AUCIELLO IRON WORKS INC. v. NATIONAL LABOR RELATIONS BOARD
The day after Auciello Iron Works' contract offer was accepted by its union employees' collective-bargaining representative, Auciello disavowed the agreement because of a good-faith doubt, based on knowledge acquired before the offer's acceptance, that a majority of employees supported the Union. The National Labor Relations Board (NLRB) ruled that Auciello's withdrawal was an unfair labor practice in violation of the National Labor Relations Act and ordered that the agreement be reduced to a formal written instrument. The Court of Appeals enforced the order as reasonable after the NLRB issued a supplemental opinion to justify its refusal to consider Auciello's defense of good-faith doubt about the Union's majority status.
May an employer disavow a collective-bargaining agreement because of a good- faith doubt about a union's majority status at the time the contract was made, when the doubt arises from facts known to the employer before its contract offer had been accepted by the union?
Legal provision: National Labor Relations, as amended
No. In a unanimous opinion delivered by Justice David H. Souter, the Court held that the NLRB reasonably concluded that an employer challenging an agreement under these circumstances commits an unfair labor practice in violation of the National Labor Relations Act. The Court agreed with the NLRB that an employer's precontractual, good-faith doubt is inadequate to support an exception to the conclusive presumption of a union's majority status, which arises at the moment when a collective-bargaining contract offer has been accepted.
Argument of John D. O'Reilly, III
Chief Justice Rehnquist: We'll hear argument next in Number 95-668, Auciello Iron Works, Inc. v. National Labor Relations Board.
Mr. O'Reilly, you may proceed.
Mr. O'Reilly: Mr. Chief Justice, and may it please the Court:
Some 8 years ago we started what I thought was a run-of-the-mill, garden-variety type labor dispute which has grown and grown, and here we are.
In the course of a collective bargaining dispute, the... a strike arose; picketing took place.
Immediately during the course of this garden-variety dispute, 40 percent of the employees, the bargaining unit, crossed the line, the same 40 percent which, it's a small unit, that 40 percent is only 9 employees, were badmouthing the union.
The employer, during the course of this 5 or 6-week strike, obtained the belief that because of the 40 percent the union did not have the tremendously strong percentage of support, and it shot across the bow of the union bargaining position a rather extreme shot.
It beefed up its contract proposal.
However, the significant point, when it beefed it up, it did not have, then, reason to believe that the union was not a majority representative.
It had every reason... in fact, the... it would... to believe that the union still maintained its majority status, but it shot this across the bow of the union, this beefed-up union proposal, and at that time the negotiations are broken off.
The very next day, the union abandoned the picket line, the pickets went down, and a number of extraordinary events took place over the next 3 business days.
Everyone... almost everyone came back to work.
Of those who came back to work, a number of them did the same as their predecessors, the 40 percent who had come back earlier, had crossed the picket line, were knocking the union, being very critical of the union.
In fact, four additional employees resigned from the union after they came back, spoke to company representatives and said, we don't need the union, I don't know why we wanted a union in the first place.
Three of these individuals who were thus bad-mouthing the union had been picketing that Friday morning.
Friday afternoon they were in saying to the company, ah, we never needed a union here in the first place.
Unknown Speaker: Mr.... Krischer, is it?
Excuse me, Mr. O'Reilly--
Mr. O'Reilly: O'Reilly.
Unknown Speaker: --Are you making any claim here that the union in fact lacked majority support at the time the union accepted the offer?
Mr. O'Reilly: Justice O'Connor, I have been making that claim not only today but for the last 8 years.
I know the issue has been raised in respondent's--
Unknown Speaker: Is that issue in front of us, do you think, properly?
Mr. O'Reilly: --I believe it is, Your Honor, particularly, I--
Unknown Speaker: Did the board deal with the case in that posture, or not?
I somehow thought that we had before us a... the issue of whether there was a good faith doubt, not whether there was in fact lack of support.
Mr. O'Reilly: --Justice O'Connor, I believe you have both issues before you.
The facts clearly indicate... for instance, the company's telegram that it sent eventually, in response to the union's Sunday evening telegram said we have reason to believe that the union no longer represents a majority.
Unknown Speaker: There may be any number of facts in the case that are not before us.
Your question presented is whether an employer is bound by a union's acceptance of an earlier proposal for a collective... when at the time of the union's... the employer had a reasonable basis for a good-faith doubt of the union's continued majority status.
Mr. O'Reilly: That is correct, Mr. Chief Justice.
Unknown Speaker: I don't see that as raising the question in fact as to whether the union had lost its majority status.
Mr. O'Reilly: Well, of course, in fact that was... Mr. Chief Justice, that was raised in our original answer to the complaint 8 years ago at the labor board.
We also used the phrase, good faith doubt, and the reason we did is because it's easier for an employer to defend and to prove its defense by... through circumstantial evidence of creating a good faith doubt, but we did--
Unknown Speaker: Well, the issues are quite different, possibly, and I wonder if we aren't bound by how the question is presented in your petition for certiorari.
Mr. O'Reilly: --I think the issues may vary, but I... in this particular case I think they're so closely intertwined that they can be treated as one and the same.
