National Labor Relations Board v. Wyman-Gordon Company/Opinion of the Court

United States Supreme Court

394 U.S. 759

National Labor Relations Board  v.  Wyman-Gordon Company

 Argued: March 3, 1969. --- Decided: April 23, 1969

On the petition of the International Brotherhood of Boilermakers and pursuant to its powers under § 9 of the National Labor Relations Act, 49 Stat. 453, 29 U.S.C. § 159, the National Labor Relations Board ordered an election among the production and maintenance employees of the respondent company. At the election, the employees were to select one of two labor unions as their exclusive bargaining representative, or to choose not to be represented by a union at all. In connection with the election, the Board ordered the respondent to furnish a list of the names and addresses of its employees who could vote in the election, so that the unions could use the list for election purposes. The respondent refused to comply with the order, and the election was held without the list. Both unions were defeated in he election.

The Board upheld the unions' objections to the election because the respondent had not furnished the list, and the Board ordered a new election. The respondent again refused to obey a Board order to supply a list of employees, and the Board issued a subpoena ordering the respondent to provide the list or else produce its personnel and payroll records showing the employees' names and addresses. The Board filed an action in the United States District Court for the District of Massachusetts seeking to have its subpoena enforced or to have a mandatory injunction issued to compel the respondent to comply with its order.

The District Court held the Board's order valid and directed the respondent to comply. 270 F.Supp. 280 (1967). The United States Court of Appeals for the First Circuit reversed. 397 F.2d 394 (1968). The Court of Appeals thought that the order in this case was invalid because it was based on a rule laid down in an earlier decision by the Board, Excelsior Underwear Inc., 156 N.L.R.B. 1236 (1966), and the Excelsior rule had not been promulgated in accordance with the requirements that the Administrative Procedure Act prescribes for rule making, 5 U.S.C. § 553. We granted certiorari to resolve a conflict among the circuits concerning the validity and effect of the Excelsior rule. 393 U.S. 932, 89 S.Ct. 301, 21 L.Ed.2d 268 (1968). ^[1]

The Excelsior case involved union objections to the certification of the results of elections that the unions had lost at two companies. The companies had denied the unions a list of the names and addresses of employees eligible to vote. In the course of the proceedings, the Board 'invited certain interested parties' to file briefs and to participate in oral argument of the issue whether the Board should require the employer to furnish lists of employees. 156 N.L.R.B., at 1238. Various employer groups and trade unions did so, as amici curiae. After these proceedings, the Board issued its decision in Excelsior. It purported to establish the general rule that such a list must be provided, but it declined to apply its new rule to the companies involved in the Excelsior case. Instead, it held that the rule would apply 'only in those elections that are directed, or consented to, subsequent to 30 days from the date of (the) Decision.' Id., at 1240, n. 5.

Specifically, the Board purported to establish 'a requirement that will be applied in all election cases. That is, within 7 days after the Regional Director has approved a consent-election agreement entered into by the parties * * *, or after the Regional Director or the Board has directed an election * * *, the employer must file with the Regional Director an election eligibility list, containing the names and addresses of all the eligible voters. The Regional Director, in turn, shall make this information available to all parties in the case Failure to comply with this requirement shall be grounds for setting aside the election whenever proper objections are filed.' Id., at 1239-1240.

Section 6 of the National Labor Relations Act empowers the Board 'to make * * *, in the manner prescribed by the Administrative Procedure Act, such rules and regulations as may be necessary to carry out the provisions of this Act.' 29 U.S.C. § 156. The Administrative Procedure Act contains specific provisions governing agency rule making, which it defines as 'an agency statement of general or particular applicability and future effect,' 5 U.S.C. § 551(4). ^[2] The Act requires among other things, publication in the Federal Register of notice of proposed rule making and of hearing; opportunity to be heard; a statement in the rule of its basis and purposes; and publication in the Federal Register of the rule as adopted. See 5 U.S.C. § 553. The Board asks us to hold that it has discretion to promulgate new rules in adjudicatory proceedings, without complying with the requirements of the Administrative Procedure Act.

The rule-making provisions of that Act, which the Board would avoid, were designed to assure fairness and mature consideration of rules of general application. See H.R.Rep. No. 1980, 79th Cong., 2d Sess., 21-26 (1946); S.Rep. No. 752, 79th Cong., 1st Sess., 13-16 (1945). They may not be avoided by the process of making rules in the course of adjudicatory proceedings. There is no warrant in law for the Board to replace the statutory scheme with a rule-making procedure of its own invention. Apart from the fact that the device fashioned by the Board does not comply with statutory command, it obviously falls short of the substance of the requirements of the Administrative Procedure Act. The 'rule' created in Excelsior was not published in the Federal Register, which is the statutory and accepted means of giving notice of a rule as adopted; only selected organizations were given notice of the 'hearing,' whereas notice in the Federal Register would have been general in character; under the Administrative Procedure Act, the terms or substance of the rule would have to be stated in the notice of hearing, and all interested parties would have an opportunity to participate in the rule making.

