Pearson Education, Inc. v. National Labor Relations Board

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 16, 2003 Decided July 6, 2004

No. 02-1266

PEARSON EDUCATION, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

UNION OF NEEDLETRADES, INDUSTRIAL AND TEXTILE EMPLOYEES,

INTERVENOR

Consolidated with

02–1324

On Petition for Review and Cross–Application for

Enforcement of an Order of the

National Labor Relations Board

Gregory J. Utken argued the cause and filed the briefs for

petitioner.

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Robert J. Englehart, Attorney, National Labor Relations

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

brief were Arthur F. Rosenfeld, General Counsel, John H.

Ferguson, Associate General Counsel, and Aileen A. Arm-

strong, Deputy Associate General Counsel. James M. Oleske,

Jr., Attorney, entered an appearance.

Barry A. Macey argued the cause and filed the brief for

intervenor.

Before: SENTELLE, ROGERS, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: Pearson Education, Inc., (‘‘Pear-

son’’ and ‘‘the company’’) petitions for review of the National

Labor Relations Board (‘‘the Board’’ or ‘‘NLRB’’) decision

following our remand in Macmillan Publishing Co. v. NLRB,

194 F.3d 165 (D.C. Cir. 1999). After remand, the Board

reaffirmed its initial decision setting aside the first election

then certifying the Union of Needletrades, Industrial and

Textile Employees of the AFL–CIO (‘‘the union’’) as the

collective bargaining agent based on a second, otherwise

uncontested, election. Pearson refused the union’s demand

for bargaining. The Board entered a bargaining order.

Pearson now petitions for review, and the Board cross-

petitions for enforcement of its order. For the reasons more

fully set out below, we deny the company’s petition for review

and allow the Board’s cross-petition for enforcement.

I. Background

Pearson distributes and sells reference materials and edu-

cational books. In 1997, the company—then Macmillan Pub-

lishing, Inc.—operated two distribution warehouses in India-

napolis: one at Northwest Boulevard and one at Rockville

Road. In June of that year, the union petitioned the Board

to represent ‘‘all full-time and all regular part-time warehouse

and distribution center employees’’ at both facilities. Because

the company planned to consolidate and transfer its opera-

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tions to Lebanon, Indiana, it argued that holding an election

would not effectuate the purposes of the National Labor

Relations Act (‘‘the Act’’). The NLRB’s Regional Director

found that the intended relocation did not render an immedi-

ate election inappropriate and ordered an election.

The Board denied the company’s Request for Review of the

Regional Director’s Decision and Direction of Election. The

union held the election in August. The initial results revealed

a sufficient number of challenged ballots to affect the results

of the election, and the Regional Director ordered that a

hearing be held to resolve the status of the challenged ballots.

While the election’s outcome was unknown, the union filed

eight objections to the election and the company filed four.

The Regional Director shelved these objections pending de-

termination of the election’s outcome.

Two weeks prior to the first election, the company had

announced an hourly-wage increase of $1.10—and later

$1.25—in connection with the move to Lebanon. One week

before the election the company distributed a leaflet stating:

WHAT DO YOU HAVE TO LOSE? How about:

$2,522.00 next year! TTT Without a union, Macmillan will

be free to proceed ahead with the announced wage

increases for the Lebanon move. With a union, since all

wages and benefits would be subject to negotiation, no

one can predict what the final package would be. WHY

TAKE THE RISK? VOTE NO! (emphasis in the origi-

nal).

When the company won the election by three votes, it

withdrew its objections and the Regional Director—without

passing on the rest of the union’s objections—found that the

company had circulated an improper leaflet to employees.

The union claimed the flyer ‘‘threaten[ed] employees with the

loss of the promised wage increase TTT if they selected the

union as their bargaining representative.’’

