Kvaerner Philadelphia Shipyard, Inc.

National Labor Relations Board - Board Decisions

Jun 9, 2006

347 N.L.R.B. 390 (N.L.R.B. 2006)

390 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
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Kvaerner Philadelphia Shipyard, Inc. and William
Smith. Case 4—CA--32182
June 9, 2006
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS LIEBMAN
AND SCHAUMBER
On February 23, 2005, Administrative Law Judge Karl
H. Buschmann issued the attached decision. The General
Counsel filed exceptions and a supporting brief, and the
Respondent filed an answering brief to the General
Counsel's exceptions. The Respondent filed cross-
exceptions and a supporting brief, the General Counsel
filed an answering brief to the Respondent's cross-
exceptions, and the Respondent filed a reply brief to the
General Counsel's answering brief
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and the record
in light of the exceptions and briefs and has decided to
affirm the judge's rulings, findings, and conclusions and
to adopt the recommended Order.
An arbitrator, upheld the discharge of employee Wil-
liam Snaith. The judge deferred to the arbitral decision
and thus dismissed the 8(a)(3) allegation regarding
Smith. Although asserting that he would find the dis-
charge unlawful, the judge determined that the arbitra-
tor's decision was not palpably wrong, and thus. deferral
was appropriate under Board law. For the reasons stated
below, we agree with the judge's deferral fulding.2
Facts
The Respondent operates a shipyard. William Smith,
an employee and former shop steward, was active in em-
ployee affairs and frequently counseled employees on
work-related matters. On June 1, 2003, Smith drafted
and -distributed a letter to his fellow employees. The
letter reads as follows:
To All Employees,
Have you looked at your pay stubs for the month
of May? There are 3 pay periods in the month of
' On June 24, 2005, the General Counsel filed a motion to strike por-
tions of the Respondent's reply brief that cited recently issued Board
cases not previously cited in these proceedings. In the alternative, the
General Counsel sought permission to file a response addressing those
cases. By letter dated July 19, 2005, the Board, by its associate execu-
tive secretary, granted the General Counsel permission to file a limited
response addressing the cases cited in the Respondent's reply brief.
The General Counsel filed his response on July 21,2005.
2 Because we adopt the judge's finding that deferral to arbitration is
appropriate in this case, we find it unnecessary to pass on the judge's
finding that Smith was, in fact, discharged for engaging in protected
concerted activity.
May. If you have medical and dental premiums
taken out in addition to union dues, you are owed
back money. Union dues, medical and dental are a
set amount each month. The company takes it out in
2 payments each month; therefore, the third pay-
check in May should not have had any deductions
for union, medical and dental taken out. Who knows
how long this has been happening. There are 2
months each year with 3 pay periods in them, and no
deductions other than taxes should come out of the
third pay period in these 2 months. Where is the ex-
tra money going? In addition to the extra money be-
ing taken out of your pocket, this money is probably
being put into a bank earning interest. This interest
is also chie you. When you finally get this money
back, as you will, demand that it be put into a sepa-
rate check. If it is put in with your pay, more taxes
will be taken out. This applies to current employees,
as well as, employees no longer employed by
Kvaemer. This could possibly be an honest mistake,
however, it should be rectified.
Sincerely,
Bill Smith
The Silent Shop Steward
It is undisputed that the claims Smith made in this letter
were false. The Respondent was not taking improper de-
ductions from employees' paychecks and placing the money
in an interest-bearing account.
Smith distributed the letter to three employees on his
way to work and left copies on the communal picnic ta-
ble. He also delivered a copy to Nicholas Gabriele, his
shop steward, who informed Smith that he should also
take a copy to Paul Weininger, the Respondent's man-
ager of human resources.
Later on the same day, Smith was called into the Re-
spondent's office. Weininger handed Smith .his termina-
tion papers and told Smith that he was fired. The termi-
nation papers stated that Smith had violated three com-
pany rules: (1) "gross misconduct" by impersonating a
shop steward and by handing out false and misleading
information with the intent to stir up employees; (2) vio-
lating company rules by distributing literature on com-
pany time without authorization from a supervisor; and
(3) making false statements and thereby engaging in un-
authorized use or disclosure of information. Weininger
also informed Smith that he believed that Smith handed
out the letters with the intent of inciting employees.
The Union filed a grievance over Smith's discharge
and, following the Respondent's denial of the grievance
at a third step hearing, the arbitrator upheld the dismissal.
In his decision, the arbitrator concluded that Smith had
347 NLRB No. 36
KVAERNER PHILADELPHIA SHIPYARD, INC. 391
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ith had
engaged in gross misconduct "reasonably construed by
the Company as defamatory and as an intentional act
designed to damage the Company's relationship with its
workers." The arbitrator then addressed Smith's argu-
ment that he was engaged in protected concerted activity.
The arbitrator first acknowledged that:
An employee need not limit his private utterances to
individual co-workers concerning their employer while
on Company premises to laudatory pleasantries. Em-
ployees may solicit information, articulate opinions, or
engage in an informal "bull-session" 'discussion about
the propriety of the Company's_ calculations without
crossing a line demarcating misconduct.
However, the arbitrator distinguished Smith's conduct
from the above permissible conduct:
However, by publishing unjustified allegations of in-
tentional bad faith to other employees without attempt-
ing to ascertain the facts the grievant rendered him-
self vulnerable to the imposition of substantial disci-
pline. The grievant's intent was clearly to incite his
co!4:Vorkers, not to find an answer to his uncertainty.
There is no merit to the Union's assertion that the
grievant was engaged in protected speech or concerted
action. His action recklessly publishing accusations of
dishonesty for other employees to take or see is not
protected speech under these circumstances .
In addition, the arbitrator found that the Respondent
reasonably construed Smith's letter as an "intentional act
designed to damage the Company's relationship with its
workers." 'The arbitrator also found that Smith's conduct
amounted, to "reckless disregard for the truth," nOting
Smith's failure to take any steps to ascertain the validity
of his accusation prior to disseminating his letter. The
arbitrator found that Smith intended to incite distrust
among his fellow workers and caused "appreciable dam-
age to the Company's reputation within the bargaining
unit." The arbitrator concluded from the foregoing that
the Respondent had sufficient cause to discharge Smith
and upheld the discharge.
The judge found it appropriate to defer to the arbitra-
tor's resolution of Smith's discharge. Although asserting
that he would have found that Smith's actions were pro-
tected under the Act, he nonetheless found that deferral
was warranted because the arbitrator's decision was not
palpably wrong. In finding that the arbitrator's decision
was not palpably wrong, the judge stated that "Smith
went further, however, than merely voice his erroneous
assumptions. He also queried what the Company was
doing with the extra money, and stated that the 'extra
money being taken out of your pocket is probably
being put into a bank earning interest' Clearly, his
erroneous accusations about the Company's ill-gotten
gains was both, unnecessary to his stated purpose and,
therefore, inflammatory."
Contrary to our dissenting colleague, we agree with the
judge that deferral is appropriate in this case.
Discussion
The Board strongly favors deferral to arbitration as a
means of encouraging parties to voluntarily resolve un-
fair labor practice issues such as that involved here. Olin
Corp., 268 NLRB 573, 574 (1984); Aramark Services,
Inc., 344 NLRB 549, 549 (2005). Thus, where parties
have agreed to be bound to an arbitrator's resolution of
an issue, the Board will defer to that resolution except in
those rare cases in which the arbitrator's decision 'is
"palpably wrong." Bell-Atlantic-Pennsylvania, 339
NLRB 1084, 1085 (2003), enfd. 99 Fed. Appx. 223 (D.C.
Cir. 2004).
The burden is on the party opposing deferral to show
that the arbitrator's decision is palpably wrong; the party
must show that it is clearly repugnant to the Act and not
susceptible to an interpretation consistent with the Act.
Martin Redi-Mix, 274 NLRB 559 (1985). As the Board
noted in Aramark, supra, this burden is a heavy one, and
the Board will not lightly set aside an arbitrator's resolu-
tion of an unfair labor practice issue where the contrac-
tual issue was factually parallel, and the arbitrator was
presented generally with the facts relevant to the unfair
labor practice issue. Thus, even where the Board would
reach a different conclusion than that of the, arbitrator,
deferral is appropriate if the arbitrator's conclusion is
susceptible to an interpretation consistent with Board
law. As the Board recently stated:
The standard for determining whether an arbitral
decision is clearly repugnant is whether it is "suscep-
tible" to an interpretation consistent with the Act.
