Respondent company's employees went on strike in April, 1954.
The union filed charges against the company, including a charge for
refusal to bargain, and while these charges were pending,
terminated the strike in April, 1955, and applied for reinstatement
of many of the strikers. Not all these employees were reinstated.
In February, 1956, the National Labor Relations Board (NLRB) found
that the company had been guilty of an unlawful refusal to bargain
and ordered it to offer reinstatement to all strikers who applied
and to "make such applicants whole for any loss of pay by reason of
the . . . refusal, if any, to reinstate them." The Court of Appeals
entered a decree in August, 1957, enforcing the order. The NLRB
regional office then notified the company that the case would
remain open until the company had fully complied with the decree.
In November, 1957, the company wrote the regional office that it
had complied with "some of the provisions of the decree" and
requested that "any instance of a failure to comply" be brought to
its attention. In March, 1960, an NLRB compliance officer requested
payroll and other records to determine the employment and back-pay
rights of employees. In November, 1961, a back-pay specification
was filed and the company applied to the Court of Appeals for a
permanent stay, alleging that the NLRB had delayed improperly in
issuing the specification. The Court of Appeals denied the stay,
although noting that the delay was regrettable. After a lengthy
hearing, the NLRB, in June, 1966, ordered back pay, which, for
cases where no company offer was made, would accrue through the
last quarter of 1961, when the specification was filed. On review,
the Court of Appeals found that the NLRB had been guilty of
"inordinate" delay prejudicing the company, and modified the order
to eliminate back pay accruing after July, 1959.
Held: While the delay in the administrative process is
deplorable, the Court of Appeals
Page 396 U. S. 259
here exceeded the narrow scope of review provided for the NLRB'
remedial orders when it shifted the cost of the delay from the
company to the employees. Pp.
396 U. S.
262-266.
399 F.2d 356, reversed.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
This case presents the question whether, when an employer has
improperly failed to reinstate striking employees, and the National
Labor Relations Board has after considerable delay ordered back pay
for those employees, a court of appeals may, on account of the
delay, modify the Board's order to provide an early cut-off date
for back pay. In the circumstances of this case, we hold such a
modification to be an unwarranted interference with the Board's
remedial power to implement the policies of the National Labor
Relations Act.
I
The employees in question chose the Amalgamated Clothing Workers
of America, AFL-CIO, as their bargaining representative in January,
1954. After three bargaining sessions between the union and the
company, the employees went out on strike in April, 1954. At that
point and thereafter, the company refused to bargain
Page 396 U. S. 260
further with the union representatives. Charges of unfair labor
practices, including a refusal to bargain in good faith, were filed
against the company. In April, 1955, while these charges were
pending, the union terminated the strike and applied for the
reinstatement of many of the strikers. The company reinstated some
of these employees and failed to reinstate others.
In February, 1956, the Board found that the company had indeed
been guilty of an unlawful refusal to bargain. It ordered the
company to offer reinstatement to all strikers who applied, and to
"make such applicants whole for any loss of pay suffered by reason
of the . . . refusal, if any, to reinstate them."
J. H.
Rutter-Rex Mfg. Co., 115 N.L.R.B. 388, 391 (1956). As is
apparently the Board's practice in reinstatement cases involving
strikers, the order did not name the individuals covered, but left
disputes over the details of reinstatement and back pay to the
compliance stage of the proceedings. The Court of Appeals enforced
the Board's order,
NLRB v. J. H. Rutter-Rex Mfg. Co., 245
F.2d 594 (C.A. 5th Cir.1957), and entered its decree on August 19,
1957.
On August 21, 1957, the Board's regional office sent the company
the standard letter describing compliance procedures, which
included the following:
"When you have fully complied with the affirmative terms of the
Decree and there are no violations of its negative provisions, you
will be notified that the case has been closed. Until you receive
such notice, you will know that the case still remains open for all
purposes as awaiting compliance."
On November 7, 1957, the company wrote to the regional office
stating that it had complied with "some of the provisions of the
decree," and asking that the regional office bring "any instance of
a failure to fully comply with the order" to the company's
attention. The regional office did not answer this letter, and the
company
Page 396 U. S. 261
heard nothing until March 22, 1960, when a Board compliance
officer notified the company that the case had been assigned to
him, and requested payroll and other records necessary to determine
the employment and back-pay rights of employees.
