George Banta Co. v. National Labor Relations Board

Citations: 222 U.S. App. D.C. 288; 686 F.2d 10Docket: No. 81-1816

Court: Court of Appeals for the D.C. Circuit; August 13, 1982; Federal Appellate Court

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In July 1981, the National Labor Relations Board (NLRB) determined that George Banta Co. Inc. violated the National Labor Relations Act by granting preferential reinstatement and seniority rights to employees who left a 1977 strike prematurely, while denying similar benefits to those who remained on strike. The company sought a review of this order, but the NLRB cross-applied for enforcement. The court found Banta's arguments unsubstantiated and enforced the NLRB's order.

Background details reveal that Banta employed approximately 1,150 workers in Menasha, Wisconsin. Collective bargaining agreements were set to expire on April 3, 1977, prompting negotiations that reached an impasse by mid-March. After the expiration of the contracts, Banta imposed its last offer unilaterally, leading the Union to strike. The Union accused Banta of unfair labor practices, resulting in an NLRB complaint filed in June 1977.

A hearing on these practices was scheduled but did not occur due to settlement negotiations between Banta and the NLRB, culminating in a Settlement Stipulation on July 22, 1977. This stipulation required Banta to revoke its last contract offer and to reinstate strikers upon their unconditional return, contingent on NLRB approval. The strike persisted while the Union formally objected to the stipulation's terms. By September, the NLRB General Counsel approved the stipulation, and negotiations resumed, allowing some strikers to return to work despite the ongoing strike.

Banta then introduced a Preferential Reinstatement System (PRS) for returning employees, which the Union opposed, advocating for reinstatement based on seniority instead. After Banta presented its final contract proposal, which included the PRS, the Union reiterated its rejection, prompting Banta officials to exit negotiations.

On October 8, Union members voted to accept Banta's proposal and authorized an unconditional offer to return to work, while asserting that the proposed PRS violated their legal rights under the National Labor Relations Act (NLRA). The Union signed the Settlement Stipulation and reiterated that they did not agree with Banta's interpretation of reinstatement rights. Banta accepted the offer but maintained that the PRS was crucial to their original offer, stating that since the Union had not accepted the full offer, no contract existed. The Union later reaffirmed its acceptance of the total offer, clarifying that it did not waive its rights under the NLRA regarding legal reinstatement. Banta acknowledged the Union's right to challenge the PRS's legality, yet the strike concluded amidst unresolved disagreements.

Subsequently, on October 20, 1977, the Union filed a second set of unfair labor practice charges against Banta, claiming the PRS violated sections 8(a)(1) and 8(a)(3) of the NLRA and breached the Settlement Stipulation, which was pending NLRB approval. This led to bifurcated legal proceedings, with Banta seeking to withdraw from the Settlement due to delays and new issues raised by the Union. However, the NLRB refused Banta's withdrawal request and enforced the Settlement Stipulation on July 14, 1978. Banta appealed to the Fourth Circuit, which upheld the NLRB's order, ruling that Banta could not unilaterally withdraw from the Settlement before Board approval. The court noted that the ongoing litigation from the Union’s charges might be affected by the Settlement, but did not determine if the litigation fully addressed the issues resolved in the Settlement Stipulation.

The Banta II proceeding addresses only post-strike violations, distinct from a prior settlement agreement aimed at pre-strike violations. Banta's objections regarding the scope of Banta II should be raised within that litigation. In April 1978, prior to the NLRB's rejection of Banta's withdrawal from the Settlement, a Complaint was issued against Banta based on the Union’s unfair labor practice charges, alleging that Banta's reinstatement method for returning strikers violated sections 8(a)(1) and 8(a)(3) of the Act. The hearings commenced on August 21, 1978, under the assumption that Banta's reinstatement policy was unlawful only if the strike was due to unfair labor practices. NLRB counsel did not contest the PRS's validity if the strike was deemed economic. However, NLRB counsel intended to present evidence indicating Banta's unilateral actions on April 4, 1977, suggesting the strikers were protesting unfair labor practices, which Banta opposed. The ALJ ruled that the strikers' reinstatement rights would be evaluated based on the Settlement, prompting appeals from both parties. In September 1978, the NLRB upheld the ALJ's decision that the Settlement was decisive for reinstatement rights but reversed on allowing background testimony about the strike's initiation. In October 1978, the ALJ concluded that Banta's PRS was discriminatory and unlawful, regardless of the Settlement's validity or the strike's nature. The ALJ also found that a bargaining impasse existed on April 4, 1977, making the strike economic, which was irrelevant to the unlawful finding. Banta's appeal to the NLRB was pending when the Fourth Circuit issued a decision in Banta I, which supported the ALJ's conclusion regarding the PRS's unlawfulness.

