Huck Store Fixture v. NLRB

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 01-2418, 01-2857
HUCK STORE FIXTURE COMPANY,
Petitioner/
Cross-Respondent,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent/
Cross-Petitioner.
____________
Petition for Review of Order of
the National Labor Relations Board
____________
ARGUED MAY 31, 2002—DECIDED APRIL 21, 2003
____________
Before HARLINGTON WOOD, JR., COFFEY, and ROVNER,
Circuit Judges.
COFFEY, Circuit Judge. Huck Store Fixture Company
(“Huck Store” or “Company”) seeks review of the order
(the “Order”) of the National Labor Relation Board (“NLRB”
or “Board”) requiring the Company to reinstate 33 employ-
ees who were laid off or discharged between March 4, 1997
and March 11, 1997. In its Order, the NLRB found that
Huck Store had committed multiple violations of the
National Labor Relations Act, 29 U.S.C. §§ 157, 158(a)(1)
2 Nos. 01-2418, 01-2857
(“NLRA” or “Act”). The NLRB filed a cross-application for
enforcement of its Order. We order the enforcement of
the decision of the NLRB.
I. BACKGROUND
Huck Store manufactures and sells fixtures used in re-
tail stores. Gene Prock, the President of Huck Store, be-
gan operating the Company in November 1995. In the
first six months of 1996, demand for the Company’s prod-
ucts exploded, due primarily to a number of large orders
placed by Border’s Book Stores. To meet the increased
demand, the Company increased its workforce from 15 to
185 production workers. Some of the workers were hired
directly by Huck Store; others remained employees of
temporary staffing service, Snelling Personnel Services, and
worked for Huck Store on a temporary basis.1
In mid-January 1997, after assembling Huck Store’s
workers and managers for a meeting, Prock informed his
employees that new orders for Huck Store products had
been placed that year, and that “business had built up
quicker than he had anticipated.” (Tr. at 117) He stated
that the outlook for the year was “good” and that there
“wasn’t much to worry about.” Id.Thereafter, senior management scheduled meetings
with the Company’s four major customers to confirm
anticipated business for 1997; on February 4, 18, and 19,
1997, senior managers met with the Company’s major
customers to confirm their orders for the year. Although
management learned that orders from one customer would
1
Snelling and Huck Store had a working agreement that Huck
Store had the option to hire a Snelling temporary employee as
a permanent employee once the employee had worked over 300
hours at the Company.
Nos. 01-2418, 01-2857 3
be reduced somewhat, overall, the Company’s business
outlook for the year was not significantly altered. (Tr. at
1315.)
Meanwhile, Huck Store’s workers began to engage in
unionization activities. On January 20 and 30, 1997, the
Mid-Central Illinois District Council of Carpenters (the
“Union”) held informational meetings attended by Huck
Store employees. During a third meeting, held on Feb-
ruary 6, 1997, organizers circulated union authorization
cards, which were signed by the attending employees. An
organizational committee comprised of seven Huck Store
workers was also formed at the meeting.
On February 13, 1997, having learned of the workers’
steps toward unionization, Prock gathered his employees,
“jump[ed] up on a work bench [waving] a Union authoriza-
tion card in his right hand . . . [and] said, himself and
management was [sic] aware of this and they strongly
opposed [it] and if anybody would like to ask for their
cards back and tear them up they could have them.” (Tr.
at 54) (testimony of Cecil Steffin, employee of Huck Store).
Prock went on to opine that he had treated the work-
ers “fairly and with open door policy.” Id.After Prock’s public denouncement of the Union, and
in spite of the fact that Prock purportedly told Huck
Store supervisors not to interrogate workers regarding
Union activities, a number of such instances did occur. For
example, the day after management became cognizant
of union activities at the Company, Supervisor James
Winking approached an employee, Jerry Schieferdecker,
and asked what the employees thought of the Union. When
Schieferdecker responded that it was time something
was done about workers’ rates of pay, Winking stated
ominously that, if confronted with the Union, Huck Store
4 Nos. 01-2418, 01-2857
would close its doors.2 Four days later, on February 19,
Winking threatened another employee, James Gallagher,
that if the Union organized, Huck Store would move its
plant “out of town.” (Tr. at 562.)
Another time, Supervisor Ronald Mock asked employee
Thomas Boone whether he had attended the Union meet-
ings. Boone replied that he had, but refused to answer
Mock’s inquiries about who had attended the meeting.
