Heinrich Motors, Inc.

National Labor Relations Board - Board Decisions

Jul 14, 1967

166 N.L.R.B. 783 (N.L.R.B. 1967)

HEINRICH MOTORS, INC. 783
Heinrich Motors, Inc. and International Union,
United Automobile , Aerospace and Agricultural
Implement Workers of America , AFL-CIO. Case
3-CA-2334
July 14, 1967
SUPPLEMENTAL DECISION AND ORDER
On July 23, 1965, the National Labor Relations
Board issued its Decision and Order in the above-
entitled proceeding,' finding inter alia that Respond-
ent violated Section 8(a)(3) of the National Labor
Relations Act, as amended, by discriminatorily
discontinuing its night shift in the automobile ser-
vice department. The Board ordered reinstatement
with backpay for nine discriminatees.
Pursuant to a backpay specification and ap-
propriate notice issued by the Regional Director for
Region 3, a hearing was held before Trial Examiner
Josephine H. Klein on April 7, 1966, for the pur-
pose of determining the amounts of backpay due
two claimants, settlement having been reached as
to the other discriminatees.
On July 29, 1966, the Trial Examiner issued the
attached Supplemental Decision, in which she
awarded backpay to one of the claimants and de-
nied backpay to the other. Thereafter, the General
Counsel and Respondent filed exceptions, with sup-
porting briefs, to the Trial Examiner's Supplemen-
tal Decision.
The Board has reviewed the rulings of the Trial
Examiner made at the backpay hearing and finds
that no prejudicial error was committed.2 The
rulings are hereby affirmed. The Board has con-
sidered the entire record in this case, including the
Trial Examiner's Supplemental Decision, the ex-
ceptions, and the briefs, and hereby adopts the
findings, conclusions, and recommendations of the
Trial Examiner as modified herein.
1. Unlike the Trial Examiner, we conclude that
Cira was entitled to backpay for the period
beginning with his discriminatory discharge on
April 18, 1964, until September 11, 1965, when
Respondent offered him reinstatement.
For the period from April 18, 1964, until his
entry into the service station operation on October
15, 1964, Cira was self-employed full time in a busi-
ness which he had previously operated part time
while he was employed by the Respondent. That
self-employment is an adequate and proper way for
the injured employee to attempt to mitigate loss of
wages hardly requires citation.3 Equally well
established is the principle that it is the employer's
burden, as a matter of affirmative defense, to prove
matters in mitigation of the losses caused the in-
jured parties by its unlawful acts.4
The locus of the burden of proving failure to
mitigate is sometimes blurred in our backpay
proceedings by the practice of admitting in the
backpay specification which initiates the proceed-
ing the amounts of interim earnings which have
been earned by discriminatees. Also, counsel for
the General Counsel will often, as was done in the
instant case, introduce exhibits relating to such
earnings. See G. C. exh. 3 and 4. Such practice is
consonant with the suggestion of the Supreme
Court in N.L.R.B. v. Phelps Dodge Corp., 313 U.S.
177, 199, that the Board "has wide discretion to
keep the present matter [trial of wilful loss issues]
within flexible bounds through flexible procedural
devices." But the willingness to admit without proof
objectively verifiable facts which go to diminish the
maximum amount of the wage loss in order to ex-
pedite the hearing process does not relieve the
Respondent in this case of its burdens of proof and
persuasion as to other facts not admitted which also
may diminish its backpay liability. As we said in
Mastro Plastics Corp.: "Absent a showing by
Respondent that the individual claimant acted un-
reasonably or wilfully or that a job would not have
been available [at the employer's plant] had the dis-
crimination not occurred, the General Counsel has
established a prima facie case." (136 NLRB at
1347.)
We find no indication in the record here that
Respondent has sustained its burden of showing
that Cira willfully incurred a loss of earnings. The
record shows that for approximately 2 years before
his employment with the Respondent, Cira was en-
gaged in the full-time business of selling used cars
and making automobile repairs. When he accepted
employment on Respondent's night shift, he con-
tinued this business on a part-time basis. After his
discriminatory layoff, Cira testified, he registered
within 2 days with the New York State Employ-
ment Service, and resumed the business of selling
used cars and engaging in auto repairs on a full-time
basis. He further testified that in addition to work-
ing longer hours, he posted a sign, a few weeks after
he left Respondent's employment, on his business
premises reading, "Tuneups and General Repairs,"
and solicited business by telling people about start-
ing automobile repairs. Sometime in September,
after learning that his business premises were to be
sold and he would have to vacate, he looked for and
found the service station which he operated after
October 15,1964.
153 NLRB 1575.
The Trial Examiner's ruling revoking Respondent's subpena of Com-
pliance Officer Hyman Dishner will be discussed in detail hereinafter
' L. B. Hosiery Co., 99 NLRB 630, 631 (Kiscaddin), Cashman Auto
Company, 109 NLRB 720, 722, and, more recently Ardumi Manufactur-
ing Corp., 162 NLRB 972 (Cassanelli). See also Fisher Construction
Company v. Lerche, 232 F.2d 508 (C A. 9), and Cornell v T V. Develop-
ment Corp., 17 N.Y. 2d 69, 215 N.E 2d 349, which collects and cites
cases
" Ozark Hardwood Co., 113 NLRB 1130, 1134; Mastro Plastics Corp.,
136 NLRB 1342, 1347. See also Cornell v. T V. Development Corp.,
supra, 215 N.E. 2d at 352, 5 Williston Contracts § 1360 (1937).
166 N LRB No. 88
784 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
We are unable to agree with the Trial Examiner's
characterization of Cira's testimony as "vague and
inconsistent throughout."5 On the material issue as
to whether he worked full time at the auto sales
operation, his testimony was unshaken even after
searching cross-examination concerning the nature
of his operations in self-employment-a cross-ex-
amination undertaken after Cira had submitted for
Respondent's use financial statements prepared by
his accountant and the books and records on which
they were based-and Respondent failed to in-
troduce independent evidence controverting it. 6
Since Cira was under no obligation to prove he
had discharged any "duty to mitigate" the loss
caused by the Respondent,' whereas the Respond-
ent did have the burden of proving the un-
reasonableness of Cira's efforts, there was no
necessity for Cira to introduce corroborative
evidence of the amount of time he spent in self-em-
ployment, as the Trial Examiner mistakenly con-
cluded. Nor would the fact that "corroboration of
such objective facts would presumably have been
easy to provide"8 shift the burden of producing
them to Cira (or the General Counsel).9 As stated
by the Fifth Circuit in N.L.R.B. v. Mooney Aircraft
Corp., 366 F.2d 809, 813: "The cases are
unanimous that the Employer must establish these
defenses by a preponderance of the evidence.
