Jam Productions, Limited, et al v. NLRB
Filing
Filed opinion of the court by Judge Rovner. We GRANT Jam Productions petition for review and REMAND for a hearing on its election objection, and DENY the Board s cross-application for enforcement. Michael S. Kanne, Circuit Judge; Ilana Diamond Rovner, Circuit Judge and Thomas M. Durkin, District Court Judge. [6934519-1] [6934519] [17-2042, 17-2111]
Case: 17-2042
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In the
United States Court of Appeals
For the Seventh Circuit
Nos. 17-2042 & 17-2111
JAM PRODUCTIONS, LTD., EVENT
PRODUCTIONS, INC., STANDING ROOM
ONLY, INC., and VICTORIA OPERATING
CO.,
Petitioners, Cross-Respondents,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent, Cross-Petitioner,
and
THEATRICAL STAGE EMPLOYEES
UNION, LOCAL NO. 2 I.A.T.S.E.,
Intervenor-Respondent.
Petition for Review and Cross-Application for Enforcement of an
Order of the National Labor Relations Board.
No. NLRB-1, No. 13-CA-186575
ARGUED DECEMBER 8, 2017 — DECIDED JUNE 28, 2018
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Before KANNE and ROVNER, Circuit Judges, and DURKIN,
District Judge.*
ROVNER, Circuit Judge. The National Labor Relations Board
(“the Board”) seeks to enforce its order requiring Jam Productions, Ltd., Event Productions, Inc., Standing Room Only, Inc.,
and Victoria Operating Co. (collectively “Jam Productions” or
“Jam”) to bargain with the Theatrical Stage Employees Union
Local No. 2, (“Local No. 2”). Jam argues that in the period
before the election to determine whether Local No. 2 would
represent Jam employees, the union attempted to influence the
election outcome by steering premium union jobs to Jam
employees. We have jurisdiction to review the Board’s application for enforcement pursuant to 29 U.S.C. § 160(e). Because
Jam presented enough evidence to warrant a hearing on the
validity of the election results, we deny enforcement and
remand for an evidentiary hearing.
I.
In mid-September 2015, Local No. 2 filed an election
petition to represent employees of Jam Productions as a single
employer. Jam produces concerts, shows, and events at venues
in and around Chicago, including the Riviera Theatre, Park
West Theatre, and Vic Theatre. In conjunction with these
productions, Jam hires part-time and non-union stagehands to
unload lighting and sound equipment into the venue, set it up,
maintain it, take it down, and move it out of the venue after the
show. Given the irregular schedule of shows at any given
*
Of the Northern District of Illinois, sitting by designation.
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venue (shows followed by days or weeks without performances) and the fact that one venue (the Riviera) was closed
for the entire summer because it lacks air conditioning, none of
the stagehands are employed full time and their employment
is generally sporadic.
On September 30, Jam and Local No. 2 entered into a
Stipulated Election Agreement identifying the potential
bargaining unit as stagehands at the Riviera, Vic, and Park
West Theatres employed during the payroll period ending on
October 4, 2015. The unit was defined more specifically as: “All
full-time and regular part-time stage production employees
employed by the Employer at the Riviera, Park West, and Vic
Theatres, but excluding production managers and crew
leaders, office clerical employees and guards, professional
employees and supervisors as defined in the Act.” Given the
sporadic nature of the work, the parties agreed to add the
following additional definition to the Agreement: “Also
eligible to vote are all employees in the unit who have been
employed by the Employer for a total of 18 concerts, shows,
and/or events over a 1-year period immediately preceding the
eligibility date.”
The day after the parties signed the Election Agreement,
however, the representation petition was held in abeyance
pending the investigation of an unfair labor practice charge
that Local No. 2 had filed only the day before it filed its
representation petition. Local No. 2’s charge was based on
Jam’s termination of the Riviera’s crew leader, Chris Shaw and
the fifty-three employees he supervised (the “Shaw crew”). The
unfair labor practice charge was not resolved until April 6,
2016, when the Board’s Acting Regional Director approved an
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agreement containing a non-admissions clause and providing
that Jam would reinstate the terminated employees by offering
them immediate and full participation in Jam’s “on-call list.”
