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Southern Bakeries, LLC v. National Labor Relations Board

United States Court of Appeals, Eighth Circuit

September 27, 2017

Southern Bakeries, LLC Petitioner
National Labor Relations Board Respondent John Hankins Amicus on Behalf of Petitioner Southern Bakeries, LLC Respondent
National Labor Relations Board Petitioner John Hankins Amicus on Behalf of Respondent National Labor Relations Board

          Submitted: April 6, 2017

          Before GRUENDER, MURPHY, and KELLY, Circuit Judges.


         Some production and sanitation employees of Southern Bakeries ("Southern" or "company") attempted several times to end their representation by the Bakery, Confectionary, Tobacco and Grain Millers Union, Local 111 ("union"). The National Labor Relations Board ("NLRB" or "Board") twice prevented union decertification votes due to Southern's unfair labor practices that would have tainted such votes. After employees later filed a withdrawal petition, the company withdrew its recognition of the union, and the union again filed an unfair labor practices charge. An administrative law judge ("ALJ") determined that Southern had committed a number of unfair labor practices that had tainted the withdrawal petition. A divided panel of the Board adopted the majority of the ALJ's rulings and, among other things, ordered the company to recognize and bargain with the union. Southern now petitions for review of the Board's order and the Board cross petitions for enforcement. For the reasons that follow, in substantial part we deny Southern's petition for review and grant the Board's cross petition to enforce its order. We also grant the petition for review and deny the cross petition for enforcement as to several portions of the Board's order.

         I. Facts

         Southern Bakeries is a commercial bakery that in 2005 purchased its facility from Meyer's Bakeries. Southern hired most of the employees and recognized the existing union as the bargaining representative for the approximate 200 production and sanitation employees. Southern and the union negotiated several subsequent collective bargaining agreements. The most recent expired in February 2012.

         In 2009 a Southern employee petitioned the Board for an election to decertify the union. Most of the employees voted to retain the union. Another decertification petition was filed in December 2011. The union then alleged that Southern had engaged in unfair labor practices. No election was held after the Board determined that Southern had unlawfully assisted the decertification petition. These charges were later settled without Southern admitting fault.

         Southern started restricting the union's access to its bakery in March 2012. The previous collective bargaining agreement had allowed the union bakery visits to ensure that the agreement was being honored. According to union representative Cesar Calderon, however, the union had in practice been free to meet with employees in the break area with no restrictions as to topic or frequency. Southern now repeatedly told the union that it could only discuss compliance with the previous collective bargaining agreement and could not lobby employees about the decertification efforts. Southern moved Calderon's visits to a small cubicle with only one chair and no table, and director of manufacturing Dan Banks threatened to call the police if Calderon met with employees in the break area. Subsequently, on March 23, Southern banned him from visiting with employees at the bakery after the company had allegedly received reports about his harassing employees. After some seven months he and other union representatives were again allowed to visit with employees at the bakery. Southern continued to limit their access and emphasized that they were not permitted to solicit union support.

         In May 2012, employee John Hankins filed a third decertification petition with the Board. It had been signed by a majority of bargaining unit employees. A decertification vote was scheduled for February 2013, but when union representatives came to the bakery in January 2013, they discovered that without notice or bargaining, Southern had installed surveillance cameras and divided the break area with plywood. The company claimed that it had installed the cameras to deter theft and replaced the windows with plywood to provide adequate ventilation.

         Southern posted a memo to employees in January 2013 stating that the union appeared to have plans to take employees on strike as it had at Hostess bakeries, which had resulted in 18, 000 lost jobs and 33 closed bakeries. Over the next month, Southern executive Rickey Ledbetter gave a series of mandatory speeches that between 150 and 170 bargaining union employees were required to hear. In the first speech he told them that unions can harm companies in many ways and leave less money for employee wages and benefits. Ledbetter specifically referred to Meyer's Bakeries and Hostess, stating that the strike at Hostess had caused 18, 000 people to lose their jobs and 33 bakeries to be closed.

         Ledbetter repeated similar points in later speeches. He said that strikes sometimes backfire and hurt employees and their families, that strikers can be permanently replaced, and that jobs can be lost at a striking facility. He told the employees that "[i]f a strike does succeed in crippling a company, " it might thereafter be unable to meet customer demands and survive. He also added that Southern employees who were not represented by a union had received pay increases each year while the bargaining unit employees had not received raises in three of the prior five years. The union thereafter filed unfair labor practice charges, and the Board declined to hold the decertification election that had been scheduled for February 2013.

