UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


MACMILLAN PLBSH CO

v.

NLRB


98-1554a

D.C. Cir. 1999


*	*	*


Randolph, Circuit Judge: Macmillan Publishing, Inc. re- fused to
bargain with, or furnish information to, a union that  won the second
of two representation elections. The compa- ny defended against the
resulting unfair labor practice  charges on the ground that the
National Labor Relations  Board had improperly certified the union as
the employees'  bargaining representative. The Board ruled against the
com- pany and ordered, among other things, that the company  bargain
with the union. The company's petition for judicial  review followed.
The Board then cross-petitioned for en- forcement and the union--the
Union of Needletrades, Indus- trial and Textile


The company is engaged in the wholesale distribution and  sale of books
and reference materials. It operated two  warehouses in Indianapolis,
Indiana. The union filed a peti- tion with the Board seeking to
represent "all full and regular  part-time warehouse and distribution
center employees" at  the two facilities. The company objected to an
election as  premature: in six months, it would be transferring its
India- napolis operations to a new "Customer Center" some 17 miles 
away; no formal offers of employment had yet been made to  the current
unit employees; additional employees would be  hired to work at the
new operation. The Regional Director  overruled the objection and
ordered an election, which the  union lost by a vote of 78 to 75. The
union filed eight  objections. The Regional Director sustained the
union's Ob- jection 2 and ordered a new election, without passing on


union's other complaints. The union won the second election  by a vote
of 58 to 52.


The union's Objection 2 centered on a campaign leaflet the  company
handed to its employees. The leaflet read:


WHAT DO YOU HAVE  TO LOSE?


HOW ABOUT:


$2,522.00 next year! 


__________

n $1.10 per hour $1.25 per hour  x 40 hours per week x 40 hours per
week  


__________

n 


__________

n $44.00 per week $50.00 per week 


x 13 weeks = x 39 weeks =  $572.00 in Jan - Mar $1,950.00 Apr - Dec  


__________

n


For a total of $2,522.00 next year Without a union, Macmillan will be
free to proceed ahead with the announced wage increases for the
Lebanon move.


With a union, since all wages and benefits would be subject to 
negotiation, no one can predict what the final wage package would be.
WHY TAKE THE RISK?


VOTE NO! The "$2,522.00" referred to an across-the-board wage in-
crease the company had announced two days earlier. (One of  the
union's objections dealt with the timing of the wage  increase.)


We may quickly dispatch the company's argument that the  first election
was premature because of the impending trans- fer to the Customer
Center. As the union rightly points out,  the second election (which
the union won), not the first (which  the union lost) led to the
Board's bargaining order. By the  time of the second election, the
company's move to the new  facility had already taken place. Of the
employees eligible to  vote in the second election, 86% had previously
worked in the  company's two Indianapolis facilities. The Regional


rector's predictive judgment before the first election--that  the work
force at the old locations would be a substantial and  representative
complement of the work force at the new  location--thus turned out to
be accurate. Nothing more is  needed to sustain the Board's order
insofar as it rested on the  results of the second election. See NLRB
v. AAA Alternator  Rebuilders, Inc., 980 F.2d 1395, 1397-98 (11th Cir.
1993).


The remaining question is whether the Board, through its  Regional
Director, properly overturned the first election be- cause of the
company's leaflet. For its part the company  relies on its free speech
right as recognized in s 8(c) of the  National Labor Relations Act, 29
U.S.C. s 158(c): "The ex- pressing of any views, argument, or opinion,
or the dissemina- tion thereof, whether in written, printed, graphic,
or visual  form, shall not constitute or be evidence of an unfair
labor  practice ... if such expression contains no threat of reprisal 
or force or promise of benefit." Section 8(c) does not exactly  fit
this case. The issue here arose in the context of a  representation
election and the consequence of the leaflet was  not an unfair labor
practice charge, but a new election.  Nonetheless, the Board admitted
at oral argument that its  treatment of employer communications at the
election stage is  indistinguishable from how it decides if an
employer's "ex- pression" is outside s 8(c)'s protection because it
"contains [a]  threat of reprisal or force or promise of benefit."


