Tns, Inc.

20 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD TNS, Inc. and Oil, Chemical and Atomic Workers International Union, AFL-CIO. Case 10-CA- 17709 March 9, 1988 SUPPLEMENTAL DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND CRACRAFT On February 22, May 16, and October 23, 1985, the Board issued Orders' deferring to non-Board settlement agreements and dismissing portions of an unfair labor practice complaint issued against the Respondent. On petition to review the Board's Orders, the United States Court of Appeals for the District of Columbia Circuit reversed the Board's Orders and remanded the case to the Board for fur- ther consideration. 2 The Board thereafter accepted the court's remand and notified the parties that they could file statements of position with the Board on remand. The General Counsel, the Charging Party, and the Respondent filed state- ments of position. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. On August 18, 1982, the General Counsel issued a complaint against the Respondent alleging that the Respondent violated Section 8(a)(3) and (1) of the Act by refusing to reinstate employees who had engaged in a work stoppage because of their good-faith belief that working conditions at the plant were "abnormally dangerous." The hearing on the merits of the case commenced on November 7, 1983, before Administrative Law Judge Arline Pacht. On January 13, 1984, attorney William K. Shaw Jr. moved to intervene on behalf of approxi- mately 70 employees, and the judge granted limited intervention. On December 17 and 18, 1984, the fmal 2 days of the hearing, Shaw presented to the judge for ap- proval non-Board settlement agreements that he had reached with the Respondent and that had been presented to and accepted by 56 employees. The settlement agreements provided that the em- ployees would each receive, depending on seniori- ty, lump-sum payments of between $2000 and $12,000 which, 'according to the settlement, "are not wage payments or backpay within the meaning of the NLRA but the sole consideration for said payments is the release of all claims by the individ- 1 Not reported in bound volumes Members Babson and Cracraft did not participate in the Board's pnor Orders in this case. 2 Chemical Workers International Union v. NLRB, 806 F 2d 269 (D.0 Cir. 1986). ual employee listed herein for damages for personal injury or illness arising from the alleged exposures to depleted uranium and its alleged radiological and toxiological effects." In return, the agreements provided that the individual employees would not sue or assert any charge or complaint against the Respondent based on the Act or various other Fed- eral statutes and would release the Respondent from any and all present and future claims arising out of their employment with the Respondent. It was also specified that the agreements and pay- ments were not to be deemed as an admission of li- ability on the part of the Respondent; that the agreements constituted a compromise "of doubtful and disputed claims"; that the charge before the Board was "of questionable merit" under which employees were "unlikely" to recover any back- pay; and that the agreements would be governed by the law of the State of Tennessee. Finally, the agreements provided that for each employee who signed the agreement, the Respondent would pay Shaw $450, "representing all attorney's fees, costs and/or expenses arising out of his [Shaw's] repre- sentation of the undersigned [employees]" and that the monetary payments provided in the agreements would be contingent on the prior approval of the Board or administrative law judge. At the hearing on December 18, 1984, the judge rejected the settlement agreements, expressing con- cern that Shaw had no standing as a limited inter- venor to negotiate or present to the judge the set- tlement agreements to the exclusion of and over the objections of the Charging Party and the Gen- eral Counsel; that Shaw might have engaged in un- ethical conduct by negotiating for his fee as part of the agreements; that the employees were not prop- erly advised before they signed the agreements; that the agreements stated that they would be gov- erned by the laws of the State of Tennessee; and that not all the employees involved in the work stoppage agreed to the terms of the settlement. The Respondent filed a request for special per- mission to appeal the judge's refusal to approve the settlement agreements. On February 22, 1985, the Board granted the request, approved the proposed settlement agreements in principle, and remanded the case for a further hearing with respect to the employees' voluntary and informed consent regard- ing the execution of the agreements. Regarding the Charging Party's allegation in its opposition to the Respondent's special appeal request, the Board stated that it was not the Board's function or re- sponsibility to pass on the ethical propriety of an attorney's conduct. On April 22, 1985, the Charging Party, the Re- spondent, and the Intervenors filed a joint motion 288 NLRB No. 5 TNS, INC. 21 with the Board asking it to amend its February 22, 1985 order and approve the settlement agreements. In their motion the parties stipulated that the em- ployees executed the settlement agreements with "informed and voluntary consent" and