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Buncher v. National Labor Relations Board

June 27, 1968


Author: Van Dusen

Before BIGGS, SEITZ and VAN DUSEN, Circuit Judges.

VAN DUSEN, C.J.: An employer, Jack G. Buncher, asks this court to review and set aside a National Labor Relations Board (NLRB) order awarding backpay to 13 employees (discriminatees) whose discharges the NLRB earlier found constituted unfair labor practices in violation of § 8(a)(3) of the NLRA, 29 U.S.C. § 158(a)(3). The Board's decision and order concerning the discriminatory discharges, 131 NLRB 1444 (1960), had stated that:

"It appears that following the layoffs . . . the Respondent's business operations were more efficient and the work load could be accomplished with a reduced work force. It is therefore possible that some of the employees discriminated against on January 15 through March 4, 1960, might have been laid off in a subsequent reduction in force even absent the Respondent's unfair labor practices. Under these circumstances, we shall order the Respondent to offer those employees . . . immediate and full reinstatement to their former or substantially equivalent positions without prejudice to their seniority and other rights and privileges, dismissing, if necessary, all employees since then hired. If there is not then sufficient work available, the Respondent shall place those employees for whom no immediate employment is available on a preferential list, with priority in accordance with the system of seniority or other nondiscriminatory practice heretofore applied by the Respondent in the conduct of its business, and thereafter offer them reinstatement as such employment becomes available and before other persons are hired for such work.

"We shall also order the Respondent to make whole those employees . . . for any losses they may have suffered because of the Respondent's discrimination, by payment to each of them of a sum of money equal to that which he would have earned as wages from the date of such discrimination to the date of the offer of reinstatement or placement on a preferential list . . . . As some of the employees discriminated against on January 15 through March 4, 1960, might have been laid off in a subsequent reduction in force, even absent unfair labor practices, such possible termination of employment shall be taken into consideration in computing the back pay due these employees under the terms of this Order."

The Board's order was enforced by this court, NLRB v. Buncher , 316 F.2d 928 (3rd Cir. 1963), where we noted:

"The Board's order of June 30, 1961, as amended by its clarifying order of September 22, 1961, recognizes that respondent's business operations were more efficient and the work load could be accomplished with a reduced work force.Its order takes that situation into consideration and properly accommodates its reinstatement provisions in accordance with it."

In subsequent proceedings, pursuant to NLRB rules, the parties attempted to implement that part of the enforced order which related to reinstatement of the discriminatees and their back pay.*fn1 The trial examiner's first supplemental decision of August 5, 1965, construed Buncher's answer to the Backpay Specification as admitting liability for back pay from the date of the discharges, January 15 through March 4, 1960, up to the date of a substantial reduction in work force that occurred on May 12, 1960.*fn2 The trial examiner refused to approve or adopt the rest of the Backpay Specification computed by the Board's compliance officer on the basis of a seniority system of hire, layoff and transfer. He reasoned that if Buncher could not contest the award for the period prior to May 12, 1960, as it constituted an attempt to relitigate the unfair labor practice proceeding, the General Counsel should also be bound by the prior proceeding in which another trial examiner,*fn3 the Board and the court had found that Buncher did not use any system of seniority in rehiring, layoff or transfer of these employees. Accepting this prior finding of no seniority system, the trial examiner ruled that the seniority-based computations lacked a rational basis. Accordingly, the General Counsel's case being a "phantom," it was unnecessary to decide whether Buncher had proved that the discriminatees would have subsequently been laid off for economic reasons, thus reducing any back pay owed for the quarters after May 12, 1960.