         Southern disciplined a number of pro union employees between March and May 2013. After Sandra Phillips discussed the closure of Hostess with another employee and gave him a related newspaper article, she was investigated and received a written warning. Vicki Loudermilk and Lorraine Marks were also investigated after discussing votes with another employee. After Marks left the production line for an emergency bathroom break of fewer than five minutes when no supervisor was available to give permission, she was suspended for six days. Southern officials also urged individual employees to oppose the union for their wages to increase and to avoid the kind of strike that purportedly caused Hostess to fail.

         In June 2013 Hankins submitted a petition to the company signed by a majority of the bargaining unit employees. They asked Southern to withdraw recognition of the union which Southern did. The union did not regard its withdrawal as legitimate, however. Several months later, the company unilaterally raised employee wages by an average of 27 cents per hour without notice or bargaining.

         The Board then filed its complaint against Southern. Before the ALJ issued a ruling on the charges, however, the Board filed a petition for injunctive relief. The district court then enjoined Southern from refusing to recognize the union. This injunction was later vacated by our court on the ground that the Board had not sufficiently shown a threat of irreparable harm, in part because the union lacked the support of most employees. See McKinney ex rel. NLRB v. S. Bakeries, LLC, 786 F.3d 1119 (8th Cir. 2015). Thereafter, the ALJ determined in the administrative proceeding that Southern had engaged in a number of unfair labor practices. The company and the Board's general counsel each filed exceptions to the ALJ's decision.

         A three member panel of the Board largely affirmed in a split decision. The majority decided that Southern had interfered with employees' exercise of collective bargaining rights, thus violating § 8(a)(1) of the National Labor Relations Act ("NLRA" or "Act"). Southern had threatened discipline, job loss, and other unspecified reprisal for protected activity; interrogated employees about protected activity; created the impression of surveillance of such activity; assured employees that continued unionization was futile; promised benefits if they did not retain the union; disparaged the union; threatened closure of the company; and implemented a rule requiring that employees report harassment. The Board also determined that Southern had discriminated against employees to discourage unionization, in violation of § 8(a)(3) and (1), by investigating and disciplining Loudermilk, Marks, and Phillips because of their union activity. It finally concluded that the company had failed to bargain with the union, violating § 8(a)(5) and (1) of the Act, when it withdrew recognition from the union, unilaterally installed surveillance cameras in the break area, unilaterally changed the union's plant access rights, barring it from entering the plant for much of 2012 and after February 2013, and unilaterally increased employee wages in September 2013.

         The Board ordered Southern to remedy these violations. Southern was ordered to cease its unlawful conduct, bargain with the union, restore union access rights, and reverse employee discipline. The third member of the panel concurred in part but dissented in part, arguing that although the company's campaign statements were lawful, its withdrawal of union recognition had not been because of the unfair labor practices it had committed. Southern then filed the current petition for review of the Board's order, and the Board filed a cross petition for enforcement. Southern claims that the Board erred by concluding that the company violated § 8(a)(1), (3), and (5). We will address each set of violations in turn.

         II. Analysis

         When reviewing an NLRB order, we "afford[] great deference to the Board's affirmation of the ALJ's findings." Cintas Corp. v. NLRB, 589 F.3d 905, 912 (8th Cir. 2009) (internal quotation marks omitted). We will enforce the Board's "order as long as the Board has correctly applied the law and its factual findings are supported by substantial evidence on the record as a whole." Id. (internal quotation marks omitted). We have defined substantial evidence to mean "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Id. (internal quotation marks omitted). To determine whether the Board's decision is supported by substantial evidence, we also consider adverse evidence. See Nichols Aluminum, LLC v. NLRB, 797 F.3d 548, 553 (8th Cir. 2015). Although the Board is permitted to draw reasonable inferences and may select between conflicting accounts of the evidence, it may not "rely on suspicion, surmise, implications, or plainly incredible evidence." Id. (internal quotation marks omitted). On legal issues, "we defer to the Board's interpretation of the Act, so long as it is rational and consistent with that law." NLRB v. Am. Firestop Sols., Inc., 673 F.3d 766, 768 (8th Cir. 2012).

