Hertz Corp. v. NLRB ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
1-28-1997
Hertz Corp. v. NLRB
Precedential or Non-Precedential:
Docket 95-3621
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 95-3621
HERTZ CORPORATION,
Petitioner
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent.
On Petition for Review of an Order of the National Labor
Relations Board , United States Department of Labor
(NLRB No. 5-CA-23956)
Argued June 11, 1996
Before: SCIRICA and ROTH, Circuit Judges
and RESTANI1, Judge, U.S. Court of International Trade
(Opinion Filed January 28, 1997)
Frank B. Shuster, Esq. (Argued)
1
Honorable Jane A. Restani, United States Judge for the United States Court of International
Trade, sitting by designation.
Costangy, Brooks & Smith, LLC
230 Peachtree Street, N.W.
Suite 2400
Atlanta, GA 30303
Attorney for Petitioner
Peter Winkler, Esq.
Supervisory Attorney
Vincent J. Falvo, Jr., Esq. (Argued)
Frederick L. Feinstein, Esq.
General Counsel
Linda Sher, Esq.
Associate General Counsel
Aileen A. Armstrong, Esq.
Deputy Associate General Counsel
National Labor Relations Board
1099 14th Street, N.W.
Washington, DC 20570-0001
Attorneys for National Labor Relations Board
OPINION OF THE COURT
ROTH, Circuit Judge:
Pursuant to the National Labor Relations Act ("NLRA"), an employer has an
obligation to provide a labor union with information that the union needs in order to perform its
collective bargaining obligations. In this case, Teamsters Local 922 sought information about
job applicants from the Hertz Corporation in connection with the Union's investigation into
possible discriminatory hiring practices at Hertz. Hertz refused to provide Local 922 with the
information. A National Labor Relations Board ("NLRB") panel ruled that Local 922 was
entitled to job applicant data and ordered Hertz to provide the Union with all of the information
3
that the Union requested. Hertz appeals the order.
Hertz argues that the NLRB's order is over broad and that the Union is not entitled
to the information that it seeks because it failed to communicate to Hertz a reasonable basis for
its request. Our precedent establishes that before an employer is required to provide a union with
information about individuals who are not members of the bargaining unit, the union must
communicate a reasonable basis for its suspicion that the employer is discriminating. Because
we conclude that the Union failed to communicate such information to Hertz, we will reverse the
NLRB's order and remand the case to the NLRB to dismiss the Union's complaint.
The National Labor Relations Board had jurisdiction of this case pursuant to 29
U.S.C. § 160(a). Because Hertz transacts business within the jurisdiction of this court, we have
subject matter jurisdiction over the final order of the Board pursuant to 29 U.S.C. § 160(f).
I
Hertz appeals a National Labor Relations Board order requiring Hertz to provide
Teamsters Local 922 with information about job applicants in the Washington, D.C. metropolitan
area. See Hertz v. Teamsters Local Union 922, 319 N.L.R.B. 597 (1995). The order, which
reversed an earlier ruling by an administrative law judge ("ALJ"), see Hertz v. Teamsters Local
Union 922, No. 5-CA-23956 (Oct. 13, 1994), reprinted in 319 N.L.R.B. 601 (appendix to NLRB
decision) (hereinafter ALJ decision), requires Hertz to provide Local 922 with the name, race,
national origin, and gender of any job applicant who would have been covered by the labor
agreement between Hertz and Local 922 if the applicant had been hired by Hertz. The order
covers individuals who applied as early as March 1990 for any of the following positions: rental
representative, reservationist, office clerical worker, courtesy bus driver, shuttler, combination
worker, and vehicle service attendant ("VSA").
Hertz and the Union have a collective bargaining agreement. The agreement
requires Hertz periodically to send the Union a list of bargaining unit employees broken down by
4
job title. The list includes the name, seniority, and date of hire of each employee. When Local
922's president and business manager, Edward Kornegay, received one of these lists in the
autumn of 1992, he became concerned about the individuals hired for the VSA position. From
his inspection of the list, Kornegay noted that a number of the VSAs hired in 1992 appeared to be
"foreign nationals." Kornegay's impression was based upon his observation that many of the
surnames on the list were not "typically American."
