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National Labor Relations Board v. Baldwin Locomotive Works.

March 23, 1942


Appeal from the National Labor Relations Board.

Author: Jones

Before BIGGS, MARIS, CLARK, JONES, and GOODRICH, Circuit Judges.

JONES, Circuit Judge.

The National Labor Relations Board petitions for the enforcement of its order which directs Baldwin Locomotive Works, the respondent, to cease and desist from certain unfair labor practices, to disassociate a company-dominated union, and to post the notices usual in such circumstances. The order eventuated in a proceeding which had been formally initiated by the Board's complaint on charges filed by the Steel Workers Organizing Committee (S.W.O.C.).

Some of the respondent's labor practices which the complaint alleged to be unfair had been committed while the respondent was operating its business as debtor in possession under an order of the United States District Court for the Eastern District of Pennsylvania in a reorganization proceeding under Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207. A plan of reorganization was approved therein by the District Court and a decree and order discharging the respondent from bankruptcy was thereafter entered. Several months later the complaint herein was filed.

A hearing on the complaint was duly had before a trial examiner. The respondent appeared in the hearing and was represented throughout by counsel, as were also the Board, the S.W.O.C., and a local labor organization known as the Federation of Baldwin Employees, which was formally granted leave to intervene. The hearing extended over a number of months during which time more than sixteen thousand pages of testimony were taken.

The respondent opposes the entry of a decree enforcing the Board's order on the ground that (1) the respondent is not chargeable with unfair labor practices which occurred while its porperty and business were being managed and operated by it as the debtor in possession under order of the District Court in the reorganization proceeding, (2) the Board's findings of fact are not supported by substaintial evidence, (3) the Board's order is invalid and improper, and (4) the respondent was denied the full and fair hearing which due process requires.

The Board's jurisdiction of the subjectmatter of the complaint (except for what occurred during the reorganization proceeding) is not questioned, nor could it well be. The Board found, and it is undisputed, that the respondent, a Pennsylvania corporation, having its principal offices and plant at Eddystone, Pennsylvania, was engaged in interstate commerce throughout the period covered by the complaint and was, therefore, subject to the provisions of the National Labor Relations Act. The legal conclusion gave proper effect to the fact thus competently found.*fn1

On the merit of the charges in the complaint as supported by the evidence, the case is a relatively simple one in the narrowness of the questions involved. But the mistaken zeal of respondent's trial attorney in endeavoring to obfuscate the matter which the complaint had properly put in issue succeeded to the point where the consequent voluminous record bristles with exceptions. Many of these are now urged upon us by reference to numerous record-page citations in support of the respondent's contentions that the trial examiner was biased and prejudiced and that he denied the respondent an opportunity to litigate justiciable issues.

The respondent also complains that the Board availed itself of the services of subordinates in assembling from the record the matter which it accepted as the factual basis for its findings. From this, the respondent argues that the Board's smethod of arriving at its decision amounted to a denial of due process. Before coming to the merits of the Board's order we shall treat first with the question as to whether the respondent is chargeable with the labor practices pursued by it while debtor in possession of its plant and business in bankruptcy, as well as the respondents assault on the trial examiner's conduct and the course pursued by the Board in deciding the matter.

The complaint, which was filed on December 21, 1938, alleged the commission, inter alia, of unfair labor practices by the respondent between February 25, 1935 (the date of the filing of the respondent's petition for reorganization in bankruptcy) and September 23, 1938 (the date of the respondent's discharge from the bankruptcy proceeding). A plan of reorganization, approved by the District Court on September 1, 1937, had been duly effectuated.

Even though some of the unfair labor practices with which the respondent is charged were committed while it was managing and operating its business and properties as the debtor in possession under court order, it will hardly be denied that a debtor in possession is responsible for the unfair labor practices which occur during a reorganization. Its status as an employer is no different, so far as the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., is concerned, than that of any other employer. Court supervision of corporate reorganization affords the operating possessor no freedom from its statutory duty to its employees.*fn2 And, where managerial control and economic interest of the debtor in possession and the reorganized company are the same, it could be only the blindness of formalism that would suggest separately instituted proceedings against the predecessor and the successor for the redress of their respective but continuous unfair labor practices. In National Labor Relations Board v. Colten, 6 Cir., 105 F.2d 179, 183, it was said that " * * * the strife which is sought to be averted is no less an object of legislative solicitude when contract, death, or operation of law brings about change of ownership in the employing agency." Nor is thelegislative solicitude any the less where the ownership of the emplying agency undergoes no substantial change upon reorganization. "An employer cannot be permitted, by reorganization or transfer, to nullify the Board's order and make it necessary to start new proceedings against the new owner of the business." Bethlehem Steel Co. v. National Labor Relations Board, App. D.C., 120 F.2d 641, 650, 651.In Southport Petroleum Co. v. National Labor Relations Board, 62 S. Ct. 452, 456, 86 L. Ed. , the Supreme Court recently held a Board order against a predecessor in interest to apply equally to the successor, proof of "a bona fide discontinuance and a true change of ownership" being wanting. Indeed, the respondent concedes, as it must, that, where a complaint for unfair labor practices has issued against a predecessor, the proceeding may be continued against the successor.*fn3 Can the successor be any less responsible for the predecessor's unfair labor practices where the complaint issues against the successor? We think not. The crucial matters are the commission of the unfair labor practices and the identity of interest of the employing agencies which perpetrated them.

