UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
decided: June 27, 1968.
JACK G. BUNCHER, DBA THE BUNCHER COMPANY, PETITIONER,
NATIONAL LABOR RELATIONS BOARD, RESPONDENT. UNITED STEELWORKERS OF AMERICA, AFL-CIO, INTERVENOR
Hastie, Chief Judge, Biggs, Kalodner, Freedman, Seitz, Van Dusen, Aldisert and Stahl, Circuit Judges. Van Dusen, Circuit Judge dissenting.
This is the decision on the Company's petition to review and set aside a supplemental backpay order of the National Labor Relations Board and the Board's request for its enforcement.
The present dispute arises out of a finding, approved by this court, that the Company had dismissed certain of its employees in violation of the Act. N.L.R.B. v. Jack G. Buncher, d/b/a The Buncher Company, 316 F.2d 928 (3rd Cir. 1963). The Regional Director thereafter issued a backpay specification and Notice of Hearing formulated in accordance with § 102.52 of the Board's Rules and Regulations. It contained a statement of the dollar amounts allegedly due each discriminatee as well as the following statement of the method employed by him in determining whether the discriminatees would have been discharged in any event for purely economic reasons after May 12, 1960:
"2. The first reduction in force at the Respondent Company's Nine Mile Run facility subsequent to March 4, 1960, occurred on May 12, 1960.
"3. Each of the discriminatees was entitled to backpay in accordance with the weekly average hours worked by the employees of Respondent at the Nine Mile Run facility until May 12, 1960.
"4. When there was not sufficient work available at the Nine Mile Run facility after May 12, 1960 for all of the discriminatees and all of the other employees who were employed at the Nine Mile Run facility at the time of the discrimination, an appropriate method of determining each discriminatee's entitlement to backpay during the period after May 12, 1960 is:
"(a) By allocating the available jobs at the Nine Mile Run facility among the discriminatees and the aforesaid other employees in accordance with their seniority; and
"(b) Only when sufficient work was not available at the Nine Mile Run facility for a discriminatee, then by allocating the available jobs at all of Respondent's locations, namely, Nine Mile Run, Leetsdale and Yard, among the discriminatees and the other employees who were employed at all of said Respondent's locations at the time of the discrimination in accordance with their seniority.
"5. The seniority referred to in paragraph 4 above is based on an employee's most recent hiring date with Respondent.*fn1
The Company filed a response to the specifications in which it challenged the position that seniority was a permissible basis for calculating the backpay. It listed some ten criteria which it indicated were utilized by it to determine whether to retain or re-employ employees. It attached a chart purporting to apply the criteria to the discriminatees, retained employees, and employees first hired during the backpay period. It was admitted, however, that the chart was prepared after the fact on the basis of personal recollections by the Company's supervisors concerning 225 employees over a four and one- half year period.
Thereafter the matter came on for hearing. The Company sought to establish the validity of the chart attached to its response by the testimony of its supervisors. The trial examiner found that no employee was entitled to backpay for the period after May 12, 1960. He so concluded because the backpay claims were based on "seniority", whereas the Company did not use seniority in effectuating reductions in force. The Board reversed and remanded, holding that "an absence of the use of seniority by the Respondent does not render the General Counsel's utilization of seniority in this proceeding unreasonable, per se."
Upon remand the trial examiner first considered the Company's evidence in support of its claim that none of the discriminatees would have been rehired after May 12, 1960, because the employees retained or newly hired during that period met the Company's employment criteria, and the discriminatees did not. The examiner, after noting that the evaluations were not based on any written records, concluded from his analysis that the Company's testimony was "fraught with inconsistencies, internal contradictions, exaggerations and implausibilities". He noted that the Company's sole proprietor, Jack Buncher, had testified that there was nothing seriously wrong with the discriminatees' work, and that he would rehire them if needed. He also found that the Company trained employees to perform tasks which the discriminatees could have been trained to perform. In the light of these and other findings, the trial examiner decided that "the charted information was contrived for the purpose of denying backpay to the discriminatees". He therefore rejected the Company's evidence and recommended that the Board adopt the specifications of the General Counsel.
The Board affirmed the examiner's decision. It pointed out that since the Company's "system" had been discredited it was impossible to determine precisely the amount of backpay in any particular case. It held further that to prevent the General Counsel from estimating the pay each discriminatee would have earned because he was unable to establish with certainty that the employees would have been retained would permit the Company to profit from its own wrong. In consequence the Board found that the premises underlying the General Counsel's prima facie case were reasonable and directed the petitioner to comply with the examiner's recommended order. The proceedings before this court followed.