Olin, 268 NLRB at 574; see The Motor Convoy, 303
NLRB 135 (1991). "Susceptible to an interpretation
consistent with the Act" means precisely what it
says. Even if there is one interpretation that would
be inconsistent with the Act, the arbitral opinion
passes muster if there is another interpretation that
would be consistent with the Act. Further, "consis-
tent with the Act" does not mean that the Board
would necessarily reach the same result. It means
only that the arbitral result is within the broad pa-
rameters of the Act. Thus, the Board's mere dis-
agreement with the arbitrator's conclusion would be
an insufficient basis for the Board to decline to defer
to the arbitrator's award.
Smwfit-Stone Container Corp., 344 NLRB 658, 660 (2005).
If Board precedent exists that supports an arbitrator's deci-
392 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
sion, Cannot be said that the decision falls outside the
broad parameters of the Act Thus, such a decision is not
palpably wrong or clearly repugnant to the Act; even if
other Board precedent is arguably contrary to the arbitral
decision. See Marty Crutmacher, Inc., 267 NLRB 528-533
(1983) (Board adopted judge's deferral to an arbitrator's
finding despite _existence of Board cases to the contrary,
because other Board cases supported the finding. The judge
concluded that "there is simply no way I could find that [the
arbitrator's] award was 'palpably wrong as a matter of
law'").
Under Board law, to find that the Respondent dis-
charged Smith for engaging in protected concerted activ-
ity, the General Counsel must show that Smith was en-
gaged in protected concerted activity, i.e., that Smith was
acting for, or on behalf of, other workers or was acting
alone to initiate group action, such as bringing group
complaints to management's attention. 1VLRB v. City
Disposal Systems, 465 U.S. 822 (1984). However,
Smith's statements would lose their protection if it is
found they were made "with knowledge of [their] falsity,
or with reckless disregard of whether [they were] true or
false." Linn v:''Plant Guard Workers Local 114, 383
U.S. 53, 61 (1966).
In his decision, the arbitrator considered the factors
that constitute protected concerted activity. The arbitra-
tor first acknowledged that certain employee speech is
permissible, even if that speech is critical of the Respon-
dent:
An employee need not limit his private utterances to
individual co-workers concerning their employer while
on Company premises to laudatory pleasantries. Em-
ployees may solicit information, articulate opinions, or
engage in an informal "bull-session" discussion about
the propriety of the Company's calculations without
crossing a line demarcating misconduct.
The arbitrator next found, however, that Smith's letter
exceeded the boundaries of acceptable discourse:
However, by publishing unjustified allegations of in-
tentional bad faith to other employees without attempt-
ing to ascertain the facts. the grievant rendered him-
self vulnerable to the imposition of substantial disci-
pline.
The arbitrator then concluded that Smith was not engaged in
protected activity in "recklessly publishing accusations of
dishonesty" leveled at the Respondent:
There is no merit to the Union's assertion that the
grievant was engaged in protected speech or concerted
action. His action recklessly publishing accusations ,of
dishonesty for other employees to take or see is not
protected speech under these circumstances, when the
grievant elected to ignore the appropriate and readily
available avenues of inquiry and redress, and was in no
way taken in concert with other employees.
We thus find that the arbitrator adequately addressed
the components of the unfair labor practice allegation in
finding that Smith had lost the protection of the Act. The
arbitrator's ruling was premised on his factual finding
that Smith had acted in reckless disregard for the truth
and thereby committed defamation. Specifically, the
arbitrator found that:
Although [Smith] had no basis for his suppositions re-
garding the correct method of deducting and his suspi-
cion of incorrect computation by the Company, he pub-
lished and disseminated a written accusation addressed
not to the Company or to the Union's hierarchy of offi-
cials, but to his co-workers, clearly implying that the
Company may be intentionally cheating its current and
retired employees. This unjustified attack was distrib-
uted to co-workers other than Union officials without
taking any reasonable steps to determine the pertinent
facts, either directly or with the assistance of the Union.
Moreover, the grievant's conduct was clearly intended
to incite his co-workers to distrust the Company's ac-
tions and motives. This action not only irresponsibly
denigrated the Company's integrity to the bargaining'
unit, but also justified the imposition of substantial dis-
cipline for acting in bad faith by recklessly refusing to
seek any accurate explanation for the phenomenon that
the grievant found troubling.
Thus, the arbitrator made the factual determination that
Smith had acted with reckless disregard for the truth,
with the intent to incite employee distrust of the Respon-
dent and to defame the Respondent. Based on that find-
ing, the arbitrator concluded that Smith's actions ex-
ceeded the bounds of protected activity.
This conclusion is not inconsistent with Board prece-
dent. The Board has found that employees lose the pro-
tection of the Act by acting with reckless disregard for
the truth. For instance, in Hertz Corp., 326 NLRB 1097
(1998), the Board deferred to an arbitrator's finding that
an employee's letter to employees—winch falsely stated
that he had been told he would be discharged if he wrote
any more such letters—was not protected by the Act be-
cause it was a deliberate and/or reckless falsehood.
Similarly, in Pizza Crust Co., 286 NLRB 490 (1987),
enfd. 862 F.2d 49 (3d Cir. 1988), the Board found that an
employee letter falsely stating that his employer fixed the
books was a reckless untruth that placed that employee
outside the protection of the Act.
In Sprint/United Management Co., 339 NLRB 1012,
1019 (2003), the judge found that some statements were
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others fell into neither category. The judge upheld the
discharge because of the statements in the first two cate-
gories. The Board agreed. Similarly here, the arbitrator
found that Smith acted with reckless disregard for truth
or falsity. In Stanley Furniture Co., 271 NLRB 702
(1984), the Board found that an employee acted "with
deliberate intention to damage the [r]espondent or with
reckless - disregard for the truth" when he publicly and
falsely asserted that the company was calling the fire
department to its plant almost daily, -without first at-
tempting to determine the actual number of times the fire
department had been called. Although the conduct in
Sprint/United Management, supra, was more extreme
than the conduct found in the arbitrator's decision here,
that case and this one are materially alike: in each, the
false assertions were found to have lacked any basis in
the hearsay claims of others. And as in Stanley Furni-
ture, supra, the Board found that Smith made no attempt
to ascertain the truth before publishing his false state-
ments.
Our colleague contends that the above cases are distin-
guishable because Smith honestly believed what he was
saying with regard to the Respondent's payroll deduc-
tions. However, as the judge finds, "Smith went further,
however, than merely voice his erroneous assumptions.
He also queried what the Company was doing with the
extra money, and stated that the `extra money being
taken out of your pocket is probably being put into a
bank earning interest. — Further, Smith's belief was not
based on any checking of the facts. Rather, the arbitrator
found that Smith acted with reckless disregard of the
truth.
The arbitrator's factual finding here, that Smith had
acted with reckless disregard for the truth, is not palpably
wrong, and is susceptible to an interpretation consistent
with Board precedent. We therefore find that deferral is
appropriate.
Our dissenting colleague says that the arbitrator's find-
ings are wrong as a matter of law. We disagree. The
standard of "maliciously false" applies not only to state-
ments that are made with knowledge of falsity but also to
statements made with reckless disregard of the truth. As
noted, the arbitrator found that Smith acted in reckless
disregard of whether his accusations were true. The arbi-
trator backed up his finding with evidence that Smith
failed to seek any accurate explanation of the Respon-
dent's conduct, and ignored readily available avenues of
inquiry. In our view, these facts lend support to a "reck-
less disregard" finding by the arbitrator. Again, the issue
is not whether. we would find "reckless disregard" but
rather whether the General Counsel has shown that this
finding is palpably wrong or clearly repugnant to the Act.
Stating that graver false accusations than Smith's have
been found protected, our colleague cites four Board
cases: Ben Pekin Corp., 181 NLRB .1025 (1970), enfd.
452 F.2d 205 (7th Cir. 1971); KBO, Inc., 315 NLRB 570
(1994), enfd. mem. 96 F.3d 1448 (6th Cir. 1996);
Tradewest Incineration, 336 NLRB 902,907 (2001); and
United Cable Television Corp., 299 NLRB 138 (1990).
These cases are distinguishable. In KBO, the Board
found that the employee had not acted in reckless disre-
gard of the truth because the employee had merely re-
peated a false statement he had heard from someone else,
not knowing it to be false. 315 NLRB at 570-571. Here,
by contrast, it cannot be said that Smith was misled;
Smith had no basis in other employees' statements for
his false assertions concerning the Respondent's payroll
deductions. The arbitrator found that Smith acted in
reckless disregard of the truth, and there is no basis for
overturning that factual finding. In United Cable Televi-
sion, the Board refused to defer to an arbitral award. The
Board relied principally on the fact that the arbitrator
found that the employee's conduct was "partially pro-
tected." The Board noted that the concept of partial pro-
tection "is not recognized under the Act." By contrast,
the concept that remarks can be unprotected by reason of
their reckless disregard for the truth is recognized by the
Act. Similarly, that case, unlike the instant one, does not
involve an arbitral finding of reckless disregard for the
truth.
