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National Labor Relations Board v. National Car Rental System Inc.

decided: February 18, 1982.



Before Seitz, Chief Judge, Garth, Circuit Judge, and Pollak*fn* , District Judge.

Author: Seitz


The National Labor Relations Board (Board) applies for enforcement of an order directing National Car Rental System, Inc., to cease and desist from restraining or coercing employees in the exercise of rights protected by section 7 of the National Labor Relations Act, 29 U.S.C. § 157 (1976), and to take certain actions to remedy National's violations of the Act. This court has jurisdiction under 29 U.S.C. § 160(e) (1976).


For more than ten years National operated a truck leasing and renting facility in Newark, New Jersey. A unit of mechanics and garagemen, represented by Local Union 723, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, staffed the facility. Because of limitations on the physical plant at Newark, National began in 1975 to look for a second New Jersey facility. In early 1977, National located a site in Edison, New Jersey, twenty miles southwest of the Newark location.

In June 1977, at National's corporate headquarters in Minneapolis, there was a meeting of its Newark manager, its general manager, and its director of truck operations. They discussed staffing at Edison, which was to be operated as a satellite of the Newark facility. National's Newark manager recommended a slight reduction in the number of rental and lease trucks that would operate out of Newark, proposed the number of vehicles that should be obtained to operate out of Edison, and recommended the transfer of several unit and nonunit employees from Newark to Edison. Most of the Newark manager's suggestions were approved, but National's general manager did not approve the transfer of unit employees to Edison, stating that National's president did not want a union at Edison.

National originally planned to open the Edison facility in the summer of 1977, but delays pushed back the opening date. In late 1977, a representative of another truck leasing corporation inquired about the possibility of purchasing some of the lease accounts that National serviced at the Newark facility. National received two other inquiries, including one from Champion Truck Rentals, Inc., on January 12, 1978. Champion offered to purchase all the Newark accounts and lease trucks, an offer that National seriously considered because the Newark operation had been steadily losing money. By the beginning of February, National expected to sell most of the Newark accounts and lease trucks. Champion submitted a written sales agreement on February 17, which National accepted and signed on February 22. The agreement provided that Champion would sublease the Newark facility beginning February 26, and purchase 22 of the 26 lease accounts and most of the lease trucks. The agreement also provided that National would discharge or reassign all its Newark employees before February 26.

On February 22, National told four nonunit employees who worked at Newark that they were to be transferred to Edison. The next day, Newark manager Monusky called a meeting of the thirteen members of Local 723 and told them that they would be discharged three days later. Some of the employees asked about being transferred to Edison, but Monusky replied that such a transfer would be impossible. National also discharged three nonunit employees as of February 25.

Some employees and Local 723 president Sal Zingone knew before February 22 that changes were in the air. First, employees had told Zingone of rumors of the opening of the Edison facility some months earlier. They told him it would be nonunion. Second, near the end of December 1977, the Newark manager told Zingone that National was considering a move, possibly to Edison. No details were discussed. Third, the Newark service manager warned some employees in December and January that their jobs were in danger. Fourth, a representative of Champion talked to some employees in late January and early February about working for Champion. Indeed, in early February the Champion representative offered mechanic Clifton Beard a job.

Zingone was not formally notified of National's move to Edison until February 22, when National's vice president for personnel and labor relations, Kenneth Sanville, called Zingone and told him that National was closing the Newark facility, and that all the union members would be discharged. Zingone said he wanted to check whether National's action was legal. He said nothing about the possibility of bargaining. Zingone called Sanville the next day, said he thought that National had acted illegally, and that he would file unfair labor practice charges. Again bargaining was not discussed. Later that day, Zingone filed an unfair labor practice charge against National.

On February 26, National ceased to operate the Newark facility, and opened the Edison facility. It had seven employees, three of whom were garagemen or mechanics. None was a member of Local 723 or any other union.

A month later Local 723 filed a second unfair labor practice charge that in substance made the same allegations as the one filed February 23. The Board's regional director issued a complaint charging that National violated section 8(a)(1), (3) & (5) of the Act. 29 U.S.C. § 158(a)(1), (3) & (5) (1976). After a hearing, an administrative law judge (ALJ) issued an opinion finding that National had violated section 8(a)(1) & (3), but not section 8(a) (5), and recommended an appropriate remedial order. The Board affirmed the ALJ's finding of a section 8(a)(1) & (3) violation, and also found that National had violated section 8(a)(1) & (5) by refusing to bargain over the effects of its move. The Board modified the recommended order accordingly. National Car Rental System, Inc., 252 N.L.R.B. 159 (1980). The Board has applied for enforcement of its order.


The Board makes three arguments in this court: (1) that the finding of a section 8(a)(1) & (3) violation is supported by substantial evidence; (2) that the finding of a section 8(a)(1) & (5) violation is supported by substantial evidence; and (3) that the Board's order was an appropriate exercise of its remedial discretion. We consider these issues in turn.