The Solicitor General does not deny that the Board ignored the rule-making provisions of the Administrative Procedure Act. ^[3] But he appears to argue that Excelsior's command is a valid substantive regulation, binding upon this respondent as such, because the Board promulgated it is the Excelsior proceeding, in which the requirements for valid adjudication had been met. This argument misses the point. There is no question that, in an adjudicatory hearing, the Board could validly decide the issue whether the employer must furnish a list of employees to the union. But that is not what the Board did in Excelsior. The Board did not even apply the rule it made to the parties in the adjudicatory proceeding, the only entities that could properly be subject to the order in that case. Instead, the Board purported to make a rule: i.e., to exercise its quasi-legislative power.

Adjudicated cases may and do, of course, serve as vehicles for the formulation of agency policies, which are applied and announced therein. See H. Friendly, The Federal Administrative Agencies 36-52 (1962). ^[4] They generally provide a guide to action that the agency may be expected to take in future case . Subject to the qualified role of stare decisis in the administrative process, they may serve as precedents. But this is far from saying, as the Solicitor General suggests, that commands, decisions, or policies announced in adjudication are 'rules' in the sense that they must, without more, be obeyed by the affected public.

In the present case, however, the respondent itself was specifically directed by the Board to submit a list of the names and addresses of its employees for use by the unions in connection with the election. ^[5] This direction, which was part of the order directing that an election be held, is unquestionably valid. See, e.g., NLRB v. Waterman S.S.C.o., 309 U.S. 206, 226, 60 S.Ct. 493, 503, 84 L.Ed. 704 (1940). Even though the direction to furnish the list was followed by citation to 'Excelsior Underwear Inc., 156 NLRB No. 111,' it is an order in the present case that the respondent was required to obey. Absent this direction by the Board, the respondent was under no compulsion to furnish the list because no statute and no validly adopted rule required it to do so.

Because the Board in an adjudicatory proceeding directed the respondent itself to furnish the list, the decision of the Court of Appeals for the First Circuit must be reversed. ^[6]

The respondent also argues that it need not obey the Board's order because the requirement of disclosure of employees' names and addresses is substantively invalid. This argument lacks merit. The objections that the respondent raises to the requirement of disclosure were clearly and correctly answered by the Board in its Excelsior decision. All of the United States Courts of Appeals that have passed on the question have upheld the substantive validity of the disclosure requirement, ^[7] and the court below strongly intimated a view that the requirement was substantively a proper one, 397 F.2d, at 396.

We have held in a number of cases that Congress granted the Board a wide discretion to ensure the fair and free choice of bargaining representatives. See, e.g., NLRB v. Waterman S.S.C.o., supra, 309 U.S. at 226, 60 S.Ct. at 503; NLRB v. A. J. Tower Co., 329 U.S. 324, 330, 67 S.Ct. 324, 327, 91 L.Ed. 322 (1946). The disclosure requirement furthers this objective by encouraging an informed employee electorate and by allowing unions the right of access to employees that management already possesses. It is for the Board and not for this Court to weigh against this interest the asserted interest of employees in avoiding the problems that union solicitation may present.

The respondent contends that even if the disclosure requirement is valid, the Board lacks power to enforce it by subpoena. Section 11(1) of the National Labor Relations Act provides that the Board shall have access to 'any evidence of any person being investigated or proceeded against that relates to any matter under investigation or in question,' and empowers the Board to issue subpoenas 'requiring the attendance and testimony of witnesses or the production of any evidence in such proceeding or investigation.' Section 11(2) gives the district courts jurisdiction, upon application by the Board, to issue an order requiring a person who has refused to obey the Board's subpoena 'to appear before the Board * * * there to produce evidence if so ordered, or there to give testimony touching the matter under investigation or in question * * *.' 29 U.S.C. §§ 161(1), (2).