Just over a month after the unfair-labor-practice charge was
resolved, on May 16, 2016, the election was held. Prior to the
election, Jam had asked the Regional Director to move the
eligibility date of the election back two weeks on account of the
seven-month election delay. The Regional Director did not
issue an order in response, so Jam included on its voter
eligibility list five stagehands hired in the two-week period
after the agreed-upon October 4, 2015 date, along with a
notation about their hiring date. Local No. 2 prevailed with
twenty-two votes in its favor and ten against; the victory was
not entirely decisive, however, because there were an additional twenty-one ballots challenged by either Jam or Local
No. 2. Eight of the challenges were uncontested, which left
thirteen contested ballots—all union challenges contested by
Jam. Five of those were the ballots cast by the employees who
had been hired in the two weeks following the stipulated
eligibility date. Local No. 2 challenged the remaining eight
ballots on various grounds such as number of shows worked
and whether the voting employees were in fact “supervisors”
ineligible to vote.
Jam also timely filed an objection contesting the election
results on the grounds that Local No. 2 unlawfully provided
economic benefits to employees during the critical period
preceding the election. Specifically, Jam alleged that Local
No. 2 provided employees premium, higher-paid work at
union venues in the weeks before the election in an attempt to
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influence the employees—particularly the Shaw crew—to vote
for the union.
In response to Jam’s objections, the Board’s Acting Regional
Director conducted an investigation and issued a Corrected
Report on June 20, 2016, concluding that Jam’s offer of proof in
support of its objection fell short of demonstrating the required
“substantial and material factual issues,” see Park Chevrolet-Geo,
Inc., 308 NLRB 1010, fn. 1 (1992), that, if proven, would warrant
setting aside the election. Specifically, the Director concluded
that although Jam had shown that employees did work union
jobs during the critical period, it had not shown that Local
No. 2 engaged in any wrongdoing by hiring those employees
through its open referral system. The report further concluded
that Jam’s evidence of an undeserved financial benefit was too
speculative to support its claim that Local No. 2 engaged in
wrongdoing. As relevant here, the Director also sustained
Local No. 2’s challenges to the ballots of four of the five
employees hired in the two weeks after the original eligibility
date,1 and certified Local No. 2 as the employees’ bargaining
agent.
Jam filed a request for review, and on January 5, 2017, a
three-member panel of the NLRB denied Jam’s request and
affirmed the Regional Director’s Corrected Report certifying
1
The Regional Director sustained twelve union challenges in all: four
employees hired after the original eligibility date and eight employees who
had not worked the requisite number of shows as defined by the eligibility
agreement. Because the nine remaining ballots would be insufficient to
impact the election results, the Regional Director did not consider those
challenges.
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Local No. 2 as the relevant bargaining unit. On the issue of
challenged ballots, one member of the panel would have
overruled the four Local No. 2 ballot challenges to employees
hired after the eligibility date. The dissenting panel member
reasoned that the delay occasioned by the Board’s resolution
of the unfair labor practice prevented the Board from enforcing
other material terms of the Election Agreement like the
eligibility date; he also noted that there was no prejudice to
Local No. 2 because Jam provided proper notice as to those
four employees. He would have, however, denied Jam’s
request for review of five additional union challenges, so the
four ballots he would have allowed would not have impacted
the election’s outcome.
Jam then refused to recognize or engage in collective
bargaining with Local No. 2, prompting the Board’s general
counsel to file a complaint alleging an unfair labor practice in
violation of § 8(a)(1) and (5) of the National Labor Relations
Act, 29 U.S.C. §§ 158(a)(1) and (5). In its answer to the complaint, Jam repeated its objections and challenges to the
certification of the election, but the Board rejected Jam’s
affirmative defenses and issued an order holding that Jam’s
refusal to bargain amounted to an unfair labor practice. See id.
Jam timely petitioned for review of the Board’s order compelling it to bargain, and the Board cross-applied for its enforcement.
II.
Because Jam refused Local No. 2’s request to enter into
collective bargaining, the central issue on appeal is whether the
Board reasonably certified Local No. 2 as the Jam employees’
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representative. As detailed above, an employer’s path to
judicial review of a Board’s decision upholding an election and
certifying a union is “circuitous.” Hanson Cold Storage Co. v.
NLRB, 860 F.3d 911, 914 (7th Cir. 2017) (quoting NLRB v. Serv.
