Petition for Writ of Certiorari — Local 1814, International Longshoremen's Ass'n v. National Labor Relations Board

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| iy Otic. Sprem Court, U.S,

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84-358 ‘a

SEP 5 1984

No. |

—rr STEVAS, |

IN THE 4

Supreme Court of the United States

OcrToBER TERM, 1984

LOCAL 1814, INTERNATIONAL

LONGSHOREMEN’S ASSOCIATION,

Petitioner,

Vv.

NATIONAL LABOR RELATIONS BOARD

JACKSON ENGINEERING COMPANY, INC.,

Petitioner,

Vv.

NATIONAL LABOR RELATIONS BOARD

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

*Rosert H. Bocucki

ANTHONY T. ScoTTo

TinA PELuso

Bocucki, DiCHIARA & SCOTTO

26 Court Street

Brooklyn, New York 11242

(212) 875-7762

Counsel for Petitioner,

Local 1814, International

Longshoremen’s Association

*Counsel of Record

QUESTIONS PRESENTED

1. Whether under Section 8 of the National Labor Relations

Act, 29 U.S.C. 158, common law principles of agency may be

applied to impute to a labor organization the concealed criminal

acts of an officer in accepting illegal employer payments under

29 U.S.C. 186 (b) when there is no substantial evidence that

the officer intended to benefit the labor organization.

2. Whether a labor organization may be found to have

violated Section 8(b)(1)(A) of the Act, 29 U.S.C. 158(b)(1)(A)

solely on the basis of the concealed criminal acts of an officer,

despite a finding by the Board that at all times the labor

organization vigorously represe1ited an uncoerced majority of

the employer’s employees.

3. Whether a labor organization must, when a union officer

is accused of accepting employer payments in violation of 29

U.S.C. 186(b), act contrary to the national labor policy and

discipline that officer or risk a judgment that it ratified and con-

doned the officer’s criminal acts.

4. Whether the Board exceeded its jurisdiction by applying

typical unfair labor practice remedies in an atypical fashion in

order to redress the criminal conduct of an officer of a labor

organization.

PARTIES

The petitioner, Local 1814, International Longshoremen’s

Association, AFL-CIO, is an unincorporated labor organiza-

tion representing longshoremen and allied craft workers in the

Port of New York. It is a subordinate unit of the International

Longshoremen’s Association, AFL-CIO.

In accordance with Rule 21(b), it should be noted that all

of the parties in the court below are listed in the caption. Jackson

Engineering Company, Inc. has not petitioned for a writ of

certiorari.

TABLE OF CONTENTS

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REASONS FOR GRANTING THE PETITION...

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TABLE OF AUTHORITIES

CASES:

Allen v. NLRB, 561 F.2d 976 (D.C. Cir. 1977) ..

Conair Corporation v. NLRB, 721 F.2d 1355

ee a EDS vs Sic ach a bk Case Cees

Consolidated Edison Co. v. NLRB, 305 U.S. 197

Sara ct aia cy 4 Ae Re

ILGWU v. NLRB, 366 U.S. 731 (1961) .........

Intalco Aluminum Corp. v. NLRB, 417 F.2d 36

rrr rr ee rr rere rer

International Distribution Corp. v. American

District Telephone Co., 569 F.2d 136 (D.C.

STE 0a GN Eb Rae ws

International Longshoremen and Warehousemen’s

Union, 79 N.L.R.B. 1487 (1948) .............

Local 60, Carpenters v. NLRB, 365 U.S. 651

SEE: 6idvnkevndas cons Cee ee eae

Melton v. United States, 488 F. Supp. 1066

ate SE 66-4446 BWA e Sa nee ae dees

Morrison-Knudsen Co. v. NLRB, 276 F.2d 63

ks re ey ee

NLRB V. Burke Oldsmobile Inc., 285 F.2d 14

(Qnd Cir. 1961) ............cecceceeeeeeeees

NLBB v. District 50, UMW, 355 U.S. 453 (1958) .

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

NLBB v. Hollywood-Maxwell Co., 126 F.2d 815

Ss ns PE LAS Ak cae Gaara bee eae es

NLBB v. Mark J. Gerry, Inc., 355 F.2d 727 (9th

Cir. 1966), cert. denied, 385 U.S. 820 (1966) ..

NLBB v. Pennsylvania Greyhound Lines, 303

2% frre ere re

PAGE

NLBB vw. U.S. Steel Corp., 278 F.2d 896 (3rd

Cir. 1960), cert. denied, 366 U.S. 908 (1961) ..

NLRB v. Vernitron Electrical Components, Inc.,

FA § Fi oe A epererrerrere cere

Park Transfer Co. v. Lumberman’s Mutual

Casualty Co., 142 F.2d 100 (D.C. Cir. 1944) ..

Phelps Dodge Corp. v. NLRB, 313 U.S. 177

COORD oa ices tx én sa c0onvcvdusebvinsactacana

Republic Steel Corp. v. NLRB, 311 U.S. 7 (1940)

Scotto v. Waterfront Commission, No. 5580 81

(Sup. Ct. Sept. 19, 1980), aff'd, 78 A.D. 2d

686 (2d Dept. 1980), leave to appeal denied, 51

N.Y. Ge TOD COORD ww ccc scr enensaescnsen

United States v. Jalas, 409 F.2d 358 (7th Cir.

rer ere errr rere re

United States v. Ricciardi, 357 F.2d 91 (2d Cir.),

cert denied, 384 U.S. 942 (1966) .............

United States v. Ryan, 350 U.S. 299 (1956) ......

United States v. Scotto, 641 F.2d 47 (2d Cir.

1980), cert. denied, 452 U.S. 961 (1981) ......

Universal Camera Corp. v. NLRB, 340 U.S. 474

GRUNBED 5 54 uous caas cease seb eseesavaenseewews

Virginia Electric & Power Co. v. NLRB, 319 U.S.

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Wirtz v. Local 153, Glass Bottle Blowers, 389

U.S. 463 (1968) .. 2.2 eee

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STATUTES AND RULES:

PAGE

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. 29 U.S.C. § 141, et seg. (1976) ................ 2

29 U.S.C. § 151, et seg. (1976) ................ 2

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29 U.S.C. § 158(a)(1) (1976)................... passim

29 U.S.C. § 158(a)(2) (1976) ................... passim

29 U.S.C. § 158(b)(1)(A) (1976) ..... 2.2.0.0... passim

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29 U.S.C. § 504(a)(1) (1976)............0.00... ll

29 U.S.C. § SO04(c) (1976) ... 0... en 10, ll

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N.Y. Unconsol. Laws § 9933 (McKinney 1974) ... 10

RESTATEMENT (SECOND) OF AGENCY (1958)

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No.

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IN THE

Supreme Court of the United States

Octroser TERM, 1984

LOCAL 1814, INTERNATIONAL

LONGSHOREMEN'’S ASSOCIATION,

Petitioner,

Vv.

NATIONAL LABOR RELATIONS BOARD

JACKSON ENGINEERING COMPANY, INC.,

Petitioner,

Vv.

NATIONAL LABOR RELATIONS BOARD

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, Local 1814, International Longshoremen’s Associa-

tion, AFL-CIO, prays that a writ of certiorari issue to review

the judgment of the United States Court of Appeals for the

District of Columbia Circuit enforcing an order of the National

Labor Relations Board (“Board”) which, upon a finding that

the petitioner violated Section 8(b)(1)(A) of the National Labor

Relations Act (“Act”), 29 U.S.C. 158 (b)(i)(A), directed

withdrawal of employer recognition, abrogation of the collec-

tive bargaining agreement between the petitioner and the

employer and petitioner’s reimbursement of dues and initiation

fees to employees of the employer.

OPINION BELOW

The opinion of the Court of Appeals (App. A, infra, la-47a)

is not yet officially reported.

JURISDICTION

The Court of Appeals filed its opinion and entered judgment

against petitioner on May 15, 1984. A timely petition for rehear-

ing and suggestion for rehearing en banc was denied, without

opinion on July 23, 1984. A copy of the orders of denial are

printed at App. B, infra, 48a-49a. By its order of August 17,

1984, the Court of Appeals stayed issuance of its mandate, under

Fed. R. App. P. 41, pending application to this Court for a writ

of certiorari. The jurisdiction of this Court is invoked under 28

U.S.C. 1254 (1).

STATUTES INVOLVED

The relevant provisions of the National Labor Relations Act,

29 U.S.C. 151 et. seq., the Labor Management Relations Act,

29 U.S.C. 141 et. seq. and the Labor Management Reporting

and Disclosure Act of 1959, 29 U.S.C. 504 are set forth in App.

E, infra, 125a-128a.

STATEMENT

This case has its origins in a jurisdictional dispute between

the petitioner and Local 17, IUMSWA over the representation

of employees of the Jackson Engineering Company, Inc.

(“Jackson” or the “employer”) with which the petitioner had

BF Seber AMT a eS OH

a previous and ongoing collective bargaining relationship. ' After

unsuccessfully pleading its case under the AFL-CIO’s jurisdic-

tional dispute resolution procedures, Local 17 filed unfair labor

practice charges against the petitioner and Jackson alleging

violations of Sections 8(b)(1)(A) and 8(a)(1)(2), respectively, of

the National Labcs Relations Act, as amended, (“Act”), 29

U.S.C. 158 (b)(1)(A), (a)(1)-(2).

A complaint issued and, subsequently, the Board’s General

Counsel issued an amended complaint focusing on concealed

payments made by the president of Jackson (Seregos) to the peti-

tioner’s vice-president (Anastasio) as a commission for referr-

ing ship repair work to Jackson. Those concealed payments

violated Section 302(b) of the Labor Management Relations Act,

1947, as amended, 29 U.S.C. 186(b).?

After full hearings, the Board’s Administrative Law Judge

(“ALJ”) found that Seregos was acting as Jackson’s agent when

he made the concealed payments and that Anastasio was ac-

ting as the petitioner’s agent when he accepted them. The ALJ

concluded that Seregos’ payments violated Section 8(a)(2) of the

Act, which prohibits interference with the administration of any

' Prior to 1975, Jackson’s employees were not represented by any labor

organization. In September 1975, the petitioner’s predecessor, Local 1277-1,

ILA, obtained signed authorization cards from a majority of Jackson's

employees and Jackson, thereupon, recognized the union as the exclusive

bargairng representative for its employees. Effective November 3, 1975

througt November 3, 1978, Jackson was party to an industry-wide collective

bargaining agreement between the petitioner's predecessor and other ship

repair companies. In March 1978, Local 1277-1, ILA merged into the peti-

tioner labor organization. Jackson was also party to the succeeding industry

agreement which became effective in November, 1978. App. C, infra, 53a-57a.

* Anthony Scotto and Anthony Anastasio, the president and vice-president,

respectively, of the petitioner labor organization, were prosecuted and con-

victed under 18 U.S.C. 1962(c)(d), for conducting and conspiring to conduct

the affairs of an enterprise (union) through a pattern of racketeering activity

predicated upon multiple misdemeanors under 29 U.S.C. 186(b), each of

which consisted of the receipt of money from an employer paid without in-

tent to influence the officers in respect to any of their actions,decisions or

duties. See United States v. Scotto, 641 F.2d 47 (2d Cir. 1980), cert. denied,

452 U.S. 961 (1981). The predicate Section 186(b) offenses are non-mens rea

misdemeanors. United States v. Ryan, 350 U.S. 299, 305 (1956); United States

v. Ricciardi, 357 F.2d 91 (2d Cir.), cert. denied, 384 U.S. 942 (1966).

labor organization or the contribution of financial or other sup-

port to it, and that Anastasio’s acceptance of the concealed

payments violated Section 8(b)(1)(A), which makes it an un-

fair labor practice for a labor organization to restrain or coerce

employees in the exercise of their statutory rights. The relief

recommended by the ALJ was limited, however, to a cease and

desist order that Jackson would not thereafter make concealed

payments to the petitioner and that the petitioner would not

thereafter receive such payments, and to the posting of notices

to that effect. App. C, infra, 109a-110a.

Subsequently, the Board issued its Decision and Order affir-

ming, inter alia, the ALJ’s findings of fact and conclusion that

the concealed payments violated Sections 8(a)(2)-(1) and

8(b)(1)(A) of the Act. The Board further found that the par-

ties’ modification of an existing collective bargaining agreement

to accommodate the establishment of a new shipyard opera-

tion was “tainted” by the illegal concealed payments. Based on

that finding, the Board drastically expanded the scope of the

remedy to include: (1) withdrawal of employer recognition of

the petitioner; (2) abrogation of the collective bargaining agree-

ment, as modified; and (3) the refund of all dues and initiation

fees to employees of the employer who joined the Union after

the effective date of the modification agreement. App. D, in-

fra, 115a-119a.

Both the petitioner and Jackson petitioned the United States

Court of Appeals for the District of Columbia Circuit for review

of the Board’s Decision and Order. The Board moved for con-

solidation of the two cases and for enforcement of its order.

The Court of Appeals, with one judge dissenting, held that the

Board’s order should be enforced. A petition for rehearing and sug-

gestion for rehearing en banc was denied. App. B, infra, 48a-49a.

REASONS FOR GRANTING THE PETITION

1. The court below characterized the issues raised in this case

as “legal questions of considerable importance and some novel-

ty.” App. A, infra, 2a. Its decision, with Wald, J. dissenting,

is of equai significance by virtue of its inevitable impact upon

the continued viability of the fundamental premises of the Na-

tional Labor Relations Act.

APD, ARB DARD DURES 2 a eR a

The indisputable core of the Act is the right of workers to

bargain collectively through representatives chosen by a ma-

jority. 29 U.S.C. 157, 159(a), Conair Corp. v. NLRB, 721 F.2d

1355, 1381-82 (D.C. Cir. 1983), App. A, infra, 4a. The deci-

sion below affirms a decision and order of the Board (App. D,

infra) which effectively eviscerates that policy by an ad hoc and

tortuous application of the principles of ordinary agency law

to achieve a desired result, i.e. the remediation of what the

Court of Appeals described as a “... truly stark case of corrup-

tion in labor-management relations.” App. A, infra, 2a. It falls

to this Court to reaffirm the national labor policy and reject

the substitution of the Board’s “big brother” judgment for a ma-

jority of employees’ express choice of collective bargaining

representative. See Conair, supra 721 F.2d at 1379.

The court below held that the acceptance of employer

payments by two of the petitioner’s highest officers in violation

of 29 U.S.C. 186(b) could properly be attributed to the Union

and, thereby, serve as predicates for the unfair labor practice

charged. App. A, infra, 3a. It based its imputation of liability

to the Union for the criminal acts of its officers upon the ap-

plication of the “scope of employment” doctrine and a finding

that the Union “benefitted” by Anastasio’s acceptance of

payments from Seregos. App. A, infra, 19a, 2la-23a.

In determining whether the acts of an individual may be im-

puted to a labor organization, the Board is bound by the “or-

dinary law of agency.” Int7 Longshoremen and Warehousemen’s

Union, 79 N.L.R.B., 1487 at 1507, quoting 93 Cong. Rec. 7001

(June 12, 1947) (remarks of Sen. Taft). Ordinary agency law

recognizes that an act may be within the scope of employment

even though it is criminal. See RESTATEMENT (Second) OF

AGENCY Section 231 (1958). However, a criminal act by an

employee is not within the scope of employment if it is not done

to benefit the employer. See id. Section 235. The act of any in-

stitution’s employees or officers may be imputed to the institu-

tion only when “it is actuated, at least in part, by a purpose

to serve the [institution].” See id. Section 228 (1)(c). See also

International Distribution Corp. v. American District Telephone

Co., 569 F.2d 136 (D.C. Cir. 1977); Park Transfer Co. v.

Lumberman’s Mutual Casualty Co., 142 F.2d 100 (D.C. Cir.

1944); Melton v. United States, 488 F.Supp. 1066 (D.D.C. 1980).

In this case, the sine qua non to a determination that Jackson

violated Section 8(a)(1)-(2) and the petitioner, Section 8(b)(1)(A),

is a finding, supported by substantial evidence, that Anastasio was

acting as the petitioner’s agent when he accepted illegal payments

from Seregos. The court below characterized the agreement bet-

ween Seregos and Anastasio as having four interlocking facets,

to wit: (1) The Company would voluntarily recognize the Union;

(2) the Company would check-off union dues and initiation fees

and fund a variety of fringe benefits; (3) the Union would steer

business to the Company; and (4) Anastasio would be paid a com-

mission for the business referred to Jackson. App. A, infra,

29a-23a. Yet, no substantial evidence was adduced that Anastasio

intended to serve the interests of the petitioner. *

The ALJ found that: (1) the record was devoid of any evidence

that Anastasio was authorized by the petitioner to obtain addi-

tional business for employers and to enter into arrangements for

payment from the employer for such referrals; (2) there is no

evidence that the petitioner received any of the monies paid by

Jackson through Seregos to Anastasio; and (3) there was no

evidence that the petitioner received any other tangible benefits

from such payments. App. C, infra, 85a. The Board disregard-

ed, but did not dispute those findings. As the dissent below ac-

curately observed:

“The solicitation and acceptance of kickback payments

here appear in no way to have been motivated by the

officials’ desire to serve their union. Instead it appears

from the evidence that Scotto and Anastasio simply ex-

ploited their powerful positions as ILA officials.” App.

A, infra, 45a.

