McGOWAN, Circuit Judge:
The decision of the National Labor Relations Board now before us arises out of a strike by the Retail, Wholesale and Department Store Union against Coca Cola Bottling Works, Inc. The petitioning Union in No. 24867 complains of the Board's order in certain respects. In No. 71-1103, the Board seeks enforcement. The most significant issue relates to the propriety of the Board's retroactive application of a change in policy effectuated by it through adjudication rather than rule making. For the reasons set forth hereinafter, the order of the Board is enforced only in part.
On February 18, 1966 the Union was certified as the collective bargaining agent of the workers at the Company's plant in Dallas, Texas. On July 26, 1966, as the result of a bargaining impasse, the workers went out on strike. The Company decided to continue operations
Two weeks after the beginning of the strike, some of the strikers began distributing "Health Warning" leaflets in the community, implying that, because of the inexperienced replacements at the plant, Coca-Cola bottles might be unclean and a hazard to health.
The Union announced the end of the strike on November 4, 1966, and at that time requested reinstatement for all striking employees. The Union also asked for a list of all strikers permanently replaced during the strike. Instead of furnishing such a list, the Company responded by asking the Union to submit a list of all strikers who actually desired reinstatement. On November 7, the Union submitted a list of 137 strikers who allegedly desired reinstatement, and on that day 40 of those appeared personally at the plant. The Company spent November 7 interviewing most of those 40 to determine whether or not any of them had engaged in the distribution of the "Health Warning" leaflet. On November 10, the Company notified the Union that 12 of the strikers had been offered reinstatement, but that all other strikers had been permanently replaced or had had their jobs abolished. By November 14, ten of the strikers offered reinstatement were actually reinstated.
On February 22, 1967, the Company announced that it would no longer bargain with the Union because it did not believe that the Union continued to represent a majority of the employees.
On the basis of these facts, the Board's General Counsel filed a complaint against the Company charging a number of unfair labor practices, and, on December 4, 1970, the Board came to the following conclusions:
On the basis of these conclusions, the Board ordered the Company to cease and desist from engaging in the cited unfair labor practices. The Board further ordered the Company to make whole the ten strikers whose reinstatement was unduly delayed, and to offer immediate reinstatement to the unreinstated strikers and to make them whole for the Company's failure to offer them jobs as they became available, discharging if necessary any employees hired instead.
The Union challenges only the Board's determinations that (1) the elimination of the bottle inspecting machines was not an unfair labor practice, and (2) the distribution of the "Health Warning" leaflets was not protected activity. There is ample evidence in the record to support the finding of the trial examiner, affirmed by the Board, that the elimination of the machines had no significant effect on the job of any worker, and that
The Board's conclusion that the leafleting was not protected activity rested on its view that the intent and effect of the leaflet was to attack the Company's product rather than inform the public of a genuine issue in a labor dispute.
1. Delay in Reinstatement.
The law is clear that striking employees may request reinstatement collectively through their union;
The Company argues, on the other hand, that its attempt to find out which strikers actually wanted reinstatement before indiscriminately offering reinstatement to some who may not have wanted it was a reasonable and perhaps more expeditious method of reinstatement. Although the question is not entirely free from doubt, we are not prepared to say that the Board's position is plainly unreasonable or arbitrary. Certainly the employer does not need to know which specific employees desire reinstatement in order to determine which positions are available; and whether the Company's course of action in this case was a more or less expeditious method of reinstatement is a matter well within the expertise of a Board far more familiar than we with the realities of labor-management relations. It is not the function of reviewing courts to substitute their judgment for the determination of an administrative agency, so long as that determination is not plainly capricious.
2. Condonation of the Leafleting
The Company next challenges the Board's finding that the Company condoned, or forgave, the distribution of the "Health Warning" leaflets by some of the strikers. On Monday, November 7, 1966, the Company's personnel manager, Wortham, interviewed thirty-seven strikers who appeared at the plant seeking
NLRB v. Marshall Car Wheel & Foundry Co., 218 F.2d 409, 414 (5th Cir. 1955).
