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Regency Electronics Inc. v. National Labor Relations Board


decided: October 3, 1975.


On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Castle, Senior Circuit Judge, and Swygert and Pell, Circuit Judges.

Author: Castle

CASTLE, Senior Circuit Judge.

Regency Electronics, Inc. ["the Company"] petitions this court to review an order of the National Labor Relations Board directing it to bargain with the International Union of Electrical, Radio and Machine Workers, AFL-CIO ["the Union"]. The Board filed a cross-application for enforcement of its order and the Union intervened. The Company does business in Indianapolis, Indiana, and jurisdiction is therefore proper under 29 U.S.C. § 160 (e) (1970). We enforce the Board's order.

On December 17, 1971 the Board conducted an election ["first election"] at the Company in which a majority of the votes cast were against the Union. This election was subsequently set aside by the Board due to misconduct by the Company and a new election ["second election"] ordered. The second election, held on March 24, 1972, resulted in a Union victory. The Company filed 12 objections to the conducting of this election, the fourth of which alleged that the Union had

promised discriminatory benefits if employees did sign cards by offering to waive all initiation fees and dues for only those who executed authorization cards.

After an evidentiary hearing, the Board overruled the Company's objections and certified the Union. 200 N.L.R.B. 625 (1972).

The Company refused to bargain with the Union in order to obtain judicial review of the Board's findings in the representation proceedings. The Board found it in violation of §§ 8(a)(5) and (1) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(5) and (1) (1970), and the Company sought review in this court. On December 3, 1973 this Court denied the Company's petition for review and enforced the Board's order. 499 F.2d 1129 (7th Cir. 1973).

However, while the Company's petition for rehearing and suggestion for rehearing en banc was pending before this court, the Supreme Court decided NLRB v. Savair Manufacturing Co., 414 U.S. 270, 38 L. Ed. 2d 495, 94 S. Ct. 495 (1973). In Savair the Court held that pre-election waivers of initiation fees which were granted only to those employees who joined the union before an election were coercive and unjustly allowed a union to "buy endorsements and paint a false portrait of employee support during its election campaign." Id. at 277. Since the Company's fourth objection had questioned the Union's waiver of initiation fees, this court stayed the proceedings before it and remanded the case to the Board to conduct a hearing on the question. 499 F.2d at 1135.

On remand,*fn1 the hearing before the Administrative Law Judge ["the ALJ"] disclosed that the Union had an established policy of exempting all employees employed at the time of an election regardless of whether such employee formally joined the Union before or after the election. In the campaign drive preceding the first election at the Company, the Union distributed "charter membership" cards to employees who had previously signed authorization cards. On the front of the cards appeared the following language:








On the reverse side, the card read:


This is to certify that:

(Name of Charter Member)

has, during an organizational drive at Regency located at Indianapolis signed an authorization card signifying his desire to be a member of the International Union of Electrical, Radio and Machine Workers, AFL-CIO. In bestowing membership on him, he is hereby exempt from payment of any initiation fee, now or at any future time, and will be listed as a charter member at the above plant.

/s/ David J. Fitzmaurice /


/s/ Paul Jennings /

International President

The evidence presented at the hearing disclosed that approximately 50 of these cards were handed out prior to the first election.*fn2 No cards were distributed during the interval between the two elections, but nonetheless the ALJ found that the meaning of the cards and exactly who would be exempted from the payment of initiation fees were apparently the subject of considerable confusion among the Company's employees.*fn3 Due to this, the Union mailed a leaflet to all employees on March 9, 1972, fifteen days before the second election. The leaflet included the following language:



Relying primarily on this leaflet, the ALJ concluded that any confusion or ambiguity surrounding the Union's waiver policy was corrected and therefore upheld the second election.*fn4

During the time while the case was before the ALJ, Board policy called for the application of a "cutoff date rule" in evidentiary hearings barring consideration of certain evidence deemed "too remote." Under that rule as applied in the election context, improper conduct which occurred prior to a first election would not be considered in assessing the validity of a subsequent second election. See Singer Co., Wood Products Division, 161 N.L.R.B. 956, n.2 (1969). However, between the time the ALJ ruled on the instant case and its subsequent review and adoption by the Board, the Board discarded the cutoff rule in cases involving alleged Savair violations. Gibson's Discount Center, a Division of Scrivner-Boogaart, Inc., 214 N.L.R.B. No. 22 (1974). Furthermore, Board precedent at the time the ALJ was deciding the instant case allowed the factfinder to consider an alleged Savair violation in the context of later clarifying conduct in order to find that a waiver offer was not improper under Savair. See Smith Co. of California, 215 N.L.R.B. No. 97 (1974); Western Refrigerator Co., Subsidiary of the Hobart Manufacturing Co., 213 N.L.R.B. No. 40 (1974).