Ben Pekin, supra, and Tradewest Incineration, supra,
are similarly distinguishable. In both cases, the Board
found that an employee had engaged in protected con-
certed activity. However, neither case involved findings
that the employees' statements were made with reckless
disregard for the truth. Specifically, in Tradewest, the
Board found that the statement was made on the basis of
an incorrect perception. In Ben Pekin, the Board found
that the employee's statements were based on a "genu-
ine" mistake of fact, i.e., conduct different from that en-
gaged in with reckless disregard for the truth. In short, in
neither case is there a finding of a reckless disregard of
the truth. In the instant case, the arbitrator found that
there was a reckless disregard of the truth.
If, and to the extent that, the cases our colleague cites
would tend to support a finding that Smith's falsehoods
did not sacrifice the Act's protection, those cases do not
make the arbitrator's award palpably wrong because, as
explained above, other Board decisions support a finding
that Smith did lose the Act's protection. In light of those
decisions, the arbitral award cannot be clearly repugnant
394 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
to the Act, notwithstanding the decisions cited by our
colleague. See Marty Gutmacher, supra.
In contending that deferral is not warranted in this
case, our colleague argues that "there is no way to read
the arbitrator's award as consistent with the Act." How-
ever, at the heart of our colleague's dissent is her dis-
agreement with the arbitrator's factual determination that
Smith acted with reckless disregard for the truth. As
noted above, we do not say that we would have made the
same factual finding. We simply say that this factual
finding of the arbitrator, who heard the relevant testi-
mony, including the testimony of Smith, is one to which
we would defer.3 And, given that arbitral finding, the
arbitrator's decision to uphold the discharge is consistent
with Board law. Under that law, cited above, statements
in reckless disregard of the truth can form a valid basis
for discharge under the Act.4 Thus, it is clear that the
arbitrator's award is not inconsistent with the Act or pal-
pably wrong.3
Our colleague treats the arbitrator rather harshly. Ac-
cording to the dissent, "no reasonable adjudicator apply-
ing the Act faithfully could have reached {his] result."
However, the Vilidity of the dissent's attack turns on
whether Smith acted in reckless disregard for the truth.
If Smith did so act, even our colleague would concede
that the discipline was laViful. The arbitrator found that
3 Our colleague says that deferral to an arbitral decision is not ap-
propriate where the arbitrator's decision "is based on a legal framework
that is antithetical to the Board's approach. We would agree that
where the Board law is clearly established, and the arbitral opinion can
only be interpreted in a way that is contrary to that law, deferral would
be inappropriate. However, as we have shown, the arbitral decision
here is based on the facOnding that the employee acted in reckless
disregard of the truth, and there are Board decisions which conclude
that such actions are unprotected. Even if the Board, on its own, would
have made a different factual finding, and even if there is some case
support for a contrary legal conclusion, that is not sufficient to warrant
nondeferral to that arbitral decision.
4 Our colleague cites Harte-Hanks Communications v. Connaugh ton,
491 U.S. 657, 685 (1989), for the asserted proposition that the issue of
"whether there is actual malice" is a question of law and not of fact. In
truth, the case holds that the question of whether there is sufficient
evidence in the record to support a finding of actual malice is a ques-
tion of law. By contrast, the issue in the instant case is whether the
arbitrator's finding of "reckless disregard" is so baseless as to be re-
pugnant to the policies of the Act. We think that the arbitrator had an
adequate basis for making this finding.
5 Thus, our colleague's reliance on Mobil Oil Exploration & Produc-
ing, U.S., 325 NLRB 176 (1997), enfd. 200 F.3d 230 (5th Cir. 1999),
and 110 Greenwich Street Corp, 319 NLRB 331, 335 (1995), is mis-
placed. In those cases, the arbitrator upheld the dismissals without
addressing the protected nature of the employee's conduct. Here, the
arbitrator adequately addressed that statutory issue. Similarly, Garland
Coal & Mining Co., 276 NLRB 963 (1985), cited by our colleague, is
distinguishable because the arbitrator in that case ignored the statutory
significance that the employee at issue was acting as a union represen-
tative.
Smith did act in this manner. As shown above, we be-
lieve that the arbitrator set forth an adequate basis for this
fact finding. Concededly, another arbitrator could have
made a contrary finding. The difference between our-
selves and the dissent is that she believes that only one
fact finding is permissible, and we disagree.
Ultimately, our colleague is reduced to suggesting that
the Olin standard should be abandoned. In this regard,
our colleague cites a law review article that is critical of
the Board's Olin policies. We decline to reverse those
well-settled principles. Instead, we apply them here.
Our colleague does not confine her attack to the arbi-
trator. She criticizes the Board majority as well. She
says that the Board has shown a "disturbing willingness
to defer to arbitration awards that are flatly inconsistent
with the Act." In support of this assertion, she cites her
own dissenting opinions. This is not the place to rehash'
those cases. The majority and the dissent have spoken,
and those opinions speak for themselves. We here de-
cide this case on its own facts, nothing more and nothinr'
less.
ORDER
The recommended Order of the administrative la\
judge is adopted and the complaint is dismissed.
MEMBER LIEBMAN, dissenting.
The Respondent fired employee William Smith for dis-
tributing a letter to coworkers criticizing the Respondent
for erroneously deducting medical, dental, and union
dues from the employees' paychecks. Although the Na-
tional Labor Relations Act clearly shielded Smith's con-
duct, an arbitrator upheld his discharge. The majority
errs in deferring to the arbitrator's award. It cannot be
reconciled with basic statutory principles governing con-
certed protected activity. Because the arbitrator's deci
sion was not just wrong, but was "palpably wrong" under
the Olin standard,1 we cannot give it deference without
compromising our duty to administer the Act.
When William Smith looked at his pay stubs for the
month of May 2003, he concluded that the Respondent's
deductions for medical and dental premiums and union
dues were too high. Smith wanted to tell other employ
ees about his discovery. As it turned out, he was wrouig
about the deductions, which, in fact, were proper uncle
customary practice. Thus, although May 2003 had thre
pay periods (instead of the usual two pay periods), Smith
erroneously thought that premiums and dues customart
were deducted only twice a, month. As became clear
premiums and dues properly were deducted each and
I Olin Corp., 268 NLRB 573, 574 (1984).
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395 KVAERNER PHILADELPHIA SHIPYARD, INC.
every pay period of the month, including in those months
having three pay periods. But, in light of his concerns at
the time, Smith wrote and distributed a letter to his fel-
low employees regarding this matter.
Smith's letter can be separated into three themes. Ini-
tially, Smith explains why he thinks that the third pay-
check of the month should not have deductions for medi-
cal and dental premiums and dues. Next, Smith asks
how long this has been happening and inquires as to
"where is the extra money going?"—concluding that it is
probably in a bank earning interest. He urges employees
to seek reimbursement by separate check to avoid a tax
Liability and to recoup their lost interest. Finally, Smith
states in the letter that "[t]his could be an honest mistake,
however, it should be rectified." The letter is signed by
Smith, with the title "The Silent Shop Steward."
When the Respondent reviewed Smith's letter, it fired
him, citing (among other grounds) his impersonation of a
shop steward, his distribution of false and misleading
information with an intent to stir up employees, and his
distribution of literature on company time and without a
supervisor's authorization. The Union grieved Smith's
discharge, which was ultimately upheld by an arbitrator.
The arbitrator found that Smith did not engage in pro-
tected concerted activity.
The Board's administrative law judge in this case
found that Smith simply made a mistake about the de-
ductions, that he did not deliberately misrepresent any
facts, and that his distribution of the letter was protected.
by Section 7 of the Act. But while the judge accordingly
concluded that the arbitrator was "wrong," he deferred to
the arbitrator's award, as neither "palpably wrong or to-
tally unjustified."
11.
The judge was correct in finding Smith's letter pro-
tected, a conclusion supported—indeed, compelled—by
Board precedent.2 The judge erred, however, in conclud-
ing that deferral was appropriate. The Board has repeat-
edly refused to defer to arbitration awards sustaining
discharges that were based on activities protected by Sec-
tion 7.3 This is such a case.
A.
The Board has a long history of scrutinizing discipline
imposed on employees for complaining to fellow em-
ployees about pay or working conditions and accusing
2 The majority finds it unnecessary to pass on this finding, given its
view that deferral to arbitration is appropriate here.
3 See Mobil Oil Exploration & Producing, U.S., 325 NLRB 176, 179
(1997); enfd. 200 F.3d 230 (5th Cir. 1999); 110 Greenwich Street
Corp., 319 NLRB 331, 335 (1995); Garland Coal & Mining Co., 276
NLRB 963, 964 (1985).
their employers of some form of impropriety based on—
as it turns out—unfounded factual predicates. Under
well settled Board law, these kind of accusations are pro-
tected under Section 7 unless they are "so offensive, de-
famatory or opprobrious" as to render the employee unfit
for service with the employer. Ben Pekin Corp., 181
NLRB 1025 (1970), enfd. 452 F.2d 205 (7th Cir. 1971).