On November 16, 1961, the regional office filed a 428-page
back-pay specification, alleging that the company owed more than
$342,000 to some 207 strikers who had either not been reinstated
within five days after applying or who had never been reinstated,
in violation of the Board and court orders. The company applied to
the Court of Appeals for a permanent stay of further action in the
back-pay proceedings, alleging that the Board had delayed
improperly in issuing the specification. By affidavit, the Board
explained that the delay was caused in part by the great complexity
of the task of processing the claims of approximately 600 strikers,
and in part by the extremely heavy caseload and severe limitations
in staff that the New Orleans regional office experienced during
the late 1950's. The Court of Appeals noted that the delay was
regrettable, but denied the requested stay.
NLRB v. J. H.
Rutter-Rex Mfg. Co., 305 F.2d 242 (C.A. 5th Cir.1962).
After a lengthy hearing, a Trial Examiner denied back pay to 35
of the 207 claimants, and reduced the amount due to just over
$160,000. He determined that each employee should receive net back
pay, computed according to the Board's usual formula, [
Footnote 1] for the period running from
five days after his application for reinstatement until the company
made a complying offer. Where no offer was made, the back pay was
to accrue through the last quarter of 1961, the quarter in which
the specification was filed. His findings and recommendations were
adopted with minor modifications by the Board on June 6, 1966.
J. H. Rutter-Rex Mfg. Co.,
Page 396 U. S. 262
158 N.L.R.B. 1414 (1966). Both the Examiner and the Board
considered and rejected the company's contention that the delay in
issuing the specification should bar the back-pay award, either in
whole or in part.
On review, the Court of Appeals found that the Board had been
guilty of "inordinate" delay, in violation of § 6(a) of the
Administrative Procedure Act, 60 Stat. 240, 5 U.S.C. § 1005(a), now
5 U.S.C. § 555(b) (1964 ed., Supp. IV), and to the prejudice of the
company, which had been "lulled into the belief that the Board was
satisfied and that no further action was to be expected."
J. H.
Rutter-Rex Mfg. Co. v. NLRB, 399 F.2d 356, 363 (C.A. 5th
Cir.1968). Arguing that the purpose of back-pay awards is to "deter
unfair labor practices,"
id. at 364, and believing that a
substantial award of back pay would be sufficient to achieve such
deterrent effect, the court modified the Board order to eliminate
all back pay accruing after July 1, 1959, thus reducing the awards
of some 37 strikers who had not yet received complying offers of
reinstatement by that date. We granted certiorari to consider the
propriety of this modification, [
Footnote 2] 393 U.S. 1116 (1969), and we reverse the
judgment below.
II
We start with the broad command of § 10(c) of the National Labor
Relations Act, as amended, 61 Stat. 147, 29 U.S.C. § 160(c), that,
upon finding that an unfair labor practice has been committed, the
Board shall order the violator "to take such affirmative action
including reinstatement of employees with or without back pay, as
will effectuate the policies" of the Act. This Court has stated
that the remedial power of the Board is "a broad
Page 396 U. S. 263
discretionary one, subject to limited judicial review."
Fibreboard Corp. v. NLRB, 379 U.
S. 203,
379 U. S. 216
(1964).
The legitimacy of back pay as a remedy for unlawful discharge or
unlawful failure to reinstate is beyond dispute,
Mastro
Plastics Corp. v. NLRB, 350 U. S. 270,
350 U. S. 278
(1956), and the purpose of the remedy is clear.
"A back pay order is a reparation order designed to vindicate
the public policy of the statute by making the employees whole for
losses suffered on account of an unfair labor practice."
Nathanson v. NLRB, 344 U. S. 344, 346
(1953). As with the Board's other remedies, the power to order back
pay "is for the Board to wield, not for the courts."
NLRB v.
Seven-Up Bottling Co., 344 U. S. 344,
344 U. S. 346
(1953).