> Conceptually, the kickback arrangement consisted of two parts: (1) Scotto

and Anastasio referred business to Jackson and (2) Seregos made cash payments

to Anastasio, which Anastasio accepted for himself. Under Section 8(a)(1)-

(2) and Section 8(b)(1)(A) of the Act, there is nothing unlawful about union

leaders referring work to a signatory employer. The court below found that

A ay Nate my <b

I ET OR ob oI

Perhaps, recognizing the gossamer texture of its application

of ordinary agency principles to this case, the court below found

refuge in the Board’s determination that the collective bargain-

ing relationship betv zen the petitioner and Jackson was

“tainted” ab initio* (App. A, infra, 21a) and that the temporal

confluence of Anastasio’s acceptance of some employer payments

while the parties were negotiating the modification of an ex-

isting collective bargaining agreement to accommodate a new

shipyard operation further supported an inference of “taint”.

Acceptance of the decision of the Board and the court below

would ,therefore, decree in similar cases a greater emphasis on

the application of the ordinary principles of agency law rather

than the principles themselves. Such a result can only penalize

the union victim rather than the officer wrongdoer.

2. In affirming the decision and order of the Board, the court

below held that a labor organization may be found to have

violated Section 8(b)(1)(A) of the Act, 29 U.S.C. 158(b)(1)(A),

solely on the basis of the concealed criminal acts of an officer

(cont.)

the petitioner “benefitted” from the arrangement through: (1) Jackson's

recognition of the union; (2) the concommitant extension of the petitioner's

representation of ship repair workers; and (3) the extension of its strength

and authority on the waterfront. App. A, infra, 2la-22a. But assuming arguen-

do, that such benefits accrued to the petitioner, they did not result from

Anastasio’s acceptance of payments from Seregos. Both benefits resulted from

referrals of business to Jackson, the lawful part of the arrangement.

*The court below described the Anastasio-Seregos arrangement as involving

the referral of business as a quid pro quo for Jackson’s recognition of the peti-

tioner. App. A, infra, 21a. If the Board had considered Jackson's recognition

of the petitioner as such a quid pro quo, presumably, it would have considered

all of Jackson’s collective bargaining agreements with the petitioner to have

been tainted and would have required the petitioner and Jackson to reim-

burse all of Jackson’s employees for dues, intitiation fees and other member-

ship obligations paid since 1975. However, the Board carefully restricted its

reimbursement remedy to those members who joined the union after

September 5, 1979. App. D, infra, 118a. Thus, in the Board’s judgment,

Jackson's recognition of the petitioner was not an element of the kickback

arrangement.

in accepting illegal employer payments despite uncontradicted

findings that at all times the labor organization vigorously and

effectively represented an uncoerced majority of the employer's

employees. As the dissent below accurately observed, this case

apparently represents the first time that the Board has applied

the Section 8(a)(2) proscription of financial and other support

of unions by employers to a scheme of individual corruption

involving kickback payments that in no way benefitted the union

as an entity. App. A, infra, 43a. Taken to its logical extremity,

the decision below grants the Board extraordinary power to

abrogate under Section 8(a)(1) and Section 8(b)(1)(A) virtual-

ly any collective bargaining agreement or relationship temporal-

ly coincident with corrupt dealings between a representative

of the employer and an officer of the union, despite uncon-

tradicted findings that the agreement or relationship was unaf-

fected by such criminal acts.

Section 7 of the Act guarantees employees the right to col-

lectively bargain through representatives of their own choos-

ing. 29 U.S.C. 157. Section 8(b)(1)(A) makes it an unfair labor

practice “... to restrain or coerce (A) employees in the exercise

of ...” their Section 7 rights. The ALJ found that the petitioner

at all times represented an uncoerced majority of Jackson's

employees. App. C, infra, 79a, 102a, 105a. The Board adopted

those findings but subsumed them in an overriding and unsup-

ported inference of “taint”. App. D, infra, 112a, 114a. In the

absence of demonstrable coercion, a necessary element of a Sec-

tion 8(b)(1)(A) violation, the court below adopted the Board’s

inference of “taint” of the collective bargaining relationship bas-

ed upon the concurrent, though without evidentiary basis, facts

of the illegal payments and negotiation for modification. * App.

5 Since the Board’s decision and order rest upon its factual conclusion that

the kickback arrangement “tainted” the parties relationship and the modified

collective bargaining agreement, the substantial evidence rule requires en-

forcement of the Board’s order only if supported by “... substantial evidence

on the record considered as a whole.” 29 U.S.C. 160(f); Allen v. NLRB, 561

F.2d 976, 978 (D.C. Cir. 1977). Although “the ‘substantial’ evidence stan-

dard is not modified in any way when the Board and its examiner disagree

A, infra, 33a. That inference is wholly inconsistent with the

uncontradicted fact that: (1) the petitioner at all

times represented an uncoerced majority of Jackson’s employees;

(2) the petitioner vigorously and effectively represented Jackson’s

employees in collective bargaining; (3) negotiations for the

modification were conducted without the participation of the

individuals involved in the kickback scheme; (4) the negotia-

tions for modification were conducted with the participation

of and ratified by the employees of Jackson; and (5) the collec-

tive bargaining agreement, as modified, contained greater

benefits than those found in comparable shipyard industry

agreements, as well as the agreement between the charging par-

ty at the Board and the previous owner of the shipyard. App.

C, infra, 105a-106a.

The dissent below flawlessly described the legal and logical

vagaries of the Board’s approach to the Section 8(b)(1)(A) viola-

tion herein as follows:

“If the Board’s decision in this case is based on its con-

clusion that concealed kickback payments of this kind

to high union officers are inherently coercive and

necessarily taint the bargaining relationship, then the

Board has introduced a major innovation in the law

‘of labor relations permitting massive government in-

tervention into collective bargaining relationships in

the absence of any evidence of coercion or lack of ma-

jority status.” App. A, infra, 46a-47a.

If the decision below is permitted to stand, it will stand for

the proposition that employees forfeit their Section 7 rights to

engage in collective bargaining through representatives of their

own choosing solely because an officer of their union has ac-

cepted payments in violation of 29 U.S.C. 186(b).

(cont.)

... the evidence supporting a conclusion may be less substantial when an im-

partial, experienced examiner who has observed the witnesses and lived with

the case has drawn conclusions different from the Board's than when he has

reached the same conclusion.” Universal Camera Corp. v. NLRB, 340 U.S.

474, 496 (1951).

3. The court below decided, inter alia, that the petitioner should

be held responsible for the concealed criminal acts of two of its

highest officers, not only on the grounds that the illegal payments

were exacted in the scope of the officers’ employment and that

the petitioner benefitted from the kickback arrangement, but also

on the ground that the petitioner condoned and acquiesced in those

criminal acts by allowing the officers to retain their positions for

more than two years after their indictment.* App. A, infra, 8a.

It would appear that the elasticity of the logic of the decision below

on the agency question was prompted, in part, by the court's

misperception of the record and, more significantly, its failure

to consider the petitioner's actions in the context of the national

labor policy ennunciated in Section 504 of the Labor Manage-

ment and Disclosure Act of 1959, 29 U.S.C. 504.

Section 504 provides that no person may hold union office after

conviction of enumerated crimes. An officer is under the disability

of “conviction” only “ ... from the date of judgment of the trial

court or the date of the final sustaining of such judgment.on ap-

peal, whichever is the later event.” 29 U.S.C. 504(c) (emphasis

added).

Two of the petitioner's officers were indicted in January, 1979

for violations of 18 U.S.C. 1962 predicated on violations of 29

U.S.C. 186(b). None of the charges were factually related to

Jackson with whom the petitioner, through 2 predecessor local

* That conclusion by the court below was obviously based upon erroneous

perceptions of the facts surrounding Scotto and Anastasio’s retention in of-

fice. First, the two union officers were never, as suggested by the Court of

Appeals (App. A, infra, 9a) ordered or sentenced by the trial judge in the

RICO prosecution to forfeit their union office. See United States v. Scotto,

supra, 641 F.2d at 50, n.1. Second, Scotto and Anastasio were not “replaced

by elections” until almost two years after the superceding indictment (App.

A, infra, 8a), but rather resigned their union offices in November, 1980 as

a result of their unsuccessful state court actions involving the application of

the Waterfront Commission Act, N.Y. McK. Unconsol. Laws, Section 9933;

See Scotto v. Waterfront Commission, No. 5580 81 (N.Y. Sup. Ct. Sept. 19,

1980), aff'd, 78 A.D. 2d 1980, 686 (2d Dept. 1980), leave to appeal denied,

51 N.Y. 2d 709 (1980).

Scotto and Anastasio’s petition for a writ of certiorari to this Court was

not denied until June 22, 1961.

- a.

. ee

ta" -

union, had maintained a collective bargaining relationship since

1975. In June 1979, the petitioner commenced negotiations with

Jackson for modification of an existing collective bargaining

agreement to accommodate a substantially new and different

ship repair operation which would create additional and more

regularized employment for the petitioner’s members. App. C,

infra, 106a. In July 1979, a superceding indictment was filed

charging Anastasio with accepting illegal employer payments

from Jackson between 1978 and early July 1979 in violation of

29 U.S.C. 186(b) and 18 U.S.C. 1962. The court below found

that at that point a “truly upright” union would have taken

“some disciplinary action” against the accused union officers. ?

App. A, infra, 23a.

The petitioner, mindful of the potential for real and/or ap-

parent conflict in the negotiations for modification of the col-

lective bargaining agreement, removed the accused officers from

participation in those negotiations. App. C, infra, 106a. Any

action by the petitioner in July or September, 1979 to remove

or suspend the accused officers would only have been predicated

upon the accusations of a federal grand jury. To adopt the

reasoning of the court below vis a vis the petitioner’s failure to

take precipitous disciplinary action would be to postulate that,

notwithstanding 29 U.S.C. 504(a)(c), a labor organization must,

upon the indictment of its officers for violations of 29 U.S.C.

186({b), undertake to discipline the accused officers or risk a fin-

ding of acquiescence, condonation, ratification and, by exten-

sion, agency. We know of no decision or statutory authority

for imposing such a requirement upon a labor organization.

’ By suggesting that the petitioner was obligated to commence some form of

disciplinary action against Scotto and Anastasio after their indictment, the

court below ignores the federal labor policy against unnecessary governmen-

tal intervention in internal union affairs. Wirtz v. Local 153, Glass Bottle

Blowers, 389 U.S. 463 (1968). Moreover, while 29 U.S.C. 529 prohibits a union

from imposing discipline on its members for certain protected activity, it does

not purport to delineate the circumstances in which the union is required to

impose discipline. See also, United States v. Jalas, 409 F.2d 358 (7th Cir. 1969).

It is submitted that the court below erred in finding the peti-

tioner responsible for the concealed criminal acts of certain of

its officers by reason of petitioner’s failure to take disciplinary

action against them after indictment and prior to the final sus-

taining of a judgment of conviction on appeal.

4. By affirming the Board’s remedial order, the court below

has approved an unprecedented extension of the Board’s jurisdic-

tion to the remediation of labor union corruption and, concom-

mitantly, grants the Board authority to remedy such corrup-

tion by the punitive and atypical application of traditional un-

fair labor practice remedies.

The Board is empowered “... to prevent any person from

engaging in an unfair labor practice ...”, 29 U.S.C. 160(a) and

shall “... take such action ... as will effectuate the policies of

[the Act] ...”. 29 U.S.C. 160(c). Although the Board has con-

siderable discretion in fashioning a remedy for unfair labor prac-

tices, the Board’s power is “remedial, not punitive.” Con-

solidated Edison Co. v. NLRB, 305 U.S. 197, 236 (1938). Ac-

cord, Local 60, Carpenters v. NLRB, 365 U.S. 651, 655 (1961).

The Board’s remedial power is limited to restraining violations

of the Act and “removing or avoiding the consequences of viola-

tion when those consequences are of a kind to thwart the pur-

poses of the Act”. Local 60, Carpenters, supra, 365 U.S. at 655,

quoting Consolidated Edison Co., supra, 305 U.S. at 236.

In this case, the Board adopted the ALJ’s recommended order

that the petitioner cease and desist from accepting payments

from Jackson for the referral of business to Jackson or, from

otherwise accepting financial or other support and assistance

from Jackson and that the petitioner post a notice to that ef-

fect. The Board also ordered extraordinary relief that the ALJ

had rejected. The Board ordered the petitioner: (1) to cease ac-

ting or purporting to act as the exclusive collective bargaining

representative of Jackson’s employees;* (2) to cease performing

* The Board has consistently approved of an employer's voluntary recogni-

tion of a labor organization as the exclusive collective bargaining represen-

tative, provided the labor organization represents an uncoerced majority of

—— a _

or giving effect to the collective bargaining agreement, as

modified in 1979;* and (3) together with Jackson, ® to reimburse

Jackson’s present and former employees for dues, initiation fees

and other membership obligations paid pursuant to the 1979

modified collective bargaining agreement. ''

(cont.)

the employer's employees in an appropriate bargaining unit . See NLRB v.

Gissel Packing Company, 395 U.S. 575, 595-600 (1969). Correlatively, the

Board may order withdrawal of such recognition where a labor organization

does not represent an uncoerced majority of unit employees. See, e.g. IL-

GWU vw. NLRB, 366 U.S. 731 (1961); NLRB v. Pennsylvania Greyhound

Lines, 303 U.S. 261 (1938). However, when the Board strips a labor organiza-

tion of its status of collective bargaining representative based on a Section

8(a)(2) or 8(b)(1)(A) violation, it penalizes the labor organization and violates

the employees’ Section 7 rights if the labor organization represents an uncoerc-

ed majority of unit employees. Ironically, the only authority cited in the deci-

sion below for the premise that an employer's bribery of a high union officer

constitutes an unfair labor practice also decries the disestablishment of a union

because it penalizes the employees by destroying their union and, thereby,

constitutes a “perversion and frustration” of the purposes for which the Act

was created. See, NLRB v. Hollywood-Maxwell Co., 126 F.2d 815 at 824

(9th Cir. 1942).

*Since “the Act gives no express authority to the Board to invalidate contracts,”

Consolidated Edison Co. v. NLRB, supra, 305 U.S. at 235, such sanctions

may be permissible, but only if the agreement itself is unlawful or if there

is some causal connection between the contract being invalidated and the un-

fair labor practice found by the Board. See also, NLRB v. Vernitron Elec-

trical Components, Inc. , 548 F.2d 24, 27 (1st Cir. 1977); NLRB v. Mark J.

Gerry, Inc., 355 F.2d 727, 730-731 (9th Cir. 1966), cert denied, 385 U.S.

820 (1966); NLRB ». U.S. Steel Corp., 278 F.2d 896 (3rd Cir. 1960), cert

denied, 366 U.S. 908 (1961); Morrison-Knudsen Co. v. NLRB, 276 F.2d 63,

7€ (9th Cir. 1960), quoted with approval in Local 60, Carpenters v. NLRB,

supra, 365 U.S. at 655-656.

Joint liability with Jackson for reimbursement of dues is illusory. On

February 18, 1983, an involuntary petition was filed against Jackson under

Chapter 11 of the Bankruptcy Code (Bankruptcy No. 183-30347-21) in the

United States Bankruptcy Court for the Eastern District of. New York. That

proceeding is pending.

'' Absent the factual finding that employees were directly coerced into pay-

ing dues and initiation fees, the Board-ordered direct reimbursement of such

payments is punitive and contrary to the purposes of the Act, even if such

The Court of Appeals’ approval of the Board’s reme: ial order

appears, again, to be solely predicated upon its conclusion that

“this is a truly stark case of corruption in labor management

relations.” App. A, infra, 2a. It held that the remedies ordered

by the Board bear a “reasonable relation” to the violations found

(App. A, infra, 4a), irrespective of their uaprecedented and

novel application to the Section 8(a)(1), 8(a)(2) and 8(b)(1)(A)

violations which were the subject of the Board proceedings. The

underlying premises of the Court of Appeals’ characterization

of the relationship between the violations and the Board ordered

remedies is its conclusion that: “Like its highest officers

themselves, the Union’s representation of Jackson employees had

been thoroughly corrupted.” App. A, infra, 38a. That premise

and conclusion is unsupported by the Record.

Stripped of its logomachistic veneer, the decision of the court

below and its approval of the remedy fashioned by the Board

is based, not upon the Board’s administrative competence,

remedial discretion or specialized expertise, but rather its im-

plicit approval of the Board’s desire to broaden its statutory man-

date to include the rooting out of labor union corruption.

(cont.)

payments are required by the unlawful union security clause or other provi-

sions of an unlawful collective bargaining agreement. See e.g., Local 60,

Carpenters, supra; Intalco Aluminum Corp. v. NLRB, 417 F.2d 36, 40-43

(9th Cir. 1969); NLRB v. Burke Oldsmobile Inc., 285 F.2d 14, 16-17 (2nd

Cir. 1961). This Court observed in Local 60, Carpenters, supra, 365 U.S.

at 655-656:

“Where no membership in the union was shown to be influenc-

ed or compelled by reason of any unfair practice, no ‘consequences

of violation’ are removed by the order compelling the union to

return all dues and fees collected from the members; and no

‘dissipation’ of the effects of the prohibited action is achieved.

The order in those circumstances becomes punitive and beyond

the power of the Board. As Judge Pope said in Morrison-Knudsen

Co. v. National Labor Relations Board, 9 Cir., 276 F.2d 63, 76,

‘reimbursing a lot of old-time union men’ by refunding their dues

is not a remedial measure in the competence of the Board to im-

pose, unless there is support in the evidence that their member-

ship was induced, obtained, or retained in violation of the Act.”

The Board’s charter was not intended to include the imposi-

tion of sanctions upon labor organizations whose highest officers

have accepted employer payments in violation of 29 U.S.C.

186(b). The Board has no special expertise in discovering or

remediating this type of corruption. By enacting 29 U.S.C. 186,

the Congress delegated those functions to other branches of the

executive and the judiciary.