A statement alleged to be libelous or defamatory will not
lose its protection unless it is made "with knowledge of
its falsity, or with reckless disregard of whether it was
true or false." Linn v. United Plant Guard Worker's Lo-
cal 114, 383 U.S. 53, 61 (1966).
Although Smith closed his letter with the admission
that "this could be an honest mistake" on the part of the
Respondent, it is true that the letter perhaps can be read
as at least implicitly raising the possibility of impropri-
ety, i.e., "where is the extra money going?" In context,
however, it is plain that Smith is simply alerting his fel-
low employees to the fact that the Respondent is retain-
ing money that, in Smith's view, actually belongs to em-
ployees and should be reimbursed to them, with interest.
Smith's letter pertains to the Respondent's contractual
and legal obligations with respect to benefits and what is
owed to 'employees. In that sense, Smith's letter is a
classic example of an employee expressing his concerns
to his fellow employees about an alleged improper loss
of pay and benefits.
It does not matter whether Smith was right or wrong,
brave or foolish, in his interpretation of the Respondent's
contractual obligations. Our precedent giVes employees
wide leeway in expressing their concerns about alleged
shortfalls in pay and working conditions. Section 7 does
not require that employees speak with "a degree of fi-
nesse and gentility" that might be prudent in other social
contexts. Cement Transport, Inc., 200 NLRB 841, 845
(1972), enfd. 490 F.2d 1024 (6th Cir. 1974), cert. denied
419 U.S. 828 (1974). Put another way, the Board recog-
nizes that Section 7's right to complain concertedly about
working conditions will occasionally work to shield
statements that are factually incorrect and even mis-
guided.
Indeed, even if Smith's letter is viewed as an accusa-
tion of impropriety, Section 7 has been found to encom-
pass and protect accusations of graver impropriety than
occurred here. In Ben Pekin, supra, an employee was
discharged for suggesting that his employer received an
under-the-table "payoff' to divert raises intended for
employees. The Board (and court) found the statement
to be a good-faith mistake of fact and protected under the
Act even though there was no evidence of any such pay-
off. In KBO, Inc., 315 NLRB 570 (1994), an employee
told other employees that there was a tape recording of a
we be-
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396 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
high management official admitting to taking money out
of employees' profit-sharing plans and diverting it to
lawyers opposing a union campaign. The statement was
found to be in good faith and protected, even though
there was no evidence such a tape existed. In Tradevvest
Incineration, 336 NLRB 902, 907 (2001), an employee
was suspended for distributing erroneous information
about wages paid by the employer to another employee.
The Board found the conduct to be protected because it
was not deliberately or maliciously false but simply inac-
curate. In United Cable Television Corp., 299 NLRB
138 (1990), an employee accused the company president
of telling untruths to employees and questioned why the
company was not putting more money in the pockets of
employees: The Board found the statements to be pro-
tected and the discipline of the employee to be unlawful.
The majority's attempt to distinguish these cases is un-
availing. The majority claims that Ben Pekin, supra, did
not involve allegations of reckless disregard of the truth,
but only pertained to whether the employee had engaged
in protected concerted activities. This reasoning is circu-
lar. It is true that the Board found -that the conduct in
Ben Pekin was P-rotected. But, it did so only after finding
that the employee's comments were not defamatory.
This finding, of course, encompasses the reckless disre-
gard of the truth standard. Rather than attempt to distin-
guish Ben Pekin on this basis, my colleagues would be
better served to heed the admonition of the Ben Pekin
Board, rejecting the defamation argument: "to hold oth-
erwise, because of a genuine mistake of fact on the part
of an employee, would severely curtail employees' rights
to act on behalf of themselves and their fellow employ-
ees." 181 NLRB at 1025. The majority makes a similar
claim with respect to Tradewest Incineration, supra. But
there too, the Board found the defamation standard was
not met because there was no evidence of a deliberate or
malicious falsehood. 336 NLRB at 907. The majority
claims that United Cable, supra, is distinguishable on the
same circUlar basis. But United Cable could hardly be
more on point. There, an employee wrote a letter to his
fellow employees about a monetary issue, an arbitrator
found that the letter was inflammatory and disruptive, the
General Counsel asserted that the defamation standard
was not met, and the Board examined the content of the
letter and determined that the General Counsel was cor-
rect and declined to defer to the award. Finally, the ma-
jority claims that KBO, Inc. supra, is distinguishable be-
cause the employee there was misled by another em-
ployee and, here, Charging Party Smith was wrong on
his own. This is a distinction without a difference. What
matters is that, in both KBO, Inc. and here, the employ-
ees honestly believed what they were saying and had no
actual malice, whatever the source of their misconception
of the facts.
In the present case, Smith did not accuse the employer
of a "payoff' or of diverting funds to undermine unioni-
zation, or the like. And, even if he had, our precedent
teaches that the activity would be protected so long as it
was not deliberately or maliciously or recklessly false.
As the judge found, Smith simply made a mistake of fact.
This error did not cost him the protection of the Act. The
cases cited by the majority to support dismissal of the
complaint are readily distinguishable.
In Hertz Corp., 326 NLRB 1097, 1101 (1988), an em-
ployee lied and engaged in dishonesty in his letters of
complaint. In the present case, as the judge found, Smith
honestly believed that his statements were correct.
In Pizza Crust Co., 286 NLRB 490, 505-507 (1987),
enfd. 862 F.2d 49 (3d Cir. 1988), an employee fabricated
a story that an employer fixed his books, apparently out
of whole cloth. In the present case, Smith made state-
ments that he honestly believed were true.
In Sprint/United Management Co., 339 NLRB 1012,
1018-1019 (2003), an employee's testimony about the
basis for her assertions regarding possible anthrax con-
tamination was discredited and key elements of her
statements to other employees were made with knowl-
edge of their falsity. Further, as noted in my concurrence
in that case, the employee's communication there was
likely to cause unnecessary fear and even panic among
her fellow employees. In the present case, Smith did
nothing more than circulate a letter about the employer's
paycheck deductions and did not know that his assertions
were incorrect.
In Stanley Furniture Co., 271 NLRB 702 (1984), the
Board found that an employee's public remarks before a
city council about his employer were malicious and may
have been made deliberately to damage the employer. In
the present case, as the judge found, Smith "did not de-
liberately misrepresent the facts in making his accusa-
tions against the employer."
In short, all of the cases cited by the majority involve
some form of actual malice raising the purposeful avoid-
ance of the truth by the offending employee. In the pre-
sent case, Smith honestly believed what he was saying
and simply erred in his suppositions about the ern-
ployei's conduct. This distinction is crucial because, as
explained below, governing Supreme Court precedent
guides our application of ."actual malice" or "reckless
disregard of the truth" principles.
B.
The question, then, is whether the decision of the arbi-
trator, who found to the contrary, is somehow "suscepti-
ble to an interpretation consistent with the Act" or, in-
stead, is "cle
Olin Corp., ;.
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'44'412111 7:4. el*
KVAERNER PHILADELPHIA SHIPYARD, INC. 397
:onception
employer
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Act" or, in-
stead, is "clearly repugnant" to it: i.e., "palpably wrong."
Olin Corp., supra, 268 NLRB at 574. There is no way to
read the arbitrator's award as consistent with the Act.
First, the arbitrator ignored Board principles and poli-
cies, reflected in the cases already discussed, with regard
to the protected expression of concerns and criticism
about employer wages and benefits. This is perhaps best
exemplified by the arbitrator's finding that Smith ex-
ceeded the bounds of "fair comment" or personal opin-
ion. "Fair comment" is not the measure of the Act's pro-
tection. Plainly, the arbitrator applied an erroneous stan-
dard and reached a result incompatible with our case law
pursuant to that standard.4
Second, the arbitrator erroneously grounded his deci-
sion on a finding that Smith improperly engaged in "self-
help," that is, distributing the letter to employees instead
of pursuing other possible avenues of inquiry and re-
dress. In this regard, the arbitrator found that Smith vio-
lated his "obligation of fair dealing" with the Respondent
and "flout(ed)" and circumvented the established griev-
ance procedure. But there is nothing in Smith's conduct
that reasonably can be viewed as undermining the par-
ties' grievance procedure under the principles of Empo-
rium Capwell Co. v. Western Addition Community Or-
ganization, 420 U.S. 50 (1975). Smith did not seek to
bargain directly with the Respondent. His letter is di-
rected, in the first instance, to his fellow employees for
their consideration (not the Respondent), and there is no
evidence that Smith's letter undermined the Union's bar-
gaining goals. Indeed, the Union filed a grievance on
Smith's behalf to protest his discharge.