"When the Board, 'in the exercise of its informed discretion,'
makes an order of restoration by way of back pay, the order 'should
stand unless it can be shown that the order is a patent attempt to
achieve ends other than those which can fairly be said to
effectuate the policies of the Act.'"
Id. at
344 U. S.
346-347.
Here, the Board ordered back pay through December, 1961, for
employees who had not yet received complying offers of
reinstatement by that date. That order clearly falls within the
general purpose of making the employees whole, and thus restoring
the economic
status quo that would have obtained but for
the company's wrongful refusal to reinstate them. The employees
encompassed by the order earned less during the relevant quarterly
periods than they would have had they been reinstated in their old
or substantially equivalent jobs with the company. Thus, the Court
of Appeals' modification, cutting off the accrual of back pay at
the arbitrary date of July 1, 1959, left the employees who had not
been reinstated by that date worse off than they would have been
but for the company's wrongful action in refusing reinstatement.
Either the company or the employees
Page 396 U. S. 264
had to bear the cost of the Board's delay. The Board placed that
cost upon the company, which had wrongfully failed to reinstate the
employees. In an effort to discipline the Board for its delay, the
court shifted part of that cost from the wrongdoing company to the
innocent employees.
The Court of Appeals justified the modification as a proper
balancing of the interests of the company, which it found was
prejudiced in litigating the back-pay claims by the Board's delay,
and the interests of the employees in full restitution. It found
statutory support for the company's position in what it took to be
the Board's violation of its duty under the Administrative
Procedure Act to "proceed with reasonable dispatch to conclude any
matter presented to it." 5 U.S.C. § 1005(a). Thus, the Court of
Appeals reasoned, the case fell within the admonition that
reviewing courts in labor cases not
"rubber-stamp their affirmance of administrative decisions that
they deem inconsistent with a statutory mandate or that frustrate
the congressional policy underlying a statute."
NLRB v. Brown, 380 U. S. 278,
380 U. S. 291
(1965).
Assuming without deciding that the delay in issuing the
specification did violate the Board's duty of prompt action under
the Administrative Procedure Act, it does not follow that
enforcement of the full back-pay remedy was an abuse of the Board's
discretion. Wronged employees are at least as much injured by the
Board's delay in collecting their back pay as is the wrongdoing
employer. In view of "the economic hardship caused by many years of
undeservedly substandard earnings," lengthy delays "must render the
back pay award a wholly inadequate and unsatisfactory remedy" to
the employees for the company's refusal to reinstate them.
NLRB
v. Mastro Plastics Corp., 354 F.2d 170, 180 (C.A.2d Cir.1965).
This Court has held before that
Page 396 U. S. 265
the Board is not required to place the consequences of its own
delay, even if inordinate, upon wronged employees to the benefit of
wrongdoing employers.
NLRB v. Electric Cleaner Co.,
315 U. S. 685,
315 U. S. 698
(1942);
Labor Board v. Katz, 369 U.
S. 736,
369 U. S. 748
n. 16 (1962).
The Court of Appeals reasoned further that the purpose of the
back-pay remedy is deterrence of unfair labor practices, and that
the substantial back-pay award that it enforced would sufficiently
serve that deterrent purpose. But the Board could properly conclude
that back pay is not only punishment for an unfair labor practice,
but is also a remedy designed to restore, so far as possible, the
status quo that would have obtained but for the wrongful
act.
Cf. Phelps Dodge Corp. v. NLRB, 313 U.
S. 177,
313 U. S. 194
(1941).
Finally, the Court of Appeals reasoned that the company was
"lulled into the belief that the Board was satisfied and that no
further action was to be expected." 399 F.2d at 363. We need not
decide whether this sort of estoppel argument would justify a court
in reducing a back-pay award, for no estoppel appears in this case.
The Board clearly informed the company that this case would remain
open as awaiting compliance until the company received a notice
that the case was closed. No such closing notice was ever given. As
the Court of Appeals itself stated, the company's subsequent letter
asking that violations of the order be called to its attention
"could not shift or avoid its duty of compliance."
Ibid.