The majority in the court below, responding to the dissent'’s

characterization of its decision as an impermissible extension of

the Board’s powers to intervene and dissolve collective bargain-

ing relationships engendered by corruption, seeks to limit its ap-

proval of the Board’s remediation efforts to the facts of this case.

App. A, infra, 4la-42a, n.29. In fact, however, violations of 29

U.S.C. 186 are neither novel nor unprecedented. What is novel

and unprecedented is the imposition of a remedy which:

“...penalize[s] not the culprits but the Union and its

members who are, as far as we can tell from the

record, only innocent bystanders to the wrongdoing.”

App. A, infra, 47a.

The punitive and inappropriate character of the Board's order

is especially evident upon consideration of the impact of its en-

forcement upon the petitioner. The petitioner, and _ its

predecessor local union, vigorously represented Jackson's

employees since 1975 — but will find its recognition withdrawn.

The petitioner negotiated the modification of an agreement

which resulted in regularization of employment for Jackson’s

employees and the creation of hundreds of new jobs — but will

find its collective bargaining agreement abrogated. The peti-

tioner expended its treasury monies, manpower and expertise

in negotiating terms and conditions of employment in excess

of comparable shipyard agreements — but will be required to

severally reimburse hundreds of thousands of dollars in dues

and initiation fees to Jackson employees, who freely chose the

petitioner as their collective bargaining representative.

The court below suggests that the Board’s remedial efforts

be “viewed pragmatically”. App. A, infra, 27a. Viewed

pragmatically, the Board’s wholly inappropriate application of

its arsenal of remedies to the facts of this case does not effec-

tuate the policies of the Act and is, therefore, punitive and

unlawful. See Local 60, Carpenters v. NLRB, supra; Virginia

Electric & Power Co. v. NLRB, 319 U.S. 533 (1943); Republic

Steel Corp. v. NLRB, 311 U.S. 7 (1940); Phelps Dodge Corp.

v. NLRB, 313 U.S. 177 (1941); NLRB v. District 50, UMW,

355 U.S. 453 (1958).

If the decision below is permitted to stand, it will constitute

an impermissible and unjustified extension of the Board’s

jurisdiction to the remediation of labor union corruption.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

*ROBERT H. BOGUCKI

ANTHONY T. SCOTTO

TINA PELUSO

BOGUCKI, DiCHIARA « SCOTTO

26 Court Street

_ Brooklyn, New York 11242

(212) 875-7762

Counsel for Petitioner,

Local 1814, International

Longshoremen’s Association,

AFL-CIO

*Counsel of Record

APPENDIX A

Notice: This opinion is subject to formal revision before publication

in the Federal Reporter or U.S.App.D.C. Reports. Users are requested

to notify the Clerk of any formal errors in order that corrections may be

made before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 83-1113

LOCAL 1814, INTERNATIONAL LONGSHOREMEN’S

ASSOCIATION, AFL-CIO, PETITIONER

Vv.

NATIONAL LABOR RELATIONS BOARD, RESPONDENT

No. 83-1117

JACKSON ENGiNEERING COMPANY, INC., PETITIONER

NATIONAL LABOR RELATIONS BOARD, RESPONDENT

Petition for Review of an Order of the

National Labor Relations Board and

Cross-Application for Enforcement

Argued November 10, 1982

Decided May 15, 1984

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

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

James M. Altman, with whom David Jaffe was on the

brief, for petitioner in No. 88-1113. Howard Schulman

also entered an appearance for petitioner.

Andrew E. Zelman, with whom Ellen R. Mandelbaum

was on the brief, for petitioner in No. 83-1117.

Allison W. Brown, Jr., Attorney, National Labor Rela-

tions Board, with whom Elliott Moore, Deputy Associate

General Counsel, was on the brief, for respondent in Nos.

83-1113 and 83-1117.

Before: WILKEY and WALD, Circuit Judges, and MAC-

KINNON, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

MACKINNON.

Dissenting opinion filed by Circuit Judge WALD.

MACKINNON, Senior Circuit Judge: This is a truly

stark case of eorruption in labor-mangement relations.

Presented to this Court are legal questions of consider-

able importance and some novelty: the responsibility of

a union that obtains a union shop agreement from an

employer as part of a corrupt agreement to pay the

union’s highest officers to steer work to the employer

from other businesses, and the authority of the National

Labor Relations Board (“NLRB”) to remedy the effects

ef such unlawful concealed assistance. Both Jackson En-

gineering Co., Inc. (“Jackson,” or the “Company,” or the

“Employer’), and Local 1814 of the International Long-

shoremen’s Association, AFL-CIO (‘“‘Local 1814” or the

“Union”) petition to reverse the Board’s decision.

In 1975, the president of Jackson struck a deal with

the two highest officials of the Union: the Company

would welcome the Union’s representation of Jackson’s

employees if the Union would steer business to the Em-

ployer. In addition to extending their Union’s represen-

tation and authority, the Union officials were to receive

a ten percent cash kickback for the business that Local

1814 referred to Jackson. As all parties are agreed, the

execution of this agreement over the next few years was

a blatant violation of the anti-bribery provision of the

National Labor Relations Act (“NLRA”), 29 U.S.C.

§ 186 (1976).

Petitioners seek review of the NLRB’s order holding

that the kickback arrangement, involving as it did the

contribution of support by the Employer to the Union,

constituted unfair labor practices on the part of both

the Employer and the Union.’ The Board ordered peti-

tioners to cease and desist from such actions, and fur-

ther ordered Jackson to withdraw its voluntary recogni-

tion of Local 1814 as the exclusive collective bargaining

representative of Jackson’s employees until the Union

was certified by the Board, that the current collective

bargaining agreement be abrogated, and that Jackson

and Local 1814 jointly reimburse Jackson’s employees

for all union dues and related membership fees paid un-

der the union security clause in the 1979 coilective bar-

gaining agreement.

Petitioners’ first objection to the Board’s decision is

that the illegal acts of the Union’s officers are not at-

tributable to the Union itself, and thus that neither the

Union nor the Employer Jackson committed an unfair

labor practice. We disagree. Local 1814 was properly

held responsible for these acts of its highest officers—

actions closely related to the conduct of the Union’s busi-

ness, which would foreseeably yield benefits to the Union

itself, and which did in fact yield such benefits.

1 Jackson was held to have violated both sections 8(a) (1)

& (2) of the Act, which prohibit employer assistance of labor

organizations through the contribution of financial or other

support; Local 1814 was found in violation of section

8(b) (1) (A) of the Act, which prohibits unions from re-

straining or coercing employees in the exercise of their statu-

tory rights to bargain collectively through representatives

of their own choosing. The full text of these statutory provi-

sions appears supra note 12.

Petitioners further contend that the Board lacked au-

thority to take affirmative remedial steps against the

Union and the Employer because the Union local always

represented an uncoerced majority of the Jackson em-

ployees. As far as this Court is aware, the NLRB has

never before applied such affirmative remedies to a case

of concealed unlawful assistance by an employer to a

union. In that sense, this is a case of first impression.

This Court recognizes, however, that the fashioning of

remedies in the field of labor relations frequently calls

for flexible application of familiar statutory policies to

novel factual situations, and that the Board possesses

broad discretion in the matching of remedies to wrongs.

Cognizant of such administrative discretion, and atten-

tive to the central policy of the NLRA—to allow workers

free exercise of their rights to bargain collectively—we

rule that the remedies ordered by the Board bear a rea-

sonable relation to the violations found. Where corrup-

tion is endemic to the relations between an employer and

union, the Board is justified in requiring a fresh start

under which employees may freely designate a collective

bargaining representative of their choice.

I. FACTUAL BACKGROUND

The facts of this case indicate the existence of a de-

liberate, flagrant, and very substantial kickback scheme

between Jackson and Local 1814. Those facts are exten-

sive but deserve detailed attention: they provide the

basis both for holding the Union responsible for the con-

duct of its officers, and for the authority of the Board to

order the remedies that it did.

A. The Origin of the Kickback Arrangement

Jackson is a New Jersey corporation performing ship

building, maintenance, and repair at sites in New Jersey

and New York. Jackson began operations in 1948, and

until 1975, its employees were not represented by any

labor organization. Some time in 1975, Nicholas Seregos,

who was at all relevant times the principal owner and

president of Jackson, came to the conclusion that his Com-

pany’s efforts to get business had been hampered by the

fact that its work force was not unionized. In particu-

lar, Seregos had observed over time that United States

flag ships would repeatedly reject his solicitations on the

grounds that Jackson was not a union shop. Sonny Mon-

tella, an acquaintance of Seregos, suggested to him that

he contact Anthony Anastasio, the Secretary-Treasurer

and later Executive Vice President of the predecessor of

Local 1814 of the International Longshoremen’s Associa-

tion, AFL-CIO (“ILA”).?

Seregos contacted Anastasio at the Union’s office and

expressed his interest in both obtaining some business

for Jackson and unionizing his shop. Anastasio then met

with the employees to see if they would be willing to sign

up with the Union; the record is silent as to the events

of this meeting.

Seregos and Anastasio met again sometime shortly be-~

fore July 11, 1975. Anastasio offered to get Jackson

some business in exchange for a kickback of ten percent

of the proceeds; Anastasio made it clear to Seregos that

he would refer business to Jackson only on the condition

that the firm unionized. Seregos agreed to both the kick-

back arrangement and to unionization of Jackson’s work-

force.

2 At the time, Anastasio was Secretary-Treasurer of Local

1277, ILA. In March, 1978, Local 1277 and other locals of the

ILA merged into Local 1814. All parties agree that Local

1814 is the successor to Local 1277. References to the ILA

local will be to “Local 1814.” As Secretary-Treasurer, Anas-

tasio was responsible for the administration of contracts for

Local 1814 in the ship repair industry. He continued exer-

cising that responsibility after the merger, when he became

Executive Vice President, the second highest position in the

merged organization.

Seregos and Anastasio next met in the Local 1814 of-

fice around July 11, 1975. Anastasio told Seregos that

he could help get Jackson business from Prudential Lines,

a United States flag line, and instructed Seregos to write

to a particular officer at Prudential. Seregos’ letter to

Prudential, dated July 11, 1975, falsely stressed that his

firm was a union shop affiliated with Local 1814. Not

until September 15, 1975, did Local 1814 actually ob-

tain authorization cards from Jackson’s employees. In

late September, Seregos, for Jackson, signed a memo-

randum of understanding with Local 1814, agreeing to

recognize the Union. The Company began to check off

employees’ union dues and forward the funds to the

Union.

Next, sometime in the fall of 1975, Seregos and An-

astasio met with Anthony Scotto, president of Loca! 1814,

at the Union’s office. Seregos asked for more work re-

ferrals; Anastasio indicated that he could help Jackson

get work with United States Shipping Lines. Anastasio

then asked how Seregos was going to pay the ten percent

kickback on the business. Scotto offered to help Seregos

set up a foreign corporation to smooth the arrangement,

but Seregos declined the offer. Seregos, Scotto, and An-

astasio then signed a collective bargaining agreement—

a multi-employer contract covering eleven other employ-

ers in the industry—binding Jackson for a period of

three years from November 3, 1975.

Soon after this meeting, Jackson got work from two

shipping lines. Jackson started to receive business from

Prudential in September, 1975. In late 1975, after Jack-

son had begun receiving business from Prudential and

United States Shipping Lines, Seregos and Anastasio

further discussed the method of payment for the kick-

backs, and agreed that Seregos would pay Anastasio in

cash.

In early 1976, the ten percent payments began; they

were made in cash at the Local 1814 office with only

Seregos and Anastasio present. For the business referred

to Jackson from the two shipping lines for 1976, Seregos

paid Anastasio $15,000. The total for 1977 was $16,000.°

During 1978, the payments totalled $28,700. Through-

out this period, Seregos and Anastasio were responsible

for administering the collective bargaining agreement be-

tween Jackson and Local 1814. Between 1975 and 1979,

both Jackson’s business and its number of employees—

all Local 1814 members—grew considerably. On Novem-

ber 3, 1978, Jackson and Local 1814 agreed to a modi-

fied three-year renewal of their collective bargaining

agreement; Seregos signed for Jackson, and Anastasio

and Joseph Collazzo signed for the Union.

B. The Criminal Indictments and Final Kickback

Payments

In January, 1979, the Grand Jury in the Southern Dis-

trict of New York handed down an indictment against

Scotto and Anastasio concerning their acceptance of pay-

ments from other employers under contract to Local

1814. Jackson was not included as a defendant in that

indictment. In early May, 1979, at the Local 1814 office,

Anastasio asked Seregos if there was any money due

“against the work.” When Seregos balked due to the

pending criminal investigation, Anastasio reassured him.

Seregos paid Anastasio $4000 on May 8, 1979.

Sometime later, Anastasio asked Seregos to contribute

to the cost of Scotto’s defense against the indictment.

When Seregos hesitated, Anastasio asked him to try to

help out, and told him that Anastasio and Scotto were

* During 1977, Seregos gave Anastasio $5000 on June 2,

$1000 on October 6, $5000 on November 17, and $5000 on

December 19.

*The 1978 figures and dates were as follows: $5000 on

February 28, $5000 on March 23, $5000 on April 10, $5000

on May 15, $3700 on July 3, and $5000 on November 15. These

payments were for the business of United States Shipping

Lines; Jackson lost Prudential’s business in 1978.

having a reception at a hotel and asking others in the

industry to contribute to pay Scotto’s attorneys’ fees.

Seregos then paid Anastasio $4000 cash at the Local 1814

office, on July 5, 1979. On July 31, 1979, a superseding

indictment was issued, charging Scotto and Anastasio

with additional corrupt conduct. In part, the added

counts involved the payments from Seregos to Anastasio

from 1977-79.°

After the superseding indictment was filed, Local 1814

removed Anastasio from dealings and negotiations with

Jackson, and Jackson removed Seregos from dealings

with the Union. Both Anastasio and Scotto, however,

were allowed to retain their offices in the Union, and the

two were not replaced by elections until almost two years

later.

Scotto and Anastasio were tried in the Southern Dis-

trict of New York on multiple criminal counts of re-

ceiving unlawful labor payments under section 302 of the

Taft-Hartley Act, 29 U.S.C. § 186(b) ;* racketeering and

5 Scotto was not indicted for dealings with Seregos or

Jackson.

$29 U.S.C. § 186(a) & (b) (1976) provides:

(a) It shall be unlawful for any employer .. . to pay,

lend, or deliver, or agree to pay, lend, or deliver, any

money or other thing of value—

(1) to any representative of any of his employees

sso

(2) to any labor organization, or any officer or

employee thereof, which represents, seeks to repre-

sent, or would admit to membership, any of the em-

ployees of such employer ...or...

(4) to any officer or employee of a labor organiza-

tion... with intent to influence him in respect to any

of his actions, decisions, or duties as a representative

of employees or as such officer or employee of such

labor organization.

(b) (1) It shall be unlawful for any person to request,

demand, receive, or accept, or agree to receive or accept,

any payment, loan, or delivery of any money or other thing

of value prohibited by subsection (a) of this section.

conspiracy charges under 18 U.S.C. § 1962(c) and (d);

and tax evasion charges under 26 U.S.C. §§ 7201 &

7206(1). In January of 1980, the jury convicted both

defendants. Anastasio was convicted on the Jackson pay-

ments, and was sentenced to two years in prison, five

years probation, and a $5000 fine. Scotto, who was not

indicted on the Jackson payments, was sentenced on other

counts to five years in prison, five years probation, and

$75,000 in fines. The trial judge also ordered that the

two defendants forfeit their offices in the Union. On

September 2, 1980, the Second Circuit unanimously af-

firmed the convictions. See United States v. Scotto, 641

F.2d 47 (2d Cir. 1980), cert. denied, 452 U.S. 961

(1981). All the time that the federal appeal and de

fendants’ unsuccessful state court actions to retain their

offices were pending, Local 1814 allowed Scotto and An-

astasio to remain in their respective positions at the

head of the Union. The two were not replaced until

May, 1981, when new elections were held.

C. Renegotiation of the Collective Bargaining Agreement

Sometime in late 1978, Jackson began negotiating with

Brewer Drydock Co. (“Brewer”) for the purchase of a

drydock facility on Staten Island. Jackson’s business had,

up to then, been purely a pierside operation; the drydock

operation would be complementary, and was located op-

posite Jackson’s facility in Brooklyn. In early June,

1979, Jackson agreed to purchase Brewer’s Staten Island

facility, and to take it over on June 15. Brewer’s Staten

Island employees had been represented by Local 17, In-

dustrial Union of Marine and Shipbuilding Workers of

America (“Local 17”).7. When Jackson took over the

™ The last collective bargaining agreement between Brewer

and Local 17 was to run until August 31, 1981, and contained

a clause binding Brewer and its “successors and assigns.”

All of Brewer’s employees, however, had been laid off prior

to the June, 1979, sale. During the summer of 1979, officials

of Local 17 asserted, without success, that Jackson was bound

10a

Staten Island facility, the Company recognized Local

1814 as the representative of its employees there, believ-

ing it was obligated to do so.

In late June or early July, 1979, Jackson initiated

negotiations with Local 1814 to modify their existing

collective bargaining agreement. Jackson sought reduc-

tion in wages and benefits, claiming that the firm’s new

ability to handle combination pierside-drydock work

would result in more regular work for employees. The

Company also asserted that shipyard work brought lower

market prices, and that labor costs of shipyard operations

were usually lower. After extensive negotiation, involving

a number of bargaining cessions, the parties reached a

modified collective bargaining agreement on September

15, 1979. The agreement extended the recognition clause

to cover the new Staten Island facility, but the Union

agreed to reduced wages and reductions in certain bene-

fits for most Jackson employees.’ The record contains no

suggestion as to what, if anything, the Employer gave

up in exchange for receiving these concessions from the

Union. Scotto and Anastasio did not personally take

part in these negotiations, but they remained the highest

officials of the Union throughout.