As to the leaflet, the company insists that it was literally  true, and
as such did not constitute a threat to employees. We  are not sure the
last proposition follows from the first. The  statement "If you vote
for the union, the company will do  everything it can to reduce your
wages," may be truthful,  depending on the company's intentions, but
it is certainly a  threat. See NLRB v. Gissel Packing Co., 395 U.S.
575, 617- 18 (1969). The leaflet was, so the company tells us, not
only  truthful but also non-threatening because it did not say the 
employees would lose their recently-announced pay raise. It  said
instead that with a union, the employees would risk  losing the raise
because "all wages and benefits would be  subject to negotiation,"
which is true, whereas without a 


union the company "will be free to proceed ahead" with the  raise,
which is also true. Compare General Elec. Co. v.  NLRB, 117 F.3d 627,
635-36 (D.C. Cir. 1997). The Board  counters with this argument: the
"test" is whether the em- ployer's communication had a "reasonable
tendency" to  coerce employees; this depends on the particular labor
rela- tions setting; here the wage increase announced on the eve of 
the election heightened employee awareness of their economic 
dependence on the employer; the Board is expert in assess- ing the
impact; and courts should recognize the Board's wide  discretion in
such matters. In support, the Board cites many  of its decisions and
the decisions of federal courts.


The trouble is that the Regional Director, whose decision  the Board
refused to review, cited none of the authorities the  Board relies
upon in its brief. Here is the sum and substance  of his reasoning:


It is well settled that, during a union organizing cam- paign, an
employer should decide the question of grant- ing or withholding
benefits as it would if a union were  not in the picture. Stumpf Motor
Company, 208 NLRB  431 (1974); The Gates Rubber Company, 182 NLRB 95 
(1970); The May Department Stores Company d/b/a  Famous-Barr Company,
174 NLRB 770 (1969). Exhibit  1 herein violates this principle by
leaving it in the minds  of the employees that they will lose the
previously an- nounced raise, amounting to $2,522.00 projected over
the  next year, if the union is voted in. The Employer's  mention,
later in the document, (in much smaller print)  that all wages and
benefits are subject to negotiation  does not cure the clear
implication that the employees  will not get their promised raise if
the union is voted in.  Accordingly, I find that the issuance and
distribution of  Exhibit 1 by the Employer constitutes objectionable
con- duct and Petitioner's Objection 2 is sustained.


The Regional Director's first sentence is inscrutable. It deals  with
the timing of the wage increase. Each of the Board  cases cited in
support of that sentence dealt with the same  subject. See Stumpf
Motor Co., 208 N.L.R.B. at 433 (regard-


ing raise announcements, "an employer's legal duty during  the pendency
of a representation petition 'is to proceed as he  would have done had
the union not been on the scene' ")  (quoting Gates Rubber Co., 182
N.L.R.B. at 95); May Dep't  Stores, 174 N.L.R.B. at 770 (during
election campaign, em- ployer "should decide the question of granting
or withholding  benefits as he would if a union were not in the
picture"). But  the often perplexing issues regarding the timing of a
raise  were not what the Regional Director was addressing. See  Perdue
Farms, Inc. v. NLRB, 144 F.3d 830, 836-37 (D.C. Cir.  1998); id. at
839-40 (Randolph, J., dissenting). Although the  union had interposed
an objection on this ground, the Region- al Director adjudicated only
the union's second objection,  which dealt with the alleged threat in
Exhibit 1--the leaflet.  The Regional Director's second sentence
therefore makes no  sense. Exhibit 1 could not have violated the
"principle" that  an employer should act as "if a union were not in
the picture."  There is no such principle governing employer
communica- tions during election campaigns, and we doubt that there 
could be in light of the First Amendment. See US Airways,  Inc. v.
National Mediation Bd., 177 F.3d 985 (D.C. Cir. 1999).  In any event,
the Board does not defend the ordering of a  new election on such a


Despite the Board's discretion in regulating representation  elections,
see Timsco Inc. v. NLRB, 819 F.2d 1173, 1175-76  (D.C. Cir. 1987), we
must set aside its order in this case. To  borrow from Chief Justice
Marshall, an agency's discretion- ary choices are not left to its
"inclination, but to its judgment;  and its judgment is to be guided
by sound legal principles."  United States v. Burr, 25 F.Cas. 30, 35
(C.C. Va. 1807) (No.  14,692d). The Regional Director's judgment
rested on no  sound principle. His rationale was the antithesis of
reasoned  decisionmaking, and as such was arbitrary and capricious. 
See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins.  Co., 463
U.S. 29, 43 (1983). Counsel for the Board has  offered different
reasons to support the ordering of a second  election. We express no
view on their validity. We cannot  sustain agency action on grounds
other than those adopted by 


the agency in the administrative proceedings. See SEC v.  Chenery
Corp., 318 U.S. 80 (1943).


The petition for judicial review is granted. The cross- petition for
enforcement is denied. The case is remanded to  the Board for further
proceedings.


So ordered.