Petition — Barney's Club, Inc. v. National Labor Relations Board

Supreme Court brief1981

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8Q-10838 JAN 2 1981

MICHAEL RODAK, JR., , CLERK

In the Supreme Court of the

United States

OcroBer TERM 1980

Barney’s Cuvs, Ine.

Petitioner,

NaTIonaL Lasor ReEvations Boarp

Respondent.

Sparks Nuacet Ine.

d/b/a Jonn AscuaGa’s NUGGET

Petitioner,

NaTionau Lasor RELATIONS Boarp

Respondent.

Petition for a Writ of Certiorari

to the United States Court of

Appeals for the Ninth Circuit

Wituram W. Wertz

25th Floor

One Embarcadero Center

San Francisco, California 94111

415-398-3344

Counsel for Petitioners

Counsel of Record

Of Counsel:

Severson, Werson, Berke & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111

SSS

BORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET, GAN FRANCISCO 84i08

QUESTIONS PRESENTED

1. Whether there is a conflict between the refusal to bar-

gain decision sought here to be reviewed and decisions on

the same matter of federal law of other Courts of Appeals.

2. Whether the Court below was in error in holding that

the National Labor Relations Board (the Board) may ig-

nore federal law and N.L.R.B. v. Local U. 103, Int.’l Ass’n.

etc., 434 U.S. 335 (1978), and for policy reasons establish a

presumption based upon two other presumptions.

3. Whether the Board may establish a rebuttable pre-

sumption to which is given mere lip service and which in

actual practice as applied by it is an absolute and irrebut-

table presumption resulting in denial of due process.

4. Whether the Board and the Court of Appeals were

in error in holding that Petitioners’ no-solicitation rules

are too broad under the National Labor Relations Act (the

Act), notwithstanding the overriding interests of the State

of Nevada in regulating its gaming industry where the

State gaming regulations create “special circumstances”

which make Petitioners’ broad rules permissible under

the Act.

5. Whether the Board and Court of Appeals erred, cre-

ating a conflict among the Courts of Appeal, by failing to

consider alternative means of communication by the Union

which would lessen the degree of “special circumstances”

needed to uphold Petitioners’ no-solicitation rules.

SUBJ ECT INDEX

Page

Questions Presented ................... i

Opinion Below 2

RAN To Sone ORE EE A 2

Constitutional and Statutory Provisions Involved ........ 2

Statement of the Case ..... 4

Reasons for Granting the Writ .....................- 6

The Decision Below Conflicts with the Decisions of

Other Courts of Appeal and this Court as to the Ap-

plication of the Presumption of a Union’s Continuing

Majority Status ET Ee oer

The Board’s Derivative Presumption Is Contrary to

Federal Law, Labor Policy and Is Impermissible .....

The Board’s Presumption Is One of Irrebuttable Force

and Constitutes a Denial of Due Process ......................

Special Circumstances Exist in the Nevada Gaming In-

dustry Which Require Broad No-solicitation Rules

and Make Such Rules Permissible Under National

RET AR NT AT CITE Fe aE

The Decision Below Conflicts With Other Courts of

Appeal as to Consideration of Alternative Means of

Communication by the Union; Those Means Existed

Which Would Lessen the Degree of Special Circum-

stances Needed to Support Petitioners’ No-solicita-

I I i

MEATS RR oe AN CORD ER PA moe,

Appendix

TABLE OF AUTHORITIES CITED

Pages

Ariasi v. Orient Ins. Co., 50 F.2d 548, 582-554 (9th Cir.

S| Se eA 7

Amalgamated Meat Cutters, etc., Local No. 36% v.

N.L.R.B., 435 F.2d 668 (9th Cir. 1970) ....0222222. 28

Automated Business Systems v. N.L.R.B., 497 F.2d

262 (Gth Cir. 1976) ccc ceecccbeccdcncenee % ee

Barney’s Club Incorporated, 227 NLRB 414 (1976) .... 2, 20

Bellwood General Hospital v. N.L.R.B., ......F.2d ........

Se ND sis vss deveialasshnsianpuitiiasdcuaciicaboeis 11

Diamond Shamrock Co. v. N.L.R.B., 443 F.2d 52 (3rd

SIS PRM peek ai oat censclenomidalibibaabateo aateenebactebe 23, 25, 26, 27

GTE Lenkurt Inc., 204 NLRB 921 (1978) .....0.00.2........ 23

Hall v. Atchison, Topeka & Santa Fe Railway Com-

pany, 349 F.Supp. 326, 330 (D. Kan. 1972) ................ 14

Harvey’s Wagon Wheel, Inc. v. N.L.R.B., 550 F.2d

DR Rs BPTI ictal aian tts ciconthsadsisehes poskudancbole 16

Hormel v. Helvering, 312 U.S. 552, 560, 61 S.Ct. 719,

UE UR soc siicdiplictes bd sicckdeecptenipinedacoinubaiieecad tebekincnaeediaediioetide 16, 17

Ingress-Plastene, Inc. v. N.L.R.B., 430 F.2d 542 (7th

I IIE isocratic sclenigc nce ics asa dnl oetioshguinonaleas Agua 11

Korn Industries, Inc. v. N.L.R.B., 389 F.2d 117 (4th

gs |) EP UMRTIED PRCRDE ee MUURD bens ces COMET OSE He OURO a 26

Jim Kelley’s Tahoe Nugget, 227 NLRB 357, 363

2 | ROSA RERS TEAERER AIAN cro Meme saeD ResnEIS SP SC A ONORE 12,13

Local Lodge No. 1424 v. N.L.R.B., 362 U.S. 411 (1960)... 17

Linden Lumber Division, Summer & Co. v. N.L.R.B.,

GE IR COUN easiest ote ities eesabiiceconciacenillintios 18

Lodges 1746 & 743, Int. Ass’n of Mach. & Aero Wkrs.

v. N.L.R.B., 416 F.2d 809 (D.C. Cir. 1969) ................ 11,12

Looney v. Metropolitan R. Co., 200 U.S. 480, 26 S.Ct.

IR, I OD Aeshna ign ls calube sles nid cain aah iain 13

Pages

Manhattan General E. Co. v. Commissioner of Int.

Rev., 297 U.S. 129, 56 S.Ct. 397 (1936) ........2........-.-0- 17

Manning v. Insurance Co., 100 U.S. 693, 698 (1880)... 13

May Department Stores, 59 NLRB 976 (1944), enf’d

as modified, 154 F.2d 533 (8th Cir. 1945), cert. denied,

Re A as CRED hc iipcnsschsarcaimesdoniicinacinsuoisidatnoroaten 19

McDonnell Douglas Co. v. N.L.R.B., 47 2 F.2d 539 (8th

RIA. PE OED: ikiilegh bce sbcrobcc pected ice * 21

National Cash Register Company v. N.L.R.B., 494 F.2d

Se TI UES a a 11

National Steel Corp. v. N.L.R.B., 415 F.2d 1231 (6th

Gy SRR RRE SRR 5S A ld a eee 26

N.L.B.B. v. Babcock & Wilcox, 351 U.S. 108 (1956) ....25, 26

N.L.B.B. v. Alvin J. Bart and Co., 598 F.2d 1267 (2nd

Ss | Re Rar SP ean oh eM ON OORCY 1 AERoOOOO 8,9

N.L.R.B. v. Beth Israel Hospital, 437 U.S. 483, 98 S.Ct.

Se eI ica heath dec insnsaiieatcatenaaindibnnniesetorinipecsnoqninsudiel 19, 27

N.L.R.B. v. Gissel Packing Co., 398 U.S. 575 (1969) ...... 18

N.L.R.B. v. Heyman, 541 F.2d 796 (9th Cir. 1976) ........ 17

N.L.R.B. v. Richard W. Kaase Company, 346 F.2d 24

EE, ___ | pa Ra AOS oe oo A SRP 10

N.L.R.B. v. LeTourneau Co. of Georgia, 324 U.S. 793

SITES lclasainicescn chen ihsdamhcdbcilasdies—abaeniieeacdosinaaiadidoniedetahehtonn 24

N.L.R.B. v. Local U. 103, Int’l Ass’n Bridge, ete., 434

i IE sists chim sebiicichibi heii cjeessbiabtatiatinitnidites 7,8

N.L.R.B. v. Magnavox Company of Tenn., 416 U.S.

ERR IRERE TSC REA SSD ca Cree Ee Se 27

N.L.R.8. v. Nu-Southern Dyeing & Finishing, Inc., 444

po BS RE: 4 RRR Ss Peneiotrs SANS sO 12

N.L.R.B. v. Randle-Eastern Amb, Serv., Inc., 584 F.2d

ee I iia RAID setcclabtaiid chi inceickstnniestaidShenckeielateinewets 10

N.L.R.B. v. Rockwell Mannfacturing Co. (DuBois

Div.), 271 F.2d 109 (3rd Cir. 1959) .................... 24, 25, 26, 27

Pages

N.L.R.B. v. Tahoe Nugget, Inc. and Nevada Lodge, 584

F.2d 293 (9th Cir. 1978), cert. denied, 442 U.S. 921.

(1979) 6, 7

N.L.R.B. v. United Aircraft Corp., 324 F.2d 128 (2nd

Cir, 1963) , z 2,6

N.L.R.B. v. United Steelworkers of America, 357 U.S.

Sea) OO Wears NN CRD cisco ivsesctcndeeiedieece 21, 25, 26

Nevada Lodge, 227 NLRB 368, 374 (1976) a 12,13

Otis Elevator Company v. Yager, 268 F.2d 137, 144

(8th Cir. 1959) ........... 13

Peyton Packing Company, 49 NLRB 828 (1940) ........ 19, 26

Ref-Chem Company v. N.L.R.B., 418 F.2d 127, 130-131

NE RSI SARC RUC i Mn SOONER COO IO 7

Republic Aluminum Company v. N.L.R.B., 394 F.2d

I I a ai acta en Sea wera Sabhllenincnine | 26

Republic Aviation Corp. v. N.L.R.B., 324 U.S. 793

a a ich aban daia he nla ns apieiomiibtanibanaiestionen 19, 26

Retired Persons Pharmacy v. N.L.R.B., 519 F.2d 486

I NS TN i al 15

J. W. Ringrose v. W & J Sloane, 266 F.2d 402, 404

(E.D. Pa. 1920), affd. 272 F. 445 (3rd Cir. 1921) ......13, 14

Sahara-Tahoe v. N.L.R.B., 533 F.2d 1125 (9th Cir.

ER SR a AS 9c pe 7

Sahara-Tahoe Corp. v. N.L.R.B., 581 F.2d 676 (9th

Cir. 1978), cert. denied, 442 U.S. 917 (1979) ............... 28

St. John’s Hospital and School of Nursing, Inc., 222

RES EA RE ASSP ce Oe ON 19

San Diego Trades Council v. Garmon, 359 U.S. 243

OC Se cee Ree Ce 23

Sears Roebuck & Co, v. Carpenters, 436 U.S. 180

(AEE ARR RR a i SR ee A 23

Smith v. Fidelity Casualty Company of New York, 261

F.2d 460, 462 (Sth Cir. 1966) nc enenacecccsesecsnsecencesee 13

?-*.

| Pages

Smith v. Pennsylvania R. Co., 239 F. 103, 104 (2nd

Cir. 1917) » 14

Sparks Nugget, Inc., 230 NLRB 275 (1977). 2, 20

Star Mfg. Co., Div. of Star Forge, Inc. v. N.L.R.B.,

536 F.2d 1192, 1196 (7th Cir. 1976) idiahnttsachina 11

Teamsters, Local 24 v, Oliver, 358 U.S. 283 (1959)...... 23

Time-O-Matic v. N.L.R.B., 264 F.2d (7th Cir. 1959)... 26

US. v. Ross, 92 U.S. 281, 23 L.Ed. 707 (1876)................ 13

W & W Steel Co. v. N.L.R.B., 599 F.2d 934 (10th Cir.

1979) ah 9, 10

vii

MISCELLANEOUS AUTHORITIES

Pages

U.S.C., Constitution, Amendment 5.... 2

28 U.S.C. § 1254(1) ............. ba 2

29 US.C.:

ES) RRO, RETR aae Speen wr 3,5

Cae i sadeaattenenie A TDN SP dah 3

RIE te cso s coh neces liaiitonaiiipeseenensgiotaenhanteavoheinee 3,5

EN iieicsapeipcicscctnledssaduabhosnaaaiyestasbotceacteenelbcets 3,5

a a alpine 18

1 BRIDES ERTS a oat EAP eet esy BB) 3,5, 15

National Labor Relations Act, [61 Stat. 136, 73 Stat.

519, 29 U.S.C. § 151, et seq. ]

I I ii iiss sodas snap ennepondidlininsoakansabacabiaieenalevens 13

I oa se dh cnainnasbeccoonbaion 13

TERRES iy BORE Alr Weacie WY BU ther ars ieee 13

EE ER CT ie VEE UR LT SRE: 13, 15

ESE RIDES cs SSD sear Pen Eom AAA 18

PGE EE EISSN ita ak a PRESETS COREE A et OD 13, 15

99 Comm Hee. SERB (1947 We. .nn..ekcncencereedocorssecccscesecesveetesh 18

Nevada Gaming Commission and State Gaming

Control Board

I I i stecnensbanehnmlaenbcabeseshiaainnesinod 22

IE pA RES Avan nr RA OER De 22, 23

RSA ones Maree IER 22

RS SE SEE S EDRRR Se oeae ONR TSE SOT SE 22

Nevada Gaming Control Act

III oss. sarnsccnitcetnenspcgp viaeenaijinonenmiienniehapeanian ~- 22

as semble 22

ES TETANUS, SES ICO TORII 22

I i saci caahctnlaiscein late hdeensedintlaniiononibicieiuie 22

EI SIIIIIITTE 1. isciscoinn hanthnnielishcoheaehnentaisenvielins 22

McCormick, Evidence, § 309, p. 641-0202... eeceeeeeeeee 7

Federal Rules of Evidence, Rule 301 «2.20... ese 15, 16

Freedom of Information Act (5 U.S.C. § 551, et seq.) 16

In the Supreme Court of the

United States

Octoser Term 1980

Barney’s Cuvs, Inc.

Petitioner,

NATIONAL Lasor Retations Boarp

Respondent.

Sparks Nuccet Inc.

d/b/a JoHn Ascuaca’s NUGGET

Petitioner,

NaTIONAL LAspor RELATIONS BoarpD

Respondent.

Petition for a Writ of Certiorari

to the United States Court of

Appeals for the Ninth Circuit

The Petitioners, BARNEY’S CLUB, INC. (Barney’s)

and SPARKS NUGGET, INC. d/b/a JOHN ASCUAGA’S

NUGGET (Sparks), respectively, pray that a Writ of Cer-

tiorari issue to review the judgments and opinion of the

United States Court of Appeals for the Ninth Circuit.'

Judgment as to Barney’s was entered on August 18, 1980.

Judgment as to Sparks was entered on September 12, 1980.

1. Hotel-Motel-Restaurant Employees and Bartenders Interna-

tional Union, Local 86 AFL-CIO intervened in those proceedings.

OPINION BELOW

The opinion of the Court of Appeals is reported at 623

F.2d 571. A copy of the opinion appears in the Appendix

hereto. The decisions and orders of the Board are reported

at 227 NLRB 414 (Barney’s) and 230 NLRB 275 (Sparks).

Copies of those decisions and orders appear in the Appendix

hereto.

JURISDICTION

The opinion of the Court of Appeals was filed on May 27,

1980. A timely petition for rehearing with suggestion for

rehearing en banc was denied on July 14, 1980. A copy of

that order appears in the Appendix hereto. On August 18,

1980 judgment was entered as to Barney’s; and judgment

was entered on September 12, 1980 as to Sparks. Justice

Rehnquist on November 7, 1980 and November 26, 1980

granted timely applications by Barney’s and Sparks for

filing their petitions to January 2 and 4, 1981, respectively.

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

U.S.C., Constitution, Amendment 5:

No person shall be held to answer for a capital, or other-

wise infamous crime, unless on a presentment or indictment

of a Grand Jury, except in cases arising in the land or naval

forces, or in the Militia, when in actual service in time of

War or public danger; nor shall any person be subject for

the same offence to be twice put in jeopardy of life or limb;

nor shall be compelled in any criminal case to be a witness

against himself, nor be deprived of life, liberty, or property,

without due process of law; nor shall private property be

taken for public use, without just compensation.

United States Code, Title 29:

§ 158(a)(1): It shall be an unfair labor practice for an

employer to interfere with, restrain, or coerce employees in

the exercise of the rights guaranteed in section 7;

§ 158(a)(3): It shall be an unfair labor practice for an

employer by discrimination in regard to hire or tenure of

employment or any term or condition of employment to en-

courage or discourage membership in any labor organiza-

tion;...

§ 158(a)(5): It shall be an unfair labor practice for an

employer to refuse to bargain collectively with the repre-

sentatives of his employees...

§ 160(b): Whenever it is charged that any person has

engaged in or is engaging in any such unfair labor practice,

the Board, or any agent or agency designated by the Board

for such purposes, shall have the power to issue and cause

to be served upon such person a complaint stating the

charges in that respect, and containing a notice of hearing

before the Board or a member thereof, or before a desig-

nated agent or agency, at a place fixed, nor less than five

days after the serving of said complaint: Provided, That no

complaint shall issue based upon any unfair labor practice

occurring more than six months prior to the filing of the

charge with the Board and the service of a copy thereof

upon the person against whom such charge is made... Any

such proceeding shall, so far as practicable, be conducted in

accordance with the rules of evidence applicable in the dis-

trict courts of the United States under the rules of civil pro-

cedure for the district courts of the United States, adopted

by the Supreme Court of the United States... |

STATEMENT OF THE CASE

From 1960 to December 9, 1974, Sparks was a member

of a multi-employer group known as the Reno Employers

Council (Council). From an unspecified date in the period

between 1963 to 1965 through August 30, 1974, Barney’s

was a member of the Council. By August 30, 1974 and

December 9, 1974, Barney’s and Sparks respectively had

withdrawn their memberships from the Council. During

their membership, each Petitioner was represented by the

Council in collective bargaining and were parties to the

Council’s multi-employer collective bargaining agreement

with Local 86 of the Hotel-Motel-Restaurant Employees In-

ternational Union (the Union). Thereafter, each Petition-

er’s status was that of a single employer unit.

