Opinion

JUSTICE O'CONNOR, dissenting.

I agree with the Court that the National Labor Relations Board (NLRB) could reasonably determine in this case that reimbursing the petitioner is not necessary to effectuate the objectives of the National Labor Relations Act (Act). My disagreement is with the Court's conclusion that the Board provided an adequate explanation for its decision. The Board offered three reasons for its conclusion that reimbursing the petitioner would not effectuate the purposes of the Act. Each of its stated reasons was in error or inadequate to justify its conclusion. I would therefore remand the case to the Board in order to give it an opportunity to determine the appropriateness of reimbursement in light of the Court's Opinion.

I

A brief review of the facts is useful in understanding the inadequacy of the Board's explanation for its decision.

For over a decade, there has been a dispute between respondent Building Material and Dump Truck Drivers, Teamsters Local 36 (Union), and respondent California Dump Truck Owners Association (Association) over the availability of hauling jobs for nonunion truck operators. In June, 1977, three contractors' associations, which are respondents in this case (Contractors), entered into a new master labor agreement (Agreement) with the Union which required signatory contractors to transport "all materials... to or from or on the site of the work by workmen furnished by the appropriate craft [union]...." App. 10. The Agreement also required contractors to obtain the services of dump truck operators only through brokers who had signed an agreement with the Union and provided for penalties for contractors who failed to comply. Thus, through the Agreement, the Union required the Contractors to ensure that only signatory brokers received subcontracts for hauling, and that only union operators performed hauling services.

Petitioner Larry Shepard is a self-employed dump truck operator. He accepted referrals from the Terra Trucking Co., a broker. In February, 1978, Shepard entered into a subhaul agreement with Terra, under which the broker was authorized to make deductions from his earnings for a number of purposes, including "payroll benefits as required by the Union Agreement." Id. at 22. When Shepard worked on union jobs, Terra deducted the appropriate amounts for payment to the Union's benefit funds.

Terra signed the Agreement, and was therefore required to refer only union operators to contractors. In August, 1978, Terra's president, Fred ReCupido, received a letter from the Union stating that seven of Terra's "employees," including Shepard, were not members in good standing of the Union. The letter requested that the seven be "removed from [Terra's] employ and not be rehired until properly cleared by [the Union]." Id. at 27. ReCupido told the seven they would have to join the Union by September 5, 1978, if they wished to work through Terra. Shepard joined the Union in September, 1978, and paid initiation fees and union dues "under protest," on advice of counsel. Some of the other operators named in the Union's letter also joined at that time.

On August 25, 1978, Shepard's counsel filed unfair labor practice charges on behalf of Terra's nonunion operators, alleging violations of both § 8(b)(4) of the Act, 29 U.S.C. § 158(b)(4) -the prohibition against secondary boycotts -and § 8(e), 29 U.S.C. § 158(e), the hot cargo provision. At the request of the Regional Director of the Board, those charges were withdrawn and replaced in October, 1978, by charges alleging only a § 8(e) violation. The Regional Director joined Shepard's unfair labor practice charge with charges previously filed by the Association, and issued a consolidated complaint against the Union and the Contractors alleging that the Agreement violated § 8(e).

After trial, an Administrative Law Judge found that the Union and the Contractors violated § 8(e) by agreeing not to do business with nonunion operators and their brokers. He found that, since 1965, the Union had brought economic pressure against the Contractors in order "to achieve its goal of unionization of owner-operators," and that the Agreement was "part of the Union's continuing efforts to achieve its goal...." 249 N.L.R.B. 386, 393 (1980).

The ALJ found that "Shepard joined the Union because of the letter Local 36 sent ReCupido." Id. at 391. In addition to this specific finding, the ALJ made findings concerning another incident [ Footnote 2/1 ] and stated that "union membership of owner-operators resulted from illegal provisions of the [Agreement]." Id. at 394.

The ALJ recommended that the Board issue a cease-and-desist order and require that notices of its ruling be posted conspicuously. In addition, the ALJ recommended that the Union and the Contractors be required to reimburse operators for payments to the Union. Id. at 395. [ Footnote 2/2 ]

The Board upheld the ALJ's findings and conclusions, but deleted his "make-whole" reimbursement order. The Board stated its reasons for doing so in a footnote which reads in relevant part:

[T]here is insufficient evidence in the record with respect to alleged losses directly attributable to actual coercion by [the Union and the Contractors]. Furthermore, we find a reimbursement order, typically used to 'make whole' employees for violations of the Act, to be generally overbroad and inappropriate in the context of 8(e) violations. We note that aggrieved owner-operators engaged in business as independent contractors may pursue a damage claim under Sec. 303 of the Act. For the foregoing reasons, we find that the reimbursement of owner-operators ordered by the Administrative Law Judge would not effectuate the remedial policies of the Act. See [Carpenters] v. N.L.R.B., 365 U. S. 651 (1961).

Id. at 386, n. 2 (emphasis in original).

The United States Court of Appeals for the District of Columbia Circuit upheld the Board's refusal to order reimbursement, rejecting the contentions that the Board had failed to explain its decision adequately and that the relief ordered was insufficient as a matter of law. 215 U.S.App.D.C. 373, 380, 669 F.2d 759, 766 (1981).

