Pacific Micronesia Corp. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 14, 2000 Decided June 27, 2000

No. 99-1078

Pacific Micronesia Corporation, d/b/a

Dai-Ichi Hotel Saipan Beach,

Petitioner

v.

National Labor Relations Board,

Respondent

Hotel Employees and Restaurant Employees

Local Union No. 5, AFL-CIO, and

Commonwealth Labor Federation,

Intervenor

On Petition for Review and Cross-Application for

Enforcement of an Order of the National

Labor Relations Board

Ronald B. Natalie argued the cause for petitioner. With

him on the briefs was Douglas W. Hall.

David A. Fleischer, Senior Attorney, National Labor Rela-

tions Board, argued the cause for respondent. With him on

the brief were Linda R. Sher, Associate General Counsel, and

Aileen A. Armstrong, Deputy Associate General Counsel.

Margaret A. Gaines, Supervisory Attorney, entered an ap-

pearance.

Intervenor Hotel Employees and Restaurant Employees

Local Union No. 5, AFL-CIO, joined in the brief filed by the

National Labor Relations Board. David A. Rosenfeld and

Victor J. Van Bourg entered appearances.

Before: Silberman, Williams and Ginsburg, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge: The National Labor Relations

Board held that Pacific Micronesia Corporation, d/b/a Dai-

Ichi Hotel Saipan Beach, violated ss 8(a)(1) & (5) of the

National Labor Relations Act, 29 U.S.C. s 151 et seq., by

refusing to bargain with or provide information to the Com-

monwealth Labor Federation and the Hotel Employees &

Restaurant Employees, Local 5, AFL-CIO (collectively, the

Union). Dai-Ichi claims it need not deal with the Union

because the Board improperly defined the bargaining unit for

which it was certified and because the election of the Union

as the employees' bargaining representative was invalid. We

agree with Dai-Ichi that the representation election was

invalid. Without resolving the unit determination issue,

therefore we grant the Company's petition for review and

deny the Board's cross-application for enforcement.

I. Background

Dai-Ichi operates a resort hotel located on the island of

Saipan in the Commonwealth of the Northern Mariana Is-

lands (CNMI). The Covenant to Establish a Commonwealth

of the Northern Mariana Islands in Political Union with the

United States of America, 48 U.S.C. s 1681 at 539 (West

1987), governs the relationship between the CNMI and the

United States. Section 502(a)(2) of the Covenant makes

certain federal laws, including the NLRA, effective in the

CNMI, see Micronesian Telecommunications Corp. v.

NLRB, 820 F.2d 1097, 1101 (9th Cir. 1987), while s 503(a) of

the Covenant provides that the "immigration and naturaliza-

tion laws of the United States" generally do not apply in the

CNMI. 48 U.S.C. s 1681. Acting under its reserved authori-

ty to regulate immigration, the CNMI enacted the Nonresi-

dent Workers Act (NWA) which "provide[s] strict[ ] enforce-

ment, control and regulation of nonresident workers," NWA

s 4411(b), by severely restricting the immigration of nonresi-

dents and by limiting the "employment of nonresident work-

ers ... to the duration of the specific job or employment for

which the alien was recruited." NWA s 4411(a). Among the

many restrictions the NWA places upon the employment of

nonresidents, the following are most noteworthy.

An employer in the CNMI may hire a nonresident worker

only if the Chief of Labor certifies that no resident is

available to fill the position. See NWA s 4433. Upon such

certification, the employer and the Chief must enter into a

"nonresident employment agreement," which memorializes a

description of the position, the time at which the employer

must again seek to fill the position with a resident, the

employment contract to be offered to the nonresident, and

the employer's commitment to secure a bond or surety for the

employee. See id. The actual employment contract in turn

must specify the term and location of employment, work

schedule, wage scale for regular and overtime hours, and any

pay deductions required by law. See NWA s 4433(g).

The Chief of Labor may authorize a nonresident employee

to work for no more than one year at a time, but the

employer may annually apply to extend his employment for

an additional year. See Alien Labor Rules and Regs. s II.D.

A nonresident may not work for anyone other than the

employer specified in the employment contract and neither

the employer nor the nonresident may alter the terms of their

employment contract without approval from the Chief. See

NWA s 4437(d). Upon the completion of the term of employ-

ment or the end of the employment relationship, a nonresi-

dent must immediately depart from the CNMI unless he has

filed a breach of contract claim against the employer, in which

case he may remain in the CNMI for a short time. See NWA

s 4434(g).

Approximately 77% of Dai-Ichi's employees are nonresi-

dents, and Dai-Ichi's Personnel Manager testified before the

Board that the company routinely seeks to extend the em-

ployment of any nonresident worker who has performed well.