Based upon certain information which came to their re-

spective attention, the managers of each Petitioner had a

good faith doubt as to whether the Union continued to rep-

resent a majority of their employees. This prompted the

withdrawal from the multi-employer unit.

There had never been a representation election, either in

the larger unit or the individual units. By letter, on the

dates mentioned, each Petitioner informed the Union of its

withdrawal from the Council and the multi-employer unit,

and that they were terminating the existing collective bar-

gaining agreement effective as of its end of the term.

Subsequently, the Union’s attorney wrote each Peti-

tioner requesting that individual bargaining take place.

Petitioners’ attorney responded on behalf of each that they

had a genuine doubt that the Union represented an un-

coerced majority in an appropriate unit and urged the Un-

ion to petition for an election to demonstrate whether in

fact they represented a majority. Petitioners, through their

attorney, also offered to cooperate to expedite an election.

- =

The response of the Union was to file a refusal to bargain

and other charges against each Petitioner.

Thereafter, a complaint issued and each matter was

heard before an Administrative Law Judge. Barney’s was

heard by Judge Taplitz and the Sparks was heard by

Judge Gilbert. Before these trials and before the Regional

Director issued the complaints, Petitioners filed petitions

for separate unit elections. The Regional Director refused

to process them on the ground that the charges blocked

such elections. The Union refused to withdraw the charges

or to proceed to an election.

In Barney’s Judge Taplitz concluded that by refusing to

bargain and by promulgation and enforcement of its no-

solicitation rules, Barney’s violated the National Labor Re-

lations Act (the Act) [29 U.S.C. $§ 158(a)(1) and (5)]. In

Sparks, Judge Gilbert concluded that by refusing to bar-

gain, by promulgation and enforcement of its no-solicitation

rules, creation of an employees council, unilateral insurance

progran. changes and disciplining employees Launius and

Dyer, Sparks had violated the Act. [29 U.S.C. §§ 158(a)(1),

(2), (3) and (5)]. Both judges’ refusal to bargain findings

were based upon a presumption that the Union continued

to represent a majority of each Petitioners’ employees by

reason of the multi-employer unit and that by derivation

the presumption applied to the new single employer units.

Each judge concluded that Petitioners had not rebutted the

presumption, notwithstanding the plethora of evidence Peti-

tioners presented or attempted to present to rebut the so-

called rebuttable presumption. Both judges also found

Petitioners’ no-solicitation rules too broad and refused to

apply the “special circumstances” doctrine which would

have validated such rules under the Act.

A three-member panel of the Board affirmed Judge Tap-

litz in Barney’s. A different three-member panel affirmed

Judge Gilbert in Sparks, but modified his determinations

as to the Sparks employees council. The Court below en-

foreed the Board orders in both cases with modification

regarding the no-solicitation rules. Review and reversal of

the erroneous findings of both judges, the Board and Court

below is sought by Petitioners regarding their no-solicita-

tion rules and their refusal to bargain with the Union.

REASONS FOR GRANTING THE WRIT

The Decision Below Conflicts with the Decisions of Other Courts

of Appeal and this Court as to the Application of the Pre-

sumption of a Union's Continuing Majority Status.

The decision of the Court below is in conflict with the

Second, Fourth, Fifth, Sixth, Seventh, Eighth, Tenth and

District of Columbia Circuits as well as this Court.

The Court below concedes:

_ “We recognize the force of [petitioners] contention

that the Board has accorded too much weight to the

presumption in these cases. This issue involves an im-

portant and difficult question which is of current na-

tional interest in the labor relations field, [Petitioners]

cite cases in other circuits which may ‘ave found the

presumption rebutted upon similar or even weaker

evidence than was presented in these cases. (fn.) [The

footnote cites the cases from the eight other Circuits.]”

(Emphasis added, App. pp. 14-15)

Further, the Court below “accept[ed] arguendo that a con-

flict exists on the issue” (App., p. 15).

Petitioners urge, as do petitioners in companion Case No.

80-660 pending before this Court, that N.L.R.B. v. Tahoe

Nugget, Inc.,d/b/a Jim Kelley’s Tahoe Nugget and Nevada

Lodge, 584 F.2d 293 (9th Cir. 1978), cert. denied, 442 U.S.

921 (1979) and Sahara-Tahoe Corp, v. N.L.R.B., 581 F.2d

767 (9th Cir. 1978), cert. denied, 442 U.S. 917 (1979), should

not control this Court’s determination, The instant Petition

discloses that as opposed to the Tahoe Nugget, Nevada

Lodge and Sahara-Tahoe decisions, the instant cases in-

volve separate issues.? The conflict conceded by the court

here was not conceded in those earlier decisions, This “im-

portant and difficult question . . . of current national inter-

est” warrants the careful attention and consideration of

this Court.

In adopting the Board’s presumption approach, the Court

below ignored its own precedent, Ariasi v. Orient Ins. Co.,

50 F.2d 548, 552-554 (9th Cir. 1931) in which the Court

held that a presumption is not evidence and has no pro-

bative force. Yet, the Court below based its approval of

the Board’s hydra-headed presumption on policy consid-

erations. Appendix p. 15. Policy considerations cannot

override the law. The principal reason courts recognize a

presumption is probability. Ref-Chem Company v. N.L.R.B.,

418 F.2d 127, 130-131 (5th Cir. 1969) ; MeCormick, Evidence,

§ 309, p. 641. Even if policy considerations are to control

then this Court’s decision in N.U.R.B. v. Local U, No. 103,

International Ass’n of Bridge, Structural and Ornamental

Iron Workers, AFL-CIO, 434 U.S. 355, 54 L.Ed. 586, 98

S.Ct. 65 (1978) should prevail, Clearly, the lower court

and Board determinations are in conflict with that case. In

Local U. No. 103 this Court upheld as “prevailing” the

federal:

“statutory policy that a union should not purport to

act as collective bargaining agent for all unit em-

ployees, and may not be recognized as such unless it is

2. Justice White would have granted certiorari in Tahoe Nugget

and Nevada Lodge. 442 U.S. 921. Further, several cases cited by

the lower court here were not decided at that time. See, e.g., W &

W Steel v. N.L.R.B., 599 F.2d 934 (10th Cir. 1979).

the voice of the majority of employees in the unit” 434

US. at 344 (Emphasis added).

Here, the “voice of the majori‘~-” has been silenced by the

Board,

The evidence which the Board, with Court approval,

ignored included: (1) that the Union through its trustee

publicly stated the Union represented only 20% of the em-

ployees in the Tahoe-Reno area, (2) statements by

employees that they were dissatisfied with the Union, (3)

the Union mounted a desperate membership drive while

they were demanding continuing recognition, (4) high

employee turnover, (5) reports of employees dissatisfac-

tion with the Union, (6) reports of the Union’s inactivity,

(7) no dues checkoff, (8) low level of membership among

Petitioners’ employees, (9) there never had been a repre-

sentation election, (10) the Union had never been certified,

(11) admissions by the Union’s representative of the

Union’s lack of support, and (12) the change from a multi-

employer unit to a single employer unit. (App. pp. 57-60;

122-126) In Barney’s the Union’s ex-president Mr. Staff

testified that the Union’s membership was decreasing in

1974. Further, Staff testified that none of its members or

employees of Barney’s or any Lake Tahoe establishment

attended a meeting of the Union in the spring of 1974 re-

garding the expiring coatract and decreasing membership

(App. pp. 57-60).

In N.L.R.B. v. Alvin J, Bart and Co., 598 F.2d 1267 (2nd

Cir. 1979) the Second Circuit rejected the Board’s use of the

presumption of majority status in factual circumstances

substantially weaker than those relied upon by the Peti-

tioners here. The Union had prevailed in a Board conducted

election. After almost two vears of bargaining without

agreement, the company withdrew recognition. A super-

visor circulated a petition among three-fourths of the em-

ployees, stating that they did not want the union to have

their names and addresses. The company then refused —

to provide the union with the names and addresses of

employees and unilaterally granted substantial wage in-

creases. Despite these Board findings, the Court found that

the company had a “serious good faith doubt of the

union’s majority.” In so ruling, the Court relied upon the

closeness of the vote, the large turnover in employees, and

a statement by a union official of the lack of support from

employees. Here, each Petitioner relied on factors similar

to those in Alvin Bart, as well as several additional factors.

In W & W Steel Co. v. N.L.R.B., 599 F.2d 934 (10th Cir.

1979), the situation is on all fours with the instant cases.

Here, the Petitioners properly withdrew from a multi-em-

ployer unit and each became a separate, independent unit.

In W & W Steel, the employer bought a single plant which

was part of a multi-plant unit. It questioned the union’s

majority status in the single plant. The union and the

Board took the position, as in the instant cases, that the

union’s majority in the single plant was presumed to exist

because the union had been certified as the bargaining rep-

resentative following an election in the multi-plant unit.

The Tenth Circuit found the emplover had a reasonable

doubt of the union’s majority status and denied enforce-

ment of the Board’s bargaining order. The Court pointed

out that the election in the multi-employer unit had taken

place two years and seven months before the employer’s

takeover of the plant. In the instant cases, there never was

an election in any unit. Each Petitioner here joined an

employer association many vears ago and by reason there-

of automatically became a party to a multi-employer con-

tract between that association and the Union.

Even the dissent in W & W Steel recognizes the conflict

among the circuits “acknowledg[ing] that this presumption

’*%

has not received universal acclaim”, and cites V.U.R.B. v.

Tahoe Nugget, Inc., 584 F.2d 293, n. 4, (9th Cir. 1978),

which the Court below relied on principally to summarily

enforce the Board orders. The majority in W é W Steel

place the Tenth Circuit with the Second, Fourth, Fifth,

Sixth, Seventh, Eighth and District of Columbia Circuits,

and contrary to the Ninth, holding that a Board-created pre-

sumption doesnot rise to the level of substantial evidence.

The Fifth Cireuit in N.U.R.B. v. Randle-Eastern, 584

F.2d 720 (5th Cir. 1978) held, denying a bargaining order:

“The Company need not have conclusive proof that a

majority of the employees do not support the Union

. . . » The Board’s determination otherwise rested

on presumptions we deem inapplicable, on the rejection

of inferences we consider permisible, and on an assump-

tion that Union’s loss of support, if any, [was based

on factors] we have determined to be entirely lawful.”

at 729-730.

The Sixth Circuit in N.L.R.B. v. Richard W. Kaase

Company, 346 F.2d 24 (6th Cir. 1965), in dealing with the

presumption of a union’s continuing majority status, held

that withdrawal from a multi-employer unit invalidated

the presumption. The Court said there could be no pre-

sumption of continuance of a union’s majority status as to

a single employer after a year following certification of the

union in a multi-employer election of which the employer

had been a part. The Court held that before the Board

could find the employer in violation of the Act by its refusal

to bargain, it must find that at the time of the refusal

the union in fact enjoyed a majority status. This burden

of proof, said the Court, was upon the General Counsel.

It was there stated (at 31):

.. . the ambiguity inherent in the multi-employer

election here relied on vitiates its efficacy to prove a

majority as to any single employer. Before the con-

tinuance of the fact of majority support can be pre-

sumed, the original existence of that fact must be

established.

In Ingress-Plastene, Inc. v. N.L.R.B., 430 F.2d 542 (7th

Cir. 1970), denying enforcement, the Seventh Circuit in con-

sidering the objective considerations which there led the

employer to question the union’s continuing majority

status, said (at 547):

Although the Board attacks each of the reasons

advanced by the company in support of its good faith

doubt of the union’s majority status, the company does

not rely on any one reason alone, but rather on all as

a whole. We think the entire record, including evidence

against the Board’s position as well as in favor of it

. Supports the company’s position.

Similarly, Star Mfg. Co., Div. of Star Forge, Ine. v.

N.L.R.B., (7th Cir. 1976) 536 F.2d 1192, 1196. See also Bell-

wood General Hospital v. N.L.R.B., .... F.2d ...., (7th Cir.

1980) [No. 79-1818 decided Aug. 11, 1980] where the Court

denied enforcement of a Board refusal to bargain order

where the employer showed evidence of good faith doubt |

shifting the burden to the General Counsel, and the General

Counsel could not establish the union’s majority status.

The Eighth Circuit in National Cash Register Company

v. N.L.R.B., 494 F.2d 189 (8th Cir. 1974) reversed a finding

of refusal to bargain and denied enforcement, holding the

employer on the collective basis of four factors could raise

a question as to the union’s majority status.

The District of Columbia Circuit in accord with the

Second, Fourth, Fifth, Sixth, Seventh, Eighth and Tenth

Circuits, held an employer who relied upon the cumulative

effect of multiple objective considerations, properly raised

a good faith doubt as to the union’s majority status. Lodges

*>*

1746 & 743, Int, Ass’n, of Mach. & Aero. Wkrs. v. N.L.R.B.,

416 F.2d 809 (D.C. Cir. 1969) .*

The Board's Derivative Presumption Is Contrary to Federal Law, -

Labor Policy and Is impermissible.

The Board in the instant cases adopted its earlier fash-

ioned so-called derivative presumption, based on the errone-

ous rationale of the Judge Taplitz, whose brainchild it was:

However, I believe that the presumption of con-

tinued majority flowing from the muJt:-employer con-

tracts requires a derivative presumption of the Union’s

majority status which is applicable to each of the em-

ployer-members of the multiemployer bargaining unit

separately. Jim Kelley’s Tahoe Nugget, 227 NLRB 357,

363 (1976) ; Nevada Lodge, 227 NLRB 368, 374 (1976).

[Emphasis added]

Dissenting Board member Walther attacked this novel

and legally contrary approach, stating:

I take issue with my colleagues’ conclusion that the

presumption of majority status flowing from the con-

tract in the multi-employer unit survives Petitioners’

timely withdrawal from that unit. By a process resem-

bling alchemy, my colleagues have concocted the exist-

ence of majority status with only the thinnest support

in legal reason and have, in complementary fashion,

ignored valid distinctions between the presumptions

applicable to single-employer and multiemployer units.

e e a

3. See also N.L.R.B. v. Nu-Southern Dyeing & Finishing Inc.,

(4th Cir. 1971) 444 F.2d 11, where the Board refused to consider

an anti-union petition signed by a majority of employees on the

ground that the anti-union petition was the result of the employer’s

8(a)(1) violations. The Court held that there were factors other

than the anti-union petition, which when viewed in their combined

effect, established that the company “possessed a good faith doubt

of + aie majority status at the time of the refusal to bargain”’

(at 16).

°’..

[C]iting cases which deal with the presumption of

majority status in single-employer units, construct

two entirely distinct and severable presumptions which

in turn give birth to yet a third presumption. Starting

with (1) a valid presumption of majority status in the

. multiemployer relationship, they turn back, and (2)

interweave a second presumption of former majority

status in the single-employer unit based upon the 10(b)

prohibition against finding conduct which occurred

years ago to be unlawful. From the interweaving of

these two presumptions the majority manages to con-

ceive yet a third presumption of current majority

status in the single-employer unit which otherwise has

no basis in fact or in logic. While I do believe that

the Board can and should base violations of Section

8(a)(5) upon legitimate legal presumptions, a viola-

tion predicated upon a presumption raising not out of

fact but out of the intermarriage of two other pre-

sumptions is, in my view, not a proper basis upon

which to establish a violation. Jt must never be for-

gotten than an 8(a)(5) finding effectively prevents

employees from exercising their right to a free choice

im the selection of a collective-bargaining represen-

tative—a right these employees have never had an

opportunity to exercise. Jim Kelley’s Tahoe Nugget,

227 NLRB at 358; Nevada Lodge, 227 NLRB at 368.

(Emphasis added)

Early on this Court held that a presumption cannot be

built upon another presumption. U.S, v. Ross, 92 U.S. 281,

23 L.Ed. 707 (1876); Manning v. Insurance Co., 100 U.S.

693, 698 (1880); Looney v. Metropolitan R. Co., 200 U.S.

480, 26 S.Ct. 303, 306 (1906). Since then many Courts of

Appeais have so similarly held. Otis Elevator Company v.

Yager, 268 F.2d 137, 144 (8th Cir. 1959) ; Smith v. Fidelity

Casualty Company of New York, 261 F.2d 460, 462 (5th Cir.

1968); J. W. Ringrose v. W & J Sloane, 266 F.2d 402, 404

(E.D. Pa., 1920), affd, 272 F. 445 (3rd Cir., 1921) ; Smith v.

Pennsylvania R. Co., 239 F. 103, 104 (2nd Cir. 1917); and

Hall v. Atchison, Topeka & Santa Fe Railway Company,

349 F.Supp. 326, 330 (D. Kansas, 1972).

The Board here has gone even beyond basing a presump-

tion upon a presumption. As Board member Walther points

out, the Board has given “birth to yet a third presumption.”

227 NLRB at 358 and 368. The Board’s entire case and its

conclusions, wh *h the Court below followed, rest upon a

presumption upon a presumption upon a presumption. The

Board and the Court below treated its triple headed pre-

sumption as evidence. Without it, the Board had no basis

for its conclusion.

The Board's Presumption Is One of Irrebuttable Force and Con-

stitutes a Denial of Due Process.

Petitioners sought to introduce evidence from the Board

and the Union which would demonstrate that the Union

did not in fact represent a majority of their respective

employees. The Board rejected this evidence and the Court

summarily affirmed the Board on this issue but for different

reasons.

Through Board agent Sargent, who had reviewed the

Union’s records and informed Petitioners’ counsel the

Union’s charges would be dismissed, Petitioners sought evi-

dence of the Union’s actual loss of majority. The judges

and Board rejected such attempts but the Court concluded

the judges rulings were erroneous, (App. 11). Yet, the Court

concluded such error was harmless because Sargent’s evi-

dence was privileged. (App. 11-12)

Through Union agent Lawrence, Petitioners sought access

to the Union’s records to determine the existence of any

majority status. The Board refused access or any related

questioning, the Court disagreed in part, stating:

“We affirm the Board’s decision, but on a different

basis. The Board cited Retired Persons Pharmacy v.

NLRB, 519 F.2d 486, 491 (2d Cir. 1975), for the propo-

sition that union membership is irrelevant to the deter-

mination of a union’s majority status. We do not agree.