II. PROCEDURAL DEVELOPMENT

A. Initiation of the Complaint

On September 28, 1979, Local 17 filed unfair labor

practice charges against Jackson and Local 1814 with

by the successor clause to recognize Local 17 as the repre-

sentative of employees at the Staten Island facility. Local 17

did not claim, however, that it represented any of Jackson’s

employees.

® The twenty-five most senior Jackson employees received

no reduction in wages or benefits. For the remainder of the

workforce, wages and pension and hospitalization benefits were

slightly reduced. Holidays, sick days, and jury days were

unchanged.

—— ye

lla

the National Labor Relations Board. As initially filed,

the Local 17 complaint was considerably broader than

the complaint ultimately brought before Administrative

Law Judge (ALJ) Fish.® As presented to the ALJ by

the General Counsel, the case primarily involved the il-

legality, under sections 8(a)(1) and (2) and section

8(b) (1) (A) of the NLRA, of the concealed payments

from Seregos to Anastasio. In addition, the complaint

presented Midwest Piping * allegations that Jackson had

committed an unfair labor practice against Local 17 by

recognizing Local 1814 as the bargaining representative

of Jackson’s Staten Island employees while a real ques-

tion of representation existed. These aspects of the com-

plaint were distinct, yet factually related.

B. The Decision of the Administrative Law Judge

Upon the foregoing facts, the ALJ found both Jackson

and Local 1814 guilty of unfair labor practices based

on the concealed payments. The judge found that the

undisputed evidence indicated that Seregos had made

illegal concealed payments to Anastasio, and that Scotto

® The allegations of the complaint that dropped out of the

case before the decision of the ALJ were the Local 17 charge

that Jackson violated section 8(a) (5) of the Act by refusing

to recognize that union as the successor to Brewer’s bargaining

obligation; that Jackson violated section 8(a)(3) by dis-

criminatorily refusing to hire former Brewer employees be-

cause of their Local 17 membership; and that Local 1814 vio-

lated sections 8(b)(1)(A) and (2) by inducing Jackson to

refuse to hire those employees. The Regional Director of the

NLRB refused to issue a complaint with respect to these

charges, and specifically dismissed the section 8(a) (5)

charges.

10 Midwest Piping & Supply Co., 63 N.L.R.B. 1060 (1945),

in which the Board held violative of section 8(a) (2) an em-

ployer’s recognition of one union as the bargaining repre-

sentative of employees while a real question of representation

existed between two rival unions.

12a

had at least condoned this arrangement. Jackson Engi-

neering Co., Nos. 29-CA-7498, 29-CB-3966 (May 27,

1982) (hereinafter “ALJ Decision”) at 24, 28 (JA 292,

315, 319). In addition, the ALJ explicitly found that the

evidence before him yielded the conclusion that the kick-

back arrangement had been agreed to before the execu-

tion of the original memorandum and contract between

Jackson and Local 1814. Id. at 8-9 (JA 299-300). Based

on those facts, the ALJ stated the central question to be:

whether the payments were made to a “labor or-

ganization”, or put another way, whether Anastasio

and Scotto were agents of [Local 1814] with respect

to this conduct.

Id. at 25 (JA 316). To find the answer to this ques-

tion, the ALJ turned to section 2(13) of the Act, see

infra, which he interpreted in turn to refer him to gen-

eral principles of agency law. Id. at 26 & n.44 (JA

317).

The ALJ found that the concealed payments were re-

lated to Anastasio’s exercise of his authority to act for

the Union, because they were “intimately connected”

with the Company’s decision to recognize the Union. 7d.

at 27 & n.44 (JA 318). Furthermore, the ALJ specifi-

cally found that the kickback arrangement had been “sup-

portive of the interests of the Union,” in generating more

work for members of Local 1814, and more funds for

the Union itself. Id. at 28 (JA 319) (emphasis added).

The ALJ reasoned that the entire arrangement had been

engineered by the Union’s highest officials, and in the

absence of outright authorization by the Union’s member-

ship, which could hardly be expected to be demonstrable

concerning illegal concealed acts, no greater degree of

responsibility by the Union could possibly be proven. Jd.

at 28-29 (JA 319-20). All these facts led to the inexor-

able conclusion that the Employer had provided the

Union with illegal assistance in violation of section

122

8(a)(1) and (2) of th Act, and that the Union had

violated section 8(b) (1) (.1) of the Act.”

The remedies ordered by the ALJ were limited to

cease-and-desist orders to both the Company and the

Union concerning illegal payments, and requirements of

posting of notices. ALJ Decision at 44-46 (JA 335-37).

The ALJ particularly declined to set aside the parties’

bargaining relationship on the basis of the unlawful pay-

ments. Id. at 43 (JA 334).

C. The Decision of the Board

The Employer, the Union, and the General Counsel

each filed exceptions to the decision of the ALJ. Adopting

the underlying facts found by the ALJ, the Board af-

firmed his decision concerning the unfair labor practices

of Jackson and Local 1814 respectively. Thus the Board

approved the ALJ’s findings that Anastasio and Scotto

had acted on behalf of the Union, and that the illicit

arrangement had served the Union’s interests. The

Board disagreed unanimously, however, with the ALJ’s

conclusion that the concealed payments arrangements did

not warrant setting aside the parties’ contract of Sep-

tember 15, 1979. Central to the Board’s decision were

the following findings:

[A]t or about the same time [Local 1814 and

Jackson] were negotiating midterm contract modi-

fications granting [the Employer] economic conces-

sions, concealed payments involving large sums of

11The ALJ went on to decide that the Company had not

committed Midwest Piping violations by recognizing Local

1814 as the bargaining representative of the employees at

Jackson’s Staten Island facility. ALJ Decision at 30, 43

(JA 321, 334). In so doing, the ALJ relied on findings that

Local 1814 had enjoyed majority status among Jackson’s

employees, id. at 40 (JA 331), and that the Union had pro-

vided those employees with “vigorous and effective represen-

tation” throughout the period of concealed payments. ZJd. at

42 (JA 333).

l4a

money were changing hands. We find that these

concurrent actions operated to taint and undermine

the bargaining relationship between [the parties]

and the contract which was negotiated by them while

the payments were being made. Our conclusion in

this regard is not affected by the fact that Anastasio,

Scotto, and Seregos personally did not engage in the

negotiations which led to the modified contract. Al-

though those individuals may not personally have

participated, they were, at all material times, [Local

1814’s] executive vice president and president and

[Jackson’s] president, respectively. Under these cir-

cumstances, we do not regard their divorce from the

actual negotiations to be determinative of this issue.

Jackson Engineering Co., Nos. 29-CA-7498, 29-CB-3966,

265 NLRB No. 175, slip op. at 5 (Dec. 28, 1982) (here-

inafter “Board Decision’) (JA 396, 400) (emphasis

added).

On this basis, the Board modified the ALJ’s remedial

order. Id. at 7-12 (JA 402-07). Beyond the original

cease-and-desist orders, the Board added remedial pro-

visions ordering Jackson to cease recognition of Local

1814 until the Union was certified by the NLRB, and

to cease giving effect to the September, 1979, collective

bargaining agreement. Corresponding orders were di-

rected at the Union. Finally, the Employer and Union

were ordered jointly and severally to reimburse all of

the Jackson employees who joined the Union after the

September 19, 1979, collective bargaining agreement be-

came effective, for the total dues and fees paid by those

employees during that period. These petitions for review

followed.

III. UNLAWFUL ASSISTANCE:

THE UNION’S RESPONSIBILITY UNDER AGENCY PRINCIPLES

This case is somewhat novel in that, as was conceded

at oral argument, the National Labor Relations Board

has seldom if ever sought to use the unfair labor practice

15a

provisions of the NLRA .o remedy corrupt criminal

payments of an employer to a union. Yet the issues in

this case all revolve around one central question that is

neither unfamiliar nor particularly troublesome: Can the

Union fairly be held responsible for the unlawful acts of

its highest officers when those acts go to the very heart

of the contractual relationship between the Employer

and Union?

Petitioners’ first challenge is directed at the Board’s

substantive conclusion that the Employer and the Union

each committed unfair labor practices, having respec-

tively violated sections 8(a) (1) & (2) and section 8(b)

(1) (A) of the NLRA.“ The premise of this attack

is that unless the acceptance of the unlawful payments

by Scotto and Anastasio can be attributed to the Union,

then neither the Employer nor the Union can be charged

with an unfair labor practice. By the same token, peti-

tioners concede that if made to the Union, the concealed

payments would constitute the contribution of support

and would therefore give rise to violations on the part

12 The portions of the NLRA under which Jackson was

found to have committed unfair labor practices provide:

It shall be an unfair labor practice for an employer—

(1) to interfere with, restrain, or coerce employees in

the exercise of the rights guaranteed in section 157 of

this title;

(2) to dominate or interfere with the formation or ad-

ministration of any labor organization or contribute

financial or other support toit....

Section 8(a) (1) & (2), 29 U.S.C. § 158(a) (1) & (2) (1976).

Local 1814 was found in violation of the following pro-

vision :

It shall be an unfair labor practice for a labor organiza-

tion or its agents—

(1) to restrain or coerce (A) employees in the exercise

of the rights guaranteed in section 157 of this

See

Section 8(b) (1) (A), 29 U.S.C. § 158(b) (1) (A) (1976).

16a

of both the Employer and Union. See Brief for Peti-

tioner Jackson at 19; Brief for Petitioner Local 1814

at 18. Preliminarily, this Court notes that the decision of

the ALJ, whose factual findings the Board adopted, care-

fully analyzed the evidence concerning the responsibility

of Local 1814, and drew reasonable inferences therefrom.

In considering petitioners’ contentions, we begin with

several broad controlling principles. First, the mere fact

that particular acts of individuals are criminally punish-

able does not render the Act’s proscription of unfair la-

bor practices inapplicable to a course of conduct. Section

10(a), 29 U.S.C. § 160(a) ;7* see Sweater Bee by Banff,

Ltd., 197 N.L.R.B. 805, 805 (1972), enforced sub. nom.

NLRB v. Suwanee Lumber Manufacturing Co., 467 F.2d

944 (5th Cir. 1972), enforced, 486 F.2d 1395 (2d Cir.

1973). On the other hand, the unfair labor practices

provisions of the NLRA regulate the conduct of employers

and labor organizations only—not the acts of individuals

as individuals. See International Longshoremen’s and

Warehousemen’s Union (Sunset Line & Twine Co.), 79

N.L.R.B. 1487, 1507 & n.87 (1948). The question here,

as to the alleged unfair labor practices of both Employer

and Union, is whether the individual acts can properly

be attributed to the Union. See Sunset Line & Twine

Co., supra, 79 N.L.R.B. at 1507.

18 Section 10 (a) of the Act provides:

The Board is empowered . . . to prevent any person from

engaging in any unfair labor practice... . This power

shall not be affected by any other means of adjustment

or prevention that has been or may be established by

agreement, law, or otherwise... .

29 U.S.C. § 160(a) (1976) (emphasis added). The italicized

language of section 10(a) refutes, by itself, the dissent’s

suggestion that the existence and availability of 29 U.S.C.

§ 186 forecloses the Board from remedying the kickback

scheme here presented as it would any other unfair labor

practice.

17a

To answer this question, we turn to the NLRA, which

deals with imputation of responsibility as follows:

In determining whether any person '*! is acting as

an “agent” of another person so as to make such

other person responsible for his acts, the question of

whether the specific acts performed were actually

authorized or subsequently ratified shall not be

controlling.

Section 2(13), 29 U.S.C. §152(13) (1976) (emphasis

added). Without more, the plain language of the statute

renders entirely ineffectual Local 1814’s reliance on the

ALJ’s conclusion that Anastasio had not been authorized

to enter into kickback arrangements with employers. See

Brief for Petitioner Local 1814 at 25-26 (quoting ALJ

Decision at 27 (JA 318)). Responsibility is not depend-

ent upon actual authorization.

Furthermore, the statutory provision yields an affirma-

tive basis for holding the Union responsible for its of-

ficers’ acceptance of the payments within the context of

the kickback scheme: the principles of agency law. Sec-

tion 2(13) of the Act was added by the Taft-Hartley

Act of 1947, 61 Stat. 186 (June 28, 1947). Beyond

doubt, the legislative intent of this provision was to

make the ordinary law of agency applicable to the at-

tribution of individual acts to both employers and unions.

See, e.g., Sunset Line & Twine Co., supra, 79 N.L.R.B.

at 1507-08; accord Mullett v. NLRB, 571 F.2d 1292,

1294 (4th Cir. 1978); NLRB v. Local 3, IBEW, 467

F.2d 1158, 1159 (2d Cir. 1972); NLRB v. International

Brotherhood of Boilermakers, Local No. 83, 321 F.2d 807,

810 (8th Cir. 1963).%° Transplantation of ordinary

14 Within the NLRA, the term “person” includes individuals,

labor organizations, and corporations. Section 2(1), 29 U.S.C.

§ 152(1) (Supp. V 1981).

15 Legislative history reveals that Senator Taft offered the

following analysis of section 2(13) :

1Sa

agency law, which arises out of ordinary contract and

tort disputes, into the NLRA context necessarily requires

sensitivity to the particular circumstances of industrial

This restores the law of agency as it has been developed

at common law.

These amendments are criticized in one breath as im-

posing too harsh a liability upon unions for the acts of

their officers or representatives and as too mild with re-

spect to the liability of employers for the acts of their

managerial and supervisory personnel. Of course, the

definition applies equally in the responsibility imputed to

both employers and labor organizations for the acts of

their officers or representatives in the scope of their

employment.

It is true that this definition was written to avoid the

construction which the Supreme Court in the recent case

of United States against United Brotherhood of Carpen-

ters [United Bhd. of Carpenters v. United States, 330

U.S. 395 (1947)] placed upon section 6 of the Norris-La

Guardia Act which exempts organizations from liability

for illegal acts committed in labor disputes unless proof

of actual instigation, participation, or ratification can be

shown. The construction the Supreme Court placed on

this special exemption was so broad that Mr. Justice

Frankfurter, speaking for the dissenting minority, pointed

out that all unions need do in the future to escape lia-

bility for the illegal actions of their officers is simply to

pass a standing resolution declaiming such responsibility.

[830 U.S. at 418, 421 (Frankfurter, J., dissenting) ]

The conferees agreed that the ordinary law of agency

should apply to employer and union representatives. Con-

sequently, when a supervisor acting in his capacity as

such, engages in intimidating conduct or illegal action

with respect to employees or labor organizers his conduct

can be imputed to his employer regardless of whether or

not the company officials approved or were even aware of

his actions. Similarly union business agents or stewards,

acting in their capacity of union officers, may make their

union guilty of an unfair-labor practice when they en-

gage in conduct made an unfair-labor practice in the bill,

even though no formal action has been taken by the union

to authorize or approve such conduct.

98 Cong. Rec. 6858-59 (June 12, 1947) (emphasis added).

Numerous other references in the legislative history of the

19a

labor relations. Courts have concluded that under the

NLRA, agency principles must be expansively construed,

including when questions of union responsibility are pre-

sented. See NLRB v. Georgetown Dress Corp., 5387 F.2d

1239, 1244 (4th Cir. 1976); NLRB v. Urban Telephone

Corp., 499 F.2d 239, 243 (7th Cir. 1974). In reviewing

the Board’s determination that Local 1814 was respon-

sible for these acts, this Court recognizes that the ex-

istence of an agency relationship is a factual matter,

NLRB v. Donkin’s Inn, Inc., 582 F.2d 188, 141 (9th

Cir.), cert. denied, 429 U.S. 895 (1976), which cannot

be disturbed if supported by “substantial evidence on the

record considered as a whole.” Local 349, IBEW v. NLRB,

357 F.2d 579, 580 (D.C. Cir. 1965); see NLRB v. Local

815, International Brotherhood of Teamsters, 290 F.2d

99, 104 (2d Cir. 1961) (Friendly, J.).

The branch of agency law best suited to this case is

the “scope of employment” doctrine. Among the most

firmly established principles in our law is that a prin-

cipal may be held responsible for the acts of an agent

committed within the scope of employment. See, e.g.,

American Fur Co. v. United States, 27 U.S. (2 Peters)

358, 364 (1829); United States v. Gooding, 25 U.S. (12

Wheat.) 460, 469-70 (1827) (Story, J.). The scope of

employment doctrine has found frequent articulation in

the NLRA context. In the seminal case of Sunset Line

& Twine Co., the Board recognized that:

A principal may be responsible for the act of his

agent within the scope of the agent’s general au-

Taft-Hartley amendments support this interpretation of this

provision making basic agency law equally applicable to the

attribution of actions to both employers and unions. See, e.g.,

House Conf. Rept. No. 510, 80th Cong., 1st Sess. 36, 98 Cong.

Rec. (House) 6371 (June 4, 1947); 98 Cong. Rec. (Senate)

6442 (June 5, 1947). It goes almost without saying that if

a union is guilty of the unauthorized unfair labor practices of

its business agents and stewards, that it is similarly respon-

sible for practices of its president and executive vice president.

20a

thority . . . if the principal actually empowered the

agent to represent him in the general area within

which the agent acted.

79 N.L.R.B. at 1509 (footnote omitted) (emphasis

added).

The Restatement fleshes out the scope of employment

doctrine more fully:

Conduct of a servant is within the scope of em-

ployment if, but only if:

(a) it is of the kind he is employed to perform;

(b) it occurs substantially within the authorized

time and space limits; [and]

to serve the master. ...

Restatement (Second) of Agency, § 228(1) at 504 (1957).

The Reporter comments that a showing that an act “tended

to accomplish an authorized purpose and was done at an

authorized time and place” gives rise to an inference

that the act was within the scope of employment. Id.

