Hunter Douglas, Inc. v. National Labor Relations Board, Hunter Douglas, Inc. v. National Labor Relations Board

WEIS, Circuit Judge,

dissenting.

The decision of the Board in this case illustrates the importance of the burden of proof to the resolution of a controversy. The Board’s opinion also demonstrates a curious ambivalence in assessing the evidence required of the parties to meet their respective burdens.

Review of the record here must be more searching than in the usual case where the Board and the AU agree on their findings. Although the “substantial evidence” test applies in both instances, that “standard is cast in a special light” when “the Board rejects certain findings made by an ALJ.” Allbritton Communications Co. v. NLRB, 766 F.2d 812 , 817 (3d Cir.1985). The evidence supporting a determination may be less substantial when an ALJ “who has observed the witnesses and lived with the case has drawn conclusions different from the Board’s than when he has reached the same conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 496 , 71 S.Ct. 456, 469 , 95 L.Ed. 456 (1951). See also Eastern Engineering & Elevator Co., Inc. v. NLRB, 637 F.2d 191, 197 (3d Cir.1980).

This caution is particularly applicable when the narrative facts found by the ALJ are grounded on evaluations of oral testimony. As the Board explained in Standard Dry Wall Products, Inc., 91 N.L.R.B. 544 , 545 (1950), the AU’s findings based on credibility will not be disturbed unless a “clear preponderance of all the relevant evidence” demonstrates error. In my judgment, it is unrealistic to assume that an AU’s choice of inferences from narrative facts is not similarly affected to a substantial degree by credibility judgments made in the course of hearing testimony.

In this case, the Board concluded that General Counsel had met the burden of establishing a prima facie case, although the ALJ had been extremely dubious on that point. The ALJ did determine that *818 Hunter Douglas had met its burden of proving an economic reason for the layoff. The Board however found to the contrary despite largely undisputed evidence, significant portions of which were statistical and documentary.

In mixed motive discharge cases, General Counsel must establish by a preponderance of the evidence that the employee’s protected conduct “was a substantial or a motivating factor in the discharge.” NLRB v. Transportation Management Corp., 462 U.S. 393, 400 , 103 S.Ct. 2469, 2474 , 76 L.Ed.2d 667 (1983). Although the General Counsel’s burden has been labeled a “prima facie” case, this use of the term should be distinguished from its application in other contexts.

In a jury trial, the plaintiff makes out a prima facie case if, assuming the truth of his evidence, a claim has been established. In a Board hearing, however, the assumption of truth criterion plays no part in the evaluation of General Counsel’s “prima facie” case. Only if he meets the burden of presenting truthful evidence that supports his position by a preponderance has he made out his case. Thus, if the AU finds that the testimony produced by the General Counsel is not worthy of belief, a prima facie case has not been established, even if that evidence would have been committed to the fact finder in a jury case.

If General Counsel successfully meets his burden of persuasion, the employer nevertheless is not liable if it proves that the discharge would have occurred in any event. Rephrased, despite the fact that an employee’s protected conduct was a substantial or motivating factor in his discharge, the employer is not subject to reinstatement or back pay orders if it can prove that the discharge would have occurred regardless of the forbidden motivation. The employer bears the burden of proving this affirmative defense. NLRB v. Transportation Management Corp., 462 U.S. at 401 , 103 S.Ct. at 2474 .

In the case at hand, the Board found that General Counsel had met his burden based on inferences it drew from the testimony. These included the fact that Santalla, the plant manager, knew that union organizing efforts were underway on the second shift. Moreover, the company deviated from its previous practice of considering individual seniority or qualifications in spreading the layoffs between shifts. The Board also found it “not credible” that Shouldis and Brown, the company officers, would accept Santalla’s recommendation and act “with such great haste.”

The Board’s emphasis on the abruptness of the layoff fails to consider that a reduction in force had been contemplated for some time and that other steps had already been taken to change the character of the operation at the Maywood Plant.

Substantial evidence indicates that the company was aware of the interest of some employees in joining a union. Although the employer did decide to lay off the second shift, it followed its previous practice to the extent of retaining ten employees because of their special skills. Significantly, these employees were union adherents, but the Board failed to mention this fact or to note that none of those on the first shift who signed union authorization cards were discharged.

Of the total who had signed union cards, thirty-six employees were from the first shift and thirty-seven were from the second. That a larger percentage of the second shift had signed cards is of no importance. Representation elections are determined by absolute numbers, not percentages.

In short, the Board strained mightily to find that General Counsel had met his burden. Yet, it was curiously reluctant to credit undisputed facts which the company offered to prove that the employees would have been discharged in any event.

The company relied on a number of factors:

1. Lower productivity of the second shift compared with the first was documented in statistical evidence showing that the gap was widening in the period from August through *819 October 1984. In addition, Jose Algarin, the supervisor for the second shift who was also discharged, conceded that he had received complaints from Santalla about productivity. The ALJ observed that Algarin “appeared to me to be a credible witness.”

2. Larger management representation was available during the first shift. The record reflects that the first shift hours were 7:00 a.m. to 3:30 p.m. (App. at 144), when management personnel would be expected to be present in greater numbers than in the later hours of the second shift.

3. Security considerations were expected to be less during the daylight hours of the first shift.

4. Indirect costs would be reduced, for example electricity used to light the work stations and run the equipment would not be required for the second shift hours.

The Board listed these factors but dismissed them, arguing that they failed to explain why the company had deviated from its previous practice of considering individual seniority and qualifications. As noted earlier, the Board overlooked the fact that some employees had been retained because of special qualifications. Furthermore, the Board ignored the evidence that since becoming director of manufacturing in May, 1984, Brown met the need for workforce reductions at three of the employer’s plants by eliminating a shift.