For instance, the court of appeals, who heard... of the First Circuit heard this case twice, and both in their first decision, as well as in their second decision, they treated it, notwithstanding the original issue having been framed as a good faith doubt case, they treated it in both decisions as a question of the employer attempting to prove before the administrative law judge and before the National Labor Relations Board that in fact the union had lost its majority status.
Unknown Speaker: And is that the board rule, that even if you were to show unquestionably, never mind good faith doubt, that the union no longer had majority status, that the same result would ensue?
Mr. O'Reilly: No, I think the only difference, Justice Scalia, would be if we, the employer, had raised and proved... established at the trial level that we had a good faith doubt, it would then be incumbent upon general counsel to establish that in fact the union had maintained a majority--
Unknown Speaker: But I'm asking you what the board rule is.
Is the board rule that neither the establishment of a good faith doubt, nor even the establishment of actual nonmajority status will suffice to get you out of the contract here?
Mr. O'Reilly: --No, as I understand the board decision, they would... decisions, they would take the position that if we had established under the facts of this case actual loss of majority, or at least my friends at the--
Unknown Speaker: Right.
Mr. O'Reilly: --AFL-CIO in their amicus brief said that would be enough.
The board has reserved in this case--
Unknown Speaker: Okay.
Mr. O'Reilly: --its position with regard to whether or not the actual loss of majority would have entitled us, under the facts of this case, to send... fire back that reply telegram disavowing any further obligations--
Unknown Speaker: So it is a separate question, then, and--
Mr. O'Reilly: --I suspect it is, but we feel the result would be the same under both scenarios.
Unknown Speaker: --Mr. O'Reilly, would you... my understanding was that your friends at the AFL-CIO took the position, but there's only one way to establish that the union has lost its majority, and that is through a secret ballot.
Mr. O'Reilly: They... Justice Ginsburg, they took the same position, of course, and filed an almost identical brief in the Curtin Matheson case, saying that the board rule that this Court has implicitly affirmed over the years, the board rule that a good faith doubt entitles you to withdraw your recognition of the union, they took the position in that case and in the amicus in this case that that is no longer a good rule, and that the only way an employer can contest the majority status of an incumbent union is to file a decertification petition, and I--
Unknown Speaker: And they also said in their brief that general counsel had recommended such a position to the board.
Mr. O'Reilly: --Well--
Unknown Speaker: Where does that stand, do you know?
Mr. O'Reilly: --My understanding, I've had an opportunity to look into that.
I contacted... and I can only reflect was I was told by the employer's counsel in that case, that the... and there is a board decision some 3 years ago in that case.
It was on appeal to the District of Columbia court of appeals, and the board then requested that it be referred back to the board.
Counsel for the employer indicated that all argument in that case was conducted a year and a half ago, and no decision has come out of it.
Unknown Speaker: So we may be talking about something that really doesn't matter anymore.
I mean, if they deep-six the whole good faith doubt rule, it doesn't matter.
You would have to have a--
Mr. O'Reilly: Well, I would just suggest if you look at the... if my--
Unknown Speaker: --I mean, it matters to your client.
I don't want to say it doesn't matter to you.
Mr. O'Reilly: --But I'm not sure what the likelihood is of the board adopting that particular view of the scenario I just described.
This case was decided within the last year.
Oral argument in the Lee Lumber case was a year-and-a-half ago.
The board certainly would have had an opportunity to adopt the general counsel's position in the meantime and at least, certainly in this case, deny it.
Unknown Speaker: But if you... we... you are going in this case on the proposition that there's a reasonable doubt rule, so that the question is, at what point can the employer... it's really a timing question.
I think the reasonable doubt... I think you're agreed, are you not, that if you had withdrawn the offer on the 18th or 19th on the basis of your good faith doubt, there would be no contract that they could accept.
Mr. O'Reilly: There would be nothing out there for them to accept, is correct.
Unknown Speaker: So why can't the board say, we have to draw the line some place, we're going to draw it at the union's acceptance of the contract?
Mr. O'Reilly: Well, of course, the board is apparently adopting this bright line theory that it's a lot easier to administer the act if we have a specific date, and obviously, I don't have a problem with that concept, but what I'm just saying is the specific date that they have picked, the bright line rule in this case, there is no logical basis for it.
The logical basis apparently is that sending a Sunday evening telegram somehow transforms a union that the employer had every reason to then believe had a good faith doubt as to its majority status, somehow this telegram, Sunday evening telegram, transforms that apparently minority union into a majority union.
Unknown Speaker: I take it that their basis is not a telegram, their basis is a contract, all right.
Mr. O'Reilly: Created--
Unknown Speaker: So once the contract is created--
Mr. O'Reilly: --Created by--
Unknown Speaker: --you can't question it for the period of the contract bar.
Mr. O'Reilly: --Yes.
Unknown Speaker: And it doesn't... I mean, what is illogical about saying there's a contract bar, it starts when the contract was created?
Mr. O'Reilly: If--
Unknown Speaker: If you have a complaint about the union, make it before the contract is... after, you're barred.
That's the contract bar, right.