The respondent takes the position that these statutory provisions do not give the Board authority to subpoena the list here in question because they are not 'evidence' within the meaning of the statutory language. The District Court held, however, that 'in the context of § 11 of the Act, 'evidence' means not only proof at a hearing but also books and records and other papers which will be of assistance to the Board in conducting a particular investigation.' ^[8] The courts of appeals that have passed on the question have construed the term 'evidence' in a similar manner. NLRB v. Hanes Hosiery Division, 384 F.2d 188, 191-192 (C.A.4th Cir. 1967). See NLRB v. Rohlen, 385 F.2d 52, 55-58 (C.A.7th Cir. 1967); NLRB v. Beech-Nut Life Savers, Inc., 406 F.2d 253, 259 (C.A.2d Cir. 1968); British Auto Parts, Inc. v. NLRB, 405 F.2d 1182, 1184 (C.A.9th Cir. 1968); NLRB v. Q-T Shoe Mfg. Co., 409 F.2d 1247 (C.A.3d Cir. 1969). We agree that the list here in issue is within the scope of § 11 so that the Board's subpoena power may be validly exercised.

The judgment of the Court of Appeals is reversed, and the case is remanded to that court with directions to enforce the Board's order against the respondent.

It is so ordered.

Judgment of Court of Appeals reversed and case remanded to that court with directions.

Mr. Justice BLACK, with whom Mr. Justice BRENNAN and Mr. Justice MARSHALL join, concurring in the result.

I agree with Parts II and III of the prevailing opinion of Mr. Justice FORTAS, holding that the Excelsior requirement ^[9] that an employer supply the union with the names and addresses of its employees prior to an election is valid on its merits and can be enforced by a subpoena. But I cannot subscribe to the criticism in that opinion of the procedure followed by the Board in adopting that requirement in the Excelsior case, 156 N.L.R.B. 1236 (1966). Nor can I accept the novel theory by which the opinion manages to uphold enforcement of the Excelsior practice in spite of what it considers to be statutory violations present in the procedure by which the requirement was adopted. Although the opinion is apparently intended to rebuke the Board and encourage it to follow the plurality's conception of proper administrative practice, the result instead is to free the Board from all judicial control whatsoever regarding compliance with procedures specifically required by applicable federal statutes such as the National Labor Relations Act, 29 U.S.C. § 151 et seq., and the Administrative Procedure Act, 5 U.S.C. § 551 et seq. Apparently, under the prevailing opinion, courts must enforce any requirement announced in a purported 'adjudication' even if it clearly was not adopted as an incident to the decision of a case before the agency, and must enforce 'rules' adopted in a purported 'rule making' even if the agency materially violated the specific requirements that Congress has directed for such proceedings in the Administrative Procedure Act. I for one would not give judicial sanction to any such illegal agency action.

In the present case, however, I am convinced that the Excelsior practice was adopted by the Board as a legitimate incident to the adjudication of a specific case before it, and for that reason I would hold that the Board properly followed the procedures applicable to 'adjudication' rather than 'rule making.' Since my reasons for joining in reversal of the Court of Appeals differ so substantially from those set forth in the prevailing opinion, I will spell them out at some length.

Most administrative agencies, like the Labor Board here, are granted two functions by the legislation creating them: (1) the power under certain conditions to make rules having the effect of laws, that is, generally speaking, quasi-legislative power; and (2) the power to hear and adjudicate particular controversies, that is quasi-judicial power. The line between these two functions is not always a clear one and in fact the two functions merge at many points. For example, in exercising its quasi-judicial function an agency must frequently decide controversies on the basis of new doctrines, not theretofore applied to a specific problem, though drawn to be sure from broader principles reflecting the purposes of the statutes involved and from the rules invoked in dealing with related problems. If the agency decision reached under the adjudicatory power becomes a precedent, it guides future conduct in much the same way as though it were a new rule promulgated under the rule-making power, and both an adjudicatory order and a formal 'rule' are alike subject to judicial review. Congress gave the Labor Board both of these separate but almost inseparably related powers. ^[10] No language in the National Labor Relations Act requires that the grant or the exercise of one power was intended to exclude the Board's use of the other.

Nor does any language in the Administrative Procedure Act require such a conclusion. The Act does specify the procedure by which the rule-making power is to be exercised, requiring publication of notice for the benefit of interested parties and provision of an opportunity for them to be heard, and, after establishment of a rule as provided in the Act, it is then to be published in the Federal Register. Congress had a laudable purpose in prescribing these requirements, and it was evidently contemplated that administrative agencies like the Labor Board would follow them when setting out to announce a new rule of law to govern parties in the future. In this same statute however, Congress also conferred on the affected administrative agencies the power to proceed by adjudication, and Congress specified a distinct procedure by which this adjudicatory power is to be exercised. ^[11] The Act defines 'adjudication' as 'agency process for the formulation of an order,' and 'order' is defined as 'the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making but including licensing.' 5 U.S.C. §§ 551(7), (6). Thus, although it is true that the adjudicatory approach frees an administrative agency from the procedural requirements specified for rule making, the Act permits this to be done whenever the action involved can satisfy the definition of 'adjudication' and then imposes separate procedural requirements that must be met in adjudication. Under these circumstances, so long as the matter involved can be dealt with in a way satisfying the definition of either 'rule making' or 'adjudication' under the Administrative Procedure Act, that Act, along with the Labor Relations Act, should be read as conferring upon the Board the authority to decide, within its informed discretion, whether to proceed by rule making or adjudication. Our decision in SEC v. Chenery Corp., 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947), though it did not involve the Labor Board or the Administrative Procedure Act, is nonetheless equally applicable here. As we explained in that case, 'the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.' Id., at 203, 67 S.Ct., at 1580.