The Regional Director sustained this objection. He ex-

plained that during a union campaign, ‘‘an employer should

decide the question of granting or withholding benefits as it

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would if a union were not in the picture.’’ Further, he stated

that the leaflet ‘‘violates this principle by leaving it in the

minds of the employees that they will lose the previously

announced raise TTT if the union is voted in.’’ The Regional

Director concluded that the company’s ‘‘mention, later in the

document (in much smaller print) that all wages and benefits

are subject to negotiation does not cure the clear implication

that the employees will not get their promised raise if the

union is voted in.’’ The Board denied the company’s request

for review of the Regional Director’s decision.

The union won the second election in June 1998, by six

votes. The company filed objections challenging the Regional

Director’s previous decision raising issues that had already

been reviewed by the Board. The Regional Director denied

the objections and certified the union as the collective bar-

gaining representative. The Board again denied the compa-

ny’s request for review of the Regional Director’s decision.

After the Board certified the union, the company refused to

bargain or provide the union with requested information.

The union charged that the company was engaging in unfair

labor practices in violation of Section 8(a)(5) and (1) of the

Act. 29 U.S.C. § 158(a)(5) and (1). On October 30, 1998, the

Board issued a Decision and Order finding that the company

had violated the Act as charged.

This Court reviewed the Board’s original decision in Mac-

millan Publishing Co. v. NLRB, 194 F.3d 165 (D.C. Cir.

1999). There, the company argued both that the first election

was premature, and that the Regional Director improperly

overturned the first election because of the flyer.

We held that the company could not successfully challenge

the order on the ground that the first election was premature

because of the impending transfer to a new facility. The

Board’s bargaining order resulted from the second election,

which the union won, not the first election, which the union

lost. The company’s move to Lebanon had already taken

place by the time of the second election. Indeed, the Region-

al Director’s predictive judgment before the first election—

that the workforce at the old locations would be a substantial

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and representative complement of the workforce at the new

location—had proved accurate. Id. at 166.

However, we held that the Regional Director’s decision to

overturn the results of the election—on the basis of the

flyer—did not rest on sound legal principles, and thus was

arbitrary and capricious. Id. at 168. Rather than citing to

Board authorities discussing the issue of when employer

communications during union election campaigns are threat-

ening and coercive, the Regional Director instead relied on

the concept that an employer should act as if a union were not

in the picture. We held that no such principle governs

employer communications during such elections. Id.

On remand, the Board ordered a hearing before an Admin-

istrative Law Judge (‘‘ALJ’’) on all of the union’s objections to

the first election. At the hearing the union stated that it was

prepared to go forward on only four of the original eight

objections.

After a three-day hearing, the ALJ issued a decision rec-

ommending that the Board sustain three of the union’s four

objections, set aside the first election, and reaffirm the un-

ion’s certification based upon its success in the second elec-

tion.

On review, the Board affirmed the ALJ’s decision to set

aside the results of the first election and—based upon the

union’s second election victory—reaffirmed its certification of

the union and ordered the company to bargain. Pearson

Education, et al., 336 NLRB No. 92 (2001) (the ‘‘Decision and

Order’’). The company moved to reconsider the appropriate-

ness of the bargaining unit, which the Board denied. This

petition for review followed.

II. Analysis

A. The Company’s Leaflet

The company’s central claim is that the union’s certification

was invalid because the Board abused its discretion in setting

aside the first election. Indeed, the company does not dis-

pute the outcome of the second election, which the union won.

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Therefore, unless the company prevails in its assertion that

the Board improperly set aside the results of the first elec-

tion, the Board’s certification of the union was valid and the

company’s refusal to bargain with the union violates sections

8(a)(5) and (1) of the Act. 29 U.S.C. § 158(a)(5) and (1). See

Gannett Rochester Newspapers v. NLRB, 988 F.2d 198, 203

(D.C. Cir. 1993); C.J. Krehbiel Co. v. NLRB, 844 F.2d 880,

881–82 (D.C. Cir. 1988).

Our review of Board decisions is deferential, and we have

specifically held that judicial review of a Board decision for a

rerun of an election is ‘‘extremely limited.’’ Timsco Inc. v.