Indeed, a significant portion of Dai-Ichi's nonresident work-

force has been in Dai-Ichi's employ for five or more years.

In November 1995 the Union petitioned for an election in a

bargaining unit consisting of all Dai-Ichi's workers. Dai-Ichi

objected to the election on various jurisdictional grounds;

alternatively it contended that the nonresident employees

"lack a community of interest with the resident employees,"

and therefore should be in a separate bargaining unit. The

Regional Director overruled Dai-Ichi's jurisdictional objec-

tions, established a single bargaining unit comprised of both

residents and nonresidents, and set the election for March 21,

1996. The Board rejected Dai-Ichi's request for review.

A little more than one week prior to the election the press

in the CNMI began describing various legislative proposals

relating to nonresident workers. (Although the record con-

tains only newspaper articles, the Board found that similar

reports aired on television at about the same time.) On

March 13, the Marianas Variety News & Views (Variety)

published a story entitled "Reyes to union: Leave us alone,"

which contains a statement by Rep. Pete Reyes, the majority

leader in the CNMI House of Representatives, announcing

his intention to introduce a bill limiting to two years the time

a nonresident worker could lawfully remain in the CNMI.

Reyes said he intended the bill to curtail "problems with

overstaying alien workers," and to "send[ ] a message to

union organizers that they cannot promise workers [an] indef-

inite stay in the [CNMI]." Three days later, the Pacific Daily

News ran an article entitled "Torres opposes union," report-

ing that Rep. Stanley Torres had announced his intention to

"introduce legislation ... to limit aliens to two renewals of

their employment contracts if they join labor unions." The

article also mentions that the announcement came approxi-

mately one week prior to the election at the Dai-Ichi hotel.

In the ensuing days prior to the election, the news media

circulated several more reports related to the legislative

proposals of Reps. Reyes and Torres. Variety published a

story on March 18 entitled "Reyes: Send home displaced

workers," which reported that Rep. Reyes' proposal would

prevent a nonresident worker who had been discharged from

remaining in the CNMI pending the outcome of his grievance.

Rep. Reyes is reported to have stated that he made the

proposal partially in response to a "recent demonstration

participated in by alien workers bearing placards calling

Saipan 'the island of the abusers.' " That same day articles in

Variety and in the Saipan Tribune quoted Rep. Torres as

saying his proposal would "limit all nonresident workers who

have joined a labor union to only two contract renewals."

Variety quoted Rep. Torres as saying that the bill "is not

about punishing those who will join the union [but rather]

about putting union organizers on notice that they could not

promise anything for these workers"; the paper also quoted

Elwood Mott Jr., a union organizer, as saying that the bill

would be inconsistent with "sections 7 and 8 of the National

Labor Relations Act." The Tribune article, entitled "Joining

a union: Hazardous to your health," mentioned that the

Union was attempting to organize Dai-Ichi's workforce, noted

that some U.S. government officials had accused the Union of

having connections to organized crime, and ended by pointing

out that Rep. Torres' bill "would allow non-union members to

continue to renew their employment contracts indefinitely."

Dai-Ichi attached this article to a flyer and circulated it to the

employees.

In the final few days before the election, the news media

reported that the bills as introduced would in fact apply to all

nonresidents, not just union members, but the stories contin-

ued to portray Reps. Reyes and Torres as very much opposed

to unionization. The March 19 Tribune, in an article entitled

"Torres: Union lying about dues," reported that Rep. Torres

had accused the Union of collecting excessive dues from

workers in Saipan and it quoted him as saying that "becoming

a union member will be a lifetime employment record and

may haunt you everywhere you go when looking for a new

job." That same day Variety reported that the Saipan Cham-

ber of Commerce strongly opposed Rep. Torres' bill and

quoted the president of the Chamber as stating that the bill

would "probably be unconstitutional" if applied only to non-

residents who join unions. On March 20, the Tribune report-

ed that Rep. Torres had introduced a bill "propos[ing] that

any 'nonresident' worker who has lived and worked in the

CNMI for two or more consecutive years be required to leave

the CNMI for at least 30 days before the worker may be

allowed to ... continue working." The remainder of the

report contrasts Rep. Torres' bill with an earlier law that had

limited nonresidents to four years in the CNMI; employers

had succeeded in having the four year limit repealed. Vari-

ety also published on March 20 a two-page advertisement

paid for by Rep. Torres that contained clippings from news-

paper articles and letters regarding the Union; several of the

articles featured in the advertisement were among the ones

described above.

