NLRB v. FOOD STORE EMPLOYEES

Argument of Mozart G. Ratner

Chief Justice Warren E. Burger: We’ll resume arguments in number 73-370.

Mr. Ratner, you have 18 minutes remaining.

Mr. Mozart G. Ratner: Thank you, Your Honor.

Mr. Chief Justice, and if it please the Court.

The Labor Board contends that the Court of Appeals usurped the Board’s function of determining in the first instance what remedies were necessary to effectuate the Act, the policies of the Act and that they thereby infringed upon on the board’s prerogative.

We say no.

We say that the Court did not reach the question in this case as to whether that the withholding of remedies frustrated rather than effectuated the policies of the Act.

What it did was merely to hold that the Board’s rationale for denying organizational expenses and counsel fees in the Heck’s case could not reasonably really reconcile with the Board’s supplemental decision in Tiidee and with the purported distinction of Heck’s in that Tiide opinion.

If the Court below was correct in its analysis of those opinions then the Court was entitled we believe, to reverse the Board for its error of law, namely its arbitrator departure from its own rule.

Unless the Court of Appeals is not empowered to require the Board to follow the principles the board says it follows, then the court below should be sustained.

If a divergence arises between Courts of Appeals on the question whether at any given set of circumstances the board is in fact following its own presets.

That difference as all the cases of conflict are for this Court to resolve ultimately.

To show that the Court of Appeals was merely holding the Board to its own guidelines, I quoted from the supplemental decision in Tiidee at page 33, that portion which indicates that the Board recognized that the award of counsel fees and organizational expenses, among other measures was both within its powers and if necessary to and I quote the Board, “Undo some of the baneful effects pointed out the by the Court of Appeals in Tiidee.”

And what were the baneful effects pointed out by the Court of Appeals in Tiidee?

There, the Court of Appeals had explained that in refusal to bargain cases, to award merely the board’s normal remedies operated counter-productively to effectuating the policies of the Act in as much as they enabled the wrong doer to retain the fruits of his wrong doings and left uncompensated and un-remedied the injuries, which the employers’ wrongful conduct had imposed upon the Union and its employee beneficiaries.

Both of those are the essential elements that are in order -- proper to effectuate the policies of the Act must contain as this Court has held.

Now, in the Tiidee opinion, the Board explained that it had the power to enter these remedies.

It assumed that it had the power to enter these remedies and assumed that and said that beyond this, we don’t think we can go.

We can’t go to make whole remedy, but we could do this and then at page 35 of the appendix, a portion that was quoted by the Court of Appeals in its opinion, the board explained that it was denying organizational expenses in Tiidee because and I quote, “We find no nexus between the employer’s unlawful conduct here under examination and the Union’s pre-election organizational expenses and accordingly we shall not award them to the Union.”

Given the portion of the supplemental opinion that I quoted yesterday, at page 33, the court below was entire -- entirely entitled we believe, to treat this explanation as to the reason organizational expenses were not being accorded in Tiidee.

As a tacit admission, that if they had been -- if there ever had been such an excess, the Board would've ordered reimbursement of the excess organizing expenses.

Now, in Heck’s, the Board conceded the nexus between the employer’s unfair labor practice and the excess organizational expenses.

It noted that as Mr. Friedman said yesterday, probably these things had occurred.

The only reason the Board gave for denying recovery was that the charging party's allegedly subordinate role in unfair labor practice litigation made it inappropriate.

But that factor is simply irrelevant to whether the employers should be required to reimburse a union -- a victim, the Union, and its members or supporters for excess organizing expenses resulting from the employer’s unfair labor practices.

Those excess costs are borne by all of the employee supporters of the Union as such.

They are the victims of the employer's unfair labor practice, so they must be made whole if possible.

Otherwise, they suffer an injury which is uncompensated and the employees in the bargaining unit are further injured not merely by having to have ultimately their dues and their assessments increased but by the fact that these are organizing expenses which the Union would otherwise have been able to use for negotiators and for experts in producing a better collective bargaining contract.

Now, if the Board charging party's role were relevant to the question of whether excess organizational fees should be reimbursed, then the Board could not award, make an award of excess organizational expenses to a Union in any case because the Union’s role in all cases, is according to the Board subordinate.

But that’s not the reasoning that the Board purported to follow in its Tiidee opinion.

It purported to say, we know that organizational expenses, excess organizational expenses should fairly be reimbursed.

We’re not going to do it here because there is no nexus, the Union suffered no nexus, no loss as the result of the employer’s activities.

Since the Board found there was a nexus in the Heck’s case then its explanation doesn’t wash and its denial of these is arbitrary and capricious and illegal.

As to the legal fees, the only reasons that the Board offered for denying recovery in this case, are the allegedly subordinate role of the charging party and the assumed common law rule.

By awarding counsel fees in Tiidee, to both the Union and the Board counsel, the Board demonstrated that its conception of the role of the charging party to the issue was absolutely irrelevant.