On July 16, 1981, the National Labor Relations Board (NLRB) adopted the Administrative Law Judge's (ALJ) order, affirming the ALJ’s findings and conclusions, except regarding the reinstatement rights of the strikers, which were determined by a previous NLRB decision in Banta. The NLRB deemed it unnecessary to address whether a bargaining impasse existed between the parties or classify the strike as economic or an unfair labor practice strike. Banta appealed this order, highlighting the complexity of the case due to multiple grounds for establishing its liability.

Initially, NLRB counsel believed Banta should be held liable for the April 4, 1977, strike linked to unfair labor practices. However, as proceedings progressed, Banta's attempts to withdraw from a settlement were rejected, allowing the ALJ to use the settlement as an alternative basis for his ruling. The ALJ further determined that Banta's post-strike reinstatement policy (PRS) was unlawful, even if the strike was deemed economic. The NLRB's decision referenced the Fourth Circuit's ruling in Banta I, asserting that the strikers' reinstatement rights were established by that case.

Banta interpreted the NLRB's footnote as limiting the ALJ's affirmance to the grounds of the binding settlement from Banta I and argued this basis was improper for two reasons: first, that the NLRB lacked jurisdiction to enforce a Fourth Circuit order, and second, that due process rights were violated as the liability under the settlement was neither alleged in the complaint nor adequately litigated. Banta further contested the ALJ's finding of liability under the Act, asserting that the economic nature of the strike meant the PRS did not violate statutory rights. Additionally, Banta claimed the negotiated PRS represented a waiver of any statutory rights and argued that it would be a due process violation to hold Banta liable without having litigated the statutory validity of the PRS.

The NLRB's reliance on the settlement raised issues regarding jurisdiction, as Section 10(e) of the Act grants exclusive jurisdiction to the court once a petition for review is filed, preventing the Board from making additional rulings without a remand.

If a Board order is approved or enforced by a court, it becomes a court order, granting the court jurisdiction for compliance enforcement. The Board can initiate contempt proceedings for non-compliance with a court order. Banta argues that since the Settlement was approved in Banta I, enforcement must occur solely through a contempt proceeding in the Fourth Circuit. However, this misinterprets the Board's actions and overlooks key distinctions between the current case and Banta I. The Fourth Circuit clarified that the Banta II proceeding addresses post-strike violations and is not a substitute for the pre-strike settlement agreement. The central issue in Banta I revolved around the company's ability to withdraw from a settlement due to the Board's delay, making it unrelated to the current litigation concerning the compatibility of the PRS with reinstatement rights. The Board had jurisdiction to address the Union's challenges to the PRS under the Act. Although there was an intervening judicial decision, it did not prevent the NLRB from addressing certain questions. 

Banta contends that the Board's order improperly finds liability based on allegations not included in the Complaint or litigated at the hearing, citing established legal principles that the Board cannot issue findings on uncharged violations. The court supports Banta's claim regarding the absence of allegations in the Complaint concerning the Settlement; however, this assertion lacks merit. From the beginning of the hearings, Banta was made aware that the reinstatement rights of its employees, following the strike, would be determined by the settlement agreement. The ALJ indicated that the employer must comply with the Board’s prior Decision and Order regarding bad faith bargaining and the obligations related to reinstatement rights.

The earlier Decision and Order established a continuing obligation for the Employer. Both Banta and the Union appealed this preliminary order, with Banta specifically challenging the ruling, but the appeal was unsuccessful. Banta cannot credibly claim that its liability under the Settlement was unexpected or that the issue was not adequately litigated. The ALJ's ruling referenced Poole Foundry, Machine Co. v. NLRB, which affirmed that settlement agreements create rights and liabilities that must be acknowledged in future proceedings. Although a settlement does not constitute an admission of past liability, it establishes a basis for future liability that the parties recognize.

At the time the NLRB began action against Banta, the company was attempting to withdraw from the Settlement Stipulation, which explains why NLRB counsel did not rely on it. The reinstatement rights under the Settlement are equivalent to the statutory rights for employees involved in unfair labor practice strikes. NLRB counsel's objective in linking the April 4, 1977, strike to unfair labor practices was to reinforce the reinstatement procedures outlined in the Settlement. Banta's due process complaint fails because the allegations under the Act and the Settlement address the same underlying issue. 

Section 7 of the Act guarantees employees the right to organize, join, or assist labor organizations, engage in collective bargaining, and participate in concerted activities for mutual aid or protection. Section 8(a)(1) prohibits employers from interfering with these rights, while Section 8(a)(3) prohibits discrimination against employees involved in union activities. There is substantial evidence supporting the NLRB's conclusion that Banta violated sections 8(a)(1) and 8(a)(3) by granting preferential reinstatement and seniority to employees who crossed the picket line during the strike, retaining those 'cross-overs' in active employment and assigning them their previous job classifications and wage rates regardless of production needs.