that a hear- ing on such issues was unnecessary. On May 16, 1985, the Board granted the joint motion. On October 23, 1985, the Board issued an Order, amending sua sponte its prior orders. The Board noted its longstanding policy of encouraging reso- lution of disputes without resort to Board process, citing Combustion Engineering, 272 NLRB 215, 217 (1984); and Coca Cola Bottling Co., 243 NLRB 501, 502 (1979). The Board also noted that the case in- volved novel legal and policy issues, the parties stipulated that the agreements were executed by the employees with informed and voluntary con- sent, the legal issue presented in the case was not affected by these non-Board settlement agreements, and there was a basic risk inherent in litigation. The Board concluded that it would effectuate the policies of the Act to give effect to the agreements. Accordingly, the Board dismissed the complaint in- sofar as it alleged a violation of the Act in connec- tion with the 56 employees who executed settle- ment agreements. The Charging Party filed a petition for review of the Board's Orders with the United States Court of Appeals for the District of Columbia Circuit. On December 2, 1986, the court issued its opinion, finding that the Board failed to explain its depar- ture from established precedent in approving the settlement agreements and remanding the case to the Board for further proceedings. The court faulted the Board for failing, without explanation, to apply the test articulated in Clear Haven Nursing Home, 236 NLRB 853 (1978), for determining whether to approve a settlement agreement. The court pointed out that under the Clear Haven test: First, the Board will assume that the case is meritorious and that the General Counsel is prepared to carry her burden of proof. Second, the Board will determine whether the settlement agreement "substantially reme- d[ies]" the alleged unfair labor practices. Among the most important of the consider- ations in assessing whether a settlement agree- ment substantially remedies the alleged unfair labor practices is a determination whether the agreement provides for traditional Board rem- edies such as reinstatement, backpay and the posting of a notice. The absence of such reme- dies will strongly militate against the Board's approval of a proposed settlement. [Footnotes omitted.] The court noted that once an unfair labor practice proceeding is instituted, the Board proceeds "in vindication of the public interest, not in vindication of private rights," and that therefore private settle- ments will not be found acceptable "merely be- cause the private parties to the labor dispute are satisfied with its terms." The court asserted that: In its three orders in this case, the Board made no attempt either to apply the above principles, or to reassess the standards it will use in determining whether to approve a pri- vate settlement of an unfair labor practice complaint. Indeed, the Board approved the settlements without any reference whatsoever to its Clear Haven precedent. In so doing, the Board approved settlement agreements that provided for none of the traditional remedies ordered by the Board for unfair labor prac- tices. It goes without saying that the Board failed in its recognized obligation to ensure that unfair labor practices have been substan- tially remedied. [Emphasis in original.] The court distinguished the cases cited by the Board in its final order on the ground that the set- tlement in those cases were negotiated by the union and the employer pursuant to an established griev- ance-arbitration procedure whereas the settlements in the instant case were negotiated by the Respond- ent and its "individual employees in derogation of the bargaining relationship between the Company and the Union." Accordingly, the court remanded the case to the Board "for further consideration (or explanation)' of its reasons for approving the settlement agree- ments." In addition, the court directed the Board to address several other questions. First, the court found it "disturbing that the Board foreclosed all inquiry into the ethical conduct of the attorney for the individual employees, who was paid $450 by the Company for each employee who signed a set- tlement agreement." The court stated that, "[alt a minimum, in discharging its responsibility for ap- proving the settlements, the Board had an obliga- tion to ensure that the agreements were not pro- cured through unethical attorney conduct." Second, the court found it "highly question- able—especially outside the grievance-arbitration context—for the Board to approve settlements and dismiss unfair labor practice charges merely on a showing that the settlements were 'voluntary." According to the court, "[i]f the Board is not going to insist that the settlements provide 'substantial' relief for the unfair labor practices—as mandated 22 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD by Clear Haven—it must, at a minimum, inquire into whether the settlement terms are reasonable." Finally, the court observed: [Vile find it especially disturbing that the set- tlements in this case provided no remedy whatsoever for the Company's alleged unfair labor practices. The monetary payments re- ceived by the employees were solely in consid- eration for the release of personal injury claims; the employees received neither rein- statement nor backpay (nor any other consid- eration) for the dismissal of their unfair labor practice charges. So far as we can discern, the Board has never, even in the grievance-arbitra- tion context, approved a settlement providing no remedy for an alleged unfair labor practice. [Emphasis in original; footnote omitted.] Recognizing that the court's opinion is the law of the case, we shall apply the court's observations and reasoning to the issue of whether to approve the settlement agreements. The Board his recently in Independent Stave Co., 287 NLRB 740 (1987), addressed the issue of the test to be applied by the Board in reviewing settle- ment agreements. 