§ 228, comment b, at 505. The criminality of an act does

not alone prevent it from falling within the scope of

employment. Jd. § 231, at 512. Most importantly, the

acts of an agent motivated partly by self-interest—even

where self-interest is the predominant motive—lie within

the scope of employment so long as the agent is actuated

by the principal’s business purposes “to any appreciable

extent.” Jd. § 236 & comment b, at 523-24.

Applying these principles to the case at bar, it is

readily apparent that Anastasio’s dealings with the Em-

ployer were within the “general area” of his authority.

Furthermore, his entering into the kickback arrange-

ment with Jackson both “tended to accomplish an au-

thorized purpose’”’—the extension of his Union’s member-

ship—and was motivated “to an[{] appreciable extent”

by furtherance of the Union’s interests in dues and pay-

ments for pension and welfare benefits, and principally,

the extension of its representation of longshoremen. Ac-

21a

cording to the record, Anastasio did have actual authority

in the general area of representing the Union in dealing

with employers; his authority extended to organizing em-

ployees, obtaining recognition, and executing and admin-

istering collective bargaining agreements with employers

(JA at 295, 147). As the ALJ and the Board properly

found, Jackson’s recognition of Local 1814, and the con-

commitant extension of the Union’s representation and

membership, were “intimately connected” with the kick-

back arrangement and the concealed payments made pur-

suant thereto. Anastasio made it clear to Seregos at the

outset that the kickback arrangement would only be set

up if Jackson agreed to recognize Local 1814 as the bar-

gaining representative of its employees. Thus, Anastasio’s

exercise of his power to steer business to Jackson—a

power directly related to and derived from his position

within the Union—was directly conditioned on the Em-

ployer’s recognition of Local 1814. Without question, this

was a package deal from the start. Thus the kickback

scheme was a means to an authorized end, and the patent

illegality of the means is immaterial.'* The existence of

an agency relationship is completed by the fact that An-

astasio had dual motivations in the arrangement: his

own pecuniary advantage, and advancement of the rep-

resentational objectives of the Union of which he was

the second highest-ranking officer.

Local 1814 derived substantial advantages from the

unlawful arrangement, and the ALJ so found. See ALJ

Decision at 28 (JA 319). In this regard, it is crucial

to distinguish the interests of the Union itself from those

of the employee members of the Union—who themselves

16 Unfair labor practices may often involve conduct that is

unlawful in other respects. See supra. Interestingly, there

is at least one case in which a court has upheld the Board’s

conclusion that an employer’s bribery of a high union official

constituted an unfair labor practice. See NLRB v. Hollywood-

Maxwell Co., 126 F.2d 815, 818-19 (9th Cir. 1942).

22a

may not have obtained any new job opportunities out of

the payment arrangement. The Union benefitted from

Jackson’s recognition of Local 1814 and the concommitant

extension of the Union’s representation of ship workers.

At the same time, the Union definitely profited from the

associated financial inflow of dues and related fees into

its treasury and pension fund. Finally, the Union bene-

fitted generally from the extension of its strength and

authority on the New Jersey-New York waterfront.

Given his position in the Union and experience in rep-

resenting it, Anastasio must have understood and ex-

pected such potential benefits to the Union. The existence

of such benefits renders entirely unavailing the reliance

of petitioner Local 1814 on the ALJ’s separate finding,

not here in dispute, that no evidence demonstrated that

the Union itself had received any of the money paid by

Jackson,” and had not received any other tangible bene-

fit. See Brief for Petitioner Local 1814 at 26 (quoting

ALJ Decision at 27 (JA 318) )."*

In sum, the agreement between the Union, the Com-

pany, and the Union’s two principal officers had four inter-

locking facets: (1) the Company agreed to recognize the

union; (2) the Company by checkoff would pay the Union,

for all its employees, their dues, fees. and payments for

1TIn United States v. Scotto, supra, 641 F.2d at 51, the

Second Circuit noted the existence of some evidence that

Scotto had used some of the illegal payments involved in that

case for political campaign contributions. The Union might

benefit from such payments.

18 The ALJ’s findings that the Union had so benefitted re-

futes the argument of the dissent that no evidence linked the

kickback payments to Local 1814. Likewise, the facts found

by the ALJ contradict the dissent’s assertion that the Union

officers’ entering into the kickback arrangement was in no

way motivated by a desire to serve the Union. Anastasio’s

participation in the scheme was directly conditioned on the

Employer’s recognition of the Union, which conferred bene-

fits on Local 1814. The Union’s officers acted both for them-

selves and for the Union.

23a

pension and welfare benefits; (3) the Union would steer,

and the Company would receive, ship repair work to the

benefit of the Company, its Union members and the

Union; and (4) the President and Executive Vice

President of the Union would be paid by the Company

sums equal to ten percent of the ship repair business

that the Company would receive from ship owners whose

repair business, because of their subservient relation-

ship to the Union, was subject to Union discretion. It

thus appears that the agreement between the Company,

the Union, and the Union’s principal officers was com-

pletely tainted by fraud and corruption from the very

beginning.

Furthermore, the Union’s retention of Anastasio and

Scotto in their high controlling offices, long after the

grand jury indictments had put Local 1814 on notice of

their misdeeds, is tantamount to acquiescence or condona-

tion of their unlawful acts. The last two payments from

Jackson were received by Anastasio after the Union had

knowledge of the criminal investigation. The continua-

tion of the acceptance of the benefits of the kickback ar-

rangement under such circumstances supports the inference

that the Union had prior knowledge of the arrangement

and that Anastasio was motivated in part by the Union’s

interests. Under such circumstances, one might reason-

ably have expected a truly upright union to have taken

some disciplinary action. As the ALJ astutely recognized,

it is hardly imaginable that any greater degree of union

responsibility could be demonstrated in such a case: the

membership certainly cannot formally authorize an ar-

rangement of which it is unaware, and would certainly

never directly ratify an illegal arrangement once it had

been exposed. Thus, a decision absolving Local 1814 of

responsibility for the acceptance by its highest officers of

financial contributions would be tantamount to a blanket

determination that a union could never be held so respon-

sible under the NLRA. We reject that alternative. We

conclude that Anastasio’s actual authority over represen-

24a

tational matters in general, together with the substan-

tial benefits received by Local 1814 as a result the entire

agreement of which the kickback arrangement was an

integral part, constitute substantial evidence on the record

as a whole, see 29 U.S.C. §160(f) (1976); Universal

Camera Corp. v. NLRB, 340 U.S. 474 (1951), in favor

of the Board’s conclusion that the Union was legally re-

sponsible for Anastasio’s acts as agent for the Union.

Extensive case law under the NLRA concerning agency

relationships within unions buttresses our conclusion. In

Mullett v. NLRB, 571 F.2d 1292 (4th Cir. 1978), the

business manager of a union, who had both authority to

remove men from a job and responsibility for seeing that

union members were hired before outsiders, had tacitly

approved members’ actions that had led to the unlawful

dismissal of a non-member. Notwithstanding the man-

ager’s lack of actual authority to take such actions, the

Fourth Circuit concluded that the union official’s wrongful

conduct could be attributed to the union. ZJd. at 1294.

Similarly, in NLRB v. Georgetown Dress Corp., supra,

537 F.2d at 1244-45, the acts of a voluntary in-plant

committee that tainted the election atmosphere were held

attributable to the union, notwithstanding the absence

of authority for those acts. Likewise, where a union

dispatcher with general authority to dispatch longshore-

men to employers unlawfully discriminated against non-

union casuals, the Ninth Circuit held the union respon-

sible for commission of an unfair labor practice, notwith-

standing the fact that the dispatcher’s discrimination was

contrary to the established practice of the local. NLRB v.

International Longshoremen’s and Warehousemen’s Union,

Local 12, 378 F.2d 125 (9th Cir.), cert. denied, 389 U.S.

846 (1967).

The import of these illustrative cases is clear: where

union officials act within the general scope of their actual

authority to conduct union business, and where their ac-

tions can be understood to further the union’s interests,

25a

the union is responsible for the officials’ unlawful acts.

Numerous other decisions provide further support.’ In

comparison to these cases, one particular instance in

which the union was held not responsible is quite in-

structive. In NLRB v. Service Employees International

Union, Local 254, 535 F.2d 1335, 13838 (1st Cir. 1976),

the court held the union responsible for certain acts, but

found no violation concerning an isolated act of violence

by a union picket, where there was no sign of union

acquiescence in, or approbation of, the assault. In con-

trast to that case, Anastasio’s conduct—recurrent accept-

ance of unlawful assistance from the Employer under an

illicit agreement—was calculated and continuous. Local

1814, furthermore, was silent after it was aware of evi-

dence of the misconduct of its officers, continuing to ac-

cept the benefits of the illegal agreement, and leaving

Scotto and Anastasio in office for many months without

taking any steps to discipline or remove the two.

The very cases offered by petitioners serve to refute

the argument that no agency relationship existed. Not

surprisingly, petitioners avoid case law under the NLRA,

preferring to focus on general agency law. Even this

approach, however, is ultimately unavailing. For in-

stance, petitioners rely on cases in which thefts by em-

ployees were not attributed to their employers to create

liability. International Distributing Corp. v. American

District Telegraph Co., 569 F.2d 186, 189 (D.C. Cir.

1977); Bremen State Bank v. Hartford Accident &

Indemnity Co., 427 F.2d 425, 428 (7th Cir. 1970).”

19 See Sheet Metal Workers’ Int’] Ass’n v. NLRB, 293 F.2d

141 (D.C. Cir.), cert. denied, 368 U.S. 896 (1961) ; NLRB v.

Int’] Longshoremen’s and Warehousemen’s Union Local 10,

283 F.2d 558, 564 (9th Cir. 1960) ; NLRB v. Local 135, Int’

Bhd. of Teamsters, 267 F.2d 870, 872-73 (7th Cir.), cert.

denied, 361 U.S. 914 (1959).

20> Cf. Park Transfer Co. v. Lumbermen’s Mutual Casualty

Co., 142 F.2d 100, 100 (D.C. Cir. 1944) (employer not respon-

sible for murder of employee by co-worker in racial incident

26a

In those cases, like that at bar, the employees’ job re-

sponsibilities give rise to the opportunity for the mis-

deed. The critical distinction, however, lies in the fact

that the employees’ acts in the cited cases cannot possibly

be understood to further the interests of the employer.

Outright thefts by employees ¢ nfer no benefit whatso-

ever on the employer, and it would be absurd to main-

tain that employees were even partially motivated by

the employer’s interest when they commit such crimes.

Further illustration is provided by another case upon

which petitioners rely, Melton v. United States, 488 F.

Supp. 1066 (D.D.C. 1980), in which a government re-

habilitation specialist had been bribed by a developer to

falsify reports. The government was held not to be re-

sponsible under agency principles for the acts of its spe-

cialist, because his unlawful acts could not be regarded

as furthering the government’s interests. Jd. at 1073-74.

Significantly, the simple question of who ended up with

the bribe money was not considered determinative: the

totality of the parties’ interests were taken into consid-

eration. Jd. When the sort of all-embracing approach

evident in petitioners’ authority is applied to this case, it

becomes evident that the Board was correct to conclude

that the conduct of Anastasio and Scotto was within the

“scope of employment.”*! Their kickback arrangement

on the job site) ; Grimes v. Saul, 47 F.2d 409 (D.C. Cir. 1931)

(rape committed by employee not attributed to building

owner).

21 Because we hold that the Union officials’ acts were within

the “scope of employment” under agency law, we need not

address the NLRB’s alternative theory for the agency rela-

tionship, the “apparent authority” doctrine. See Brief for

Respondent at 18-19, 21-25. We note, however, that the “ap-

parent authority” strain of agency law has been applied under

the NLRA as an independent theory for the attribution of

responsibility to a union. See NLRB v. Local 3, IBEW, 467

F.2d 1158, 1160 (2d Cir. 1972); NLRB v. Local 815, Int’l

Bhd. of Teamsters, 290 F.2d 99, 103-04 (2d Cir. 1961)

(Friendly, J.). By analogy, the Supreme Court has given

27a

foreseeably and effectively benefitted the Union and fur-

thered the Union’s interests. We conclude that the ac-

ceptance of the money—a prohibited form of employer

payment and assistance—by the Union’s principal officers

is properly attributable to Local 1814, and gave rise to a

finding that both the Employer and the Union engaged in

unfair labor practices.

IV. THE BoARD’s REMEDIAL ACTIONS

Both the Union and Employer challenge the Board’s statu-

tory authority to order the remedial measures that it did.

The essence of their complaints is that the “remedies punish

Local 1814 for conduct beyond its control and conflict

with the purposes of the Act.” Brief for Petitioner Local

1814 at 31. Recognizing the NLRA’s remedial nature,

and the Board’s considerable remedial discretion, this

Court cannot agree that the Board exceeded its authority

or abused its discretion in ordering affirmative relief as it

did. Viewed pragmatically, the Board, when faced with

the egregious pattern of concealed unlawful assistance

approval to the liberal development of “apparent authority”

doctrine to hold organizations responsible for the acts of their

high officials in the context of other federal statutes. See

American Soc’y of Mechanical Eng’rs, Inc. v. Hydrolevel Corp.,

456 U.S. 556 (1982) (Sherman Act) ; United States v. Acme

Process Equip. Co., 385 U.S. 1388 (1966) (Anti-Kickback Act

provides basis for United States’ cancellation of contract).

Apparent authority doctrine, however, may not be well-

suited to a case such as this. When working within that doc-

trine, one must remain attentive to the question of to whom

authority might be said to be “apparent.” In the typical

unfair labor practice, the critical audience is the workforce:

the Act priiiiarily protects their interests. Apparent authority

doctrine under the NLRA has so recognized. In this case, how-

ever, the record nowhere indicates that Jackson’s employees

were aware of the kickback arrangement, at least until the

supervening indictment in the criminal case was issued. Thus

as an audience, the employees were shielded from most of

this performance.

28a

before it, was justified in ordering a completely fresh

start to relations between Jackson and its employees.

A. Background: The Board’s Remedial Discretion

The NLRA vests in the Board broad discretion to rem-

edy unfair labor practices:

If . . . the Board shall be of the opinion that any

person ‘named in the complaint has engaged in. .

any such unfair labor practice, then the Board shall

state its findings of fact and shall issue and cause to

be served on such person an order requiring such

person to cease and desist from such unfair labor

practice, and to take such affirmative action ... as

will effectuate the policies of this chapter... .

Section 10(c), 29 U.S.C. §160(c) (1976) (emphasis

added); see also Section 10(a), 29 U.S.C. § 160(a)

(1976) (“The Board is empowered .. . to prevent any

person from engaging in any unfair labor practice... .’’).

The Supreme Court has consistently recognized the great

breadth of discretion given the Board in remedial mat-

ters, thus implementing Congress’ intention to entrust

labor-management relations to a policy-making adminis-

trative body:

Because the relation of remedy to policy is peculiarly

a matter for administrative competence, courts must

not enter the allowable area of the Board’s discretion

and must guard against the danger of sliding un-

consciously from the narrow confines of law into the

more spacious domain of policy.

Phelps Dodge Corp. v. NLRB, 318 U.S. 177, 194 (1941) ;

see International Association of Machinists, Lodge 35 v.

NLRB, 311 U.S. 72, 82 (1940). The Court has also iden-

tified the need for judicial deferrence to the specialized

expertise of the NLRB, frankly acknowledging that the

Board’s remedial “conclusions may ‘express an intuition

of experience which outruns analysis and sums up many

unnamed and tangled impressions... .2” NLRB v.

29a

Seven-Up Bottling Co., 344 U.S. 344, 348 (1953) (cita-

tion omitted).

Accordingly, judicial review of Board-ordered remedies

has a narrow scope. The reviewing court must satisfy it-

self that the Board has employed its expertise, and has

fulfilled its duty to explain how the proposed remedy

furthers the policies of the Act. See Phelps Dodge, supra,

313 U.S. at 196-97. In addition, the court must ulti-

mately ensure that the selected remedy is rationally re-

lated to the purposes asserted by the Board, and does not

conflict with any statutory purpose. See Seven-Up Bot-

tling Co., supra, 344 U.S. at 346-48; Consolidated Edison

Co. v. NLRB, 305 U.S. 197, 235-36 (1938); NZRB v.

MacKay Radio & Telepraph Co., 304 U.S. 333, 348

(1988). Some decisions have spoken of the Act as

barring “punitive” rather than remedial measures, but

the Supreme Court has made it clear that the punitive

remedial distinction is merely a way of restating the un-

derlying question of whether a given remedy furthers,

and is in no manner inconsistent with, the purposes of

the Act. Seven-Up, supra, 344 U.S. at 348; Consolidated

Edison, supra, 305 U.S. at 235-36. In the remedial con-

text as in others, the central purposes of the Act are the

encouragement of collective bargaining and the protection

of employees’ rights to freedom of association and free

choice of bargaining representatives. See 29 U.S.C.

§§ 151, 157 (1976 & Supp. V 1981).

This Court’s duty is to ascertain whether the remedies

ordered by the Board are proximately tailored to the

facts of this case. The remedies selected by the Board

are virtually routine in large classes of cases, so it is not

the novelty of the remedies that should be our concern.

Rather, the question is whether these routine remedial

measures are appropriate to the violations here presented.

Several facts underlying the unfair labor practices in

question are of particular significance. First, the corrupt

arrangement went back to the very origins of the parties’

30a

relations, and actually predated the Employer’s recogni-

tion of the Union. Second is the extreme degree of col-

laboration between Jackson and Local 1814: although

Local 1814 was not a “company union” in the traditional

sense, its ties under the kickback arrangement were very

strong. The involved officers of the Union, without being

employees, in effect were paid for the services they were

able through the strength of the Union in the shipping

industry to render to Jackson.

