (1979), Administra- tive Law Judge Jerrold Shapiro made such a finding. The Board did not appear to disagree with the judge's legal theory, but reversed the judge after finding that the discriminatee voluntarily supplied the General Counsel AD ART, INC. 991 with the information and further fording that there was no attempt to pervert a remedial order of the Board into an instrument of personal gain. The Board held that it was not inclined to penalize the discriminatee in that case in the absence of fraud or any evidence that the discri- minatee was trying to undermine the Board's remedial process. The Ninth Circuit Court of Appeals (640 F.2d 989, 993 (9th Cir. 1981)), enforced the Board order only in the amount awarded by the judge. In agreeing with the judge, the court held that the full award would reward the discriminatee "for his perfidy as opposed to discouraging such claimants from perverting an order issued in their and the public interest into a scheme for unjustifiable personal gain." When there is serious abuse of the Board's process which makes it impossible to as- certain interim earnings, the Board has long held that no backpay would be awarded. Thus, in M. J. McCarthy Motors Sales Co., 147 NLRB 605, 617 (1964), the Board adopted that part of the judge's decision which held:3 The abuse of the Board processes by Marzano has rendered the ascertainment of his interim earnings impossible. To determine that backpay is due Mar- zano, under the circumstances of this case, would encourage the abuse of Board processes and thus would not effectuate in an overall manner the pur- poses of the Act. In Great Plains Beef Co., 255 NLRB 1410 fn. 1 (1981), the Board refused to grant backpay to a discriminatee, stating: In view of Trotter's testimony, we find in agree- ment with the Administrative Law Judge that Trot- ter's deception, evasiveness, and concealment of in- terim earnings constitutes an abuse of the Board's processes and that his failure or refusal to recall what other information he failed to supply the Board renders ascertainment of Trotter' s interim earnings impossible. II. THE FACTS RELATING TO THE ALLEGED ABUSE OF PROCESS A. Preliminary Matters A number of items in the backpay specification raise questions about the reliability of the information fur- nished by Wydner. They relate to the date for the end of the backpay period, the lack of interim earnings, and his availability for work because of injury. Each of those items can be explained in a manner that does not under- mine Wydner's credibility. However, they do present un- usual circumstances which make one want to look fur- ther. In themselves they can be treated summarily. With regard to the ending date for the backpay period, the backpay specification alleges that the proper date was March 3, 1981, when the discriminatee accepted Re- spondent's offer of reinstatement. On January 30, 1981, Respondent wrote a letter to Wydner offering him rein- statement effective February 4, 1981. That letter was sent by Respondent to the wrong address and Wydner 3 See also Robinson Freight Lines, 129 NLRB 1040, 1043 (1960) never received it. However a copy of that letter was sent to Neal Jennings, the business manager for Local 591 IBEW, the collective-bargaining agent for the employees in Wydner's bargaining unit. Another copy was sent to the Union's steward. Wydner's brother was a steward in that bargaining unit.4 Although it was Respondent's error in sending the letter to the wrong address, it is un- likely that Wydner did not hear about the offer when a copy had been sent to his union and his steward. Howev- er, Respondent could not refute Wydner' s testimony in that regard. With regard to the interim earnings, the backpay spec- ification indicates that throughout the backpay period (fourth quarter 1976 through first quarter 1981) Wydner's interim earnings were extremely low. For the first year and a half (from the fourth quarter 1976 through the first quarter 1978) Wydner reported a total earnings of $587. For the last two quarters of the back- pay period (fourth quarter 1980 through first quarter 1981) no interim earnings were reported. In most of the other calendar quarters the interim earnings reported were very low. Wydner was a journeyman sign man and, as such, he possessed skills as a welder , painter, blueprint reader, electrician, rigger, cement and steel worker, and designer. Though those skills might not have been sufficient to qualify him for journeyman status in the construction trades, it is likely that they would have had some marketability. It is apparent that either Wydner was not seriously seeking interim employment or that the job market in the area was in a disastrous state. However Respondent has not rebutted Wydner's testimony that, except for the time when he was trying to build up a business with a partnership arrangement, he signed up for work with the unemployment office and the Union, and that he repeatedly visited possible em- ployment sites in seeking work. With regard to his physical availability for work, Wydner suffered a back injury while employed with Re- spondent in July 1976. At that time he was out of work for 4 to 6 weeks and received disability. He then re- turned to work and continued on the job until he was discharged on December 23, 1976. Wydner claims that except for very limited periods he was physically able to work during the entire backpay period of December 24, 1976, to March 3, 1981.5 Wydner claims that he aggra- vated his back condition when he was startled by a fris- bee a few days after his March 3, 1981 return to work. However on December 29, 1980, which was before his return to work and was during the backpay period, Wydner filed an application for adjudication of claim with the California Division of Industrial Accidents- Workers' Compensation Appeals Board in which he claimed both temporary and permanent disability indem- nity based on the July 20, 1976 injury. After returning to 4 Wydner's brother testified that he did not see the letter. 