II

The broad language of § 10(c) of the Act, 29 U.S.C. § 160(c), compels the conclusion that the Board has the authority to order restitution of money unlawfully collected by a union, regardless of whether the money was collected from employees or other persons. [ Footnote 2/3 ] See Virginia Electric & Power Co. v. NLRB, 319 U. S. 533 (1943). Indeed, in a proceeding very similar to the instant case, the Board ordered reimbursement of independent owner-operators who joined a union as a result of the union's successful efforts to coerce an employer to enter into and enforce a hot cargo agreement. Local 814, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Santini Brothers, Inc.), 208 N.L.R.B. 184 (1974), enf'd, 178 U.S.App.D.C. 223, 546 F.2d 989 (1976), cert. denied, 434 U.S. 818 (1977).

The Board's first reason for denying reimbursement was that it found that there was "insufficient evidence in the record with respect to alleged losses directly attributable to coercion by [the Union and the Contractors]." There is however, ample evidence, as found by the ALJ, that Shepard and other Terra owner-operators joined the Union and paid initiation fees and dues, [ Footnote 2/4 ] against their will, as a result of the Union's effort to enforce an agreement which violated § 8(e).

The Board's second reason, that a reimbursement order is "generally overbroad and inappropriate in the context of 8(e) violations," cannot withstand scrutiny. Although it would be inappropriate to order reimbursement of persons who would have made payments to a union regardless of whether it had attempted to enforce an illegal provision, an order requiring that Shepard be reimbursed for the initiation fees and dues he paid to the Union would not be "overbroad and inappropriate" in light of the ALJ's finding that Shepard joined the Union as a result of the Union's effort to enforce the hot cargo provision. Cf. Carpenters v. NLRB, 365 U. S. 651 (1961).

As its third reason for refusing to order reimbursement, the Board stated that the owner-operators "may pursue a damage claim under Sec. 303 of the Act." But as the Board conceded, § 303, by its terms, only creates a damages remedy for persons harmed by a § 8(b)(4) violation, not a § 8(e) violation. Ante at 459 U. S. 351. See Connell Construction Co. v. Plumbers & Steamfitters, 421 U. S. 616, 421 U. S. 649, n. 9 (1975) (Stewart, J., dissenting). Thus in the absence of a finding of a § 8(b)(4) violation, petitioner could not successfully pursue a § 303 action.

It is true that the Court "will uphold a decision of less than ideal clarity if the agency's [reasons] may reasonably be discerned." Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U. S. 281, 419 U. S. 286 (1974) (citation omitted). But as the Court ruled in SEC v. Chenery Corp., 318 U. S. 80, 318 U. S. 95 (1943),

[a]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.

See FPC v. Texaco Inc., 417 U. S. 380, 417 U. S. 397 (1974). The Board's order in this case simply does not support its denial of reimbursement. [ Footnote 2/5 ] I would therefore reverse the judgment of the Court of Appeals and remand this case to allow the Board to consider whether reimbursement of any or all of the funds paid to the Union by the petitioner is necessary to effectuate the Act's prohibition against hot cargo agreements. See NLRB v. Food Store Employees, 417 U. S. 1 (1974).

Notes

[ Footnote 2/1 ]

The ALJ found that, in November, 1977, the Kissinger Trucking Co., a broker, entered into an agreement with a contractor, the Penhall Co., to supply hauling services. Shortly thereafter, Kissinger's manager was informed by Penhall's superintendent that the Union had said that Kissinger should be replaced because it was referring nonunion operators. Kissinger lost the contract with Penhall, and subsequently signed the 1977 Agreement. 249 N.L.R.B. at 390.

[ Footnote 2/2 ]

The recommended order, which was omitted from publication, would have required the Union and the Contractors

[j]ointly and severally [to] make whole all owner-operators... for all dues, initiation fees, assessments, and contributions to trust funds which... said owner-operators paid to [the] Union or its trust fund as a result of enforcement of the [illegal] provisions of the... Agreement.

Building Material and Dump Truck Drivers, Teamsters Local Union No. 6, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, No. 21-CE-197, slip op. at 18 (NLRB, Oct. 30, 1979).

[ Footnote 2/3 ]

I express no opinion as to whether the Board could, as the ALJ recommended here, require an employer to reimburse employees or independent contractors for funds unlawfully collected by a union with the acquiescence of the employer.

[ Footnote 2/4 ]

Because Shepard signed the subhaul agreement, which authorized Terra to make deductions from his earnings for payments to the Union's benefit funds, prior to the Union's efforts to enforce the illegal provisions of the Agreement, it is not clear whether his payments to the benefit funds should be attributed to the Union's attempts to enforce the hot cargo provision.

[ Footnote 2/5 ]

Unlike the majority, I do not believe that it can reasonably be discerned from the terse footnote quoted above that the Board has barred reimbursement in cases in which there is no finding of a § 8(b)(4) violation because "reimbursement should be reserved for especially egregious situations." Ante at 459 U. S. 350.