We do not mean that delay in the administrative process is other
than deplorable. It is deplorable if, as the Court of Appeals
thought, the company was hampered in the presentation of its
defenses to the back-pay specification by the delay. It is even
more deplorable if, as seems clear, innocent employees had to live
for some years on reduced incomes as a combined result
Page 396 U. S. 266
of the delay and the company's illegal failure to reinstate
them. It may be that the company could have, through the courts,
compelled earlier Board action. [
Footnote 3] But the Court of Appeals exceeded the narrow
scope of review provided for the Board's remedial orders when it
shifted the cost of the delay from the company to the employees in
this case.
Reversed.
[
Footnote 1]
NLRB v. Seven-Up Bottling Co., 344 U.
S. 344,
344 U. S. 345
(1953).
[
Footnote 2]
The Court of Appeals also reversed back-pay awards as to 10
strikers in their entirety, finding the awards not supported by
substantial evidence. 399 F.2d at 365. Certiorari was not sought as
to this modification of the Board's order.
[
Footnote 3]
Section 10(e)(A) of the Administrative Procedure Act, 5 U.S.C. §
1009(e)(A), now 5 U.S.C. § 706(1) (1964 ed., Supp. IV), provides
that courts shall "compel agency action unlawfully withheld or
unreasonably delayed."
MR. JUSTICE DOUGLAS, with whom THE CHIEF JUSTICE and MR. JUSTICE
HARLAN concur, dissenting.
Universal Camera Corp. v. NLRB, 340 U.
S. 474, requires a dismissal of the writ of
certiorari.
To start with, the Board is allowed a wide field of discretion
over awards of back pay against a company found to have committed
an unfair labor practice. As the Court said in
Phelps Dodge
Corp. v. NLRB, 313 U. S. 177,
313 U. S.
198:
"The remedy of back pay, it must be remembered, is entrusted to
the Board's discretion; it is not mechanically compelled by the
Act. And in applying its authority over back pay orders, the Board
has not used stereotyped formulas, but has availed itself of the
freedom given it by Congress to attain just results in diverse,
complicated situations."
Thus, the employees in this case have no automatic "right" to
any award of back pay.
The
Universal Camera case concerned the scope of
judicial review of orders of the Board. Prior to that decision,
many courts had conceived their function of review as an extremely
narrow one; some courts looked
Page 396 U. S. 267
only for evidence which, when viewed in isolation, substantiated
the Board's findings. Congress registered its dissatisfaction with
this restricted scope of review by stating the proper test in the
Taft-Hartley Act as one of "substantial evidence on the record
considered as a whole." 61 Stat. 148, 29 U.S.C. § 160(e). This
meant that the courts of appeals were to "assume more
responsibility for the reasonableness and fairness of Labor Board
decisions" than had been the practice of many of these courts in
the past. 340 U.S. at
340 U. S.
490.
The impact of this decision was to vest the courts of appeals
with general supervisory responsibility over Board decisions and
orders. Accordingly, the role of this Court was to be an extremely
limited one. The Court in
Universal Camera put it this
way:
"Our power to review the correctness of application of the
present standard ought seldom to be called into action. Whether, on
the record as a whole, there is substantial evidence to support
agency findings is a question which Congress has placed in the
keeping of the Courts of Appeals. This Court will intervene only in
what ought to be the rare instance when the standard appears to
have been misapprehended or grossly misapplied."
Id. at
340 U. S.
490-491.
The problem in the present case is one of working out the
equities of a back-pay order. Because the Board's delay in
initiating compliance proceedings with respect to its original
order was deemed unreasonable, the Court of Appeals saw fit to
modify the terms of that order. The impact of the specific facts
relating to the Board's and the company's actions in this case was
taken into account by the Court of Appeals in reviewing the terms
of the back-pay order. It arrived at its judgment as
Page 396 U. S. 268
an exercise of its responsibility "for assuring that the Board
keeps within reasonable bounds" (
id., at
340 U. S. 490)
in a subject area that necessarily involves "diverse, complicated
situations."
Casting the issue as one of "law", rather than as one of "fact"
does not conceal the substantial departure in this case from the
learning of
Universal Camera: that the courts of appeals,
and not this Court, are the watchdogs of the Board.
I would dismiss the writ as improvidently granted.