Mr. O'Reilly: --And that's--
Unknown Speaker: And that, as I understand it, is the rule, and why is that illogical?
Mr. O'Reilly: --And that's their bright line theory.
I think the illogical argument comes into play this way, Justice Breyer.
We have an obligation, as an employer dealing with any union, at all times to see to it to investigate, to analyze what is the status of this union?
Is it a majority union, or is it a minority union?
Obviously, if it's a minority union, does not represent a majority of employees, it's illegal under the statute for us to--
Unknown Speaker: Is that right, even though it's been certified?
Can you be subjected to liability for dealing with a properly certified union?
Mr. O'Reilly: --Yes, Your Honor, at least beyond the... this is... the certification in this case, and of course, none of the employees who were involved in that certification process are still employed by the company, but the certification in that case was in the 1970's, as I recall, so you have... you could deal with... the board principle is that once it's certified there is an irrebuttable presumption no matter what happens to the majority status for a 1-year period.
Unknown Speaker: For 1 year.
Mr. O'Reilly: So even though you know, as a matter of moral certainty, that the union has lost its majority status during that year, not only is it not illegal to deal with them, you have to deal with them.
Unknown Speaker: But that gets us back to Justice Breyer's question that I don't think you fully answered.
The point was, why not make the contract bar rule become effective upon the acceptance of a contract?
We know when contracts are accepted, we know when they're not.
Why not make that the bright line rule?
Mr. O'Reilly: We suggest, Justice Kennedy, that the employer should have an opportunity, when it is going across a crescende of events that happened in this case during this 3-day period, should have an opportunity to analyze, review those events, to see whether in fact it is dealing with a majority or a minority union, and in this case we suggest that it didn't have.
Unknown Speaker: But you could have done that by withdrawing your offer.
You could have sent them a telegram just as readily as they sent you one.
Mr. O'Reilly: In view of the board's decision in this case, Your Honor--
Unknown Speaker: You wish you had done it.
Mr. O'Reilly: --I would... I certainly wish I had done it--
Unknown Speaker: No, but I mean, you could--
Mr. O'Reilly: --and now the world knows that that's probably the best way to do it, but unfortunately that does not advance productive negotiations, where any time you have a question in your own mind--
Unknown Speaker: --Well, when the point comes that you're questioning the union's continuing capacity as a representative, there's going to be a certain chill upon the proceedings anyway.
Mr. O'Reilly: --Absolutely.
Unknown Speaker: You've got to accept that, and I don't see that the chill is going to be any greater by withdrawing the offer on that ground than it is by doing what you want to do.
Mr. O'Reilly: Well, I'll just take two of the major events, if I may, Your Honor, that led to the employees eventually creating in its own mind the good faith doubt.
Seven union supporters, including the union steward, the employer received that information on Friday afternoon, that hearsay information that these seven are employed elsewhere, and aren't coming back.
Now, they should have an opportunity to review that.
Have... was that decision made out of anger?
Are they going to be back next Wednesday, maybe, the next week?
They should have some time to look into that.
The other information was that--
Unknown Speaker: May I just interrupt with one question to be sure I understand correctly?
If you did review it thoroughly and concluded... and assume the facts are that, even though you had your doubts, that there still was majority support for the union, why is it all unfair?
If the other had happened, if you had been able to prove there was not, your doubt was correct, even though they'd accepted the offer you could get out of it, couldn't you?
Mr. O'Reilly: --That's correct, Your Honor, as long as we move quicker than they do.
Unknown Speaker: Yes, but even if you didn't move quickly enough, if your doubts had been substantiated by your thorough investigation on Monday and Tuesday, you still would have been protected.
Mr. O'Reilly: --If... we would have been protected only if we had withdrawn the offer or withdrawn recognition.
Unknown Speaker: Or if you could prove they did not have a majority.
Mr. O'Reilly: Our position is, we would be... if at the time of that telegram, and we had the opportunity to conduct this investigation, even though we had not won that race to the telegraph office, we would be protected, and that's our position in this case, Justice Stevens, that the mere fact that they send a telegram before we have an opportunity to fire off our withdrawal... and I'd ask the Court to bear in mind that this was Thanksgiving week, it was a 3-day week, and Sunday of week... we couldn't fire it back, obviously, that evening.
Who are we going to send--
Unknown Speaker: I'm not sure--
--We don't know, Mr. O'Reilly, do we, whether the board takes the position that if, in fact, there was not majority support at the time that you tried to withdraw your offer the contract bar rule would apply.
We don't... do we know the board's position on that?
Mr. O'Reilly: --We know the board is not taking a position on that, Justice Scalia.
They have expressly reserved--
Unknown Speaker: Right, so--
Mr. O'Reilly: --on that issue, even though the court of appeals said--
Unknown Speaker: --I think your answer to Justice Stevens' question has to be, we really don't know, the board's going to tell us some day.
But in this case, just so I have it clear in my own mind, did they make a factual determination one way or another as to whether there really was a majority or not?
Mr. O'Reilly: --They did not, Justice Stevens.
Unknown Speaker: They did not.
Mr. O'Reilly: There was no evidence submitted--
Unknown Speaker: There was no finding one way or the other.