Where it has been established, as here, that an employer has discharged employees discriminatorily, but it asserts in mitigation of backpay claims that such employees would have been laid off even absent such discrimination, it has the burden of proving that fact. NLRB v. Mastro Plastics Corp., 354 F.2d 170, 175-176 (2nd Cir. 1965), cert. den. 384 U.S. 972, 16 L. Ed. 2d 682, 86 S. Ct. 1862 (1965). The examiner offered and the Company took full advantage of the opportunity to meet its burden of producing credible evidence from which a remedial formula might be adopted by the Examiner to approximate the result in the absence of discrimination.
A chart, prepared after the fact, was introduced into evidence by the Company. It listed numerous non-discriminatory factors and evaluations concerning its employees during the pertinent period, which tended to support the Company's contention that none of the discharged employees would have been rehired. It also offered elaborate supporting testimony. The examiner found, and his findings have substantial record support when the record is considered as a whole, that the Company's evidence contained so many pervasive infirmities that it was not a reliable basis for deciding the backpay issue. The matter being in this posture, was it arbitrary or unreasonable for the examiner to apply the seniority rule suggested by General Counsel? Admittedly, this Company did not have a formal seniority system. But the record in this case does indicate that length of service was a factor in its employment "policy." Furthermore, the seniority standard represents "normal industrial practice generally." NLRB v. Kartarik, Inc., 227 F.2d 190 (8th Cir. 1955). Thus, in our view, considering the credible evidence in this record, the seniority standard was a rationally permissible device for the examiner to employ in fashioning the remedy.
But the Company argues that there is no substantial evidence to support the use of the seniority formula and, further, that its use was in contradiction to other and previous findings of the Board which are said to have substantial evidentiary support. In our view, these contentions fail to give appropriate recognition to the manner in which these proceedings unfolded. Certainly the previous findings of the Board showed that the Company did not have a formal seniority system. But it does not follow that the use of such a factor in molding relief is automatically unreasonable where the Company, though having the burden and given the opportunity, failed to supply credible evidence in support of some other method of approximating the situation absent discrimination. Having in mind that the examiner was seeking an approximation, the remedy is not objectionable merely because it may not be consistent with the work histories, etc., of some of the employees involved. The Company had a full and fair opportunity to make its record in this already protracted proceeding. Since the burden here was on the Company, and since it failed to carry that burden, we think the examiner and the Board properly adopted the seniority device as a rational remedy on this record.
The Company attacks the examiner's admittedly rough rule that seven consecutive days or less of interruption in employment was not deemed to constitute a break in seniority. The record showed that employees were often discharged for "cause" and rehired without any economic sanctions. The evidentiary history of this rather "personalized" operation justified some rule to cover this problem. We cannot say on this record that the period adopted was unreasonable.
Finally, we consider the Company's contention that the Board erred in concluding that the Company was liable for backpay as to all discriminatees up to May 12, 1960, which was the date of the first economic reduction in force subsequent to the last discriminatory lay-off.
The Company urges that the first lay-off for economic reasons subsequent to the discriminatory one would have occurred during the week of March 10, 1960, because it was clear by that date that the Company was operating the Nine Mile Run facility efficiently with the reduced work force. From this premise, the Company reasons that, had it then carried thirty-five men rather than the twenty-two actually employed (there being thirteen discriminatees), it would have reduced its work force to twenty-two. This contention contains so many doubtful propositions that we cannot say the Board was unreasonable in rejecting it. First, of course, it suggests the Company would have been aware of the economic feasibility of operating the facility with twenty-two men on March 10, 1960. Considering the nature of the Company's operation we do not think that there would have necessarily been such a precise correlation between economic efficiency and the number of employees retained. Another infirmity in the Company's contention is its assumption that had there been a reduction in the work force for purely economic reasons the discriminatees would have been among those discharged. In any event, there is no basis for assuming that the discriminatees would not have been transferred to other operations of the Company. When these factors are considered in conjunction with the admittedly objective evidence of an economic reduction in force on May 12, 1960, we think the Board was justified in using that date as the commencement date for inquiry into possible economic justification for the discharge of the discriminatees. We say this without passing upon the correctness of the Board's reasoning that the Company's contention here constitutes an attempted relitigation of the unfair labor practice proceeding.