Similarly, Supervisor Roger Trimpe asked employees
James Mooneyham and Jeremy Fruit whether they were
going to attend the next Union meeting, warning them
that if they did, he would recognize their car and would
have to fire them. When Fruit commented that such ac-
tions sounded illegal, Trimpe replied that Fruit could not
be fired for his union activity, but that he could be fired
because of poor job performance.
Supervisor Paul Lowe confronted employee Richard
Budde and asked why he (Budde) was attempting to
organize the Union, and inquired as to whether Budde
felt guilty about the possibility that employees would lose
their jobs because of what he was doing. As their conver-
sation continued, Lowe became agitated and stated that
if Budde did not like working at the Company, he should
“get the hell out” of there before he cost everybody their
jobs.
In addition to these tactics of coercion and surveillance,
Huck Store supervisors also committed unlawful labor
2
Although Winking denied threatening plant closure, the ALJ
found Winking’s testimony incredible, in light of the fact that
he gave inconsistent testimony at the hearing. NLRB App. at 12.
On appeal, Huck Store does not dispute the ALJ’s findings
regarding the coercive practices of Huck Store supervisors;
accordingly, this Court’s recitation of the facts reflects the
uncontested findings of the ALJ.
Nos. 01-2418, 01-2857 5
practices by: (1) requiring supervisor permission prior
to employee circulation of a petition related to union
activity; (2) urging employees to sign an antiunion petition;
and (3) threatening physical violence against the “boys . . .
who signed antiunion cards.” (Tr. at 570.)
On February 20, the same day that Union representa-
tives distributed literature to workers at the Company,
and around a week after Huck Store management be-
came aware of workers’ unionization efforts, Prock and
other senior managers at Huck Store resolved to imple-
ment a reduction in the Company’s workforce. According
to Huck Store, while 1997 sales figures were projected to
be better than those of the previous year, the Company
had built up around $2.1 million in inventory, and such
excess inventory necessitated a reduction in workforce.
Thus, in spite of the fact that Huck Store employees
were not expecting to undergo performance evaluations
for another two months, the Company’s management
decided to perform another round of evaluations in
March to determine which employees would be laid off or
terminated. The evaluations weighed factors such as em-
ployee attendance, work habits, quality of work, knowledge,
and “attitude.”
Based on the evaluation results, the Company dis-
charged eight Huck Store employees and three Snelling
employees on March 4, and ten Snelling employees on
March 7. Huck Store also laid off 12 permanent Huck
Store employees on March 11. Of the eight Huck Store
employees discharged on March 4, five had signed union
authorization cards. Of the 12 Huck Store employees laid
off on March 11, ten had signed union authorization cards,
and four were also members of the Union’s seven-person
organizing committee. Amidst this workforce reduction
process, on March 10, the Company hired ten Snelling
employees who had previously been working only on a
6 Nos. 01-2418, 01-2857
temporary basis. A week thereafter, the Company granted
wage increases to thirty of the remaining employees.
Subsequent to the downsizing, the Union filed a charge
of unfair labor practices and the Board’s General Counsel
issued a complaint against Huck Store based on the
allegations made by the Union. After a five-day hearing,
an administrative law judge (the “ALJ”) issued a recom-
mended order, finding that Huck Store violated the NLRA
by: (1) interrogating and threatening employees in con-
nection with their union activities (in violation of Section
8(a)(1) of the Act); and (2) discharging or laying off 33
members of its workforce on account of antiunion animus
(in violation of Section 8(a)(1) and (3) of the Act).
On appeal to a three-member panel of the NLRB, Huck
Store contested the ALJ’s recommendation as to the
workforce reduction, but did not dispute the ALJ’s finding
that Huck Store’s coercive interrogation and surveillance
of its employees’ union activities violated the Act. On
July 13, 2001, the Board’s three-member panel issued an
order adopting the ALJ’s conclusion that the 33-person
workforce reduction violated Section 8(a)(1) of the Act. The
Board ordered Huck Store to cease and desist from its
coercive and threatening tactics, to reinstate the Huck
Store employees it had discharged or laid off, and to “make
whole” (by issuing back compensation) the 13 Snelling
employees who were discharged in violation of the Act.
II. ANALYSIS
Under the NLRA, employees have the right to form, join
or assist labor organizations, and to engage in activities
for the purpose of collective bargaining. See 29 U.S.C. § 157(Section 7 of the Act). Section 8(a)(1) of the Act protects
such rights, by making it unlawful for an employer to
“interfere with, restrain, or coerce employees in the exer-
Nos. 01-2418, 01-2857 7
cise of the rights guaranteed in section 7.” The Act also
prohibits an employer from taking adverse action against
an employee in order to discourage union activities. 29
U.S.C. § 158(a)(3) (Section 8(a)(3) of the Act).