Kornegay knew that there was "a large pool of unemployed unskilled or
semiskilled young Afro-American men living in Washington, D.C." who might be interested in
the VSA positions. Hertz, 319 N.L.R.B. at 597. Based upon his observations concerning the
VSA list, Kornegay became concerned that Hertz might be intentionally discriminating against
African-American job applicants by hiring foreign nationals instead of African-Americans. At
about the time he reviewed the list, Kornegay also received telephone calls from members of the
bargaining unit who worked at Hertz. These individuals said that Hertz appeared to be hiring
only foreign nationals. In subsequent visits to various Hertz facilities, Kornegay observed that
the company appeared to be employing greater numbers of individuals who appeared to him to be
foreign nationals. Despite his concerns, Kornegay did not conduct any further investigation of
Hertz's hiring practices during his visits.
In late 1992 or early 1993, Kornegay met with Michael Kovalcik, Hertz Manager
of the Baltimore-Washington "pool." Kornegay says that he raised his concerns about the VSA
list in this meeting and requested the applications of everyone who had applied for a position
with the bargaining unit during the period in question. Kovalcik agrees that Kornegay asked for
information about persons who had applied for bargaining unit positions, but, according to
Kovalcik, Kornegay did not mention foreign-sounding names or possible discrimination by
Hertz. Kovalcik testified that Kornegay asked instead for a list of the names and addresses of job
applicants so that he could forward the list to a Teamster's committee involved in union
5
enrollment.2 Kovalcik said that he would get back to Kornegay but did not do so.
In March 1993, Kornegay met with Kovalcik and Hertz's Vice President for the
Mid-Atlantic Region, Joseph Happe. Kornegay testified that he again requested information
about applicants and reiterated his concerns about discrimination. Kovalcik and Happe stated
that Kornegay requested the names and addresses of job applicants and reiterated that he wanted
the list for the Teamsters' committee on union enrollment. According to Kovalcik and Happe,
Kornegay mentioned neither discrimination in hiring nor his suspicions concerning the names on
the hiring list. Happe testified that Kornegay made a subsequent request for the list by telephone
and that Happe denied Kornegay's request. Happe testified that Kornegay said again that he
sought the list for Teamster purposes and that Kornegay did not mention discrimination.
When these preliminary conversations proved fruitless, an exchange of
correspondence ensued. On April 30, 1993, Kornegay sent a letter to Kovalcik that read in
pertinent part as follows:
As a follow up to the Union's previous request, the Union is again requesting a list
of all applicants for employment in the Washington Metro area who, if employed,
would have been covered by the Labor Agreement between the Hertz Corporation
and Local 922 for the period March 1990 to present. Such list to the extent it can
be determined, should distinguish the applicant by race, National origin, and sex
gender.
As I explained earlier, this information is needed for the Union to assure that we
are in compliance with Federal and State law and to assure that the provision
referencing Non-Discrimination of the labor Agreement [sic] is beeing [sic] fully
complied with.
2
Although Kornegay and Hertz offer conflicting accounts of this meeting and subsequent
meetings, the ALJ credited Hertz's account of the meetings. According to the ALJ, "Kornegay's
testimony, more so than either Kovalcik's or [Hertz Vice President] Happe's suggests that his
memory can be spotty and that on occasion Kornegay is willing to shade the truth." ALJ decision,
319 N.L.R.B. at 603. The NLRB sustained the ALJ's credibility determination. Hertz, 319
N.L.R.B. at 597 n.1.
6
Ohio App. at 209. The ALJ noted that this request did not ask for applicant addresses and that it was
therefore unlikely that the Union intended to use this information for enrollment purposes. ALJ
decision, 319 N.L.R.B. at 603.
Kovalcik responded to Kornegay on May 5, 1993, that "as you were informed in
March, we do not feel that we are required to provide you with that information which you
requested." App. at 210. On June 9, 1993, the Union's attorney sent a letter to Kovalcik that read
in part:
As Mr. Kornegay has explained, the Union wants this information to determine whether the
Company is in compliance with the collective bargaining agreement and relevant
law.
By this letter, I renew Mr. Kornegay's request and further ask that, in addition to
the information already requested for each applicant, you also indicate (1) the date
on which the applicant applied for employment, (2) the applicant's color, (3)
whether the applicant was hired, and (4) if the applicant was hired, the date on
which he or she was hired.