Finally, we have the concealment of the unlawful as-

sistance payments in this case. Such payments usually

furnish the basis for the criminal prosecution of the re-

cipients, but here they furnish the basis for the unfair

labor practices. The more usual unfair labor practice

case based on company assistance to the union involves

more open management contributions of money or services

to the union——assistance of which the employees would pre-

sumably be aware. In this case, there is no evidence that

Jackson’s employees could have known of the kickback

arrangement until the issuance of the superseding indict-

ment.

Recognizing the broad contours of the NLRA’s reme-

dial scheme, and attentive to the peculiar facts of this

case, this Court has considered each of the contested rem-

edies ordered by the Board. We find that the Board’s

decision represents nothing more than a sensible applica-

tion of routine remedial practices to a slightly unusual

case, and that its orders were entirely consistent with the

purposes of the Act. The Board’s approach is based on

holding the Union responsible for its officers’ acts and on

restoring the employees to the position they would have

enjoyed but for the illegal arrangement.

B. The Cease-and-Desist Order Directed to the Union

Local 1814 contests the Board’s order directing the

Union to cease and desist from entering an arrangement

“where it receives payments from Jackson,” and to post

3ha

a notice declaring that the Union will never again enter

into such a scheme. Board Decision at 10, 11 (JA 405,

406). This objection is easily disposed of, for it is little

more than a renewal of the argument that Local 1814

cannot be held responsible for the actions of its officers.

The Board has specific authority to order cease-and-

desist orders to employers and unions, 29 U.S.C. § 160(c),

supra, and such orders are the staple of the NLRB’s

remedial practice. In particular, for instance, the Board

has ordered an employer to cease and desist from bribing

a union official. See Hollywood-Maxwell, supra, 126 F.2d

at 818-19. The proper scope of a cease-and-desist order

is determined only by inquiry into whether the Board

could reasonably conclude from the evidence that the or-

der was necessary to prevent further violations. See May

Department Stores Co. v. NLRB, 326 U.S. 376, 390

(1945). Notwithstanding the Board’s plenary authority

to issue such orders, the Union maintains that in this

case cease-and-desist orders are inappropriate, because

they “will not prevent a recurrence of the unfair labor

practices the Board found here, since in this case Local

1814 never received any of the money Seregos paid

Anastasio.” Brief for Petitioner Local 1814 at 51 (em-

' phasis in the original). As the entirety of section III of

this opinion demonstrates, supra, the absence of any evi-

dence that the Union received illegal payments is not

dispositive of whether the Union was unlawfully assisted.

The actions of Anastasio and Scotto are properly attrib-

utable to the Union. Local 1814 has the authority and

responsibility to control the conduct of its highest officers

and is responsible for their acts to the extent herein-

before set forth. Thus the cease-and-desist orders di-

rected to the Union were the natural concomitant of the

Board’s substantive findings in the case. The remedy fits

the facts. The orders issued to Local 1814 were neither

unfair nor misleading. In sum, we find no infirmity in

this portion of the Board’s order.

32a

C. The Board’s Order that the Employer Withdraw

Recognition of Local 1814 as Exclusive Bargaining

Representative of the Employees

In addition to the straightforward cease-and-desist or-

ders approved by the ALJ, the Board ordered several af-

firmative remedies on the part of the two petitioners. The

first such remedy consists of the portions of the Board’s

order compelling the Employer to cease recognizing Local

1814 as the exclusive bargaining representative of its

employees until the Union has been certified by the

NLRB, and requiring the Union to cease acting as the

representative of Jackson’s employees. Board Decision

at 7, 8, 11 (JA 402, 403, 406). Petitioner Local 1814

attacks this remedy as “punitive,” arguing that it “con-

flicts with [Jackson’s] employees’ rights under §7 of

the Act, because Local 1814 was the chosen representative

of an uncoerced majority of Jackson’s employees at all

relevant times.” Brief for Petitioner Local 1814 at 32;

see id. at 34, 38-39.

The Board’s standard practice in cases involving ex-

tensive unlawful assistance of a union is to issue the type

of decertification order here presented. See, e.g., NLRB

v. American Beef Packers, Inc., 488 F.2d 331 (10th

Cir.), cert. denied, 403 U.S. 919 (1971); American Bak-

ery & Confectionary Workers International Union v.

NLRB, 379 F.2d 160, 163 (D.C. Cir. 1967); Bowman

Transportation, Inc., 120 N.L.R.B. 1147, 1151 (1958). The

principal remedial issue in this area has revolved around

the distinction drawn between “employer domination”

and the lesser offense of “employer assistance;” the for-

mer has been remedied by complete disestablishment of

the union, while the latter has been corrected by the less

absolute means of decertification.2 Under the Board’s

established remedial practice, the purposes behind a de-

22 For evidence of this distinction at work, see NLRB v.

District 50, UMW, 355 U.S. 453, 458-59 (1958), and the

numerous cases cited therein.

33a

certification order are clear: to allow the effects of an

unfair labor practice to be dissipated, pending the estab-

lishment of the majority status of the union in an election

free of restraint and coercion. See NLRB v. District 50,

UMW, 355 U.S. 458, 459-60 (1958). Under such circum-

stances, the central policy of the NLRA is served—em-

ployees are given a true opportunity, after a breathing

spell, to choose freely their bargaining representative.

See id.

In this case, the Board ordered the decertification rem-

edy on the basis of its established practice and of the

statutory purposes fulfilled by that practice. See Board

Decision at 5 (JA 400). The Board had found unfair

labor practices on the part of both the Employer and the

Union, the core substances of which were respectively the

Employer’s concealed assistance of the Union, and the

Union’s capitulation, through its two principal officers, of

its independence and undivided loyalty to those whom it

represented. Noting the contract concessions made by the

Union during the 1979 renegotiation of the collective bar-

gaining agreement, the Board emphasized that the unfair

labor practices had “operated to taint and undermine the

bargaining relationship between” the Employer and Un-

ion. Jd. (emphasis added). That finding was central to

the Board’s imposition of the decertification remedy as a

means of allowing for a fresh start to the labor-

management relations of Jackson’s employees. As such,

it appears to be the real target of petitioners’ objections

to the affirmative remedies in question. However, we find

that the Board’s finding of a “taint” was supported by

substantial evidence on the record as a whole: * the long-

standing illicit kickback arrangement went to the very

core of the parties’ working relationship. The corrupt

agreement to provide the unlawful assistance pre-dated

the Employer’s recognition of Local 1814 by several

23 See 29 U.S.C. § 160(f) (1976) ; Universal Camera Corp.

v. NLRB, 340 U.S. 474 (1951).

34a

months, and was a condition imposed by the Union’s offi-

cials prior to entering into the collective bargaining

agreement. The final payments were made even after the

indictments, and even as the 1979 negotiations were get-

ting underway. See ALJ Decision at 4-9 (JA 295-300).

By necessity, a union represents its membership through

its officers, and in this case Local 1814’s officers had been

thoroughly corrupted. The Union’s representation of

Jackson’s workforce was thereby tainted.

In contesting the Board’s decertification remedy, peti-

tioners rely heavily on the ALJ’s findings that Local 1814

had enjoyed majority status among Jackson’s employees.

See ALJ Decision at 22, n.36, 40, 42 (JA 313, 331, 333).

Petitioner Jackson observes that the typical employer as-

sistance case in which the NLRB orders decertification

involves conduct which assists the union in obtaining ma-

jority status. Brief of Petitioner Jackson at 11. The

main thrust of this argument is that where majority

status has been demonstrated, a decertification order can-

not be reasonably imposed because the initial recognition

of the union was not flawed in any way. See id. at 12-13.

There are two potent responses. First, the Board has the

remedial authority and responsibility to apply its discre-

tion to all factual configurations that come before it; is-

suance of certain remedies is not limited to standard

factual situations. Second, the unlawful agreement to

provide the assistance in this case was entered into in

July, 1975 (JA 295), and predated the September date

when a majority of the employees expressed a preference

for the Union (JA 296). The evidence thus strongly

demonstrates that the kickback arrangement was an in-

tegral part of the mutual understanding that initially led

Jackson to consent to recognition. The Supreme Court

has recognized that the existence of majority status is not

necessarily determinative of whether employer assistance

has overriden the employees’ free choice. See NLRB v.

Newport News Co., 308 U.S. 241, 248-51 (1939). We

conclude that imposition of the decertification remedy

35a

here “properly reconcile[s] the objectives of eliminating

improper employer interference and preserving the em-

ployees’ full choice of a bargaining representative.”

District 50, UMW, supra, 355 U.S. at 461.

Finally, Local 1814 argues that the absence of demon-

strable coercion of the Jackson workforce precludes the

decertification remedy. Brief for Petitioner Local 1814

at 37-40. This demand for a showing of “coercion” is

highly disingenuous, to say the least. In this case, the

Board was inherently prevented from introducing out-

ward evidence of coercion because from the very outset

the unlawful assistance payments were effectively con-

cealed from Jackson’s employees, as from the world at

large. Thus petitioner’s argument amounts to little more

than an assertion that because the Employer and Union

succeeded so long and so well in concealing their trans-

gressions, the unfair labor practices found here cannot be

remedied. The Board’s decertification order saw through

this argument. This Court finds a sufficient factual nexus

between the underlying facts, the violations found, and

the remedy of decertification. The Union has not been

*% Both in its brief, Reply Brief for Petitioner Jackson at

15, and at oral argument, Jackson adopted the position that

approval of decertification here must necessarily be equated

with the proposition that once the Employer became aware

of the violations, it was legally obligated to cease recognizing

the Union, even in the absence of any Board action in the

matter. We emphasize that the latter situation, in which

there has been no administrative or legal determination that

an unfair labor practice has occurred, is clearly distinguishable

from that at bar, and is most certainly not before this Court.

We do not imply that an employer placed in the situation

hypothesized would be obligated in the manner that Jackson

suggests. We note, however, the decision of the Ninth Circuit

that where the employees had designated a union as their

bargaining agent, and had later discovered that a union official

had accepted bribes from the employer, the employees were

empowered to revoke the prior designation, and the employer

was then justified in refusing to bargain with the union. See

Hollywood-Mazwell, supra, 126 F.2d at 819-20, 823.

36a

irrevocably disestablished: if Local 1814 truly enjoys

majority status among Jackson’s employees, then the

Union will be able to demonstrate its majority status in

an election conducted free from the tainted atmosphere

that so long pervaded relations between this Employer

and Union.

D. Abrogation of the 1979 Collective Bargaining Agree-

ment

Petitioners next contest the Board orders requiring

Local 1814 and Jackson to cease giving effect to the 1979

collective bargaining agreement between the parties—in-

cluding all dues checkoff cards executed pursuant thereto

—until the Union has been certified by the NLRB. Board

Decision at 6, 8, 10-11 (JA 401, 403, 405-06). Because

the Board provided the employees substantive protection

from the Employer disregarding the terms of the con-

tract,* the abrogation remedy is essentially only a cor-

ollary to the decertification remedy. Like that remedy,

abrogation was based on the central finding of the Board,

which we endorsed above—that the illegal concealed pay-

ments, particularly when viewed together with the con-

tract concessions, had served to “taint and undermine”

the parties’ bargaining relationship. Concerning the ab-

rogation of the collective bargaining agreement, we af-

firm the Board’s conclusion that in light of the fact that

Anastasio and Scotto had remained as officers of the Un-

23In order to protect the employees’ substantive interests,

the Board provided the following:

Nothing in our Order . . . shall be deemed to require

[Jackson] to vary or abandon those wage, hour, seniority,

or other substantive features of its relations with em-

ployees established in the performance of the aforemen-

tioned collective-bargaining agreement, or to prejudice

the assertion by the employees of any rights they may

have thereunder.

Board Decision at 6-7 (JA 401-02) (citing Sweater Bee by

Banff, Ltd., 197 N.L.R.B. 805 (1972) ).

372

ion, “their divorce from the actual negotiations” was not

determinative of whether those negotiations had been

tainted. Board Decision at 5 (JA 400).

Like the decertification remedy, the abrogation remedy

is designed to dissipate the effects of unfair labor prac-

tices and to protect employees’ statutory rights. In un-

lawful assistance cases where the violation has had some

impact on the contract in question, the abrogation remedy

is virtually routine. See, e.g., International Association of

Machinists, supra, 311 U.S. at 75; American Bakery &

Confectionary Workers International Union, supra, 379

F.2d at 163; Ditzler Mechanical Contractors, Inc., 259

N.L.R.B. 610, 612-13 (1981) ; Jeffrey Manufacturing Co.,

208 N.L.R.B. 75 (1974) ; Bisso Towboat Co., 192 N.L.R.B.

885 (1971).

In attacking the abrogation remedy, petitioner Jackson

argues that “there is simply no connection between the

unlawful payments and what has been nullified by the

Board.” Reply Brief for Petitioner Jackson at 14; see

Brief for Petitioner Local 1814 at 44-45. Petitioners rely

on the findings of the ALJ that the modified collective

bargaining agreement had been the product of hard bar-

gaining. See ALJ Decision at 42 (JA 333). In addition,

petitioners assert that the unlawful payments and the

contract concessions were not truly contemporaneous, in

that the payments ceased shortly before the 1979 contract

was executed. See Brief for Petitioner Local 1814 at 42;

Reply Brief for Petitioner Jackson at 14. Therefore, they

conclude, the 1979 modified contract was not the “fruit”

of the illegal assistance, within the sense of Consolidated

Edison, supra, 305 U.S. at 236, 238.

We cannot so easily dismiss the Board’s conclusion that

the illegal assistance was sufficiently proximate to the

1979 negotiations, in both time and practical impact, to

support the abrogation remedy. The last illegal payment

was made even as the negotiations were getting under

way. As we have indicated, the kickback arrangement

38a

went to the very heart of the Jackson-Local 1814 rela-

tionship through the summer of 1979. Like its highest

officers themselves, the Union’s representation of the Jack-

son employees had been thoroughly corrupted. In this

context, the fact that Scotto and Anastasio, still the Un-

ion’s highest officers with no diminution of their internal

authority, did not actually take part in the negotiations

amounts to a mere formality. The Board has fulfilled its

responsibility to tailor the remedy to the violation: it

demonstrated with reasonable specificity the impact of the

illegal assistance on the parties’ bargaining relationship

and on the modification negotiations in 1979. Petitioners

would simply have the Board ignore the forest for ex-

amining the trees. Given the magnitude of the violations

presented, the Board’s “taint and undermine” finding, as

applied to the 1979 modifications, was no great leap.

That taint on the agreement warrants abrogation there-

of. The Board’s order, however, does leave open the pos-

sibility that the contract may be reinstated when and if

the NLRB certifies the Union.

E. The Reimbursement of Dues

The final contested remedy is the Board’s order that the

Employer and Union, jointly and severally, reimburse all

employees who joined the Union after the 1979 contract

for all dues and fees extracted from those employees un-

der the collective bargaining agreement. See Board De-

cision at 6, 8-9, 11 (JA 401, 403-04, 406). Petitioners

contend that reimbursement is unwarranted because there

was no showing that employees had been coerced into

joining the Union and paying dues, and because the union

security clause in the 1979 collective bargaining agree-

ment was entirely legal.”

26 As a threshold matter, the Court holds that the Board

was not precluded from ordering reinstatement by either the

ALJ’s decision not to recommend that remedy, or the absence

of an exception on that point by the General Counsel—or by

39a

The reimbursement remedy is another way of dissipat-

ing the effects of unlawful labor practices, and also re-

stores to employees that which was unlawfully taken from

them. On these bases, the Board has long ordered repay-

ment of dues where employees, as a requirement of em-

ployment, were unlawfully required to support a union.

See Virginia Electric and Power Co. v. NLRB, 319 US.

533, 539-45 (1943). Reimbursement may be ordered

when the union is assisted, as well as when it is “domi-

nated.” See, e.g., NLRB v. Vernitron Electrical Compo-

nents, Inc., 548 F.2d 24, 27 (1st Cir. 1977); NLRB v.

Revere Metal Art Co., 280 F.2d 96, 100-101 (2d Cir.),

cert. denied, 364 U.S. 894 (1960). In either case, the con-

tinued existence of a union security clause may compel

union members to financially support a union that has

compromised its undivided loyalty to the employees.”

There is no dispute that the 1979 collective bargaining

agreement contained, as had the predecessor agreement,

both a union security clause and a dues checkoff provi-

sion. Nonetheless, petitioners argue that reimbursement

those two factors taken together. NLRB v. WTVJ, Inc., 268

F.2d 346, 348 (5th Cir. 1959) (“Even absent an exception, the

Board is not compelled to act as a mere rubber stamp for its

[ALJ].”) ; see Hedstrom Co. v. NLRB, 629 F.2d 305, 315-16

(3d Cir. 1980) (en banc), cert. denied, 450 U.S. 996 (1981) ;

NLRB v. Duncan Foundry & Machine Works, Inc., 485 F.2d

612, 620 (7th Cir. 1970) ; Kohler Co., 128 N.L.R.B. 1062, 1096

(1960), remanded on other grounds sub. nom. Local 8338,

UAW v. NLRB, 300 F.2d 699 (D.C. Cir.), cert. denied, 370

U.S. 911 (1962). The conclusion that the Board was not pre-

cluded from ordering this remedy is particularly strong be-

cause the reimbursement remedy was before the ALJ and was

briefed at that stage of this case: the petitioners cannot claim

unfair surprise at this later stage.

27 Under Supreme Court decisions, the question whether

union members allegedly receive benefits from union bar-

gaining that they might otherwise not have enjoyed is im-

material to the propriety of a reimbursement order. See Vir-

ginia Electric Power Co., supra, 319 U.S. at 543-44; Vernitron,

supra, 548 F.2d at 27.