N.L.R.B. v. Miami Coca-Cola Bottling Co., supra
[360 F. 2d 569]: N.L.R.B. v. Mastro Plastics Corp.,
2 Cir. 1965, 354 F.2d 170; N.L.R.B. v. Brown &
Root, Inc., supra [311 F.2d 447 (C.A. 8)]."
That Cira may have spent less than full time at
the used car business while searching for another
source of business in October 1964, after he had
been informed that the lot at St. Paul Street had
been sold and would no longer be available for
rent, does not in any way detract from a finding that
he was engaged in full-time self-employment. The
time spent by an entrepreneur in seeking business
opportunities is in these circumstances necessarily
related to his self-employment.10
On the record in this case, the failure of Cira to
operate his used car business at a 'profit, or to in-
crease its revenues after his discharge, furnishes no
support for a finding that he did not devote his full
time to the business. As the First Circuit said in en-
forcing the Board's backpay determination of two
self-employed auto mechanics in Cashman Auto
Co.; v. N.L.R.B. 223 F.2d 832, 836 (C.A. 1) "But
the principle of mitigation of damages does not
require success; it only requires an honest good
faith effort . . ." We cannot find, because the
revenues from the used car business amounted to
$3,256 in approximately 9 months of 1964, and that
$1,948 of this sum was earned in the 6 months
between April 18 and October 15, that Cira's
sworn and uncontradicted testimony that he
devoted his full time to the operation of his used car
business after discharge must be disregarded, and
a finding made that he did not act with reasonable
effort to minimize his wage loss.11 There is a failure
here to show that Cira acted "unreasonably or wil-
fully" unless those words are to take on a meaning
not previously ascribed to them.12
We find contrary to the Trial Examiner,
moreover, that Cira is entitled to backpay from Oc-
tober 15, 1964, until September 11, 1965. During
this period it is not questioned that Cira was en-
gaged in full-time self-employment, and, as noted
above, a claimant in that category need not seek
other employment. The Trial Examiner's inference
that Cira's full-time operation of the service station
demonstrated a withdrawal from the labor market
is inconsistent with out settled view that full-time
self-employment is not tantamount to such a
withdrawal.13 The statements by the Examiner that
the operation of the service station imposed such
responsibilities upon Cira that he would not have
accepted reinstatement with Respondent are not in
the nature of findings of fact. Rather they are no
more than an expression of her views, which differ
from our own, that self-employment, unlike other
employment, represents as a matter of law a
withdrawal from the labor market. We reaffirm our
Trial Examiner's Decision under "Findings and Conclusions "
6 Cf. MJ McCarthy Motor Sales Co, 147 NLRB 605, 615-618 (Mar-
zana).
7 5 Corbin Contracts, 1039, 5 Williston, on Contracts §§ 1353, 1359,
(rev ed , 1937), Contracts Restatement §336, commented to subsec. (1);
22 Am. Jur. 2d article "Damages," § 71 at 106.
8 Trial Examiner 's Decision, under "Findings and Conclusions."
9 Fisher Construction Co. v Lerche, supra, 510, Realty Acceptance
Corp. v. Montgomery, 6 F. Supp. 593, affd. 77 F.2d 762 (C.A. 3), cert.
denied 296 U.S. 390, rehearing denied 296 U S. 662
11 See Cornell v T.V. Development Corp, supra, where at the time of
trial the plaintiffs self-employment had amounted principally-if not sole-
ly-to his efforts to become self-employed-". A he proof shows that the
plaintiff was borrowing funds to form a corporation for the purpose of
going into the electronic business . At the time of trial, the corporation had
no bank account, it owned no assets; and the plaintiff received no employ-
ment income after his discharge , but did receive $600 in unemployment
insurance payments." 215 N.E. 2d at 352.
11 In this connection , compare the rather stringent standard of proof
required in seeking recovery for wages under a state statute which was
determined to be penal in nature - Standard Fruit & Steamship Co. v.
Hampton, 233 F.2d 782, 783 (C.A. 5) By the same reasoning , to penalize
Cira by forfeiting all backpay due him for a period of 6 months would
seem to require more clearcut proof than appears in this record.
1z Our finding that the Respondent failed by a preponderance of the
evidence to sustain its burden of proving that Cira had failed to act
reasonably in lessening the loss caused by it makes it unnecessary to con-
sider the effect of the telephone call received at his home by his wife from
the New York State Employment and Service "two or three weeks" after
April 20, 1964, when he registered for unemployment benefits. But in any
event a person is not required to look for other employment while em-
ployed, even though that employment may be at a rate of pay less than
that from which he was discharged. East Texas Steel Castings Co., 116
NLRB 1336, 1344-45 (Bogan). Further, it was not shown that the call
was in connection with a job offer, that the job, if any, was substantially
equivalent to the one from which he had been discharged unlawfully, or
that it was a job for which Cira was qualified. See Arduini Manufacturing
Corp, 162 NLRB 972 (Gibeault). It is clearly within the Board's discre-
tion not to consider "remote and speculative claims by employers ..
(Phelps Dodge Corp v. N L R B., 313 U.S 177, 199).
1" E.g., Brown and Root, Inc, 132 NLRB 486,500
HEINRICH MOTORS, INC. 785
rule that self-employment is not the equivalent of a
willful loss of earnings, but is to be treated as other
interim employment.14 Nor do we find the Trial Ex-
aminer's conclusion to be supported by Cira's
refusal of the eventual offer of reinstatement.
Neither alone nor in the context of self-employment
is this refusal probative of the prior situation.15
Accordingly, we shall order that Respondent
make Cira whole for any loss of earnings resulting
from its discriminatory discharge for the period
from April 18, 1964, to September 11, 1965.
2. As we have determined that Respondent has
a backpay obligation to Cira, we must consider a
procedural issue raised by Respondent.
Respondent made a timely request of the General
Counsel to permit Board Agent Hyman Dishner,
compliance officer in Region 3, to testify at the
hearing.16 Respondent also served a subpena upon
Dishner. Respondent thereby sought evidence as to
the method of computing gross backpay an as to
any statement by claimant Cira to Dishner that
reinstatement with Respondent was not desired.
The General Counsel granted permission to
Dishner only as to the former matter.
When the issue came before the Trial Examiner
upon the General Counsel's petition to revoke the
subpena served upon Dishner, the issue as to gross
backpay had been mooted by agreement as to the
correctness of the grossJbackpay figure used by the
General Counsel. The Trial Examiner revoked the
subpena, insofar as it sought evidence from Dishner
as to statements by Cira, on the ground that the
General Counsel had not granted permission for
Dishner to testify on this issue and that therefore
Section 102.118 of the Board's Rules required her
to revoke the subpena.17 In her Supplemental Deci-
sion, however, the Examiner concluded that she
had erred in revoking the subpena in reliance upon
Section 102.118,18 but found her ruling nonprejudi-
cial as she was awarding no backpay to Cira.