In the present instance, the only change effected in the debtor by the r organization was a readjustment of its bond and capital structures.*fn4 The claims of creditors (other than bond) were unaffected; and, except for the retirement of one officer, the respondent's executive personnel and management were of the same group as they had been while the company was the debtor in possession.*fn5 In no legally significant sense, therefore, can the respondent be differentiated from the debtor in possession so far as the employer-employee relationship is concerned. Manifestly, this works no injustice to the present respondent. As already pointed out, even the claims of general creditors were wholly unimpaired by the reorganization and the same employing corporation which entered that proceeding emerged therefrom with the same management and control intact.

In reality, except for the back pay provisions of the Board's order, the question of the reorganized company's responsibility for its unfair labor practices while debtor in possession is presently academic. The record discloses conduct on the part of the respondent, following its emergence from the reorganization proceeding, of itself sufficient to sustain the charges of the complaint. The question therefore is merely what effect did the debtor's discharge in the reorganization proceeding have upon the reorganized company's liability for back pay. The answer is tht it had none.

The Board's order of reparation constitutes something other than an ordinary debt. The power to award back pay, which the statute authorizes, exists for and is exercised in the public interest. See Agwilines, Inc., v. National Labor Relations Board, 5 Cir., 87 F.2d 146, at page 150, where the Court of Appeals aptly said that "The procedure the statute outlines is not designed to award, the orders it authorizes do not award, damages as such. The proceeding is not, it cannot be made, a private one to enforce a private right. It is a public procedure, looking only to public ends. The statute has in mind the maintenance and furthering of industrial amity, and therefore peace, the prevention of industrial war." See also National Labor Relations Board v. Newark Morning Ledger Co., 3 Cir., 120 F.2d 262, 267, 268, 137 A.L.R. 849. The deterrent function of the back pay award in inducing general obedience to the Labor Relations Act has been noted.*fn6 In the very nature and purpose of the power which the Board exercises in laying a charge for back pay upon an offending employer, such power must needs be unembarrassed by an intervening plan of reorganization conerned with the readjustment of the same employer's liability for its private obligations.

The jurisdiction of a United States District Court in bankruptcy does not embrace the power to treat with a debtor's unfair labor practices which affect commerce. Nor is such a court's leave to the Board to proceed in appropriate manner required. By Section 10(a) of the National Labor Relations Act the Board is expressly empowered to prevent any person from engaging in any unfair labor practices affecting commerce; and that power is exclusive in the Board and unaffected "by any other means of adjustment or prevention that has been or may be established by agreement, code, law, or otherwise." The Act moreover explicitly removes the possibility of any restraint upon the Board's power which might be thought to arise where the employer's properties and business are operated under an order of a District Court in a reorganization proceeding in bankruptcy.*fn7

We conclude therefore that under the circumstances shown in this case the respondent is chargeable on the complaint of the Board with the unfair labor practices committed while the ultimately reorganized company was operating the business and properties as the debtor in possession and that the Board's power to dissipate the unfair practices is wholly unaffected by the reorganization proceeding.

