810 F.

2d 977
125 L.R.R.M. (BNA) 2667, 105 Lab.Cas. P 12,195

Thomas R. HARBERSON and Bill Talley, Petitioners,

v.
NATIONAL LABOR RELATIONS BOARD, Respondent,
and
Hilton Hotels Corporation, d/b/a the Denver Hilton Hotel,
Intervenor.
No. 84-2488.

United States Court of Appeals,

Tenth Circuit.
Feb. 4, 1987.

Paul Alan Levy (Alan B. Morrison, of Public Citizen Litigation Group,

Washington, D.C., with him on the briefs), Public Citizen Litigation
Group, Washington, D.C., for petitioners.
Judith A. Dowd (Rosemary M. Collyer, General Counsel; John E.
Higgins, Jr., Deputy General Counsel; Robert E. Allen, Associate General
Counsel; and Elliott Moore, Deputy Associate General Counsel, N.L.R.B.,
Washington, D.C., with her on the brief), N.L.R.B., for respondent.
Before LOGAN, TACHA and BALDOCK, Circuit Judges.
TACHA, Circuit Judge.

In this case we review an order of the National Labor Relations Board (Board)
in which the Board deferred to the decision of an arbitration panel in dismissing
an unfair labor practice complaint against Hilton Hotels Corporation (Hilton).
This case arises under the National Labor Relations Act, 29 U.S.C. Secs. 151169 (the Act). This court has jurisdiction over the case because the events in
question occurred in Denver, Colorado. 29 U.S.C. Sec. 160(f). The
circumstances of this case raised both contract and unfair labor practice
questions. The contract issue was resolved through arbitration. A hearing on the
unfair labor practice issue was held before an Administrative Law Judge (ALJ)

in which the ALJ rejected the argument that he should defer to the decision of
the arbitrators on the contract claim. The Board concluded that the ALJ should
have deferred to the arbitrators' decision. Hilton Hotels Corp., 272 N.L.R.B.
488 (1984). We find that the Board has failed to provide adequate reasons for
its decision, and we therefore remand for further consideration by the Board.
2

Hilton operates a large convention hotel in Denver, Colorado.1 Most of Hilton's

Denver employees are represented by the Hotel Employees and Restaurant
Employees International Union in basic housekeeping, culinary and related job
classifications. Hilton's engineers, carpenters, plumbers, painters and
maintenance workers are represented by the International Union of Operating
Engineers (IUOE). Its five electricians are represented by the International
Brotherhood of Electrical Workers (IBEW). All three unions have collective
bargaining agreements with Hilton. At the time of the events in question,
Thomas Harberson and Bill Talley were members of the IBEW and worked as
electricians in the maintenance department. Harberson's duties included
electrical repair work, relamping, and running the control room. Talley was
primarily engaged in repairing television sets, performing electrical
maintenance work, and operating the control room amplifier and spot lights.

On July 1, 1982, the IUOE commenced an economic strike against Hilton.

Some Hilton employees who were members of the other two unions, including
Harberson and Talley, honored the IUOE picket line. Hilton continued its
operations by relying upon its nonunion employees and by bringing in
additional personnel from other facilities. On about July 6, Hilton began
interviewing replacement job applicants for the maintenance department. Mike
Bozic was hired on July 6 and began working for Hilton the next day. Tim Jude
was hired on July 8 and began working for Hilton the same day. Bozic and Jude
performed some general electrical maintenance work during the remainder of
the strike.

On July 12, Hilton and the IUOE reached a strike settlement agreement which
provided that all of the striking IUOE employees would be reinstated
immediately. On the morning of July 13, Harberson and Talley reported to their
supervisor, Robert Langdon. Langdon told the two employees that no work had
been scheduled for either of them that day. He subsequently referred them to
the personnel office where they were told that they had been permanently
replaced during the strike. On July 14, Hilton sent letters to Harberson and
Talley informing them that, although work was unavailable at that time because
they had been permanently replaced, their names had been placed on a
preferential reinstatement list and they would be recalled as soon as positions
for which they were qualified became available.