App. at 212.
Hertz responded to this letter on July 9, 1993, with its legal conclusion that:
[A] showing must be made by the Union as to the relevancy of its request for applicant
information. Certainly, the mere assertion by the Union that the information is
needed to determine whether the Company is in compliance with the Collective
Bargaining Agreement does not automatically trigger entitlement to applicant
equal employment data.
* * * * * *
IBT Local 922 has not alleged that Hertz has engaged in discriminatory hiring practices. In fact,
the Union has not alleged any breach of the Collective Bargaining agreement. If
that is not the case and you wish to correct the record in that regard, I would
appreciate hearing from you.
App. at 214-15. In a letter dated August 6, 1993, the Union's attorney replied that "Local 922 is
requesting the information because it [sic] investigating allegations that Hertz may have
discriminated against certain protected classes of applicants in making hiring decisions for
7
positions under the Agreement." App. at 216. Hertz did not provide the requested information to
Local 922.
In an attempt to obtain the applicant information, the Union brought this action
before the NLRB pursuant to NLRA §§ 8(a)(5) and (1). See 29 U.S.C. §§ 158(a)(5) and (1). The
Union argued that Hertz violated the Act by withholding the information that the Union had
requested in its letters. After a hearing at which Kornegay, Kovalcik, and Happe all testified, the
ALJ determined that Local 922 was not entitled to the list of job applicants. He therefore
recommended that the Union's complaint be dismissed.
The ALJ determined that the Union had no rational basis for believing that Hertz
might be discriminating against African-Americans in any position except for the VSA position.
ALJ decision, 319 N.L.R.B. at 605. The ALJ did conclude that further inquiry by Kornegay
about the VSA position would have been justified. He based this determination upon the phone
calls that Kornegay had received, Kornegay's interpretation of the last names on the seniority
lists, and the fact that the universe of likely applicants for the VSA positions included a high
percentage of African-Americans.3 Id.
The ALJ decided, however, that Hertz was under no obligation to surrender the
list of VSA applicants to the Union. Although the ALJ found that Local 922 had a rational basis
for believing that Hertz was discriminating against African-Americans who applied for the VSA
position, he concluded that the Union never adequately communicated to Hertz its factual basis
for this belief. Id. at 606 (citing United States Postal Svc. v. N.L.R.B., 308 N.L.R.B. 1305
3
The seniority list for the VSA position included the following names: Phung, Ayubi,
Mangialai, Chhun, Riaz, Telila, Baig, and Ashraf. The list for the rental representative position
included the names Adawi, Towne, Mohammed, Shammir, and Bhaskar. The courtesy bus driver
list included the names Stewart, Smith, Dobbins, and Rusnak. The General Counsel did not seek
to introduce into the record seniority lists pertaining to other bargaining unit positions. ALJ
decision, 319 N.L.R.B. at 602.
8
(1992)). The ALJ determined that, until Kornegay testified at the hearing, the Union had never
communicated to Hertz the facts that caused Kornegay to believe that Hertz might be
discriminating in its hiring of VSAs. Id.
Moreover, Hertz provided evidence during the administrative proceedings to
demonstrate that over half of the Hertz VSAs in the bargaining unit were African-American. Id.
at 604. The ALJ found that, given the number of African-Americans employed in the VSA
position, Hertz was not on notice of the reason for the Union's concern about discrimination. Id.
at 606 (citing Brazos Electric Power Cooperative, 241 N.L.R.B. 1016, 1018 (1979)).4 Hertz's
managers credibly testified that they did not know before the administrative hearing why the
Union was concerned about Hertz's hiring practices, despite the fact that Hertz had specifically
inquired into the basis for the Union's concern in its July 9 letter. Id.
On appeal, the NLRB overturned the ALJ's decision. An NLRB panel found that
pursuant to the collective-bargaining agreement, the Union demonstrated a sufficient basis for its
request for information and gave adequate notice that it was requesting the information in order
to fulfill its representative functions.