We consider it unnecessary to pass on whether
the Trial Examiner erred in revoking the subpena
on the strength of Section 102.118. In our view, the
subpena should have been revoked in any event
upon another ground urged by the General Coun-
sel, and that is the irrelevancy of the evidence
Respondent sought from Dishner. We hold that
whether or not Cira told Dishner that he did not
desire reinstatement was wholly irrelevant to the is-
sues in this case.
Section 10(c) of the Act expressly empowers the
Board to order "reinstatement of employees with
... backpay;" and as the Supreme Court has noted,
"Reinstatement is the conventional correction for
discriminatory discharges."19 Thus, our remedial
order in this case provides that Respondent must
offer Cira reinstatement and make him whole for
any loss of earnings suffered until the offer of rein-
statement is made. The fact that a remedial offer of
reinstatement may be declined, particularly where,
as here, it is made long after the discriminatory
discharge, does not diminish the importance of the
offer in our remedial scheme. Reinstatement is
basic to our remedy here, for "to limit the sig-
nificance of discrimination merely to questions of
monetary loss to workers would thwart the central
purpose of the Act."20 Respondent's offer of rein-
statement was required to comply with our order
and to remedy its discrimination by demonstrating
to employees that their rights will be vindicated. To
toll Respondent's backpay obligation prior to its
offer in September 1965 would eliminate the practi-
cal incentive for compliance with our order.
We note initially that a statement by Cira to
Dishner that reinstatement was not desired could
not be relevant to indicate a wilful loss of earnings.
Furthermore, Respondent does not suggest that its
backpay obligation should be tolled because it re-
lied in any way upon Cira's statement and delayed
its offer of reinstatement. Indeed, there is no sug-
gestion that such a statement ever came to Re-
spondent's attention.
As to whether Cira's alleged statement to
Dishner would constitute a waiver of his right to
reinstatement, we consider it clear that such a state-
ment prior to Respondent's offer could not manifest
"an unequivocal resolve not to accept reinsta-
tement."21 Both in order to preserve the public in-
terest in Respondent's meaningful compliance with
our order and to safeguard a discriminatee's rights,
we consistently have discounted statements, prior
to a good-faith offer of reinstatement, indicating un-
willingness to accept reinstatement.22 We are mind-
ful of the fact that such statements may reflect only
a momentary state of mind that is subject to change;
prior to an offer of reinstatement, such statements
14 E g., Mastro Plastics Corporation, 136 N LRB 1342, 1350
15 Brown and Root, Inc., 132 NLRB 486, 500, 534
is Section 102.118 of the Board Rules and Regulations provides, as
here relevant, that no Board employee "shall produce ... any files, docu-
ments, reports, memoranda, or records of the Board or testify in behalf of
any party to any cause pending . . before the Board ..." without the
written consent of the Board or General Counsel. Unless otherwise
directed, any employee served with a subpena covering Board records of
information is to move to revoke such subpena on the ground of privilege.
17 See footnote 16, supra
18 The Trial Examiner appears to have viewed the Board's Decision in
J. H. Rutter-Rex, 158 NLRB 1414,-which issued after the hearing in this
case-as an acquiescence by the Board in General Engineering, Inc. v
N.L.R.B., 344 F.2d 367 (C.A. 9), remanding 147 NLRB 936. The court
there held that Section 102.118 was not in itself a valid basis for the revo-
cation of a subpena upon a Board agent in a backpay proceeding The
court stated that such revocation could only be predicated upon a ground
recognized in a Federal district court trial.
1q Phelps Dodge Corporation v. N.L.R B., 313 U.S. 177, 187
20 Id., at 193
21 Arista Service, Inc., 127 NLRB 499,500
22 E.g., Leeding Sales Corp., 155 NLRB 755; Hatch Chevrolet, 136
NLRB 284, 293; Borg-Warner Controls, 128 NLRB 1035, 1044; Burnup
& Sims, Inc, 157 NLRB 366.
786 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
are in the nature of answers to a hypothetical
question; and the discriminatee's expression "may
have been made in the heat of dissatisfaction with
his treatment by Respondent."23
That Cira's alleged statement was made to a
Board agent during compliance discussions does
not convert it into a waiver of reinstatement. 24 To
the contrary, the fact that Cira's alleged statement
was made to a Board compliance officer is itself
good reason to find it incompetent as well as irrele-
vant for evidentiary use.25 Board experience in-
dicates that it is not unusual for an employer to seek
settlement of his compliance obligations by offering
backpay if reinstatement is waived.26 Should litiga-
tion ensue a compliance officer has explored the
necessity for reinstatement with the discriminatee,
matters developed in such conversations cannot be
relevant in determining the employer's obligations.
The pressures here upon the discriminatee to waive
his rights are obvious and his situation is markedly
different from one where he is confronted with a
bona fide offer of reinstatement. Apart from the un-
fairness to a discriminatee in considering state-
ments made to compliance officers in such a con-
text, the use of such statements would disrupt set-
tlement procedures, as the discriminatee's attitude
could not be readily explored if this could only be
done at the risk of having settlement views ex-
pressed by the discriminatee used as a basis. to
eliminate a respondent's need to remedy his dis-
criminatory conduct whether or not a settlement is
effected.
3. Respondent has excepted to the Trial Ex-
aminer's treatment of vacation pay for Edward
Knaak. If Knaak had remained in Respondent's em-
ploy he would have been granted a vacation with
pay, while at his subsequent place of employment
he did not receive paid vacations. In calculating the
backpay due Knaak in the quarters during which
vacation pay is involved, the Trial Examiner
backpay and the interim earnings totals. To the net
backpay for each of those quarters, she added the
2 weeks' vacation pay Knaak would have received
had he remained with Respondent. In like manner,
the difference between the $25 Knaak would have
gotten as a bonus from Respondent and the $15 he
received at his interim employment was added to
the net backpay.
We agree with the Trial Examiner, for the
reasons set forth in her Decision, that vacation pay
must receive special treatment in determining net
quarterly backpay due. However, we disagree with
her method of computing the vacation pay entitle-
ment of the discriminatees. The Trial Examiner
added the 2 weeks' vacation to net quarterly
backpay due. The effect of this is to grant the dis-
criminatee vacation pay even in quarters in which
his interim earnings exceed his gross backpay plus
vacation pay. We believe this to be unwarranted.
Accordingly, we shall calculate the backpay due
Knaak and Cira by providing for vacations through
deducting from net interim earnings 2 weeks' pay.
The bonus amounts are included in gross backpay
and net interim earnings.
SUPPLEMENTAL ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respond-
ent, Heinrich Motors, Inc., Rochester, New York,
its officers, agents, successors, and assigns, shall
pay to the employees involved in this proceeding as
net backpay the amounts, including interest at 6
percent per annum from the date of the Board's
Decision'27 but minus the tax withholding required
by Federal and State laws, set forth below.