This court must accept as conclusive findings of the Board that are supported by substantial evidence considered on the record as a whole. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 487-91, 71 S. Ct. 456, 463-66, 95 L. Ed. 456 (1951).

To find a violation of section 8(a)(3), which states that "(i)t shall be an unfair labor practice for an employer ... by discrimination in regard to hire or tenure of employment ... to encourage or discourage membership in any labor organization," the Board must first find that National engaged in conduct in the staffing of the Edison facility that discriminated against union members in a way that could have adversely affected their employee rights. Second, that discriminatory conduct constitutes an unfair labor practice if it meets the standards set forth in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34, 87 S. Ct. 1792, 1798, 18 L. Ed. 2d 1027 (1967) (emphasis in original):

First, if it can reasonably be concluded that the employer's discriminatory conduct was "inherently destructive" of important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on employee rights is "comparatively slight," an antiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct.

First, we examine whether substantial evidence supports the Board's finding that National refused to consider the Newark union members for hire at Edison. When, on February 23, the employees found out they were being let go, Newark manager Monusky told the employees who inquired about the possibility of transfer to Edison that they would not be considered. Monusky testified, "I informed (the union employees) that we were going down to Edison." After being asked whether any of the employees had responded to this statement, Monusky answered, "(h)aving them all in my office, as I said, I know some of them inquired about the Edison facility and the possibility of going down to Edison." Monusky further testified that he responded to their inquiries: "I said to them unfortunately there was nothing I could do for them, and that as of three days they would be terminated." Employee Beard testified that the men "asked (Monusky) if they were going to take any of them down there (to Edison), and (Monusky) said no, they weren't going to take any of them, and they asked why." We conclude that substantial evidence supports the finding that National refused to consider the Newark union members for hire at Edison.

National claims the testimony of Monusky and Beard was inadmissible hearsay. Hearings before the Board must comply with the Federal Rules of Evidence "so far as practicable." 29 U.S.C. § 160(b) (1976). Hearsay is defined as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Fed.R.Evid. 801(c).

The statements of Monusky and Beard, however, were not offered to prove that any employees wanted to transfer to Edison. They were offered to show that employees asked about transferring. The significance of the statements the employees made "lies solely in the fact that (they) were made, (and) no issue is raised as to the truth of anything asserted." Notes of Advisory Committee on Proposed Rules, Note to Subdivision (c) of Rule 801, reprinted in 28 U.S.C. Appendix (1976). The truth of their statements does not depend at all on "the veracity of the out-of-court declarant." C. McCormick, Handbook of the Law of Evidence § 249, at 588 (E. Cleary ed. 1972). The testimony of Monusky and Beard about the employees' statements was not hearsay, was not otherwise challenged, and therefore was properly admitted.

Second, we examine whether the discriminatory conduct meets the Great Dane test. National argues that its conduct was neither inherently destructive nor motivated by antiunion animus, as required by Great Dane, and that there was a legitimate business justification for its conduct. The Board, relying on Allied Mills, Inc., 218 N.L.R.B. 281, 288-89 (1975) (refusal to allow employees opportunity to transfer is inherently destructive in some circumstances), enf'd, 543 F.2d 417 (D.C.Cir.1976), cert. denied, 431 U.S. 937, 97 S. Ct. 2648, 53 L. Ed. 2d 254 (1977), argues that National's conduct was inherently destructive, and that, in any event, there was substantial evidence of antiunion animus.

We need not address the question whether National's conduct was inherently destructive because we think that the following facts constitute the requisite substantial evidence of antiunion animus: (1) National planned from the start to make Edison a nonunion facility; and (2) National did not change this plan after it decided to close the Newark facility. National does not dispute the truth of these facts, but argues that they are not relevant, because it believed that Champion would hire all of its Newark garagemen and mechanics. Champion in fact hired four of them to start work on February 27. National also relies on its harmonious relationship with Local 723 during the entire time that National operated the Newark facility. We believe, however, that the evidence substantially supports the Board's finding that, after the sale of most of the Newark accounts became likely, National flatly refused to consider the transfer of the unionized Newark employees. In conjunction with the numerous earlier expressions that Edison would be nonunion, this is substantial evidence of antiunion animus.

Thus, we conclude that substantial evidence supports the Board's finding that the refusal to consider the Newark employees for transfer violated section 8(a) (1) & (3).


The ALJ found that National did not violate section 8(a)(1) & (5) by failing to bargain over, first, the decision to sell most of the Newark accounts and to close the Newark facility; second, the decision to open the Edison facility and to transfer some Newark accounts there; and third, the effects of these two decisions. The Board affirmed the first two findings, but not the third. It found that the failure to bargain over the effects of the relocation violated section 8(a)(1) & (5). National challenges this finding. Here, too, our ...

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