Am. Corp., 841 F.2d 191, 193 n.3 (7th Cir. 1988)). Unlike an
unfair labor practice order by the Board, Board-certification
decisions are not immediately appealable. Thus, an employer
seeking judicial review must, as Jam did here, expose itself to
an unfair labor practice charge by refusing to bargain with the
Board-certified union. Only once Local No. 2 files an unfair
labor practice charge that is sustained by the Board can we
review the Board’s underlying certification decision. See id.
(describing process for employer to obtain judicial review of
Board’s decision upholding election and certifying union); see
also Ruan Transp. Corp. v. NLRB, 674 F.3d 672, 674 (7th Cir.
2012).
We have jurisdiction under 29 U.S.C. §§ 160(e) and (f) over
Jam’s petition for review of the Board’s May 16, 2017 decision.
See, e.g., NLRB v. City Wide Insulation, Inc., 370 F.3d 654, 657
(7th Cir. 2004). If the Board acted reasonably in certifying Local
No. 2, we will uphold the Board’s enforcement of its order
compelling Jam to enter into collective bargaining. See NLRB v.
River City Elevator Co., Inc., 289 F.3d 1029, 1032 (7th Cir. 2002).
We review factual conclusions by the Board to ensure that they
are supported by “substantial evidence” and expect its legal
conclusions to have a “reasonable basis in law.” City Wide
Insulation, 370 F.3d at 657. Both standards are deferential; the
Board’s factual conclusions are supported by substantial
evidence when they are based on “such relevant evidence as a
reasonable mind might accept as adequate to support a
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conclusion.” Sears, Roebuck & Co. v. NLRB, 349 F.3d 493, 502–03
(7th Cir. 2003) (internal quotations and citation omitted); NLRB
v. O’Daniel Trucking Co., 23 F.3d 1144, 1148 (7th Cir. 1994)
(same). We review the Board’s determination not to hold a
hearing on an employer’s objections under the same substantial evidence standard. Clearwater Transport, Inc. v. NLRB, 133
F.3d 1004, 1008 (7th Cir. 1998).
Jam’s primary argument on appeal is that the Board erred
in certifying the election results without holding a hearing on
its objections. Specifically, Jam challenges the Board’s determination that Local No. 2 work given to the Shaw crew preceding
the election did not make the election unfair.
Here, Jam contends that Local No. 2 engaged in a concerted
effort to steer high-paying union jobs to the twenty-one voting
members of the recently reinstated Shaw crew (whose votes
made up a majority of the counted votes). Jam submitted an
offer of proof outlining multiple instances in the critical period
before the election (between April and the first half of May
2016) where Local No. 2 chose members of the Shaw crew to
work shows Jam alleged would have ordinarily been staffed by
Local No. 2 Union members.
Local No. 2 selects stagehands for shows through an
“automated call steward” system accessible through its web
site. Individuals could log in to the automated system, where
they filled out a member profile describing their applicable job
classifications and availability. Stagehands then received job
offers via text, and simply replied to confirm or deny offers.
To support its theory, Jam submitted the anticipated
testimony of Behrad Emami, the production manager at the
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Riviera Theatre, and Eric Linz, a runner who worked at a
David Gilmour show at the Auditorium Theater on April 5.
Based on telephone conversations and text messages (attached
to Jam’s proffer), Emami would have testified to a number of
interactions with the members of the Shaw crew who were
unavailable to work or attend meetings at the Riviera because
they were working at union venues during the critical period.
Emami was prepared to testify that of the twenty-one voting
members of the Shaw crew, at least thirteen were hired to work
union shows during the critical period, including the David
Gilmour show at the Auditorium Theatre on April 5 and 6; the
Rihanna show at the United Center from April 14 to 16; the
NFL Draft in Grant Park from April 28 to 30; and the stage set
up at Northerly Island at the beginning of May. Eric Linz
would have testified that he had seen at least six members of
the Shaw crew while he was working as a runner at the David
Gilmour show, including two more not included in the thirteen
listed by Emami.