Anthony Cira-$4129.5228
eliminated 2 weeks' pay from both the gross Edward Knaak-$152.88 29
23 Borg-Warner Controls, supra missible in a subsequent litigation 4 Wigmore , Evidence, § 1071 (3ed
24 E.g., Burnup & Sims, Inc., supra; The Triple AAA Water Co., 142 1940).
NLRB 803, 810. To the extent that English Freight Company, 67 NLRB 26 E.g , Burnup & Sims, Inc., supra
643, is inconsistent with our holding, we hereby overrule it 27 Local 138, International Union Of Operating Engineers, 151 NLRB
25 Positions taken for settlement purposes are of course generally mad- 972.
23 Year and Quarter Weekly Wage Weeks of Work
in Quarter
Gross Backpay Net Interim
Earnings
Net Backpay Due
1964 - 2 $74.04 10 $740.40 $159.46 $580.94
1964- 3 80.92 13 1051.96 -.0- 1051.96
1964- 4 80.92 11 902.62* 169.38 733.24
1965- 1 80.92 13 1051.96 281.38 770.58
1965- 2 80.92 13 1051.96 140.90 911.06
1965- 3 80.92 11 890..12 988.02** 81.74
* Includes the $12.50 bonus that Cira would have received from Heinrich.
** Deduct $179.64, representing 2 weeks' vacation pay.
29 After providing for vacations by suncontracting 2 weeks from Net Interim Earnings, the Net Interim Earnings
exceed Gross Backpay for the third quarter of 1965 so that there is no backpay due for that quarter; the Trial
Examiner awarded $242.64. The amount due Knaak totals $545,01, from which is deducted the $392.07 already
advanced by Respondent.
HEINRICH MOTORS, INC.
TRAIL EXAMINER'S SUPPLEMENTAL
DECISION
STATEMENT OF THE CASE
JOSEPHINE H. KLEIN, Trial Examiner : On July 23,
1965, the Board issued its decision and order finding that
Heinrich Motors, Inc., Respondent , had violated Section
8(a)(3) of the Act by discriminatorily discontinuing the
night shift of its automobile service department. The
Board ordered the reinstatement with backpay of nine
employees.
Respondent did not seek review of the Board's deci-
sion . Pursuant to agreement reached between Respond-
ent and a representative of the General Counsel,
Respondent offered reinstatement to all the dis-
criminatees and paid eight of them agreed amounts of
backpay. Agreement could not be reached as to the
amount of backpay due Anthony Cira, one of the dis-
criminatees , and it was stipulated that a Backpay Specifi-
cation and Notice of Hearing thereon was to be issued by
the Regional Director. (The stipulation of the parties is
quoted and discussed infra.)
On February 21, the Regional Director issued a
Backpay Specification and Notice of Hearing claiming
backpay for Cira and for Edward Knaak , another of the
discriminatees covered by the Board 's order.
In its answer to the Backpay Specification , Respondent
contended that nothing was due Cira because he had been
guilty of a willful loss of earnings . Respondent pleaded
that nothing was due to Knaak because, pursuant to the
agreement reached with the General Counsel, Respond-
ent had paid him "$392.07 in payment of all back pay
owing to" him.
A hearing was held before the duly designated Trial
Examiner in Rochester , New York, on April 7, 1966. At
that time , without objection , the backpay specification
and Respondent ' s answer were amended . Both parties
waived of al argument at the end of the hearing. Briefs
have been received from both parties and have been fully
considered by the Examiner.
Before the hearing, Respondent addressed a request to
the General Counsel for permission to Hymen Dishner,
compliance officer in the Board's Regional Office, to ap-
pear and produce records and testify at the hearing.
Respondent also served a subpeona duces tecum on Mr.
Dishner . The General Counsel filed a petition to vacate
the subpena. That petition was referred to the Trial Ex-
aminer for disposition. The petition, along with Respond-
ent's attempts to call Mr. Dishner as a witness, is
discussed infra.
Upon a consideration of the entire record ' in this sup-
plemental proceeding, including consideration of the
briefs filed by the parties, the prior decision of the Board,
and observation of the witnesses while they were testify-
ing, the Examiner makes the following:
' The General Counsel's unopposed motion to correct the transcript is
granted.
L There was no testimony as to whether he worked either for Respond-
ent or at his used car business on Saturdays . It seems unlikely, however,
that Respondent 's night service department operated on Saturdays
FINDINGS AND CONCLUSIONS
787
Anthony Cira
Cira worked as an automobile mechanic on Respond-
ent's night shift from early in February 1964 until April
18, 1964, when the night shift was abolished under cir-
cumstances which the Board has found constituted a
violation of Section 8(a)(3) and (1) of the Act. While so
employed by Respondent , he also conducted a used car
sales business which he had been operating since some
time in 1962. He worked for Respondent from 5 p.m. to
1 a.m. and at the used car sales business from 10 a.m. to
3 p.m.2 He testified that , upon being discharged by
Respondent, he extended the time spent on his used car
business to the hours of 8 a.m . to 5:30 p .m. the same
hours which he had maintained before going to work for
Respondent? He also testified that, after leaving Re-
spondent's employ, he changed the nature of his own
business by adding repair services. He testified that "a
couple of weeks after he left Respondent's employ," he
posted a sign on his business premises reading "tuneups
and general repairs" and solicited business by telling
"people about his starting automobile repairs."
Although Cira testified unequivocally that he had not
been providing repair services before he was discharged
by Respondent , his profit and loss statements and a stipu-
lation of facts reached at the hearing show that in the first
quarter of 1964 (which included most of the time he
worked for Respondent) his gross income from the busi-
ness consisted of $768.29 for repairs and $540 for used
car sales. In the third quarter of 1964, the only full
quarter during which he operated this business after being
discharged by Respondent, his gross income was $600
from sales and $314.68 from repairs.
On April 20, 1964, Cira registered with the New York
State Employment Service . About 2 or 3 weeks later, the
Service telephoned him. Since he was not at home at the
time , the Service representative told his wife to have Cira
visit the Service 's office . Although his wife relayed the
message, he never did call. He testified that he "intended
to call them but it slipped [his] mind." When asked why
he had registered with the State Employment Service, he
answered:
I might have gotten a job similar to the one I had over
to Heinrich 's nights ...
And he explained his conceded failure to make any other
attempt to secure employment as follows:
Well, I was - I went into like repairs, the repair busi-
ness and it seemed to be doing all right as of then.
And maybe unemployment would have called me
again , I don't know.
On cross-examination he admitted that he "thought [he]
should have been working some place else besides" his
own business and stated that he "was waiting for the
unemployment , but ... missed their call."
3 Concerning his business hours before he was employed by Respond-
ent, Cira testified : " I had all hours because I used to bring cars South to
the wholesale auction , too, so I had no specific hours . But on regular days,
it was about from 8 to 5:30."
