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George Ryan Co. v. National Labor Relations Board


decided: November 21, 1979.


On Petition for Review of an Order of the National Labor Relations Board

Before Fairchild, Chief Judge, and Tone and Wood, Circuit Judges.

Author: Tone

The issue before the court is whether the National Labor Relations Board abused its discretion either procedurally or substantively by approving an informal post-complaint settlement agreement over the objection of the charging parties. We uphold the Board's decision.

George Ryan Company and Municipal Engineering and Construction Corporation, both members of the Evansville Contractors Association, filed charges with the National Labor Relations Board alleging that Teamsters Local Union No. 215 had violated §§ 8(b)(1)(A), 8(b)(4)(i) and (ii)(B), and 8(e) of the National Labor Relations Act. 29 U.S.C. § 158(b)(1)(A), 4(i) & (ii)(B), (e).*fn1 Based on these charges, the Board's Regional Office issued complaints against the union, which were then consolidated. These complaints alleged that the union had violated § 8(e) by including in its collective bargaining agreement with the Association a provision binding all subcontractors of the contracting employers to the terms of the agreement,*fn2 and, further, by demanding that Ryan cease doing business with a subcontractor who had no contract with the union. The alleged violations of § 8(b)(4)(B) and § 8(b)(1)(A) were various union efforts to enforce the illegal provision of the contract: a strike of one of Ryan's job sites, threats of physical injury to employees and supervisors of Municipal if they continued to work at a Municipal job site, physical blockage of entry to the Municipal job site, and threats of reprisals and bodily harm to employees and supervisors of Municipal who filed charges or gave testimony under the Act.

After the hearing before an Administrative Law Judge had commenced, the General Counsel's representative and the union attorney announced on the record that they had reached an informal settlement agreement. The agreement provided that the union would not "enter into, maintain, give effect to, or enforce Section 1 of Article IX of our contract with Evansville Contractors Association, Inc.," the provision described above, and declared that provision "unenforceable and void." The agreement also provided that the union would not induce employees of Ryan or of any other employer to strike for the purpose of forcing any employer to cease doing business with the subcontractor involved in this case or with any other employer. The union also undertook not to try to achieve the same objective by threatening, coercing, or restraining Ryan or any other person engaged in commerce or in an industry affecting commerce, and not to threaten, coerce, or restrain employees in the exercise of their rights under § 7 of the Act. See note 1 Supra.

Attorneys for the companies objected to the agreement, primarily on the ground that it permitted the union to enforce §§ 2 and 3 of Article IX of the collective bargaining agreement,*fn3 "union standards" provisions which they argued had the same effect as the voided provision. They also argued that the promise not to interfere with employees' § 7 rights was an inadequate remedy for the § 8(b)(1)(A) violation. After listening to these objections,*fn4 the ALJ approved the informal settlement agreement, stating only that she was doing so "in light of its satisfaction to the counsel for General Counsel, who is, after all, in charge of . . . the prosecution of this case."

The companies then asked the Board for leave to appeal the ALJ's approval of the informal settlement agreement pursuant to 29 C.F.R. § 101.9(d)(2), and all sides filed written submissions before the Board. The Board issued a telegraphic order summarily denying the companies' request for leave to appeal. The companies then petitioned this court to review the decision of the Board.*fn5

The companies here contend that approval of the informal settlement by the ALJ and the Board was beyond the limits of their discretion both procedurally and substantively. According to the companies, the Board and its ALJ were required to explicate more fully the reasoning behind their decisions and to accord the companies, as charging parties, a larger role in the resolution of this dispute. The companies also argue that various substantive provisions of the settlement agreement are inadequate to remedy the violations charged.


The Board's discretion with respect to the approval of informal settlement agreements, while not without limit, is broad. In enforcing the Act the Board is not providing a "private administrative remedy," but is acting in the public interest to prevent unfair labor practices and ensure overall industrial harmony through efficient use of Board resources. See Amalgamated Utility Workers v. Consolidated Edison Co., 309 U.S. 261, 264-65, 267-69, 60 S. Ct. 561, 84 L. Ed. 738 (1940); Oshkosh Truck Corp. v. NLRB, 530 F.2d 744, 748 (7th Cir. 1976). Private rights must give way when the Board reasonably determines that the purposes of the Act are best served by settlement. See Local 282, International Brotherhood of Teamsters v. NLRB, 339 F.2d 795, 799 (2d Cir. 1964).