To prove that a Section 8(a)(3) violation has taken place
under the analysis set forth in NLRB v. Wright Line, a
Division of Wright Line, Inc., 251 NLRB 1083 (1980), the
General Counsel must demonstrate that antiunion
animus was a “substantial or motivating factor” in the
employer’s decision to take adverse action against the
employees. NLRB v. Joy Recovery Tech. Corp., 134 F.3d
1307, 1314 (7th Cir. 1998). Antiunion animus is established
by showing that the employees were engaged in union
activities, that the employer knew of and harbored animus
toward the union activities, and there was a causal con-
nection between the animus and the implementation of
the adverse employment action. NLRB v. Clinton Elec-
tronics Corp., 284 F.3d 731, 738 (7th Cir. 2002).
Once the elements are met, an employer may avoid
a finding of unfair labor practices by showing that it
would have taken the adverse action regardless of the
employees’ unionization efforts. Id. If the Board rejects the
employer’s proferred explanation by finding either that the
reason “did not exist or that the employer did not rely on
that reason, the inquiry is over.” Id.Our review of the Board’s determination of a Section
8(a)(3) violation is limited; we ask only whether the
Board’s factual conclusions are supported by substantial
evidence, and whether its legal conclusions have a “reason-
able basis” in the law. NLRB v. Cook County School Bus.,
Inc., 283 F.3d 888, 892 (7th Cir. 2002). Substantial evi-
dence is such relevant evidence as a reasonable mind might
accept as adequate to support the conclusion of the Board.
NLRB v. Clinton Electronics Corp., 284 F.3d at 737.
8 Nos. 01-2418, 01-2857
At this stage, we must not “dabble in fact-finding and
may not dispute reasonable determinations simply be-
cause we would have come to a different conclusion if we
reviewed the case de novo.” Livingston Pipe v. NLRB, 987
F.2d 422, 426 (7th Cir. 1993). In conducting our review,
we show particular deference to factual findings of cred-
ibility; such assessments are adopted by this Court, absent
“extraordinary circumstances.” L.S.F. Transp., Inc. v.
NLRB, 282 F.3d 972, 980 (7th Cir. 2002).
A. Antiunion animus
Huck Store contends that the NLRB erred in determin-
ing that the March 1997 layoffs were unlawful, arguing
first that there was insufficient evidence to support the
Board’s finding of antiunion animus. The Company’s chal-
lenge to the finding of antiunion animus is curious, given
that Huck Store does not dispute the NLRB’s finding
that its supervisors participated in numerous unlawful anti-
union activities, including circulating antiunion petitions
and threatening physical harm to union supporters.
There is ample evidence in the record that those who
made the workforce reduction determination both had
knowledge of and had exhibited animus toward the workers’
efforts to unionize. President Prock, for instance, publicly
voiced his disdain for the Union; and, although he had
a right to engage in such expression, in so doing he exhib-
ited his knowledge that the union was attempting to
organize. And, as far as “animus” is concerned, the Board
found (and Huck Store does not dispute) that Soebbing,
a senior-level manager who took part in the March 20,
1997 decision to lay off workers, had committed an unfair
labor practice by circulating and obtaining signatures to
an antiunion petition. There is thus substantial evidence
to support the Board’s finding that antiunion animus
was a motivating factor in Huck Store’s decision to reduce
its workforce.
Nos. 01-2418, 01-2857 9
B. Legitimate business purpose
Huck Store also argues that, even assuming the Gen-
eral Counsel demonstrated a prima facie claim of anti-
union animus, the Company nonetheless had a legitimate
business reason for reducing its workforce—namely, excess
production capacity. Huck Store reasons that, consider-
ing the substantial amount of inventory on hand in Feb-
ruary 1997, it needed only $35,000 of daily production
to meet the then-current demand for its product (based on
its estimates of annual demand derived from informa-
tion given at the February meetings with customers). Thus,
the Company argues, in light of its estimated $45,000
of daily production capacity at the time, the most efficient
course was to reduce the workforce by 20 to 25%.