788 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Profit and loss statements covering the period January
1, through October 15, 1964, show that business
sustained a net loss in each quarter. Cira received no sa-
lary or other compensation from the business.4
The business was conducted on rented premises. At
some unspecified time, probably in the first half of Sep-
tember, Cira was notified that the premises were to be
sold and he would have to vacate. He then made arrange-
ments to take over management of a Sinclair gasoline ser-
vice station. He testified that he originally anticipated
winding up his used car and repair business sometime in
November but the sale of the premises occurred sooner
than expected, with the result that he terminated the busi-
ness hurriedly on October 15 and commenced operation
of the service station the next day. He conceded that in
September he started to take time off from his used car
sales and repair business to make arrangements for taking
over the service station. However, he minimized the
amount of time so used and testified that actual prepara-
tions for moving to the gas station were "only a question
of about three days."
No testimony was introduced as to the nature of Cira's
ownership or propriety interest in the service station, the
method of its financing, etc. However, profit and loss
statements for the period October 15, 1965, indicate that
the premises are rented but there was no evidence as to
the duration of the lease. Cira has no paid employees. He
testified that he works at the service station from 7 a.m.
to 8 p.m. on Mondays through Fridays and from 8 a.m.
to 6 p.m. on Saturdays. Net profits were realized from the
service station for all periods up to September 11, 1965,
when Cira was offered reinstatement by Respondent. He
rejected the offer of reinstatement.
The original Backpay Specification stated that Cira
was "unemployed" during the second and third quarters
of 1964 and "self-employed" during the remainder of the
backpay period. At the beginning of the hearing, how-
ever, the Specification was amended to show him as
"self-employed" during the entire period.
At the outset of the hearing , the parties stipulated also
as to the accuracy of the "gross backpay" computations
contained in the Backpay Specification as amended at
that time.5 Cira' s net losses from the automobile sales and
repair business and his net profits from operation of the
service station, as shown in the amended Backpay
Specification, were supported by his records and were
not controverted at the hearing.6
In his brief, the General Counsel contends that Cira's
expansion of the nature of his business and extension of
the hours of operation serve to bring him within the sub-
stantial body of Board precedent that " a discriminatee
who devotes his full time to self-employment is entitled to
back pay, the amount to be computed by deducting his
net profits from his gross back pay." Armstrong Tire &
Rubber Co., 119 NLRB 353, 356, enforcement denied in
pertinent part 363 F.2d 680 (C.A. 5). For the reasons
hereafter set forth, the Examiner concludes that Cira's
postdischarge activities do not constitute due diligence
within the "self-employment" rule developed in prior
Board decisions.
The undisputed evidence shows that at all times-be-
fore he went to work for Respondent, while he was work-
ing for Respondent, and after he was discharged-Cira's
business consisted of both used car sales and automobile
repairs. Cira's testimony was vague and inconsistent
throughout. His testimony that he expanded his hours of
operation was uncorroborated although corroboration of
such objective facts would presumably have been easy to
provide. His volume of business did not increase after he
left Respondent's employ. Indeed, his gross sales were
highest in the first quarter of 1964, during which he was
working for Respondent.7 On direct examination he
stated that he had worked his full expanded hours until he
took over the gas station operation in October. On cross-
examination, however, he conceded that for some time,
never clearly defined, he had been devoting time to secur-
ing a new business. On all the evidence, the Examiner
finds that Cira did not change the nature or extent of his
self-employment to compensate for the loss of income
from Respondent.
Citing Harvest Queen Mill & Elevator Co., 90 NLRB
320, 327, as "particularly applicable," the General Coun-
sel argues that Cira chose self-employment over seeking
other employment expecting "to improve his financial
position ." The present case is entirely different from
Harvest Queen. In that case the discriminatee had not
previously been self-employed. It was only when he was
discriminatorily fired by the respondent that he decided
to go into a venture with his father because, as he
testified, "he expected to make more money." In the
present case, Cira had been self-employed for about 2
years before he went to work for Respondent, which was
only about 2 months before he was discharged. At no
time did he testify that he thought enlarging and concen-
trating on his own business would be more profitable than
taking outside employment to replace his job with
Respondents Had he thought that "expansion" of his
own business was practicable and would be profitable,
presumably he would not have gone to work for Respond-
ent, as he had only about 2 months earlier. Any present
claim that he thought total self-employment would be
more profitable than partial self-employment supple-
mented by an outside job is inconsistent with his
testimony that he registered with the New York State
" He testified that he owned three houses and lived on the income from
them during this period
5 Respondent withheld agreement as to the method of computing vaca-
tion pay if any was to be allowed This matter is discussed infra
6 The Backpay Specification listed such net profits in their entirety as
"net interim earnings " and allowed them as a credit to Respondent in
computing net backpay due" for the first, second, and third quarters of
1965 Assuming, contrary to the Examiner 's holding, that any backpay
was due for the period in question , the net profits should not have been
credited as "interim net earnings " in their entirety , but should have been
apportioned and credit should have been given to Respondent only for
such portion thereof as could be found to have resulted from his "non-em-
ployment by Respondent " Rice Lake Creamery Co, 151 NLRB 1113,
1114, fn 4, enfd in part 365 F 2d 888 (C A D C )
The Examiner further notes that the tabulation of backpay due Cira in
the Backpay Specification contains an apparently inadvertent error in fail-
ing to subtract the stated "net interim earnings" from the "gross backpay"
shown for the fourth quarter of 1964 On the General Counsel 's method
of computation "net backpay due" for that quarter should be $882.58
rather than the $1,051 96 listed
' His profit and loss statements for the automobile sales and repair busi-
ness show gross income of $ 1,308 29 in the first quarter of 1964, $689 86
in the second, $914 68 in the third, and $342 65 in the first half of Oc-
tober
" The closest he ever came was to adopt the General Counsel's state-
ment in a leading question that he "hoped to make a go of his own busi-
ness
HEINRICH MOTORS, INC. 789
Employment Service for the purpose of securing works
and with his concession that he thought he should have
outside employment. As said in N.L.R.B. v. Cashman
Auto Co., 223 F.2d 832, 835 (C.A. 1), enforcing 109
NLRB 720, "There is no essential incompatibility
between operating a business of one's own while at the
same time seeking employment." In part of his testimony
at least, Cira testified that he pursued this dual course.
Yet the only step he took toward finding a job was initial
registration with "the unemployment." Although the sub-
sequent telephone call by the Employment Service was
not affirmatively shown to have been in connection with
a job offer, Cira's failure to return the call bespeaks a total
disinterest in employment, particularly when his
testimony makes it clear that he believed or assumed that
the call related to a job opportunity. His initial application
to the Employment Service, with no followup or other job
hunt was not sufficient to establish due diligence.