The NLRB reversed and remanded this first supplemental decision to the trial examiner for findings and conclusions on the post-May 12, 1960, pay awards, declaring that the General Counsel's use of seniority in the computations was not arbitrary or unreasonable per se . The second supplemental decision of May 23, 1966, with three small variations, granted the full back pay computed for the 13 discriminatees.*fn4 In doing so, the trial examiner analyzed Buncher's arguments for economically justified layoffs. This affirmative defense consisted of a detailed chart showing all Buncher employees since the first discriminatory discharge and their ratings in any of 52 jobs performed for Buncher, as well as their rating in the ten categories that Buncher said governed all layoff, hiring or transfer.*fn5 The trial examiner, after also considering approximately 700 pages of testimony of Buncher employees explaining the chart, concluded that "inconsistencies, internal contradictions, exaggerations, and implausibilities" in the testimony and chart showed that the chart "was contrived for the purpose of denying back pay to the discriminatees . . ." Consequently, such examiner found that, Buncher not having sustained his burden of proof, the General Counsel's prima facie case for the seniority-calculated back pay should prevail.

We agree with the trial examiner and the NLRB that under § 10(c) of the NLRA 29 U.S.C. § 160(c) the Board is vested with wide discretion in devising procedures and methods for awarding back pay to discriminatees as long as the award is remedial, not punitive.*fn6 In particular cases where the award cannot be computed precisely, the Board can exercise its power by adopting formulas that are approximations.*fn7 But such approximations must not be "arbitrary or unreasonable in the circumstances involved."*fn8 The Board's statement is correct that a finding of a discriminatory discharge in violation of § 8(a)(3) "necessarily establishes a pay loss by the employees for, without discrimination, the selection would not have been made until some point later in time." And we agree that in computing back pay, an employer should not be allowed to relitigate the very discharges found illegal,*fn9 and that the employer carries the burden of proving economic nondiscriminatory reasons why subsequent layoff would have occurred.*fn10

We disagree, however, with the conclusions reached by the Board in applying these legal rules to this particular case.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. Operating out of three locations, Buncher had a diversified business which apparently resulted from efforts to avoid sole dependence on the steel industry's fluctuating needs for scrap retrieved from slag. Buncher needed men who could perform diverse jobs at the several locations, jobs ranging from the construction of warehouses to 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 as early as December 1959 (131 NLRB 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, finding, instead, that despite the strong economic defense (131 NLRB at 1456), the discrimination was shown by the "timing of the terminations" (131 NLRB at 1457) and the fact that all discriminatees were union adherents (131 NLRB at 1460). In reaching this conclusion, he noted that:

"It is appreciated that in an economic cut back, 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 NLRB at 1460.

Approval of this lack of a seniority system and of the peculiar nature of Buncher's business is quite evident in the particular wording of the Board's decision and order quoted above, to which we explicitly referred in enforcing the order, 316 F.2d at 929. In light of these prior findings and after an examination of the testimony supporting the back pay computation,*fn11 we think that the instant use of seniority to compute the back pay was arbitrary and unreasonable. The full award of back pay, as computed in the Regional Director's Backpay Specification, cannot be justified solely by the prior finding of a violation of § 8(a)(3). The unfair labor practice proves only that some back pay is owed; if the precise amount cannot be determined, the Board's approximation must nonetheless have a rational basis. This basis for the back pay does not become more rational because the trial examiner rejects the employer's evidence as subjective and self-serving. The General Counsel's case, even when labelled "prima facie," must stand on its own.

Not only is there not 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 concerning Buncher's business operation which were based upon substantial evidence in the record as a whole.*fn12

The Board and the trial examiner may be correct in rejecting an employer calculation that is ultimately based solely on subjective evaluation.*fn13 However, at least some of the allegedly important factors in Buncher's evaluation, of which Buncher employees' jobs would have been terminated due to economic cutbacks and the dates of such terminations, are capable of objective proof by means other than testimony and cross-examination of members of the employer's management. The number of jobs employees have performed, their willingness to transfer to other plants, rates of pay, limitations on their availability, experience with Buncher, and experience with other employers are examples of criteria suggested by Buncher, which may be obtained by interviewing employees, including the discriminatees, and by using documentary and other evidence. Such factors (and possibly others), if challenged, thus appear capable of "objective" proof. The Regional Director can secure such information, affidavits, etc., and can augment calculations based on relative length of service with Buncher in order to make the back pay calculation a more rational approximation in light of the demonstrated, peculiar characteristics of Buncher's ...

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