If the board’s -- if the charging party’s role is subordinate and the general counsel’s role is superior then as the Court perceived in Tiidee, the way to take care of the problem is to award counsel fees against the employer of both for having unnecessarily forced the burden of litigation on both.

And consequent, as a result of that, the Board can no longer in this case rely upon that reasoning to sustain its denial of litigation expenses in the Heck’s case.

Now, the Board’s conception nevertheless, treating it as a matter raised in Tiidee, the Board’s conception of the role of the charging party in an unfair labor practice litigation simply does not swear with this Court’s view of the matter as expressed in Scofield .

In Scofield , the Board recognized that the statute itself carries with it the germ of protection of private interests and it also recognizes that when the charging party at "X" effectively to protect those private interests, it is necessarily also effectuating the public interest in enforcement of public rights which the statute establishes.

Now, if that is so and we submit that can't denied, if that is so, then the charging party’s counsel in a Labor Board proceeding, acts as private Attorney General in the same vital sense that others do in statutes which this Court has held to imply private rights of actions where the burnt of the litigation is borne by the private party.

But with the blessings of the Government agency and usually with the support of the Government's -- Government agency when a case comes to this Court for the private counsel seeking fees, and I speak particularly of cases like Mills versus Auto-Lite.

The Board did not see this.

It took a dog in the manger view here unlike the attitude that most administrative agencies take when private parties are acting, surely, perhaps exclusively in a wrong private interest, but in fact in a manner which benefits the public interest inescapably.

The Court should welcome and not reject their support.

The Court should reward their success and make the litigation of these matters a concern of capable private counsel.

And a way to do that is of course, as this Court has said to award attorney’s fees, particularly to them.

Chief Justice Warren E. Burger: Well, is the question Mr. Ratner, so much whether some consideration should be given to these items as to whether that should be done in the Court of Appeals or in the Board?

Mr. Mozart G. Ratner: Well, Your Honor as I started by saying, this is not a question res integra.

The Court of Appeals read what the board said in its supplemental decision in Heck’s and the Board in Heck’s specifically said, as I read yesterday afternoon, that an award of counsel fees, the board says, “An award of counsel fees will tend to discourage raising violations of the Act and they said they have the power to do this and they would do this and in Heck’s, in fact they did do this.

The only distinction that they drew was between willful defenders who have no substantial or debatable defense and willful offenders who presented debatable offense and the Board thought that that distinction was controlling.

Now, we say that that distinction is arbitrary and unreasonable, and therefore, an error of law.

Justice William H. Rehnquist: Mr. Ratner, you’ve used a term twice which I have seen in books, but I don’t know what it means, res integra, what does it mean?

Mr. Mozart G. Ratner: As an initial proposition, I think.

As if the board -- the Court were sitting without a board opinion before it was saying what do you think it would do?

Now, we say that the Board’s distinction between frivolous defenses and willful violators who happen to catch hold of the debatable defense is erroneous because it rests in part upon this misconception of a role of the charging party and because the Board in drawing it demonstrated that it was in fact relying upon what it thought the common law rule was as to the award of attorney -- of attorney’s fees.

In cases of bad faith and willful persistent offenses, despite the fact that there maybe a debatable offense.

Now, insofar as the Board thought it was followed in its opinionated case that it was and I did not hear Mr. Friedman yesterday deny that, the language I think makes it too clear.

As far as it was following the common law rule, its posture is the same in this case as the SEC's was in the Charney case where the SEC purported to follow what it erroneously conceived to be in the common law.

This Court reversed holding that the SEC was not bound to follow the common law, but if it was going to follow it, it better know what it was doing and in that case the SEC did not correctly perceive what the common law was.

So in this case, we say that the Board purported to follow the common law rule and it simply didn't understand what the common law counsel fees was.

Now, that's not particularly surprising because the award of counsel fees is not an area in which the Board is expert.

It did never done it before.

That happens to be the peculiar expertise of the judiciary which in time immemorial its equity practice has developed the award of counsel fees as a measure of making whole the aggrieved victim of outrageous misconduct and not allowing the perpetrator that kind of wrong doing to escape.

So that, we are not in the area of board expertise and that aspect of the protection of the board would normally be entitled to, does not apply here.

Speaking of both organizational expenses and counsel fees, the Board said at page five of its supplemental brief, which Your Honors have before you that was filed on March 15, quote, “Such an award helps assure the employees that the Union which they have chosen as their representative will have the same resources to represent their interests as it would have absent the employer's unfair labor practices.”

Starting with this as the Board’s premise, we submit that the Court of Appeals properly held that nothing in the Board’s rationale in this case or in Tiidee warranted denial of counsel fees and organizing expenses in Heck’s.

Justice Potter Stewart: Mr. Ratner, you say the Board had filed a supplemental brief?

Mr. Mozart G. Ratner: Yes, Your Honor.