It is the primary contention of the Company on this appeal before us that the Board erred in adopting the ALJ's recommended order. The Company argues that the Board incorrectly read the ALJ's decision as resting on alternative grounds: the first based on all the evidence, including the pre-first election cards, and the second applying the cutoff rule and based only on evidence of conduct occurring after the first election.*fn5 It is the Company's contention that the ALJ employed the cutoff rule in arriving at both grounds for decision thus barring his consideration of the charter membership cards.*fn6 Therefore, the Company insists, because the Board had previously discarded the cutoff rule in Savair cases, it was required to remand the case back to the ALJ for his consideration of the pre-first election cards in arriving at his decision.

The Board possesses wide latitude in its review and adoption of decisions and recommended orders of those who conduct its hearings. We cannot find that the Board has erred unless our reading of the ALJ's decision discloses that the Board's interpretation is clearly unfounded. Cf. Plumbers Local No. 519 v. NLRB, 416 F.2d 1120, 1123 (1969); NLRB v. Fishermen's Union of San Pedro, 374 F.2d 974, 978 (9th Cir. 1967).

A reading of the ALJ's decision makes it abundantly clear to us that the ALJ first considered all of the evidence including the charter membership cards in deciding that, taken in total context, the cards and other Union conduct did not amount to a Savair violation. It is clear to us that in so doing, he did not employ the cutoff rule. It is also clear to us that ALJ's second ground, which employed the cutoff rule, was an alternative ground for decision. The following language from the ALJ's decision bears this out:

In my opinion the above [March 9] leaflet satisfied any duty imposed upon the Union to clarify ambiguities that may have arisen from the charter membership cards utilized during the campaign preceding the first election. The terms of the statement in the leaflet are clear and would dispel any reasonable understanding among employees that those who fail to sign cards before the election will be liable for initiation fees. . . .

While it is my conclusion that the effects of any ambiguities were erased prior to the second election and that Inland Shoe is distinguishable for that reason, a further ground exists for deeming objection 4 as lacking in merit. . . . Said offers of charter memberships and references thereto were confined to the period preceding the first election, and were not renewed thereafter. In accordance with established Board policy, the critical period for considering interference with a second election begins running from the date of the first election, and the Board will not set aside an election on the basis of events occurring prior thereto. . . . As the cutoff date for consideration of objectionable conduct in this case was December 17, 1971, the date of the first election, and since there is no evidence that charter memberships were referred to thereafter, I find reliance thereon as a basis for challenging the second election to be time-barred under long established Board policy. [ALJ's opinion at 9-10 (emphasis added)].

Since the ALJ clearly based his decision on two alternative grounds, we cannot say the Board erred in adopting the decision on the first ground. The Board made it clear it was not adopting the cutoff rule based ground for decision.

The Company further argues that regardless of whether the charter membership cards constituted a Savair violation, the Union misrepresented its initiation fee policy in such a way that the second election must be set aside.

The ALJ found that the Union's longstanding and established policy was to waive initiation fees for all employees of a company employed at the time of the election regardless of whether the employees joined the Union before or after the election. In light of this, the Company argues that the statement on the cards that "THIS CARD IS VALUABLE - KEEP IN YOUR WALLET" constitutes an "offer of a non-existent benefit." The misrepresentation exists, it contends, because the Union's established policy was to waive the fee for all employees as a matter of course and becoming a "charter member" therefore conferred no additional benefit to make the card "valuable." Assuming that the card accurately portrayed the Union's waiver policy, we cannot say that the possession of such a membership card was not of some "value" to its holder so to conclude that its declaration that "THIS CARD IS VALUABLE" constituted a misrepresentation.*fn7

Accordingly, the Company's petition for review is denied and the Board's cross-application for enforcement is granted.




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