Full-term strikers who returned to work were assigned based on classifications determined by Banta, resulting in significant differences in wage rates and benefits depending on when they returned. Banta acknowledged the discriminatory effects of its Preferential Reinstatement System (PRS) but argued that it did not provide cross-over employees with the benefits deemed unlawful in Erie Resistor Corp., which prohibits granting seniority benefits to strike replacements. The Administrative Law Judge (ALJ) rejected Banta's justification that the PRS was necessary for legitimate business reasons, finding that the system unfairly divided employees into those who participated in the strike and those who returned early, thereby infringing on their right to strike. The argument that the Union had negotiated a waiver of statutory rights was dismissed as unconvincing, as Banta's assertion lacked clarity and did not provide an express waiver in contractual language, as required under the National Labor Relations Act (NLRA). The discussion emphasizes that even if waiving rights were permissible, such waivers must be explicitly stated in the agreement.

Explicit language in legal agreements is not interpreted broadly, as established in Delaware Coca-Cola Bottling Co. v. General Teamster Local 326. The negotiations between Banta and the Union regarding the October 1977 strike indicate that both parties agreed to leave the legality of the preferential reinstatement system (PRS) unresolved for future litigation. Banta’s subjective interpretation of the negotiations does not shift the burden of proof to the Union, and the agreement does not indicate any clear waiver of statutory rights.

Banta’s defense claims that the NLRB's order violates due process because the NLRB counsel suggested that the legality of the PRS was contingent on whether the strike was economic or related to unfair labor practices. Banta argues that this issue was neither raised in the Complaint nor adequately litigated. However, this argument is dismissed as the statutory reinstatement rights for economic and unfair labor practice strikers are effectively the same, with the exception that during an economic strike, employers may hire permanent replacements, which was not the case here. Banta conceded that it did not hire permanent replacements, meaning the entitlements to reinstatement are identical for both types of strikers.

The ALJ focused on Banta’s obligations concerning reinstatement of employees based on their return during or after the strike. Given the lack of permanent replacements, Banta's statutory duties were the same for both economic and unfair labor practice strikers. Consequently, the Board's review of the ALJ’s determination that the strike was economic is justified. The Complaint alleges that Banta violated sections 8(a)(1) and (a)(3) of the Act by granting preferential reinstatement and seniority rights to employees who returned before the Union abandoned the strike, while denying similar rights to those who engaged in the strike until its abandonment.

No indication in the Complaint suggested that the legality of Banta's conduct was contingent on whether the strike involved unfair labor practices. Banta did not present any claims or evidence that would have been brought before the Administrative Law Judge (ALJ) absent the National Labor Relations Board (NLRB) counsel's focus on unfair labor practices, and the ALJ determined that Banta was not prejudiced by the counsel's statements. The situation does not involve uncharged violations of the Act, distinguishing it from the cases cited by Banta. The ALJ's preliminary rulings indicated that he deemed the nature of the strike irrelevant, providing Banta with sufficient notice. While the ALJ initially sought to exclude background testimony regarding events from April 4, 1977, he could still address uncharged violations that had been fully litigated. The Union contended from the beginning that Banta's Post-Release System (PRS) was unlawful, regardless of the strikers' legal status. All relevant issues, including employee reinstatement conditions and Banta's defenses of waiver and business justification, were thoroughly examined during the hearing, granting Banta a meaningful opportunity to litigate. Although Banta expressed frustration over NLRB counsel's misleading comments, these statements did not constitute a coherent theory of the case for Banta to rely on. NLRB counsel's positions evolved throughout the process, incorrectly assuming the PRS was defensible due to the Union's endorsement, while later arguing against the waiver of statutory rights based on the discriminatory nature of the PRS. Ultimately, these shifts are inconsequential as the legal theories of NLRB counsel do not bind the Board, which retains the authority to make judicial and policy decisions post-complaint issuance. If the General Counsel could dictate the process, it would undermine the Board’s adjudicatory role. Significant discrepancies between the Board's and NLRB counsel's theories necessitate thorough review of any alleged due process violations, particularly if a party relied on counsel's statements to its detriment.

Granting enforcement based on findings not included in the complaint or litigated at the hearing violates procedural due process. However, Banta's argument lacks sufficient merit, as established in *Rogers Manufacturing Co. v. NLRB*, where the Sixth Circuit dismissed a similar due process claim regarding preferential reinstatement systems. Although Banta attempted to challenge the NLRB’s findings, the court found no basis for a different conclusion than in *Rogers*, maintaining that Banta was not prejudiced by any variances in the complaint's allegations.

The NLRB's delays and misunderstandings during the proceedings contributed to Banta’s claims of due process violations, which the court noted were largely unfounded. The court criticized the NLRB's lack of clarity in its opinion, particularly regarding footnote 4, which created ambiguity about whether the Board's affirmance of the ALJ was based on the Settlement or statutory requirements. Regardless, the court determined that Banta's preferential reinstatement system (PRS) was unlawful for favoring certain employees based on their prior strike actions. 

