Opposition — Houston Distribution Services, Inc. v. National Labor Relations Board

No. 78-490 Oy 22 |

pe

Supreme Court, U. S,

Bs ee 3°

978

R., CLERK

——— or

In the Supreme Court of the United States

OCTOBER TERM, 1978

HOUSTON DISTRIBUTION SERVICES, INC. AND

SOUTHWEST WAREHOUSE SERVICES, INC., PETITIONERS

Ve

NATIONAL LABOR RELATIONS BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT Of APPEALS FOR

THE FIFTH CIRCUI,

BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD

IN OPPOSITION

WADE H. MCcCREE, JR.

Solicitor General

Department of Justice

Washington, D.C. 20530

JOHN S. IRVING

General Counsel

JOHN E. HIGGINs, JR.

Deputy General Counsel

ROBERT E. ALIEN

Acting Associate General Counsel

NorRTON J. COME

Deputy Associate General Counsel

LINDA SHER

Assistant General Counsel

VIVIAN A. MILLER

Attorney

National Labor Relations Board

Washington, D.C. 20570

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

No. 78-490

HOUSTON DISTRIBUTION SERVICES, INC. AND

SOUTHWEST WAREHOUSE SERVICES, INC., PETITIONERS

V.

NATIONAL LABOR RELATIONS BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD

IN OPPOSITION

OPINIONS BELOW

The order of the court of appeals (Pet. App. A-48 to A-

62) is reported at 573 F. 2d 260. The decision and order of

the National Labor Relations Board (Pet. App. A-I to A-

47) are reported at 227 NLRB 960.

JURISDICTION

The judgment of the court of appeals was entered on

June 26, 1978 (Pet. App. A-63 to A-64). The petition for a

writ of certiorari was filed on September 22, 1978. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

QUESTIONS PRESENTED

1. Whether substantial evidence supports the Board’s

finding that petitioners violated Section 8(a)(3) and (1) of

(1)

the National Labor Relations Act by refusing to hire

three applicants for employment and by discharging four

employees in order to avoid bargaining with the union.

2. Whether, in the circumstances of this case, the Board

properly amended the complaint to include the parent

corporation of the wholly-owned subsidiary nained in the

unfair labor practice charge.

3. Whether the court of appeals properly found that no

prejudice resulted from the Administrative Law Judge’s

refusal to admit certain evidence.

STATUTE INVOLVED

The relevant provisions of the National Labor Re-

lations Act, 29 U.S.C. 151 ef seq., are set forth at Pet.

2-4.

STATEMENT

1. In December, 1974, the Company,' which provides

public warehouse services, purchased the assets of

Shippers Transportation Services (“Shippers”), including

a long term lease on the Spikewood warehouse. Shippers’

warehouse employees were represented under a collective

bargaining agreement by Teamsters Freight, Tank Line

and Automobile Industry Employees Local Union No.

988 (“the Union”). (Pet. App. A-22 to A-23.)

The Company began operating the Spikewood

warehouse on February |, 1975.2 The existing workforce

'The Board found that petitioner Houston Distribution Services,

Inc. (HDS) and its wholly-owned subsidiary, petitioner Southwest

Warehouse Services, Inc. (Southwest), are single-employer within

the meaning of the Act (Pet. App. A-3). Petitioners do not contest

that finding here. Unless otherwise noted, petitioners are individ-

ually & jointly referred to herein as “the Company.”

?After assuming control of the Spikewood facility, the Company

continued to honor Shippers’ obligations to customers. The major

customers and principal products stored continued as before and only

Pe

at the warehouse was required to file application forms by

February 3 for consideration for employment with the

Company (Pet. App. A-8).

The Union’s business agent visited Spikewood on

February 3. He asked Company Vice-President Daniel

Barrett if he knew that the Union represented the

warehouse employees and that there was an existing

contract. Barrett replied that he had no connection with

the Union and that, as far as he was concerned, the Union

was out. (Pet. App. A-9; Tr. 26-28, 45-46.)

Seventeen Shippers employees applied for jobs. Nine

were hired, and eight were refused employment, including

Eugene Plater, Emmet Lewis, and Phillip Ware. (Pet.

App. A-10 to A-15; Tr. 84-86, 554-555, 604.) During the

first week of February, Barrett hired six employees, who

responded to a Company newspaper ad, including four

college students with no experience in warehousing (Pet.

App. A-8 to A-9, A-20 n.12; Tr. 72, 135, 604). Two

additional employees were on the Company payroll when

Spikewood was acquired and Barrett hired Company

President Gary Stillwell’s son as a regular part-time

employee (Pet. App. A-9; Tr. 398-399, 555, 604, 614-615).

Thus, the workforce at the end of the first week of

February numbered eighteen employees.

On February 13, Barrett rejected the Union’s request

for contract discussions, stating that less than a majority

of the Spikewood workforce were formerly employed by

Shippers, that the majority of the workforce had no

known union affiliation, and that Southwest was not

required to bargain with a labor organization which did

not represent more than half of its employees (Pet. App.