Third, the arbitrator erroneously found that Smith did
not engage in concerted activity. He did so even though
the arbitrator elsewhere in his award found that Smith
intended to communicate with and influence other em-
ployees to action—activity that the arbitrator viewed as
"intended to incite." It is well settled that concerted ac-
tivity encompasses those circumstances, as here, where
individual employees seek to initiate or to induce group
action. Meyers Industries, 281 NLRB 882, 887 (1986),
affd. sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir.
1987), cert. denied 487 U.S. 1205 (1988). "Incitement"
or not, Smith's conduct was concerted because it was a
call from One employee to other employees to initiate or
4 In deferring to the award, the judge relied on NLRB v. Pincus
Bros., Inc., 620 F.2d 367, 374 (3d Cir. 1980), denying enforcement to
Pincus Bros., 237 NLRB 1063 (1978), a case the judge found. to be
analogous. The Pincus court found that deferral was appropriate, con-
trary to the Board's decision not to defer. But, as the judge noted here,
the court's decision appears to be based, in part, on its finding that the
disciplined employee's leaflet contained material about the employer's
products and policies that the employee knew to be false. That is not
the case here.
induce group action. The arbitrator plainly erred in find-
ing to the contrary.
Finally, the arbitrator was clearly wrong to suggest that
Smith's failure to inquire of the company or the union
steward prior to distributing the letter demonstrates that
he acted in reckless disregard of the truth. Smith hon-
estly believed, as the judge found, that his interpretation
of the benefits and dues-deduction requirements was
correct. Smith did not make up a story that he knew to
be false, nor is there any showing that he possessed con-
trary evidence about the Respondent's obligations that he
chose to ignore. Smith was wrong and nothing more.
Further, the arbitrator's analysis suggesting that Smith
should have "inquired of the company" before distribut-
ing the letter would seemingly require an employee to
first check matters out with management before commu-
nicating with fellow employees, at the risk of losing the
protection of the Act. That is not the law. Nor does Sec-
tion 7 require that an employee seek clarification about
wages and benefits from the union before communicat-
ing with employees. Although such communication to
management and/or the union may have been advisable
in these circumstances as a practical matter, Section 7 is
not so circumscribed. See KBO, Inc., supra, 305 NLRB
at 571 fn. 6 (employee has no affirmative obligation to
verify); HCA/ Portsmouth Regional Medical Center, 316
NLRB 919 fn. 4 (1995) (no obligation to investigate or
verify in absence of knowledge of falsity or reason to
know of falsity).
In short, whatever legal principles the 'arbitratorap-
plied here, they did not have their origin in the National
Labor Relations Act or Supreme Court precedent. No
reasonable adjudicator applying the Act faithfully could
have reached the same result.
The majority contends that deferral is appropriate be-
cause the arbitrator found that Smith acted with reckless
disregard of the truth. What my colleagues seemingly
fail to grasp is that the arbitrator's concept of "reckless-
ness" is wholly at odds with not only Board precedent,
but with Supreme Court precedent as well.
The "reckless disregard of the truth" standard is satis-
fied only when a statement has been made with a "high
degree of awareness of probable falsity." Garrison
v. Louisiana, 379 U.S. 64, 74 (1964).5 The statement
must amount to a purposeful avoidance of the truth.
Harte-Hanks Communications, Inc. v. Connaughton, 491
U.S. 657, 692 (1989). In the present case, as the judge
5 The majority gives short shift to the principles set forth in the gov-
erning Supreme Court cases noted below. Thus, my colleagues simply
.note, without discussion, that the arbitrator found that the "standard was
met.' This, of course, only begs the question of whether the arbitration
award has any coherent basis under settled law. It does not.
398 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
found upon hearing his testimony, Smith "honestly be-
lieved that he was correct" and "did not deliberately mis-
represent the facts." Nothing in the arbitrator's decision
is to the contrary. In short, Smith made certain supposi-
tions and those suppositions turned out to be false. This
is not even close to satisfying the standard for reckless
disregard of the truth.
As noted, the arbitrator applied a wholly different (and
incorrect) standard. This was an error of law—and not
simply a mistaken factual determination, as the majority
mistakenly asserts. See, e.g., Harte-Hanks Communica-
tions, supra, 491 U.S. at 685-686. Indeed, the majority
emphasizes that it is simply deferring to the arbitrator's
findings of fact: "as we have shown, the arbitral decision
here is based on the fact-finding that the employee acted
in reckless disregard of the truth." The majority is wrong
when it claims that reckless disregard of the truth is sim-
ply a factual question. As the Supreme Court made clear
in Harte-Hanks Communications "the question of
whether the evidence in the record in a defamation case
is sufficient to support a finding of actual malice is a
question of law:" 491 U.S. at 685 (emphasis added). In
short, the majoriiy's deferral analysis is based on a fun-
damental misconception. And, even in deferral cases, the
Board must apply the law to the facts. Here, the majority
mischaracterizes the arbitrator's findings of recklessness
as simply issues of fact and then compounds this error by
failing to address governing Supreme Court precedent on
the legal question of reckless disregard of the truthi
The arbitrator considered Smith to have been reckless
because he failed "to seek any accurate explanation." He
also found that Smith was reckless because he "ignore(d)
the appropriate and readily available avenues of inquiry
and redress." Put another way, the arbitrator disapproved
of Smith's tactics—conduct that the arbitrator found to
be "self-help." But a failure to investigate does not in
itself constitute a reckless disregard of the truth. St.
Amant v. Thompson, 390 U.S. 727, 733 (1968). There is
no showing that Smith had serious doubts about his
statements, much less a high degree of awareness of
probable falsity. This is the factual predicate for finding
a reckless disregard of the truth. Instead of applying the
appropriate legal standard—or at least something in the
vicinity of the correct standard—the arbitrator concocted
a standard based on his personal view of the appropriate-
ness of Smith's "self-help" tactics. No binding Board or
Supreme Court precedent supports the arbitrator's idio-
syncratic application of the "reckless disregard" standard,
or the majority's puzzling deference to it.
In the end, it is clear that the arbitrator's conception of
recklessness is grounded on nothing more than Smith's
failure to "inquire" and the propriety of going around
established channels. The majority does not explain how
this rationale is compatible with governing Board and
Supreme Court precedent.6 As explained above, Smith's
failure to inquire plainly does not constitute reckless dis-
regard of the truth under that precedent. Equally defi-
cient is the grounding of the arbitrator's finding of reck-
lessness on the purported absence of concerted activity.7
As I have explained, there is no basis under our prece-
dent for the arbitrator's finding—and the majority appar-
ently agrees because its opinion does not embrace the
arbitrator's finding as to concertedness.
It is wrong for my colleagues to defer to the applica-
tion of a standard that bears little or no relationship to the
governing law. But recently, the Board has shown a dis-
turbing willingness to defer to arbitration awards that are
flatly inconsistent with the Act.8 The Federal labor pol-
icy favoring arbitration does not mandate that approach,
and our precedent does not permit it.9 There are limits to
the lengths to which the Board may go in deferring to
arbitration. Were the majority's approach to deferral
6 Citing Marty Gutmacher, Inc., 267 NLRB 528 (1983), the majority
asserts that "[i]f Board precedent exists that supports an arbitrator's
decision,' ' then the decision cannot be palpably wrong, "even if other
Board precedent is arguably contrary to the arbitral decision.' Here, as
I have shown, no Board precedent genuinely supports the arbitrator's
decision.
The majority's test has a dubious origin. It was not articulated by
the Board in Marty Gutmacher, supra. In that case, decided by a three-
member panel, the Board affirmed the decision of an administrative law
judge, deferring to an arbitration award. Member Hunter concurred in
the result. See 267 NLRB at 528 fn. 1. Member Jenkins dissented. Id.
at fn. 2. The Board's decision, then, would seem to be limited to its
facts and to stand for no general legal proposition.
It is certainly true that "to warrant deferral, an arbitrator's award
need not be totally consistent with Board precedent.' Bell-Atlantic-
Pennsylvania, 339 NLRB 1084, 1085 (2003). The test is whether the
award is "susceptible to an interpretation consistent with the Act.' Id.
In some areas, Board precedent establishes a legal framework allowing
for a range of permissible decisions in particular cases, depending on
their factual circumstances. See id. (Board's cases involving right to
wear union insignia "turn[] on fine distinctions involving a balancing of
respective statutory interests and on unique factual circumstances").
But where the arbitrator's decision is based on a legal framework
that is antithetical to the Board's approach, then deferral is not appro-
priate. See, e.g., Kohler Mix Specialties, 332 NLRB 630, 531(2000);
Columbian Chemicals Co., 307 NLRB 592, 592 fn. I (1992), enfd,
mem. 993 F.2d 1536 (4th Cir. 1993). This is such a case.
7 The arbitrator found that Smith's "action recklessly publishing ac-
cusations of dishonesty for other employees to take or see is not pro-
tected speech and was in no way taken in concert with other em-
ployees. Had he inquired of the Company or waited until his Union
could obtain an answer, the grievant would have been immune from
discipline.'
g See Smurfit-Stone Container Corp., 344 NLRB No. 82, slip op. at 4
(2005) (dissenting opinion); Aramark Services, Inc., 344 NLRB 549,
552 (2005) (dissenting opinion).
9 Garland Coal, supra, 276 NLRB at 964-965.
here correc
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KVAERNER PHILADELPHIA SHIPYARD, INC. 399
lain how
)ard and
, Smith's
dess dis-
til)/ defi-
of reck-
activity.a
ur prece-
ty apriar-
race the
here correct, then so would be a recent criticism of the
Board's current deferral doctrines:
The combination of the Collyer [Collyer Insulated
Wire, 192 NLRB 837 (1971)] and Olin [Olin Corp.,
268 NLRB 573 (1984)] doctrines constitutes a general
refusal by the Board to enforce statutory rights during
the term of an agreement. It has ceded this role to deci-
sion makers who are not expert in interpreting the law
and a process that is not devised for dealing with diffi-
cult statutory issues. Thus, when it comes to protecting
Section 7 job rights, the Board is ineffectual prior to
unionization and largely indifferent thereafter.
Julius Getman, The National Labor Relations Act: What
Went Wrong; Can we Fix It?, 45 Boston College Law Rev.
125, 133-134 (2003).
Contrary to the majority, I would not defer to the arbi-
trator's award, because it was palpably wrong and re-
pugnant to the Act. In turn, I would find that the Re-
spondent violated Section 8(a)(1) and (3) by discharging
Smith on the basis of his exercise of protected concerted
activities. Accordingly, I dissent.
Edward J. Bonett Jr., Esq., for the General Counsel.
John B. Lange! and Jason A. Collier, Esqs. (Ballard, Spahr,
Andrews, & Ingersoll, LLP), of Philadelphia, Pennsylvania,
for the Respondent.
DECISION
STATEMENT OF THE CASE
KARL H. BuscHmANN, Administrative Law Judge. This case
was tried in Philadelphia, Pennsylvania, on December 15, 2004.
The charge was filed by William Smith, an individual, on June
2, 2003, and the complaint issued on July 27, 2004, alleging
that the Respondent, Kvaemer Philadelphia Shipyard, Inc.,
violated Section 8(a)(1) and (3) of the National Labor Relations
Act (the Act) by discharging its employee, William Smith,
because he engaged in concerted protected activities. The Re-
spondent filed an answer to the complaint, admitting certain
jurisdictional elements raised in the complaint, and denying that
that it had violated the Act, stating that the discharge of the
employee had been found justified after a full and fair hearing
by an arbitrator.
On the entire record,' including my observation of the de-
meanor of the witnesses, and after considering the briefs filed
by the General Counsel and the Respondent, I make the follow-
ing
FINDINGS OF FACT
I. JURISDICTION
The Company, a Delaware corporation, with a facility at the
Philadelphia Naval Business Center, 2100 Kitty Hawk Avenue,
Philadelphia, Pennsylvania, is engaged in the construction and
building of ships. With sales and shipments of goods valued in
excess of $50,000 directly from points outside the State of
Delaware, the Company is admittedly an employer engaged in
commerce within Section 2(2), (6), and (7) of the Act.
The Union, International Brotherhood of Boilermakers, Iron
Ship Builders, Forgers & Helpers Local Lodge Number 19, is
admittedly a labor organization within the meaning of Section
2(5) of the Act.
H. ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The instant controversy arose when William Smith, one of
the Respondent's employees, addressed a letter to all employ-
ees questioning the Company's payroll deductions for union
dues and medical and dental benefits from their paychecks.
Instead of directing any inquiries to his Union or to his Em-
ployer with his concerns, Smith took it upon himself to involve
his coworkers.
The Company and the Union have maintained a bargaining
relationship and are bound by a collective-bargaining agree-
ment, effective August 23, 2003, through December 31, 2006
(it. Exh. 4). Smith, a member of the Union and a past shop
steward, was employed as a bender and machinist at the Phila-
delphia Shipyard since August 2001. He was discharged on
June 2, 2003, for handing out a flyer, addressed to all employ-
ees and signed, The Silent Shop Steward. Smith had drafted his
letter on .June 1, 2003, because, in his words, he "wanted to
avoid confrontations, and an answer to [his] question [w]ere
they making the payroll deductions properly." He accordingly
drafted the following letter (it. Exh. 1):
To All Employees,
Have you looked at your pay stubs for the month of
May? There are 3 pay periods in the modth of May. If you
have medical and dental premiums taken out in addition to
union dues, you are owed back money. Union dues, medi-
cal and dental are a set amount each month. The company
takes it out in 2 payments each month; therefore the third
paycheck in May should not have had any deductions for
union, medical and dental taken out. Who knows how long
this has been happening. There are 2 months each year
with 3 pay periods in them, and no deductions other than
taxes should come out of the third pay period in these 2
incinths. Where is the extra money going? In addition to
the extra money being taken out of your pocket, this
money is probably being put into a bank earning interest.
This interest is also due you. When you finally get this
money back, as you will, demand that it be put into a sepa-
rate check. If it is put in with your pay, more taxes will be
taken out. This applies to current employees, as well as,
employees no longer employed by Kvaemer. This could
possibly be an honest mistake, however, it should be recti-
fied.
Sincerely,
Bill Smith
The Silent Shop Steward
applica-
hip to the
wit a dis-
s that are
abor pal-
approach,
limits to
ferring to
) deferral
the majority
arbitrator's
yen if other
3.' Here, as
. arbitrator's
ticulated by
by a three-
istrative law
lioncurred in
issented. Id.
imited to its
ator's award
tell-At/antic-
whether the
he Act.' Id.
ork allowing
epending on
ving right to
balancing of
tances").
.1 framework
is not appro-
, 531 (2000);
,1992), enfd.
ublishing ac-
is not pro-
ith other em-
til his Union
mmune from
,slip op. at 4
NLRB 549,
The General Counsel's motion to correct transcript is granted.
400 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Smith testified that he referred to himself as the silent shop
steward, beCause his coworkers continued to seek his advice on
contract issues, even though he had earlier been removed as a
shop steward. Smith testified that he distributed the letter to
three employees, Tom Dietry, Dan Bennett, and Bill Haigs in
the morning on his way to work, and suggested that they pro-
vide a copy to their respective shop stewards. He also left cop-
ies on the picnic table and handed the letter to Nicholas Gab-
riele, his shop steward. Gabriele informed Smith that he would
take it to Paul Weininger, manager of human resources.
In the afternoon of the same day, Smith was called into the
office. His termination papers had already been prepared.
Handing him the termination statement and, without any further
discussion, Weiniriger told Smith, he was fired and asked him
to sign the papers. The termination statement cited three infrac-
tions of company rules: First, "gross misconduct" by illegally
impersonating a shop steward and handing out false and mis-
leading information with the obvious intent to stir up the em-
ployees, second, "refusal to abide by KPSI rules" by distribut-
ing such literature on company time and without authorization
from a supervisor, and three, "unauthorized use or disclosure of
information" by making false statements regarding information
about pay and taxes (Jt. Ddi. 5). During that brief meeting in
the office, Weininger also expressed his view that Smith
handed out his letter with the intent to start negative reactions
from his coworkers.
The Union filed a grievance at Smith's behest. By letter of
June 13, 2003, the Company informed Smith that his grievance
was denied after a third-step hearing (Jt. Exh. 6). The Union,
contending that Smith acted within his right protected by law,
submitted the issue to arbitration. Following a hearing on Janu-
ary 30, 2004, before an arbitrator, a decision issued on April 25,
2004, upholding the Company's actions (Jt. Exh. 3).
The General Counsel, in disagreement with the arbitrator's
award, filed the complaint in this case, alleiing that the dis-
charge of William Smith for addressing the letter to other em-
ployees encouraging them to question the Respondent's payroll
deductions violated the Act. This presents the issues, whether
the Board should defer to the arbitrator's award.
Analysis
The party opposing the award has the burden to show that
deference to an arbitration decision is inappropriate. Turner
Construction Co., 339 NLRB 451 (2003). Under well-
established law, deference is proper where the arbitration pro-
ceeding has been fair and regular, where the parties agreed to
be bound, and where the award is not repugnant to the Act, and
the unfair labor practice issue has -been considered. Spielberg
Mfg., 112 NLRB 1080 (1955); Olin Corp.; 268 NLRB 573
(1984); Mobil Oil, 325 NLRB 17.6 (1997), enfd. 200 F.3d 230
(5th Cir. 1999).