While we affirm the Board's determination, we note also that it is supported on the slenderest of reeds. The Board, by crediting the testimony of Parker, Smith, and Reese, purported to find as a fact that Wortham reinstated these strikers despite his knowledge of their participation, discrediting the contrary testimony of Wortham. The trial examiner, however, never ruled on the question of condonation, and never expressly discredited Wortham's testimony or credited the testimony of Parker, Smith, and Reese. Particularly in cases where, as here, the question of condonation on the facts is a close one, the resolution of credibility conflicts is more properly made in the first instance by the trial examiner, who, unlike the Board, has had the opportunity to observe the witnesses and to hear the testimony at first hand.
The Company's principal opposition to the Board's action in this case is directed against the imposition of a back-pay remedy in respect of the permanently replaced economic strikers to whom it did not offer reinstatement to vacancies that occurred in the normal turnover of personnel. This is the issue which was the subject of the 1969 supplemental evidentiary hearing referred to in Note 5 supra. Trial Examiner Goerlich identified the individual strikers who were, in his view, entitled to have reinstatement affirmatively offered them when and as vacancies occurred after November 4, 1966. He found that enough such vacancies had developed by June 21, 1967 to meet this obligation. The Board in its opinion dealt with the matter in these terms:
Prior to the decision of the Board in Laidlaw on June 13, 1968, it was a well settled rule, enunciated and applied by the Board, that when an employer permanently replaced an economic striker, he was under no obligation thereafter to treat that striker other than as a new applicant for employment.
Applying the Laidlaw rule, the Board in this case determined that the Company committed unfair labor practices in failing to seek out and to offer to former strikers reinstatement to vacancies occasioned by the departure of replacements hired during the strike, and has imposed backpay liability against the Company on the basis of these unfair labor practices. Since all of the events relevant to this determination occurred before the Board's decision in Laidlaw, the Company protests the seeming inequity of branding as unfair, and imposing a back-pay remedy for, actions which, when undertaken, were squarely within explicitly articulated Board policy as sustained by the courts.
The Company does not assail the validity of the Laidlaw rule itself; and, were the validity of that rule directly before us, we would have no difficulty in joining the growing number of circuits that have upheld it.
Whether to give retroactive effect to new rules adopted in the course of agency adjudication is a difficult and recurring problem in the field of administrative law. It has arisen with notable frequency in the review of decisions by the Board. In order to establish an alternative procedure where inequity may be avoided, the Administrative Procedure Act, 5 U.S.C. § 551 et seq., has authorized agencies to conduct formal rule making proceedings, in which all interested parties are notified, hearings conducted, and new rules thereby adopted. See also 29 U.S.C. § 156 (1970). Rules so adopted are prospective in application only. 5 U.S.C. § 551(4) (1970). Despite substantial and repeated scholarly and judicial criticism, the Board has largely ignored the rule making process, and has chosen rather to fashion new standards and to abrogate old ones in the context of case-by-case adjudication. See, e. g., 1 Davis, Administrative Law § 6.17 (1970 Supp.); Peck, The Atrophied Rule-making Powers of the National Labor Relations Board, 70 Yale L.J. 729 (1961); Shapiro, The Choice of Rule-making or Adjudication in Development of Administrative Policy, 78 Harv.L.Rev. 921 (1965); NLRB v. Wyman-Gordon Co., 394 U.S. 759, 89 S.Ct. 1426, 22 L.Ed. 2d 709 (1969).