A-18 to A-19). But see note 3, infra.

minor changes were made in the warehouse facility and the method of

operation. (Pet. App. A-22 to A-28; Tr. 69-70, 98, 122-128, 144-145,

182, 473-474.) “Tr.” references are to the transcript of the unfair labor

practice hearing.

On February 26 or 27, Barrett and another supervisor

learned that the Union had scheduled a meeting for the

first week of March and that Raymond Mills and

Nathaniel Jones, two former Shippers employees who had

been hired by the Company, planned to attend the

meeting (Pet. App. A-29 to A-30; Tr. 107-108, 232-235,

344-346, 348). On Tuesday, March 4, in the middle of a

pay period, the Company discharged Mills and Jones as

well as Wilford Davis and Curtis Mack, former Shippers

employees and members of the Union (Pet. App. A-28 to

A-29, A-32 to A-33; Tr. 115, 235-236). In discharging

Jones and Mills, Barrett said that he was terminating

them because “they” were not satisfied with their working

conditions (Pet. App. A-32; Tr. 235, 280).

2. The Board concluded that the Company refused to

hire three Shippers’ employees, Plater, Lewis, and Ware,

“because of a predesign * * * to decline to hire [Shippers]

employees beyond a number constituting a majority of the

work force” and thereby “avoid bargaining with the

Union” (Pet. App. A-19, A-21). In so holding, the Board

rejected the Company’s contention that the three were

denied employment because they could not report to work

immediately and because their applications were either

incomplete, ambiguous concerning the job sought, or

failed to show warehousing experience. The Ad-

ministrative Law Judge, whose decision was adopted by

the Board, pointed out that, although the Company

contended that it sought to hire the most qualified

employees, it did not check with former Shippers’

officials, including those hired by the Company, as to the

qualifications of individual Shippers’ warehousemen who

applied for work with the Company (Pet. App. A-17).

And, although the Company contended that the three

former Shippers employees’ applications did not disclose

their qualifications for the job, it hired, in their place,

college students with no previous experience in warehouse

work. Finally, all three applicants were available for work

no later than February 4 and other applicants were hired

who were not available until that date (Pet. App. A-19 to

A-12).

The Board further found that Davis, Mack, Mills, and

Jones were terminated “as a further step in [the

Company’s] effort to thwart the threat of union or-

ganization of its warehouse facilities” (Pet. App. A-32),

rather than because of poor work performance as the

Coinpany contended. The Law Judge pointed out that,

although the four employees’ alleged work deficiencies

“were detected shortly after hire” (Pet. App. A-30), and

there were no “specific work derelictions or acts of

misconduct at a time proximate to their terminations”

(Pet. App. A-29), the employees were discharged in the

middle of a pay period and shortly after the Company

found out about their continuing interest in union

representation (Pet. App. A-32). The Law Judge also

relied on Vice-President Barrett's allusion to Jones’ and

Mills’ continuing interest in the Union as grounds for

their discharge (Pet. App. A-32).

Accordingly, the Board concluded that the Company

violated Sections 8(a)(3) and (1) of the Act, 29 U.S.C.

158(a)(3) and (1), by refusing to hire Plater, Lewis and

Ware, and by discharging Mills, Jones, Davis and Mack

(Pet. App. A-33).

Additionally, the Board concluded that the Company

violated Section 8(a)(5) and (1) of the Act, 29 U.S.C.

158(a)(5) and (1), by refusing to recognize and bargain

with the Union (Pet. App. A-33). The Board found that

the Company was a successor employer to Shippers, and

that, at the inception of operations, a majority of its

employees had been employees of Shippers who were

represented by the Union.} (Pet. App. A-24 to A-28.)

3At the end of the first week of Febuary there were 18 employees in

the workforce: nine Shippers employees, 6 new employees hired as a

result of newspaper advertising, 2 employees already on the Company

The Board ordered the Company, inter alia, to offer

employment to Plater, Lewis, and Ware, to reinstate the

four discriminatorily discharged employees, and to

bargain with the Union (Pet. App. A-34 to A-35).4

3. The court of appeals upheld the Board's decision

and enforced its order. The court found that substantial

evidence supports the Board’s finding that the Company

was motivated by anti-union animus in refusing to hire

the three applicants and in discharging the four union

adherents (Pet. App. A-54 to A-56, A-57). The court

noted that the fact that the Company “had good cause to

fire the four workers * * * is not enough to vitiate the

Board’s finding unless the good reason was a motivating

cause of the discharge” (Pet. App. A-57).