On the day of the election Variety ran an article reporting

the parties' predictions of victory, a statement by Dai-Ichi's

counsel accusing the Union of charging excessive dues, re-

sponses by Union supporters claiming the Union would re-

duce dues if it won, and a statement by Rep. Torres that the

Union has a history of striking and that strikes "would cause

civil unrest in the CNMI." Variety also published an article

entitled "2-year, 4-year limits for workers opposed" in which

Diego Benavente, Speaker of the CNMI House of Represen-

tatives, stated that he intended to "lobby his colleagues in the

House against any legislation seeking to impose a limit on the

legal stay of non-resident workers in the CNMI." Speaker

Benavente is quoted as stating that Rep. Torres' bill "is not

only for union members but for all non-resident workers" and

that federal law prevents the CNMI from "treat[ing] union

members differently." Finally, the Tribune printed an article

in which Dai-Ichi's counsel is quoted as saying the Union lied

to employees when it told them it would charge reduced dues

and that Dai-Ichi planned to file unfair labor practice charges

against the Union for deceptive advertising.

The election of March 21 resulted in a decisive defeat (157

to 91) for the Union. The Union filed objections to the

election, including three objections claiming, as the Regional

Director characterized them, that "third parties interfered

with employee free choice ... by threatening the reinstate-

ment of the four year limit on non-resident worker's [sic]

contract renewals and/or threatening to limit non-resident

worker's [sic] contracts to two years." Finding that the

"remarks published in the barrage of newspaper articles"

described above "constitute third party conduct so aggravated

that they created a general atmosphere of fear, reprisal, and

confusion rendering a free election impossible," the Regional

Director recommended overturning the election results. The

Board adopted the Regional Director's findings, rejected Dai-

Ichi's objections, and directed that a second election be held.

The second election was held on February 5, 1998. This

time the Union prevailed (131 to 121) and Dai-Ichi filed

objections to the election, including its claim that the Board

erred by overturning the results of the first election. The

Regional Director rejected Dai-Ichi's objections and certified

the Union as the representative of the bargaining unit; the

Board rejected Dai-Ichi's request for review.

In order to obtain judicial review, Dai-Ichi refused to

provide information to or to bargain with the Union. Upon

the Union's filing an unfair labor practice charge, the General

Counsel issued a complaint claiming Dai-Ichi had violated

ss 8(a)(1) & (5) of the NLRA. Finding no issues of disputed

fact, the Board granted summary judgment in favor of the

General Counsel and directed Dai-Ichi to bargain with the

Union. Dai-Ichi petitioned this court for review of the

Board's order, the Board cross-applied for enforcement, and

the Union intervened in support of the Board.

II. Analysis

Dai-Ichi argues that the Board erred by overturning the

first election and by including within a single bargaining unit

both resident and nonresident employees. We must uphold

the Board's decisions unless "upon reviewing the record as a

whole, we conclude that the Board's findings are not sup-

ported by substantial evidence or that the Board acted arbi-

trarily or otherwise erred in applying established law to the

facts of the case." Micro Pacific Development Inc. v. NLRB,

178 F.3d 1325, 1328-29 (D.C. Cir. 1999). To meet the re-

quirement of "[s]ubstantial evidence," the Board must pro-

duce "more than a mere scintilla" of evidence; it must

present on the record "such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion,"

Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938),

taking into consideration the "record in its entirety ...

including the body of evidence opposed to the Board's view."

Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951).

Our review for substantial evidence also must ensure that the

Board has "draw[n] all those inferences that the evidence

fairly demands." Allentown Mack Sales & Serv., Inc. v.

NLRB, 522 U.S. 359, 378-79 (1998).

We think there is serious reason to doubt the propriety of

the bargaining unit in this case because of the inherent

conflict of interest between resident and nonresident employ-

ees, but the matter is far from clear. See Saipan Hotel Corp.

v. NLRB, 114 F.3d 994, 998 (9th Cir. 1997). We need not

decide that issue, however, because we agree with Dai-Ichi

that the Board erred by overturning the results of the first

election.

The Board's precedents establish that it rarely overturns

the results of a representation election because of misconduct

not attributable to a party to the election, and then only if

that "misconduct was so aggravated as to create a general

atmosphere of fear and reprisal rendering a free election

impossible." Westwood Horizons Hotel, 270 NLRB 802, 803

(1984). In this case the Board found the statements made by

various members of the CNMI House of Representatives, as

reported by the news media, constituted "third party threats"

that made it impossible for the employees freely to decide

whether to vote for the Union. We question seriously the

idea that statements made by lawmakers concerning legisla-

tive proposals designed to address political issues could ever

be grounds for overturning a representation election. Cf.