Judge Henry Friendly has observed that "There has been increasing expression of regret over the Board's failure to react more positively to the Supreme Court's rather pointed hint, SEC v. Chenery Corp., 332 U.S. 194, 202, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947), (footnote omitted) that since an administrative agency has the ability to make new law prospectively through the exercise of its rule-making powers, it has less
In a Second Circuit decision handed down since this case was taken under submission and brought to our attention by the Board, H. & F. Binch Co. Plant of Native Laces and Textile Division of Indian Head, Inc. v. NLRB, note 20 supra, Judge Friendly wrote for the court in sustaining a retroactive application of Laidlaw. He noted, however, that
456 F.2d at 365. After saying that "It is indeed surprising that the Board should so consistently have refused to utilize its rule-making power, or to develop techniques of prospective ruling and overruling . . . ," Judge Friendly concluded that ". . . we do not deem this case an appropriate vehicle for taking the action the company seeks . . . ," since the events in question occurred after Fleetwood and, accordingly, "the extension in Laidlaw thus was hardly a great surprise." Id. It was in the light of this salient fact that he weighed the hardships to the employees against ". . . the hardship in imposing liability on the company for conduct conforming to what it may reasonably have thought the limit of its duties . . . ," and concluded to "await a stronger case before we refuse to give retroactive force to a Board order because it was founded on a decision enunciating a stricter rule of conduct for employees or unions than the Board had previously imposed." In the case before us, this pivotal fact is missing, since the Company here, during the period referred to by the Board as giving rise to its remedy, acted without the benefit of Fleetwood.
In deciding whether to grant or deny retroactive force to newly adopted administrative rules, reviewing courts must look to the standard established by
332 U.S. at 203, 67 S.Ct. at 1581. Which side of this balance preponderates is in each case a question of law, resolvable by reviewing courts with no overriding obligation of deference to the agency decision, NLRB v. Guy F. Atkinson Co., 195 F.2d 141 (9th Cir. 1952); and courts have not infrequently declined to enforce administrative orders when in their view the inequity of retroactive application has not been counterbalanced by sufficiently significant statutory interests. See NLRB v. Majestic Weaving Co., supra; NLRB v. E & B Brewing Co., 276 F.2d 594 (6th Cir. 1960); NLRB v. International Brotherhood of Teamsters, 225 F.2d 343 (8th Cir. 1955); Pedersen v. NLRB, 234 F.2d 417 (2d Cir. 1956); NLRB v. Local 176, 276 F.2d 583 (1st Cir. 1960).
Among the considerations that enter into a resolution of the problem are (1) whether the particular case is one of first impression, (2) whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law, (3) the extent to which the party against whom the new rule is applied relied on the former rule, (4) the degree of the burden which a retroactive order imposes on a party, and (5) the statutory interest in applying a new rule despite the reliance of a party on the old standard. Taking all of these considerations into account, we find that the inequity of applying the Laidlaw rule to the facts of this case far outweighs the interests that might be furthered if it were applied.
First, while the Supreme Court has observed in Chenery that "[E]very case of first impression has a retroactive effect . . . ," this is not a case of first, but of second impression. The case in which the rule in question was adopted by the Board was Laidlaw itself, and, although the Seventh Circuit upheld its application to the employer there, it must be recognized that "[t]he problem of retroactive application has a somewhat different aspect in cases not of first but of second impression."
Whatever may be the precise reach of Wyman-Gordon in terms of agency power to engage in wholly prospective adjudication, see The Supreme Court, 1968 Term, 83 Harv.L.Rev. 7, 220-27 (1969), it does not prevent an agency in adjudication from declining in subsequent cases to apply a new rule retroactively if equitable or statutory considerations militate against it, any more than Article III prevents a federal court from limiting the retroactive scope of new legal principles articulated in judicial decisions. Nor does Wyman-Gordon prevent reviewing courts from refusing to enforce such retroactive orders when the circumstances so dictate.
The standard to which the Company attempted to conform its conduct in this case was well established and long accepted by the Board. Unlike Chenery, this is not the kind of case where the Board "had not previously been confronted by the problem" and was required by the very absence of a previous standard and the nature of its duties to exercise the "function of filling in the interstices of the Act."