Mr. O'Reilly: --That is correct.
In fact, there was no evidence at all submitted by the general counsel to--
Unknown Speaker: Or by you.
Mr. O'Reilly: --to attempt to support that there was no... that there was a majority status.
Our evidence was that we had--
Unknown Speaker: You had a good faith doubt, I understand that, but did you also try to prove that there was on fact no majority.
Mr. O'Reilly: --Yes, and we explained that.
Unknown Speaker: And was there a finding on that point?
Mr. O'Reilly: No.
Unknown Speaker: I see.
Mr. O'Reilly: No, there was no finding.
The administrative law judge as well as the board said, it's immaterial, we don't have to get into that because at the time the company had an acceptance, therefore the rest of the evidence that was... and this was a 3-day hearing, most of which dealt with our evidence that we had the basis for a good faith doubt, but the administrative law judge and the board said all of that is immaterial because there was an offer-acceptance and Sunday evening you had a contract, so it's too late to--
Unknown Speaker: Well, the way you describe it, it sounds as though at least the administrative law judge's ruling was that even though you had been able to prove that there was no majority support, it was irrelevant, and yet I understood you to say the board took no position if you could prove that fact.
Mr. O'Reilly: --The board in its petition, in its brief to this Court has expressly reserved and said that that might be a different consideration but we're not going to get into that, because we feel a good faith doubt case, which they claim this is, is different from a actual loss of majority case, so they are hypothesizing saying it might be different, but they are not expressly taking that position.
Unknown Speaker: Well, what's the effect of that case from this Court in '61, the International Ladies' Garment Workers Union case, where presumably we held it was an unfair labor practice for an employer to enter a collective bargaining agreement with a union that in fact lacks majority support?
Is that good law as far as you know?
Mr. O'Reilly: I think it's excellent law, Justice O'Connor.
Unknown Speaker: So do you think it's open to the board to alter that rule or not?
Mr. O'Reilly: We would suggest it is not, and I would remind the Court, as I am sure we do not have to, that in that case there was an unknowing violation.
The employer was under the false impression at the time of entering the agreement it felt the union in fact was a majority union.
When it was established that... after the fact that it was not, the court said, that contract that you thought was a contract with a majority union is illegal.
Unknown Speaker: Mr.--
--Well, they felt it was an unfair labor practice.
Mr. O'Reilly: That's correct, and the ironic aspect of this case is, I find it difficult to reconcile the logic of the ILG which says it's an unfair labor practice even unknowingly to enter into a contract with a minority union, but the--
Unknown Speaker: Mr. O'Reilly, is there something different in a union that has never been certified by the board, which I take it was the ILGWU case, where there's a concern that maybe it's a sweetheart union, and here, where the board was... the union was certified and had a long-term bargaining relationship with the company?
Mr. O'Reilly: --There is a possible, or a definite argument, certainly during the 1 year after the certification, that there was a legitimate recognition, but the certification in this case goes back at least a generation, so I think the mere fact that they were certified--
Unknown Speaker: But the employer at any point could have asked for a new election.
Mr. O'Reilly: --That's correct, Your Honor.
Unknown Speaker: Instead of renewing the contract.
Mr. O'Reilly: That's... that's--
Unknown Speaker: Well then, why... is... are you saying the contract bar rule is unlawful?
Mr. O'Reilly: --No, Your Honor.
Unknown Speaker: Well, the contract bar rule has to start somewhere.
Mr. O'Reilly: It's... has--
Unknown Speaker: So... and I take it it's up to the board, basically, to say where it starts.
Mr. O'Reilly: --But a contract bar rule would never be based upon an agreement that in turn is an unfair labor practice.
When an employer enters into an agreement with a union not maintaining majority status, that contract would not legitimately serve as the basis for a contract bar, so we're saying that if you adopt a contract bar rule by analogy in this case, we are saying that when that telegram was fired off, the union more than likely knew, and we definitely knew, that they didn't maintain a majority status.
Unknown Speaker: But even if they've lost their majority status during the time of the contract, and different people, people come in and say, look, we represent the workers now, junk that, you can't do anything about it.
Mr. O'Reilly: That's correct.
Unknown Speaker: So that principle has to start some place, so I want to see what's wrong, what's illogical about starting it?
Mr. O'Reilly: I think you have to focus on when was the collective bargaining agreement that serves as the basis for the... what was the basis of the offer and acceptance?
What was the status of the parties as of that offer and acceptance that created that contract?
We're saying in this case if the status of the union as of the date of that purported acceptance was that the union did not maintain a majority status, there cannot be a contract, and the implications of a legitimate contract do not flow.
A legitimate contract, of course, creates for the... if it's a 3-year or less contract, for the balance of that collective bargaining there is an irrebuttable presumption that the union, notwithstanding its actual status over the 3 years, there is an irrebuttable presumption that it is maintaining its majority status so as to encourage the parties to deal with each other.
We do not have that premise, namely a legitimate majority status, at the time of the inception of this, or conception, I guess, of this agreement.
Unknown Speaker: Have employers ever appended to their offer clause that says, if you accept this offer, execution of the contract will be subject to our determining within 7 days that you continue to have a majority status?