These events raised questions under the Act and under the contract between
Hilton and the IBEW. Under Sec. 7 of the Act, 29 U.S.C. Sec. 157, employees
have the right to engage in concerted activities including strikes (unless such
activity is proscribed, for example, by a no-strike clause in a collective
bargaining agreement). Section 8(a)(3) of the Act, 29 U.S.C. Sec. 158(a)(3),
forbids discrimination to discourage the exercise of the right to engage in
concerted activities. Under the Act, an employer may not discharge striking
employees. However, an employer may permanently replace employees
engaged in a protected strike in order to continue operations. NLRB v. Mackay
Radio & Tel. Co., 304 U.S. 333, 345-46, 58 S.Ct. 904, 910-11, 82 L.Ed. 1381
(1938). If an employer hires permanent replacements during an economic
strike, striking workers are entitled only to preferential reinstatement as
positions become available. See id. at 345-47, 58 S.Ct. at 910-11. If the
employer does not hire permanent replacements during the strike, it must
reinstate strikers as soon as they make an unconditional offer to return to work.

The collective bargaining agreement between Hilton and the IBEW provides
that employees will not be "disciplined or discharged for refusal to cross a
legally approved picket line...." Harberson and Talley were thus engaged in a
protected activity when they honored the IUOE picket line. Therefore, under
the Act, Hilton had the right to replace but not discharge them; if Hilton did not
permanently replace them before the strike ended, Hilton potentially violated
the Act by refusing to reinstate Harberson and Talley.

The events involving Harberson and Talley also presented a question under the
contract between Hilton and the IBEW. The IBEW took the position that
because the contract forbids "discipline or discharge" of sympathy strikers,
Hilton had waived its right to permanently replace such employees. The IBEW
argued that whether Harberson and Talley were permanently replaced does not
matter because permanent replacement constitutes "discharge or discipline"
which is forbidden under the contract, and therefore Harberson and Talley must
be reinstated. Hilton argued that the contract allows it to permanently replace
striking employees.

The IBEW filed contractual grievances on behalf of Harberson and Talley.

Hilton denied the grievances and they were taken to arbitration before a threemember board of arbitration. The parties stipulated that the issue before the
arbitrators was whether Harberson and Talley had been discharged in violation
of the collective bargaining agreement. At the arbitration hearing, Hilton
denied that it had discharged Harberson and Talley, and contended instead that
it had lawfully replaced them and had a right to do so under the contract. The
IBEW argued that Hilton's refusal to reinstate Harberson and Talley constituted

discharge and is therefore prohibited under the contract.

9

The arbitrators first addressed the issue of whether Harberson and Talley had
been discharged or whether they had been permanently replaced. At the
hearing, Hilton's personnel director testified that Harberson and Talley
continued to receive insurance and pension benefits and that their names had
been placed on a preferential hiring list. The IBEW presented no evidence on
the issue of whether the two employees had been discharged or permanently
replaced.2 The arbitrators concluded from Hilton's letters to Harberson and
Talley and the testimony of Hilton's personnel director that Harberson and
Talley had not been discharged. The arbitrators did not make an explicit finding
that Harberson and Talley had been permanently replaced; rather they assumed
that the employees had been permanently replaced on the basis of Hilton's
unrebutted evidence and as a direct corollary to the finding of no discharge.

10

The arbitrators then addressed the issue of whether Hilton had a right to
permanently replace Harberson and Talley under the terms of the collective
bargaining agreement. The arbitrators concluded that Harberson and Talley
could not lawfully be discharged but that they could lawfully be permanently
replaced under the contract. Accordingly, the arbitrator denied Harberson's and
Talley's grievances, as presented by the IBEW, over Hilton's refusal to reinstate
them.

11

In addition to the contractual grievances that IBEW filed on behalf of

Harberson and Talley, the IBEW also filed an unfair labor practice claim with
the Board's Regional Office.3 After the arbitrators rendered their decision,
Harberson personally filed an unfair labor practice charge. Harberson's claim
was consolidated with the earlier claim filed by the IBEW and the Regional
Director ordered a hearing before an Administrative Law Judge (ALJ).