The record shows that in this case the Company at all times sought and closely followed the advice of counsel. The trial
The Board does not now deny or minimize any of the reasons just advanced which militate against the application of its order to past conduct, but rather attempts to justify that retroactivity solely by reference to the statutory design. A distinction must, however, be made between the purpose of a statute and the necessity of a particular remedy to effectuate that purpose. The purpose of Sections 8(a)(1) and (3) of the Act, as construed by the Supreme Court in Fleetwood and the Board in Laidlaw, was to provide that striking employees retain their status as employees under the Act even after they have been permanently replaced, and as such remain entitled to offers of reinstatement to positions that subsequently become available. In order to protect these rights, the Seventh Circuit in Laidlaw held that a retroactive back-pay order was appropriate:
In that case, however, the Board had expressly found that the employer's failure to reinstate former strikers was discriminatorily motivated, as manifested by its "avowed policy of not considering the strikers once they had been replaced" and by the entire pattern of events before and during the strike.
In this case, however, there is no evidence that the employer's actions were discriminatorily motivated, or that the relationship between the Company and the Union was characterized by hostility, or that any former striker who personally applied for reinstatement (in response
Since the circumstances of this case do not reflect discriminatory treatment or present any of the other considerations calling for the retroactive application of the Board's order, we conclude that
Therefore, enforcement of the Board's order, insofar as it relates to reinstatement and back-pay liability for any period before the Supreme Court's decision in Fleetwood, is denied.
As we have said hereinabove, the advent of Fleetwood marks the earliest point at which the Company could be said to have been put on notice that it must deal differently with former striking employees in respect of reemployment. The Fifth and Second Circuits have regarded Fleetwood as clothing the Board with remedial discretion to apply Laidlaw retroactively, and we are not disposed to dispute that conclusion. Fleetwood was decided on December 18, 1967, and the Company did not begin offering reinstatement until some time in August of 1968. Thus we remand this case to the Board for further consideration of remedies in the light of what we consider to be its discretion to apply Laidlaw retroactively to vacancies occurring after January 15, 1968 (a date providing a reasonable time for notice of the Fleetwood decision).
The remaining issue before us involves the Board's finding of an unfair labor practice in the Company's withdrawal of recognition from the Union on February 22, 1967. To support its claim of good faith doubt as to the Union's continuing majority status, the Company points to the fact that, in a bargaining unit of approximately 400 workers, 107 failed to join the strike, 82 who initially joined abandoned it and returned to work, and 100 were hired as permanent replacements during the strike. The Company does not contest the Board's position that the 105 unreinstated strikers (who may be presumed to support the Union) comprise the remaining employees in the bargaining unit, but argues that, even if they are included, the Company had a basis for questioning the Union majority.
Although an employer is permitted to refuse to bargain with a certified union after the expiration of one year from the time of its certification if he entertains a good faith doubt as to its continued majority support, the union is still presumed to represent a majority of the unit; and the refusal to bargain must clearly rest on more than an allegation of subjective good faith doubt, easily made and difficult to refute.
The petition in No. 24867 is denied; and, in No. 71-1103, enforcement is granted except as otherwise provided hereinabove and this case is remanded for the purpose stated.
It is so ordered.
What makes the question here particularly difficult is that the Board's resolution of the credibility conflict in the first instance was made in the face of undisputed evidence that Wortham did ask most of the interviewees about their participation in the distribution of the leaflets, which in itself hardly suggests a forgiving attitude on the part of the Company. Moreover, the Board's finding is arguably inconsistent with a stipulation of the General Counsel concerning the interviews. At the hearing before the trial examiner, the Company submitted a list of 14 names as those strikers who had told Wortham that they had participated in the leafleting. Parker, Smith, and Reese were not on that list. The General Counsel stipulated that those fourteen had told Wortham of their participation and were not reinstated. Whether the General Counsel also stipulated that those fourteen were the only strikers who told Wortham of their participation is not clear from the record. Because of the ambiguity in the stipulation, we do not hold the Board concluded on the issue of whether Parker, Smith, and Reese, who were reinstated, also told Wortham prior to their reinstatement.