Mr. O'Reilly: I have not encountered that type of situation, but this decision, if it is upheld, might encourage the type of appendage to an offer.
Unknown Speaker: There would be no bar in labor law from appending such a clause to an offer.
Mr. O'Reilly: --I think the labor board might have a problem with that.
It's one thing to append something such as this contract is only valid for X days, or sundown tonight the offer is withdrawn, but to put something like that onto it might cause some problems at the labor board.
Unknown Speaker: With respect to the board, they did this twice because the First Circuit said the first time it wasn't good enough.
What deference, if any, do we owe to the board's drawing this line where it did and explaining it?
Mr. O'Reilly: I think the deference that this Court traditionally gives to labor board decisions is not applicable here.
You always... the Court has always conditioned it, we will defer to the board as long as the board's ruling is rational and consistent with the act.
Our position, of course, is, here it's not rational because it's--
Unknown Speaker: And there, you're taking on the First Circuit, too, which decided it was rational.
Mr. O'Reilly: --The... well, not in the presence of some people in this Court that we are going to call the First Circuit irrational, but they--
Unknown Speaker: From time to time.
Mr. O'Reilly: --They did determine, without saying why, really... of course, they sent it back, you will recall, in the first instance saying that the board's decision really didn't say anything, that cited a few cases having nothing to do with this factual situation, and then after the board finally... and the Court did create a rather impossible task for the board.
It said, all right, take this irrational result and give us a rational basis for it, and I don't blame the board for taking... and even though the court said do this expeditiously, I don't blame the board for taking 2-1/2 years to come up with an attempt to rationalize what I think is an irrational result.
Unknown Speaker: Did the board give you an opportunity to prove that in fact there was no majority status?
Mr. O'Reilly: Yes, Your Honor, we had a 3-day hearing before the administrative law judge.
Unknown Speaker: And did they make a finding that you couldn't... that you hadn't proved it?
Mr. O'Reilly: No.
Their finding was that all of the evidence we presented... this is both the administrative law judge as well as the board itself.
All of the evidence we had presented over this 3-day period was immaterial in view of the fact that there was a contract and therefore... we could have all of the evidence, people swearing on Bibles that they didn't want this union there, that's immaterial because there was a contract.
Unknown Speaker: I find it difficult to understand how it can possibly be said that the question of whether actual nonmajority status would suffice to avoid the contract bar rule is not in this case.
How could it possibly be said that it's not in this case?
Mr. O'Reilly: Well, my position, of course, it is in this case, notwithstanding perhaps inartful phrasing of mine in the petition for certiorari.
Unknown Speaker: Apart from the question presented, may I ask you where in the papers before us is there either a pleading or an argument by you or your client that there was, in fact, no majority status?
Do the papers anywhere show that you made that argument and preserved it in a pleading?
Mr. O'Reilly: Yes, Your Honor.
Unknown Speaker: And where?
Mr. O'Reilly: In the two decisions of the court of appeals.
If I may, on page 3a, this is the second decision of the court of appeals, appendix 3a, where the court described the scenario as follows.
Unknown Speaker: 3a, you say?
Mr. O'Reilly: 3a of the--
Unknown Speaker: The white brief?
Mr. O'Reilly: --No, of the... I'm sorry, yes, of the petition.
Unknown Speaker: Petition, okay.
Mr. O'Reilly: And the court of appeals said the board thus refused to allow the company to present evidence--
Unknown Speaker: Where on page 3a are you reading from, Mr. O'Reilly?
The middle of the page.
I think I see--
Mr. O'Reilly: --Yes.
Unknown Speaker: --The middle of the page.
Mr. O'Reilly: Thank you, Mr. Chief... the board thus refused to allow the company to present evidence that the union in fact lacked majority support at the time it accepted the company's outstanding offer.
Almost identical comments are made by the court of appeals in the earlier decision--
Unknown Speaker: Yes, but the preceding sentence says that the board affirmed the ALJ's refusal to consider the company's defense that at the time the union accepted the company's contract proposal, the company entertained a good faith doubt.
Mr. O'Reilly: --Yes.
Unknown Speaker: So it describes your defense as one that they... that you entertained a good faith doubt.
Mr. O'Reilly: That's correct, Your Honor.
Unknown Speaker: And you're saying there was an additional defense.
Mr. O'Reilly: It was... we used the same evidence to--
Unknown Speaker: I know.
I realize you have the same evidence, but is there some pleading that you filed in which you said one of your defenses is they in fact did not have majority status?
Mr. O'Reilly: --I would have to ask leave of the Court to stray from the record.
I had... in view of the... when I saw in the respondent's brief the question being raised that we had not raised this below, I pointed out to brother counsel there were seven separate provisions in our brief to the administrative law judge, same separate seven provisions in our brief to the board--
Unknown Speaker: Forgetting the briefs for a minute, how about your pleading?
Mr. O'Reilly: --No, in the pleading, Your Honor, our response said only we had a good faith doubt.
This was filed at the time of the original complaint, but in our briefs to the board, in our briefs to the First Circuit, as well as the First Circuit's opinion, they refer to the loss of majority status.
Unknown Speaker: So you say you raised it to the board, then.