Jam also offered its own records from shows it produced at
union venues2 demonstrating that when Local No. 2 had
supplied stagehands for Jam outside the critical period, it did
not hire non-union employees. Jam’s records demonstrated
that at three large productions at the United Center outside the
critical period—January 13 (a Muse concert with 129 stagehands), January 19 (a Bruce Springsteen concert with 109
stagehands), and February 17 (an AC/DC concert with 116
2
In addition to the Riviera, Vic, and Park West Theatres, Jam occasionally
produced shows at union venues. For those shows Local No. 2 typically
provided the stagehands.
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stagehands)—Local No. 2 did not hire any members of the
Shaw crew. And Jam identified (as a hostile witness) the
individual on the Shaw crew, Justin Hoffman, who it believed
helped coordinate the plan to offer union jobs. Finally, Jam
sought employment records from Local No. 2 for the twentyone voting employees of the Shaw crew so that Jam could
demonstrate that it was unusual for the Shaw crew to have
received union jobs.
Local No. 2 refused to provide any of the requested records,
and the Regional Director declined to interview any of the
individuals identified in the offer of proof or require Local
No. 2 to turn over any business records. In rejecting Jam’s
request for a hearing, the Regional Director acknowledged that
the Shaw crew had received union jobs during the critical
period, but concluded that Jam had not demonstrated that
Local No. 2 made a gift of “tangible economic value” to garner
union votes.
The Regional Director is obligated to hold a hearing only
when the objecting party raises “substantial and material
factual issues” sufficient to support a prima facie showing of
objectionable conduct. Clearwater Transport, 133 F.3d at 1011
(quoting NLRB v. Lake Holiday Assoc., Inc., 930 F.2d 1231,
1236–37 (7th Cir. 1991)); 29 C.F.R. § 102.69(c)(1)(i). Jam could
meet its burden by alleging misconduct that, if proven, would
warrant setting aside the election under the substantive law of
representation elections. See, e.g., NLRB v. AmeriCold Logistics,
Inc., 214 F.3d 935, 938 (7th Cir. 2000) (“The NLRB must hold a
hearing when the employer makes a prima facie showing of
misconduct that would be sufficient to set aside the election.”);
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see also Serv. Am. Corp., 841 F.2d at 195; Clearwater Transport, 133
F.3d at 1011.
Although the standard of review is deferential, we believe
Jam presented enough evidence to obtain an evidentiary
hearing, and that the Board abused its discretion by failing to
hold one. When conducting a representation election, the
Board has wide discretion to “ensure the fair and free choice”
of bargaining representatives by employees. NLRB v. Savair
Mfg. Co. 414 U.S. 270, 276–77 (1973). This obligation to ensure
fair and free choice includes a prohibition on campaign tactics
by either the employer or the union that induce workers to cast
their votes on grounds other than the advantages and disadvantages of union representation. See id. (“We do not believe
that the statutory policy of fair elections … permits endorsements, whether for or against the union, to be bought and sold
in this fashion.”); see also Freund Banking Co. v. NLRB, 165 F.3d
928, 931 (D.C. Cir. 1999). Not only does the Act forbid employers from utilizing threats or rewards as campaign tactics, it
prohibits “both crude and subtle forms of vote-buying” by the
union. Freund, 165 F.3d at 931 (emphasis added). Thus, a union
is barred from both blatantly giving something of value to an
employee in exchange for his vote as well as offering a benefit
in a way that “tacitly obliges the employee” to vote for the
union. Id. (citing Savair, 414 U.S. at 277–78).
In considering whether a particular incentive taints the
fairness of the election, we ask whether what is offered is
“‘sufficiently valuable and desirable in the eyes of the person
to whom they are offered, to have the potential to influence
that person’s vote?’” River City Elevator, 289 F.3d at 1033
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(quoting Nestle Ice Cream Co. v. NLRB, 46 F.3d 578, 583 (6th Cir.
1995)). Specifically, the Board has held that a union is forbidden from providing voters anything of “tangible economic
benefit” during the critical period before the election. See King
Elec., Inc. v. NLRB, 440 F.3d 471, 474 (D.C. Cir. 2006) (quoting
Freund, 165 F.3d at 931–32); see also Mailing Servs., Inc., 293
NLRB 565, 565–66 (1989)).