Southern Silk Mills, Inc., 116 NLRB 769, 770-771, en-
forcement denied 242 F.2d 697 (C.A. 6), cert. denied,
355 U.S. 821; American Bottling Co., 116 NLRB 1303,
1306-07; N.L.R.B. v. Pugh and Barr, Inc., 207 F.2d 409
(C.A. 4).
The General Counsel's present position, contrary to
much of Cira's testimony, 19 is that Cira chose total self-
employment as the means of mitigating his damages
This being so, the General Counsel argues, Cira was not
obligated to seek employment. Of the cases cited in the
General Counsel's brief, Rice Lake Creamery Co., 151
NLRB 1113, enfd. in pertinent part, 365 F.2d 888
(C.A.D.C.), is superficially most analogous to, but clearly
distinguishable from, Cira's. 11 In Rice Lake, the dis-
criminatee, instead of seeking employment upon
discharge by the Respondent,12 expanded his existing
business and took on additional new enterprises. The Ex-
aminer has hitherto found that Cira did not expand the
scope of his self-employment when he was discharged by
Respondent. Further, the discriminatee in Rice Lake,
unlike Cira, did not reject a good-faith offer of reinstate-
ment . While the Board had often ruled that a dis-
criminatee is not required to make a decision as to rein-
statement until he has received a bona fide offer13 and ul-
timate refusal of reinstatement is not conclusive as to
earlier availability, 14 the Examiner does not read the
Board decisions as precluding consideration of a refusal
of reinstatement as relevant in a backpay case to cor-
roborate other evidence indicating that, as a matter of
fact, a discriminatee had previously withdrawn from the
labor market.
The Examiner discredits Cira's testimony that it was
not until he was offered reinstatement on September 11,
1965, that he decided he did not want it. He explained his
failure to return the call of the State Employment Service
about 2 weeks after the discharge in part by stating that
"the repair business ... seemed to be doing all right as of
then." The Examiner construes his testimony as
manifesting a clear decision at that time to withdraw from
the labor market and to devote his entire energies to self-
employment. See Deena Artware, Inc., 112 NLRB 371,
378, enfd. 228 F.2d 871 (C.A. 6), cert. denied, 345 U.S.
906.
In any event, Cira certainly removed himself from the
labor market at least as early as October 1964, when he
took over operation of the gasoline service station. His
hours in this operation were such as to have precluded his
having worked for Respondent, or anybody else, in either
a day or a night shift.'5 While the burden of proof is on
Respondent to establish that Cira was not entitled to
backpay, the Examiner believes that that burden has been
met by the undisputed facts of the service station opera-
tion. Those facts warrant an inference that Cira was
unavailable for employment,' since it is unlikely that he
would have abandoned this new business or entrusted it
to somebody else. In the Examiner's opinion, this in-
ference is strengthened by his refusal of Respondent's
offer of reinstatement about 11 months later, when the
service station operation was presumably fairly well
established and could probably more readily be entrusted
to somebody else. Having removed himself from the
labor market, Cira was not entitled to backpay. Rutter-
Rex Manufacturing Co. (Dorothy B. Rubit), 158 NLRB
1414, 1420; English Freight Co., 67 NLRB 643, 644,
658. The fact that Cira's postdischarge activities did not
produce as much income as he had been receiving from
Respondent does not affect the result, since withdrawal
from the Respondent's labor market disentitles an em-
ployee to backpay irrespective of the success or failure of
his operations. Underwood Machinery Co., 95 NLRB
1386, 1399.
On all the evidence, including Cira's demeanor while
testifying, the Examiner concludes that during the entire
backpay period Cira was guilty of willful loss of earnings
9 He indicated that he hoped he might secure night work. Manifestly,
daytime work would have been incompatible with either his automobile
sales and service business or his service station operation . His failure to
make any genuine effort to secure night work obviates the necessity of
considering any potential problems that might have arisen under the
Board's order, which gave Respondent the option of offering the dis-
criminatees reinstatement in its day shift or reestablishing the night shift.
to J. H Rutter-Rex Manufacturing Co., 158 NLRB 1414, 1420: "We
find that [the discriminatee's] testimony, which at best is inconsistent, is
insufficient to warrant a finding that she was diligent in her search for
work during the backpay period. Accordingly, we find that she incurred a
willful loss of earnings and is not entitled to any backpay."
11 In Mastro Plastics Corp., 136 NLRB 1342, enfd. 354 F.2d 170
(C A. 2); Brown & Root, Inc, 132 NLRB 486, modified 311 F.2d 447;
and N.L.R .B. v. Cashman Auto Co., supra , 223 F.2d 832, upon which the
General Counsel relies, the "self-employed" discriminatees had made
diligent efforts to secure employment.
12 He admitted that he registered with the State Employment Service
solely for the purpose of securing unemployment compensation. Cira, on
the other hand, as previously observed, testified that he registered for the
purpose of securing employment.
13 East Texas Steel Castings Co., 116 NLRB 1336, enfd 255 F.2d 284
(C.A. 5); Leeding Sales Co., 155 NLRB 755, 756-757 ; Burnup & Sims,
Inc., 157 NLRB 366.
14 Brown & Root, Inc., supra, 132 NLRB at 534.
15 Availability for part-time employment would not alter this conclu-
sion. Mastro Plastics Corp ., supra, 136 NLRB at 1351.
308-926 0-70-51
790 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
or had removed himself from the employment market.
Accordingly, he is not entitled to any backpay. 16
Edward Knaak
Edward Knaak was employed by Respondent from
July 1963 until April 18, 1964, when, as a member of the
night shift, he was discriminatorily discharged. He was
offered reinstatement on September 1 1 , 1965. He
declined the offer because he was then satisfactorily em-
ployed elsewhere.
According to the Backpay Specification, net backpay
due Knaak is $582.88 for the second quarter of 1964;
$181.21 for the third quarter of 1964; $111.16 for the
fourth quarter of 1964; $242.64 for vacation pay in the
third quarter of each of the years 1964 and 1965; and $10
in bonus pay for the fourth quarter of 1964.