Mr. O'Reilly: In our briefs, Your Honor, but not in our answer, expressly.
Unknown Speaker: And did the board refuse to consider it because you hadn't raised it in your answer?
Mr. O'Reilly: The board's position was that the evidence, whether it purported to go to a good faith doubt or to a lack of majority status was immaterial in view of the contract having been formed.
If I may reserve the balance of my time, Mr. Chief Justice.
Unknown Speaker: Very well, Mr. O'Reilly.
Mr. Seamon, we'll hear from you.
Argument of Richard H. Seamon
Mr. Seamon: Mr. Chief Justice, and may it please the Court.
The narrow issue before this Court is the reasonableness of a rule of the National Labor Relations Board that concerns the timing of an employer's assertion of a good faith doubt a union's majority status.
Unknown Speaker: Well, what would the situation be, Mr. Seamon, if, in fact, there were no majority support at the time the union tried to accept the offer?
Mr. Seamon: Justice O'Connor, the board has not addressed that issue, and it reserves it in this case.
It would obviously present very different considerations in light of decisions such as Ladies' Garment Workers, but we emphasize that at issue in this case is only a claim of a good faith doubt of majority status.
Unknown Speaker: Well, is it possible that if in fact there was no majority support that it would be an unfair labor practice for the employer to enter the contract?
Mr. Seamon: It is possible but I would emphasize that one important difference to which Justice Ginsburg alluded between the present context and Garment Workers is that Garment Workers involved a voluntarily recognized union, whereas the present case involves a union that was certified by the board.
Unknown Speaker: Was there anything in the opinion that made it turn on that, do you know?
Mr. Seamon: The board framed its rule in terms of a previously certified union, and its prior decision in the same context called Belcon also dealt with a previously certified union.
Unknown Speaker: And is it your position that the pleadings in this case did not raise the in fact lack of support issue?
Mr. Seamon: Emphatically so.
In fact, at every stage of the proceeding where petitioner had an opportunity to make a claim of an actual loss of majority support, it failed to do so.
In its answer to the general counsel's complaint of an unfair labor charge, it specifically asserted a good faith doubt, but did not assert a loss of--
Unknown Speaker: But in its briefs below, it tried to present that issue?
Mr. Seamon: --No, that is also inaccurate, in our view.
In the objections to the ALJ's decision, the petitioner only complained about the ALJ's finding regarding its failure to establish a good faith doubt, and I would refer the Court to the petition appendix, the white brief, at page 85a, in which the board, in delivering its first decision in this case, stated, we agree with the ALJ that under established board precedent, once--
Unknown Speaker: Where on the page are you reading from, Mr. Seamon?
Mr. Seamon: --I'm reading from the beginning of footnote 85, on page 85a.
Unknown Speaker: Okay.
Mr. Seamon: We agree with the judge that, under established board precedent, once the board finds that the parties have reached a binding collective bargaining agreement, it is unnecessary to consider the issue of a respondent's alleged good faith doubt of the union's majority status.
I would also refer the Court to page 54a of this same filing, which is from the board's second supplemental opinion in this case.
On page 55a, the very last sentence in the footnote states, we further emphasize that the case before us does not involve allegations of an actual loss of majority status.
Unknown Speaker: And this is the board's opinion, 65a.
Mr. Seamon: This is the board's supplemental decision in this case.
Unknown Speaker: Well, I suppose the only way we really know that the... correct me if I'm wrong, that we know in a legal sense that the board... that the union doesn't have majority status is that there's been a certification, or decertification petition and an election, and it seems to me the employer is being put in a very difficult position here where it makes the quite careful, measured statement that it has good faith doubt, which is a term of art in the labor law, and then you fault him for not saying that he knew.
It really amounts to a very trivial difference, it seems to me.
Mr. Seamon: Well, one of the reasons that the board has developed the good faith doubt rule is the recognition that it can be difficult, in the absence of a decertification, to prove an actual loss of majority status.
Unknown Speaker: And it seems to me that the employer acted quite consistently with the dictates of the labor board and the dictates of the labor law in that regard.
Mr. Seamon: The labor law permitted it to assert a good faith doubt, but it also required it to take other steps to either withdraw its offer and then assert the good faith doubt to petition for an election before the new agreement was entered into by the union's acceptance of its offer.
And it shouldn't be lost sight of that the employees themselves had an opportunity to file a petition for decertification during the window period from 60 to 90 days before the collective bargaining agreement expired and again after the agreement expired and before a new one was entered into.
Unknown Speaker: But isn't the force of your argument somewhat undercut by the fact that the board is reserving the question of what the result should be if, in fact, the claim was and was proven that there had been a loss of majority support?
Because one of your arguments is there is need to have a bright line rule for the sake of stability and industrial peace once a contract has been formed, but now I understand the board is saying, well, we reserve the question whether there is such a need if it can be shown that the union actually had lost majority support.
So if... it seems to me that the practical effect of that is going to be that so long as that question is reserved, that any employer with a good faith doubt is going to make in good faith a claim that in fact majority support was withdrawn--
Mr. Seamon: I--
Unknown Speaker: --and there goes the whole need for the bright line... or the whole justification based on a bright line argument.