5 Wydner acknowledged that because of his back problem he turned down a 1-day job in late 1977 or early 1978, he missed 2 or 3 days when he was working for Delta Sign, he missed about 4 days when working for Sign Systems, he missed about 3 weeks when working for Wood N Art Graphics, and he was limited to light duty for about 30 days when he was working for Wood N Art Graphics 992 DECISIONS OF NATIONAL LABOR RELATIONS BOARD work on March 3, 1981, Wydner worked 4-1/2 months until mid-July 1981 when he ceased work because of a claimed physical disability. He has performed no work for Respondent from that date through the close of the trial on March 2, 1982. Wydner's testimony concerning his relative health and ability to work during the back- pay period as compared to periods during which he would not be receiving backpay does raise some suspi- cions. However such things can happen and Respondent has not refuted Wydner's testimony in that regard. None of the above matters establishes that Wydner was unworthy of belief. However they all could cause Respondent to have enough doubts to warrant a full in- quiry concerning Wydner's veracity. In making that in- quiry, Respondent has produced a great deal of evidence to challenge Wydner's credibility. That evidence is dis- cussed below. B. The relationship Between Wydner, Norgard, and Wood NArt Graphics The second amended backpay specification indicates that Wydner had interim employment with a firm named Wood N Art Graphics6 from third quarter 1979 through third quarter 1980.7 Wood N Art Graphics was a sign company owned by Dennis Norgard. Prior to 1979 Wood N Art Graphics worked only on wood and sand- blasted and made plastic signs. The company did not do any sheet metal or illuminated sign business. Wood N Art Graphics maintained a checking account with the Union Safe Deposit Bank in Stockton since March 1978.8 About March 1979 Wydner approached Norgard and suggested that Norgard expand his business into sheet metal and illumination work by forming a partner- ship between the two of them. Shortly thereafter Nor- gard and Wydner began working together on an infor- mal basis. They built some overseas shipping crates to- gether and did other work that did not directly relate to the sign company. Norgard opened a checking account in his own name at Union Safe Deposit Bank in Stock- ton, California, on July 24, 1979. On July 31, 1979, Wydner's name was added to the account. That account is referred to as the Norgard-Wydner account. It has always been kept separate from the Wood N Art Graph- ics account. All items from the Wood N Art Graphics business went through the Wood N Art Graphics ac- count and none of the checks drawn on the Norgard- 8 The name of that company is spelled several different ways in the transcript This spelling is the one used in the company's original bank account and in a subsequent partnership agreement 7 The interim earnings admitted in the specification as amended at the end of the hearing were- third quarter 1979-$250, fourth quarter 1979- $800, first quarter 1980-$615, second quarter 1980-$1173, and third quarter 1980-$424 After all parties had rested, the General Counsel moved to further amend the backpay specification by reducing the amounts it admitted as interim earnings for some of those quarters That motion was denied Respondent had relied on the General Counsel's ad- missions in the backpay specification with regard to mtrim earnings throughout the trial. I was unprepared to allow the General Counsel to partially withdraw its admissions after all parties had rested under cir- cumstances where Respondent would not have an opportunity to adduce evidence with regard to the new material In her brief the General Coun- sel renews her motion. It is denied for the reasons set forth above a Norgard was the only one authorized to issue checks on that account until May 7, 1980, when Wydner was added as a signatory Wydner account were reported on the Wood N Art Graphics books. Wydner kept the checks and stubs from the Norgard-Wydner account in his desk drawer and it is, therefore, reasonable to infer that he knew that those checks were not being entered on the Wood N Art Graphics books. By August 1979 Wydner was working part time on jobs at Wood N Art Graphics and by mid- September 1979 he was averaging at least 40 hours a week at that work. Norgard and Wydner were still talk- ing about a partnership arrangement but in fact were working with an informal understanding under which each would draw equal amounts from the business with- out any fixed hourly rate. Effective April 1, 1980, Nor- gard and Wydner entered into a written partnership agreement under the name Wood N Art Graphics. The agreement provided that the profits of the partnership were to be divided with 55 percent to Norgard and 45 percent to Wydner. Wydner did not provide any capital for the partnership but he did supply about $1900 worth of tools. It was understood that Wydner's services were to be his contribution to the partnership. The partnership was dissolved in July 1980 and Norgard and Wydner have been in litigation ever since. Norgard credibly testi- fied that Wydner acquired an equity position of about $18,000 when he entered into the partnership. He averred that at the time of the partnership agreement the business was worth about $50,000 and that after deduct- ing liabilities from that amount, Wydner's 45-percent in- terest came to about $18,000. Wydner