By failing to answer these specific points, the Board seems to concede, implicitly at least, that the company had articulated adequate reasons for laying off some employees, if not particularly those on the second shift. The record compels that conclusion.

Undisputed evidence shows that early in 1984 the company had decided to expand its policy of using a network of independent fabricators to assemble blinds. Substantial reductions in management personnel, inventory, and amount of floor space had already taken place before August, when the company announced that further referrals of work to fabricators would be made. That decision made reductions in the number of employees inevitable.

The record demonstrates, again without contradiction, that in August, Shouldis and Brown discussed the necessity of reducing the work force. No employees were discharged then because the J.C. Penney business unexpectedly arrived at the point when the company otherwise would have implemented the cutback.

The records of Hunter Douglas’s operations in the months following the October discharges amply demonstrate that economic pressures were the actual motivation for the reduction in manpower. Although J.C. Penney sent in a few more orders after October 24, the volume of other new orders continued to decline. The company has not recalled any of the employees who were discharged in October, nor has it hired new employees to replace those lost by normal attrition.

Furthermore, Hunter Douglas did not find an increase necessary in its overtime assignments after the October discharges. In August overtime expenses were $5,280. That sum increased in September to $11,-521 when the J.C. Penney orders came in, and it fell to $5,550 in October. In the first month after the October discharges, the overtime dropped to $2,199, rose to $5,807 in December, and declined to $103 in January.

In the face of this uncontroverted data, it is difficult to understand how the same Board that piled inference on inference drawn from largely circumstantial evidence to find that General Counsel had met its burden, could then conclude that the company’s factual data did not satisfy the burden of establishing an independent business justification for the reduction in force.

Like the AU, I am skeptical that General Counsel presented a prima facie case. Accepting arguendo the Board’s determination that the burden had been met, however, I am persuaded that application of the same test to the employer’s claim cannot *820 but result in a conclusion that it was the much stronger of the two.

The weakness of the Board’s decision is perhaps most evident when an attempt is made to ferret out just what the Board thinks the employer should have done to meet its burden of procf. There is some indication, although not clearly stated, that the company should have followed its previous practice in laying off those with less qualifications and seniority. The Board, however, cites no authority for freezing a company’s procedures when legitimate business conditions justify a change. To the contrary, in Hardwick Co., Inc., 263 NLRB No. 47 (1982), the Board refused to find a violation of the Act where the employer, during an organizing campaign, changed its method of selecting employees for layoff from a subjective merit system to a purely seniority-based one.

Moreover, I suspect that if that previous practice had been followed, more union adherents would have been laid off than was the case here. In that event, the Board might well have complained that a more neutral method — perhaps laying off an entire shift without individual discrimination — would have been a permissible way of effecting the necessary reduction in force. One also wonders whether the Board would not be forced by its logic to say that choosing the first shift instead of the second likewise would have been a violation of the Act.

The Board also placed some significance on the timing, implying perhaps that even though a reduction in force was to be expected, it should not have come so soon. Even if the layoff could have been postponed for possibly a month, based on orders received, the Board did not limit its relief to that period of time. Reinstatement and back pay awards result in the employer being required to pay for two full shifts during a period in which, by no stretch of the imagination, would it have employed a work force of that size.

In short, I conclude that the record does not contain substantial evidence to support the Board’s rejection of the employer’s affirmative defense, 1 and accordingly I would deny enforcement of the reinstatement order.

Many of the same observations apply to the charge that Santalla's conversations coerced Nunez. We described the legal standards applicable to a claim of this nature in Graham Architectural Products Corp. v. NLRB, 697 F.2d 534, 537 (3d Cir. 1983). We noted that, as here, the AU was in a better position than the Board to determine the character of the interrogation. Adopting a pragmatic view of the workplace, we observed that supervisors and employees often work closely together and that during the course of the day they may discuss many subjects including unionization efforts. “To hold that any instance of casual questioning concerning union sympathies violates the Act ignores the realities of the workplace.” Id. at 541 .

To make out a violation, General Counsel must establish the necessary element of a tendency to intimidate or coerce. When interrogation occurs under casual circumstances and conveys no direct or implied threat or warning to the employee, the employer’s right “to communicate with their employees concerning an ongoing union organizing campaign” comes within the scope of the First Amendment. Id. at 541 .

I recognize that the test is objective— whether the interrogation “tends” to restrain or coerce rather than actually produces that result, Frito Lay, Inc. v. NLRB, 585 F.2d 62, 65 (3d Cir.1978). Nevertheless, it is interesting that at the time Santalla questioned Nunez, he apparently had not joined the union effort. He, however, later signed an authorization card on October 23, 1984. (App. at 212).

*821 The AU had the opportunity to hear testimony from both Nunez and Santalla, and was thus in a far better position to appraise the effects of the interrogation than the Board. Judgments based on demeanor are particularly important in questions of this nature. The Board failed to provide any satisfactory reason for its refusal to accept the AU’s findings that the questioning had not been coercive.

In sum, substantial evidence does not support the Board’s decision on the coercion issue. The determination not only is contrary to our holding in Graham Metals, but also is inconsistent with the Board’s own opinion in Rossmore House and Hotel Employees and Restaurant Employees Union, 269 NLRB No. 198 (1984). I would deny enforcement of this order as well.

. Based on the same record as that before the Board, the district court concluded that the employer had overcome the presumption in favor of a § 10(j) injunction by establishing the defense of economic necessity. The court rejected the Board’s contention that there was "reasonable cause” to believe the discharges were caused by anti-union animus.