The financial benefit of the higher-paying jobs immediately
preceding the election could plausibly be seen as an economic
inducement to secure votes in favor of Local No. 2. The NLRB
has refused to certify elections where a union has offered
benefits to employees of similar or lesser value than the
premium-pay jobs allegedly offered here. See Owens-Ill., Inc.,
271 NLRB 1235, 1235–36 (1984) (gift of union jackets); Mailing
Servs., 293 NLRB at 566 (free medical screenings offered by
union impermissible conferral of benefit); Wagner Elec. Corp.,
167 NLRB 532, 533 (1967) (union’s gift of life insurance coverage “is a tangible economic benefit”).
The Board defends the refusal to investigate or hold a
hearing on the grounds that union job referrals “in the ordinary course of its referral system, according to the pre-existing
standards and practice” provide no reason to suspect Local
No. 2 of using the jobs to induce votes. But whether the jobs
were in fact offered to the Shaw crew “according to preexisting standards and practice” is precisely the question Jam
sought to answer with its objection. The Board attacks Jam’s
offer of proof as nothing more than a fishing expedition,
devoid of the type of “specific evidence” about “specific
people” required to warrant an evidentiary hearing. See NLRB
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v. Service Am. Corp., 841 F.2d 191, 195 (7th Cir. 1988). But in
describing the alleged deficiencies in Jam’s offer of proof, the
Board highlights precisely the Catch-22 Jam faced in attempting to demonstrate that the referrals were in fact an aberration
from Local No. 2’s ordinary referral operating system.
For instance, the Board faults Jam’s offer of proof for failing
to provide evidence showing (1) Local No. 2’s normal referral
procedures; (2) whether the voting employees were treated
differently than others with access to the referral system; or
(3) whether the employees who received Local No. 2 jobs were
members of Local No. 2 or not. But these are the very questions
Jam sought to have answered with its offer of proof.
As detailed above, Jam provided more than vague, unsubstantiated accusations. Using its own employment records, it
compared the likelihood of non-union members receiving
union jobs before the critical period to what appeared to be the
dramatic increase in availability of union jobs during the
critical period. It also identified by name three individuals who
could provide further detail about how the referrals were
given and which specific employees had received Local No. 2
work. And it requested the very union records that the Board
now faults it for failing to produce: Local No. 2’s employment
records that would have identified union members and shed
light on the referral procedures and whether the Shaw crew
received different treatment during the critical period.
The Board’s primary argument is that Local No. 2 did not
engage in objectionable conduct because the referral system
was available to non-union members and thus it was unremarkable that the Shaw crew received union work. But that
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reasoning begs the question whether, despite the availability of
the referral system, non-union employees were ever selected
for union jobs outside of the critical period. As we noted in
Service American Corporation, “[t]he whole purpose for the
hearing is to inquire into the allegations to determine whether
they are meritorious; it makes little sense to expect the employer to prove its case, especially without power of subpoena,
to the Regional Director before a hearing will be granted.” 841
F.2d at 197 (quoting NLRB v. J-Wood/A Tappan Div., 720 F.2d
309, 315 (3d Cir. 1983)). Because the Regional Director declined
to interview either Justin Huffman, who Jam believed was
responsible for coordinating jobs for the Shaw crew during the
critical period, or any of the twenty-one Shaw crew members
identified in Jam’s offer of proof, he had no way of knowing if
members of Shaw’s crew ordinarily received union job offers
outside the critical period.
Without subpoena power, Jam produced as much evidence
as it had available tending to suggest that non-union voting
employees received a sudden increase in offers to work union
jobs in the period immediately preceding the election. Although such a benefit may not have formally obligated
members of the Shaw crew to vote for Local No. 2, having been
the beneficiaries of the premium-pay jobs, members of the
Shaw crew may well have felt some duty to return the favor
with a union vote. See Savair, 414 U.S. at 277 (noting that
although an employee may not be “legally bound to vote for
the union and has not promised to do so in any formal sense”
some “would feel obliged” to cast a union vote after having
signed a union recognition slip) (emphasis added). This may be
especially true if, outside of the critical period, the jobs offered
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were rarely, if ever, available for those non-union voting
employees.
