Nestle Dairy Systems

National Labor Relations Board - Board Decisions

May 28, 1993

311 N.L.R.B. 987 (N.L.R.B. 1993)

987
311 NLRB No. 100
NESTLE DAIRY SYSTEMS
1 In the absence of exceptions, we adopt pro forma the Regional
Director’s dismissal of Objections 2, 3, 4, 5, 10, and 17.
2 Referred to hereafter as ‘‘the Petitioner.’’
3 The Federal Racketeer Influenced and Corrupt Organizations Act
of 1970, 18 U.S.C. § 1961 et seq.
4 This alleged unlawful contract was the subject of unfair labor
practice charges filed by Joint Petitioner Operating Engineers Local
501 and a subsequent informal settlement agreement between the
Employer and the Board. In a companion case, the Petitioner entered
into a separate formal settlement agreement on February 4, 1992,
which was approved by a Board Decision and Order on March 12,
1992.
Nestle Dairy Systems, Inc. and General Teamsters
& Food Processing Local Union No. 87, Inter-
national Brotherhood of Teamsters and Inter-
national Union of Operating Engineers, Local
501, AFL–CIO, Joint Petitioners. Case 31–RC–
6878
May 28, 1993
DECISION AND CERTIFICATION OF
REPRESENTATIVE
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND OVIATT
The National Labor Relations Board, by a three-
member panel, has considered objections to an election
held March 13, 1992, and the Regional Director’s re-
port recommending disposition of them. The election
was conducted pursuant to a Stipulated Election
Agreement. The tally of ballots shows 192 for and 126
against the Joint Petitioners, with 2 challenged ballots,
an insufficient number to affect the results.
The Board has reviewed the record in light of the
exceptions and briefs, has adopted the Regional Direc-
tor’s findings and recommendations,1 and finds that a
certification of representative should be issued.
We agree with the Regional Director that Local
87’s2 filing of a $20-million class action RICO3 law-
suit against the Employer on behalf of employees was
not objectionable conduct. As discussed more fully
below, we find that neither the lawsuit nor the costs
attendant to its filing constituted a substantial benefit
to employees, and therefore could not have reasonably
tended to interfere with the employees’ free choice in
the election. Accordingly, we also find that the timing
of the lawsuit and its announcement to employees
could not have affected the outcome of the election.
The Petitioner and three individual bargaining unit
employees were plaintiffs in the RICO suit filed by the
Petitioner against the Employer and three former offi-
cers of the Petitioner. The suit was filed on March 10,
1992—3 days before the election. The suit alleged that
the Employer and the former officers of the Petitioner
violated the RICO statute by entering into a collective-
bargaining agreement in 1988 at a time when the Peti-
tioner did not represent an uncoerced majority of unit
employees.4 The suit further alleged that union dues
were unlawfully exacted under the collective-bar-
gaining agreement and that the agreement resulted in
lower wage rates for the employees. The lawsuit
sought recovery of the dues and lost earnings in a tre-
bled amount. The plaintiffs alleged that the suit was
brought in their representative capacity on behalf of an
appropriate class of employees employed during the
period when the collective-bargaining agreement was
in effect. The Petitioner wholly financed the lawsuit.
The Petitioner announced the filing of the lawsuit to
employees at a meeting on the evening of March 12,
the night before the election. Approximately 100 em-
ployees of the 334-employee unit attended this meet-
ing. Ward Allen, the Petitioner’s business agent,
opened the meeting by speaking about issues dealing
with flyers which had been distributed by the Peti-
tioner and the Employer during the campaign. Allen
then introduced the Petitioner’s International president,
Ron Carey, who stated that he wanted employees to
vote for the Joint Petitioners, and discussed an arbitra-
tion award won by the Petitioner on behalf of an indi-
vidual employed by a different employer in the area.
David Rosenfeld, attorney for the Petitioner, then
spoke. He stated that the Petitioner had filed a lawsuit
against the Employer to get backpay for employees,
double or triple the amount that was owed. Rosenfeld
noted that the suit was filed on behalf of all employ-
ees, regardless of whether they were members of the
Petitioner. Rosenfeld stated that the Employer had not
paid employees the right amount of wages, and that
the Petitioner had calculated that, if the lawsuit were
successful, each employee might collect as much as
$35,000 based on the theory that the employees were
owed $5 per hour in lost wages. Rosenfeld, however,
told the employees at the March 12 meeting that there
were no guarantees of winning the lawsuit, and that it
would be a long and difficult battle. Before the meet-
ing closed, Carey repeated that the Petitioner needed
the employees’ vote the next day, and Allen stated that
the Petitioner had filed the lawsuit for the employees,
and that ‘‘you’ve got to support the union.’’