NLRB v. Gissel Packing Co., 395 U.S. 575, 617-18 (1969)

(stating employer's comments about representation election

must be more limited than those regarding "the enactment of

legislation ... where the independent voter may be freer to

listen more objectively and employers as a class freer to

talk"). Nevertheless, we need not and do not decide that

question here because the Board's determination that the

reports "created an atmosphere of confusion, and fear of

reprisals so as to render impossible the rational, uncoerced

selection of a bargaining representative" is not supported by

substantial evidence. Indeed, there are two major deficien-

cies with the evidence the Board relies upon to support its

determination: Most of the news reports could not have

affected in any way the employees' ability to decide freely

whether to select the Union as their bargaining representa-

tive, and to the extent any of the reports conceivably could

have affected the employees' ability to choose freely, the

reports are too insignificant to have caused such fear and

confusion that free choice was impossible.

The Board overturned the results of the first election

because it determined that the reports in the media made it

impossible for the employees to vote freely. In order to

support this determination, therefore, the Board needed at a

minimum to present evidence of events from which "it reason-

ably appears that the freedom of choice of the employees

could have been interfered with." James Lees & Sons Co.,

130 NLRB 290, 291 n.1 (1961). Although the type of evidence

required in this case seems self-evident, see, e.g., Westwood

Horizons Hotel, 270 NLRB at 803 (threats of physical vio-

lence if employees voted against Union); James Lees & Sons

Co., 130 NLRB at 291 ("[N]umerous statements and conduct

by various responsible groups and individuals in the commu-

nity ... reasonably conveyed the view to the employees that

in the event of unionization the Employer would shut down its

plant and other employers would not locate in the communi-

ty"), the Board repeatedly attempts to justify its decision to

overturn the first election by relying upon evidence that

simply is not relevant to the employees' free choice.

For example, the Regional Director observed that passage

of the bills limiting the amount of time nonresidents could

remain in the CNMI would have meant immediate job loss

and deportation for a significant number of Dai-Ichi's long-

term employees. Noting that threats of deportation and job

loss are quite serious, he then opined that many of Dai-Ichi's

workers might have "reasonably conclud[ed] that it was bet-

ter to stay and work without union representation, than to be

sent back to their homeland[s]." The gap in this reasoning is

obvious: Passage of the proposed legislation was not in any

way contingent upon the outcome of the election. Therefore,

the pendency of the legislative issue (and the reports thereon)

had no bearing upon the employees' ability to choose freely in

the election. Although it is quite possible that news of the

legislative proposals caused fear and confusion among Dai-

Ichi's employees--perhaps causing some of them to worry

that they would not be able to remain in the CNMI--they

simply had no reason to fear the consequences of voting for

the Union. Yet the Board overturned the first election on the

ground that the employees' fear and confusion "render[ed]

impossible" a "free expression of choice." Westwood Hori-

zons Hotel, 270 NLRB at 803. From the evidence in the

record, that is a non sequitur.

In this court the Board highlights four aspects of the

record in support of its conclusion. First, the Board points

out that some early reports had erroneously described the

bills as limiting the number of times nonresidents who joined

a union could renew their employment contracts while leaving

unaffected the renewals of nonresidents who did not join a

union. Second, the Board notes that several articles about

the proposed legislation refer to the impending election at

Dai-Ichi. Third, the Board points out that some of the

reports contain statements indicating that the proposals were

intended to deter the Union. Finally, the Board relies upon

one of the articles that quotes Rep. Torres as stating that

joining a union "may haunt you everywhere you go when

looking for a new job." We consider these four points both

seriatim and cumulatively, but are nonetheless constrained to

conclude they do not, even in the aggregate, constitute sub-

stantial evidence supporting the Board's determination that

the employees were unable to vote freely in the first election.

First, although some of the early reports did refer to

(nonexistent) legislative proposals that would have adversely

affected only nonresidents who were union members, later

reports repeatedly corrected those early mis-descriptions.

The last article to err in that regard appeared on March 18;

all subsequent articles either expressed opposition to such a

proposal or stated that the actual proposals would apply to all

nonresident workers, union and non-union alike. A report on

March 19 stated that the Chamber of Commerce believed a

bill targeting union members would be unconstitutional and

that it would strongly oppose a bill limiting the number of

times any nonresident's contract could be renewed. Then, on

March 20, the Tribune reported that the bills actually intro-

duced applied to all nonresidents regardless whether they

were members of a union, and Variety published an article on

March 21 reiterating that the bills applied to all nonresidents.