40a

is inappropriate. First, Local 1814 maintains that the

ease is controlled by the Supreme Court’s decision in Lo-

cal 60, Carpenters v. NLRB, 365 U.S. 651 (1961). That

case held that reimbursement was punitive when applied

to long-time union members, at least in the absence of

evidence that those employees had somehow been coerced

into joining the union as a condition of employment. /d.

at 654-66. The Board’s reimbursement order here, how-

ever, benefits only employees who joined the union after

the 1979 collective bargaining agreement became effective.

Thus the incongruency perceived by the Court in Local

60, Carpenters—the reimbursement of longstanding union

members, whose membership had not demonstrably been

coerced—is absent in this case. Numerous decisions have

recognized that reimbursement is entirely proper when

applied to employees joining the union after the unlawful

assistance, and where a union security clause, that is un-

lawfully acquired, compels payment of dues. See, ¢.g.,

Vernitron, supra, 548 F.2d at 27; NLRB v. Raymond

Buick, Inc., 445 F.2d 644, 645 (2d Cir. 1971). The Local

60, Carpenters requirement of demonstrable coercion is

simply inapplicable.

Petitioners next produce a series of related arguments,

the common core of which is the objection that the 1979

agreement was not unlawful in any way. Both Local

1814 and Jackson reason that because the union security

clause in the 1979 agreement was merely carried over

from the preceding agreement, that the 1979 clause was

not the result of any unfair labor practice. Brief for Pe-

titioner Local 1814 at 49-50; Brief for Petitioner Jackson

at 41. In addition, pewtioners appear to treat the Board’s

application of the reimbursement remedy only to employ-

ees joining the Union under the 1979 collective bargain-

ing agreement as some sort of concession that the checkoff

of dues was unrelated to the unlawful payments. If the

two had truly been related, the argument goes, the Board

would have extended reimbursement further back in time.

Both arguments miss the mark. Regardless of the pre-

4la

existence of the union security clause, the Board found

that the unlawful assistance, particularly in light of the

Union’s bargaining concessions, had been severe enough to

“taint and undermine” the parties’ bargaining relation-

ship that led to the 1979 agreement. In that way, the en-

tirety of the modified collective bargaining agreement, in-

cluding the union security and dues checkoff clauses, were

infected. That being so, reimbursement was appropriately

ordered. The Board’s decision not to extend reimburse-

ment further back in time 7* was an exercise of remedial

discretion, and in no way detracts from the Board’s au-

thority to go as far as it did. The Board is not obliged to

adopt an all-or-nothing remedial stance. That the Board

might have been justified in going back further than it

did is not a sound reason to set aside its order limiting

reimbursemerit to more recent payments.

¥.

For the foregoing reasons, this Court upholds the

Board’s decision that both the Employer and Union com-

mitted unfair labor practices. The acts of the Union’s

Officials being properly attributable to the Union itself,

the illicit kickback arrangement gave rise to violations on

the part of both petitioners. The Board’s remedies were

reasonably designed to dissipate the effects of those vio-

lations, and to prevent their recurrence. We deny the

petitions and order that the Board’s order be enforced in

its entirety.”

Judgment Accordingly.

28In so limiting the scope of the reimbursement remedy,

the Board cited, without comment, its decision in Unit Train

Coal Sales, Inc., 284 N.L.R.B. 1265 (1978), enforcement de-

nied on other grounds, 636 F.2d 1121 (6th Cir. 1980). In

that case, the Board limited the imposition of its reimburse-

ment remedy to that time frame in which the union security

clause could be deemed unlawful. See id. at 1273.

29 The dissent suggests that the foregoing decision would

permit the Board to “abrogate... any bargaining relationship

and any labor contract involving corrupt dealings between the

42a

employer and union officials.” Dissent at 2. That assertion

is overbroad and misconstrues this opinion. Our approval of

the Board’s findings and remedial actions in this case is predi-

cated upon the specific factual situation that was presented

to the Board—a situation in which the entire relationship be-

tween the Union and Company was predicated from the

beginning on the unlawful assistance to the Union and subse-

quent kickbacks to the Union’s principal officers. From the

very beginning of negotiations it was agreed between the

officers of the Union and the Company that the Union would

benefit materially from the corrupt arrangement and that the

corrupt payments would not begin until the Company’s em-

ployees joined the Union, and both of these requirements

which materially benefitted the Union were complied with

before any sums were paid. We intimate no views on other

cases, differing in kind or in degree, that might come before

the Board.

43a

WALD, Circuit Judge, dissenting: Although I, like the

majority, abhor the corrupt conduct of the union officials

in this case, I have considerable difficulty in enforcing

the Board’s remedial order against the union on the basis

of the record before us. As the majority points out, Maj.

Op. at 12, this is apparently the first time in the fifty-

year history of the NLRA that the Board has applied the

section 8(a) (2) proscription of financial and other sup-

port of unions by employers to a scheme of individual

corruption involving kickback payments that in no way

benefitted the union as an entity. I am not willing to

say at this juncture that the Board is not authorized un-

der any circumstances to apply section 8(a) (2) and its

decertification remedies to a union so infected by its

leaders’ corruption that it cannot properly represent its

members. But neither am I willing to read the statute as

permitting the Board to make this major innovation in

the interpretation of the law without any findings or al-

lusions to evidence on the record demonstrating a rela-

tionship between the individual officers’ corruption and

the union’s representation of its members. To do so would

impermissibly expand the Board’s power to intervene in

and dissolve collective bargaining relationships vitally af-

fecting the welfare of union members in situations not

within the legitimate ambit of section 8(a) (2).

The uniqueness of this case of course does not lie in the

corrupt scheme recounted in detail by the majority. Kick-

backs of precisely this kind motivated Congress to enact

as part of the Taft-Hartley Act a special statute, 29

U.S.C. § 186, proscribing the acceptance of payments by

union officials from employers and providing for both

criminal penalties and various civil remedies for its vio-

lation. Indeed the very existence of 29 U.S.C. § 186

strongly suggests to me that Congress never intended

1 Although the Board also found violations of § 8(a) (1)

and § 8(b) (1) (A), making it unlawful for an employer and

? labor organization respectively to restrain or coerce em-

ployees in the exercise of their rights under the labor laws,

hae violations are entirely derivative of the § 8(a) (2) vio-

on.

44a

section 8(a) (2), a provision designed to deal with the

altogether different problem of “company unions,” to be

applied to kickback schemes like this one.

By its terms, section 8(a) (2) proscribes financial or

other support to a labor organization. There is absolutely

no evidence that any of the kickback money here went

into the union coffers or in any other way benefitted the

union. ALJ Opinion at 27, J.A. 318. I cannot agree with

the majority’s attempts to finesse this point by character-

izing the payments as simply part of a “package deal”

that benefitted the union. The sole basis for the Board’s

finding of an unfair labor practice was the kickback pay-

ments themselves and those payments did not in any way

(as far as the record shows) benefit the union. Under

the “package deal” theory, the Board could abrogate un-

der section 8(a) (2) virtually any bargaining relationship

and any labor contract involving corrupt dealings between

the employer and union officials. This would radically ex-

pand the Board’s power to determine for employees which

unions are or are not worthy of their support. The ALJ

specifically found that the union here maintained the sup-

port of an uncoerced majority, ALJ Op. at 40, J.A. 331.

I need not remind this court of the fundamental premise

of the National Labor Relations Act that employees should

be free to choose their own representatives; we recently

rejected a Board decision to issue a bargaining order

where the union had not attained majority status because

such an order was deemed inconsistent with that premise.

Conair Corp. v. NLRB, 721 F.2d 13855 (D.C. Cir. 1983) ;

see infra note 2.

The use of common law agency principles to substitute

for a total lack of evidence that the kickbacks benefitted

the union does not work. Obviously, as the ALJ noted, we

could not expect the union to ratify the illegal actions of

its officers. But that truism does not mean that we should

presume that every illegal action taken by a union officer

to line hix own pockets is done by and for the benefit of

the union. Indeed, the common law of agency incorpo-

rates the opposite presumption, that an illegal act ordi-

45a

narily will not be found within. the agent’s scope of em-

ployment. Although there are situations in which the

principal is held liable for such conduct, generally where

innocent third parties are the direct victims of the

agent’s illegal conduct, it remains the general rule that

“if the employee committing the crime is acting solely

for his own benefit, his employer is not liable.” Melton v.

United States, 488 F. Supp. 1066, 1074 (D.D.C. 1980).

See also Hoston v. Silbert, 681 F.2d 876, 880 (D.C. Cir.

1982) (under D.C. law, “foreseeability must be com-

bined with a purpose to further the employer’s interest’) ;

Restatement (Second) of Agency § 235. The solicitation

and acceptance of kickback payments here appear in no

way to have been motivated by the officials’ desire to

serve their union. Instead it appears from the evidence

that Scotto and Anastasio simply exploited their powerful

positions as ILA officials. Indeed, it is odd, in light of

the Board’s attempt to portray this as a routine applica-

tion of agency principles to what is unfortunately a fam-

iliar set of facts, that we have been cited to no prior

Board decision that held a union responsible under prin-

ciples of agency for its officers’ acceptance of illegal kick-

backs.

The majority, the ALJ and the Board all presume that

no direct evidence could be shown—and therefore that

none need be shown—to link the kickback payments to

the union. But that link is precisely what the statute re-

quires—some proof that the employer provided unlawful

support to the union by virtue of the payments—or at

least what agency law ordinarily requires—that Scotto

and Anastasio, in soliciting and accepting kickbacks, were

acting pursuant to a plan entered into for the benefit of

or with the approval of the union as an entity. This

would for instance be a different case if there were evi-

dence of widespread knowledge and acceptance of the

kickback scheme by other union officers or members. In-

“jead we have only the bare fact of an indictment that

came down at the very end of the kickback scheme. What-

ever our personal views of what action a “truly upright

46a

union” would take under the circumstances, Maj. Op. at

20, there is no evidence at all in this record of knowledge

or ratification by other officers or members so as to fill

the gaping holes in the Board’s application of agency

law.

This would also be a different case if the Board had

found on the basis of substantial evidence that the em-

ployer or the union had, by virtue of the kickback pay-

ments or otherwise, coerced or restrained employees in

their choice of bargaining representative, or that the un-

ion had failed to represent the employees adequately. In-

stead, the ALJ specifically found on the evidence before

him that Local 1814 had maintained the support of an

uncoerced majority, ALJ Op. at 40, J.A. 331, and had

provided the employees with “vigorous and effective rep-

resentation” in spite of the ongoing kickback scheme.

ALJ Op. at 42, J.A. 333. Without pointing to a single

piece of evidence undermining these carefully supported

findings, the Board concluded that the entire bargaining

relationship was “tainted.” It proceeded to order a set of

section 8(a) (2) remedies, including decertification of the

union and abrogation of the collective bargaining agree-

ment, that make sense only in the usual 8(a) (2) case, in

which the employer’s out front assistance to the union

carries with it a threat of coercion to the rank and file

and therefore undermines the union’s claim of majority

status. I point out at the risk of tedium the absence of

any precedent for the application of these remedies to a

case of direct and secret employer payments to officials,

apparently inuring solely to the personal benefit of those

individual union officials.

If the Board’s decision in this case is based on its con-

clusion that concealed kickback payments of this kind to

high union officers are inherently coerceive and neces-

sarily taint the bargaining relationship, then the Board

has introduced a major innovation in the law of labor

relations permitting massive government intervention

into collective bargaining relationships in the absence of

47a

any evidence of coercion or lack of majority status. At

the very least the Board is obligated to acknowledge the

significance of this innovative use of the NLRA and to

justify it.2 Here, however, we are presented with no link,

logical or factual, between the corrupt kickbacks and the

need for a complete abrogation of the entire collective

bargaining relationship that the Board, reversing the

ALJ, ordered as a remedy.

The government has a wide range of remedies and

penalties under 29 U.S.C. § 186 that are tailor-made to

penalize and rectify the evil of such kickback schemes.

Section 8(a) (2) and the traditional remedies for its vio-

lation simply do not fit the situation depicted here of

corrupt union officers extorting money from the employer

solely for their own use. Without proof of any motive to

benefit the union or any relationship between their in-

dividual greed and the union’s activities, I am not con-

vinced that there is a legitimate invocation of section

8(a) (2). However distasteful the misdeeds of these in-

dividuals, they do not justify novel remedies that bend

the statute out of shape and, in so doing, penalize not the

culprits but the union and its members who are, as far

as we can tell from this record, only innocent bystanders

to the wrongdoing. I respectfully dissent.

2In Conair Corp. v. NLRB, 721 F.2d 1355 (D.C. Cir. 1983),

this court held that the principle of majority support is so

central to the statutory scheme that the NLRB may never

issue a bargaining order in the absence of evidence that the

union had a majority before the employer’s coercive conduct

took its toll. 721 F.2d at 1377-84. I dissented. In my view,

the Board had adequately supported its conclusion that the em-

ployer’s massive and unprecedented campaign of coercion had

eliminated any possibility of a fair election and that a tempo-

rary bargaining order was the only possible means of restoring

employee freedom of choice. See id. at 1387-1401. The ma-

jority decides here, ironically, that the principle of majority

rule and freedom of choice is so unimportant that a collective

bargaining representative whose majority status is not in

doubt may be ousted on the basis of individual officers’ cor-

ruption bearing no demonstrated relationship to the quality

of the representation in collective bargaining.

APPENDIX B

48a

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 83-1113 September Term, 1983

Local 1814, International Longshoreman’s Association,

AFL-CIO

Petitioner

National Labor Relations Board,

Respondent

And Consolidated Case No. 83-1117

BEFORE: Wilkey and Wald, Circuit Judges, and MacKinnon,

Senior Circuit Judge

ORDER

On consideration of the Petition for Rehearing of Petitioner-

Cross Respondent, Local 1814, it is

ORDERED by the Court that the aforesaid Petition for

Rehearing is denied.

Per Curiam

For the Court:

Georce A. FisHer, Clerk

By:

Robert A. Bonner

Chief Deputy Clerk

Circuit Judge Wald would grant the Petition for Rehearing.

49a

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 83-1113 September Term, 1983

Local 1814, International Longshoreman’s Association,

AFL-CIO

Petitioner

National Labor Relations Board,

Respondent

And Consolidated Case No. 83-1117

BEFORE: Robinson, Chief Judge; Wright, Tamm, Wilkey,

Wald, Mikva, Edwards, Ginsburg, Bork, Scalia and

Starr, Circuit Judges

ORDER

The Suggestion for Rehearing en banc of Petitioner-Cross

Respondent, Local 1814, has been circulated to the

full Court and a majority of the Judges in regular

active service have not voted in favor thereof. On

consideration of the foregoing, it is

ORDERED by the Court en banc that the aforesaid Sugges-

tion is denied.

Per Curiam

For the Court:

GeorceE A. FisHEer, Clerk

By:

Robert A. Bonner

Chief Deputy Clerk

Circuit Judge Wald, Edwards and Ginsburg would grant the

Suggestion for Rehearing en banc.

APPENDIX C

UNITED STATES OF AMERICA

BEFORE THE NATIONAL LABOR RELATIONS BOARD

DIVISION OF JUDGES

BRANCH OFFICE

NEW YORK, NEW YORK

JACKSON ENGINEERING CO.

and

INDUSTRIAL UNION OF MARINE

AND SHIPBUILDING WORKERS

OF AMERICA, AFL-CIO and

LOCAL 17, INDUSTRIAL UNION

OF MARINE AND

SHIPBUILDING WORKERS OF

AMERICA, AFL-CIO

and

LOCAL 1814, INTERNATIONAL

LONGSHOREMEN’S

ASSOCIATION, AFL-CIO

Party to the Contract

LOCAL 1814, INTERNATIONAL

LONGSHOREMEN’S

ASSOCIATION, AFL-CIO

(JACKSON ENGINEERING CO.)

and

INDUSTRIAL UNION OF MARINE

AND SHIPBUILDING WORKERS

OF AMERICA, AFL-CIO and

LOCAL 17, INDUSTRIAL UNION

OF MARINE AND

SHIPBUILDING WORKERS OF

AMERICA, AFL-CIO

and

JACKSON ENGINEERING CO.

Party to the Contract

Case No. 29-CA-7498

Case No. 29-CB-3966

5la

Stanley, L. Goodman, Esq. and

Steven M. Swirsky, Esq.,

Brooklyn, NY for General Counsel.

Andrew E. Zelman, Esq. and Jeffrey

H. Lapidus, Esq. (Seham, Klein &

Zelman, Esqs.) New York, NY for

Respondent Employer.

Howard Schulman, Esq. and Donald

L. Sapir, Esq. (Schulman &

Abarbanel, Esqs.) New York, NY

for Respondent Union.

Michael Brodie, Esq. (Freedman &

Lorry, Esqs.) Philadelphia, Penn.

for Charging Parties.

DECISION

Statement of the Case

STEVEN B. FISH, Administrative Law Judge: Pursuant to

charges and amended charges filed by Industrial Union of Ma-

rine and Shipbuilding Workers of America, AFL-CIO and Local

17, Industrial Union of Marine and Shipbuilding Workers of

America, herein called Charging Parties or IUMSWA, the Gen-

- eral Counsel of the National Labor Relations Board by the

Regional Director for Region 29 issued an Order Consolidating

Cases, Consolidated Complaint and Notice of Hearing on May

30, 1980 and a Consolidated Amended Complaint on October

7, 1980. The Complaint as amended alleges that Jackson Engi-

neering Co., herein called Respondent Employer or Jackson,

violated Section 8(a)(1), (2) and (3) of the Act and that Local

1814, International Longshoremen’s Association, AFL-CIO,

herein referred to as Respondent Union or ILA, violated Section

8(b)(1)(A) and (2) of the Act, by inter alia, on September 13,

1979,' executing and thereafter maintaining and enforcing a

collective bargaining agreement with respect to Jackson’s em-

‘ Unless otherwise obtained all dates hereinafter referred to are in 1979.