The Board filed a supplemental brief on the 15th directed predominantly to the Hecks’ brief and the reasons that shouldn’t be considered by this Court.

I can’t explain why the Government having made all the arguments in favor of striking the brief doesn’t add up to the (Voice Overlap).

Chief Justice Warren E. Burger: Mr. Ratner, is it a bound brief?

Mr. Mozart G. Ratner: No, no it's --

Justice Potter Stewart: Oh!

It’s the one referred to it by, Mr. Friedman yesterday and was (Voice Overlap).

Mr. Mozart G. Ratner: Right, it’s that -- well on page five appears this language that I quote.

Chief Justice Warren E. Burger: The Court just don’t have it, but the Court will be given of course.

Mr. Mozart G. Ratner: As I said, I -- since the Government has made all the arguments in favor of striking, I can’t understand their reluctance to take the final step but in any event the brief is highly meritorious one.

The supplemental decision in Tiidee assigned, the Board has not merely power, but a duty to enter orders which effectuate the policies of the Act.

This has been true ever since National Licorice, 309 U.S. and Phelps Dodge in 313 U.S.

That duty must be judicially enforceable.

If the Court finds that failure to grant a remedy defeats rather than effectuates the policy of the Act by encouraging, rewarding instead of discouraging violations, it is the Court’s prerogative, we believe, and duty to reverse.

If there are no further questions?

Chief Justice Warren E. Burger: Thank you, Mr. Ratner.

Mr. Friedman do you have anything further?

Argument of Friedman

Mr. Friedman: Yes, Mr. Chief Justice.

There is just really one or two related points I’d like to make.

I think in considering the propriety of what the Board did in this case, it’s important to recognize that the Board did not just focus on whether or not to award counsel fees and organizational expenses.

In addition to the normal remedies that the Board usually provides in this type of case, the Board provided additional remedies here on the remand as a result of its evaluation of the employer’s conduct.

That is in addition to the normal cease and desist order in the posting of notices here in order to aid the Union, the Board required that the employer send the notices out to each employee at his home, required that the employer give the Union access to company bulletin boards for a year and required that the employer finally give the Union a list of the names and addresses of the employees, so that the Union would be able to make contact more easily with the employees.

And then it went on to say that those remedies would, given it did not feel as a general rule, it should give the additional remedy of organizational expenses and counsel fees because in the light of the nature of the charging party’s limited role, this case was not one in which that additional remedy, in addition to what the Board had already given, was necessary to effectuate the policies of the Act.

Now the Board did refer to the American rule, the general rule that ordinarily in the absence of statute or contract, attorney’s fees are not awarded and that is a rule which this Court has recognized, including the two most recent cases dealing with counsel fees, but that was not the touchstone of the Board’s decision.

The touchstone of the Board’s decision is set forth on page 38 (a) was that it was not necessary to effectuate the policies of the Act, the statutory standard for determining remedies.

It was not necessary to effectuate the policies of the Act to give this extraordinary remedy in addition to the remedies already given.

Now, when the Board came to the Tiidee case, the Tiidee case was a very special case.

There what you had was frivolous litigation.

Let me just indicate in a minute or so exactly what happened in Tiidee because I think that puts the frivolous aspect of the litigation in context.

In Tiidee, the employer had agreed to have a consent election.

He was not fighting the election, he had a consent election and he agreed to abide by the results of the election.

Then after the Union had won the election overwhelmingly by a vote of 19 to 6, the employer refused to abide by the election saying that the Regional Director in approving the election had acted arbitrarily and capriciously and that in addition to that, the Regional Director had denied Due Process of law.

The Court of Appeals characterized that as a frivolous contention forcing the Union to litigate, they said that was frivolous litigation.

That was the basis upon which the Court of Appeals remanded the Tiidee case to the Board and when the Board got back the Tiidee case it looked at it and said, "Yes" where there’s frivolous litigation, there’s a strong public interest in not permitting such litigation to clog the Board’s processes and the Court’s processes.

That’s frivolous litigation, but there’s a great distinction and a valid one which we think the Board was justified in drawing between frivolous litigation, where there's no basis at all for the claim made and litigation which is conducted with an arguable case even though ultimately, ultimately the party asserting the defense loses, that’s a very different thing.

The policy considerations that justify and led the Board to conclude that an exception should be made in the case of frivolous litigation, do not carry over we believe to litigation conducted in good faith even though the company loses and even though that was a persistent violator.

And we believe that the Board acted well within its discretion in declining to extend the general rule that it had announced in this case, in Heck’s beyond the limited exception for frivolous litigation.

And we therefore think the Court of Appeals, misinterpreted what the Board had done and that really the Court of Appeals itself was attempting to decide what it believed the effectuation of the policies of the Act required and that we submit is not the proper function of the Court of Appeals.

Thank you.

Chief Justice Warren E. Burger: Thank you, Mr. Friedman.

Thank you, Mr. Ratner.

The case is submitted.