PETITION FOR REVIEW AND CROSS-APPLICATION FOR ENFORCEMENT OF ORDERS OF THE NATIONAL LABOR RELATIONS BOARD Dated November 25, 1980 and March 19, 1981 (NLRB No. 22-CA-9259)
Before Aldisert, Rosenn and Weis, Circuit Judges.
Judgment based upon default is a procedural mechanism that can have serious adverse effects on the nonresponding party. The harshness of this device is vividly demonstrated in this case where the National Labor Relations Board entered judgment against respondents for failing to file an answer to a complaint issued against them. The Board thereupon ordered, among other things, that the company reopen its facility, rehire terminated employees, and awarded backpay to the employees. This was done despite the fact that the union that filed the original charge had requested that it be withdrawn.
At the instance of Local 804, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, General Counsel of the National Labor Relations Board issued a complaint on August 3, 1979, charging respondents APD Transport Corporation and its alleged alter ego, National Book Consolidators, Inc., with unfair labor practices. The complaint maintained that APD wrongfully ceased operations in New York, moved to New Jersey, and carried on its activities there under the name of National Book Consolidators, Inc.
Mr. Irwin Horowitz, counsel for the respondents, wrote to the regional director of the NLRB on August 16, 1979, asking for an extension of time to file an answer. He explained that his request was "predicated upon the fact that the matter has been settled and appropriate papers are now being drawn" to reduce the terms to writing. In response, the regional director issued an order which read: "Counsel for Respondent, by letter, requested an extension of time to file an Answer because of the probability of a settlement between the parties, and the matter having been duly considered, IT IS HEREBY ORDERED that the time for filing an Answer ... be ... extended to September 16, 1979."
Respondent's counsel later requested an additional ten day extension by telephone. He wrote a letter on September 17 to confirm the telephone conversation with the regional director as to the agreement to enlarge the time. In it, Mr. Horowitz also stated, "We hope to have the settlement papers executed by all parties prior to that date." The regional director then issued an order in the same form as that signed in August, extending the time for filing to September 27, 1979.
On October 26, 1979, Ms. Marguerite R. Greenfield, counsel for General Counsel, wrote to respondent's lawyer and stated that unless an answer was filed by October 31, she would seek summary judgment. On October 30, 1979, Mr. Horowitz, in a letter to General Counsel's office, replied:
"James V. Morgan, the attorney for the Petitioner (Local 804) in the above-captioned matter has advised that the Complaint would be withdrawn. The Settlement Agreement has been signed as per our telephone discussions.
"I would appreciate it if you would mark your records accordingly."
Counsel for General Counsel did not respond to this letter until January 3, 1980, when she telephoned Mr. Horowitz and as she conceded, "(A)t which time I advised him of the Charging Party's continued failure to request withdrawal and of my intention to file immediately for summary judgment."
On January 8, 1980, counsel for Local 804 sent a letter to the regional director, asking that the charges against respondent be withdrawn. The letter also set out the general terms of the settlement which had been reached. On that same day, however, General Counsel mailed a motion for summary judgment to the Board in Washington. The union's letter had not yet been received when the motion was submitted.
Even after receipt of the withdrawal notice, however, General Counsel's office did not rescind its action in asking for summary judgment. To the contrary, on February 12, 1980, Ms. Greenfield sent a letter to the Board opposing the union's withdrawal request. In it, she asserted for the first time in any record document "(t)hat a settlement agreement between the parties had been executed is no defense to Respondent's failure to file an Answer, particularly where the General Counsel is not a party to the settlement and where Respondent, for three (3) months after its execution, despite repeated extensions of time, filed no Answer and made no attempt to otherwise resolve the matter."
On February 15, 1980, respondent filed an answer, accompanied by a letter stating:
"This Answer would have been filed within time, and prior to this date, had it not been for the fact that the issues set forth in the Complaint and Notice of Hearing had been resolved in October, 1979, by the signing of a formal settlement agreement ... On a number of occasions we have reported to your office that a settlement had been agreed upon and signed and on a number of occasions the attorney for the Union, James V. Morgan, has requested that the Complaint be withdrawn."
Horowitz's firm then asked that a meeting of counsel be held under the auspices of the regional director to resolve the matter, a suggestion that was apparently declined.
On that same date, counsel for the union wrote to the Board, reaffirming that the company's counsel had satisfactorily negotiated a settlement with the union. The union's position was that:
"Respondent, in good faith, believed that settlement with Local 804 and withdrawal of the charges would make further proceedings, including an answer to the complaint, unnecessary ... Under the circumstances, it would be unfair and inequitable to deny respondent an opportunity to answer the complaint and to defend the case on the merits. For the foregoing reasons, Local 804 urges the Board not to grant the motion for summary judgment herein upon default."
Two weeks later, the Horowitz firm withdrew its appearance. Present counsel was substituted and undertook informal, although ultimately unsuccessful, efforts to have the motion for summary judgment withdrawn. Additional motions and responses were filed by the parties over a period of months through September 17, 1980. Included among the documents filed was an affidavit by Mr. Horowitz, in which he asserted that counsel for the General Counsel had led him to believe that if APD and Local 804 settled their differences, National Book Consolidators would be unaffected by the proceedings and would not be required to file an answer. He also stated that he had advised counsel for General Counsel "at all times ... that National Book Consolidators, Inc. ...