Although it did not explicitly address the issue of inven-
tories, the Board did expressly reject as incredible the
Company’s claim that its implementation of a workforce
reduction was done for business reasons. The Board based
its conclusion on the following observations: (1) Huck
Store’s business outlook at the time the workforce reduc-
tion decision was made was not significantly different from
the outlook in January (one month prior), at which time
Prock had told the employees the outlook for the year
was “good” and that there “wasn’t much to worry about”;3
(2) in the midst of its 20-percent workforce reduction, the
Company actually hired ten Snelling employees to work
on a permanent basis (just one day prior to firing 12 of
its own employees); and (3) a disproportionate percentage
of workers who had not signed the antiunion petition
3
In other words, the February meetings with clients largely
verified previous estimates of the level of 1997 sales, making
it unclear what had changed between Prock’s “business looks
good” assessment, and management’s conclusion that Huck Store
had to implement a drastic workforce reduction.
10 Nos. 01-2418, 01-2857
(27 percent) were laid off or fired during the workforce
reduction, as compared to those who had signed the
antiunion petition (6 percent).4 See Huck Store App. at 3-5.
Given the deferential standard of review, which re-
quires us to enforce the Board’s decision if it is supported
by substantial evidence, we see fit to enforce the Board’s
Order in this case. Huck Store essentially attacks the
ALJ’s determination “[ ]not [to] credit Prock’s or Soebbing’s
testimony that the decision for the layoffs and dis-
charges w[as] business related . . . .” NLRB App. at 15.
Because the Board’s Order was based on credibility deter-
minations of the ALJ, as well as reasonable inferences
drawn therefrom, we will not disrupt such determina-
tions even if we might have interpreted the record differ-
ently. NLRB v. O’Hare-Midway Limousine Service, Inc., 924
F.2d 692, 696 (7th Cir. 1991).
As the Board rightly noted, Huck Store’s decision to
reduce its workforce was made less than a week after the
management became aware of its workers’ efforts to
unionize. The timing of the decision—so closely correlated
with the commencement of union-related activities at the
Company—renders suspect Huck Store’s claim that the
decision was purely based on economic factors. See, e.g.,
NLRB v. Joy Recovery Tech. Corp., 134 F.3d 1307, 1314 (7th
Cir. 1998) (noting that, in the case at bar, “timing [wa]s
everything.”).
And, while we are aware that Huck Store’s inventory
levels were high in February of 1997, we do not believe
the record supports that, absent the developments re-
lated to the Union, the Company would have implemented
the February 1997 workforce reduction in any case. We note
4
An “antiunion” worker is defined as a worker who signed the
antiunion petition, while a “prounion” worker is defined as anyone
who did not sign the antiunion petition.
Nos. 01-2418, 01-2857 11
at the outset that high inventory levels are not necessarily
undesirable. For instance, in this case, President Prock
himself admitted that the Company had purposefully been
“building [up] inventory levels” for the legitimate busi-
ness purpose of “trying to level out production over [the]
year.” (Tr. at 1289).5 Evidently, then, it was Huck Store’s
stated goal in January 1997 to increase its inventory levels.
Therefore, in order to support its claim that high inven-
tory levels ultimately became a “bad” thing, requiring
a workforce reduction, the Company must show that its
inventories had grown to levels that were high relative to
what the Company expected, intended, or desired them
to be6—not just that inventories were high as an absolute
matter. Because Huck Store’s “high inventory” justifica-
tion lacks adequate support in the record, we conclude
that the Board’s treatment of the evidence on this issue
was reasonable and proper.
As the Board noted, Prock, in January 1997, announced
a positive outlook for the Company’s 1997 business fore-
5
By increasing inventories and leveling out production, Huck
Store would avoid having to pay workers to work overtime dur-
ing the high-demand parts of the annual business cycle.
6
In the alternative, Huck Store could demonstrate that demand
was significantly less than anticipated. Huck Store has not
made this argument, however, admitting instead that its busi-
ness outlook was essentially the same in February 1997 (when
the decision to reduce workforce was made) as it was in January
1997 (when Prock stated to his employees that business
looked “good”). See Tr. at 1316 (“the difference between the first
part of January and the end of February was not that signifi-
cant . . .”); and Huck Store Reply Br. at 3 (“Prock[ ] believe[d]
1997’s business ‘looked good’ [in January of 1997] and . . . this did
not change after the customer meetings on February 18-19” and
“the . . . meeting [to discuss workforce reduction] was called
because of HSFC’s inventory buildup, not because of any changes
in customer expectations. . .”).