acknowledged in his testimony that he has brought a legal action against Norgard for 45 percent of $50,000 as his interest in the business.9 C. The Norgard- Wydner Account As is set forth above, there were two separate bank ac- counts. The one was for Wood N Art Graphics and the other was for Norgard-Wydner. Wydner is in difficulty in this case because of his testimony and his actions with regard to the Norgard-Wydner account. The figures for interim earnings contained on the second amended back- pay specification were given to the General Counsel by Wydner. He obtained the figures relating to Wood N Art Graphics from the Wood N Art Graphics bookkeep- er. The bookkeeper obtained the figures from the Wood N Art Graphics records which did not include any items relating to the Norgard-Wydner account. Wydner knew that the Norgard-Wydner checks were not reflected on the Wood N Art Graphics books. As is set forth in detail below, Wydner drew both directly and indirectly a sub- stantial amount of money from the Norgard-Wydner ac- count. Though that money was interim earnings, it was not included in the information given to the General Counsel or set forth in the backpay specification. For the 9 There have also been two arbitration awards relating to the dissolu- tion of the partnership In the first award which was dated October 14, 1980, the arbitrator found that the then financial condition of the partner- ship was quite precarious The arbitrator recommended that Norgard pay Wydner $3500 and a 1969 Chevrolet pickup truck Wydner succeeded in having the award set aside and a second arbitration was held In an arbi- tration award dated April 1, 1982, an arbitrator decided that Norgard should pay Wydner $4770 AD ART, INC reasons set forth below, I believe that Wydner was delib- erately trying to mislead the General Counsel with regard to the true state of his interim earnings. On the third day of the trial, January 13, 1982, Wydner testified concerning his interim earnings at Wood N Art Graphics. He averred that from third quar- ter 1979 through third quarter 1980 he did no work other than that at Wood N Art Graphics and his only earnings were in the amounts set forth in the second amended backpay specification He testified that, other than petty cash, all the money he received from Wood N Art Graphics was by check either from the Wood N Art Graphics checking account or from the separate check- ing account that was set up when they decided to become partners. In fact the amounts listed in the second amended backpay specification were received only from the Wood N Art Graphics account, even though he re- ceived substantial amounts that were unreported to the Board from the Norgard-Wydner account. He therefore not only withheld information from the General Counsel but he gave false information during the trial. At the time that Wydner gave his testimony there was no indi- cation concening the whereabouts of the records relating to the Norgard-Wydner account. Those records would either corroborate Wydner or show that he was giving false evidence. Insight about the whereabouts of the records was given by Norgard after Wydner was ex- cused as a witness. Norgard testified that 3 or 4 weeks before he gave tes- timony Wydner came to the shop and told him that Wydner had destroyed the Norgard-Wydner records. Norgard also averred that Wydner asked him not to bring out or discuss that checking account. Wydner, when he testified later in the trial, denied that he had such a conversation with Norgard. I have no hesitation in crediting Norgard over Wydner. I believe that Wydner was a completely unreliable witness. As is set forth below, when he was confronted with copies of the Norgard-Wydner account that had been obtained from the bank he was forced to admit that he did receive money from that account that was not reported to the General Counsel nor included in the second amended backpay specification. I have considered the possibility that Norgard slanted his testimony because of bias against Wydner. There was obvious hostility between the two men. It is noted however that Norgard did not have a financial interest in this proceeding. Respondent and not Norgard would pay any moneys due Wydner. In general I was impressed with Norgard's candor and I be- lieve him to be an honest witness. On the basis of Wydner's admission to Norgard I find that Wydner did destroy the Norgard-Wydner account records so as to prevent the Board from uncovering the fact that he had given false testimony with regard to his interim earnings. I also find that Wydner sought to induce a potential wit- ness to withhold relevant evidence from the Board in order to cover up Wydner's false statements. If there was any doubt with regard to deciding wheth- er to credit Norgard or Wydner, it was resolved by Nor- gard's production of a check dated August 5, 1980, made out to cash from the Norgard-Wydner account in the amount of $553.74. That check had been endorsed and 993 cashed by Wydner. It was cashed during third quarter 1980 during which period Wydner had reported interim earnings of $424. The $553.74 check was drawn to close the account and Norgard and Wydner split the money. Wydner's share was therefore $276.87. The $424 had been received from Wood N Art Graphics. The extra $276.87 was not reported at all. Later, when confronted with the check, Wydner had to acknowledge that his prior testimony had been in error. Norgard credibly tes- tified that he found that check and a few other records in Wydner's desk but that the bulk of the records had been removed. At that point in the trial, counsel for the General Counsel took the position that she could not proceed with the cross-examination of Norgard until she had ob- tained