3 The Board, overruling Clear Haven, rejected "the limited approach to settlement agreements set forth in Clear Haven in favor of an expanded approach which will evaluate the settle- ment in light of all factors present in the case to determine whether it will effectuate the purposes and policies of the Act to give effect to the settle- ment." In this regard, the Board stated that it will "examine all the surrounding circumstances includ- ing, but not limited to, (1) whether the Charging Party(ies), the Respondent(s), and any of the indi- vidual discriminatee(s) have agreed to be bound, and the position taken by the General Counsel re- garding the settlement; (2) whether the settlement is reasonable in light of the nature of the violations alleged, the risks inherent in litigation, and the stage of the litigation; (3) whether there has been any fraud, coercion, or duress by any of the parties in reaching the settlement; and (4) whether the re- spondent has engaged in a history of violations of the Act or has breached previous settlement agree- ments resolving unfair labor practice disputes." 'The complaint in Independent Stave alleged that the respondent vio- lated Sec. 8(a)(1) and (3) by refusing to hire four employees because they had held offices with the union. Three of the discrimmatees entered into settlement agreements with the respondent, accepting employment, retro- active seniority, and $350 in return for requesting the withdrawal of the unfair labor practice charges. The agreements were approved by the =on. The Regional Director refused to approve the withdrawal requests of the unfair labor charges because the agreements did not fully remedy the alleged unfair labor practices. The respondent then filed a Motion for Summary Judgment with the Board. Examining the settlement agreements in Inde- pendent Stave in light of these factors, the Board approved the agreements. The Board noted that the three discriminatees, who were also the charg- ing parties, the respondent, and the union, all ap- proved the settlement, and the case was settled 10 days after issuance of the complaint. Viewing the settlements against the customary risks inherent in any litigation and in light of the early stage of the proceedings and the nature of the allegations, the Board found the settlements to be reasonable. Noting also that there was no evidence of fraud, coercion, or duress or of prior violations or breaches of prior agreements committed by the re- spondent, the Board concluded that "honoring the parties' agreements advances the Act's purpose of encouraging voluntary dispute resolution, promot- ing industrial peace, conserving the resources of the Board, and serving the public interest." Examining the present settlement agreements in light of Independent Stave and the court's opinion, we find that the policies underlying the Act would not be effectuated by our approving them. Unlike Independent Stave, both the Charging Party and the General Counsel oppose the settlement agreements. Further, particularly given the court's determina- tion, by which we are bound, that the agreements provided "no remedy whatsoever" for the alleged unfair labor practices, we find the agreements to be unreasonable. In this regard, we also note that the agreements were reached more than 2 years after complaint issued and at the conclusion of a lengthy hearing. Although we recognize that this case pre- sents novel and complex issues of law which may involve unusual litigation risks, we find this factor outweighed by those enumerated above in the de- termination of reasonableness. We additionally are cognizant that the Respondent has no history of violating the Act or of breaching prior settlement agreements. Nevertheless, in light of the opposition of the General Counsel and the Charging Party and our finding that the settlement agreements were not reasonable, we cannot approve them.4 Accordingly, we vacate the Board's prior Orders of February 22, May 16, and October 23, 1985, and reinstate the complaint insofar as it alleges a viola- tion of the Act in connection with the 56 employ- ees who have executed settlement agreements. ORDER The National Labor Relations Board orders that its prior Orders of February 22, May 16, and Octo- ber 23, 1985, are vacated and that the complaint in- 4 In light of this fmding it is unnecessary to inquire into the ethical propriety of attorney Shaw's conduct as directed by the court. TNS, INC. 23 sofar as it alleges a violation of the Act in connec- tion with the 56 employees who have executed set- tlement agreements is reinstated. .7 •