Given the large pay disparity for union and non-union
stagehands, certainly the jobs at union venues during the
critical period could be seen as a gift of “tangible economic
value.” If the jobs were in fact, as Jam maintains, previously
unavailable to those employees, the offer of the premium-pay
jobs could certainly be seen as an unearned benefit to induce
union support. Savair, 414 U.S. at 280 (“[A]lthough the benefits
granted by the employer were permanent and unconditional,
employees were ‘not likely to miss the inference that the source
of benefits now conferred is also the source from which future
benefits must flow and which may dry up if it is not obliged.’”)
(quoting NLRB v. Exchange Parts Co., 375 U.S. 405, 409 (1973)).
And, as discussed above, without an evidentiary hearing on
Jam’s objections, it is impossible to determine whether the jobs
at union venues amounted to an improper inducement to vote
in favor of Local No. 2.
It follows that Jam’s circumstantial evidence of a concerted
effort to incentivize non-union employees with access to Local
2 jobs prior to the vote established a “substantial and material
factual issue” sufficient to warrant an evidentiary hearing. The
Regional Director thus abused his discretion by failing to
investigate or hold such a hearing.
That leaves Jam’s contention that the Board’s rulings on the
challenged ballots were clearly erroneous. Jam takes issue
primarily with the Board’s decision to uphold the Regional
Director’s refusal to move the eligibility date in light of the
delay attributable to the unfair labor practice charge. Jam
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suggests that by failing to count the votes of those employees
hired shortly after the original date in the Stipulated Election
Agreement, the Board effectively disenfranchised those
employees.
Under the Board’s election rules, the parties may enter a
stipulated election agreement, which must include, among
other things, the payroll period to be used for determining
voter eligibility. See 29 C.F.R. § 102.62(b). The Board has long
treated such election agreements as “‘contracts,’ binding on the
parties that executed them.” T & L Leasing, 318 NLRB 324, 325
(1995) (quoting Barceloneta Shoe Corp., 171 NLRB 1333, 1343
(1968), enforced mem., 1970 WL 5417 (1st Cir. 1970)). As such,
election agreements will be enforced except in limited circumstances. For instance, upon a showing of “cause,” Regional
Directors may revoke their approval of the agreements. And
the parties may withdraw from election agreements upon
agreement of all the parties or an “affirmative showing of
unusual circumstances.” T & L Leasing, 318 NLRB at 325.
Otherwise, the agreement will be enforced so long as the terms
are clear and unambiguous and it does not run afoul of settled
Board policy or specific statutory exclusions. Id.
Given the express and unambiguous payroll period cut-off
of October 4, 2015 in the stipulated agreement, we would be
hard-pressed to conclude that the Board committed clear error
by refusing to allow the ballots of the employees who started
working after the cut-off date. Jam cites several cases it claims
lend support to its argument that eligibility dates may be
moved in the case of a delayed election. But the cases Jam cites
not only involve much longer delays (two or more years) than
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the seven months at issue here, they also speak to the issue of
whether the Regional Director has the authority to change the
eligibility date when an election is delayed, not to whether it
would be an abuse of discretion to enforce the agreed-upon
eligibility date. See Hartz v. Mountain Corp., 260 NLRB 323, 327
(1982) (three-member panel of the Board affirmed decision
allowing union that had not participated in proceedings for
election held two years earlier to withdraw petition for
certification and intervention in another union’s petition);
Interlake v. Steamship Co., 178 NLRB 128, 129 (1969) (concluding
that a new eligibility date would be appropriate for a second
runoff election held three years after original election) (emphasis
added). No one disputes that the Regional Director could have
allowed the parties to agree on a new eligibility date or
perhaps accepted Jam’s request to push back the eligibility date
two weeks on account of the delay. Indeed, on review one
member of the panel would have allowed Jam to push back the
eligibility date. That there were reasons for allowing the
additional voters who shared a community of interest with the
other employees does not mean that it was clear error not to
count the challenged votes.
As the Board noted, the terms of the stipulated agreement
were clear and unambiguous. As detailed above, such terms
will ordinarily be enforced. There was nothing so extraordinary about the delay preceding the election here that the Board
committed clear error by upholding Local No. 2’s challenges to
the voters hired after the agreed-upon eligibility date. In light
of our deferential standard of review, we affirm the Board’s
ruling on the challenged ballots.
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III.
For the foregoing reasons, we GRANT Jam Productions’
petition for review and REMAND for a hearing on its election
objection, and DENY the Board’s cross-application for enforcement.
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