NLRB, 819 F.2d 1173, 1176 (D.C. Cir. 1987) (citation omit-

ted). The legal principles governing the sort of conduct here

alleged are clear and well-settled: the Board will sustain an

objection to a party’s statements or conduct during an elec-

tion when the challenged actions had a reasonable tendency

to interfere with employee free choice. See NLRB v. Superi-

or Coatings, Inc., 839 F.2d 1178, 1180 (6th Cir. 1988). Fur-

ther, the Board reasonably finds that employee free choice

has been compromised when the election is tainted by con-

duct or statements that ‘‘tended to interfere substantially

with the ability of the employees to make a free and rational

choice in the election.’’ General Dynamics Corp., 250 NLRB

719, 719 (1980) (citations and internal punctuation omitted).

See also Macmillan Pub’g. Co., 194 F.3d at 168.

In sum, the issue before the Board was whether an employ-

er’s threats or statements had a reasonable tendency to

interfere with the free exercise of employee rights under the

Act. S.W. Reg’l. Joint Bd., Amalgamated Clothing Workers

v. NLRB, 441 F.2d 1027, 1031 (D.C. Cir. 1970).

In our prior review of this case, we found that the Regional

Director, whose decision the Board refused to review, did not

engage in the required reasoned decisionmaking. We specifi-

cally addressed the Regional Director’s conclusion that the

flyer violated the ‘‘principle’’ that an employer should act as

‘‘if a union were not in the picture.’’ Macmillan Pub’g. Co.

v. NLRB, 194 F.3d at 168. However, as we held, ‘‘[t]here is no

such principle governing employer communications during

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election campaigns, and we doubt that there could be in light

of the First Amendment.’’ Id. Because of this defect, we

found that the Board’s decision reflected a classic case of lack

of reasoned decisionmaking. Id. (The ‘‘rationale was the

antithesis of reasoned decisionmaking, and as such was arbi-

trary and capricious.’’) (citing Motor Vehicle Mfrs. Ass’n v.

State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). We

hold that this defect has now been cured.

The Board correctly found that the company’s leaflet, circu-

lated several days before the election, threatened to withhold

a promised wage increase if the union won the election, and

set aside the results of the first election. The Board then

certified the union as the bargaining representative of the

unit employees based on the employees’ vote in favor of union

representation in the second election. If the Board’s decision

as to the first election was correct, the second follows without

challenge. It was correct.

The settled law is clear: to state that a previously-

announced wage increase will probably be lost if a union wins

constitutes employer coercion. See Flamingo Hilton–Laugh-

lin, 324 NLRB 72, 111 (1997), enforced in relevant part, 148

F.3d 1166, 1175 (D.C. Cir. 1998). Here, just days after the

company announced a ten-percent wage-increase, and just

days before the election, the company distributed a campaign

flyer that threatened that the increase, amounting to

‘‘$2,522.00 next year,’’ was ‘‘WHAT TTT YOU HAVE TO

LOSE if the Union wins the election.’’ As the Board empha-

sized, the flyer ‘‘explicitly states that the promised wage

increase will be put in jeopardy if the employees choose the

Union.’’ We agree with the Board that this constitutes

classic coercive conduct. See Pepsi–Cola Bottling Co., 315

NLRB 882, 892–93 (1994), enforced in relevant part, 96 F.3d

1439 (4th Cir. 1996). And petitioner’s arguments to the

contrary are unavailing.

The flyer states that ‘‘[w]ithout a Union, [the Company] will

be free to proceed ahead with the announced wage increases

for the [upcoming] move,’’ but ‘‘[w]ith a union, since all wages

and benefits would be subject to negotiation, no one can

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predict what the final wage package will be. WHY TAKE

THE RISK?’’ We agree with the Board’s conclusion that the

language ‘‘leaves the clear impression that if the employees

choose the union, ‘what they may ultimately receive depends

upon what the union can induce the employer to restore.’ ’’

As the Board indicated, this is coercive conduct because it

‘‘sends the clear message that, in the absence of the Union,

the Company is willing to grant the raise, but if the Union

wins the election, the Company will pay only what the Union

can force it to pay.’’ See NLRB v. Saunders Leasing System,

Inc., 497 F.2d 453, 457 (8th Cir. 1974) (‘‘Express threats to

bargain from scratch and withdraw benefits during negotia-

tions can carry in themselves their own seeds of coercive

threats.’’); NLRB v. Aerovox Corp., 435 F.2d 1208, 1211–12

(4th Cir. 1970).