Procedurally, petitioners ask us to remand to the Board for either further explication of its decision or an evidentiary hearing. The federal case law delineating the rights of charging parties dissatisfied with a settlement agreement reached by the Board and the charged party varies widely from circuit to circuit. See 14 A.L.R.Fed. 25, 53-60 (1973). In UAW v. NLRB, 231 F.2d 237 (7th Cir.), Cert. denied, 352 U.S. 908, 77 S. Ct. 146, 1 L. Ed. 2d 117 (1956), we required that a charging party be allowed to submit evidence in a full hearing on its objections to a proposed settlement where the disagreement concerned a stipulation of facts upon which the settlement was based. In Oshkosh Truck, supra, 530 F.2d at 748-49, however, where the charging party's objections pertained to the terms of an informal settlement agreement, we decided that it was not entitled to a full evidentiary hearing but only to "an opportunity . . . to insure that (its) interests in the dispute will at least be considered before the matter is resolved," 530 F.2d at 748 (quoting Concrete Materials of Georgia, Inc. v. NLRB, 440 F.2d 61, 68 (5th Cir. 1971)).*fn6 See also Local 282, International Brotherhood of Teamsters, supra, 339 F.2d at 798. On the facts before us in Oshkosh Truck, we held that the charging party's objections had been sufficiently considered because it had been given ample opportunity to present its objections at a hearing before the ALJ, who had adequately articulated the reasons for his decision, and because, given the presence on the record of the ALJ's reasons, the summary affirmance by the Board showed adequate consideration of the charging party's objections.

The case at bar is distinguishable because, although the companies did have an opportunity to state their objections before the ALJ on the record, the attorneys for the General Counsel and the union presented no arguments countering those advanced by the charging party, and the ALJ gave no indication of her reasons for approving the settlement despite the charging party's objections. No doubt she should have articulated such reasons. The question before us is whether her failure to do so, coupled with the Board's like failure in denying leave to appeal, requires remand.

We hold that remand for articulation of reasons is unnecessary under the circumstances of this case. The charging parties' opportunity to state their objections before the ALJ and, in greater detail, in briefs before the Board provided them with sufficient opportunity to participate in the approval of the settlement in view of the nature of the substantive objections to the settlement. An administrative agency is generally required to articulate its reasons because effective judicial review of agency actions is thereby facilitated. See NLRB v. Metropolitan Life Insurance Co., 380 U.S. 438, 443 n.6, 85 S. Ct. 1061, 13 L. Ed. 2d 951 (1965); 2 K. Davis, Administrative Law Treatise § 16.14, at 490 (1958). When the agency's reasons would not materially facilitate review, however, remand would be useless. See NLRB v. Wyman-Gordon Co., 394 U.S. 759, 767 n.6, 89 S. Ct. 1426, 22 L. Ed. 2d 709 (1969) (Fortas, Warren, Stewart & White, JJ.). The companies' principal substantive contentions here are that provisions of the collective bargaining agreement left intact by the settlement violate the Act on their face. These contentions do not involve agency discretion but questions of statutory construction that, as we point out below, have already been decided by the courts. Other substantive contentions do concern discretionary acts, but the companies allege no possible line of reasoning that would invalidate the Board's action. Compare NLRB v. Metropolitan Life Insurance Co., 380 U.S. 438 at 441-43, 85 S. Ct. 1061, 13 L. Ed. 2d 951 (remand because one of the possible explanations for the Board's decision was unlawful).*fn7

As to the companies' request for a remand for an evidentiary hearing, such a hearing is not required unless there is a dispute about a material fact. See, e. g., NLRB v. Oil, Chemical, & Atomic Workers International Union, supra note 7, 476 F.2d at 1036-37; NLRB v. IBEW Local 357, supra note 7, 445 F.2d at 1016. But see Leeds & Northrup Co. v. NLRB, 357 F.2d 527, 533 (3d Cir. 1966). Here the companies contend not that a dispute about any material fact exists, but that a full hearing is necessary to test the propriety of the ALJ's decision. The essential facts are not in dispute, and the companies have not alleged any facts that would lead us to question the exercise of the Board's discretion in approving the settlement.*fn8


The companies' primary substantive contention is that the settlement inadequately remedies the alleged § 8(e) violations because it allows the union to achieve the prohibited ends of § 1 of Article IX of the collective bargaining agreement through enforcement of §§ 2 and 3 of that Article.