As a total defense to the claim for backpay for Knaak,
Respondent pleads, in effect, an accord and satisfaction
arising from a settlement agreement and payment of
$392.07 pursuant thereto. As previously stated, the
Board's original order in this case required reinstatement
with backpay for nine employees. Respondent did not
seek review of the Board's decision. It offered reinstate-
ment to all nine and agreement was reached between
Respondent and personnel in the Board's Regional Office
concerning the amount of backpay due to eight, including
Knaak. Respondent made payments pursuant to such
agreement. A formal stipulation was then executed by
Respondent and the General Counsel for the Board.17
The stipulation, in its entirety, reads as follows
The following matters are stipulated by and
between counsel for Respondent and the General
Counsel for the National Labor Relations Board:
1. Respondent has no objection [to] the Board's
Order of July 23, 1965;
2. Respondent has not been able to reach an agree-
ment with the General Counsel as to the amount
of backpay due Anthony Cira under the terms of
said Order;
3. The Regional Director for the Third Region may
issue an order setting a date for hearing before
a Trial Examiner to determine the amount of
backpay due Anthony Cira;
to In view of the decision here reached, the Examiner 's exclusion of
evidence concerning events immediately following the discharge is
academic However, since the Board may not agree with the Examiner's
substantive decision , and Respondent has moved to reopen the record, a
brief discussion may be in order
Respondent sought to show that when the night shift was abolished,
Respondent asked Cira to come in the following Monday, when Respond-
ent "would try to make a place for him " Respondent contends that
Cira's failure to visit Respondent until later in the week , when he ap-
peared to get his severance pay, would provide further evidence that Cira
did not want reinstatement but rather had withdrawn from the labor mar-
ket
The Examiner here reaffirms her ruling excluding the proffered
evidence and would deny the motion to reopen for the receipt of such
evidence Cira was under no obligation to discuss anything with Respond-
ent short of an unconditional offer of complete reinstatement (Monroe
Feed Store, 122 NLRB 1479 , 1480), which Respondent freely concedes
was not made Cira was not obliged immediately after his discharge to
4. Following the report of the Trial Examiner is-
sued after such hearing, the matter will be sub-
ject to review in due course by the Board. In the
event judicial proceedings are thereafter neces-
sary to enforce or to review the Board's backpay
determination, the only issue before the court
will be the validity of the backpay computation
as Respondent concedes that in all respects the
Board's Order of July 23, 1965 is valid and
proper.
So far as appears from the present record, the agreements
as to the amounts paid to the eight discriminatees other
than Cira were not reduced to writing in any formal way.
Were we concerned with private litigation between
Knaak and Respondent, there would be an accord and
satisfaction precluding the present claim for additional
backpay for Knaak. However, in backpay proceedings to
implement Board orders in complaint cases, "it is well
settled that only formal approval by the Board will make
a settlement binding upon the parties." Decker Truck
Lines, 139 NLRB 65, 66, enfd. 296 F.2d 338 (C.A. 8).
As said by the Court of Appeals for the Fifth Circuit in
Armstrong Tire & Rubber Co., supra, 263 F.2d 680, 682,
. the Act vests in the Board itself the sole authority to
determine the amount of backpay due an employee who
has been discriminated against ... and this authority has
not been and could not validly be delegated to subor-
dinates so as to bind the Board in circumstances of this
kind."
In its brief, citing Sherry & Gordon Co., 107 NLRB
13, Respondent attempts to invoke a form of equitable
estoppel against the Board. Sherry & Gordon, however,
involved a complaint proceeding in which a Board agent
had erroneously told the respondent that the Regional
Director had approved the charging party's withdrawal of
the charges upon the respondent's taking certain action.
The Regional Director had authority to permit
withdrawal of the charges without approval of the
Board.1' Here, however, the Board's original order
required reinstatement with full backpay and nobody was
authorized to "settle" for anything less than full backpay
or to determine conclusively how much backpay was due.
The Examiner concludes that the quoted stipulation
and the payment by Respondent of $392.07 to Knaak as
backpay do not preclude the present claim for additional
backpay due to Knaak., The $392.07 will, however, be
credited against any amount here found to be due Knaak.
Robinson Aviation, Inc., 99 NLRB 196, 197.
consider "a lesser job," which were the terms in which Respondent's pre-
sident was thinking Moss Planning Mill Co, 119 NLRB 1733, 1743-44,
modified 256 F 2d 653 (C A 4). Cira' s declination of Respondent's in-
vitation would not serve to establish that Cira would have refused rein-
statement at that time Leeding Sales Co , supra, 155 N LRB at 757
The Examiner's substantive conclusion also renders moot Respond-
ent's attempt to secure the testimony of Mr Hymen Dishner, com-
pliance officer in the Board's Regional Office If the issue were not
academic, however, the Examiner would reverse her rulings in this con-
nection and would permit Respondent to question Dishner concerning
any statements Cira might have made to the effect that he did not want
reinstatement with Respondent English Freight Co, supra, 67 NLRB
643. See discussion infra
i7 The stipulation was signed by a Deputy Associate General Counsel
18 Cf. Jackson Tile Mfg Co, 122 NLRB 764, 767, enfd 272 F 2d 181
(C.A 5), where the Board denied reinstatement and backpay to an em-
ployee who had received payment pursuant to a settlement of a complaint
proceeding
HEINRICH MOTORS, INC.
Absent the settlement, the Knaak case, as developed at
the hearing, presents two substantive issues, which will
be discussed in order:
(1) Whether Knaak is chargeable with willful loss of
earnings for the period between April 18, 1964, when he
was discharged, and June 10, 1964, when he went to
work for Keystone Auto Mart;
(2) The proper method for computing the amount of
backpay due for paid vacations which Respondent con-
cedes that he would have been granted in the third quarter
of 1964 and 1965 had he remained in Respondent's
employ. t 9
(1) Although Respondent's answer to the Backpay
Specification relied solely upon the "settlement" as a
defense to the Knaak claim, at the hearing, without objec-
tion, Respondent was allowed to amend its answer to add
a "general denial" and the parties fully litigated the
specific issue of whether Knaak had incurred a willful
loss of earnings from the time of his discharge until he ap-
plied for and secured employment with Keystone Auto
Mart.
After being discharged by Respondent, Knaak
promptly registered with the New York State Employ-
ment Service but never received any calls from the Ser-
vice concerning job openings. He testified that he went to
about six or seven gasoline service stations and observed
them for a while. At those which appeared to have suffi-
cient work for a full-time mechanic he discussed employ-
ment possibilities. Although the record is not entirely
clear, it appears that he received some offers from
gasoline stations, but, according to Knaak's testimony,
the highest pay offered was "$65 or a little over a week,"
as contrasted with the $111 average he had been receiv-
ing from Respondent.
Around the third week of May (approximately a month
after he was discharged by Respondent) he went to Hall-
man Chevrolet, an automobile sales agency at which he
had worked in the past. He testified that he did not apply
for work there, however, since one of the employees with
whom he had previously worked told him that all the
available mechanics' stalls were occupied, i.e., that there
were no vacancies. Knaak stated that he also made inqui-
ries of friends-"employees in other garages, and so
forth" -concerning possible openings, but he supplied no
details and no corroboration was presented.
Within a week or two after he was laid off by Respond-
ent, he received a telephone call from Mr. Memmel of
Brown Chevrolet, where he had worked for about 5
months just before going to work for Respondent in 1963.