The Employer contends that by filing the lawsuit,
the Petitioner granted a benefit to employees which
took the form of free legal representation in connection
with the lawsuit. In addition, the Employer argues that
the Petitioner held out the promise of each employee
receiving $35,000 as a result of the suit, thus creating
a sense of obligation on the part of the employees to
vote for the Petitioner. The Employer also contends
that the timing of the lawsuit and the manner in which
the Petitioner publicized it interfered with the election.
We begin with the well-established principle that the
burden is on the Employer, as the objecting party, to
show that the alleged benefit granted to employees by
the Petitioner was a substantial and direct benefit. We
find that the Employer has failed to carry this burden.
988 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Our dissenting colleague acknowledges that the only tangible
benefit bestowed here was the payment of attorney and filing fees,
and the preparation of the lawsuit.
6 See Smith Co., 192 NLRB 1098, 1101 (1971).
7 Thus, because the direct financial ‘‘benefit’’ to employees was
so minimal and the possibility of a large backpay award so specula-
tive, we cannot agree with our dissenting colleague’s conclusion that
the Petitioner’s actions could cause the employees to feel obligated
to vote for the Petitioner.
8 See Johnson & Hardin Co., 305 NLRB 690 (1991).
9 A union may take actions to protect employees’ rights before the
union has been elected as the employees’ collective-bargaining rep-
resentative. See, e.g., Eddyleon Chocolate Co., 301 NLRB 887
(1991).
10 Thus, we do not agree with our dissenting colleague’s sugges-
tion that the Petitioner was required to offer a justification for filing
the lawsuit 3 days before the election. We note, however, that inde-
pendent events outside of the Petitioner’s control may have affected
the timing of the filing and announcement of the lawsuit. It is not
unreasonable, for example, to conclude that the Petitioner waited
until the Regional Director approved its settlement agreement with
the Board on February 7, 1992, before it decided to file the RICO
lawsuit and that it took 3 to 4 additional weeks for the Petitioner
to prepare the RICO complaint. Contrary to the dissent’s assertion,
we do not view the approval of the settlement agreement as a ‘‘pre-
requisite’’ to preparing the RICO lawsuit.
11 We find unpersuasive the Employer’s arguments that the em-
ployees received a benefit because the lawsuit created an obligation
flowing to the employees from the law firm retained to handle the
lawsuit, including alleged enforceable rights for the employees
against the firm that ‘‘they previously did not have or to which they
were not entitled.’’ Whatever legal obligations to the employees the
law firm may have incurred under the court and state bar codes,
those obligations and their possible breach are matters of concern
only to the courts and the state bar. As such, they can no more con-
stitute a substantial, tangible, and direct benefit than the lawsuit that
gave rise to them.
The Employer failed to present any evidence regarding
the cost of filing the lawsuit. It is reasonable to as-
sume, however, that the costs attendant to filing the
suit were minimal at best. The filing of the lawsuit be-
stowed no tangible benefits on employees, because the
outcome of the RICO litigation was uncertain and re-
mote. Moreover, even assuming that the filing of a
lawsuit on employees’ behalf can be considered an ac-
tual benefit, the granting of legal services worth a min-
imum amount is certainly not a benefit that is suffi-
ciently substantial or direct to warrant finding that it
would have a reasonable tendency to interfere with the
employees’ free choice in the election.5
In arguing that the election must be set aside, the
Employer and our dissenting colleague also rely on
Rosenfeld’s suggestion that each employee might col-
lect up to $35,000 in backpay if the RICO suit were
successful. This statement cannot be considered an im-
permissible promise of a gift or benefit because the Pe-
titioner has no control over the outcome of the lawsuit
and it is not within the Petitioner’s power to bring
about that financial gain for the employees. At most,
Rosenfeld’s reference to a possible judgment resulting
in $35,000 per employee is analogous to a union’s
promise during an election campaign to obtain in-
creased wages or benefits for employees. The Board
consistently has found that such union campaign prom-
ises are not objectionable because employees are aware
that these promises are contingent on factors beyond
the union’s control—such as the results of collective
bargaining—and that a union does not have the ability
to achieve such results independently.6 In this case,
Rosenfeld, the Petitioner’s attorney, emphasized to em-
ployees the contingencies involved in the RICO suit
and warned them that the possible backpay for em-
ployees was not guaranteed but only might be possible
after a ‘‘long and difficult battle.’’ Further, the Peti-
tioner did not attempt to establish a nexus between its
winning the election and success in the RICO suit.7
In addition, even assuming arguendo that the filing
of the lawsuit here was a benefit, public policy consid-
erations dictate that the Board not constrain a party’s
ability, prior to an election, to seek redress on behalf
of employees for alleged misconduct by the other party
to the election. To set aside the election here would
have a chilling effect on the legitimate right of unions
and employers to file lawsuits and to invoke adminis-
trative proceedings.8 Here, the Petitioner sought re-
dress for the employees in the form of a RICO law-
suit.9 The filing of this lawsuit properly can be analo-
gized to the filing of an OSHA complaint, a charge
with a state labor commission, or an unfair labor prac-
tice charge with the Board just before an election. We
would not regard any of these filings or charges to
constitute a tangible benefit for employees and there-
fore conduct interfering with the representation elec-
tion.
Nor does the timing of the filing of a lawsuit or ad-
ministrative action transform what is not objectionable
into a basis for setting aside an election. Our dis-
senting colleague’s position would improperly place
limits on a party’s right to file a lawsuit by effectively
discouraging any lawsuits during a representation cam-
paign leading up to an election.10 In any event, the
timing of the Petitioner’s lawsuit is of no consequence
here because there has been no benefit bestowed in the
filing of the suit. Accordingly, we conclude that the
Petitioner’s conduct in filing and announcing the law-
suit did not exceed the bounds of privileged campaign
propaganda.11
Further, we agree with the Regional Director that
the Petitioner’s actions did not violate the settlement
agreement or vitiate the purpose of the agreement such
that the election results must be set aside. As the Re-
gional Director noted, the remedy for violating or viti-
ating the purpose of a settlement agreement with the
Board is to set aside the settlement agreement and re-
instate the unfair labor practice charges. See Bangor
Plastics, 156 NLRB 1165 (1966); Gould, Inc., 260
989NESTLE DAIRY SYSTEMS
12 In addition, we note that the RICO suit is allegedly based on
the same factual allegations that formed the basis of the charge filed
against the Employer in Case 31–CA–17367 that led to the Employ-
er’s entering into the informal settlement agreement mentioned in fn.
4, supra.
Member Oviatt finds it unnecessary to rely on Midland, supra. In
Member Oviatt’s view, the Petitioner’s statements at the March 12
meeting with employees concerning the objectives of its RICO law-
suit do not present an issue of an alleged misrepresentation. Member
Oviatt points out that the Employer’s contention that the Petitioner
deceived the employees with respect to the RICO lawsuit relates
solely to the alleged merits of the lawsuit, a matter which is not rel-
evant to the question of whether the Petitioner interfered with the
employees’ free choice in the election by the manner in which it an-
nounced and explained its lawsuit. Member Oviatt also notes that
there is no contention that the Petitioner, in fact, failed to file the
RICO lawsuit or failed to seek monetary damages for the class of
affected employees.
1 I agree with the majority’s findings that the Board will not in-
quire into the truthfulness of the representations made in the RICO
complaint and that filing the lawsuit did not violate the settlement
agreement between the Petitioner and the Board. I do, however, take
administrative notice that subsequent to the Regional Director’s re-
port in this case, the RICO complaint pending in U.S. district court
was dismissed because the Petitioner’s allegations did not support
certain of the claims and because the other claims were preempted
by the National Labor Relations Act.
2 302 NLRB 245 (1991).
NLRB 54 (1982). Thus, even if we were to find
(which we do not) that the settlement agreement was
violated by the Petitioner’s actions, we would void the
settlement agreement and resume prosecuting the un-
fair labor practice charges, but we would not nec-
essarily be required to set aside the representation elec-
tion.
Finally, the Regional Director correctly applied Mid-
land National Life Insurance Co., 263 NLRB 127
(1982), in response to the Employer’s request that the
Board examine the representations made in the RICO
suit. Midland requires that unless a representation is
made in a deceptive manner, e.g., forgery, the Board
will not examine the truthfulness or falsity of the rep-
resentation and will leave the task of evaluating the
campaign propaganda to the employees.12
CERTIFICATION OF REPRESENTATIVE
IT IS CERTIFIED that a majority of the valid bal-
lots have been cast for the Joint Petitioners, General
Teamsters & Food Processing Local Union No. 87,
International Brotherhood of Teamsters and Inter-
national Union of Operating Engineers, Local 501,
AFL–CIO, and that they are the exclusive collective-
bargaining representative of the employees in the fol-
lowing appropriate unit:
Included: All production and maintenance em-
ployees employed by the Employer at its Bakers-
field, California facility.
Excluded: Office clerical employees, profes-
sional employees, guards and supervisors as de-
fined in the Act.
CHAIRMAN STEPHENS, dissenting in part.
I would set the election aside because the combina-
tion of circumstances involving the Petitioner’s filing
a lawsuit on behalf of the unit employees and the man-
ner of the Petitioner’s announcement of that lawsuit
had a reasonable tendency to interfere with the em-
ployees’ free choice.
The majority adopts the Regional Director’s sum-
mary of the test for evaluating preelection benefits.
According to the majority, neither the Petitioner’s fil-
ing of the lawsuit, payment of attorney fees, nor pay-
ment of filing fees constituted a substantial benefit to
employees and therefore, could not reasonably tend to
interfere with the employees’ free choice. Thus, the
majority finds that the election should not be set aside.
There is no per se rule of invalidity governing
preelection payments or gifts. See Bristol Spring Mfg.
Co., 247 NLRB 245 fn. 6 (1980). Whether impropri-
eties exist in a given case is a matter to be decided
under the particular facts of that case. The appropriate
test in determining whether conduct is objectionable,
and that an election must therefore be set aside, is
whether the conduct in question has a ‘‘reasonable
tendency to influence’’ the outcome of the election.
NLRB v. Gulf States Canners, 585 F.2d 757, 759 (5th
Cir. 1978), on remand 242 NLRB 1326 (1979), enfd.
634 F.2d 215 (5th Cir. 1981); see also Savair Mfg.
Co., 414 U.S. 270 (1973).
Contrary to my colleagues, on the narrow set of
facts before us, I would find that the Petitioner’s filing
a $20-million class action RICO lawsuit against the
Employer on behalf of the employees, without cost to
them, announcing the suit to the employees the
evening before the election, and holding out the pros-
pect of their recovering $35,000 each, while at the
same time ‘‘reminding’’ them that the Petitioner need-
ed their votes the next day, would have a reasonable
tendency to influence the outcome of the election and
therefore interfere with the employees’ exercise of
their free choice.1
More specifically, as the Board explained in B & D
Plastics,2 it uses a multifactor test to determine wheth-
er granting a benefit would unlawfully influence the
outcome of an election:
[W]e examine a number of factors, including: (1)
the size of the benefit conferred in relation to the
stated purpose for granting it; (2) the number of
employees receiving it; (3) how employees rea-
sonably would view the purpose of the benefit;
and (4) the timing of the benefit. In determining
whether a grant of benefits is objectionable, the
Board has drawn the inference that benefits grant-
ed during the critical period are coercive. It has,
however, permitted the employer to rebut the in-
990 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
3 Although B & D Plastics involved a benefit granted by an em-
ployer, unions and employers are generally held to the same standard
for evaluating the permissiveness of preelection benefits, see Mailing
Services, 293 NLRB 565 (1989), therefore the factors articulated
above are applicable here.
ference by coming forward with an explanation,
other than the pending election, for the timing of
the grant or announcement of such benefits. [Cita-
tions omitted.]3
In the present case, the Petitioner filed the RICO
lawsuit approximately 3 days before the election, but
it was not immediately served on the Employer. The
Petitioner announced the lawsuit to the public at a
press conference the afternoon before the election and
announced it to employees attending a union meeting
the evening before the election.
At the union meeting, the Petitioner’s attorney ex-
plained to the employees that the damages sought in
the lawsuit were based on $5 per hour for each hour
worked by the employees under an alleged ‘‘sweet-
heart contract’’ and stated that because RICO suits
allow double or triple damages, this amounted to
$35,000 per employee. The Petitioner’s International
president then addressed the employees, stating that the
Petitioner needed the employees’ votes the next day.
The Petitioner’s business agent next stated, with ref-
erence to the lawsuit, that the Petitioner was doing this
for the employees and that ‘‘you’ve got to support the
union.’’
The lawsuit was reported on the television news and
in the newspapers the evening before and the day of
the election. The Regional Director credited the Em-
ployer’s evidence that knowledge of the lawsuit was
widespread among the employees and that the employ-
ees were excited about the opportunity to collect
$35,000 each. The lawsuit was completely financed by
the Petitioner including attorney and filing fees.
The B & D Plastics factors support a finding of ob-
jectionable conduct. Less than 24 hours before the
election, the Petitioner announced that it had granted
a tangible benefit (payment of attorney and filing fees,
and preparation of a $20-million lawsuit) to most of
the employees, whether or not they were union mem-
bers. The Petitioner also announced that the lawsuit
might result in $35,000 for each employee. Finally, the
Petitioner made statements that clearly linked its filing
of the lawsuit to its request that the employees vote for
the Petitioner the next day. Based on these facts, it is
obvious that the Petitioner’s actions could cause the
employees to feel obligated to vote for the Petitioner
and would have a reasonable tendency to influence the
outcome of the election. Therefore, unless the Peti-
tioner presents a persuasive justification for the timing
of the lawsuit and its announcement to the employees,
the election should be set aside.
The Petitioner offers no justification whatsoever for
filing the lawsuit 3 days before the election and an-
nouncing it to the employees the day before the elec-
tion. The majority attempts to provide the justification
for the timing of the lawsuit and its announcement that
was not furnished by the Petitioner, by speculating that
the Petitioner may have waited until the settlement
agreement was approved before it began drafting the
RICO complaint. The majority fails to explain how-
ever, why the approval of the settlement was a pre-
requisite to preparing the RICO suit, or why, having
waited for such approval, the Petitioner could not have
waited until the day or week after the election to file
the lawsuit. Because the Petitioner has not presented a
persuasive justification for the timing of its actions, I
conclude that the Petitioner timed the filing of the law-
suit to influence the votes of the employees. I there-
fore, would set aside the election.
The majority assumes that the costs of the lawsuit
are ‘‘minimal at best.’’ I question the reasonableness
of the majority’s assumption regarding the legal fees
involved in preparing a $20-million class action law-
suit. However, even if the majority assumed correctly
that the costs were ‘‘minimal,’’ I point out again that
the monetary value of the fees as a benefit is not the
sole criterion, but is one of many factors to consider
when determining whether the Petitioner’s lawsuit had
a reasonable tendency to influence the outcome of the
election. B & D Plastics, supra. The majority’s charac-
terization of the value of the legal services as being
worth a minimal amount is very different from the Pe-
titioner’s portrayal of the benefit to the employees less
than 24 hours prior to the election. The Petitioner’s
presentation of the benefit was in effect that ‘‘we, the
union, have filed a $20 million lawsuit on your be-
half—based on our belief that the Employer owes each
of you approximately $35,000. We have done this for
you and we need your votes tomorrow.’’ When all of
the B & D Plastics criteria are considered, it is obvi-
ous that the Petitioner’s presentation would have a
tendency to influence the outcome of the election the
next day, regardless of the actual costs of the lawsuit.
991NESTLE DAIRY SYSTEMS
The majority suggests that setting the election aside
in this case will chill a party’s willingness to seek re-
dress on behalf of employees for wrongs committed
prior to a representation election. I am certainly not
proposing that we adopt a per se rule of invalidity ap-
plicable to each representation case in which a party
files a lawsuit on behalf of employees prior to an elec-
tion. I base my conclusions on the unique combination
of factors in this case. In particular, the timing of the
filing and announcement of the lawsuit (3 days and 1
day, respectively), the amount of money that the Peti-
tioner suggested would result from its gift in the form
of the lawsuit, and especially the statements made by
the Petitioner’s representatives linking the lawsuit with
their exhortations to vote for the Petitioner the next
day, combined to impermissibly influence the employ-
ees’ votes.