12

At the hearing, Hilton contended that the Board should defer to the arbitrators'
finding that Hilton had lawfully replaced Harberson and Talley. The ALJ,
however, proceeded with a hearing on the merits of the unfair labor practice
charge. At the hearing, both parties presented evidence on the issue of whether
Harberson and Talley had been permanently replaced. On the basis of
testimony of witnesses and numerous exhibits, the ALJ found that Bozic and
Jude had been hired not as electrical workers but as maintenance workers, they
had been given no expectation that their jobs would be permanent, and Hilton's
records were altered after the fact to reflect otherwise. Hilton Hotels Corp., 272
N.L.R.B. at 491 (decision of ALJ). The ALJ concluded that Hilton had not
permanently replaced Harberson and Talley before the strike ended and had
thus violated the Act by refusing to reinstate the employees.

13

The ALJ also addressed Hilton's argument that he should defer to the
arbitrator's decision. The ALJ examined this issue in light of Olin Corp., 268
N.L.R.B. 573 (1984), which is the Board's most recent articulation of the
standard to be applied in deciding whether the Board should defer to an
arbitrator's determination.

14

The Board has put forth various formulations as to when deferral is appropriate.
The various formulations reflect the tension between the Board's responsibility
to prevent and remedy unfair labor practices under Sec. 10(a) of the Act, 29
U.S.C. Sec. 160(a), and its mandate to encourage settlement of labor disputes
through collective bargaining under Sec. 203(d) of the Labor Management
Relations Act, 29 U.S.C. Sec. 173(d).

15

In Spielberg Mfg. Co., 112 N.L.R.B. 1080, 1082 (1955), the Board ruled that
an arbitration award could be recognized if (1) the proceedings appeared to
have been fair, (2) all parties had agreed to be bound, and (3) the decision of
the arbitrators was not clearly repugnant to the purposes and policies of the Act.
In Raytheon Co., 140 N.L.R.B. 883, 887 (1963), the Board added a further
requirement. Deferral would be justified only if the unfair labor practice issue
had been "fully and fairly litigated" before the arbitrators.

16

In Electronic Reproduction Service Corp., 213 N.L.R.B. 758 (1974), the Board
changed the policy articulated in Spielberg and Raytheon. In Electronic
Reproduction, the Board ruled that deferral was appropriate unless "special
circumstances" precluded the grievant from a "full and fair opportunity" to
present evidence of an unfair labor practice. Id. at 764. In other words, where
an unfair labor practice issue could have been presented to the arbitrators but
was not, the Board would defer to the arbitrators' decision absent special
circumstances. This standard was criticized by courts, see, e.g., Stephenson v.
NLRB, 550 F.2d 535, 537-41 (9th Cir.1977); Banyard v. NLRB, 505 F.2d 342,
345-48 (D.C.Cir.1974), and the Board expressly overruled Electronic
Reproduction in Suburban Motor Freight, Inc., 247 N.L.R.B. 146 (1980). The
Board recognized that the Electronic Reproduction standard, while furthering
the aim of encouraging collective bargaining, "derogates the equally important
purpose of protecting employees in the exercise of their rights" and thus
constituted an "unwarranted extension of the Spielberg doctrine and an
impermissible delegation of the Board's exclusive jurisdiction under Section
10(a) of the Act to decide unfair labor practice issues." Id. at 146 (footnote
omitted). In Suburban Motor Freight, the Board ruled that it would not defer to
an arbitration decision "which bears no indication that the arbitrator ruled on
the statutory issue." Id. at 147.

17

In Olin Corp., 268 N.L.R.B. 573 (1984), the Board adopted yet another
standard. The Board noted that the deferral standard under Raytheon and
subsequent cases did not adequately encourage arbitration. In Olin, the Board
expressly reaffirmed the Spielberg criteria and then further stated:

18 adopt the following standard for deferral to arbitration awards. We would find
[W]e
that an arbitrator has adequately considered the unfair labor practice if (1) the
contractual issue is factually parallel to the unfair labor practice issue, and (2) the
arbitrator was presented generally with the facts relevant to resolving the unfair labor
practice. In this respect, differences, if any, between the contractual and statutory
standards of review should be weighed by the Board as part of its determination
under the Spielberg standards of whether an award is "clearly repugnant" to the Act.
And, with regard to the inquiry into the "clearly repugnant" standard, we would not
require an arbitrator's award to be totally consistent with Board precedent. Unless
the award is "palpably wrong," i.e., unless the arbitrator's decision is not susceptible
to an interpretation consistent with the Act, we will defer.
19

Finally, we would require that the party seeking to have the Board reject
deferral and consider the merits of a given case show that the above standards
for deferral have not been met. Thus, the party seeking to have the Board
ignore the determination of an arbitrator has the burden of affirmatively
demonstrating the defects in the arbitral process or award.
Id. at 574 (footnotes omitted).4

20

The ALJ applied the Olin standard to the facts of the present case and
concluded that deferral was not appropriate. He found that:

21 14 page award [of the arbitrators] covers several doctrines of labor law,
[T]he
alludes to the pending unfair labor practice charge, and expressly refers to Section
8(a)(3) of the Act. However, the Board of Arbitration did not in any remote way deal
with the factual issue of whether certain new individuals actually assumed the
established task patterns of the grievants and did so on a regular basis. This is
separate and apart from my further express finding that Langdon has attempted to
deceive respecting the true utilization of Bozic and Jude during the disordered days
of early July, and he has proffered spurious records in the process. For this reason
the factual issue that was present in the arbitral process was dissimilar to that of the
unfair labor practice charge, and was not in even a general way presented to the
Board of arbitration. On this basis General Counsel has met the burden of
demonstrating how this arbitral decision was not based on facts relevant to resolving
the statutory claim.

22

The Board reversed the ALJ's decision and concluded that the ALJ should have
deferred to the arbitrators' decision. The Board found that the contractual and
unfair labor practice issues were "factually parallel" because resolution of both
issues "was contingent on the factual finding of whether Harberson and Talley
had been permanently replaced during the strike." Hilton Hotels Corp., 272
N.L.R.B. at 488. The Board also found that the arbitrators had been presented
generally with the facts relevant to the unfair labor practice charge because
Hilton's personnel director had testified that Bozic and Jude had performed
electrical work, Hilton continued to carry the two employees on the payroll and
Hilton had informed them they had been permanently replaced. The Board
therefore concluded that the General Counsel had failed to carry his burden of
showing "that the arbitrators were not presented generally with the relevant
facts pertaining to the question of whether Harberson and Talley had been
permanently replaced." Id. at 489.

23

The Board's factual findings are to be accepted by a reviewing court if they are
supported by substantial evidence in the record considered as a whole.
Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464, 95
L.Ed. 456 (1951); Glaziers Local Union 558 v. NLRB, 787 F.2d 1406, 1411
(10th Cir.1986); Pennypower Shopping News, Inc. v. NLRB, 726 F.2d 626,
629 (10th Cir.1984); U.S. Soil Conditioning v. NLRB, 606 F.2d 940, 943 (10th
Cir.1979). The standard of review is not altered when the ALJ and the Board
reach contrary conclusions. Universal Camera, 340 U.S. at 496, 71 S.Ct. at 468;
Glaziers Local Union, 787 F.2d at 1411; Pennypower, 726 F.2d at 629; U.S.
Soil Conditioning, 606 F.2d at 943-44. However, the ALJ's findings, whether
they contradict or support the Board's determination, are part of the record and
must be considered. Universal Camera, 340 U.S. at 492-97, 71 S.Ct. at 466-69.

24

In the present case, the ALJ applied the Olin standard to the deferral question
and found that deferral was not appropriate. The ALJ considered the question
of whether Hilton acted to replace Harberson and Talley before or after they
reported for work following the strike. The ALJ made extensive findings of fact
and concluded that the permanent replacement of Harberson and Talley
occurred after they reported for work. Because this factual question was crucial
to the unfair labor practice claim and had not been resolved by the arbitrators,
the ALJ found that deferral was not appropriate under Olin.