The Union by its three letters advised the Respondent that the purpose of its information request
was its investigation of allegations concerning whether the Respondent was
discriminating in hiring for unit positions in violation of the nondiscrimination
clause of the collective-bargaining agreement. Under these circumstances, and in
light of the fact that the Respondent was a party to this collective-bargaining
agreement, we find that the Union provided the Respondent with an adequate
basis of knowing that the information request was related to the Union's
collective-bargaining duties.
Hertz, 319 N.L.R.B. at 599.
The NLRB also held that the Union had a basis to inquire about positions other
4
According to the facts presented in the ALJ opinion, Hertz employed 49 VSAs during the
relevant time period. Of those 49 VSAs, the racial composition was as follows: 27 African-
American, 11 White, 8 Asian American, and 3 Hispanic.
9
than the VSA position. The panel based this conclusion on Kornegay's inspection of the hiring
lists, the phone calls that Kornegay received, and Kornegay's observations during his visits to
Hertz. The panel made clear that "it is not necessary, as the [ALJ] seems to suggest, that the
Union demonstrate actual instances of discrimination based on gender, race, and national origin,
directed against employees from each of the unit job classifications before the Respondent must
supply the requested information." Id. The NLRB ordered Hertz to provide the Union with all of
the information that it requested in its April 30, May 5, and June 9 letters. Id. at 600. This ruling
would require Hertz to provide information about the race, national origin, and gender of all
applicants for any of the positions in the bargaining unit within the time frame specified by Local
922.
II
Hertz challenges the NLRB decision on two grounds. First, Hertz asserts that the
Union did not possess information sufficiently probative of discrimination to justify a request for
information relative to all of the job classifications covered by the collective bargaining
agreement. Second, Hertz argues that the Union never communicated to Hertz a factual basis for
its charges of discrimination sufficient to compel Hertz to supply the Union with the applicant
information.
We review the NLRB decision to determine whether it is supported by substantial
evidence given the record as a whole and whether it is in accordance with applicable law.
Universal Camera Corp. v. N.L.R.B., 340 U.S. 474 (1951).
An employer's duty to provide information to a union derives from its duty to
bargain with its employees. Under subsection 8(a)(5) of the NLRA, it is considered an unfair
labor practice for an employer to refuse to bargain with the employees' representative. 29 U.S.C.
§ 158(a)(5). This obligation to bargain entails an obligation to "confer in good faith with respect
to wages, hours, and other terms and conditions of employment . . .." 29 U.S.C. § 158(d);
10
N.L.R.B. v. United States Postal Service, 18 F.3d 1089, 1096 (3d Cir. 1994).
It is well settled that an employer, on request, must provide a union with
information that is relevant and necessary for the union to perform its bargaining obligations.
See, e.g., N.L.R.B. v. Acme Industrial Co., 385 U.S. 432, 435-36 (1967). Although hiring
practices do not apply directly to employees, discriminatory hiring practices potentially have a
direct effect on the workplace. Postal Service, 18 F.3d at 1099; East Dayton Tool and Die Co.,
239 N.L.R.B. 141, 142 (1978) (citing Tanner Motor Livery, Ltd., 148 N.L.R.B. 1402, 1404
(1964)). Therefore, a hiring practice may be a mandatory subject of collective bargaining when
the union has an "objective basis for believing [the practice] to be discriminatory." Postal
Service, 18 F.3d at 1099; East Dayton, 239 N.L.R.B. at 142; see also Star Tribune v. Newspaper
Guild of the Twin Cities, 295 N.L.R.B. 543, 548 n.17, 549 (1989).
As a general rule, the duty to bargain over hiring practices "arises only when the
union has made a demand and has communicated information to the employer indicating that it
has an objective basis for alleging discrimination." Postal Service, 18 F.3d at 1100. First, the
union must show that it has a rational basis for believing that the hiring practice at issue may
discriminate. Id. at 1101. Second, the union must make known to the employer its "reasonable
basis" for believing that there is discrimination in hiring. Id. at 1100. "[O]nly after an employer
has had an opportunity to consider the basis for a union's information or bargaining demand can
the employer violate the NLRA by rejecting the demand." Id. at 1102 n.7. The "relevant
evidence is that which has been communicated to the employer as of the time of the refusal to
bargain . . .." Id.