copies of the Norgard-Wydner records from the bank. A continuance was granted for that purpose and when the trial resumed on March 2, 1982, the records were produced and admitted into evidence. The bank records of the Norgard-Wydner account show that Wydner endorsed and cashed the August 5, 1980 check for $553.74 (of which one-half was Wydner's) that is discussed above. It also shows that he deposited a check made out to himself dated December 27, 1979, for $225 as well as another check dated Janu- ary 24, 1980, for an additional $225. That $726.87 was in- terim earnings.'0 Wydner's actions in destroying the Norgard-Wydner records and in asking Norgard not to testify about them is a strong indication that the failure to report those items to the General Counsel and the misinformation he gave while testifying were not simply inadvertent errors but were deliberate attempts to de- ceive the Board. The bank records also show $3113.60 worth of checks made out to a Bill Henderson.) i Those were for the pur- chase of a boat that Norgard and Wydner purchased in their joint names. The total price of the boat was $4500. The checks of $1400 and $500 were for the initial pay- ments and the other checks weie toward the balance due. Norgard credibly testified that the boat was used by them for fishing and that it was not used for business. i 2 Half of the $3113.60 ($1556.80) was used by Wydner for his own personal expenses. It would not have mattered whether he bought a half interest in a boat or spent the money on groceries. It was his money that had been withdrawn from the Norgard-Wydner account for his own purposes. As such it was interim earnings. Wydner attempted to conceal those interim earnings. On November 12, 1979, a check was drawn on the Norgard-Wydner account for $1500 to Wood N Art Graphics. Half of that $1500 ($750) belonged to Wydner 10 At the conclusion of the trial the General Counsel successfully moved to amend its backpay specification to show those two $225 items as interim earnings No motion was made with regard to the $276 87 itemii The checks were September 1, 1979-$1400, September 8, 1979- $500, October 18, 1979-$231 25, November 19, 1979-$231 25, Decem- ber 11, 1979 $288 60, January 14, 1980-$231 25, and May 22, 1980- $231 25 12 It was not used as a business expense for tax purposes. Subsequently Wydner sold his interest in the boat for a loss However that is irrelevant for backpay purposes 994 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and it could only have been used for the loan with Wydner's consent . His signature was necessary on the check. Wydner must have considered the $750 to be his own because he has brought a small claims court action to recover that money. The $750 was Wydner's and it was interim earnings no matter how he spent it. Once again, for the purpose of interim earnings, I see no dis- tinction between his spending the money on a loan to someone or in buying groceries. Other interim earnings have been established that did not appear on any records. Norgard credibly testified that about April 1979 he and Wydner worked on a job for a firm called Fran Rica.' 3 The job was for about $5000 and of that the profit before labor cost was about $3700. The only labor cost, except for the possibility of some minor work by a helper, was for the labor of Nor- gard and Wydner. Wydner made about $1850 on that job but he hid the fact that he had those interim earnings. In April 1979 Wydner went with Norgard and some others for a fishing trip in La Paz, Mexico, for 4 days and 3 nights. Norgard paid for Wydner's expenses in the amount of $500 or $600.14 That money should have been but was not reported as interim earnings. D. Conclusions In summary, I find that a preponderance of the credi- ble evidence establishes that Wydner abused the Board's process by withholding relevant evidence, by testifying falsely, by destroying records to cover up his misstate- ments, and by attempting to prevent a witness from testi- fying truthfully. Without giving credence to information furnished by Wydner which was incorporated in the backpay specification , it is impossible to make a determi- nation about the amount of backpay due, and Wydner has demonstrated by his testimony and actions that he is unworthy of belief. Both to protect the Board's processes and because Wydner's conduct has made a calculation of backpay impossible, I recommend that the backpay claim be denied in its entirety, 15 On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed1s ORDER The backpay specification as amended is dismissed in its entirety. 13 Wydner in his testimony denied that he worked on that job I credit Norgard 14 This finding is based on the credited testimony of Norgard . Wydner acknowledged in his tesimony that he did take such a trip . In Wydner's initial testimony he averred that he did not know where the money came from but that it might have been from a personal friend named Betty Later in his testimony he averred that the funds came from his joint ac- count with Norgard but that his portion of the trip only came to $160 Still later in his testimony he averred that he received $103 in cash from Norgard for that trip Where Wydner's testimony conflicts with that of Norgard's, I credit Norgard 15 See the applicable principles of law set forth in sec. A, above. In the light of this finding it is unnecessary to consider the partial defenses raised by Respondent . In addition no consideration is given to the ques- tion of whether the value of the capital interest that Wydner secured in the partnership in lieu of hourly wages should be considered as interim earnings 1e If no exceptions are filed as provided by Sec 102.46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses