Urban Laboratories

National Labor Relations Board - Board Decisions

Dec 31, 1991

305 N.L.R.B. 987 (N.L.R.B. 1991)

987
305 NLRB No. 152
URBAN LABORATORIES
1 295 NLRB 1120 (1989).
2 Judge Kennedy’s order relies on Am. Jr. 2d, ‘‘Release and Dis-
charge,’’ Sec. 35; ‘‘Judgments’’ Sec. 989; and 69 ALR2d 1034. See
also Washington State decisions, Pinkham Lumber Co. v. Woodland
State Bank, 156 Wash. 117, 123, 286 Pac. 95, 98 (1930) and Elliot
v. Burns, 645 P.2d 1136 (Wash.App. 1982).
3 The General Counsel contended, inter alia, that the Board is ‘‘not
bound by state court decisions regarding technical interpretation of
settlements’’ and, in any event, does not follow the technical re-
quirements of contract law. Respondent Burke contended, inter alia,
that in the absence of Board precedent, the Board should apply state
law and release the joint tortfeasors regardless of any expressed res-
ervation of rights.
4 See generally CHM 10130.3, which discusses settlement proce-
dures in joint and several liability cases.
Urban Laboratories, Incorporated and Hotel and
Restaurant Employees and Bartenders Union
of San Diego, Local 30, AFL–CIO and Gerald
Burke, Lemont Combs, Jr., and Carl J. Brown,
Parties Charged with Derivative Liability;
Urban Laboratories, Inc., and Gerald G.
Burke, and Lemont Combs, Jr., and Carl J.
Brown, Parties Charged with Derivative Liabil-
ity and Carolyn Ramseur and National Mari-
time Union of America, AFL–CIO, ITPE Divi-
sion and Jacqueline C. Williams and Esperanza
Rodriguez. Cases 19–CA–20948, 19–CA–20949,
19–CA–20950, 19–CA–20951, 19–CA–20952,
and 19–CA–20953
December 31, 1991
DECISION AND ORDER GRANTING
REQUEST
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY, OVIATT, AND RAUDABAUGH
On July 31, 1989, the National Labor Relations
Board issued a Supplemental Decision and Order Re-
manding in the above-entitled proceeding.1 The Board
denied the General Counsel’s motion to partially strike
the Respondents’ answers to backpay specifications
and motion for partial summary judgment and re-
manded the proceeding to the Regional Director for the
purpose of scheduling a hearing before an administra-
tive law judge, which hearing was to be limited to tak-
ing evidence concerning the amounts due the
discriminatees and the issue of the derivative liability
of Respondents Burke, Combs, and Brown.
On April 24, 1991, a hearing opened before Admin-
istrative Law Judge James M. Kennedy. After the hear-
ing opened counsel for the General Counsel and Re-
spondent Lemont Combs Jr. entered into a partial set-
tlement agreement which was submitted to Judge Ken-
nedy for approval. The settlement proposal was limited
to one of the potential jointly and severally liable Re-
spondents and provided for payment of $10,000 to be
apportioned among the discriminatees. The settlement
provided that the payment constituted Combs’ entire li-
ability but further provided that the potential liability
of the other Respondents was unaffected.
On September 18, 1991, Judge Kennedy issued an
Order to Show Cause, advising that he was with-
holding approval of the settlement ‘‘until I resolve the
issue of whether or not approval of that agreement
might have the unintended effect of extinguishing any
further claims against Respondents Burke and Brown.’’
The judge’s order sets forth ‘‘a general rule that a set-
tlement by one of the joint and several tortfeasors,
even though it may be a compromise, extinguishes the
claim for the remainder due insofar as the others are
concerned, even if a settlement agreement provides
otherwise.’’2 Acknowledging his uncertainty whether
this ‘‘rule’’ applied to Board proceedings, Judge Ken-
nedy ordered the General Counsel and Respondent
Combs to show cause why the proposed settlement
should not be disapproved. The General Counsel and
Respondent Burke filed responses to the judge’s
order.3 On November 1, 1991, Judge Kennedy, reit-
erating the concerns expressed in his order to show
cause, issued an Order Denying Approval of the Settle-
ment Agreement.
On November 8, 1991, the General Counsel filed a
request for special permission to appeal and an appeal
from administrative law judge’s failure to approve set-
tlement agreement. The General Counsel argues that:
(1) although the partial settlement involves only one of
the alleged jointly and severally liable Respondents, it
was negotiated with all parties present; (2) the com-
mon law rule relied on by Judge Kennedy is not estab-
lished Board law and its application would not effec-
tuate the purposes of the Act; (3) the rule applied by
the judge is not applicable in all States and has been
modified by both statutes and courts in a significant
number of jurisdictions; and (4) to follow the rule ap-
plied by the judge ‘‘would create a patchwork pattern
in this area and a totally chaotic situation.’’ Therefore,
the General Counsel urges the Board to grant the ap-
peal, reverse the judge’s order, and direct him to ap-
prove the settlement agreement.
Having duly considered the matter, the Board has
decided to grant the General Counsel’s appeal and, on
appeal, vacate the judge’s order. It is not unusual, in
situations where the General Counsel is alleging joint
and several liability, for one respondent to settle while
litigation proceeds with respect to another respondent
who declines to settle.4 Further, although there is an
absence of Board precedent treating the issue which
prompted the judge to refuse to approve the settlement
at issue, the Supreme Court has expressly repudiated
the old common law rule in a case involving a statu-
tory cause of action created under Federal law (anti-
trust). Rather, the Court adopted in that case the more
modern rule that a release of one joint tortfeasor does
not release the other joint tortfeasor unless that is the
988 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
intention of the parties. See Zenith Radio Corp. v. Ha-
zeltine Research, 401 U.S. 321, 342–348 (1970). We
note that this modern rule has also been adopted by the
Second Restatement of Torts (see Restatement (Sec-
ond) of Torts Sec. 85 (1977)), and an increasing num-
ber of States (see 66 AM Jur. 2d Release Secs. 37 and
38). As the Board is administering and enforcing a
Federal statute which establishes national labor policy,
we find, in agreement with the General Counsel, that
this rule should also be applied in Board proceedings.
Here, the partial settlement agreement involving
Lemont Combs Jr. expressly provides that the potential
liability of the other Respondents was unaffected.
Thus, applying the modern rule, we find that approval
of the partial settlement with Combs will not extin-
guish the claims against the remaining Respondents.
Accordingly,
IT IS ORDERED that the General Counsel’s request
for special permission to appeal the judge’s ruling is
granted and, on appeal, the administrative law judge’s
order is vacated and the judge is directed to approve
the partial settlement agreement.
IT IS FURTHER ORDERED that the proceeding is re-
manded to Administrative Law Judge James M. Ken-
nedy for further appropriate action consistent with the
Board’s Order.