It is true that in a right-to-work state an employee

may choose not to join a union, but, nevertheless, desire

union representation. However, this observation does

not render union membership irrelevant to a determin-

ation of whether an employee had a reasonable doubt

of the union’s majority or whether the union in fact

lacked majority support. Union membership, even ‘in a

right-to-work state, is some indication of union sup-

port, though it may be only marginally relevant.”

[Citations omitted] (App. pp. 12-13)

Notwithstanding this analysis, the Court, by sheer specu-

lation, concluded that even with such evidence which was

exclusively controlled by the Union, “the presumption would

not have been rebutted” (App. p. 13) by Petitioners.

This reasoning is plainly wrong. The Board is bound

to follow the “rules of evidence applicable to district courts”

(29 U.S.C. 160(b)). The Board, with Court approval here,

has prevented Petitioners from submitting any evidence

making the so-called rebuttable presumption conclusive in

application and impermissably shifting the burden of proof

to Petitioners. |

Rule 301 of the Federal Rules of Evidence provides:

In all civil actions and proceedings not otherwise pro-

vided for by Act of Congress or by these rules, a pre-

sumption imposes upon a party against whom it is

directed the burden of going forward with the evidence

to rebut or meet the presumption, but does not shift

’ >

to such party the burden of proof in the sense of the

risk of nonpersuation, which remains throughout the

trial wpon the party upon whom it was originally cast.

[West’s 1979 ed. p. 210, (Emphasis added) |

In Automated Business Systems v. NLRB., 497 F.2d

262 (6th Cir. 1974) denying enforcement of a Board bar-

gaining order based upon the presumption of continuing

majority status the Court held at 271:

The Board would not permit the Company to introduce

evidence regarding the number of cards filed in support

of the decertification petition. Thus the Board puts the

burden of proof on the employer and then denies it the

means of meeting its burden. We cannot accept this

procedure. (Emphasis added)

But the Board and the Court below have denied the

Petitioners access to evidence bearing on the Union’s

majority status and imposed an insurmountable burden

of proof on each Company.‘

In defining administrative due process, this Court said

in Hormel v. Helvering, 312 U.S. 552, 560, 61 S.Ct. 719, 723

(1941):

Congress has entrusted the Board with exclusive

authority to determine disputed facts. Under these

circumstances we do not feel that petitioner should be

foreclosed from all opportunity to offer evidence be-

fore the Board on this issue...

Despite this Conrt’s mandate, Petitioners here were fore-

closed by the Board’s rejection of their proffered evidence

and by the Board’s application of its presumption, which

4. Each Company, under the Freedom of Information Act (5

U.S.C. § 551, et seq.) sought production of documents from the

Board bearing on this. The Board refused. For a history of these

attempts by each Company to obtain such information, see Harvey's

Wagon Wheel, Inc. v. N.L.R.B., 550 F.2d 1139 (9th Cir. 1976).

made the presumption one of “irrebuttable force.” This

brings into play the issue of due process. The Court below,

in an earlier decision, citing with approval this Court’s

opinion in Hormel v. Helvering, supra, stated in N.L.R.B.

v. Heyman, 541 F.2d 796 (9th Cir. 1976) at 801.

As a statute creating a presumption which operates

to deny a fair opportunity to rebut would not afford

due process ...a Labor Board presumption to the

same effect would also suffer shortcomings.

Also in Heyman, supra, the Court below held (at 801):

.. » by coupling § 10(b) with the presumption the

Labor Board would create an irrebuttable presumption

having the substantive law effect that was rejected in

Local Lodge. (Local Lodge No. 1424 v. N.L.R.B., 362

U.S, 411 (1960).]

This Court examined the matter of an irrebutable pre-

sumption, hence one of substantive law, in Manhattan Gen-

eral E. Co. v. Commissioner of Int. Rev., 297 U.S. 129, 56

S.Ct. 397 (1936) and declared (297 U.S, at 134):

The power of an administrative officer or board to

administer a federal statute and to prescribe rules and

regulations to that end is not the power to make law,

for no such power can be delegated by Congress .. .

From the Union ex-president’s admissions of lack of

majority status, its trustee’s public concessions that “less

than 20 percent of the Reno-Tahoe area is unionized” with

11 other areas of evidence disclosing the clear lack of Union

majority status to Petitioners’ unsuccessful attempts to

produce documents and other evidence from the Board

and Union of further support to the conclusion that the

Union lacked any majority status, Petitioners met a stone

wall.

74%

-*%

The result was a conclusive presumption created by

Board fiat and adopted by the Court below in contravention

of federal labor law, federal evidence rules and funda-

mental rights of due process. By this conclusive presump-

tion, upon which the Union’s unfair labor practice charges

were solely based, the Board permitted such charges to

block Petitioners’ attempts for single-union elections. The

statutory right of an employer to seek an election under

Section 9(c) of the NLRA [29 U.S.C. § 159(c)] was abro-

gated here by such Board fiat and the lower Court’s

approval.

This result is diametrically opposed to the Congressional

purpose of Section 9(c), “which gives [the employer con-

fronted with a claim for recognition or a claim of majority

support] the right to go to the Board and say, ‘IT want an

election. I want to know who is the bargaining agent for

my employees.’ ” 93 Cong. Rec. 3838 (1947) (Remarks of

Senator Taft). Accord, Linden Lumber Division, Summer

& Co. v. N.L.R.B., 419 U.S. 301, 308, 95 S.Ct. 429, 433

(1974). In N.L.R.B. v, Gissel Packing Co., 395 U.S. 575, 89

S.Ct. 1918 (1969), this Court emphasized that the most

traveled route for a union to obtain recognition as the

exclusive bargaining representative :

... is through the Board’s election and certification

procedures under §9(c) of the Act [29 U.S.C. § 159

(c)]

The Board itself has recognized, and continues to do

so here, that secret elections are generally the most

satisfactory indeed the preferred—method of aacer.

taining whether a union has majority support. (FEm-

phasis added.) (395 U.S. at 602)

In short, the presumption abrogates the Petitioners’

statutory right, to paraphrase Senator Taft, “to know who

is the bargaining agent for [their] employees.”

Special Circumstances Exist in the Nevada Gaming Industry Which

Require Broad No-solicitation Rules and Make Seach Rules

Permissible Under the National Labor Relations Act.

It is .2ttled that while the Board may establish certain

presumptions regarding the validity of no-solicitation rules,

special circumstances may exist in an industry which over-

come the presumption that certain no-solicitation rules are

illegal. Republic Aviation Corporation v, N.L.R.B., 324 US.

793, 65 S.Ct. 982 (1945). Thus, special needs associated

with maintaining “production or discipline” may support

the establishment of a broad no-solicitation rule in certain

industrial settings. Peyton Packing Company, 49 NLRB

828, 844, cited with approval in Republic Aviation Corpo-

ration v. N.L.R.B., swpra, at 803 n. 10. Additionally, the

Board and the courts have recognized the appropriateness

of special broad rules regarding no solicitation by employ-

ees in retail establishments, May Department Stores, 59

NLRB 976 (1944), enforced as modified, 154 F.2d 533 (8th

Cir.), cert. denied, 329 U.S. 725 (1946), and in certain health

care operations. St. John’s Hospital and School of Nursing,

Inc., 222 NLRB 1150 (1976); N.L.R.B. v. Beth Israel Hos-

pital, 437 U.S. 483, 98 S.Ct. 2463 (1978). The Court below

recognized but failed to apply these principles. (App., pp.

15-19)

Petitioners submitted to the Board and Court of Appeals,

below, evidence that the Nevada gaming industry requires

a specialized set of rules regarding in-house employee solie-

itation because State rules mandate that gaming operators

maintain strict control over, and security in, their estab-

lishments. Neither the Board nor the Court of Appeals,

however, addressed these “special circumstances” which

Petitioners showed exist in the gaming industry.

In Barnevy’s, Judge Taplitz, as affirmed by the Board,

merely noted that gaming enterprises are analogous to

retail stores in that they directly serve the public. He then

mechanically applied Board doctrine regarding no-solicita-

tion rules in general retail establishments. He did not con-

sider the evidence that gaming establishments closely con-

trolled by State regulations, require more finely specialized

rules regarding no solicitation which are specially fitted to

the specialized interests and needs of the gaming industry.

Similarly, in Sparks, Judge Gilbert, as affirmed by the

Board, failed to balance Sparks’ evidence that special cir-

cumstances exist in the state-regulated gaming industry

which require broad no-solicitation rules. Rather, the Judge

summarily concluded that the rule was not necessary for

production, safety or discipline.

The Ninth Cireuit enforced, with modification, the

Board’s orders regarding Petitioners’ no-solicitation rules,

but also failed to address Petitioners’ evidence that special

circumstances in the gaming industry support special no-

solicitation rules. The Court of Appeals also simply applied

general retail establishment no-solicitation doctrine stating:

In Barney’s Ciub and Sparks Nugget, the respondent

employers are engaged primarily in the direct service

of customers through their gambling, restaurant and

bar facilities. There is no contention any of these facil-

ities serve primarily as employee-service areas, Thus,

under the previously discussed precedent, the respond-

ents could promulgate no-solicitation rules which pro-

hibited employees from engaging in solicitation or dis-

tribution of materials in areas open to the public even

during non-working periods.

We agree with the Board, though, that the rules pro-

mulgated by respondents were overly broad and thus

invalid. (App. pp. 18-19)

Thus, the Board and the Court below completely failed

to address the evidence submitted by Petitioners which

establishes the need for even more specialized no-solicita-

tion rules for the gaming industry than those established

for general retail operations, Neither the Board nor any

court has indicated that the specialized rules for general

retail operations or health care institutions provide the

exhaustive list of specialized circumstances, or that new

exceptions cannot be created in other types of industries.

On the eontrary, this Court unequivocally declared in

N.L.R.B. v. United Steelworkers of America, 357 U.S. 357,

363, 78 S.Ct. 1208 (1958), that “mechanical answers” are of

no avail “for the solution to this nonmechanical, complex

problem in labor management relations.”

The Third Circuit Court of Appeals aptly instructed in

N.L.R.B. v. Rockwell Manufacturing Co., 271 F.2d 109, 115

(3rd Cir. 1959):

This is not to say that the Board could not apply a

presumption of invalidity to the no-distribution rule.

But the burden of proving the unfair labor practice is

on the charging party, In order to determine whether

the respondent had justified its rule the Board is com-

pelled to examine all of the evidence, If respondent is

entitled to justify its rule, the Board must examine

respondent’s evidence. (Emphasis added)

Accord, McDonnell Douglas Corporation v. N.L.R.B., 472

F.2d 539 (8th Cir. 1973). By failing to properly address

Petitioners’ evidence of “special circumstances”, the Board,

as incorrectly supported by the Court of Appeals, in effect

changed the Board’s no-solicitation doctrine into an irrebut-

table presumption and impermissibly encroached upon the

overriding interests of Nevada to regulate its gaming

industry.

Nevada is extensively regulated by over 150 separate

statutory provisions of the Nevada Gaming Control Act

and by over 225 regulations and subregulations of the

Nevada Gaming Commission and State Gaming Control

Board. Review of these provisions indicates the gaming

operators are carefully licensed and closely regulated

in the public interest of the State of Nevada. (Nevada

Gaming Control Act, Chapter 463.130) Any breach of a

statutory provision or of a Gaming Board or Commission

regulation can be grounds for loss of an operating license.

(Gaming Commission and Gaming Control Board Regula-

tion Section 5.010) The State also requires that gaming

operation employees are to be closely regulated and are

expected to maintain a high degree of integrity in light

of their sensitive employment position. (Gaming Control

Act, Chapter 463.335) Accordingly, all gaming employees

must be licensed and fingerprinted. (Reg. 5.100) Cheating

by an employee is not only grounds for loss of the em-

ployee’s license, it can also be grounds for severe penalty

against the gaming operator/employer. (Gaming Control

Act, Chapter 463.337 :Reg, 5.011) State statutory provisions

and administrative regulations further authorize the total

exclusion of certain individuals from gaming operations

whose association would not be in the interest of the in-

dustry or the State. (Gaming Control Act, Chapters 463.151-

155) Gaming operators are under an affirmative obligation

to keep their premises free of other individuals whose

presence and association are inimical to the public interests.

(Gaming Control Act, Chapter 463.151(3) )

A broad no-solicitation rule in gaming establishments

the general public is necessary to police activities in gaming

operations as required by the State of Nevada. Regulation

5.011(1) states that a gaming operator may be disciplined

for the “failure to exercise discretion and sound judgment

to prevent incidents which might reflect on the repute of

the state of Nevada and act as a detriment to the develop-

ment of the industry.” (Emphasis added.) Petitioners is-

sued the instant off-shift employee no-solicitation rules in

accord with these strict State regulations.

Nevada’s laws intensively regulating the gaming industry,

which necessitate Petitioners’ broad no-solicitation rule, are

established in the interests of the health, safety, and morals

of the citizens of the State of Nevada. Where the interests

of a state are not in full accord with federal labor law

doctrine, the interests of the State are not always to be

ignored or preempted. Rather, this Court has indicated that

states can regulate in areas where there is “an overriding

state interest”, San Diego Trades Council v. Garmon, 359

U.S. 243 (1959), and has also indicated that local health

and safety regulations are entitled to some deference. Team-

sters, Local 24 v. Oliver, 358 U.S. 283 (1959). Regulation of

gaming operations is clearly an overriding State and local

concern, and here the State regulations necessitating the

Petitioners’ broad no-solicitation rules are based on health,

safety and public interest.

Additionally, Petitioners’ rules, based on the State’s regu-

lations, only constrict the organizational rights of off shift

employees who the Board and the courts have indicated

should be treated as nonemployee solicitors. GTE Lenkurt,

Inc., 204 N.L.R.B. 921 (1973); Diamond Shamrock Co., v.

N.L.R.B. 443 F.2d 52 (3rd Cir. 1971). This Court has

recently upheld a state court application of state tres-

passing laws even though those laws had some limiting

effect on the arguably protected organizational rights of

nonemployees. Sears, Roebuck & Co. v. Carpenters, 436

U.S. 180 (1978). Accordingly, deference to the State gaming

statute here by the Board in determining whether “special

circumstances” exist is clearly proper.

By refusing to consider “special circumstances” here, the

’*%

- '

Board with Court approval, violated Petitioners’ rights to

due process by creating an irrebuttable presumption.

Accordingly, absent overturning the lower court and the

Board completely, these actions should be remanded to the

Board to allow a proper examination of whether “special

circumstances” exist which support Petitioners’ no-solicita-

tion rules.

The Decision Below Conflicts With Other Courts of Appeal as to

Consideration of Alternative Means of Communication by the

Union; Those Means Existed Which Would Lessen the Degree

of Special Circumstances Needed to Support Petitioners’ No-

solicitation Rules.

The Board and Ninth Circuit also failed to consider

whether alternative means of communication, other than

after shift in-house solicitation, existed by which the Union

could advance its message. Several circuit courts of appeal

have found that alternative methods of communication must

be considered in determining the degree of “special cireum-

stances” needed to be shown by an employer in support of

a non-solicitation rule limiting employees’ rights to engage

in in-house solicitation.

Alternative means of communication as a necessary con-

sideration in determining the validity of an employee no-

solicitation rule was first required in N.L.R.B. v. Rockwell

Manufacturing Company, supra, see particularly 271 F.2nd

at 113-118 (3rd Cir. 1959). The Third Circuit’s well-reasoned

analysis of was based upon three of this Court’s decisions,

including Republic Aviation Corporation v. N.L.R.B., supra,

which was decided together with N.L.R.B. v. Le Tourneau

Company of Georgia. The Court noted that in the Le Tour-

neau case the Board had specifically found that the isolated

nature of the plant made direct contact with employees

away from the plant “extremely difficult”.

. The second case, N.L.R.B. v. Babcock & Wilcox Co., 351

U.S. 108, 76 S.Ct. 679 (1956) held that alternative methods

of communication must be considered in determining the

validity of a rule prohibiting the distribution of union

literature by nonemployee union organizers on company

premises, The third case, V.L.R.B. v. United Steelworkers

of America, 357 U.S. 357, 78 S.Ct. 1268 (1958) held that a

showing of diminished ability to communicate with em-

ployees is a vital consideration in determining whether a

valid no-solicitation rule is fairly applied, “just as [it]

is a vital consideration in determining the [initial] validity

of the no-solicitation rule.” (357 U.S. at 363-364) On these

cases, the Third Circuit concluded:

Clearly if the employees have virtually no alternative

opportunities to distribute literature and membership

applications, then respondent must show strong justi-

fication for its prohibition. Conversely when, as the

respondent contends in this case, the employees have

readily available means of distribution, the employcr’s

duty to show exceptional justifiable circumstances is

lessened. (Emphasis added)

Moreover, the Board’s decision merely held that re-

spondent had offered no “valid reason for the applica-

tion of its no-distribution rule.” Nowhere does the

Board’s decision indicate that it considered the sub-

stantial evidence offered by respondent in justification

of its rule, nor did it find that it operated to prevent

the union from effectively reaching respondent’s em-

ployees with its prounion message, (271 F.2d at 115-

116)

The Rockwell rationale was reaffirmed recently in Diamond

Shamrock Co. v. N.L.R.B., supra.

Similarly, the Eighth Circuit in McDonnell Douglas Cor-

poration v. N.L.R.B., supra, 472 F.2d at 544-547, examined

Republic Aviation, supra; Babock & Wilcox, swpra; and

Umted Steelworkers, swpra, and concluded that the avail-

ability of alternative means of communication must be

considered by the: Board in cases involving employee

solicitation. —

The Eighth Circuit declared at 547:

... [O]n remand the Board would be well advised to

give consideration, inter alia, to... (2) whether there

are other means of access or communication available

to employees for distribution and solicitation such as

entrances to the parking lots and to the avenues con-

sidered in Diamond Shamrock and Rockwell Manufac-

turing Co., swpra;...

Thus, alternative means of communication is a necessary

ingredient in any evaluation of the validity of a. rule

broadly prohibiting employee solicitation. A few courts

have conversely concluded that alternative means of com-

munication need not be considered by the Board in cases

involving employee solicitation.’ These courts erroneously

concluded that the Court in Republic Aviation limited to its

holding in Peyton Packing, which on the surface does not

include consideration of alternative communication. These

courts further attempt to distinguish the Board’s decisions

in Babcox & Wilcor and United Steelworkers, on the

grounds that the former case involves nonemployee solici-

tation and that the latter case involves the invalid applica-

tion of an admittedly valid rule.®

5. Time-O-Matic, Inc. v. N.L.R.B., 264 F.2d 96 (7th Cir. 1959) ;

N.L.R.B. v. United Aircraft Corporation, 324 F.2d 128 (2nd Cir.

