Before MCLAUGHLIN, STALEY and HASTIE, Circuit Judges.
STALEY, C.J.: This is a petition by the National Labor Relations Board filed pursuant to Section 10(e) of the National Labor Relations Act, 29 U.S.C. § 160(e). It seeks enforcement of the Board's order of March 13, 1956, requiring respondent J. W. Rex Company to bargain with a designated union as the representative of respondent's production and maintenance employees. The company resists enforcement of the order upon two principal grounds. First, it is contended that the Regional Director's decision on challenged ballots cast in a consent election was arbitrary and capricious in that the Director filed his report on the basis of an ex parte investigation, refusing to grant a hearing. Second, it is argued that in any event a merger of respondent company with three smaller firms, occurring after the refusal to bargain, had rendered the original bargaining unit inappropriate. No question of jurisdiction or commerce is involved.
The Board approved a consent election agreement entered into by the union and respondent company on February 2, 1955. This agreement provided that the appropriate collective bargaining unit would be composed of all production and maintenance employees; it excluded certain specified groups. The parties agreed that:
"* * * The determination of the Regional Director shall be final and binding upon any question, including questions as to the eligibility of voters, raised by any party hereto relating in any manner to the election * * *."
The agreement also provided:
"* * * If the challenges are determinative of the results of the election, the Regional Director shall investigate the challenges and issue a report thereon. The method of investigation of objections and challenges, including the question whether a hearing should be held in connection therewith, shall be determined by the Regional Director, whose decision shall be final and binding." Italics supplied.
The election was held on February 10, 1955. The results showed 31 votes for the union and 27 against it. Five ballots were challenged. After an ex parte investigation of the status of the five employees in question, the Regional Director issued his Report on Challenged Ballots and Certification of Representatives on March 16, 1955. In that report, three of the challenges were sustained on the determination that the employees were supervisors. The other two were overruled, but since these votes could not affect the outcome of the election, it was ordered that the ballots remain unopened. The union was thereupon certified as the bargaining agent for the employees of the J. W. Rex Company in the unit stipulated in the consent election agreement.
On April 7, 1955, the union requested to bargain with the company. However, since the company was dissatisfied with the Regional Director's rulings on the challenged ballots, its representatives refused to meet with the union. Another meeting was requested by the union on April 13, 1955, and again the company declined. On April 22, 1955, the union filed the customary charge with the Board, complaining of the refusal to bargain.
The first defense upon which the company resist enforcement of the order is that its refusal to bargain was justified in view of the fact that the Regional Director denied a formal hearing on the election challenges, thereby rendering the union certification invalid. This first defense need not long detain us. In the consent election agreement, the respondent company acceded to the position that all of the Regional Director's decisions concerning the election were to be final, including the decision of whether a formal hearing would be necessary in the determination of the challenged ballots. A consent election stipulation that the Regional Director's decisions shall be final places a restrictive limitation upon our power to review. His decision made under such an agreement must be sustained unless it is arbitrary or capricious, or not in conformity with the policies of the Board or the requirements of the Act. National Labor Relations Board v. General Armature and Mfg. Co., 192 F.2d 316, 317 note 1 (C.A.3, 1951), cert. denied, 343 U.S. 957 (1952); National Labor Relations Board v. Carlton Wood Products Co., 201 F.2d 863, 866 (C.A.9, 1953); Semi-Steel Casting Co. v. National Labor Relations Board, 160 F.2d 388, 391 (C.A.8), cert. denied, 332 U.S. 758 (1947); see also Annot., 36 A.L.R.2d 1177 (1954). The company contends that since the facts concerning the challenged ballots were in dispute and the considerations close, the Regional Director should have ordered a formal hearing, and his refusal to do so constituted arbitrary and capricious action. We do not agree. Implicit in the position of the Regional Director is the fact that his work involves making decisions. The normal course of human behavior requires that some of these decisions be made upon an investigation of disputed facts. The Regional Director would hardly need to be an expert in his field if every decision he made were obvious and based upon an agreed factual situation. The respondent company supports its allegation of arbitrary action by seeking to demonstrate that the Regional Director's decisions on the challenged ballots were erroneous. But something more than error is necessary to spell out arbitrary or capricious action. National Labor Relations Board v. Volney Felt Mills, Inc., 210 F.2d 559, 560 (C.A.6, 1954).The company seems to rely on National Labor Relations Board v. Sidran, 181 F.2d 671 (C.A.5, 1950) as holding that the refusal to grant a hearing where the challenged votes might affect the election result is arbitrary and capricious. It must be noted, however, that the Sidran case involved a consent election agreement which did not state expressly that the Regional Director's decision on whether a hearing should be held was to be final. See National Labor Relations Board v. Saxe-Glassman Shoe Corp., 201 F.2d 238, 241 (C.A.1, 1953). The specific attribute of finality accorded the Regional Director's view on whether a hearing should be held distinguishes this consent election agreement from the one involved in Sidran.
The National Labor Relations Act provides that nothing contained therein "shall be construed to prohibit the waiving of hearings by stipulation for the purpose of a consent election in conformity with regulations and rules of decision of the Board." Section 9(c)(4); 29 U.S.C. § 159(c)(4); 29 Code Fed. Regs. § 102.54 (1956 Supp.). Respondent company specifically waived its right to a hearing. It will not now be heard to complain that it should have been given a hearing simply because the Regional Director's opinion conflicted with its view. We find nothing arbitrary or capricious in his refusal to grant a formal hearing.
The company argues in the alternative that even if the union were properly certified, nonetheless its refusal to bargain was justified on the ground that a merger with three smaller firms subsequent to its refusal to bargain now renders the original unit inappropriate for bargaining purposes.
The J. W. Rex Company had two departments prior to the merger; one involved the heat treatment of metals, and the other produced ordinance items for the armed forces.Painting, chemical processing of metals, and plating work were delegated to outside firms. It was three such firms that merged with the J.W Rex Company on May 16, 1955. The merger added 29 employees to the production and maintenance group of the new J. W. Rex Company.
After its refusal prior to the merger to bargain with the certified agent of the original unit, the respondent company then, after the merger, pursued a second procedure designed again to postpone the beginning of collective bargaining. It moved the Board on June 22, 1955, to revoke the union's certification upon the ground that the merger added new operations which made the original unit inappropriate, and new employees which meant that the union no longer represented the majority in the expanded unit. The Board denied the motion on August 1, 1955, without opinion. On August 3, 1955, the General Counsel's complaint was served on the company, alleging the refusal to bargain and meet with the union as unfair labor practices within the meaning of Section 8(a)(1) and (5) of the Act. 29 U.S.C.§ 158(a)(1) and (5).
The company's answer applicable to the appropriateness of the unit after the merger involved two aspects. First, it was alleged that the surviving corporation was not responsible for its predecessor's unfair labor practices. This argument seems to have been abandoned by respondent on appeal, and we think rightly so. A mere change of employers, under the circumstances present in this case, is no defense to a charge of ...