The respondent's assertion that the trial examiner was biased and prejudiced is utterly lacking in merit.An examination of the record clearly indicates that the offender against due and orderly trial procedure was in reality respondent's trial attorney, whose apparent desire from the outset of the hearing was to goad the examiner into unjudicial words or conduct. Fortunately, counsel's efforts in such regard failed of success. That the course he pursued, however, was in fulfillment of a predetermined hostile design is evidenced by the fact that by answer antedating the hearing, and filed on the first day of the hearing before any testimony on the complaint had been taken, counsel had his client (the respondent) charging "the Board, its members, officers, agents and employees" with "partiality and active aid to the persons and organizations (including their affiliates) on whose charge the Board instituted this proceeding * * * ".*fn8 Nor did respondent's trial attorney long delay in acting out the role which he had thus prematurely foreshadowed. During the examination of the first witness for the Board (an officer of the respondent company) over a matter no more disputable than the production of company records relating to the character of its business, respondent's trial attorney promptly ascribed the examiner's rulings to bias and prejudice and as constituting a denial of due process in violation of the Fifth Amendment of the Constitution.*fn9 From then on and almost continuously throughout the lengthy proceeding respondent's trial attorney repeatedly hurled the charge of bias and prejudice in connection with his exceptions to rulings, when even a bare exception was hardly necessary. The examiner stated early and a number of times that a continuing exception to each and every adverse ruling would automatically be allowed the respondent. Yet counsel continued to impugn the examiner's integrity, invariably parroting his charge according to a uniform pattern of expression.*fn10 But, not once did he even suggest his own faith in the imputation by moving to disqualify the examiner, - the effective means for eliminating bias and prejudice where, in fact, it is believed to exist. Bethlehem Steel Co. v. National Labor Relations, Board, App. D.C., 120 F.2d 641, 652, 653. Notwithstanding a lack of appropriate power, in aid of orderly procedure, to deal with counsel's contumacy directly and adequately, the examiner none the less exercised commendable restraint under the aggravating circumstances and proceeded with the hearing fairly and impartially to the conclusion thereof. It therefore comes with little grace for the respondent now to urge upon us its trial attorney's own partisan imputation of bias and prejudice as being fatal to the proceeding.

The issues which the respondent says it was prevented by the examiner from litigating related to immaterial and irrelevant matter which in some instances amounted to scandal and impertinence. This, respondent's trial attorney endeavored to inject into the case by a prolix answer which for the most part was wholly unresponsive to the complaint. Paragraph 29, quoted in full in footnote 8, supra, is a fair illustration. On motion duly made by counsel for the Board before any testimony was taken, the examiner properly struck the irrelevant and immaterial matter from the respondent's answer; and, thereupon, he stated of record, succinctly and correctly, the issues to be litigated in the light of the complaint.Thenceforth, he rightly excluded the respondent's offers of proof of the matter stricken from the answer.

The examiner's refusal of the respondent's request for subpoenas was warranted. The witnesses whom respondent's trial attorney thus sought to summon,*fn11 he intended to use in an effort to build up a record of irrelevancy and immateriality, as the stricken portions of the answer clearly envisioned.The examiner's action with respect to the particular subpoenas requested properly served to confine the hearing to the issues and, at the same time, it eliminated nothing that was either material or relevant to the case.

Complaint is made of the fact that the examiner at times interrogated witnesses.The respondent suggests that this was done out of hostility to it, but we are cited to no single instance throughout the extensive record that would justify the respondent's insinuation. It is an examiner's duty to develop the facts material to the issues, and to that end he is authorized "to call, examine and cross-examine witnesses and to introduce into the re cord documentary or other evidence". See Section 24 of Rules and Regulations, Series 1, as amended, promulgated by the National Labor Relations Board pursuant to authority contained in Section 6(a) of the National Labor Relations Act and in force at the time of the hearing. 1 N.L.R.B. 1032-1037.*fn12 See, also, Bethlehem Steel Co. v. National Labor Relations Board, App. D.C., 120 F.2d 641, 652, where it was said that, - "It is the function of an examiner * * * to see that the facts are clearly and fully developed. He is not required to sit idly by and permit a confused or meaningless record to be made." The examiner, therefore, acted within his authority in interrogating witnesses.

Nor did the examiner err when he refused to permit respondent's trial attorney to impeach witnesses by interrogating them with respect to their arrests without conviction for crime and their tendency to drink intoxicating liquors, etc. By limiting counsel, in such connection, to a showing of convictions for felony or misdemeanors amounting to crimen falsi, the examiner acted in accordance with a well recognized rule of evidence. See United States v. Montgomery, 3 Cir., 126 F.2d 151.

It is now urged by the respondent that the Board was biased and prejudiced just as the stricken paragraph of the answer had alleged. To support the charge the respondent relies on articles written and speeches made by members of the Labor Board. But nowhere is there an allegation or showing that either the Board or any member thereof ever acted in respect of the subject-matter of the instant complaint other than officially and directly. The case of Berkshire Employees Ass'n, etc., v. National Labor Relations Board, 3 Cir., 121 F.2d 235, is therefore not in point; and the current charge of bias and prejudice stands unsustained.