Here, the parties agree that the first two criteria have been
met and are not in issue. The General Counsel, however, argues
"that the arbitration decision was clearly repugnant to the Act,
and that it has met the burden for rejecting deferral." The Gen-
eral Counsel reasoned that the Respondent clearly discharged
Smith in retaliation for his protected concerted activity that
Smith's conduct was not outside the bounds of protected activ-
ity that the arbitrator failed to find protected activity, that he
erroneously found that Smith lost the protection of the Act and
improperly relied on the manner in which he signed his letter.
The Respondent argues that the arbitrator's award is consistent
with NLRB policy and case law, that Smith's conduct in draft-
ing and distributing a defamatory and malicious letter was not
protected concerted activity, and that the arbitrator considered
the unfair labor practice issue.
Protected concerted activity. The record supports a finding
that the employee's distribution of his letter to several cowork-
ers and to his shop steward concerning the Company's payroll
deductions constituted concerted activity. The Board has con-
sistently defined concerted activity as encompassing the lone
employee who is acting for or on behalf of other workers, or
one who has discussed the matter with fellow workers, or one
who is acting alone to initiate group action, such as bringing
group complaints to management's attention. NLRB v. City
Disposal Systems, 465 U.S. 822 (1984); Meyers Industries (II),
281 NLRB 882 (1986); Globe Security Systems, 301 NLRB
1219 (1991); Alaska Pulp Corp., 296 NLRB 1260 (1989), enfd.
944 F.2d 909 (9th Cir. 1991). The letter dealt with the employ-
ees' working conditions affecting Smith's coworkers and. was
intended to correct a perceived error in the employees' payroll
deductions for union dues and medical expenses, a matter of
mutual concern. The concerted action was protected, because it
satisfied the Section 7 requirement that the conduct was in-
tended for mutual aid and protection. Eastex, Inc. v. NLRB, 437
U.S. 556 (1978); Liberty Ashes & Rubbish Co., 323 NLRB 9
(1997).
Was Smith's conduct so flagrant, egregious, or so abusive
that he should loose the protection of the Act? Smith testified
that the purpose of his letter was "to find out an answer to [his]
question" and "to avoid confrontation. Smith also conceded
that he had access to his union steward and to his supervisor to
express his concerns. Instead, he passed out the letter, ad-
dressed to all employees, to his steward and to several employ-
ees. The letter states as a matter of fact that the third check in
the month of May "should not have had any deductions for
union, medical and dental taken out." It questions "how long
this has been happening," and where. "is the extra money go-
ing?" Smith asserts that "the extra money being taken out of
your pocket is probably being put into a bank earning interest.'
The letter then challenges the employees to "demand that [the
money] be put into a separate check" when they finally get the
money back; The last sentence theorizes that this "could be an
honest mistake [which] however, should be rectified." (Jt. Exh.
1.) Clearly, the letter goes beyond a mere request to clarify the
payroll deductions, particularly considering the testimony of
Nicholas Gabriele, chief shop steward, who received the letter
from Smith early in the morning of June 2, 2003. Gabriele testi-
fied that he read the letter, and that he explained to him how the
dues were taken out, namely that they were taken out biweekly;
not monthly. .Nevertheless, Smith told him to take the letter to
human resources.
In his testimony, Weininger, manager of human resources,
confirmed that he obtained the letter from Gabriele, and that he
was aware the letter had been distributed to several employees.
According to his interpretation, statements therein accused the
Company 01
their pocket
earning inte.
the san
ees, er
had wc
Weining
office with
Smith's ac,
Weininger)
tion emplo:
puted, poir
based the d
1). This w
caused a gr
of manage.
between m
be interpre
steal from
Responden
the incidei
inger's opi
paychecks
The Re
tably those
ating a sh
time with(
and incorts
when aske
was a fay
not. Wein
hearing th
on compai
added the
letter. I, t
charge, in
clearly ac
ing (Tr. 9:
Such E
by technit
nity dun'
unprotect
product c
NLRB v.
When an
gram ab(
which di;
employee
Luke's
F.3d 575
tected. A
posting c
agement
employe
opinion,
than sen
401 KVAERNER PHILADELPHIA SHIPYARD, INC.
7y, that he
ie Act and
his letter.
consistent
;t in draft-
was not
;onsidered
a finding
1.1 cowork-
i's payroll
i has con-
the lone
rorkers, or
irs, or one
S bringing
'B V. City
.stries (II),
01 NLRB
)89), enfd.
e employ-
s and was
is' payroll
matter of
because it
:1 was in-
ILRB, 437
NLRB 9
;o abusive
h testified
'er to [his]
conceded
iervisor to
letter, ad-
ii
in
ctions for
'how long
noney go-
:en out of
, interest.'
3 that [the
Ily get the
mid be an
(it. Exh.
:larify the
:imony of
the letter
riele testi-
n how the
'biweekly.
e letter to
resources,
nd that he
mp I oyees.
:cused the
Company of stealing, "not only is the Company stealing from
their pockets, but have a secret bank account somewhere -
earning interest on their money" (Tr. 70). He testified (Tr. 72):
I interpreted it that he was accusing the company of
the same theft for either retired, prior terminated employ-
ees, employees who may have resigned, employees who
had worked for Kvaemer since its inception.
Weininger also testified that a shop steward later came to his
office with several employees expressing their concern about
Smith's accusations. Three weeks later, on June 20, 2003,
Weininger posted a memorandum and distributed to all produc-
tion employees an explanation how the deductions were com-
puted, pointing out in particular that the Company correctly
based the deductions on 26 pay periods during a year (R. Exh.
1). This was necessary, according to Weininger, because "it
caused a great deal of damage to [his] credibility, the credibility
of management in general, the credibility of the relationship
between management and the union, because this letter could
be interpreted as the union having permitted the company to
steal from its employees all these years" (Tr. 79). Although the
Respondent did not suffer any financial damage as a result of
the incident, a credibility issue lasted for a month in Wein-
inger's opinion, because employees were not sure whether their
paychecks were accurate.
The Respondent's additional reasons for the discharge, no-
tably those contained in the discharge letter, such as imperson-
ating a shop steward, and distributing literature on company
time without a supervisor's authorization, were contradictory
and inconsistent with the Respondent's testimony. For example,
when asked at the hearing, whether the silent steward reference
was a factor in the discharge, Weininger testified that it was
not. Weininger also admitted that he stated at the arbitration
hearing that it did not matter whether the letter was distributed
on company time. In subsequent testimony, he equivocated and
added that Smith acted without authorization in posting his
letter. I, therefore, conclude that the real reason for the dis-
charge, in Weininger's opinion, was the content the letter that
clearly accused the Company of wrongdoing, illegal wrongdo-
ing (Tr. 93).
Such accusations are not new. The distribution of handbills
by technicians critical of the employer's service to the commu-
nity during negotiations for a new contract, were held to be
unprotected activity, because the handbills disparaged the
product or services of their employer during a critical time.
NLRB v. Electrical Workers Local 1229, 346 U.S. 464 (1953).
When an employee makes statements on a local television pro-
gram about her employer which were materially false, but
which disparage her employer or its products and services, that
employee "exceeds the boundaries of protected activity." St.
Luke's Episcopal-Presbyterian Hospital, Inc. v. NLRB, .268
F.3d 575 (8th Cir. 2001). Inflammatory remarks are not pro-
tected. American Steel Erectors, 339 NLRB 1315 (2003). The
Posting of a sarcastic letter which criticized and ridiculed man-
agement for its action designed to improve the morale of the
employees, was held to be unprotected, because, in the Court's
opinion, the letter was intended to mock the employer rather
than serve to protest working conditions. New River Industries
v. NLRB, 945 F.2d 1290 (4th Cir. 1991). However, employees
do not forfeit the protection of the Act, for making false or
inaccurate allegations about their employer so long as the
statements are not deliberately or maliciously false or made
with reckless disregard for their veracity. KBO, Inc., 315 NLRB
570 (1994); Simplex Wire & Cable Co., 313 NLRB 1311
(1994).