We think that, in these circumstances, the Board did not exceed its power in concluding that the Company did not make a showing entitling it to the relief requested with respect to the period prior to May 12, 1960.
We therefore deny the Company's petition to review and to set aside the Board's order and grant the Board's cross-petition to enforce its order.
VAN DUSEN, C.J. (dissenting):
I respectfully dissent from the majority opinion because this record shows that the determination of back pay, based on the seniority system adopted by the General Counsel, is arbitrary and unreasonable under the circumstances and that the substantial award is punitive, rather than remedial, in nature.*fn1
The trial examiners in both the original unfair labor practice case and the present back pay case made detailed findings of the peculiar nature of Buncher's business and his employment practices. Buncher operated out of three locations: Nine Mile Run, Leetsdale, and the "Yard." The business was quite diversified, including scrap reclamation, scrap breaking, construction and leasing of industrial buildings, demolition and salvage of buildings and bridges, steel fabrication, and operation and maintenance of a large river port, including a half-mile long dock with gantry cranes and vessels (722a, 191a-194a, 205a-208a). Buncher's diversification apparently resulted from efforts to avoid sole dependence on the steel industry's fluctuating needs for scrap retrieved from slag. He needed men who could perform various jobs at the several locations, jobs ranging from the construction of warehouses and docks to the demolition of buildings and the operation of several complicated machines. The lengthy 1960 Intermediate Report in the unfair labor practice proceeding discussed in great detail Buncher's defense that the discharges beginning January 15, 1960, were motivated by economic reasons considered by the employer as early as December 1959 (131 N.L.R.B. at 1456-59). This defense included the argument that discrimination could not be shown from the fact that some men retained had less seniority than those discharged because Buncher used no seniority system. The trial examiner accepted this proposition, but also found that, despite the strong economic defense (131 N.L.R.B. at 1456), the discrimination was shown by the "timing of the terminations" (131 N.L.R.B. at 1457) and the fact that all discriminatees were union adherents (131 N.L.R.B. at 1460). In reaching this conclusion, he noted that:
"It is appreciated that in an economic cutback, selection of men equally competent requires fine decisions, particularly in the absence of a seniority agreement or practice, and the Company's business judgment is not to be lightly cast aside and errors in judgment substituted for proof of discrimination. The Company's asserted reasons for its selections, however, cannot be considered apart from the considerable evidence indicating discrimination in selection set forth above." 131 N.L.R.B. at 1460.
The Board, in its decision of June 30, 1961 (131 N.L.R.B. at 1444), approved this finding of lack of a seniority system and of the peculiar nature of Buncher's business,*fn2 to which this court explicitly referred in enforcing the order, 316 F.2d at 929. In light of these prior findings and after an examination of the testimony offered by petitioner*fn3 to support the back pay computation,*fn4 the use of seniority (in the Board's back pay formula quoted in the majority opinion) appears arbitrary and unreasonable. The unfair labor practice proceeding, with its finding of a violation of § 8(a)(3), proves only that some back pay is owed; if the precise amount cannot be determined, the Board's approximation must still have a rational basis. This basis for the back pay does not become more rational because the second trial examiner rejects, for the first time in his Second Supplemental Decision, some of the employer's evidence as subjective and self-serving, particularly where the first trial examiner did not find the testimony of substantially the same Company witnesses "fraught with inconsistencies, internal contradictions, exaggerations and implausibilities."*fn5
Not only is there an absence of substantial evidence to support the seniority system used to calculate the back pay, but the sole reliance on such a seniority system (and its "ground rule" that a seven-day layoff would break seniority, but only for purposes of determining seniority up to January 14, 1960) is in contradiction to other and previous findings of two trial examiners concerning Buncher's business operation which were based upon substantial evidence in the record as a whole.*fn6
No reason has been shown to justify rejection of the findings of the trial examiner in his Intermediate Report, 131 NLRB 1448, affirmed by the Board, 131 NLRB 1444, and by this court, NLRB v. Buncher, 316 F.2d 928 (3rd Cir. 1963); cf. NLRB v. United States Air Con. Corp., 336 F.2d 275 (6th Cir. 1964); NLRB v. Biscayne Television Corporation, 337 F.2d 267 (5th Cir. 1964). On the basis of this first trial examiner's findings that various modifications and improvements were made to Buncher's plant during the 1959 steel strike (131 NLRB at 1457); that Buncher had decided there were too many employees on the payroll and determined to lay some off (131 NLRB at 1457); and that only 7 or 8 acres of the original 200-acre slag dump at Nine Mile Run remained to be worked, and less heavy equipment was, therefore, needed (131 NLRB at 1457), he concluded that Buncher had an economic justification for reducing the staff (131 NLRB at 1460-61). The only questions in the back pay proceeding then were which employees were to be laid off, at what time, and by what standards (see 131 NLRB at 1457).