1963) ; Republic Aluminum Company v. N.L.R.B., 394 F.2d 405

(5th Cir. 1968); and National Steel Corporation v. N.L.R.B., 415

F.2d 1231 (6th Cir. 1969).

6. One other circuit court which had the oppertunity to address

the issue, after noting the conflict between the circuits, refused to

decide the issue. Korn Industrics, Inc. v. N.L.R.B., 389 F.2d 117

(4th Cir. 1967). The Ninth Circuit enforcing the Board’s decision

here did not and has never expressly addressed the issue.

These cases reveal the conflict among the circuits which

hinges on different interpretations of this Court’s rulings.

Accordingly, only this Court can provide a definitive reso-

lution of the controversy, which it has not yet done. Two

recent decisions of this Court support that conclusion.

In N.L.R.B. v. Magnavox Company of Tennessee, 416 U.S.

952 (1974), this Court stressed that the Board must con-

sider alternative means of communication in cases involving

employee no-solicitation rules which are asserted to be

valid by “special circumstances”. N.0.R.B. v. Beth Israel

Hospital, supra, 98 S.Ct. at 2476, modifies Magnavoz:

While outside the health care context, the availability

of alternative means of communication is not, with

respect to organizational activity, a necessary inquiry,

see Babcock & Wilcox, supra, 351 U.S. at 112-113, 76

S.Ct. at 684, it may be that the importance of the em-

ployer’s interest here demands use of a more finely

calibrated scale, (Emphasis added. )

Thus, even if this Court were to conclude that alternative

means of communication is not a general requirement in

cases involving employee or non-employee solicitation pro-

hibitions the “special circumstances” which exist in the

gaming industry require use of the “more finely calibrated

scale” mandated by this Court in Beth Israel, swpra.

Again, the matters involve clear and compelling state

interests which should not be preempted by inconsistent

federal labor law. Finally, Petitioners applications of their

rules were proper.’

7. The Board and the Court below incorrectly concluded that

Sparks’, applying its no-solicitation rule, illegally interrogated

employee Launius regarding her Union activities and illegally

counseled employee Dyer regarding the same. Launius was solicit-

ing and apparently acting for the Union during working time. An

employer can normally prohibit solicitation on working time as

“working time for work”. Republic Aviation Corp., supra. Accord-

ingly, Sparks was privileged to question Launius whether her

CONCLUSION

For these reasons, a writ of certiorari should issue to

review the judgments and opinion of the Ninth Circuit.

Alternatively the matters should be remanded for further

consideration.

Respectfully submitted,

December 31, 1980.

Wituram W. WERTz

25th Floor

One Embarcadero Center

San Francisco, California 94111

Counsel for Petitioners

Of Cownsel:

Severson, Werson, BerKE & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111

actions were in violation of its valid rule prohibiting solicitation on

working time. The collective bargaining agreement permitted Union

representatives to engage in official Union activities during working

time but required prior notice. Sparks needed to know whether

Launius’ Union activities during working time were peculiarly

privileged. Launius was not an “authorized representative’’ within

the meaning of the bargaining agreement, thus was told that such

future solicitations by her would not be allowed.

The questioning of Launius was for legitimate purposes, and the

conversation was not coercive; thus it was lawful. “When the in-

quiries are not undertaken in a threatening manner but are only

isolated instances free of any coercion without any systematic

intimidation in the background, they are not unlawful.” Amalga-

mated Meat Cutters, etc., Local No. 364 v. N.L.R.B., 435 F.2d 668

(9th Cir. 1970); Sahara Tahoe v. N.L.R.B., 533 F.2d 1125 (9th

Cir. 1976).

Employee Dyer was soliciting for the Union, both on Sparks

time and on its premises after his shift had ended. Sparks, there-

fore, properly issued Dyer a counselling notice with regard to

that solicitation. Dyer testified that he understood Petitioner’s no-

solicitation rule to mean that he could not solicit during working

time. Thus, Sparks had a reasonable basis to believe that Dyer

was soliciting in violation of its valid no-solicitation rule.

IN THE SUPREME COURT OF THE

UNITED STATES

Octroser TERM 1980

Barney’s Cuvs, Inc.

Petitioner,

vs.

NaTIONAL Lasor RELATIONS Boarp

Respondent.

Sparks Nuccet Inc.

d/b/a John Ascuaga’s Nugget

Petitioner,

vs.

NaTIonaL Lasor REvLatiIons Boarp

Respondent.

APPENDIX TO A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WituiaMm W. Wertz

25th Floor

One Embarcadero Center

San Francisco, California 94111

Counsel for Petitioners

Of Counsel:

Severson, WeRsON, BerKEe & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111

Filed May 27 1980

Richard H. Deane, Clerk, U.S. Court of Appeals

Received May 28 1980

Severson, Werson, Berke & Melchior

In the United States Court of Appeals

For the Ninth Circwt

Nationa. Lasor Reiations Boarp,

Petitioner,

and

Hore - Moret - Restaurant EmpLoyees &

BarTeNpDERS Union, Locat 86, Horst,

Restaurant & Barrenpers Inrerna- ) No. 77-2311

TIonaAL Union, AFL-CIO,

Intervenor,

vs.

Sriver Spur Casino,

Respondent.

NaTIONAL Labor RE.Lations Boarp,

Petitioner,

and

Hore - More. - Restaurant Empioyvees &

BarTENDERS Union, Locat 86, No. 77-2939

Intervenor,

vs.

Nevapa Cuvs, Inc.,

Respondent.

2 Appendiz

Nationa Lasor REtations Boarp,

Petitioner,

and

Horet - Moret - Restaurant Empuoyees &

Bartenvers Union, Locat 86,

Intervenor,

vs.

Sparks Nuacet, Inc., d/b/a Jonn Ascua-

Ga’s NUGGET,

Respondent.

Nationa Lasor Retations Boarp,

Petitioner,

and

Hore. - Moret - Restaurant Empvoyveses &

BarTenvDERS Union, Locat 86,

Intervenor,

Vs.

Barney’s Cuuvs, Inc.,

Respondent.

Nationa. Lasor Re.ations Boarp,

Petitioner,

and

Hore - Moret - Restaurant Empvoyers &

BartTenvers Union, Locat 86,

Intervenor,

Vs.

Finavy, [nc., d/b/a THe Patace Civs,

Respondent.

No, 77-2954

No. 77-2658

No. 77-2938

Appendix 3

OPINION

On Application for Enforcement of an Order of the

National Labor Relations Board

Before: KENNEDY and ANDERSON, Circuit Judges,

and SCHWARTZ,®* District Judge.

ANDERSON, Circuit Judge:

These consolidated cases are before this court pursuant

to petitions filed by the National Labor Relations Board

(Board) for enforcement of its Orders.’ 29 U.S.C. § 160(e).

The unifying issue is whether the employer-respondents

violated sections 8(a)(1) and (5) of the National Labor

Relations Act (the Act) by refusing to bargain with the

Union. We shall consider this issue first, then deal with the

other issues that pertain to the individual respondents.

I. REFUSAL TO BARGAIN

A. Background

The respondents were all members of the Reno Employ-

ers Council (Council), a voluntary association of employers

engaged in casino, restaurant and related businesses. The

Council existed in part for the purpose of representing

member-employers, in multi-employer units, in collective

bargaining with labor organizations. The individual re-

*The Honorable Edward J. Schwartz, Chief United States Dis-

trict Judge for the Southern District of California, sitting by

designation.

1. We were advised by counsel for the respondents at oral

argument that the Palace Club (No. 77-2938) nad completely

closed down, with no successor taking over that operation. The

Board has not withdrawn its petition for enforcement of its order

against the Palace Club. Without deciding whether the petition

against the Palace Club has, in fact, been rendered moot, we deem

this opinion to be moot as to the Palace Club if there is no employer

upon whom the order may be enforced.

4 Appendiz

spondents joined the Council on different dates, but they all

recognized the Union as the bargaining representative of a

unit of their employees consisting of culinary workers,

waiters and bartenders (employees). After being parties to

successive multi-employer collective bargaining contracts

with the Union,? respondents withdraw from their multi-

employer bargaining units. Subsequent to their withdrawal

from the multi-employer units, the respondents informed

the Union that they would not negotiate new, individual

collective bargaining agreements with the Union. Each re-

spondent claimed to have a good faith doubt that the Union

enjoyed the majority support of their respective employees.

Unfair labor practice charges were filed by the General

Counsel of the Board against the respondents for their

refusal to bargain with the Union. In each case the Board

found that the respondents had committed unfair labor

practices by withdrawing recognition of the Union as the

collective bargaining representative of their employees and

by refusing thereafter to bargain with the Union? The

2. Sparks Nugget, Silver Spur, Nevada Club, and the Palace

Club were in the same multi-employer bargaining unit and were

signatories to the same 1972-1975 collective bargaining agreement

with the Union as the Sierra Development Co., NLRB v. Sierra

Development Co., 604 F.2d 606 (9th Cir. 1979), and Carda Hotels,

NLRB v. Carda Hotels, 604 F.2d 605 (9th Cir. 1979).

Barney’s Club, on the other hand, was a signatory to the same

1971- 1974 collective bargaining agreement with the Union as Tahoe

Nugget, NLRB v. Tahoe Nugget, 584 F.2d 293 (9th Cir.), cert.

denied, 442 U.S. 921, 61 L.Ed.2d 290, 99 S.Ct. 2847, reh. denied,

weieil US. aileeeat, A L.Ed.2d 12, 100 S.Ct. 186 (1979), Nevada

Lodge, NLRB v. Nevada Lodge, id., and Sahara-Tahoe, Sahara-

Tahoe Corp. v. NLRB, 581 F.2d 167 (9th Cir.), cert. denied, 442

U.S. 917, 61 L.Ed.2d 284, 99 S.Ct. 2837, reh. denied, — sere

62 L.Ed.2d 122, 100 St.Ct. 187.

3. Silver Spur Casino, 228 NLRB 1147 (1977); Nevada Club,

Inc., 229 NLRB 1186 (1977); Sparks Nugget, Inc., 230 NLRB

275 (1977); Barney's Club, Inc., 227 NLRB 414 (1977) ; Finally,

inc, d/b/a Palace Club, 229 NLRB 1128 (1977).

Appendix 5

Board ordered each respondent to cease and desist from

the unfair labor practices and required each respondent to

recognize and, upon request, bargain with the Union, and

post certain notices. These cases are before us in part, for

the enforcement of those orders.

We enforce the Board’s orders on the issue of the re-

spondents’ refusal to bargain based upon the principles we

have announced in Tahoe Nugget, Sahara-Tahoe, Carda

Hotel, and Sierra Development.

We deal with the issue in more depth in the following

discussion to emphasize and, where necessary, to clarify

portions of our previous opinions.

B. Discussion

In an unfair labor practice proceeding before the Board

the burden is upon the General Counsel to establish by a

preponderance of evidence that an unfair labor practice

has occurred. NLRB v. United Brotherhood of Carpenters

& Joiners, etc., 531 F.2d 424, 426 (9th Cir. 1976). Where an

employer has been charged with a violation of section 8(a)

(5), refusal to bargain, the General Counsel must show that

the union represented a majority of the employees in the

unit at the time the employer refused to bargain with the

union. NLRB v. Tahoe Nugget, Inc., 584 F.2d at 297.

1. Presumption of Majority Support

The General Counsel is assisted by a presumption of

majority union support in its attempt to meet its burden

of proving that the employer unlawfully refused to bargain.

“For a reasonable time, usually one year, after certifica-

tion or voluntary recognition, majority support is irrebut-

tably presumed absent ‘unusual circumstances.’ After one

4. Citations at footnote 2.

6 Appendix

year, the presumption becomes rebuttable.” Jd. Where suf-

ficient proof to rebut the presumption is not presented by

the employer, the presumption carries the General Coun-

sel’s burden of proof regarding the unfair labor practice

charge. Id.

An employer may rebut the presumption by presenting

sufficient evidence to demonstrate that the union was ac-

tually in the minority or that the employer had a good faith

reasonable doubt of the union’s majority support at the time

of the refusal to bargain. Jd. If the presumption is deemed

rebutted, then the General Counsel must come forward with

evidence to satisfy its burden of proof. National Cash

The rebuttable presumption was applied by the Board

in these cases. The Board determined that the respondents

had not rebutted the presumption and found that they had

committed unfair labor practices by refusing to bargain

with the Union.

The respondents challenge that determination on the

grounds that:

a. the presumption should not be applicable in a

situation where employers have withdrawn from a

multi-employer unit;

b. an emplover’s good faith belief is all that is re-

quired to rebut the presumption of majority support

for the union;

ce. the objective factors considered by the respond-

ents were sufficient to rebut the presumption of major-

ity support for the union.

d. the respondents were improperly precluded from

showing, that only a minority of employees supported

the vuion.

e. the Board has made it impossible to rebut the

presumption under the circumstances.

Appendix 7

2. Withdrawal from the Multi-Employer Unit

The respondents contend that their withdrawal from the

multi-employer bargaining unit should allow them to start

anew in their relationship with the Union. That is, they wish

to be viewed as single employers faced with the Union’s

initial claim for recognition.

In four previous cases® we have rejected that approach

and have determined that the presumption survives an

employer’s withdrawal from the multi-employer bargain-

ing unit.®

The bargaining history of the respondents shows that the

same fact patterns have occurred. Thus, the conclusions

reached in our previous cases apply equally as well here.

Moreover, our conclusion that the presumption survives

the respondents’ withdrawal from the multi-employer unit

is a recognition that the presumption is also grounded in

policy, not just probability. NLRB v. Tahoe Nugget, 584

F.2d at 302. 302. The most valued objective of the Act is

industrial peace. Application of the presumption is a policy

determination by the Board that industrial peace is more

likely to be achieved by maintaining continuity in the bar-

gaining structure.

We have not failed to observe that, in so deciding, the

Board has favored continuity in the bargaining structure

5. NLRB v. Tahoe Nugget; Sahara-Tahoe Corp. v. NLRB;

NLRB v. Sierra Development Co.; NLRB v, Carda Hotels.

6. In the formation of multi-employer units, it is an unfair

labor practice for an individual employer to voluntarily recognize

a union which does not enjoy majority support among that em-

ployer’s employees. Thus when employers join a multi-employer

unit and recognize the union, they are viewed as implicitly declar-

ing that the majority of their employees favor the union. Subse-

quent withdrawal from the multi-employer unit simply entails a

reversion to the original unit, a unit previously determined from

the employer’s own conduct to favor the union's representation.

NLRB v. Tahoe Nugget at 303.

8 Appendix

over the enhancement of employee free choice. However,

the Board’s decision, while not enhancing employee rights,

does not adversely affect those rights. As always, the em-

ployees may exercise their freedom of choice by petitioning

the Board for an election to choose whether to have another

representative or to have no union representation at all.

Adherence to the presumption does not stifle that right.

The presumption does make it more difficult for the re-

spondents to rely on employee rights in refusing to bargain

with their employees’ designated representative. However,

as we stated in Tahoe Nugget, at 301, “[I]n refusing to bar-

gain because of an alleged decline in union adherents, the

employer is acting as vicarious champion of its employees,

a role no one has asked it to assume.” See, Brooks v. NLRB,

348 U.S. 96, 103, 99 L.Ed. 125, 75 S.Ct. 176 (1954).

We thus believe that the Board has not abused its discre-

tion in applying the presumption of majority union support

here where employers have withdrawn from a multi-

employer unit.

3. Good Faith Reasonable Doubt

An employer may withdraw recognition from an incum-

bent union because of its asserted good faith doubt of the

union’s support. Respondents contend that under Celanese

Corporation of America, 95 NLRB 664 (1951), the employ-

er’s good faith belief that the union no longer had the

majority support of its employees is all that is required.

The respondents misread Celanese and misconceive the

law."

7. Respondents correctly quoted a passage from Celanese which

states that:

“We believe that the answer to the question whether the

Respondent violated Section 8(a)(5) of the Act on October 8

depends not on whether there was sufficient evidence to dem-

onstrate that the Union in fact did not represent the majority

Appendix 9

An employer’s good faith doubt of a union’s majority

status must be reasonable and supported by objective con-

siderations. NLRB v. Cornell of Cal., Inc., 577 F.2d 513,

515-516 (9th Cir. 1978) ; Dalewood Rehabilitation Hostal,

Inc. v. NLRB, 566 F.2d 77, 80 (9th Cir. 1977); NURB v.

Tahoe Nugget, 584 F.2d at 299. Respondents’ contrary in-

terpretation of the law is erroneous.

4, Establishing Good Faith Reasonable Doubt

Whether an employer has established a good faith rea-

sonable doubt defense is a determination that must be made

initially by the Board. The Board’s decision will be upheld

if it is supported by substantial evidence on the record as a

whole, Sahara-Tahoe Corp. v. NLRB, 581 F.2d at 771.

In Tahoe Nugget and Sahara-Tahoe we stressed that the

evidence presented to establish reasonable good faith doubt,

individually or cumulatively, must unequivocally indicate

of the employees but upon whether the Employer in good faith

believed that the Union no longer represented the majority

of the employees.”

Id. at 671. However, the respondents failed to turn the page and

read on as the Board, later in the opinion, went on to elaborate on

the “good faith” criteria, and stated that:

“By its very nature, the issue of whether an employer has

questioned a union’s majority in good faith cannot be resolved

by resort to any simple formula. It can only be answered in

light of the totality of all the circumstances involved in a par-

ticular case, But among such circumstances, two factors

would seem to be essential prerequisites to any finding that

the employer raised the majority issue in good faith in cases

in which a union had been certified. There must, first of all,

have been some reasonable grounds for believing that the

union had lost its majority status since its certification. And,

secondly, the majority issue must not have been raised by the

employer in a context of illegal anti-union activities, or other

conduct by the employer aimed at causing disaffection from

the union or indicating that in raising the majority issue the

employer was merely seeking to gain time in which to under-

mine the union.” (emphasis added)

Id. at 673.

10 Appendix

that union support had declined to a minority. In those

cases the Board found that the employers had not estab-

lished the good faith doubt defense. Some evidence was

presented of employee discontent, high employee turnover

rates, low union membership, financial difficulties of the

union, and a vigorous union membership drive. However,

efter evaluating the evidence, the Board determined that

the evidence introduced by the respondents was not suffi-

cient to support a good faith reasonable doubt of the union’s

majority status. The evidence, standing alone or viewed

in their totality, presented only an ambiguous inference of

loss of majority support for the union. We enforced the

Board’s orders in those cases, determining that there was

substantial evidence on the record as a whole to support

the findings.

The evidence presented here does not differ materially

from that considered by the Board and this court in Tahoe

Nugget and Sahara-Tahoe. The Board in the present cases

found that the respondents failed to establish the good

faith reasonable doubt defense, Substantial evidence on the

record as a whole supports the findings that the evidence,

individually or cumulatively, presents only an equivocal

inference of loss of majority support for the union.

5. Actual Loss of Majority

The presumption may also be rebutted when the employer

brings forth sufficient evidence to demonstrate that the

union did not, in fact, have the support of a majority of the

employees in the unit. Tahoe Nugget, 584 F.2d at 297.

In Barney’s Club the administrative law judge determined

that the respondent’s evidence fell short of demonstrating

that the union did not have majority support. The Board

Appendix 11

affirmed. Reviewing the record as a whole, we uphold that

decision.

In Silver Spur, Sparks Nugget, Nevada Club and Finally,

Inc., the respondents were restricted in their ability to ques-

tion Board field examiner David Sargent and Union agent

Howard Lawrence, They contend that the Board’s actions

erroneously prevented them from presenting their “actual

loss of majority” defense and thus their cases should be

remanded.

a. Board Field Examiner Sargent

Respondents, in their individual cases, subpoenaed Board

field examiner Sargent. The administrative law judges

quashed the subpoenas on the basis that Sargent’s testi-

mony would have been irrelevant (Nevada Club; Finally,

Inc.), or that 29 CFR § 102.118 prevented the subpoena

from issuing to an agent of the Board without the Board’s

or General Counsel’s consent (Silver Spur, Sparks Nug-

get).

In NLRB v. Heath Tec Division/San Francisco, 566 F.2d

1367, 1371 (9th Cir.) cert. denied, 439 U.S. 832, 58 L.Ed.2d

127, 99 S.Ct. 110 (1978), we stated that in the absence of

some valid evidentiary objection or privilege, 29 CFR

§ 102.118 cannot alone be the basis for the revocation of a

properly issued subpoena. Thus the rulings of the adminis-

trative law judges in Silver Spur and Sparks Nugget were

erroneous. However, the Board upheld the quashing of the

subpoenas in all the cases, finding that a valid evidentiary

privilege and a valid evidentiary objection existed. We

agree.

The Board determined that there was an evidentiary

privilege which protected the informal investigatory and

trial preparatory process of administrative agencies, citing

12 Appendix

Stephens Products Co., Inc. v. NLRB, 515 F.2d 1373,

1376-1378 (8th Cir. 1975). Sargent apparently had spoken

informally to the attorneys representing the respondents

and had stated that the refusal to bargain charges would

probably be dismissed. Later, however, formal complaints

were filed, charging the respondents with refusing to bar-

gain. Through Sargent respondents sought to establish that

the initial determintaions were actually made and they also

sought the information which provided the basis for those

determinations.

It is clear that the testimony and documents which the

respondents sought were informal investigatory material

and preliminary determinations. The qualified privilege

of preserving the confidentiality of investigative files is

applicable here. NLRB v, Heath Tec, 566 F.2d at 1370;

Stephens Products Co., Inc. v. NLRB, 515 F.2d at 1376.

As in Heath Tec, and Stephens Products Co., supra,

we conclude that the investigatory privilege concerning

“informal deliberations of all prosecutorial agencies and

branches of government” (Stephens Products, p. 1376, n.1)

was properly invoked. Others were present during conver-

sations with Sargent. They were not called 1s witnesses,

however, and respondents have shown no reason why

examining these people was not possible or would not have

produced information similar to that which they sought

from Sargent. Moreover, we have some doubt whether the

information sought was sufficiently material to respondents’

case to outweigh the privilege.

b. Union Agent Lawrence

The Board also sustained objections to the questioning

of Union agent Lawrence regarding whether the Union had

any records that would disclose it represented an actual

Appendix 13

majority of the unit employees of the respective respond-

ents. The Board determined that the line of questioning

was irrelevant because where union membership was volun-

tary, as in Nevada, such records provided no correlation to

whether a majority of employees desired representation.

We affirm the Board’s decision, but on a different basis.

The Board cited Retired Persons Pharmacu v. NLRB, 519

F.2d 486, 491 (2d Cir. 1975), for the proposition that union

membership is irrelevant to the determination of a union’s

majority status. We do not agree. It is true that in a right-

to-work state an employee may choose not to join a union,

but, nevertheless, desire union representation. However,

this observation does not render union membership irrele-

vant to a determination of whether an employee had a

reasonable doubt of the union’s majority or whether the

union in fact lacked majority support. Union membership,

even in a right-to-work state, is some indication of union

support, though it may be only marginally relevant. NLRB

v. Tahoe Nugget, 584 F.2d at 307, NLRB v. Vegas Vic, Inc.,

546 F.2d 828 (9th Cir.), cert. denied, 434 U.S. 818, 54

L.Ed.2d 74, 98 S.Ct. 57 (1978), and Terrell Machine Co. v.

NLRB, 427 F.2d 1088, 1090 (4th Cir.), cert. denied, 398 U.S.

929, 26 L.Ed.2d 91, 90 S.Ct. 1821 (1970), are not to the

contrary.

The question asked by the respondents was whether the

Union could produce any records that would demonstrate

that it had the majority support of the employees. Al-

though not dispositive, the question had some relevance to

the issues of the Union’s majority status and should have

been allowed.

However, based upon the record before us, we cannot say

that reversible error was committed, If the Union had an-

swered the question affirmatively, the Union’s position

’;%

’%

14 Appendix

would have been bolstered. If the question had been an-

swered in the negative, that would have presented only

slight evidence that the Union in fact did not have the ma-

jority support of the employees. Even with the addition of

this evidence, the presumption would not have been re-

butted.* Therefore, we find no error that would require a

reversal.

6. Impossibility of Rebutting the Presumption

Finally, the respondents contend that the Board has in

effect created a presumption that is impossible to rebut.

Respondents argue that the burden is placed upon them to

rebut the presumption, but they are denied the means to

do so. Further, the respondents contend that the Board has

demanded more evidence than should be required to rebut

the presumption.

We find no merit to the respondents’ first argument. As

we discussed in the previous section, the Board’s rulings

regarding Board field examiner Sargent and union agent

Lawrence did not improperly deny the respondents access

to information.

As to the respondents’ second argument, we recognize

the force of their contention that the Board has accorded

too much weight to the presumption in these cases, This

issue involves an important and difficult question which is

of current national interest in the labor relations field. Re-

spondents cite cases in other circuits which may have found

8. See, Barney’s Club Incorp., 227 NLRB 414 (1976) (Board

affirming administrative law judge’s determination that the re-

spondent failed to establish that the Union in fact did not represent

a majority of the respondent's employees).

Moreover, respondents did not materially rephrase the question

after the administrative law judge's ruling and either ended the

line of questioning or dropped the subject matter.

Appendix 15

the presumption rebutted upon similar or even weaker evi-

dence than was presented in these cases.® Accepting, argu-

- endo, that a conflict exists on this issue, we nevertheless

adhere to the views expressed in this and our previous

opinions. While we find that there is substantial evidence

on the record as a whole to support the Board’s decision

in each of these cases, we also believe that the policies and

goals of the Act will be best served by the enforcement of

the Board’s orders on the respondents’ refusal to bargain.

II. NO SOLICITATION RULE

A. Background

In Barney’s Club and Sparks Nugget the employers

promulgated no-solicitation rules which, among other

things, prohibited employees from soliciting on company

premises after their shifts had been completed. The Board

determined in both cases that the employers had violated

Section 8(a)(1) of the Act, 29 U.S.C. § 158(a) (1), by main-

taining the rules. We agree with the Board that the rules

9. Respondents have cited cases from various circuits where the

presumption of majority support was deemed rebutted. See, e¢.g.,

Ingress-Plastene, Inc. v. NLRB, 430 F.2d 542 (7th Cir. 1970) ; Star

Manufacturing Co. v. NLRB, 536 F.2d 1192 (7th Cir. 1976) ;

Lodges 1746 & 743, Int'l Ass’n of Mach. & Aero. Workers v. NLRB,

416 F.2d 809 (D.C. Cir.), cert. denied, 396 U.S. 1058, 24 L.Ed.2d

752, 90 S.Ct. 751 (1970); but see, Teamsters Local U. 769 v.

NLRB, 532 F.2d 1385 (D.C. Cir. 1976); National Cash Register Co.

v. NLRB, 494 F.2d 189 (8th Cir. 1974) ; National Car Rental Sys-

tem v. NLRB, 594 F.2d 1203 (8th Cir. 1979); NLRB v. Alvin J.

Bart & Co., Inc., 598 F.2d 1267 (2d Cir. 1979) ; W & W Steel Co. v.

NLRB, 599 F.2d 934 (10th Cir. 1979); Automated Business Sys-

tems v. NLRB, 497 F.2d 262 (6th Cir. 1974) ; NLRB v. Nu Southern

Dyeing & Finishing, Inc., 444 F.2d 11 (4th Cir. 1971); NLRB

v. Randall-Eastern Ambulance Service, Inc., 584 F.2d 720 (5th

Cir. 1978). Of these cases cited by respondents, we believe only

W & W Steel Co. v. NLRB, Star Manufacturtng Co. v. NLRB

and Ingress-Plastene, Inc. v. NLRB, present factual situations

in which other circuits may have found the presumption of

majority support rebutted upon similar or weaker evidence than

presented in these cases.

16 Appendix

promulgated by these respondents were violative of Sec-

tion 8(a)(1). However, we believe the Board’s orders were

too broad. We thus enforce the Board’s order as modified

herein.

B. Discussion

1. Applicable Law

The freedom to communicate is essential to the effective

exercise of organizational rights granted to employees un-

der Section 7 of the Act, 29 U.S.C. § 157. Central Hardware

Co, v. NLRB, 407 U.S. 539, 543, 33 L.Ed.2d 122, 92 S.Ct.

2238 (1972); Beth Israel Hospital v. NLRB, 437 U.S. 483,

491, 57 L.Ed.2d 370, 98 S.Ct. 2463 (1978). However, the

right ot employees to solicit or distribute materials must

be balanced against an employer’s right to maintain disci-

pline in its establishment. Republic Aviation Corp. v.

NLRB, 324 U.S. 793, 797-798, 89 L.Ed. 1372, 65 S.Ct. 982

(1945). Thus, certain rules have been developed with re-

spect to the exercise of employee organizational rights un-

der Section 7. Since “working time is for work,” a rule

prohibiting employee solicitation and distribution of litera-

ture during work time is presumed to be valid. On the other

hand, “the time outside work, whether before or after work,

or during luncheon or rest periods, is an employees’ time

to use as he wishes without unreasonable restraint,” even

though he is on company property. Therefore, a rule pro-

hibiting employee solicitation or distribution of literature

during nonworking time in nonwork areas is presumptively

invalid unless special circumstances warrant the adoption

of the rule. Republic Aviation, at 802 n. 10; NLRB v. Mag-

navox Co., 415 U.S. 322, 325, 39 L.F.d.2d 358, 94 S.Ct. 1099,

reh. denied, 416 U.S. 952, 40 L.Fid.2d 302, 94 S.Ct. 1962

(1974).

Appendix 17

The finding of the requisite “special circumstances” or an

exception to the presumption of invalidity may arise where

the business is one dealing in direct selling and service to

customers. The Board has approved employer rules which

prohibit all employee solicitations, even during an em-

ployee’s nonworking time, in the selling areas of stores and

restaurants on the theory that such activity may tend to

drive away customers. May Department Stores Co., d/b/a

Famous-Barr Co., 59 N.L.R.B. 976, 981, enf’d as modified,

154 F.2d 533 (8th Cir.), cert. denied, 329 U.S, 725, 91 L.Ed.

627, 67 S.Ct. 72 (1946); Goldblatt Bros., Inc., 77 N.L.R.B.

1262, 1264 (1948); Marriott Corp., Children’s Inn), 223

N.L.R.B. 978 (1978) ; see also Beth Israel Hospital at 493.

In allowing the broader no-solicitation rules, the goal has

been to strike the appropriate balance between organiza-

tional rights of employees and the rights of employers to

control their businesses. Thus, as the Supreme Court stated

in Beth Israel Hospital at 506:

“Tn the retail marketing and restaurant industries, the

primary purpose of the operation is to serve cus-

tomers, and this is done on the selling floor of a store

or in the dining area of a restaurant. Employee solici-

tation in these areas, if disruptive, necessarily would

directly and substantially interfere with the employ-

er’s business. On the other hand, it would be an un-

usual store or restaurant which did not have stock-

rooms, kitchens, and other nonpublic areas, and in

those areas employees solicitation of nonworking em-

ployees must be permitted. In that context, the Board

concluded that, on balance, employzes’ organizational

interests do not outweigh the employer’s interests in

prohibiting solicitation on the selling floor.”

However, the fact that an establishment is a restaurant

or a store does not automatically allow it to impose a

broad no-solicitation rule. In Beth Israel Hospital the

18 Appendiz

question was whether a hospital cafeteria could prohibit

employee solicitations in its dining room. The Supreme

Court noted that the primary purpose of the hospital was

patient care and therapy. The hospital cafeteria functioned

more as an employee-service area than a patient care area,

as 77% of its patrons were employees. Thus the Court

stated that “when the primary function and use of the

cafeteria, the availability of alternative areas of the [hos-

pital] facility in which § 7 rights effectively could be exer-

cised, and the remoteness of interference with patient care

are considered,” it was appropriate for the Board to strike

the balance in favor of §7 rights in the hospital cafeteria.

Id, at 506. Therefore, the relationship of the restaurant or

store to the employer’s business. enterprise must also be

considered in striking the appropriate balance between

employee and employer rights.

Even though an employer’s business enterprise justifies

a more restrictive no-solicitation rule, that rule may be

over-broad and thus invalid. Marriott Corp. at 978. In

Marriott Corp. the Board stated that the employer could

prohibit solicitation, even during employee break and lunch

periods, in areas where customers were likely to be present.

However, the Board determined that the employer’s rule

was not limited to the customer or sales area of the res-

taurant; thus the rule was declared to be over-broad and

invalid on its face.

2. Present Cases

In Barney’s Club and Sparks Nugget the respondent

employers are engaged primarily in the direct service of

customers through their gambling, restaurant and bar fa-

cilities. There is no contention that any of these facilities

serve primarily as employee-service areas. Thus, under

the previously-discussed precedents, the respondents could

Appendiz 19

promulgate no-solicitation rules which prohibited employees

from engaging in solicitation or distribution of materials

in areas open to the public even during nonworking periods.

We agree with the Board, though, that the rules prom-

ulgated by the respondents were overly broad and thus

invalid. However, the Board’s orders in these cases were

themselves overly broad. The orders stated that the re-

spondments must cease and desist from:

“maintaining any rule or regulation prohibiting its em-

ployees from soliciting on its premises after their

shifts have been completed unless such prohibition is

demonstrably necessary to maintain production, dis-

cipline or security.”

The orders go too far. Since the respondents could prohibit

their employees from soliciting during nonworking hours

in publie areas of their premises, we modify the Board’s

order to read that the respondents must cease and desist

from:

“maintaining any rule or regulation prohibiting its em-

plovees from soliciting on its premises during non-

working hours in nonpublic areas of its premises.”

We enforce the Board’s order on this issue as modified.

Il. UNILATERAL CHANGES

As long as its bargaining obligation is not extinguished,

an employer has a continuing duty to bargain over manda-

tory subjects of bargaining without instituting unilateral

changes, even after the expiration of the prior agreement.

NLRB v. Sky Wolf Sales, 470 F.2d 827 (9th Cir, 1972).

See, Allied Chemical & Alkali Workers v. Pittsburg Plate

Glass Co., 404 U.S. 157, 30 L.Fid.2d 341, 92 S.Ct. 383

(1971). Mandatory subjects of collective bargaining include

insurance benefits and grievance procedures for employees.

20 Appendix

404 U.S. at 159; The Developing Labor Law, 404 (1971).

In Sparks Nugget, the Board found that the employer

committed unfair labor practices in violation of Sections

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

(1), by unilaterally implementing a new grievance pro-

cedure and a new insurance program.

The respondent’s sole argument to justify the unilateral

change in the grievance procedure was that the change was

made after its obligation to bargain had terminated. We

have already ruled in Section I that there was a continuing

duty to bargain, The respondent’s unilateral change of the

grievance procedures was an unfair labor practice. NLRB

v. United Nuclear Corp., 381 F.2d 972 (10th Cir. 1967).

We enforce the Board’s order on this issue.

There appears to be little question that the new insur-

ance plan was implemented by the respondent without

consultation or negotiation with the Union over the matter.

The respondent was found to have committed an unfair

labor practice, The administrative law judge, however, lim-

ited the proposed remedy to requiring the respondent to

“cease and desist from unilaterally altering or modifying

the terms and conditions of a collective bargaining agree-

ment it may have with the Union” (R. 151) because he

found that the Union had condoned the respondent’s ac-

tions.'® The decision and order were affirmed by the Board.

10. The administrative law judge stated :

“It further appears from the failure of the Union to lodge

any protest with regard to the unilateral implementation of

the program, the position taken by the Union as to compliance

with Section 3 of article XVIII, and the attempt, disclosed in

McKinlay’s testimony, to obtain benefits for an employee

under the program, that the Union condoned the Respondent's

failure to consult with it prior to its implementation ... .”

(R. 151)

The Board affirmed the administrative law judge’s findings.

’%

Appendix 21

We cannot agree that an unfair labor practice can be found

as the acts were condoned.

Condonation takes place when the injured party demon-

strates a willingness to forgive the improper conduct and

“wipe the slate clean.” Confectionery & Tobacco Drivers

€& Warehousemen’s Union v. NLRB, 312 F.2d 108, 113 (2d

Cir. 1963); Cast Optics Corp. v. NLRB, 458 F.2d 398, 404

(3d Cir.) cert. denied, 409 U.S. 850, 34 L.Ed.2d 92, 93 S.Ct.

58 (1972). In Confectionery & Tobacco Drivers, employees

had engaged in a walkout in violation of their contractual

no-strike clause. The court there stated, however, that,

“TA)fter a condonation the employer may not rely upon

prior unprotected activities of employees to deny reinstate-

ment to, or otherwise to discriminate against them.” 312

F.2d at 113.

We agree with the Board that condonation took place

with regard to the implementation of the new insurance

plan. The Union’s condonation of the unilateral action,

however, “wipes the slate clean.” The Board erred in its

application of the law of condonation; there was no unfair

labor practice upon which to base the charge. We, therefore,

deny enforcement of the cease and desist order.

TV. REFUSING TO PROVIDE A COPY OF THE NEW

INSURANCE PLAN

There is a duty on the part of the employer to supply

the Union, upon request, with sufficient information to en-

able the Union to effectively carry out its collective bar-

gaining duties. San Diego Newspaper Guild, etc. v. NLRB,

548 F.2d 863, 866 (9th Cir. 1977). The information how-

ever, must be relevant to a legitimate union collective bar-

gaining need. 7d. 548 F.2d at 867. Failure of the employer

to comply with a request for relevant information is a

3.4%

’>

22 Appendix

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

§§ 1158(a) (5) and (1).

The administrative law judge found, and the Board sum-

marily affirmed, that the respondent committed an unfair

labor practice in violation of Sections 8(a)(5) and (1) by

its refusal to furnish the Union with a requested copy of

the new insurance program. Since there was a continuing

duty to bargain, the refusal to comply with the request was

found to inhibit the Union in meaningfully bargaining with

the respondent. We enforce the Board’s order on this issue;

substantial evidence on the record as a whole supports the

Board’s determination.

V. INTERROGATION OF EMPLOYEE LAUNIUS

Section 8(a)(1) of the Act, 29 U.S.C. § 158(a)(1), pro-

vides that it shall be an unfair labor practice for an em-

ployer to interfere with, restrain or coerce employees in

the exercise of their rights guaranteed under Section 7 of

the Act. The questioning of employees by the employer

regarding their concerted activities can be a violation of

Section 8(a)(1) where it interferes with Section 7 rights.

Amalgamated Meat Cutters, etc., Local No. 364 v. NLRB,

435 F.2d 668 (9th Cir. 1970). However, employer question-

ing of employees regarding their concerted activities is not

per se unlawful. Penasquitos Village, Inc. v. NLRB, 565

F.2d 1074, 1080 (9th Cir, 1977). “The test is whether, under

all the circumstances, the interrogation reasonably tends to

restrain or interfere with employees in the exercise of their

protected rights.” 7d. at 1080. To be an unfair labor prac-

tice, interrogation “must be associated with express or im-

plied threats or promises, or form part of an overall pattern

tending to restrain or coerce employees with regard to their

protected activities. Amalgamated Meat Cutters, 435 F.2d

at 669.

Appendia 23

The Board affirmed the administrative law judge’s find-

ing that the employer in Sparks Nugget unlawfully inter-

rogated employee Gail Launius in violation of Section 8(a)

(1). The administrative law judge’s determination was

based upon its finding that the totality of the circumstances

indicated animosity towards the employee for her union

activity and that a threat of discharge for any “further”

violation of the company’s no solicitation rule was made.

This issue presents a close question. However, the infer-

ences drawn from the facts by the administrative law judge

and affirmed by the Board are reasonable. Finding sub-

stantial evidence on the record as a whole, we enforce the

Board’s order on this issue.

VI. REPRIMAND OF EMPLOYEE DYER

An employer violates Sections 8(a)(3) and (1) of the

Act, 29 U.S.C. §§ 158(a)(3) and (1) by discriminating to

encourage or discourage membership in any labor organiza-

tion. Radio Officers’ Union v. NLRB, 347 U.S, 17, 98 L.Ed.

455, 74 S.Ct. 323 (1954). Discrimination violative of Sec-

tions 8(a)(3) and (1) may be found where an employer

disciplines an employee because that employee has engaged

in or is suspected of engaging in union activities. NLRB v.

Bin-Dictator Co,, 356 F.2d 210, 214-215 (6th Cir. 1966).

The Board found that employee John Dyer was repri-

manded by the employer in Sparks Nugget because he was

suspected of engaging in union activities and the employer

sought to deter him from such activities. (R. 146) While

different inferences may be drawn from the facts, the infer-

ences drawn by the Board were reasonable and supported

by substantial evidence on the record as a whole. We enforce

the Board’s order on this issue.

*- >

24 Appendix

CONCLUSION

Summarizing our disposition of the various issues con-

sidered:

1. We enforce the Board’s orders with regard to

the respondents’ refusal to bargain (Section I) ;

2. The Board’s orders concerning the respondents’

no solicitation rules in Barney’s Club and Sparks Nug-

get are enforced as modified (Section IT) ;

3. The Board’s order regarding the unilateral

changes made in Sparks Nugget is enforced as to the

unilateral implementation of the new grievance pro-

cedure, but denied as to the unilateral implementation

of the insurance program (Section ITI) ;

4, The respondent in Sparks Nugget committed an

unfair labor practice in refusing to provide the Union

with a copy of the new insurance program; therefore,

we enforce the Board’s order on that issue (Section

IV);

5. The interrogation of Sparks Nugget employee

Launius and the reprimand of employee Dyer were

unfair labor practices. Thus, we enforce the Board’s

order on those issues (Sections V & VI).

IT IS SO ORDERED.

Appendia

FILED Jul 14 1980

Richard H. Deane

Clerk, U.S. Court of Appeals

In The United States Court of Appeals

For the Ninth Circuit

Natrionau Lasor Retations Boarp,

Petitioner,

and

Horet-Moret-RestauRANT EMPLOYEES

& Bartenvers Union, Locat 86,

Hore, Restaurant & BARTENDERS No.

INTERNATIONAL Union, AFL-CIO,

Intervenor,

vs.

Suiver Spur Casino,

Respondent.

Nationa Lasor Reiations Boarp,

Petitioner,

and

Horet-Moret-ReEsTAuRANT EMPLOYEES

& Bartenvers Union, Loca 86, No.

Intervenor,

vs.

Nevapa Cuvs, Inc.,

Respondent.

Nationa Lasor Retations Boarp,

Petitioner,

and

Hore.-Moret-RestavRaANnt EMPLOYEES

& Bartenvers Union, Locat 86,

Intervenor,

vs.

Sparks Nvuacet, Inc., d/b/a

Joun Ascuaga’s Nuacet,

Respondent.

No.

77-2311

77-2939

17-2954

-*%

26 Appendix

NationaL Lasor REiations Boar,

Petitioner,

and

Horet-MorTe.t-RESTAURANT EMPLOYEES

& Bartenvers Union, Locat 86, No. 77-2658

Intervenor,

vs.

Barney’s Cuvs, Inc.

Respondent.

National Lasor REuations Boarp,

Petitioner,

and

Hore.-Moret-REsSTAURANT EMPLOYEES

& Bartenvers Union, Loca 86, No. 77-2938

Intervenor,

vs.

Finay, Inc., d/b/a

THe Paxace Civs,

Respondent.

ORDER

Before: KENNEDY and ANDERSON, Circuit Judges,

and SCHWARTZ,?® District Judge.

The panel as constituted in the above case has voted to

deny the petition for rehearing and to reject the suggestion

for a rehearing en banc.

The full court has been advised of the suggestion for

en banc rehearing, and no judge of the court has requested

*The Honorable Edward J. Schwartz, Chief United States Dis-

trict Judge for the Southern District of California, sitting by

designation.

Appendiz oT

a vote on the suggestion for rehearing en banc. Fed. R. App.

P. 3b(b).

The opinion in these consolidated appeals is amended as

follows:

At page 16, line 28 (of the typed manuscript), by

adding to the modification of the Board’s Order the

following language after the word “premises” :

“unless such prohibition is demonstrably necessary

to maintain production, discipline or security.”

and as applied to Barney’s Club, No. 77-2658, and

Sparks Nugget, No. 77-2654.

The National Labor Relations Board shall forthwith

submit proposed judgments reflecting this amendment.

The petition for rehearing is denied and the suggestion

for a rehearing en banc is rejected.

28 Appendix

RECEIVED

SEP 19 1980

Severson, Werson,

Berke & Melchior

RECEIVED

Richard H. Deane

Clerk, U.S. Court of Appeals

AUG 4 1980

Filed 9-12-80

Docketed 8-27-80

’%

United States Court of Appeals

For the Ninth Circuit

No. 77-2954

NationaL Lasor RExiations Boarp,

Petitioner,

and

Horet-Morer-ResTauRANT EMPLOYEES

& Bartenvers Union, Loca 86,

Intervenor,

Sparks Nuacet, Inc., d/b/a

Joun AscuaGa’s NuGGET,

Respondent.

AMENDED JUDGMENT

Before: KENNEDY and ANDERSON, Circuit Judges,

and SCHWARTZ,? District Judge.

THIS CAUSE came on to be heard upon an application

of the National Labor Relations Board for the enforce-

1. The Honorable Edward J. Schwartz, Chief United States Dis-

trict Judge for the Southern District of California, sitting by

designation.

Appendix 29

ment of an order issued by it against the Respondent,

Sparks Nugget, Inc., d/b/a John Ascuaga’s Nugget, Sparks,

Nevada, its officers, agents, successors, and assigns on

June 17, 1977. The Court heard argument of respective

counsel on December 12, 1979, and has considered the briefs

and transcript of record filed in this cause. On May 27,

1980, the Court, being fully advised of the premises, handed

down its opinion granting enforcement of the Board’s

Order, as modified. In conformity therewith, it is hereby

ORDERED AND ADJUDGED by the Court that Re-

spondent, Sparks Nugget, Inc., d/b/a John Ascuaga’s

Nugget, Sparks, Nevada, its officers, agents, successors, and

assigns, shall:

1. Cease and desist from:

(a) Maintaining any rule or regulation prohibiting

its employees from soliciting on its premises during

nonworking hours in nonpublic areas of its premises

unless such prohibition is demonstrably necessary to

maintain production, discipline or security.

(b) Unlawfully interrogating employees concerning

their relationship to and activities upon behalf of

Hotel-Motel-Restaurant Employees & Bartenders Un-

ion, Local 86, Hotel & Restaurant Employees & Bar-

tenders International Union, AFL-CIO, (hereinafter

called the Union) or any other labor organization.

to deter them from supporting or engaging in activities

upon behalf of said Union, or any other labor organiza-

tion.

(d) Unilaterally instigating, establishing, maintain-

ing, or utilizing the Sparks Nugget Employees’ Council

and the grievance procedure of which said Council is a

part.

> |

has found necessary to effectuate the policies of the Act:

Appendix

(e) Unilaterally instituting any alterations, modifi-

cations or changes in the terms and conditions of

employment which are mandatory subjects of bargain-

ing with the aforesaid Union.

(f) Refusing to furnish to said Union a copy of its

current insurance program covering employees repre-

sented by said Union.

(g) Refusing to recognize and bargain with said

Union as the exclusive bargaining representative of

the employees in the appropriate bargaining unit de-

scribed below, with regard to the wages, hours, working

conditions, and other terms and conditions of employ-

ment of the unit employees:

All employees employed by the Respondent in its

bar and culinary operations at its Sparks, Nevada,

place of business, excluding all other employees,

guards and supervisors, as defined in the Act.

(h) In any other manner interfering with, restrain-

ing, or coercing its employees in the exercise of the

rights guaranteed in Section 7 of the National Labor

Relations Act (hereinafter called the Act).

Take the following affirmative action which the Board

(a) Recognize and, upon request, bargain collec-

tively with the Union, as the exclusive bargaining rep-

resentative of the employees in the appropriate unit

described below, with regard to the wages, hours,

working conditions and other terms and conditions of

employment of the unit employees, and if an under-

standing is reached, embody such understanding in a

signed agreement. The unit found appropriate for the

purposes of collective bargaining is:

Appendix 31

All employees employed by the Respondent in its

bar and culinary operations at its Sparks, Nevada,

place of business, excluding all other employees,

guards and supervisors, as defined in the Act. :

(b) Furnish said Union, upon request, a copy of its

current insurance policy covering its employees in the

above-described bargaining unit.

warning notice it issued to him on or about January

20, 1975.

(d) Post at its Sparks, Nevada, place of business

copies of the attached notice marked “Appendix.”

Copies of the notice on forms provided by the Regional

Director for Region 20 of the National Labor Relations

Board (San Francisco, California) after being duly

signed by an authorized representative of the Re-

spondent, shall be posted by the Respondent immedi-

ately upon receipt thereof, and be maintained by it for

a period of 60 consecutive days thereafter, in conspicu-

ous places, including all places where notices to em-

ployees are customarily posted. Reasonable steps shall

be taken by the Respondent to ensure that the notices

are not altered, defaced or covered by any other

material.

(e) Notify the aforesaid Regional Director in writ-

ing, within 20 days from the date of this Judgment,

what steps the Respondent has taken to comply here-

with. Costs in this court in favor of the petitioner and

against the respondent.

Costs:

BRIEF FOR THE

PETITIONER $235.54

32 Appendiz

Endorsed, Judgment Filed

and Entered

/s/ Ricuarp H. Deane

Clerk

A TRUE COPY

ATTEST:

Ricuarp H, DEanE

Clerk

SO ORDERED:

JUDGES:

_ AntuHony M. Kennepy, CJ

J. Buarne Anperson, CJ

Edward J. Schwartz, DJ

A TRUE COPY

ATTEST 18 SEP 1980

Richard H. Deane

Clerk of Court

by: Oscar Tagle

Deputy Clerk

APPENDIX

NOTICE TO EMPLOYEES

POSTED PURSUANT TO A JUDGMENT OF THE

UNITED STATES COURT OF APPEALS ENFORC-

ING AN ORDER, AS MODIFIED, OF THE NATIONAL

LABOR RELATIONS BOARD

An Agency of the United States overnment

WE WILL NOT maintain any rule or regulation pro-

hibiting our employees from soliciting on our premises

during nonworking hours in nonpublic areas of its premises

unless such prohibition is demonstrably necessary to main-

tain production, discipline or security.

WE WILL NOT unlawfully interrogate employees con-

cerning their relationship to and activities upon behalf of

Hotel-Motel-Restaurant Employees & Bartenders Union,

Local 86, Hotel & Restaurant Employees & Bartenders

International Union, AFL-CIO, or any other labor organi-

zation.

WE WILL NOT issue warning notices to employees in

order to deter them from supporting or engaging in activi-

ties upon behalf on said Union, or any other labor organi-

zation.

WE WILL NOT instigate, establish, maintain, or utilize

Sparks Nugget Employees’ Council and the grievance pro-

cedure of which said Council is a part.

WE WILL NOT unilaterally institute any alterations,

modifications, or changes in the terms and conditions of

employment which are mandatory subjects of bargaining

with the aforesaid Union.

WE WILL NOT refuse to furnish to said Union a copy

of our current insurance program covering employees

represented by said Union.

WE WILL NOT refuse to recognize and bargain with

said Union as the exclusive bargaining representative of

34 Appendiz

the employees in the appropriate bargaining unit described

below with regard to the wages, hours, working conditions,

and other terms and conditions of employment of the unit

employees:

All employees employed in our bar and culinary opera-

tions at our Sparks, Nevada, place of business, exclud-

ing all other employees, guards and supervisors, as

defined in the Act.

WE WILL NOT in any other manner interfere with,

restrain, or coerce emplovees in the exercise of the rights

guaranteed them by Section 7 of the Act.

WE WILL recognize and, upon request, bargain collec-

tively with Hotel-Motel-Restaurant Employees & Bartend-

ers Union, Local 86, Hotel & Restaurant Employees &

Bartenders International Union, AFL-CIO, as the exclusive

bargaining representative of the employees in the appro-

priate unit described above, with regard to the wages,

hours, working conditions, and other terms and conditions

of employment of the unit employees, and, if an under-

standing is reached, embody such understanding in a signed

agreement.

WE WILL furnish said Union, upon request, a copy of

our current insurance policy covering our employees in the

above-described bargaining unit.

WE WILL remove from the personnel file of John Dyer

the warning notice we issued to him on or about January

20, 1975.

SPARKS NUGGET, INC.

d/b/a JOHN ASCUAGA’S NUGGET

(Employer)

(Representative) (Title)

Appendix 85

This is an official notice and must not be defaced by

anyone.

This notice must remain posted for 60 consecutive days

from the date of posting and must not be altered, defaced,

or covered by any other material. Any questions concerning

this notice or compliance with its provisions may be di-

rected to the Board’s Office, 13018 Federal Building, Box

36047, 450 Golden Gate Avenue, San Francisco, California

94102, Telephone 415-556-0335.

-_ |

36 Appendix

United States Court of Appeals

For the Ninth Circuit

No. 77-2954

NationaL Lasor Retations Boarp,

Petitioner,

and

Horet-More.t-REsTAURANT EMPLOYEES

& Bartenpers Union, Loca 86,

Intervenor,

Sparks Nuacet, Inc., d/b/a

Joun AscuaGa’s NuGGET,

Respondent.

CERTIFICATE OF SERVICE

The undersigned hereby certifies that one copy of the

Board’s amended proposed judginent in the above-cap-

tioned case has this day been served upon the following

counsel at the addresses listed below:

William W. Wertz, Esquire

Severson, Werson, Berke & Melchior

One Embarcadero Center

San Francisco, California 94111

Geoffrey V. White, Esquire

Davis, Cowell & Bowe

351 California Street, Suite 420

San Francisco, California 94101

Exxuiotr Moore

Elliott Moore

Deputy Associate General Counsel

NATIONAL LABOR RELATIONS BOARD

Dated at Washington, D. C.

this 30th day of July, 1980.

Appendix

Received

Richard H. Deane

Clerk, U.S. Court of Appeals

Aug. 4, 1980

Filed 8-18-80

Dated : 8-4-80 DM

Received Aug 21 1980

Severson, Werson,

Berke & Melchior

United States Court of Appeals

For the Ninth Circuit

No, 77-2658

Nationa Lasor Rexations Boarp,

Petitioner,

and

Horet-Morte.-RestauranT EMPLOYEES

& Bartenpers Union, Locat 86,

Intervenor,

Barney’s Cuivs, Inc.,

Respondent.

