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04/13/81 Pedro's, Inc., D/B/A Pedro v. National Labor

April 13, 1981




Before McGOWAN, Chief Judge, and ROBINSON and EDWARDS, Circuit Judges.


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


Opinion for the court filed by Circuit Judge HARRY T. EDWARDS.


Pedro's, Inc. (the "company") here seeks review of a decision and order of the National Labor Relations Board ("NLRB" or the "Board").1 The Board has filed a cross-application for enforcement of its order. For reasons set forth below, we hold that only certain of the Board's unfair labor practice findings are entitled to enforcement, and remand this case to the Board for further proceedings. I. BACKGROUND

Pedro's is a restaurant and bar located in Los Gatos, California. On about January 18, 1978, an employee of the restaurant contacted the Hotel and Restaurant Employees and Bartenders Union, Local 19, to discuss the possibility of organizing Pedro's employees. ALJ 3.2 The union held a number of employee meetings, and several employees signed cards authorizing the union to serve as the exclusive bargaining representative of Pedro's employees. On February 2, 1978, a union representative hand-delivered to the company a letter stating that the union had obtained authorization cards from a majority of Pedro's employees. ALJ 4. On February 17, after company management had responded that they had a good faith doubt that the union represented an uncoerced majority of the employees, the union filed a petition for an election with the NLRB. An election was held on April 21, 1978, and the union was defeated by a vote of 56 to 36. ALJ 1.

The union challenged the results of the election, and filed unfair labor practice charges against the company. After a hearing, the Board found that Pedro's had committed several violations of Section 8(a)(1)3 of the National Labor Relations Act ("NLRA" or the "Act")4 during the course of the union campaign. ALJ 4-17. In addition, the Board ruled that this unlawful conduct undermined the union's majority and rendered doubtful or impossible the holding of a free and fair second election. ALJ 22-32. As a result, and pursuant to standards announced in NLRB v. Gissel Packing Co., 395 U.S. 575, 89 S. Ct. 1918, 23 L. Ed. 2d 547 (1969), the Board ordered the company to bargain collectively with the union. Pedro's challenges the unfair labor practice determinations made by the Board, and the issuance of a bargaining order in this case. II. THE SECTION 8(a)(1) VIOLATIONS

*fn1. Introduction

With two important exceptions set forth below, we hold that substantial evidence exists to support the findings of the Board that the company committed several violations of Section 8(a)(1) of the Act during the union campaign.5 Although each of these findings is vigorously contested by the company, it is firmly established that findings of the Board are entitled to judicial enforcement if supported by substantial evidence. 29 U.S.C. ยง 160(e) (1976); Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S. Ct. 456, 95 L. Ed. 456 (1951).

We are unable to find substantial evidence, however, to support a finding of the Board that the company violated Section 8(a)(1) by implementing a health insurance plan for its employees during the union organizational drive. Proper resolution of this issue requires a detailed review of the facts surrounding the implementation of the plan.

*fn2. The Facts Relating to the Establishment of the Health Insurance Plan

The subject of health insurance coverage for employees of the restaurant first arose in either late 1975 or at some unspecified time in 1976. ALJ 7. Employees were told on this first occasion that the restaurant was not in a suitable financial position to provide insurance. Id. However, on April 23, 1977, the subject again arose during an employee meeting, and Peter S. Ramirez, president and co-owner of the company, told employees that the company was in a position to begin to collect bids from insurance companies. ALJ 8. Ramirez stated that he thought coverage could be secured by the end of the year. No date was mentioned, however, as to when such a plan would go into effect. Id.

Although the company contends that several insurance companies were contacted unsuccessfully after the April 23 meeting, the only documentary evidence to support this contention is a letter dated November 18, 1977, indicating that State Farm Insurance had been requested to submit a bid. ALJ 8. In mid-December 1977, however, Harold Hobson, an experienced insurance broker, was introduced to company management and agreed to solicit additional bids. Id. Hobson contacted the Prudential Life Insurance Company and the New York Life Insurance Company. Another broker, Jack Montgomery, also solicited bids from three additional underwriters. Id. During January, 1978, several meetings were conducted between company officials and representatives of the insurance companies. ALJ 8; A. 99, 263.6 On February 1, 1978, Prudential submitted a formal, written proposal. ALJ 8. The company compared ...

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