$2a

ployees, containing a Union Security Clause, notwithstanding

the fact that a real question concerning the representation of

said employees had been raised and was pending by virtue of

requests for recognition made by IUMSWA. The Complaint

also alleges that Jackson violated Section 8(a)(1) and (2) and ILA

violated Section 8(b)(1)(A)of the Act, by virtue of an arrangement

in existence from 1975 to 1979 whereby Jackson made concealed

payments to Anthony Scotto and Anthony Anastasio, president

and executive vice-president of the ILA, respectively, in amounts

equal to ten percent of the additional volume of business result-

ing from referrals to Jackson by the ILA.

A hearing on the issues encompassed by said complaint was

heard before me in Brooklyn and New York, New York on

October 27, 28 and 29, 1980 and on June 3 and 4, 1981.”

Briefs which have been received from General Counsel, Re-

spondent Company and Respondent Union, have been carefully

considered, and I might add were all excellently prepared and

most helpful in assisting my deliberations herein.

Upon the entire record, including my observation of the

demeanor of the witnesses, I make the following:

Findings of Fact

I. Jurisdiction

Respondent Employer, a New Jersey corporation, is engaged

in the business of performing maritime ship maintenance, build-

ing and repair services and related services, with places of

* Although not appearing at the hearing, Counsel for the Charging Parties

submitted a motion to the Chief Administrative Law Judge, which was re-

ferred to me for disposition, requesting withdrawal of the charges herein. Said

request had previously been denied by the Regional Director for Region 29,

by letter dated October 1, 1980, except for the portion of the charge in Case

No. 29-CB-3966 insofar as it relates to the International Longshoremen’s

Association, AFL-CIO, which had been named a Respondent in the original

Complaint issued on May 30, 1980. The Amended Complaint issued on

October 7, 1980, pursuant to the Director's approval of the partial withdrawal,

removed the international as a Respondent herein. I deferred ruling on the

motion of Charging Parties to withdraw the remaining portions of the charge

pending my hearing the record testimony and consideration of the parties

briefs on this issue.

$3a

business at 1418 Willow Avenue in Hoboken, New Jersey,

herein called the Hoboken facility, at 2945 Richmond Terrace

in Staten Island, New York, herein called the Staten Island

facility, and various other places of business in New York and

New Jersey. Annually, Respondent Employer in the course of

its business operations, performed services in excess of $50,000

for various steamship companies, including United States Lines

and Prudential Lines, each of which companies annually derives

gross revenues in excess of $50,000 from the transportation of

goods and passengers among the several states of the United

States and to foreign countries. Respondents admit and I find

that Jackson *s an employer engaged in commerce within the

meaning of Section 2(2), (6) and (7) of the Act.

It is also admitted and I so find that Charging Parties and the

ILA are, and have been at all times material herein labor organ-

izations within the meaning of Section 2(5) of the Act.

Il. Facts

A. Recognition of ILA By Jackson and Arrangement

For Payments to ILA Officers By Jackson

Respondent Employer began its operations in 1948. Prior to

1975 its employees were not represented by any labor organi-

zation. Nicholas Seregos, herein called Seregos, became presi-

dent of Jackson on or about August 1971, when it had sales of

less than $500,000 per year.

In the middle of 1975, Seregos noticed that when he would

go around soliciting for business, particularly on U.S. flag ships,

he would be told that unless he was a Union shop his firm could

not obtain the work on the piers. Sonny Montella, an acquaint-

ance of Seregos, suggested to him that he ccntact Anthony

Sta

Anastasio, an officer of the ILA.* Seregos then telephoned An-

astasio at the ILA’s office and informed Anastasio of his being

referred by Montella to Anastasio. Seregos added that he was

looking for some business and was interested in unionizing the

shop. A meeting was arranged for and held either at the Re-

spondent Employer's Hoboken shop or Respondent Union's

Brooklyn office. Seregos repeated that he was looking for work

and wanted to unionize his shop. Anastasio responded that he

wished to meet the employees at the shop and see if they would

be williag to sign up. Anastasio then met with Jackson’s employ-

ees. The record does not disclose what if anything Anastasio said

to the employees at that time.

Seregos next met with Anastasio sometime prior to July 11,

1975. At this meeting Anastasio offered to obtain some business

for Jackson, for a consideration of 10% of the proceeds of any

business obtained through his efforts. Anastasio made it clear to

Seregos that he would not help Seregos get any business unless

Jackson became a Union shop. Seregos agreed to the arrange-

ment and agreed that his firm would become a Union shop.

On or about July 11, 1975, Seregos met again with Anastasio,

this time in the ILA’s office. At this meeting Anastasio in-

structed Seregos to write a letter to Prudential Lines, a U.S.

flag ship, attention John Marano. Anastasio told Seregos that he

could help him obtain business from this firm. Pursuant to

Anastasio’s instructions Seregos wrote a letter dated July 11,

1975 to Marano of Prudential, stating that Jackson is a complete

union plant affiliated with ILA, and that its employees are ILA

members.

* At that time Anastasio was Secretary Treasurer of Local 1277, ILA. In

March 1978, Local 1277 as well as other locals of the International merged

into Local 1814, ILA, the Respondent Union herein. All parties concede that

Respondent Union is the successor to Local 1277. As Secretary Treasurer,

Anastasio was responsible for the administration of contracts for the ILA in the

ship repair industry. He continued exercising that responsibility after the

merger when he became Executive Vice President, the number two position

in the merged organization.

55a

On September 15, 1975 the ILA obtained authorization cards

from Jackson’s employees and in late September, Jackson by

Seregos signed a memorandum of understanding with the ILA,

apparently agreeing to recognition. Thereafter pursuant to

checkoff authorizations executed by Jackson’s employees, it be-

gan to checkoff dues and forward them to the ILA.‘

Sometime in the fall of 1975, Seregos met with Anastasio and

Anthony Scotto, president of the ILA, at the ILA’s office. Sere-

gos indicated that he was looking for more work. Scotto replied

that he could help Seregos obtain the United States Shipping

Lines account. The conversation then drifted to how Seregos

was going to come up with the 10% commission arrangement on

this business. Scotto indicated that he was concerned about how

Seregos was going to get the money and suggested that he would

assist Seregos in setting up a foreign corporation to help him in

this regard. Seregos replied that this will not be necessary.

The parties then signed a collective agreement effective No-

vember 3, 1975 to November 3, 1978. This contract was the

industry contract, known as the “blue book,” and was signed by

Seregos, Anastasio and Scotto.

At some point in the early fall of 1975, Seregos received a

phone call from a Mr. Bauer, assistant to the director at U.S.

Lines, notifying Jackson to start work on one of their ships.

Jackson began receiving business from Prudential Lines in or

about September of 1975.

At some time late 1975, after Jackson began receiving busi-

ness from Prudential and U.S. Lines, Seregos discussed with

Anastasio the method of payment of the 10% commission. An-

astasio informed Seregos that payments were to be made in

cash, and Seregos agreed.

* The memorandum of understanding signed by Jackson was not introduced

into the record, nor does the record reveal its terms. However, the record

tends to suggest and I so find that the memorandum of understanding in

addition to providing for recognition of ILA, also called for Jackson to be

bound by the terms of the [LA's industry contract, including checkoff provi-

sions, which was about to expire.

$6a

In early 1976 Seregos began his payments to Anastasio, which

were made in cash at the ILA’s office with no else present.

Pursuant to the arrangement made, Seregos paid Anastasio

$15,000 during the course of 1976 covering 10% of the business

obtained by Jackson from Prudential and U.S. Lines. During

the year 1977, Seregos paid to Anastasio, $5,000 on June 2,

$1,000 on October 6, $5,000 on November 17, and $5,000 on

December 19. All of these payments, representing 10% of busi-

ness Jackson obtained from U.S. and Prudential, were also made

to Anastasio by Seregos at the ILA office.

In 1978, Jackson lost the Prudential account. Seregos com-

plained to Anastasio about it and asked if there was anything he

could do to reinstate the business. The record does not reflect

Anastasio’s response, but the business was not thereafter re-

stored.

During the year 1978, payments were made in the same

fashion, but only covering Jackson's business from U.S. Lines.

Seregos gave Anastasio pursuant to their arrangement, $5,000

on February 28, $5,000 on March 23, $5,000 on April 10, $5,000

on May 15, $3,700 on July 3, and $5,000 on November 15.

During this period of time Seregos met with Anastasio on

various union matters, as Anastasio was directly responsible for

the administration of the collective bargaining agreement with

Jackson.

In early May 1979, at Anasiasio’s office, Anastasio asked Ser-

egos if there was any money due “against the work.” Seregos

responded why now in view of the investigation. Anastasio

replied that it was all right.°

On May 8, 1979 Seregos paid Anastasio $4,000, again at the

ILA’s office.

Shortly thereafter, by telephone Anastasio asked Seregos if

he could make a contribution for the purpose of helping Scotto

* The “investigation” referred to by Seregos was apparently the criminal

investigation which culminated in eventual indictments and convictions of

Anastasio and Scotto discussed more fully infra.

57a

pay his attorney's fees. Seregos replied that it was rather diffi-

cult at that time to come up with any money. Anastasio asked

him to try, and informed Seregos that they are having an affair

at a hotel and were asking others in the industry to contribute

to pay Scotto’s attorney fees. Subsequently, Seregos obtained

$4,000 in cash and gave it to Anastasio at ILA office on July 5,

1979.

During the period between 1975 and 1979 Jackson’s business

as well as its number of employees and ILA members grew

substantially.

On November 3, 1978 Jackson and the ILA entered into a

renewal of the prior contract, with a number of changes in-

cluded therein, running from November 3, 1978 to November

2, 1981. This contract was executed by Anastasio and Joseph

Collazzo for the ILA and by Seregos on behalf of Jackson. *®

In January 1979, an indictment was handed down in the

Southern District of New York by the Grand Jury pertaining to

the receipt of certain payments by Anastasio and Scotto from

certain employers under contract to ILA, not including Jackson.

On July 31, 1979 a superseding indictment was filed adding

additional counts of such conduct by Anastasio and Scotto, in-

cluding payments made by Seregos to Anastasio from 1977-

1979. Scotto was not indicted for any dealings with Seregos or

Jackson.

Shortly after the filing of the superseding indictment, the ILA

upon recommendation of its attorney immediately removed An-

astasio from participation in any dealings or negotiations with

Jackson. The ILA also insisted upon and Jackson agreed that

Seregos be removed from any dealings or negotiations with the

ILA.

Anastasio was permitted by the ILA to remain as its Executive

Vice President and Scotto was allowed to remain as president.

* This contract as well as the prior contract was negotiated and signed by

eleven employers in the industry, including Jackson.

58a

Scotto and Anastasio were tried in Federal Court in New

York, on multiple counts of receiving unlawful labor payments

in violation of Section 302 of the Taft Hartley Act, 29 USC

Section 186(b), as well as conspiring to participate in the affairs

of the ILA through a pattern of racketeering activity, and for

failure to report and pay federal income taxes on the unlawful

amounts obtained from such activities.

After an eight week trial, both Scotto and Anastasio were

convicted in January 1980, of forty three counts under the

indictment and the jury was unable to reach a verdict on sev-

enteen other counts included therein.” Anastasio was convicted

of receiving unlawful payments from Seregos and Jackson for a

period of February 28, 1978 to July 5, 1979. Scotto as noted was

not indicted nor convicted of the receipt of any payments from

Seregos or Jackson. Anastasio was sentenced to two years in

prison, five years probation and a $5,000 fine. Scotto was sen-

tenced to five years in prision, with five years probation and

$75,000 in fines.

The sentencing occurred in February 1980, and it also in-

cluded any order by the trial court judge that Anastasio and

Scotto forfeit their Union offices. The convictions were appealed

to the 2nd Circuit Court of Appeals. On September 2, 1980, a

three judge panel unanimously affirmed the convictions of An-

astasio and Scotto. The Court in its decision found as follows.

“Nicholas Seregos of Jackson Engineering Co., Inc. an ILA-

affiliated marine engineering company doing general ship re-

pair, paid Anastasio a 10% “commission” on business obtained

for his company with Scotto’s and Anastasio’s assistance from

Prudential Lines, Inc. and United States Lines.”

Anastasio and Scotto subsequently petitioned the Circuit en

banc for a re-hearing. At some point undisclosed by this record,

such request was denied.

egos testified for the prosecution under a grant of immunity. Anastasio

did r,t take the witness stand. Scotto did testify and denied knowledge of any

10% commission arrangement with Seregos.

59a

Meanwhile, shortly after the conviction, an action was brought

by Scotto and Anastasio in the New York State Supreme Court

for a declaratory judgment that the term “conviction” under the

New York and New Jersey Waterfront Compact, means after all

appeals are exhausted.* The Waterfront Commission moved for

judgment in its favor claiming that “conviction” under the statue

applies to the date of sentencing. The Supreme Court rules in

favor of the Commission in September 1980, and directed that

Anastasio and Scotto be removed from office. Upon application,

the Appellate Division stayed the order of the Court, pending

an expedited appeal from the Court’s judgment. Said appeal was

filed and in late October 1980, the Appellate Division unani-

mously affirmed the decision of the Supreme Court. The record

does nut disclose whether or not any appeal was filed from this

decision to the New York State Court of Appeals.

The record does disclose however that the ILA permitted

Anastasio and Scotto to remain as officers of the ILA until the

exhaustion of their appeals from these various proceedings. New

elections were conducted by the ILA in May 1981, and new

individuals were elected to fill the positions previously held by

Scotto and Anastasio.

Portions of the testimony given by Seregos in the Federal

Court trial were stipulated into evidence by the parties and

forms the basis for my findings set forth above with respect to

Seregos’ dealings with Anastasio and Scotto. The portions of his

testimony included in this record are sketchy and somewhat

unclear in certain areas, and my findings set forth herein are

based on what I perceive to be a fair reading of such testimony.

The parties are in substantial agreement as to the above facts

with the exception of one area. Respondents assert that the

record establishes that the unlawful arrangement between Ser-

egos and Anastasio was entered into after the ILA organized

* Under the Waterfront Compact Act, a Waterfront Commission was estab-

lished to regulate and control the affairs of longshoremen and labor organiza-

tions representing such workers in New York and New Jersey. The Act

provides that upon conviction of a crime, any officer of such a labor organiza-

tion must be removed.

a ee eee

60a

Jackson’s employees and after the memorandum of understand-

ing and/or contract was executed by the parties in September

and November 1975. Although Seregos’ testimony is particu-

larly uncertain on this subject, I am persuaded that my findings

set forth above, accurately reflect his testimony and a reasonable

conclusion as to the true facts.

Respondent Union points to Seregos’ testimony that Anastasio

after having been approached by Seregos about his becoming a

Union shop, insisted upon speaking to Jackson's employees to

see if they wished to sign up. Such a meeting did occur accoré-

ing to Seregos, and Respondent Union argues that this meeting

must have been in September when the authorization and

checkoff cards were executed by Jackson employees. Thus, it is

argued since Seregos testified that the arrangement for pay-

ments was made after Anastasio met with his employees, that

perforce the arrangement was not made until the contract or at

least the memorandum of understanding was signed.

I do not agree with this analysis of Seregos’ testimony how-

ever, and believe that General Counsel's position that the ar-

rangement was agreed to prior to the execution of the

memorandum and contract, more accurately reflects Seregos’

testimony as weil as the record evidence. I note that with

respect to the meeting held by Anastasio with Jackson employ-

ees after his initial conversation with Seregos, there is no record

testimony as to what was said therein, and in fact Seregos

indicated that no materials were distributed by Anastasio to his

employees at that time. More significantly, Seregos sent a letter

to Prudential dated July 11, 1975, which was received by Pru-

dential on July 15,° asserting that Jackson was an ILA shop and

requesting business. This letter was sent pursuant to the in-

structions of Anastasio, and was sent two months prior to the

execution of any contract or memorandum. Since Anastasio

* Although Seregos in direct testimony was unsure of when he mailed the

letter to Prudential and suggested the possibility that the letter may have been

backdated, when confronted on cross examination by the original letter with a

Prudential date stamp reading July 15, he recalled that it was sent in July and

that he had orally agreed to recognize the Union prior to sending such letter.

6la

made it clear to Seregos that he would not refer Jackson any

business unless it became an ILA shop, I find that he would not

have suggested a letter to Prudential unless he had a committ-

ment from Seregos to become a Union shop.

Therefore, I am convinced that Seregos and Anastasio entered

into their agreement for the 10% commission payment for busi-

ness referred in July, at least two months before any memoran-

dum contract was executed or any authorization cards obtained.

At the same time as noted, I find that Seregos orally agreed with

Anastasio that he would become an JLA shop.

B. Jackson’s Acquisition of the Staten Island Facility

Jackson has been made and is engaged in the business of

major shop repairs, overhauls and renovations, both at its own

and leased locations, as well as at sites where vessels are docked

and berthed. Jackson owned and operated a machine shop in

Hoboken, New Jersey, and leased facilities at Columbia Street

and Pier 12 on the Brooklyn, New York waterfront, alongside of

which were berthed vessels worked upon by its employees.

Jackson’s employees also would travel to make ship repairs upon

vessels tied up at other parts along the coast.

This type of operation that Jackson was engaged in was known

in the industry as a pierside operation, as contrasted with dry-

dock work’ operations, which rwpair ships at their own facilitie

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