In the present case there is no dispute that all the procedural safeguards required for 'adjudication' were fully satisfied in connection with the Board's Excelsior decision, and it seems plain to me that that decision did constitute 'adjudication' within the meaning of the Administrative Procedure Act, even though the requirement was to be prospectively applied. See Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 53 S.Ct. 145, 77 L.Ed. 360 (1932). The Board did not abstractly decide out of the blue to announce a brand new rule of law to govern labor activities in the future, but rather established the procedure as a direct consequence of the proper exercise of its adjudicatory powers. Sections 9(c)(1) and (2) of the Labor Relations Act empower the Board to conduct investigations, hold hearings, and supervise elctions to determine the exclusive bargaining representative that the employees wish to represent them. This is a key provision of the plan Congress adopted to settle labor quarrels that might interrupt the free flow of commerce. A controversy arose between the Excelsior Company and its employees as to the bargaining agent the employees desired to act for them. The Board's power to provide the procedures for the election was invoked, an election was held, and the losing unions sought to have that election set aside. Undoubtedly the Board proceeding for determination of whether to confirm or set aside that election was 'agency process for the formulation of an order' and thus was 'adjudication' within the meaning of the Administrative Procedure. Act.

The prevailing opinion seems to hold that the Excelsior requirement cannot be considered the result of adjudication because the Board did not apply it to the parti § in the Excelsior case itself, but rather announced that it would be applied only to elections called 30 days after the date of the Excelsior decision. But the Excelsior order was nonetheless an inseparable part of the adjudicatory process. The principal issue before the Board in the Excelsior case was whether the election should be set aside on the ground, urged by the unions, that the employer had refused to make the employee lists available to them. See 156 N.L.R.B., at 1236-1238. The Board decided that the election involved there should not be set aside and thus rejected the contention of the unions. In doing so, the Board chose to explain the reasons for its rejection of their claim, and it is this explanation, the Board's written opinion, which is the source of the Excelsior requirement. The Board's opinion should not be regarded as any less an appropriate part of the adjudicatory process merely because the reason it gave for rejecting the unions' position was not that the Board disagreed with them as to the merits of the disclosure procedure but rather, see 156 N.L.R.B., at 1239, 1240, n. 5, that while fully agreeing that disclosure should be required, the Board did not feel that it should upset the Excelsior Company's justified reliance on previous refusals to compel disclosure by setting aside this particular election.

Apart from the fact that the decisions whether to accept a 'new' requirement urged by one party and, if so, whether to apply it retroactively to the other party are inherent parts of the adjudicatory process, I think the opposing theory accepted by the Court of Appeals and by the prevailing opinion today is a highly impractical one. In effect, it would require an agency like the Labor Board to proceed by adjudication only when it could decide, prior to adjudicating a particular case, that any new practice to be adopted would be applied retroactively. Obviously, this decision cannot properly be made until all the issues relevant to adoption of the practice are fully considered in connection with the final decision of that case. If the Board were to decide, after careful evaluation of all the arguments presented to it in the adjudicatory proceeding, that it might be fairer to apply the practice only prospectively, it would be faced with the unpleasant choice of either starting all over again to evaluate the merits of the question, this time in a 'rule-making' proceeding, or overriding the considerations of fairness and applying its order retroactively anyway, in order to preserve the validity of the new practice and avoid duplication of effort. I see no good reason to impose any such inflexible requirement on the administrative agencies.

For all of the foregoing reasons I would hold that the Board acted well within its discretion in choosing to proceed as it did, and I would reverse the judgment of the Court of Appeals on this basis.

Mr. Justice DOUGLAS, dissenting.