Despite the NLRB's complications, Banta's claims against the Board’s order were ultimately unmaintainable. The enforcement of the Board’s order was upheld. Additionally, the document notes the merger of two locals of the Graphic Arts International Union in 1978 and references correspondence between Banta and the Union in October 1977. Judge Bryan dissented, citing the General Counsel’s failure to execute the Settlement as justifying Banta’s termination of the agreement.

The dissent criticized the General Counsel for inaction, labeling it as inexplicable and deplorable, and noted Banta's frustration over the delays. The case involved allegations against Banta for violating Section 8(a)(1) of the Act by terminating seven employees due to strike-related misconduct. The Board upheld the Administrative Law Judge’s (ALJ) determination that Banta unlawfully discharged three employees, a finding Banta did not contest. The order regarding these discharges is enforced without further review. 

The excerpt distinguishes between "unfair labor practice strikes," caused by employer misconduct, and "economic strikes," which are centered on wage and working condition disputes. Both types of strikers are classified as "employees" under Section 2(3) of the Act, although their rights to reinstatement differ. Although claims typically arise in the same proceedings for efficiency, they can be addressed separately as evidenced by past cases like Mosher Steel Co. 

The NLRB's June 1977 complaint against Banta categorized the strike as related to unfair labor practices, and the terms for reinstatement aligned with those rights. A specific example highlighted was Don Williams, a long-term employee who, upon attempting to return to work, was assigned to a lower position and wage compared to coworkers who left the union. Banta’s policies favored non-union employees, allowing them to retain their pre-strike positions, while union members faced adverse treatment, even when no operational justification existed for such staffing decisions. Banta officials acknowledged that staffing decisions could have been made based on seniority without impacting costs or efficiency.

The ALJ determined that the business rationale provided by management for its reinstatement plan was insufficient, indicating that similar objectives could have been achieved without distinguishing between 'cross-overs' and returning strikers. Key cases, such as Rogers Manufacturing Co. v. NLRB and Great Lakes Carbon Corp. v. NLRB, illustrate that denying strikers full credit for accrued seniority or preferential treatment undermines their right to strike. Banta's claim regarding the legality of its reinstatement policy was deemed irrelevant, as previous Board decisions did not address the priority of reinstating employees who abandoned strikes. The ALJ noted that economic strikers maintain employee status and cannot be unlawfully discouraged from striking. Employers may refuse reinstatement to strikers if their positions have been filled by permanent replacements but must not discriminate based on union activity. Additionally, the ALJ criticized the NLRB counsel for presenting excessive evidence on the existence of a bargaining impasse, though this was not seen as a due process violation.

Courts have identified significant discrepancies between the allegations presented and the violations determined in proceedings, particularly when these involve different sections of the Act. In cases like NLRB v. Blake Construction Co., the complaints failed to address issues such as the denial of benefits to nonunion employees or the company's refusal to negotiate with the union representing them. Similarly, in Soule Glass & Glazing Co. v. NLRB, the allegations did not pertain to violations concerning wage increases or bad faith in negotiations. In NLRB v. Tamper, Inc., the company was not found liable for disciplining an employee due to union activity because the complaint did not allege such motivation.

Charging parties are entitled to propose theories that the General Counsel may not pursue, as established in International Union of Electrical Workers v. NLRB, and both the Administrative Law Judge (ALJ) and the Board have the authority to evaluate these theories. Banta emphasizes the General Counsel's exclusive statutory power to issue unfair labor practice complaints and to define their scope, which is upheld in various cases, such as Winn-Dixie Stores, Inc. v. NLRB. The General Counsel has final authority over the prosecution of these complaints, and the Board cannot entertain amendments opposed by the General Counsel.

However, Banta’s argument overlooks the Board's responsibilities, which include deciding material issues that were adequately tried, even if not explicitly stated in the complaint. The Act mandates that ALJs act as neutral fact-finders without assuming the prosecutorial role of the General Counsel. Thus, the Board retains the judicial duty to address relevant issues within a complaint's scope, as supported by precedent cases like American Boiler Manufacturers Ass’n v. NLRB.

Defining issues raised by opposing pleadings is primarily a judicial role. Once proof is admitted without objection from the General Counsel, it becomes irrelevant to the ongoing prosecution of the case. The analysis of the Board can be evaluated against procedural due process principles, focusing on fairness depending on whether the employer was aware of the conduct in question and had a fair chance to defend itself. Banta's due process argument lacks support from claims of the Board overstepping the General Counsel's prosecutorial role. It is established that the respondent was informed of the complaint's basis and had the opportunity to defend its actions, demonstrating that it comprehended the issues and could justify its officers' conduct as non-discriminatory.