25

The Board disagreed; it noted only that the resolution of both the contract and
the statutory claims depended on a finding of whether the employees had been
replaced during the strike and pointed to the testimony of Hilton's personnel
director as generally presenting to the arbitrators the facts relevant to resolving

the unfair labor practice question. The Board, however, did not address the
factual question that the ALJ considered dispositive: whether Hilton acted to
replace Harberson and Talley before or after they reported for work. The Board
did not respond to the ALJ's findings except to say that he erred in failing to
defer.
26

The ALJ's interpretation of the Olin standard as applied to the facts of the
present case seems reasonable. Considering that the IBEW did not litigate the
unfair labor practice issue before the arbitrator, both sides presented a
substantial amount of evidence on this issue at the hearing before the ALJ, and
the ALJ found the evidence supporting the employees' position to be
compelling, the finding of the ALJ that the facts were not generally presented to
the arbitrator on the unfair labor practice question is particularly well
supported. In view of this finding by the ALJ, we cannot say that the Board's
decision is supported by substantial evidence on the record as a whole.
Although the ALJ's findings are not conclusive and may be rejected by the
Board, they cannot be ignored. Universal Camera, 340 U.S. at 492-96, 71 S.Ct.
at 466-68; Decker v. SEC, 631 F.2d 1380, 1386 (10th Cir.1980). The Board
must accord them due weight in making its decision. Id.

27

Moreover, the Board has failed to articulate adequately its reasons for rejecting
the ALJ's decision. It is an elementary principle of administrative law that an
administrative agency must provide reasons for its decisions. SEC v. Chenery
Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943); Phelps Dodge
Corp. v. NLRB, 313 U.S. 177, 197, 61 S.Ct. 845, 853, 85 L.Ed. 1271 (1941).
Applied to the present case, this principle requires the Board to give reasons for
rejecting the ALJ's opinion. UAW v. NLRB, 802 F.2d 969, 975 (7th Cir.1986).
The Board's decision leaves unclear why the ALJ's decision was rejected. The
Board referred to no facts in the record inconsistent with the ALJ's finding. Nor
did the Board indicate that it found that the ALJ's finding was not adequately
supported.

28

When applied to a particular factual situation, the standard for deferral set out in
Olin may be interpreted in various ways. The ALJ's interpretation of the Olin
standard is a reasonable one. The Board may have based its decision on a
different interpretation, but no such interpretation is evident from the Board's
opinion. We cannot supply an interpretation of the Olin standard to uphold the
Board when the Board has not provided that interpretation. Chenery Corp., 318
U.S. at 95, 63 S.Ct. at 462. We therefore do not address the issue of whether
the Olin standard as applied by the Board is permissible under the Act. We set
aside the decision and remand the case to the Board for further consideration.
Darr v. NLRB, 801 F.2d 1404 (D.C.Cir.1986) (remanding a case to the Board

for further consideration and explanation of the reasons for deferring to an

arbitrator's award). On remand the Board must give some explanation of the
reasoning underlying its decision. Simply citing Olin without indicating how
the standard applies in a particular case is not sufficient especially where the
ALJ has applied the standard and reached a contrary result.
29

REMANDED.

The facts as presented here are drawn from the findings of the ALJ. Although
the Board reversed the ALJ's decision on the deferral issue, it did not overrule
any of the ALJ's factual findings. Since the Board did not reverse these
findings, we take them as true for purposes of evaluating the Board's decision

The IBEW presented no evidence on this issue because its position was that
both discharge and permanent replacement are forbidden under the contract.
Therefore, it did not matter whether the employees were discharged or
permanently replaced. Presumably, the IBEW took this position because a
favorable decision by the arbitrators would benefit all IBEW members because
the IBEW members would then have greater rights under the contract than they
enjoy under the Act

The Regional Office deferred action on the charge pending the outcome of the
arbitration proceeding on the contractual grievances. The Regional Director
subsequently notified the IBEW that it would proceed no further with the
unfair labor practice charge because the arbitation award had resolved the issue

In Taylor v. NLRB, 786 F.2d 1516 (11th Cir.1986), the Eleventh Circuit
rejected the Olin standard as impermissible under the Act because it did not
sufficiently protect employees' rights under the Act