At best, the record made at the back pay hearings is incomplete and the case deserves a remand in order to benefit from further testimony. An example of the incompleteness of the testimony to support even the specific findings in the Second Supplemental Decision is evidenced by the finding that "on and after May 12, 1960, Respondent had jobs available at Nine Mile for . . . two shovel operators . . . ." (731a-32a). The only testimony shows that there were two shovels being used on March 10, 1960 (455a), but that when the back pay testimony was given in 1965, Mr. Green, the General Manager of Buncher Company, made clear that only one shovel was then, and had been, in operation at that location (375a). Also, he testified that only one shovel was being operated there following May 12, 1960 (243a-244a). It is unclear from the testimony whether Buncher ever operated two shovels at the same time at Nine Mile Run after May 12, 1960, but the record makes this seem most unlikely. That fact would be significant for two reasons. First, there were five discriminatees whose job it was to operate the shovel. It is, therefore, necessary to determine which two of the five, if any, would have been retained, absent the discrimination. When the operation was reduced to one shovel, the back pay for one of the operators should be terminated on that date. Second, three of the discriminatee shovel operators (Greene and the Cindricks) were found to be entitled to no back pay after January 12, 1962. Assuming two of these three were entitled to back pay originally, the back pay for one of these two should have been cut off prior to January 12, 1962, provided, as the record indicates, operation of one of the shovels did not resume between May 12 and that date. No reason has been shown why the trial examiner, who made back pay awards based on the operation of two shovels, could not determine when single shovel operations began, which two of the five discriminatees, if any, would have operated the shovels but for the discrimination, and, when only one shovel was operated, which discriminatee, if any, would have operated the shovel absent the discrimination.*fn7
Also, the findings and comments in the Second Supplemental Decision (719a-745a) contain references, favorable to General Counsel's Backpay Specifications, concerning certain discriminatees but fail to refer to further explanatory or additional testimony of the same witness which points to the opposite conclusion. In the case of John Cindrick, for example, the trial examiner relies on respondent's admission that Cindrick was an excellent shovel operator (612a), but fails to consider that the same witness testified that Cindrick refused to go to Leetsdale, "wouldn't get his hands dirty with grease," and would not do any other work (612a).*fn7 I have been unable to find any support in the record for statements in the Second Supplemental Decision such as that Gerald Hinger, a retained employee, had "an admitted lack of proficiency in the jobs in which the Cindricks and Greene concededly excelled . . ." (740).*fn8
This language of the Supreme Court of the United States appears to apply to the situation presented by this record:
" . . . The Board may [not] apply a remedy it has worked out on the basis of its experience, without regard to circumstances which may make its application to a particular situation oppressive and therefore not calculated to effectuate a policy of the Act." National Labor Relations Board v. Seven-Up Co., 344 U.S. 344, 349, 73 S. Ct. 287, 97 L. Ed. 377 (1953). See, also, NLRB v. Ozark Hardwood Company, 282 F.2d 1, 7-8 (8th Cir. 1960).*fn9
The arbitrary imposition of this seniority system under these peculiar facts fails to take job assignments and employee capabilities into account. There are five discriminatee shovel operators, for example, yet there were, at most, only two shovels at Nine Mile Run. The seniority system adopted in the Backpay Specification would cause arbitrary assignment of discriminatees to jobs for which they are unqualified, and would require that certain retained employees be dismissed to make room for discriminatees who are incapable of performing the tasks incident to such jobs and would not have been assigned such work but for the fictional solution of seniority.
The propriety of the determination that petitioner had admitted liability for back pay up to May 12, 1960, seems doubtful if based, as it appears, solely on the ground that Buncher sought to relitigate the unfair labor practice proceeding.*fn10 However, a new Backpay Specification might make this issue moot.*fn11
For the foregoing reasons, I would grant the Petition to Review, set aside the Board's order, remand the case to the Board for proceedings in the light of this opinion, and deny the Board's cross-petition to enforce its order.
Kalodner and Aldisert, Circuit Judges, join in this dissent.