Mr. Seamon: --I acknowledge, Justice Souter, that one of the difficulties that would arise from creating a different rule for claims of actual loss of majority status from the rule that applies to good faith doubt claims is that employers would be tempted to circumvent it by a mere point of pleading, to say not only did I have a good faith doubt, but I also believe that the union in fact lost majority status, and that may, in fact, be a consideration that the board could validly take into account if and when in the future it addresses the question of whether the rule should be different.
Unknown Speaker: But it is--
--But that's a question for the board, because isn't there some doubt as to what extent the Government can bind an employee to be represented by a union that in fact does not occupy majority status?
Mr. Seamon: It is a very serious question for the reasons elaborated in the Ladies' Garment Workers decision.
Again, there are differences between that decision and this one, but obviously--
Unknown Speaker: So you're saying that the need for the bright line is still there, but there just may be a circumstance in which, need or no need, we simply cannot have the benefit of it?
Mr. Seamon: --That is right, and again, quite apart from the employer's temptation to plead an actual loss of majority status, it is perfectly logical for the board's rule to operate upon the acceptance of the petitioner's outstanding contract offer.
In this case--
Unknown Speaker: No, but... may I interrupt you, though?
That would not be the case... the board is reserving the question, as I understand it, whether any bright line rule would operate upon acceptance if it can be shown that at the time of acceptance majority status had been lost, isn't that correct?
Mr. Seamon: --Yes, that's correct.
Unknown Speaker: Yes, okay.
Mr. Seamon: That's correct.
Unknown Speaker: But that reservation also would be overtaken if the general counsel's Lee Lumber proposal is adopted.
Mr. Seamon: Yes, that's also correct.
Unknown Speaker: And do you... can you give us any representation of where that proceeding stands?
Mr. Seamon: Yes.
My brother at the bar correctly stated the posture of the case right now.
It is under submission before the board following oral argument, which occurred about a year ago, but I would say it's far from clear whether the board is going to address the general counsel's argument that the good faith doubt rule should be abandoned.
That is not the primary argument in that particular case, and the general counsel emphasizes that the board doesn't need to address it at all.
Unknown Speaker: What is the gestation period for a proceeding like this?
Mr. Seamon: I'm uncertain of the answer to that.
Unknown Speaker: Maybe they should think about rulemaking down there at the NL--
Mr. Seamon: Of course, they do from time to time.
I recognize that the AFL--
Unknown Speaker: Think about it from time to time, are you saying?
Mr. Seamon: --I recognize the AFL-CIO takes the position that the pendency of Lee Lumber renders the grant of cert improvident.
We... in our judgment, again, it is so unclear whether the... how the board is going to rule and whether it's going to rule that that alone doesn't weigh against the grant, but by the same token, of course, we wouldn't oppose dismissal on those grounds.
Unknown Speaker: The acceptance was a logical point for cutting off consideration of claims of good faith doubt, because it was that point in this case that ended the strike and restored productivity at the plant, and from the point of view of the National Labor Relations Act, that is an event of central importance.
More generally, when unions accept contract offers from employers, that marks a fundamental alteration in the relationship between the parties.
After that point, it is reasonable for the board to require the parties to accept the results of the process and get back to the productive enterprise in which they both have such an important interest.
I would also suggest that in any event it is not necessary for the Court in this case to decide whether, in lieu of a bright line, the board should have adopted a rule that would require it to determine in every case whether the employer had a reasonable opportunity to investigate and to voice its good faith doubt, because petitioner did have such an opportunity.
Most or all of the evidence on which it premised its good faith doubt was received 6 days before the union accepted petitioner's contract offer, and has arisen earlier in the argument.
At any time, petitioner had the option of withdrawing its offer.
It also could have petitioned for an election.
It didn't take any of these options, nor did it break off negotiations and take its offer off the table.
It may ultimately be for the board to balance, but the rule that it's adopted almost encourages employers to continue making allegations as to good faith doubts and disrupting the bargaining process.
It seems to me much more sensible to do it post hoc.
Mr. Seamon: Well, in many ways the most sensible approach, and the approach that is preferred for purposes of the statute, is for the employer to file a petition for an election, assuming that the employees themselves have not availed themselves of that right.
This Court recognized that in Brooks, and it also recognized that the reason for that is that we can justifiably be concerned about employer's attempts to vindicate the rights of employees, especially when the employees themselves have ample opportunity to assert those rights.
The Court in Brooks said, in fact, that allowing employees to assert the rights of employees was not conducive to industrial peace, it is inimical to it.
Unknown Speaker: But Mr. Seamon, wouldn't that be a burden for a small company like this?
There's only 23 employees.
Wouldn't it be an expense?
They've got to hire a lawyer to petition the board for an election.
Mr. Seamon: It is not necessarily a particularly elaborate procedure, and in this case, of course, the litigation that ensued was quite as extraordinary as it would have been had... as it might have been had the employer taken the preferred route and filed the petition for an election in the first place.
And it also bears emphasizing that the board's rule does not permanently foreclose an employer from asserting its good faith doubt.