The later reports clearly dispelled any notion that the pro-

posed legislation affected only those nonresidents who joined

a union. The Board's emphasis solely upon the earlier arti-

cles, therefore, is misplaced.

Second, mention of the election at Dai-Ichi in some articles

lends no support to the Board's determination. To begin,

only three of the articles even mention the then-impending

first election in relation to the proposed legislation. The rest

of the articles either do not mention the election at all or

mention it in a way that does not relate to the proposed

legislation. For example, an article appearing in the Tribune

on March 19 begins by mentioning that "[w]ith an election set

this week at the Dai-Ichi Hotel ... Rep. Stanley T. Torres

has renewed his criticism" of the Union, but that article does

not mention any of the legislative proposals. Even assuming,

however, that some of the articles did lead employees to

believe that the legislation was introduced because of the

Union's efforts to organize Dai-Ichi's workforce, those arti-

cles cannot reasonably be seen as constraining the employees'

ability to vote freely in the election. Not one of the articles

ever intimates that the results of the election could affect the

legislative outlook in any way. Although it may have been

reasonable for an employee to speculate that the Union's

efforts to organize Dai-Ichi's workforce at least partially

precipitated the proposals, it would not have been reasonable

for an employee to conclude that the results of the election

could do anything to defeat or otherwise derail the proposals,

which dealt with larger issues of immigration and employ-

ment policy.

Nor does the Board's third point, that some news reports

indicated the legislative proposals were designed to deter the

Union's organizers, suggest that the employees were unable

to vote freely in the first election. Only by quoting fragments

of the articles out of context can the Board argue otherwise.

For example, the Board argues that several of the articles

"quoted the legislators as saying they wanted to 'send a

message to union organizers,' " implying that the proposals

were designed to deter unionization. Read in context, howev-

er, the reports are much less ominous. In fact, the articles

containing the phrase "send a message" state in substance

that Reps. Torres and Reyes "wanted to send a political

message to union organizers 'that they could not promise

alien workers permanent residency in the island.' "

Some of the articles cited by the Board do indicate that

some legislators were adverse to unionization in general and

to the Union in particular but those articles simply do not

support the Board's conclusion that the employees were

unable to vote freely. The Supreme Court has held that in an

election contest even the employer, who has some direct

control over his employees' economic well-being, "is free to

communicate to his employees any of his general views about

unionism or any of his specific views about a particular union,

so long as the communications do not contain a 'threat of

reprisal or force or promise of benefit' " for voting respective-

ly against or for unionization. Gissel Packing Co., 395 U.S.

at 618. Overturning an election based upon statements made

by legislators requires more reason to believe that employees'

freedom of choice was compromised: The Board will overturn

an election if conduct attributable to the parties "created such

an environment of tension and coercion as to have had a

probable effect upon the employees' actions at the polls," but

will overturn an election based upon third party conduct only

if the misconduct is "so aggravated as to create a general

atmosphere of fear and reprisal rendering a free election

impossible." Overnite Transp. Co. v. NLRB, 140 F.3d 259,

264-65 (D.C. Cir. 1998). Applying this standard, the state-

ments made in the present case by various legislators op-

posed to unionization in general and accusing the Union in

particular of corruption cannot possibly be a ground for

overturning the first election. If the rule were otherwise, the

electoral process would be subject to endless manipulation by

politicians and their allies in labor or management.

With respect to the Board's last point, the statement

attributed to Rep. Torres appeared in an article in which he

accused the Union of charging excessive dues and of engaging

in "sneaky" and potentially illegal campaigning. The article

ends with the following passage: "In closing his statement,

Torres said that although workers have a right to choose

whether or not to join a union, 'becoming a union member will

be a lifetime employment record and may haunt you every-

where you go when looking for a new job.' " This statement,

like the statements just discussed, is nothing more than Rep.

Torres' expression of general dislike of unions and cannot be

a ground for overturning an election. Therefore, this portion

of the record also fails to provide meaningful evidence for the

Board's finding that the employees were unable to vote freely

in the first election.

Considering the Board's evidence as a whole, we think it

falls well short of being substantial. None of the individual

points is probative, and taken as a whole they do not add up

to any more than the sum of the parts. We are therefore

constrained to conclude that the Board has failed to support

with substantial evidence its decision to overturn the first

election.

III. Conclusion

The Board's finding that news reports "created an atmo-

sphere of confusion, and fear of reprisals so as to render

impossible the rational, uncoerced selection of a bargaining

representative" in the first election is not supported by

substantial evidence. Consequently, we grant Dai-Ichi's peti-

tion for review and deny the Board's cross-application for

enforcement.

It is so ordered.