The court found no error in the amendment of the

complaint to include Southwest. It noted that “the

addition of the correct corporate entity is not so

completely outside the original charge that the Board

could be said to have initiated a proceeding on its own

motion” and observed that working men filing an unfair

labor practice charge “are not required to wander the

maze of corporate structure” (Pet. App. A-53).

payroll, and the son of the Company president. Since the nine

Shippers employees did not constitute a majority of the 18 employees

hired, the Company considered that it had no obligation to recognize

the Union (Pet. App. A-18 to A-19). However, since Section 2(3) of

the Act, 29 U.S.C. 152(3), excludes from employee status any

individual employed by “his parent or spouse,” President Stillwell's

son was not properly included in the unit. Therefore, there were only

17 rank-and-file employees, and the nine former Shippers employees

constituted a majority. (Pet. App. A-23 to A-24.)

4At the Board hearing, petitioners moved to dismiss the complaint

on the ground that the charge and complaint named only HDS and

that the alleged unfair labor practices related solely to Southwest.

The Judge denied the motion because HDS and Southwest constitute

a single employer and amended the complaint sua sponte to include

Southwest. (Pet. App. A-2 to A-5; Tr. 13-17, 497-500, 587-588.)

The court did find that the Law Judge committed error

in refusing to accept the testimony of a white employee,

Bret Griffin, concerning the job performance of black

employees on the ground that the testimony of the former

would be likely to be animated by racial prejudice.

However, the court found that the Company was not

prejudiced thereby “because of the cumulative nature of

the proposed testimony” (Pet. App. A-59).

ARGUMENT

1. Petitioners contend (Pet. 6-7) that the instant case

presents a conflict with the First Circuit as to the standard

to be applied in discriminatory discharge cases where

there is evidence that an employer had both proper and

improper motives for the discharge. However, the Board,

upheld by the court of appeals, found that the Company

discharged the four employees solely to deter the

unionization of its warehouse facilities and then

attempted to justify the discharges with pretextuous

reasons “unworthy of belief” (Pet. App. A-31). Accord-

ingly, this case presents no occasion to resolve any

difference between the First and the Fifth Circuits as to

the proper standard to apply in assessing the lawfulness of

a discharge in mixed-motive cases.

Similarly, the Board, upheld by the court below, found

that the sole reason for denying employment to the three

applicants was to avoid bargaining with the Union. Thus,

assuming arguendo petitioners are correct in contending

(Pet. 8) that Howard Johnson Co., Inc. v. Hotel

Employees, 417 U.S. 249 (1974), stands for the proposi-

tion that a refusal of a successor to hire a predecessor's

employees is lawful unless solely motivated by anti-union

considerations,’ the Board found that to be the case here.

‘There is, however, no merit to that contention. As the court of

appeals correctly noted the sentence from Heward Johnson quoted

by petitioners (Pet. 8) was not “an attempt to formulate a test for

Thus, the question actually presented. is whether the

Board improperly rejected petitioners’ assertion that the

failure to hire the three applicants and the discharge of

the four employees were motivated by legitimate

economic considerations. Those are merely evidentiary

matters that do not warrant review by this Court.

Universal Camera Corp. v. National Labor Relations

Board, 340 U.S. 474, 490-491 (1951).

2. Contrary to petitioners’ contention (Pet. 9), the

court of appeals did not uphold the Board’s action in

amending the complaint by invoking any broad principle

that a parent company is always answerable for its

subsidiary. Rather, the court merely upheld the Board’s

finding, which petitioners do not contest here, that HDS

and Southwest were, in fact, a single employer for the

purposes of the Act. Thus, the case raises no question

concerning the propriety of administrative action based

only on common ownership of corporate entities.

3. Petitioners’ contention (Pet. 7-8) that the error of the

Administrative Law Judge in refusing to admit the

evidence of Bret Griffin (supra, page 7) required dismissal

of the complaint raises only the issue whether the court of

appeals abused its discretion in determining that the error

was not prejudicial because the disallowed testimony was

cumulative. See National Labor Relations Board v.

Safway Steel Scaffolds Co. of Georgia, 383 F. 2d 273, 277

(Sth Cir. 1967), cert. denied, 390 U.S. 955 (1968). That

burden of proof in successorship cases (Pet. App. A-54),” but merely

gave an example of conduct which would be unlawful. The court

added (ibid.):

Indeed, after citing with approval two cases, neither of which

adopts a “sole motivation” test, Mr. Justice Marshall further

states, “There is no suggestion in this case that Howard Johnson

in any way discriminated in its hiring against the former Grisson

employees because of their union membership, activity, or

representation.” [417 U.S. at 262 n.8.]

factual question is not appropriate for review by this

Court.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WADE H. McCRreE, Jr.

Solicitor General

JOHN 3. IRVING

General Counsel

JOHN E. HIGGINS, JR.

Deputy General Counsel

ROBERT E. ALLEN

Acting Associate General Counsel

NorTON J. COME

Deputy Associate General Counsel

LINDA SHER

Assistant General Counsel

VIVIAN A. MILLER

Attorney

National Labor Relations Board

NOVEMBER 1978

DOJ-1978-11