AMENDED JUDGMENT

Before: KENNEDY and ANDERSON, Circuit Judges,

and SCHWARTZ,® District Judge.

THIS CAUSE came on to be heard upon an application

of the National Labor Relations Board for the enforcement

of an order issued by it against the Respondent, Barney’s

*The Honorable Edward J. Schwartz, Chief United States Dis-

trict Judge for the Southern District of California, sitting by

designation.

38 Appendiz

Club, Incorporated, Stateline, Nevada, its officers, agents,

_ guecessors, and assigns on December 17, 1976. The Court

heard argument of respective counsel on December 12,

1979, and has considered the briefs and transcript of record

filed in this cause. On May 27, 1980, the Court, being fully

advised of the premises, handed down its opinion granting

enforcement of the Board’s Order, as modified. In con-

formity therewith, it is hereby

ORDERED AND ADJUDGED by the Court that Re-

spondent, Barney’s Club, Incorporated, Stateline, Nevada,

its officers, agents, successors, and assigns, shall:

1. Cease and desist from:

(a) Maintaining any rule or regulation prohibiting

its employees from soliciting on its premises during

nonworking hours in nonpublic areas of its premises

unless such prohibition is demonstrably necessary to

maintain production, discipline or security.

(b) Refusing to recognize and bargain in good faith

with Hotel-Motel-Restaurant Employees & Bartenders

Union, Local 86, Hotel & Restaurant Employees &

Bartenders International Union, AFL-CIO, (herein-

after called the Union) as the exclusive representative

of its employees in the following bargaining unit:

All employees employed by it in its bar and culinary

operations at its Stateline, Nevada operations, ex-

cluding all other employees, guards and supervisors

as defined in the Act.

restraining or coercing employees in the exercise of

their rights guaranteed in Section 7 of the National

Labor Relations Act (hereinafter called the Act).

2. Take the following affirmative action which the Board

has found necessary to effectuate the policies of the Act:

Appendia 39

(a) Recognize and, upon request, bargain in good

faith with the Union as the exclusive representative

of its employees in the unit described above.

(b) Post at its Stateline, Nevada facility copies of the

attached notice marked “Appendix.” Copies of the

notice, on forms provided by the Regional Director for

Region 20, after being duly signed by its authorized

representative, shall be posted by it immediately upon

receipt thereof, and be maintained by it for sixty (60)

consecutive days thereafter in conspicuous places, in-

cluding all places where notices to employees are cus-

tomarily posted. Reasonable steps shall be taken by it

to insure that said notices are not altered, defaced or

covered by any other material.

ing within twenty (20) days from the date of this

Judgment, what steps it has taken to comply herewith.

Endorsed, Judgment Filed SO ORDERED:

and Entered JUDGES:

/s/ Ricuarp H. Deane Antuony M. Kennepy, CJ

Richard H. Deane Anthony M. Kennedy, CJ

Clerk J. Buarye Anperson, CJ

A TRUE COPY J. Blaine Anderson, CJ

20 AUG 1980 Epwarp J. Scuwartz, DJ

Edward J. Schwartz, DJ

ATTEST:

Ricuarp H, Deane

Clerk

Oscar TAGLE

Deputy Clerk

40 Appendix

NATIONAL LABOR RELATIONS BOARD

' ‘NOTICE TO EMPLOYEES

Posted Pursuant to a J udgment of the United States

Court of Appeals Enforcing an Order, as Modified,

of the National Labor Relations Board

An Agency of the United States Government

We hereby notify you that:

WE WILL NOT prohibit our employees from soliciting on

our premises during nonworking hours in nonpublic areas

of its premises unless such prohibition is demonstrably

necessary to maintain production, discipline or security.

WE WILL NOT refuse to recognize and bargain in good

faith with Hotel-Motel-Restaurant Employees & Bartenders

Union, Local 86, Hotel & Restaurant Employees & Bartend-

ers International Union, AFL-CIO, as the exclusive repre-

sentative of our employees in the foiiowing bargaining unit:

All employees employed by us in our bar and culinary

operations at our Stateline, Nevada operations, exclud-

ing all other employees, guards, and supervisors as

defined in the Act.

WE WILL NOT in any like or related manner interfere

with, restrain or coerce employees in the exercise of their

rights guaranteed by Section 7 of the Act.

WE WILL recognize and, upon request, bargain in good

faith with said Union as the exclusive representative of our

employees in that unit.

BARNEY’S CLUB,

INCORPORATED

(Employer)

Dated

0 TARTS Sa aR

(Representative)

(Title)

Appendix 41

THIS IS AN OFFICIAL NOTICE AND

MUST NOT BE DEFACED BY ANYONE

This notice must remain posted for 60 consecutive days

from the date of posting and must not be altered, defaced,

or covered by any other material. Any questions concern-

ing this notice or compliance with its provisions may be

directed to the Board’s Office, 13018 Federal Building, Box

36047, 450 Golden Gate Ave., San Francisco,

42 Appendix

| Barney’s Club, Incorporated and Hotel-Motel-

Restaurant Employees & Bartenders Union,

Local 86, Hotel and Restaurant Employees &

Bartenders International Union, AFL-CIO.

Case 20-CA-9737

December 17, 1976

DECISION AND ORDER

By CHarrmMAn MurpPHY AND MEMBERS

FANNING AND PENELLO

On February 20, 1976, Administrative Law Judge Richard

D. Taplitz issued the attached Decision in this proceeding.

Thereafter, the Respondent filed exceptions and a support-

ing brief. The General Counsel and the Charging Party filed

briefs in support of the Decision.

Pursuant to the provisions of Section 3(b) of the National

Labor Relations Act, as amended, the National Labor Rela-

tions Board has delegated its authority in this proceeding

to a three-member panel.

The Board has considered the record and the attached

Decision in light of the exceptions and briefs and has

decided to affirm the rulings,’ findings,? and conclusions® of

1. The Respondent’s request for oral argument is hereby denied,

as the record and the briefs adequately present the issues and

positions of the parties. We also find no merit in the Respondent’s

motion to strike the Charging Party’s brief on various grounds

and that motion is hereby denied.

2. The Respondent has excepted to certain credibility findi

made by the Administrative Law Judge. It is the Board’s esta

lished policy not to overrule an Administrative Law Judge’s

resolutions with respect to credibility unless the clear preponderane:

of all of the relevant evidence convinces us that the resolutions

are incorrect. Standard Dry Wall Products, Inc., 91 NLRB 544

(1950), enfd. 188 F.2d 362 (C.A. 3, 1951). We have carefully

examined the record and find no basis for reversing his findings.

3. For the reasons set forth in Tahoe Nugget, Inc., 227 NLRB

357 (1976), we agree with the Administrative Law Judge's con-

Appendix 43

the Administrative Law Judge* and to adopt his recom-

mended Order.

ORDER

Pursuant to Section 10(c) oi! the National Labor Rela-

tions Act, as amended, the National Labor Relations Board

adopts as its Order the recommended Order of the Adminis-

trative Law Judge and hereby orders that the Respondent,

Barney’s Club, Incorporated, Stateline, Nevada, its officers,

agents, successors and assigns, shall take the action set

forth in the said recommended Order.

DECISION

STATEMENT OF THE CASE |

Ricuarp D, Tapuitz, Administrative Law Judge: This

case was heard in South Lake Tahoe, California, on October

1 and 2, 1975. The charge was filed on November 19, 1974,

by Hotel-Motel-Restaurant Employees & Bartenders Union

Local No. 86, Hotel and Restaurant Employees & Bartend-

clusion that the Union’s presumption of majority status based on

its recognition as the bargaining representative for the Respondent’s

employees as part of a multiemployer unit survived the Respondent's

timely withdrawal from that unit and the shift to bargaining on

a single-employer basis.

Also for the reasons set forth in Nevada Lodge, 227 NLRB 368

(1976), we disagree with the Respondent's contention that the

Board should not assert its clearly established legal jurisdiction

in this case.

4. Chairman Murphy in agreeing that the Respondent violated

See. 8(a) (1) of the Act in maintaining the disputed no-solicitation

rule does so on the ground that in her view the rule was overly,

and thus unlawfully, broad. See her concurring opinion in M

Restaurants, Incorporated, d/b/a The Mandarin, 221 NLRB 264

(1975).

Member Penello adheres to the position he took in GTE Lenkurt,

Incorporated, 204 NLRB 921 (1973), but agrees with Chairman

Murphy, for the reasons given by her in her concurring opinion

in Mandarin, supra, that the instant no-solicitation rule which is

identical to the one considered by the Board in Mandarin is not

a “no-access” rule under the principles set forth in Lenkurt, supra,

but is an unlawfully broad no-solicitation rule.

-*%

44 Appendix

ers International Union, AFL-CIO, herein called the Union.

The complaint and amended complaint issued on April 11

and July 31, 1975, respectively, alleging that Barney’s Club,

Incorporated, herein called Respondent, violated Section

8(a)(1) and (5) of the National Labor Relations Act, as

amended.

IssuEsS

The primary issues are:

1. Whether Respondent violated Section 8(a)(1) of the

Act by maintaining a written rule prohibiting solicitation

on company premises by employees after the employees’

shifts, while permitting employees to remain on the prem-

ises for other purposes.

2. Whether Respondent violated Section 8(a) (5) and (1)

of the Act by withdrawing recognition from and refusing to

bargain with the Union as the collective-bargaining repre-

sentative of its bar and culinary employees. Subsidiary

issues with regard to that allegation are:

(a) Whether the rebuttable presumption of the Union’s

continued majority status which flowed from a contract

in a multiemployer bargaining unit survived Respondent’s

timely withdrawal from that unit and was applicable to a

single-employer bargaining unit.

(b) If the presumption did apply, whether Respondent

has rebutted that presumption by affirmatively establishing

that the Union had, in fact, lost its majority or by showing

that Respondent had sufficient objective bases for reason-

ably doubting the Union’s continued majority.

A further issue is whether the Employer has engaged in

any conduct tending to encourage employee disaffection

from the Union.

All parties were given full opportunity to participate, to

introduce relevant evidence, to examine and cross-examine

**s

Appendix 45

witnesses, to argue orally and to file briefs.’ Briefs, which

have been carefully considered, were filed on behalf of the

General Counsel, Respondent, and Charging Party.

Upon the entire record of the case, and my observation of

the witnesses and their demeanor, I make the following:

Finprings or Fact

I, THE BUSINESS OF RESPONDENT

Respondent is a Nevada corporation engaged in the oper-

ation of a gaming casino, bar, and restaurant at Stateline,

Nevada. During the year immediately preceding issuance of

complaint, Respondent’s gross revenues were in excess of

$500,000, and during the same year Respondent purchased

goods and materials valued in excess of $10,000 which origi-

nated outside of Nevada.

Respondent is an employer engaged in commerce and in

a business affecting commerce within the meaning of Section

2(6) and (7) of the Act, and it will effectuate the policies of

the Act for the Board to assert jurisdiction. See The An-

thony Company d/b/a El Dorado Club, 220 NLRB 886

(1975), and cases cited therein.

II, THE LABOR ORGANIZATION INVOLVED

The Union is a labor organization within the meaning of

Section 2(5) of the Act.

Ill. THE ALLEGED UNFAIR LABOR PRACTICES

A. The Backgrownd

The Reno Employers Council, herein called the Associa-

tion, is a Nevada corporation with an office located in Reno,

1. In its brief Respondent requests reconsideration of its motion

to reopen its case-in-chief. For the reasons set forth in the record

relating to the original motion, the request is denied.

46 Appendix

Nevada. It is a voluntary association of employers engaged

in the casino, restaurant, and other industries. The Associa-

tion exists in part for the purpose of representing its mem-

ber-employers in collective bargaining and in administering

collective-bargaining agreements with vaiious labor organ-

‘ izations, including the Union. The Union and the Association

entered into a multiemployer collective-bargaining contract

on August 3, 1959. The Association agreed to the contract

on behalf of employers it represented in the Lake Tahoe

area. Succeeding contracts followed,’ with the last effective

from December 1, 1971, through November 30, 1974. That

contract was between the Union and the Association on be-

half of the individual members thereof signatory thereto.

Five employers were signatory to the contract, including

Respondent.* Employees covered by that contract were those

in the employers’ bar and culinary operations at Lake Tahoe.

On May 16, 1963, Respondent and the Union entered into

a single-employer collective-bargaining agreement effective

by its terms from November 30, 1962, through November 30,

1965. In the contract, Respondent recognized the Union as

the sole bargaining agency for all employees employed by it

in its bar and culinary operations at Lake Tahoe. At some

unspecified date, Respondent joined the Association. Re-

spondent became a party to the multiemployer bargaining

agreement between the Association and the Union, which

was effective from November 30, 1965, through November

30, 1968. Respondent continued to be a party to the succes-

2. In some of those contracts new member-employers of the

Association were added and other employers were deleted.

3. Nevada is a right-to-work State and none of the contracts con-

tain a union-security clause.

4. The signatory employers were Barney's Club, Harvey's Re-

sort Hotel, Nevada Lodge, Sahara-Tahoe and Tahoe Nugget.

Appendix 47

sive multiemployer collective-bargaining contracts through

the one that expired on November 30, 1974.

On August 30, 1974, Respondent timely withdrew its mem-

bership from the Association.*

On October 24, 1974, Respondent refused to bargain with

the Union, and Respondent has withdrawn recognition from

the Union. On July 25, 1975, Respondent filed a petition for

an election with the Board. That petition sought an election

among Respondent’s culinary and bartender employees in a

single-employer unit. The complaint alleges a refusal to bar-

gain in that single-employer unit. The complaint alleges, the

answer as amended admits, and I find that the appropriate

bargaining unit is:

All employees employed by the Respondent in its bar

and culinary operations at its Stateline, Nevada, opera-

tions, excluding all other employees, guards, and super-

visors as defined in the Act.

B. The No-Solicitation Rule

1. The facts

On about July 22, 1974, Respondent posted a no-solicita-

tion rule on its front door. The posting was authorized by

Robert G. Berry, Respondent’s chief executive officer.* The

posted rule enunciated a policy that had been in existence

for at least 4 years prior to July 22, 1974.7 The part of the

5. The General Counsel concedes in its complaint that the with-

drawal was timely.

6. Berry is also vice president of Respondent and a member of

its board of directors.

7. These findings are based on a stipulation of the parties. There

is no evidence in the record that the employees were aware of the

rule before the posting. Respondent offered no evidence that would

indicate that the rule was necessary to maintain discipline or pro-

48 Appendix

Tule that is alleged to be violative of the Act states :*

Based upon long established rules, your attention is

called to the folowing:

Solicitation on company premises by employees after

employees shift has been completed is prohibited.

Violation of any of the above rules will result in

immediate disciplinary action, including discharge.

Respondent permitted employees to come on to its prem-

ises after their shifts. Indeed, such a practice was encour-

aged in that Respondent customarily allowed employees to

have a free drink at its bar after they had completed a

shift. Employees often sat at the bar for extended periods

when they were off shift and spoke among themselves and

with supervisors. Sometimes the employees were in uniform

and sometimes they were not. In general, Respondent con-

sidered off-shift employees to be members of the public who

were welcome to use its facilities.

Respondent did not maintain an employees’ lounge or

rest area. The only area in Respondent’s facility that was

reserved for off-shift or off-duty employees was a single

table, that seated about eight people, in its public restau-

rant. That table was about 4 feet away from the next table

at which customers sat and customers could overhear what

was being said at the table reserved for employees. That

8. The rule also reads:

Solicitations of any type by employees during working time

is prohibited.

* + * * *

Distribution of literature of any type or description by em-

ployees during working time is prohibited.

Distribution of literature of any type or description in work-

ing areas is prohibited.

°%

Appendix 49

table was generally used by employees during their break

periods and was seldom used by off-shift employees.

Respondent maintained the no-solicitation rule by post-

ing it and thereby notifying the employees that it was

currently in force. The rule provided on its face that a

violation would result in immediate disciplinary action,

including discharge. There is no contention that anyone

was disciplined for violation of the rule. Off-shift employees

did engage in a number of different types of solicitation on

Respondents’ premises, and Respondent took no action

against those solicitations.

As to some types of solicitations, there is no evidence in

the record that Respondent knew they were taking place.

In that category are sale of Avon products and shoes by

employees to other employees and invitations by employees

to other employees to attend parties.® With regard to two

types of solicitation, Respondent did have knowledge. Those

related to the sale of Elks Club raffle tickets and the par-

ticipation by employees in football and baseball gambling

pools.

Al Labendz, who was employed by Respondent as a

bartender from about 1967 through part of 1969 and then

9. Al Labendz, who was a bartender for Respondent from about

1967 through part of 1969 and again from 1970 through July 1973,

credibly testified that he saw off-duty employees selling Avon prod-

ucts on the premises during both his periods of employment and that

at sometime in 1971 or 1972 he bought a pair of shoes from another

employee on the premises. He also averred that he didn’t know

whether the people showing the Avon products and selling the shoes

made any attempt to conceal their action from management, and he

didn’t know if management knew about the sales. Labendz and Gary

Powers, who was a bartender for Respondent from July 1973 to

November 1974, credibly testified that on a number of occasions

employees on the premises invited them to parties. Even if such in-

vitations could be considered solicitations within the compass of the

no-solicitation rule, there is no evidence that Respondent knew of

them.

50 Appendix

again from 1970 through July 1973, credibly testified that,

two or three times a year during the time he was employed,

he sold Elks Club raffle tickets to employees, supervisors,

and customers on the premises. At times he sold as many as

80 or 100 tickets: Each time a raffle was held, he solicited

then General Manager Lewis and then Assistant General

Manager Source. Some of the employees he sold the tickets

to were on duty and others were off duty. He also sold the

tickets to Barney O’Malia, who at one time was owner of

the club, and to Eugene Terry, who at one time was. bar

manager.

Labendz credibly testified that a football pool was held

every week during the fall up to his termination in 1973.