Notes

1. When we granted certiorari, the Fifth Circuit had expressly approved the procedure the Board followed in adopting the Excelsior rule. Howell Refining Co. v. NLRB, 400 F.2d 213 (1968). Two other circuits had approved enforcement of the Excelsior rule without explicitly passing on the correctness of the method by which it was adopted. NLRB v. Hanes Hosiery Division, 384 F.2d 188 (C.A.4th Cir. 1967); NLRB v. Rohlen, 385 F.2d 52 (C.A.7th Cir. 1967). After our grant of certiorari in the present case, three more courts of appeals explicitly upheld the Excelsior rule and the procedure by which it was adopted, NLRB v. Beech-Nut Life Savers, Inc., 406 F.2d 253 (C.A.2d Cir. 1968); British Auto Parts, Inc. v. NLRB, 405 F.2d 1182 (C.A.9th Cir. 1968); NLRB v. Q-T Shoe Mfg. Co., 409 F.2d 1247 (C.A.3d Cir. 1969); and the Fifth Circuit reaffirmed its earlier holding in Howell Refining Co., Groendyke Transport, Inc. v. Davis, 406 F.2d 1158 (1969).
2. We agree with the opinion of Chief Judge Aldrich below that the Excelsior rule involves matters of substance and that it therefore does not fall within any of the Act's exceptions. See 5 U.S.C. § 553(b)(A).
3. The Board has never utilized the Act's rule-making procedures. It has been criticized for contravening the Act in this manner. See, e.g., 1 K. Davis, Administrative Law Treatise § 6.13 (Supp.1965); Peck, The Atrophied Rule-Making Powers of the National Labor Relations Board, 70 Yale L.J. 729 (1961).
4. The Solicitor General argues that this Court has previously approved 'rules' articulated by the Board in the adjudication of particular cases without questioning the propriety of that procedure. He cites Republic Aviation Corp. v. NLRB, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372 (1945); NLRB v. A. J. Tower Co., 329 U.S. 324, 67 S.Ct. 324, 91 L.Ed. 322 (1946); NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 73 S.Ct. 287, 97 L.Ed. 377 (1953); and Brooks v. NLRB, 348 U.S. 96, 75 S.Ct. 176, 99 L.Ed. 125 (1954). In none of these cases has this Court ruled upon or sanctioned the exercise of quasilegislative power-i.e., rule making-without compliance with § 6 of the NLRA and the rule-making provisions of the Administrative Procedure Act.
5. In his Decision and Direction of Election, the Regional Director ordered that '(a)n election eligibility list, containing the names and addresses of all the eligible voters, must be filed with the Regional Director within seven (7) days of the date of this Decision and Direction of Election. The Regional Director shall make the list available to all parties to the election. * * *'
6. Mr. Justice HARLAN'S dissent argues that because the Board improperly relied upon the Excelsior 'rule' in issuing its order, we are obliged to remand. He relies on SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943). To remand would be an idle and useless formality. Chenery does not require that we convert judicial review of agency action into a ping-pong game. In Chenery, the Commission had applied the wrong standards to the adjudication of a complex factual situation, and the Court held that it would not undertake to decide whether the Commission's result might have been justified on some other basis. Here, by contrast, the substance of the Board's command is not seriously contestable. There is not the slightest uncertainty as to the outcome of a proceeding before the Board, whether the Board acted through a rule or an order. It would be meaningless to remand.
7. See NLRB v. J. P. Stevens & Co., 409 F.2d 1207 (C.A.4th Cir. 1969), and the cases cited in n. 1, upra.
8. 270 F.Supp., at 285. The Court of Appeals did not reach the issue whether the Board could subpoena the lists in question.
9. This requirement first announced in the Excelsior case, 156 N.L.R.B. 1236 (1966), has often been referred to by the Board, the lower courts, and the commentators as 'the Excelsior rule.' I understand the use of the word 'rule' in this context to imply simply that the requirement is a rule of law such as would be announced in a court opinion and not necessarily that it is the kind of 'rule' required to be promulgated in accordance with the 'rule-making' procedures of the Administrative Procedure Act. For the sake of clarity, however, I have chosen in this opinion to avoid use of the word 'rule' when referring to the procedure required by the Excelsior decision.
10. See National Labor Relations Act §§ 6, 9(c)(1), 10; 29 U.S.C. §§ 156, 159(c)(1), 160.
11. The procedure to be followed in 'adjudication,' which includes notice of the issues, an opportunity for responsive pleadings, a hearing, and decision, is specified in 5 U.S.C. §§ 554, 556, and 557. The Administrative Procedure Act expressly exempts proceedings for 'the certification of worker representatives' from these requirements, 5 U.S.C. §§ 554(a)(6), 556(a), 557(a), and these proceedings are therefore governed only by the requirements specified in the National Labor Relations Act, 29 U.S.C. § 151 et seq.