Agreements to force cessation of business with other employers that have "primary," as opposed to "secondary," goals are permissible even though the terms of § 8(e) do not draw a distinction,*fn9 NLRB v. Enterprise Association of Pipefitters, 429 U.S. 507, 517, 97 S. Ct. 891, 51 L. Ed. 2d 1 (1977); National Woodwork Manufacturers Association v. NLRB, 386 U.S. 612, 633-42, 87 S. Ct. 1250, 18 L. Ed. 2d 357 (1967). Thus § 8(e) does not prohibit agreements that are made for the "primary" purpose of protecting work standards for union members. "Union standards" clauses, which provide that an employer may subcontract only to other employers whose wage and working standards are commensurate with those in the union's collective bargaining agreement, have been justified as serving to remove an incentive for the employer to contract out work done by union employees. Teamsters Local 216 v. NLRB, 171 U.S.App.D.C. 440, 442-43, 445-46, 520 F.2d 172, 174-75, 177-78 (D.C.Cir.1975); Orange Belt District Council of Painters No. 48 v. NLRB, 117 U.S.App.D.C. 233, 235, 237-38, 328 F.2d 534, 536, 538-39 (D.C.Cir.1964); Retail Clerks Local 770 v. NLRB, 111 U.S.App.D.C. 246, 251-52, 296 F.2d 368, 373-74 (D.C.Cir.1961).

In the case at bar the settlement agreement enforces a permissible union standards provision. While § 1 of Article IX of the collective bargaining agreement required the companies to make all subcontractors party to the collective bargaining agreement, §§ 2 and 3 served only to dissuade the companies from contracting out union work by requiring them to reimburse subcontractors' employees for any difference between the rate paid them and the rate specified in the collective bargaining agreement for the companies' employees.

The companies also argue that the Board should have invalidated § 5 of Article XI of the collective bargaining agreement, which permits the union to use "economic recourse" to remedy any breach of the contract. This argument, however, is based on the incorrect assumption that §§ 2 and 3 of Article IX can be justified only by the construction industry proviso of § 8(e), See note 9 Supra, and thus cannot be enforced through economic action. See Los Angeles Building & Construction Trades Council, 239 N.L.R.B. No. 42, at 19-22 (Nov. 13, 1978). Inasmuch as those sections constitute valid union standards provisions with primary objectives, economic recourse is permitted so long as it is directed to benefitting union members in their relations with their employer rather than to achieving union objectives elsewhere. See NLRB v. Enterprise Association of Pipefitters, supra, 429 U.S. at 528-31 & n.16, 97 S. Ct. 891.

The companies' other arguments are equally without merit. That the settlement does not provide for a "consent decree" or the entry of a court order if the union breaches the terms of the settlement is not a reason for overturning it. If it is breached, it can be set aside and the case heard on the merits. See Oshkosh Truck v. NLRB, supra, 530 F.2d at 749; 29 C.F.R. § 101.9(e)(2). The possibility that the union may unlawfully try to apply §§ 2 and 3 of Article IX beyond the equalization of rates of pay does not render those provisions unlawful. They are to be construed "to require no more than what is allowed by law." Teamsters Local 216 v. NLRB, 171 U.S.App.D.C. 440, 446, 520 F.2d 172, 178 (D.C.Cir.1975); General Teamsters Local 982, 181 N.L.R.B. 515, 517 (1970), Enf'd sub nom. Joint Council of Teamsters No. 42 v. NLRB, 146 U.S.App.D.C. 275, 450 F.2d 1322 (D.C.Cir.1971).*fn10 The companies also complain that the notice of the agreement provided to employees was impermissibly vague and incomplete. The form of the notice is primarily for the Board's discretion, and we do not find the notice so deficient as to require our intervention. Their final substantive complaint is that the agreement contains a non-admission clause. This too is a matter for the Board's discretion.

Petition for Review Denied.

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