         A. Section 8(a)(1) violations

         Section 7 of the Act guarantees employees the right to organize and bargain collectively. See 29 U.S.C. § 157. Under § 8(a)(1), an employer commits an unfair labor practice if it "interfere[s] with, restrain[s], or coerce[s] employees in the exercise of their rights" under § 7. Id. § 158(a)(1). Section 8(c) provides that "[t]he expressing of any views, argument, or opinion, or the dissemination thereof . . . shall not constitute or be evidence of an unfair labor practice . . . if such expression contains no threat of reprisal or force or promise of benefit, " id. § 158(c), and thereby "implements the First Amendment, " NLRB v. Gissel Packing Co., 395 U.S. 575, 617 (1969).

         Southern argues that the Board erred in determining that it violated § 8(a)(1) of the NLRA by making a number of unlawful campaign statements that threatened plant closure, communicating that unionization was futile, promising benefits if the union was decertified, creating a harassment reporting rule, and disparaging the union. The company also challenges the Board's determination that it violated § 8(a)(1) by creating the impression that union activity was under surveillance, interrogating employees, and threatening discipline, job loss, and other reprisals. We will consider each of these determinations.

         1. Plant closure threats

         Southern claims that the Board erroneously determined that it violated § 8(a)(1) of the Act by threatening plant closure if the union was not decertified. The NLRA allows an employer to predict the effects of unionization only if such prediction is "carefully phrased on the basis of objective fact to convey an employer's belief as to demonstrably probable consequences beyond his control or to convey a management decision already arrived at to close the plant in case of unionization." Gissel, 395 U.S. at 618. Under Gissel, the expression "of the employer's belief, even though sincere, that unionization will or may result in the closing of the plant" is a violation of § 8(a)(1) "unless, which is most improbable, the eventuality of closing is capable of proof." Id. at 618-19 (internal quotation marks omitted); see also NLRB v. Noll Motors, Inc., 433 F.2d 853, 854-56 (8th Cir. 1970).

         In one of the captive audience meetings, Southern executive Rickey Ledbetter said to the company's employees:

From an economic standpoint, we do not want a union because we believe it drags our Company down in so many ways. If we can't meet or beat the competition we can't survive. Just look at what happened to the Hostess Bakeries, Automobile companies and Steel companies. Unions strangled these companies to death. . . . There are lots of things a union can do to hurt these ingredients for success. Higher costs, less flexibility, lower productivity and loss of team unity can be crippling to a business and cost employees their jobs.

         In another speech, Ledbetter told employees that "[j]ust because the contract is for a certain period of time doesn't mean that a company has to stay open or keep all of its employees during that period."

         In a similar case, we determined that an employer violated § 8(a)(1) when it "called [employees'] attention to other plants in the community where employees had been laid off following their vote to unionize." Noll Motors, 433 F.2d at 854. We concluded that "the employer's prediction was not carefully phrased to demonstrate probable consequences beyond [its] control nor to convey a management decision already arrived at to close the plant in case of unionization." Id. at 856. Rather, the employer's statements were "phrased to predict that unionization would inevitably cause the plant to close, throwing employees out of work regardless of the economic realities." Id.; see also NLRB v. Mark I Tune-Up Ctrs., Inc., 691 F.2d 415, 417 (8th Cir. 1982) (per curiam). We also conclude that substantial evidence supports the Board's determination that Southern's statements implied an unlawful threat that continued unionization would cause the bakery to close and employees to lose their jobs. Although the company argues that it also assured employees that it would continue to work with them under the same conditions if the union prevailed, these assurances did not make its threats of plant closure lawful. Cf. A.P. Green Fire Brick Co. v. NLRB, 326 F.2d 910, 914 (8th Cir. 1964).

         2. Futility statements

         Southern claims that the Board erred by determining that it violated § 8(a)(1) by communicating to employees that continued unionization was futile. During captive audience meetings, Southern management told employees that the union could only make promises but could not guarantee that they would come true. The company also told employees that the union would only win what the company was voluntarily willing to give and that "a union is powerless in guaranteeing changes." While the Board found that these statements suggested that unionization was futile, it did not determine that they contained a "threat of reprisal or force or promise of benefit." 29 U.S.C. § 158(c). The Board therefore erred in determining that these statements violated the NLRA. See id.