The respondent asserts that the Board did not read or consider the evidence in this case but relied entirely for its findings upon an analysis of the testimony and documentary proofs, and recommendations, made by attorneys in its "review section".This charge the respondent rests upon inferences which it draws from testimony given by Board members and employees before a special investigating committee of the House of Representatives and from the speeches made or articles written by Board members. The respondent points to no direct proof in the record now before us which discloses what course the Board pursued in considering the testimony, in making its findings of fact, or in arriving at its decision in this case.

However, we may well assume that the Board did avail itself of the services of subordinates in familiarizing itself with the material evidence and in arriving at the findings whereof its conclusions are predicated. Such action does not constitute a want of due process. In Morgan v. United States, 298 U.S. 468, 481, 56 S. Ct. 906, 912, 80 L. Ed. 1288, it was said that the rule as to the hearing necessary to insure due process "does not preclude practicable administrative procedure in obtaining the aid of assistants in the department.Assistants may prosecute inquiries. Evidence may be taken by an examiner. Evidence thus taken may be sifted and analyzed by competent subordinates. Argument may be oral or written. The requirements are not technical. But there must be a hearing in a substantial sense." Wherever the question of due process has been raised in regard similar to the present, it has been answered adversely to the respondent's contention.*fn13 The very exigencies of the Board's situation, because of the character and scope of the work imposed in the discharge of the duty which Congress has placed upon it, require that the courts do not lightly impute want of due process to the Board's mode of procedure simply because it happens to be an administrative body. As was said in National Labor Relations Board v. Biles Coleman Lumber Co., 9 Cir., 98 F.2d 16, 17, "It is obvious that such an administrative body, with scores of cases for its decision, many involving complicated questions of fact and often inticate questions of law, properly will rely upon its employees for assistance in their preparation. The administrative duties imposed on the Board by the Congress could not proceed otherwise."

In determining what course the Board may follow and, yet, not offend against constitutional inhibitions, it would be bootless to enter upon a discussion as to the relative merits or constitutional validity of the court-tradition and institutional concepts of administrative procedure. For, while "a 'full hearing' has obvious reference to the tradition of judicial proceedings" (Morgan v. United States, 298 U.S. 468, 480, 56 S. Ct. 906, 911, 80 L. Ed. 1288), we may not dogmatically tell the Board that it must "hear" in some one particular manner so long as it does "hear", i.e. consider the evidence and argument. The question is not what procedure a court might favor but whether the procedure actually followed by the Board was violative of due process. The responsibility for the administration of the National Labor Relations Act lies exclusively with the Board.So long, therefore, as the Board's procedural methods do not violate constitutional restraints, the right to choose the method is the Board's. What the courts may and do determine, on petitions to enforce or to set aside Board orders, is whether the Board's procedure in given circumstances comported with the requirements of due process. And, thus, court decisions do tend automatically to delineate more specifically from time to time the course which the Board may pursue and keep within constitutional bounds, but that is as far as the courts can properly go in directing Board procedure. They may not "probe the mental processes" of an administrative offier "in reaching his conclusions if he gave the hearing which the law required". Morgan v. United States, 304 U.S. 1, 18, 58 S. Ct. 773, 776, 999, 82 L. Ed. 1129.

Whether there was due process in this case depends, therefore, upon whether the respondent was accorded the hearing which the law required. From the record before us, we are unable to see how the answer could possibly be otherwise than in the affirmative.

A charge of unfair labor practics by the respondent which was sufficient under the Act (Consumers Power Co. v. National Labor Relations Board, 6 Cir., 113 F.2d 38, 42) was duly filed with the Board. The Board's complaint, which specified the charges in detail, thereupon issued against the respondent. In due course a hearing on the complaint was begun before a trial examiner. The respondent by its trial attorney actively participtaed in the hearing throughout the five months which it endured. Immediately following the settlement of the pleadings after the respondent's motions to quash the complaint*fn14 and the motion to strike portions of the respondent's answer had been disposed of, and before any testimony in relation to the charges had been taken, the examiner correctly states for the record in the presence of respondent's trial counsel the charges to be litigated. From then on the respondent by its trial attorney cross-examined the Board's witnesses and called and examined witnesses. Surely, the respondent cannot justly say that it was not given an "opportunity to know the claims of the opposing party and to meet them". Morgan v. United States, 304 U.S. 1, 18, 58 S. Ct. 773, 776, 999, 82 L. Ed. 1129. After the hearing had been concluded the examiner filed an intermediate report to which, as well as to the record, the ...

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