12 Nos. 01-2418, 01-2857
cast, as well as plans to “build[ ] [up] inventory because
[Huck Store] had commitments and [Prock] was trying
to reduce overtime work which [had been] necessary the
prior year.” Huck Store App. at 13. Nonetheless, in Febru-
ary of 1997, at which time Huck Store’s business out-
look “had not changed significantly,” id., Huck Store’s
managers resolved to implement a massive workforce
reduction. Given that Huck Store concedes there was no
significant change in the Company’s business outlook
for 1997 between January (when things looked “good” and
the goal was to build up inventories to even out produc-
tion demands), and March 1997 (when the management
decided to implement a 20% reduction in workforce, pur-
portedly because inventories were “too high”), see Huck
Store App. at 13, Huck Store Reply Br. at 3, one wonders
what—other than the workers’ unionization activities—
could have precipitated the change in upper-manage-
ment’s business policy.7
7
Nor does Huck Store present any evidence that it considered
or in any way anticipated a need to reduce its workforce until
the February 20, 1997 meeting, which took place less than a
week after management learned of the unionization efforts. Cf.
NLRB v. Vemco, Inc., 989 F.2d 1468, 1485 (6th Cir. 1993) (noting
that the employer, Vemco, had, in the face of uncertainty as to
its production capacity needs, previously documented its inten-
tion to layoff workers if necessary). And, although Soebbing claims
that he “had been wanting to call a meeting [to discuss inven-
tory buildup] for a month to two months,” he admits that neither
he nor anyone else actually called the meeting until “the day
before” it took place. (Tr. at 1004) The haste with which the
meeting was called, as well as the lack of explanation as to
why inventory buildup was suddenly and inexplicably a “problem”
(when, just a month prior, it had been a goal (Tr. at 1289)), sat-
isfy us that the Board’s decision to reject the Company’s proffer
as mere pretext was supported by the evidence.
Nos. 01-2418, 01-2857 13
These factors, combined with the fact that a rela-
tively high percentage of pro-union workers who were
terminated or laid off on account of the workforce reduc-
tion, provide substantial evidence to support the NLRB’s
conclusion that Huck Store was motivated by antiunion
animus, rather than business considerations such as high
inventory levels.
C. Remedy
Huck Store argues that, even if there is substantial
evidence to support the Board’s finding of an NLRA viola-
tion, this Court should nonetheless refuse enforcement of
the Board’s remedy to the temporary employees, on the
basis that the Board’s remedy to the temporary em-
ployees8 was too broad. The Board’s decision, in pertinent
part, ordered Huck Store to “make whole” the temporary
employees who had been discharged or laid off by Huck
Store, by requiring Huck Store to award them back
pay (dated to the time of layoff or discharge) and to
notify Snelling that it (Huck Store) had “no objection to
Snelling . . . referring [the various temporary employees] to
work in [the Company’s] facility.” NLRB App. at 7. In its
brief, Huck Store claims that these temporary employees
did not have an expectation of employment with the
Company, and that the Board therefore had no basis to
provide “make whole” relief to such workers.
In support of its argument, Huck Store notes that tempo-
rary agency employees were given the right to join a
bargaining suit after the workforce reduction at issue
in this case took place. Specifically, in M.B. Sturgis, Inc.,
331 N.L.R.B. No. 173 (2000), the Board held that tem-
8
The temporary employees to which Huck Store refers were
staffed at the Company on a temporary basis, while they re-
mained employed by Snelling.
14 Nos. 01-2418, 01-2857
porary employees may join a bargaining unit of permanent
employees, so long as they are in the same “community
of interest” as the permanent employees. Id. However
valid Huck Store’s “argument” on this point may be, it
comprises not more than a page of its main brief, and only
a sentence of its reply brief, and is wholly inadequate
and undeveloped. Indeed, Huck Store has made no ar-
gument that M.B. Sturgis, Inc. was wrongly decided or
that the temporary employees in this case were not in
the same “community of interest” as the permanent em-
ployees. Thus, to the extent that Huck Store is arguing
that the Snelling employees are entitled to no remedy, it
has waived such argument by not developing it before
this Court. See, e.g., Palmquist v. Selvik, 111 F.3d 1332,
1342 (7th Cir. 1997) (“Even an issue expressly presented
for resolution is waived if not developed.”).
Moreover, insofar as Huck Store argues that the na-
ture of the remedy afforded the temporary employees
was overly broad, this Court, following the course em-
ployed by other courts under similar circumstances, finds
it appropriate to leave the details of Huck Store’s remedy
to be resolved in compliance proceedings. See, e.g., NLRB
v. Dazzo Products, Inc., 358 F.2d 136, 138 (2d Cir. 1966)
(noting, in the context of a seasonal temporary worker,
that the employer’s duties as to reinstatement of and
award of back pay to the temporary employee should be
left for resolution in compliance proceedings).
The order of the NLRB is hereby ENFORCED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-21-03