         3. Promises of benefits

         The Board also determined that Southern had committed an unfair labor practice under § 8(a)(1) by promising employees benefits if they were to decertify the union. Southern argues that its speeches merely explained to employees the costs associated with dealing with a union and provided wage information for non union employees. In one speech, Ledbetter had stated the company's desire to "work together" with the union "to make Southern Bakeries a successful, competitive company that can provide greater job security and better wages and benefits for all of us." Later in the speech, he said, "If you think about the issue logically, you will know the answer to the question of what will happen to your wage, benefits and working conditions if the . . . union is voted out." These statements implied that Southern would provide benefits to employees if they voted out the union and therefore provide substantial evidence to support the Board's conclusion.

         4. Harassment reporting rule

         Southern disputes the Board's determination that it violated § 8(a)(1) by promulgating an unlawful reporting rule. In the speech at issue, Ledbetter instructed employees as follows:

Keep in mind that the company is not the only party to this election that has a right to state its views. The union has the same right-and so do you. The most important thing you can do for yourself in the weeks leading up to the election is learn and consider the facts-not rumors, not lies, not groundless fears, but facts. Some of you may have faced harassment or intimidation because you signed a decertification petition or otherwise oppose the union. If any of you are harassed or threatened on any basis during this election campaign, regardless of whether you are for or against the union, we want to know about it immediately so we can address the problem, just as we always have.
We will not tolerate the abuse of any employee rights in this work place. But to remedy the problem and prevent recurrence, you must bring it to our attention.

         We have previously enforced an NLRB order finding that an employer violated § 8(a)(1) when it asked "its employees to report union solicitation activities." Bank of St. Louis v. NLRB, 456 F.2d 1234, 1235 (8th Cir. 1972) (per curiam). In that case, an executive had "received a report from supervisors that some employees were 'badgering and pestering' other employees during working hours to sign Union authorization cards." Id. He had then written a letter to employees stating, "[I]f you are threatened in any way or subjected to constant badgering by union proponents to sign these cards, please report these matters to your Department Head immediately." Id. The NLRB "concluded that in the context of the general anti-union tenor of the letter, the concluding paragraph could reasonably be interpreted by the employees to request the reporting to management of the names of employees who were engaging in persistent union solicitation, " and we upheld the Board's determination. Id.

         The facts in the present case are similar to those in Bank of St. Louis, and we conclude that substantial evidence supports the Board's determination that Ledbetter's statements were unlawful. Although the reporting rule was worded in neutral terms, it was announced by Ledbetter immediately after his comments about union harassment of opponents. And while a statement encouraging employees to report harassment might appear harmless, Ledbetter's comments may have been understood to equate persistent union activity with harassment. The NLRA allows employees to "engage in persistent union solicitation even when it annoys or disturbs the employees who are being solicited." Brandeis Mach. & Supply Co. v. NLRB, 412 F.3d 822, 830 (7th Cir. 2005) (quoting Ryder Truck Rental, Inc., 341 N.L.R.B. 761, 761 (2004)). The company encouraged employees to report such purported "harassment" and stated that it would "address the problem." These statements may reasonably be understood as a threat of reprisal against employees who solicited their coworkers to support or oppose the union. Considering the statements in context, we conclude that the Board's determination that Ledbetter's statements were unlawful threats was supported by substantial evidence, regardless of whether "we might have reached a different decision had the matter been before us de novo." Town & Country Elec., Inc. v. NLRB, 106 F.3d 816, 819 (8th Cir. 1997).

         5. Disparagement of union

         The NLRB determined that Southern's campaign statements violated § 8(a)(1) of the NLRA by unlawfully disparaging the union in two ways. First, Southern stated that "[t]he union appear[ed] to have plans to take our employees out on strike" as it had at Hostess, which the Board interpreted as a threat that continued unionization would lead to a strike and plant closure. As discussed above, the Board's conclusion that this statement threatened plant closure was reasonable. We therefore uphold the Board's determination that the statement was unlawful.

         The Board also concluded that Southern unlawfully disparaged the union "by appealing to racial prejudice" by its memo to employees stating that it had "raised concerns that the [union] was discriminating against Hispanics through targeted grievance allegations." The Board determined that this statement was unlawful because it was not supported by additional evidence. The Board's practice, however, is not to "probe into the truth or falsity of parties' campaign statements." U-Haul Co. of Nev., Inc., 341 N.L.R.B. 195, 195 (2004). Moreover, the NLRB has not shown that this statement was a threat to employees. See 29 U.S.C. ยง 158(c). The Board has not identified any case in which such a ...

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