Instead, if the employer fails to raise the doubt before an employer has accepted the offer, the employer simply has to bid his time during the contract term.
When the contract expires, it again has an opportunity to assert its good faith doubt.
Unknown Speaker: Do the board rules permit this particular employer to go back and raise the other half of the claim, or has it lost... have they lost that?
I mean, I take it initially they thought there was just going to be one rule, actual good faith the same, and then they found out there wasn't.
There's a division... good faith, they lose, actual, we haven't decided.
Mr. Seamon: Well--
Unknown Speaker: Do the board rules permit them to go back now, or not?
Mr. Seamon: --I'm not certain of the answer to that question, but I would suggest that there's a very good argument that they've waived the argument to the extent that the board made it quite clear in both of its decisions that it considered this case as presenting only a good faith doubt, and petitioner could have sought reconsideration of the board's decision on the grounds that the board had overlooked one of its claims, but it failed to do so.
Unknown Speaker: These avents took place in 1988, so it may be a little late to go back and argue about the thing, I suppose.
Mr. Seamon: That's right, and I believe the petitioner in this case had ample opportunity.
It was quite clear... it's been clear since the Celanese Corporation decision in 1951... that there are two separate claims that can be used to justify refusal to bargain.
One is a good faith doubt, the other is an actual loss of majority status, so petitioner... the clarity of the board's precedent can't be blamed for petitioner's failure to raise both claims if it thought both were grounded in the facts.
Unknown Speaker: The board's rule serves the interest in repose for the most part by drawing a bright line after which the parties are required to accept the results of the negotiation process, and it also prevents sand-bagging, which can occur where an employer decides that it is going to keep its doubts regarding the union's majority status to itself during the negotiation process and raise them after an agreement has been concluded if it decides in hindsight that the agreement is not to its liking.
We're not suggesting that that was operative here, and that it is a very real concern in the general run of cases.
Do we have... refer to Judge Campbell's opinion on page 2a of the petition.
The second time around he says, several years ago the National Labor Relations Board petitioned this court for enforcement of an order and we retain jurisdiction.
The board has now at long last responded.
Did the board ever offer any explanation for the years it took in this case to reply to the Second... the First Circuit's request?
Mr. Seamon: It did not.
However, the second board decision was a decision by the full board, and obviously, in general those take longer to issue than decisions--
Unknown Speaker: Years longer?
Mr. Seamon: --of the four panels, and I would suggest the other consideration may well have been that the First Circuit outlined a number of very specific concerns that it wanted the board to address in full on remand, but there's no specific explanation--
Unknown Speaker: What's at stake here as of this point?
What does the enforcement order provide?
Mr. Seamon: --The enforcement order is... includes a usual cease and desist provision, and it also requires petitioner to enter into a contract based on the agreement that was formed when the union accepted petitioner's contract.
Unknown Speaker: But will that mean back pay, or what?
Mr. Seamon: That will mean that the employees should be entitled to the benefits of all of the wage and conditions provisions of the original contract.
If the Court has no further questions, that concludes my--
Unknown Speaker: Let me just ask one other.
Mr. Seamon: --Yes.
Unknown Speaker: What was the term of the original contract?
Mr. Seamon: Three years.
Unknown Speaker: And that 3 years, of course, has long expired.
Mr. Seamon: That's right, and I suppose since the employer has never honored the agreement it is still open for it to be required to do so.
Unknown Speaker: Thank you, Mr. Seamon.
Mr. O'Reilly, you have 2 minutes remaining.
Rebuttal of John D. O'Reilly, III
Mr. O'Reilly: Thank you, Mr. Chief Justice.
I do want to emphasize the manner in which the First Circuit dealt with this case, and it dealt with it on the basis of being a loss of majority case.
If I may just briefly, in addition to the reference at page 3a, the Court makes identical references on pages 80a, 82a, and in the specific order of remand to the board at page 83a it continuously refers to the issue as being a loss of majority, and it is easy to somehow distinguish, or sometimes confuse the distinguishing factors.
In fact, in this case there is a reference to the Chicago Tribune, the Seventh Circuit case.
That was a clear loss of majority case.
In the board's brief before this Court it says that has nothing to do with that, that was a loss of majority case, and this is a good faith doubt case.
Yet if... I direct the Court's attention to the board's own decision in this Auciello case.
How does it refer to... on seven different pages of the board's decision in this case, it refers to the Chicago Tribune case as being a good faith doubt.
It continuously says the employer raised its good faith doubt.
So sometimes the distinction between the two is not as clear as we would like it to be, so I think we have adequately raised the actual loss of majority in this case.
Notwithstanding the fact it was not expressly raised in the answer to the board, it was raised a number of times in the briefs, and that's how the court of appeals addressed it.
It remanded it to the board to deal with an actual loss of majority scenario, and the board can't pick and choose, I would submit.
While... even though the First Circuit told us to do it, number 1, quickly, we are not going to do that.
It had told us to deal with the actual loss of majority case.
It can't dictate that.
That's up to the court of appeals, and I think the issue is a live one before this Court.
Certainly... thank you.
Chief Justice Rehnquist: Thank you, Mr. O'Reilly.
The case is submitted.