III
Based upon the employee lists, the phone calls received by Kornegay, and
Kornegay's personal observations, the ALJ concluded that the Union had a reasonable basis to
believe that Hertz was discriminating in hiring for the VSA position. The ALJ ruled, however,
11
that the Union had not, prior to the hearing, communicated this information to Hertz. The NLRB
panel issued a much broader ruling. The panel concluded that
based on Kornegay's examination of the list of vehicle service attendants, the contemporaneous
calls he received from employees regarding new hires, and his subsequent visits to
the Respondent's facilities, as well as the nondiscrimination clause in the
collective-bargaining agreement . . . the Union had an adequate basis for seeking
information relevant to an investigation of all possible discriminatory hiring
practices in all unit classifications.
Hertz, 319 N.L.R.B. at 599 (emphasis added). Since we resolve this appeal on legal grounds,
our holding does not address the factual issue of whether there is sufficient evidence in the record
to support the NLRB's sweeping order.
Because the NLRB has failed to apply the legal standard mandated by our
precedent, we need not dwell on these factual ambiguities. The NLRA does not require an
employer to divulge information relating to individuals who are not part of the bargaining unit
until the union has communicated to the employer a reasonable factual basis for its belief that the
employer is discriminating. "[O]nly after an employer has had an opportunity to consider the
basis for a union's information or bargaining demand can the employer violate the NLRA by
rejecting the demand." Postal Service, 18 F.3d at 1102 n.7. The only evidence of discrimination
relevant to our consideration of the Union's demand for applicant information is the evidence that
the Union had communicated to Hertz at the time of Hertz's refusal to bargain. Id.
The Board appears to rely on two facts to support its ruling that the Union
satisfactorily communicated to Hertz its reasons for requesting the applicant data. First, Hertz
and the Union had entered into a collective bargaining agreement that prohibited direct or
indirect discrimination on the basis, inter alia, of race or national origin. See Hertz, 319
N.L.R.B. at 597 (quoting text of nondiscrimination agreement). Second, the Union made clear in
its letters that pursuant to its obligations under the collective-bargaining agreement, it was
investigating allegations of discrimination. The NLRB therefore concluded that "the Union
12
provided the Respondent with an adequate basis of knowing that the information request was
related to the Union's collective-bargaining duties."
As the ALJ found, these communications did not satisfy our requirement that the
Union communicate the basis for its bargaining demand. Postal Service, 18 F.3d at 1102 n.7.
The Union was obliged to do more than state the reason and/or authority for its request for
information. The Union was required to apprise Hertz of facts tending to support its suspicion
that Hertz might be discriminating. Id. There is no evidence in the record that any of the Union's
oral or written communications fulfilled this obligation. One letter from the Union noted that the
Union sought the information "because it [was] investigating allegations that Hertz may have
discriminated against certain protected classes of applicants in making hiring decisions for
positions under the Agreement." This vaguely worded explanation for the request referenced no
facts that would have supported an objective basis for the Union's concerns.
We stress that the Union did not need to demonstrate actual discrimination in
order to obtain information about allegedly discriminatory hiring practices. It needed only to
communicate some reasonable basis for its suspicion that the employer might be engaging in
discrimination. Despite a request from Hertz for more information, see App. at 214-15, Local
922 failed to satisfy this minimal obligation.
In some situations, a union's reason for suspecting that discrimination is occurring
will be readily apparent. When it is clear that the employer should have known the reason for the
union's request for information, a specific communication of the facts underlying the request may
be unnecessary. As the ALJ noted in this case, however, two of Hertz's managers testified
credibly that they had no idea why the Union believed that Hertz's hiring practices might be
discriminatory until they arrived at the administrative hearing. The employment charts published
in the ALJ opinion demonstrate that a significant portion of the VSA workforce was comprised
of African-Americans. Although this fact does not rule out the possibility of discrimination, it
13
does support Hertz's assertion that it could not readily determine the factual basis of the Union's
claim.
Information pertaining to individuals who are not members of a union bargaining
unit is not available to a union on demand. A union must communicate facts that reasonably
support its suspicion of discrimination in hiring. Because Local 922 failed to do so in this case,
we will grant Hertz’s petition for review, reverse the NLRB panel decision, and remand the case
to the NLRB to dismiss the Union's complaint.
14