A promised raise must be awarded even if a union wins an

election. See Advo System Inc., 297 NLRB 926, 940 (1990);

Arrow Elastic Corp., 230 NLRB 110, 113, enforced, 573 F.2d

702 (1st Cir. 1978). Although the union here could legally

bargain away the raise, as the Board emphasized, ‘‘that is not

what the leaflet says.’’ We agree with the Board’s conclusion

that ‘‘[t]he message of the leaflet is that the Union would

have to bargain to get the employees the raise, and this is

simply not true.’’

Because we agree with the Board that the company’s

distribution of the leaflet was objectionable conduct ‘‘indepen-

dently sufficient to set aside the election,’’ we do not need to

reach the additional allegations of objectionable conduct by

the company.

B. Changed Circumstances

We turn briefly to petitioner’s assertion that the Board

erred in rejecting its arguments on changed circumstances.

The company contends that there are a number of changed

circumstances that render the certified unit of ‘‘warehouse

and distribution center’’ employees at the Lebanon, Indiana

facility no longer appropriate. The company asserts that

since the Regional Director originally designated the bargain-

ing unit in 1997, circumstances have changed substantially

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and dramatically, compelling the result that the unit is no

longer appropriate. But with the exception of all but a few,

the company’s ‘‘changed circumstances’’ were brought to the

attention of this Court before, when the company argued that

these very same changes required dismissal of any election

petition until the company had completed the changes.

These changes include incorporation at the Lebanon facility

of various satellite operations, changes to work procedure,

and changes to technologies used by bargaining-unit employ-

ees. We again agree with the Board that the company’s

alleged changed circumstances are the same ones the compa-

ny asserted when it argued the prospective changed circum-

stances required dismissal of any election petition until it had

completed the changes. And apart from this recycled catalog

of superficial differences, changes in ownership and post-

election employee turnover are—on their own—each insuffi-

cient grounds to render a certification no longer appropriate.

The company rightly points out that in November 1998,

Macmillan was sold to Pearson. However, as the Board noted

in denying the company’s motion for reconsideration, mere

change of employers or of ownership is not such an unusual

circumstance as to affect the force of certification by the

Board within the normal operative period if the majority of

employees after the change of ownership were employed by

the preceding employer. The company makes no allegation

that only a minority of employees employed in the bargaining

unit after the change of ownership had been employed by the

company prior to the change.

The company’s emphasis on the employee turnover that has

occurred since this Court first reviewed and remanded the

Board’s certification of the union is similarly unavailing. In-

deed, as the Board noted in denying the company’s motion for

reconsideration, ‘‘it is well settled that post-election turnover

is an insufficient ground to set aside an election.’’ See Avis

Rent–A–Car System, Inc., 285 NLRB 1032, 1033 (1987),

enforced mem., 849 F.2d 599 (3d Cir. 1988). We have recent-

ly held that apart from bargaining orders that arise in the

Gissel context, turnover is not something that affects the

ongoing validity of Board bargaining orders. Scepter, Inc. v.

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NLRB, 280 F.3d 1053, 1057 (D.C. Cir. 2002) (‘‘The simple fact

of employee turnover TTT would not, without more, have been

enough to require a different decision by the Board.’’).

Lastly, although the company asserts that since the second

election the entire workforce has doubled, it is unclear wheth-

er the relevant bargaining unit has changed in size at all.

Regardless, even a doubling in the size of the bargaining unit

is not the kind of change that alters the ongoing validity of a

Board certification. We thus find no changed circumstances

that render the certified unit inappropriate.

III. Conclusion

For the reasons set forth above, we deny the petition and

uphold the Board’s decision sustaining the results of the

second election.