Did Smith make false allegations against his employer with
reckless disregard for their veracity? The scenario in this case is
analogous to two cases cited by the parties. United Cable, 299
NLRB 138 (1990), and Pincus Bros., 237 NLRB 1063 (1978),
enfd. denied 620 F.2d 367 (3d Cir. 1980), like the instant case,
involve written statements drafted and disseminated by an em-
ployee critical of the employer. In United Cable, the employee
spoke up at an employee meeting suggesting higher wages. He
also posted a letter after the meeting on the bulletin board, chal-
lenging the employees to question the veracity of a company
official and urging that "they start putting more money in the
employees' pockets." Even though the employee was found to
have accused the company of lying, the Board declined to defer
to the arbitrator's finding that the employee's conduct was only
partially protected. The Board found that his letter was not so
flagrant, violent, or extreme as to remove the employee from
the protection of the Act. Similarly in Pincus Brothers, the
Board refused to defer to the arbitration award. There, after a
meeting between the company and the union to discuss em-
ployees' concerns, the discriminate distributed a handbill, refer-
ring to the meeting as a circus, stating that the employees might
suffer pay cuts in their "already stinking pay checks." Even
though the arbitrator found the leaflet to misrepresent and dis-
tort facts relating to employment practices and the company's
business practices, the Board found that the handbill constituted
proteated concerted activity. However, on appeal, the court
disagreed and refused enforcement of the Board's decision for
several reasons, namely, that the leaflet contained defamatory
material known to be false, that the employee's actions consti-
tuted unprotected disloyalty, that the employee intended to
interfere with the collective bargaining relationship, and that
the employee's conduct may not have been concerted.
Unlike the situation in Hertz Corp., 326 NLRB 1097 (1998),
where the employee's deliberate false accusations and reckless
disregard for the truth was not protected, Smith honestly be-
lieved that he was correct. He did not deliberately misrepresent
the facts in making his accusations against the employer. His
suppositions about the Respondent's payroll deductions turned
out to be false.
In his letter, Smith went further, however, than merely voice
his erroneous assumptions. He also queried what the Company
was doing with the extra money, and stated that the "extra
money being taken out of your pocket. is probably being put
into a bank earning interest." Stating that the "interest is also
due you, he tells his coworkers, including current and past
employees, "when you finally get the money back, as you will,
demand that it be put into a separate check." Clearly, his erro-
neous accusations about the Company's ill-gotten gains was
both, unnecessary to his stated purpose and, therefore, inflam-
matory.
402 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2. The Uni
Section 2(5) 0-
3. Deferral
On these find
entire record,
If no excep
Rules and Reg
I agree with the Respondent that the statements imply that
the Company had been stealing from the paychecks of past and
current employee as a result of improper payroll deductions.
But I also find the Company's unusually swift and drastic reac-
tion exaggerated. It is clear by now that the silent shop steward
reference was of little consequence other than a possible at-
tempt by its author to add a touch of credibility or puffery to the
letter. Yet the termination letter dramatized it as an impersona-
tion. Similarly, whether the letter was distributed on company
time or without company authorization adds little to the consid-
eration of the fundamental issue in this case. I also find that
Weininger's testimony inconsistently and dramatically exag-
gerated the employees' reactions to the letter.
Without a doubt, the Respondent discharged this employee
because he had drafted and distributed the letter and argues that
it took the same action involving another employee who had
distributed a letter about the Company's use of hazardous mate-
rials (GC Exh. 3). In that incident, the accusations against the
Company were far more serious. The letter, typed on company
stationary, was entitled "The numerous and sudden deaths of
coworkers." It blames the deaths of employees on a contami-
nated work environment. This scenario may show an absence
of a discriminatory motive here.
On balance, while I consider Smith's testimony evasive and
his actions misguided, the conciliatory last sentence in the let-
ter, that this "could be an honest mistake," persuades me to find
the letter to be protected concerted activity.
Deferral to arbitration. In a strongly worded opinion, the ar-
bitrator upheld the discharge (Jt. Exh. 3). The arbitrator found,
inter alia, that the letter clearly implied "that the Company may
be intentionally cheating its current and retired employees,"
that it was "intended primarily to incite his co-workers," that it
can be construed "as defamatory and as an intentional act de-
signed to damage the Company's relationship with its work-
ers,' and, significantly, that there "is no merit to the Union's
assertion that the grievant was engaged in protected speech or
concerted action.- The arbitrator also chided the Company for
its "hyperbolic characterization'. and "exaggerated description
of the grievant's denigration of the Company's honesty," but
reserved his strongest criticism for Smith, not only for his eva-
sive testimony and his disingenuous explanations, but also for
having "irresponsibly denigrated the Company's integrity to the
bargaining unit."
The General Counsel takes issue with the arbitrator's award,
"because it failed to acknowledge the obvious protected con-
certed nature of Smith's letter.' ' That alone renders his decision
repugnant to the Act, according to the General Counsel. Similar
criticism is directed at the arbitrator's finding that the manner
of signing the letter as silent shop steward was "engendering
potential confusion." The General Counsel assigns additional
errors in the arbitrator's decision, none of which, standing
alone, would render the award repugnant to the Act. While I
agree that the arbitrator should not have relied upon Smith's
manner of signing the letter as a factor justifying the discharge,
it is also clear that it was not one of the deciding factors. The
arbitrator's decision states as follows:
There is no merit to the Union's assertion that the grievant
was engaged in protected speech or concerted action. His ac-
tion recklessly publishing accusations of dishonesty for other
employees to take or see is not protected speech under these
circumstances, when the grievant elected to ignore the appro-
priate and ready available avenues of inquiry and redress, and
in no way taken in concert with other employees.
Although he clearly considered the issue, the General Coun-
sel is correct that the arbitrator failed "to find protected con-
certed activity." Moreover, the arbitrator also applied an im-
proper standard, according to the General Counsel, in determin-
ing "when otherwise protected activity loses protection," by
finding that the letter "exceeded the bounds of fair comment or
personal opinion," because the standard is more stringent than
simply fair comment.
However, the arbitrator's standard for finding Smith's activ-
ity to have lost protection, was, his "action recklessly publish-
ing accusations of dishonesty," a theme which the arbitrator
repeatedly emphasized, as follows: Publishing a screed implic-
itly accusing the Company of cheating its employees, deni-
grated the Company's integrity, written accusation clearly im-
plying that the Company may be intentionally cheating its cur-
rent and past employees, causing appreciably damage to the
Company's reputation, publishing unjustified allegations of
intentional bad faith, attack on the Company's integrity and
trustworthiness, and accusations of financial misconduct.
The arbitrator's finding, that the "grievant's intent was
clearly to incite his co-workers," was also not unjustified, for
his chief shop steward, Gabriele testified in the present case,
that before he handed the letter to management, he had ex-
plained to Smith how union dues were taken out, which would
suggest that Smith already had a partial answer. Yet Smith
insisted that Gabriele proceed anyway with the distribution of
the letter.
As already stated, I found Smith's activities to be protected
under the Act. Accordingly, I believe that the arbitrator was
wrong. But to set aside the arbitration award, it need be more
than wrong, it must be "palpably wrong.' Olin Corp., 268
NLRB 573, 574 (1998). The arbitrator had considered the pro-
tected and concerted nature of the controversy, and he rejected
it after he was presented with the facts relevant to resolving the
unfair labor practice. The "Board has considerable discretion to
respect an arbitration award and to decline to exercise its au-
thority over alleged unfair labor practices if to do so will serve
fundamental aims of the Act." Carey v. Westinghouse, 375 U.S.
761, 771 (1964). An award need not be entirely consistent with
Board precedent. Indeed, even if it is only arguably correct and
"would be decided differently in a trial de novo," the arbitral
result can be sustained. NLRB v. Pincus Bros., 620 F.2d 367,
374 (3d Cir. 1980); Wabeek, 301 NLRB 694 (1991). I cannot
find that the arbitration award was palpably wrong or totally
unjustified. I, therefore, find that the Board should defer to the
arbitrator's award.
CONCLUSIONS OF LAW
I. The Respondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
. "..e.u,41M4.,54-, ..e1L
KVAERNER PHILADELPHIA SHIPYARD, INC. 403
2. The Union is a labor organization within the meaning of
Section 2(5) of the Act.
3. Deferral to arbitration is appropriate in this case.
On these findings of fact and conclusions of law, and on the
entire record, I issue the following.2
2 If no exceptions are filed as provided by Sec. 102.46 of the Board's
Rules and Regulations, the findings, conclusions, and recommended
ORDER
The complaint is dismissed in its entirety.
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.
grievant
His ac-
br other
ler these
e appro-
ress, and
11 Coun-
ted con-
1 an jim
eterrnin-
ion," , by
sment or
;ent than
i's activ-
publish-
srbitrator
implic-
es, deni-
early im-
g its cur-
3e to the
ations of
grity and
ct.
item was
tified, for
sent case,
had ex-
ich would
et Smith
ibution of
protected
trator was
be more
?orp., 268
:c1 the iN0-
le rejected
:olving the
scretion to
:ise its au-
will serve
375 U.S.
:istent A.vith
:orrect and
the arbitral
F.2d 367,
). I cannot
; or totally
defer to the
commerce
e Act.