Records of the pool were maintained on a card which was

kept in the cashier’s cage, and supervisors participated in

the pool, including Lewis, Source, Keno Boss Bill Coombs,

and Pit Bosses Lorin Phoenix and Vern Pratt. Gary Powers,

who was a bartender from July 1973 to November 1974,

credibly testified that most of the employees participated in

baseball and football pools after their shifts ended and that

supervisors participated. He personally asked employees to

. participate. He participated in a world series pool in the fall

of 1974 and sold chances to off-duty employees. As late as a

few weeks before the hearing, one of the bartenders offered

Union Business Representative Howard Lawrence a chance

to get in the football pool while Lawrence was visting the

premises.

2. Analysis and conclusions with regard to the

no-solicitation rule

The right of employees to self-organization has often

come into conflict with the right of employers to maintain

discipline in their establishments and to control the use of

their property. Over the years, the Board and the courts

Appendix | 51

have attempted to reconcile these conflicts through the

formulation of rules of law which attempt to maximize the

scope of the rights of each to the extent that they do not

unduly diminish the rights of the other. Republic Aviation

Corporation v. N.L.R.B., 324 U.S. 793 (1945); N.O.R.B. v.

Babcock & Wilcox Company, 351 U.S. 105 (1956). In draw-

ing guidelines in this area the United States Supreme Court

has held: “No restriction may be placed on the employees’

right to discuss self-organization among themselves, unless

the employer can demonstrate that a restriction is necessary

to maintain production or discipline.” N.L.R.B. v. Babcock

¢ Wilcox Co., supra at 113. In N.L.R.B, v. United Steel-

workers of America, CIO [Nutone], 357 U.S. 357 (1958), the

Supreme Court noted that “mechanical answers” do not

solve “this non-mechanical, complex problem in labor man-

agement relations.” However certain guidelines have been

well established. In attempting to reconcile the legitimate

interests of both employers and unions, the Board has looked

at the nature of the business. Thus, the rules which have

evolved relating to industrial establishments” have not been

applied to retail stores. Because active solicitation in a

sales area may disrupt the retail store’s business, an em-

ployer may legally prohibit distribution and solicitation

by employees and nonemployees on the selling floor even

during the non-working time of the employees. May Depart-

ment Stores Co., 59 NLRB 976 (1944), enfd. 154 F.2d 533

(C.A. 8, 1946); Marshall Field & Co., 98 NLRB 88 (1952),

enforcement denied in part 200 F.2d 375 (C.A, 7, 1952). In

Marshall Field, the Board was faced with the question

whether a public restaurant within a department store

should or should not, be considered a sales area within which

10. See Stoddard-Quirk Manufacturing Co., 138 NLRB 615

(1962).

52 Appendix

employees could be prohibited from soliciting. The Board

answered the question in the negative, holding; “The Board

does not agree with the Respondent’s general contention

that prohibition of all solicitation in public restaurants is

lawful.’

In the instant case Respondent operates a gambling

casino, bars, and a public restaurant. The gambling estab-

lishment is analogous to a retail store for the purposes of

the no-solicitation rule. Thus, Respondent could lawfully

ban all solicitation in the gambling area, but it could not

lawfully maintain a general ban on solicitation in the public

bars or restaurant. In that the no-solicitation rule in ques-

tion applies equally to the gaming area, the bars, and the

public restaurant, the legal principles applicable to the

lawful limitation of soliciting on the sales floor of a depart-

ment store do not apply.

In GTE Lenkurt, Incorporated, 204 NLRB 921 (1973),

the Board found to be lawfu! a no-solicitation rule that

read: “An employee is not to enter the plant or remain on

the premises unless he is on duty or scheduled for work.”

The Board stated:

Under well-settled principles applicable to employee

activities...an emplover may not, absent special cir-

cumstances, prohibit employees lawfully on the pre-

mises from engaging in union solicitation on their own

time. However, it is also well settled that nonemployees

are not entitled to enter an employer’s premises to

engage in union activity there. Accordingly, to dispose

11. In N.L.R.B, v, Magnavor Company of Tennessee, 415 U.S.

$22 (1974), the Supreme Court held:

The place of work is a place uniquely appropriate for dis-

semination of views concerning the bargaining representative

and the various options open to the employees. So long as the

distribution is by employees to employees and so long as the

in-plant solicitation is on nonworking time, banning of that

solicitation might seriously dilute § 7 rights.

Appendix 53

of the issue here, we must determine which of these

principles applies to an off-duty employee, i.e.,

whether, nonwithstanding an employer rule to the

contrary, he has a right to enter or remain on an em-

ployer’s premises if he wishes to do so for this purpose,

Tn our view he does not, for his status is more nearly

analogous to that of a nonemployee, and he is subject

to the, principles applicable to nonemployees, [Foot-

notes omitted, ]

In Lenkurt, the Board was dealing with a total exclusion of

off-duty employees from respondent’s nonretail premises,

In M Restaurants, Incorporated d/b/a The Mandarin, 221

NLRB 264 (1975), the Board considered a situation where

off-shift employees were allowed to enter a restaurant’s

premises for limited purposes, In that case, the no-solicita-

tion rule read: “Solicitation on company premises by em-

ployees after employees’ shift has been completed is pro-

hibited,” The Board distinguished the Lenkurt situation and

ruled that the no-solicitation clause was invalid, holding:

The rule in the instant case was directed solely at

employee solicitation, In fact Respondent permitted

off-duty employees to wait for fellow employees to

finish work, to pick up their paychecks on their days

off, and to return to the premises to eat with their

coworkers, Under these circumstances and particularly

in view of the majority’s holding in Lenkurt, it is evi-

dent that even under the standard enunciated in that

case Respondent’s no-access rule is presumptively in-

valid and unlawful,

In the instant case the no-solicitation rule is identical to the

one considered by the Board in the Mandarin case, As in

the Mandarin case, Respondent’s employees were permitted

to come on to Respondent’s premises when they were off

shift. They were encouraged to do so by Respondent in that

Respondent gave them free drinks after shift. They were

54 Appendix

allowed to remain at the bar and to use Respondent’s

facilities, In addition, Respondent knew that off-shift

employees were participating in sports pools and employees

had been solicited to purchase Elk’s Club raffle tickets,

Respondent made no effort to limit those activities, There is

no evidence that the rule was known to employees before

the posting, The rule was posted after the Union’s renewed

organizational activity, Respondent offered no evidence to

establish that it’s rule was necessary to maintain production

or discipline,”

Respondent cannot justify its no-solicitation rule on the

ground that no one was disciplined under it, It was

enforced in that employees were warned by the very word-

ing of the rule that they would be disciplined for its viola-

tion, As the Board stated in The Great Atlantic & Pacific

Tea Company, Ine,, 162 NLRB 1182, 1884 (1967) ;

... we reject the Respondent’s argument that the rule

could have had no coercive effect since it was not

enforced, It is well established that the mere existence

of an unlawful no-solicitation rule makes it susceptible

to application to employees and this factor alone tends

to coerce, restrain, and interfere with their right to

engage in self-organizational activities, [Footnote

omitted, ]

I find that the principles enunciated in the Mandarin case

are controlling and that Respondent violated Section

8(a)(1) of the Act by maintaining the no-solicitation rule,

C, The Refusal To Bargain

1, The facts

a, The testimony of Staff

Alfred EF, Staff is the bar manager for the Overland

Hotel in Reno, From early July 1973 until the summer of

12, Ct, Florida Steel Corporation, 215 NLRB 97 (1974).

Appendix 55

1974, when a trusteeship was imposed on the Union, Staff

was president of the Union, During that time, Staff, in addi-

tion to being union president, was a full-time bartender,

The only full-time paid union officer was Secretary-Trea-

surer and Business Manager K, W, Tucker, The following

findings are based on the credited testimony of Staff.

During the summer of 1974, the Union had about $11,000

in its treasury and that amount was decreasing. However,

the Union’s liabilities did not exceed its assets, The Union

had approximately 1,000 members, of whom between 700

and 800 were paid up in their dues,” In the spring of 1974,

the Union sent Business Manager Tucker to the headquar-

ters of the International in Cincinnati to see if he could

obtain money to help the Union organize, The executive

committee of the Union had discussed the need to obtain

more members and to build up the membership to a point

where the Union could have some strength when it met with

the Employers to negotiate the next contract, Tucker went

to Cincinnati and discussed the matter with representatives

of the International, He then returned and reported to the

executive committee that the International would give the

Union money to organize if the officers resigned, the Union

went into trusteeship, and the International administered

the Union, The executive committee decided to let the Inter-

national take over, The matter was brought up at the next

regular meeting of the Union, and a majority of the mem-

bership voted to accept the trusteeship. The officers resigned

18. At another point in his testimony, Staff averred that there

were about 700 to 750 paid-up members and in addition there were

about 150 other people who were on the membership rolls who were

not paid up, but who were not suspended, The highest number of

members during Staff’s term of office was about 1,200.

56 Appendix

and the trusteeship was imposed sometime during the

summer of 1974,"

During the summer of 1974, Tucker told Staff that there

were about 30,000 employees in the Lake Tahoe and Reno

areas who were employed in categories over which the

Union had jurisdiction.

Conversations with Tucker and Staff’s review of member-

ship records led Staff to believe that of the approximately

900 or 1,000 union members in May 1974, about 20 percent

were in the Lake Tahoe area and the balance were in Reno.

Staff appeared confused in his testimony with regard to the

distinction between union members and employees repre-

sented by the Union. His testimony, read as a whole, clearly

indicates that when he was referring to the approximately

900 or 1,000 employees and to the 20-percent figure, he was

referring to members and not to all employees who were

represented through coverage by outstanding contracts.

In the spring of 1974, the Union placed announcements

in local newspapers stating that the Union would hold a

meeting to discuss with employees what it would ask in

contract negotiations and to see if it could get more people

interested in an expansion of the Union, The employees

invited were those ir the Lake Tahoe area. No employees

showd up for the scheduled meeting and it was not held.

During the time that he was president, Staff spoke to

some union bartenders whom he worked with at the Over-

land Hotel in Reno and he received comments from them

to the effect that they were discouraged with the Union,

that the Union didn’t do anything for them, and that they

did not like the way the Union was being run. Some bar-

tenders said: “When is the Union going to be able to do

anything for us,” “They never do nothing for us,” and

14. Staff testified that the officers resigned in July or August

1974, but later in his testimony he averred that the trusteeship might

have been imposed in June.

Appendix 57

“What’s the sense of joining a Union.” He never received

any compliments on the performance of the Union. In addi-

tion to talking to bartenders at the Overland Hotel, he spoke

to some culinary workers at various clubs in the Reno area

in an attempt to organize them. However, there is no evi-

dence in the record that any employees of Respondent

expressed dissatisfaction with the Union to Staff.

Staff did not communicate any of the matters related

above to Respondent and there is no indication in the

record that Respondent knew of the substance of those

matters at the time that it refused to bargain with the

Union.

Apparently Respondent is relying on Staff’s testimony

solely for the purpose of attempting to prove that the

Union, in fact, did not have majority status.’* With regard

to the matters set forth below, Respondent contends that it

did have a reasonably based doubt as to the Union’s major-

ity, upon which it acted in withdrawing recognition.

b. Remarks by employees of Respondent,

conversations between supervisors, and the newspaper

articles

In October 1974, Respondent had in its employ about 40

employees in bar and culinary classifications.’* In mid-

15. As the Board held in Bartenders, Hotel, Motel and Restau-

rant Employers Bargaining Association of Pocatello, Idaho, and its

Employer-Members, 213 NLRB 651 (1974), an employer's reason-

ably based doubt of the union’s majority status must be predicated

on information it had at the time of its refusal to bargain. See also

Orion Corporation, 210 NLRB 633 (1974), enfd. 515 F.2d 81

(C.A. 7, 1975).

16. This finding is based on the credited testimony of Respond-

ent’s assistant general manager, N. Darl Voss. Robert G. Berry, who

is Respondent's chief executive officer, board member, and vice presi-

dent, has less daily contaet with the employees than Voss. Berry

testified that the number of bar and culinary employees in the sum-

mer is about 40 to 50, in the fall, 30 to 35, and in the winter about

half that of the summer.

58 Appendiz

August 1974 Respondent made a determination that the

Union did not represent a majority of its bar and culinary

employees, However, Respondent continued its investiga-

tion concerning the Union’s majority from July 1974 until it

authorized its attorney to send a letter dated October 24,

1974, in which the Union was notified that Respondent

doubted the Union’s majority status."

The decision to question the Union’s majority status was

made by Respondent’s chief executive officer, Robert G.

Berry. Berry received some direct and indirect reports

concerning the attitude of some of his employees toward

the Union.

Sometime between July 15 and the latter part of August

1974, Berry spoke to a waitress named Pam, whose last

name he could not remember. She told him that she had

never seen a union person at the Club and didn’t want any

part of the Union. Sometime between July 15 and late

August 1974, Berry spoke to a bartender named Barry,

whose last name he could not recall. He had no specific

recollection of what that employee told him about the

Union. Sometime before August 30, Berry spoke to a

waitress named Connie, whose last name he could not

remember. She told him that she was not interested in being

represented by the Union.

Sometime in August or September 1974, Respondent’s

assistant general manager, N. Darl Voss, had a conversa-

tion with employee Elmer Willsey. Willsey told Voss that

there had been someone from the Union contacting them,

trying to get them to join the Union. Willsey also said that

he had dealings with those people before and that he did

not want anything to do with them. Voss reported the

incident to Respondent’s general manager, Harry Bay. In

17. These findings are based on the testimony of Berry.

Appendix 59

September or October 1974, Bay himself had overheard

Willsey tell someone else: “Damn those unions—I wish

they’s stay out of here, so I can get my work done.” Both

these incidents were reported to Respondent’s chief execu-

tive officer, Berry.

Sometime between September through October 1974, Voss

spoke to employee Mitch Roskin. Roskin said that a union

representative had offered to pay his initiation fees and

dues if he would recruit other employees to join the Union.

Roskin also told Voss that he had dealings with the Union

in the east and he was not too happy with them. Voss

reported the conversation to Bay who in turn reported it to

Berry.

Berry testified that he was told about a Mitch and an

Elmer, neither of whose last names he could recall, by Bay.

He also averred that he spoke to Voss and Bar Manager

Robert Badertscher about employees. He testified that

between July 15 and October 1974 Voss told him that,

based on his (Voss’) investigation, he was of the opinion

that the Union did not represent a majority of the bar and

culinary employees.

Between July and October 24, 1974, Bar Manager

Badertscher told Voss that he (Badertscher) felt the people

in the bar were not interested in being represented by the

Union and that they were all happy with the conditions as

they were. Voss reported that comment to Berry."*

In August 1974, Badertscher told Bay that in his

(Badertscher’s) opinion, people who worked under him did

not want the Union to represent them. Bay credibly

testified that Badertscher did not tell him the basis for that

opinion. Bay reported the conversation to Berry. Also in

August 1974 Voss told Bay that he (Voss) didn’t think the

18. These findings are based on the credited testimony of Voss.

’*%

60 Appendix

Union had a majority at the Club. Bay reported that to

Berry.

About late June or early July 1974, Berry read certain

articles in the Reno Evening Gazette and the Tahoe

Tribune which stated that there was a trusteeship. He saw

in the papers advertisements by International Trustee

Bramlet concerning organizational meetings which were to

be held. Berry was also informed about the trusteeship by

his attorney.”

ce. The decision to withdraw recognition

' Respondent acknowledges that on or about October 24,

1974, it refused to bargain with the Union and that it has

withdrawn recognition from the Union. Respondent con-

tends that at the time it refused to bargain it had sufficient

objective bases for reasonably doubting the Union’s con-

tinued majority.

The remarks of certain employees concerning their

attitude toward the Union and various conversations be-

tween supervisors relating to the employee’s attitudes are

discussed above. Also, as indicated above, Berry obtained

information concerning the Union’s trusteeship and the

financial difficulties of the Union. In addition, Berry knew

that Nevada is a right-to-work State and the contracts did

not contain a union-security clause. He credibly testified

that he had no knowledge of any election ever having been

held among the employees.

19. Berry testified that he understood from several sources that

a trusteeship was imposed because.of the Union's inadequate funds,

lack of membership, and lack of eash flow to conduct operations.

When asked the sources of his belief, he testified that his opinion

was based on such matters as his obeservation of the business

practices of the Union and lack of interest by emp in the

Union. He also referred to certain newspaper articles advertise-

ments he had read.

Appendiz 61

Sometime prior to October 24, 1974, Berry had a

conversation with his law partner, George Allison. Allison

had represented another employer, Harvey’s Casino, in a

state court proceeding, Allison told Berry that during that

proceeding a union representative said that he did not know

how many people the Union represented at the Lake and

that the union representative refused to disclose the actual

membership of the Union among people at the Lake.

Respondent also adduced considerable evidence con-

cerning the turnover of its employees and the Union’s

activity or lack thereof. Between July and October 1974,

Berry, Bay, and Voss often discussed the amount of

turnover among Respondent’s employees. During that

period the highest number of culinary and bar employees

was about 50. Voss testified that from his observation of the

employees who were physically present, he concluded that

there was about a 50-percent turnover between June and

October 24, 1974. Bay testified that from July to the end of

October 1974 the turnover rate among bar and culinary

employees was 4 or 5 to 1. Berry testified that during the

summer there was a complete turnover of culinary employ-

ees about every 2 months and a turnover of bar employees

somewhat less frequently. He averred that his data on

turnover was based on transaction sheets that he examined

every day, on reports from the supervisors, and from his

observation of employees on the premises. Respondent did

not offer any records in this regard and there was no

testimony concerning the classifications of the employees

who most frequently left Respondent’s employ. However, I

credit the testimony of Respondent’s witnesses to the extent

that they averred that there was a very substantial amount

of turnover among Respondent’s bar and culinary employ-

ees.

62 Appendix

In late June or early July 1974, Berry attended a meeting

of the Association. Berry had been paying dues to the Asso-

ciation and he knew that Respondent was a member. At the

meeting, Association Official Knoll told the employer-

members that the union contract was going to be renego-

tiated that fall. Berry testified that until that meeting

he did know that Respondent had a contract with the

Union. On May 10, 1973, Berry and others purchased a

majority of the shares of Respondent. From August 3, 1973,

to the present Berry has been a member of the board of

directors, vice president, and chief executive officer of

Respondent. For about 5 years before 1973, Berry repre-

sented Respondent as its attorney. Shortly after Berry took

over management of Respondent, he received bills from the

Association which he paid. Respondent was

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