At Memmel's request, Knaak said he would stop by for
lunch soon but he did not do so. Memmel then called
again about a week later, renewing his luncheon invitation
and also stating that 1 wanted Knaak to return to work
at Brown's. Knaak agreed to stop in, but again he did not
do so. Memmel appears to have pursued the matter with
additional calls, but Knaak never did visit Brown's.
Knaak testified that he did not want to work for
Brown's not only because it paid less than Respondent
did, but also because the working conditions were bad.
He maintained that the inefficient exhaust system and ex-
tremely poor lighting in the old building in which Brown's
was located constituted a health hazard. In the course of
"' The vacation pay issue would also be presented by Cira's claim if it
were not denied in Coto.
There is no indication in the record (nor was any given off the record) as
to why no "supplemental" claim has been made for vacation pay for any
791
cross-examining Knaak, Respondent produced and in-
troduced into evidence a letter which Knaak had written
to Compliance Officer Hymen Dishner of the Board's
Regional Office on March 21, 1965. In this letter'20
Knaak said that he had not refused Brown's offer of em-
ployment, "but [he] would let [Memmel] know of [his]
decision." The letter to Dishner then proceeded:
Having worked for Brown Chevrolet, from February
1963 to August 1963, prior to going to work for
Heinrich's, I knew my earnings of $2,051.78
averaged out to less that $100 wkly, which would be
less than I had been earning at Heinrich's. There was
no guarantee, that I would be able to earn any more
at Brown's than I had at the previous time they
employed me:
I knew Ed Memmel, and I was flattered that Brown's
was willing to employ me for a second time, but I had
to think of my family's welfare, so I decided to look
further for the best offer I could get, in the quickest
possible time.
The letter to Dishner made no mention of working condi-
tions at Brown's. On cross-examination, Respondent's
counsel elicited testimony that Knaak had not gone to
Brown's to discuss wages or to ascertain whether the
lighting and exhaust systems had been changed or im-
proved since his prior employment there.
Knaak conceded that there were "may 25 or 30" car
agencies in Rochester and a number of them had adver-
tised in the newspapers for mechanics during the period
in question. However, he did not apply for employment
at any until June 8, 1964. On that day, in answer to
newspaper advertisements, he applied to two car agen-
cies-Fincher Chevrolet and Keystone Auto Mart.
Keystone offered him a job on the spot. He accepted and
started to work on June 10. On June 9, Fincher offered
him a job, which he declined because of his commitment
to Keystone.
In explanation of his delay in applying for employment
by an automobile agency, the type of establishment at
which he had been working, Knaak said he "was a little
bit leery to get into that" because he had been fired pur-
portedly for being "non-productive" and "any of these
garages around town ... want somebody that is produc-
tive." This explanation is totally unconvincing and is dis-
credited by the Examiner. Both the persistent offer by
Brown Chevrolet and the alacrity with which Keystone
and Fincher offered him employment when he applied
ness." Neither his demeanor nor his testimony showed
Knaak to be an abnormally shy or timid person. And he
did not attempt to explain what overcame his "leeriness"
in June, when he did apply to Keystone and Fincher.
The Examiner also discredits Knaak's testimony that
he made some investigation of employment possibilities
with gasoline service stations. Such testimony was vague
and totally uncorroborated. Further, with his long ex-
perience as an automobile mechanic in the Rochester
area, Knaak may be presumed to have known of the ap-
parent wide difference in the wages paid to mechanics by
service stations and car agencies. Thus, in the absence of
of the other seven discrmunatees
20 The letter was in reply to one by Dishner dated March 19. Dishner's
letter was not produced at the hearing.
792 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
any sound explanation for Knaak's failure to apply for
employment with car agencies, the Examiner finds that,
under the facts of this case, investigation of gasoline ser-
vice stations would not constitute a diligent search for
means to mitigate Knaak's damages. And the Examiner
similarly finds that Knaak's vague testimony that he made
inquiries of friends in the business does not establish any
sincere, good-faith effort to secure employment.
Respondent sought to call Dishner as a witness for ex-
amination as to the basis for the "settlement" of Knaak's
claim. The Examiner refused to permit Dishner to testify
because the General Counsel had refused to grant per-
mission for Dishner to testify except as to a matter which
was no longer in dispute. (See discussion infra.)
The General Counsel contends that Dishner could not
be required to testify and that the opinion of a Board
agent as to Knaak's diligence in seeking employment
would have "no binding effect whatsoever" on the Board
Assuming arguendo that these contentions were correct,
the Examiner believes that the General ( ounsel's refusal
to permit Dishner to testify concerning any facts known
by him which entered into the computation of the
backpay agreed upon would warrant an inference that the
facts developed by the Board's investigation supported
the uncontradicted testimony of Respondent's president
that "it was [the] feeling of [Messrs. Heinrich, Lawler
and Dishner] that [Knaak] had not made a serious at-
tempt to find employment "21 Knaak himself provided
corroboration for the inference that Dishner was aware
of facts warranting this conclusion In this connection, on
cross-examination, over the objection of the General
Counsel, Knaak testified as follows
A. . . . [Dishner] explained to me just how the
figures were-
Q. How the $392-
A How it was figured out.
Q. And what was that explanation , can you recall
how he explained that to you?
A. I can't for the life tell you how this sum was ar-
rived at because I'm pretty good in mathematics and
I couldn't come to this figure if I had sat down with
a pencil and paper from now until doomsday.
Q. Well, was any conversation had, Mr. Knaak,
that you were not going to be paid backpay from the
time of April 18th [to] the time you went to work for
Keystone because you had not made a good faith ef-
fort to obtain employment"
A. Yes, there was some conversation like that
Q. Will you tell us what that consisted of?
A. I think maybe it was said how much time did
you spend painting your house"
* * * * *
Q. Well, Mr. Knaak, are you saying that someone
told you that because you painted your house and
you didn't-what else was there mentioned, what
else besides the fact that you painted your house dur-
ing this period; what else was mentioned as the
reason why you only received $392.
A. I don't know.
On all the evidence, including the demeanor of the wit-
nesses, the Examiner finds that Knaak made no diligent
effort to secure employment between April 18, the date
of his discharge, and June 8, when he sought and secured
employment with Keystone Auto Mart. He is, therefore,
chargeable with willful loss of earnings and thus not enti-
tled to any backpay for this period. Knickerbocker Plastic
Co., 132 NLRB 1209, 1218.
Except for its contention that the "settlement" ended
the matter, Respondent does not dispute Knaak's entitle-
ment to backpay for the period during which he was
working for Keystone Auto Mart, where his earning rate
was lower that it had been with Respondent. Excluding
the period between April 18 and June 10, Knaak's gross
backpay during the second quarter of 1964 would be
$310.80 (2-4/5 weeks at $110). During that time he
received $290 in wages from Keystone. Thus, for that
quarter he would be entitled to net backpay in the amount
of $20.80. However, during that period he received
$217.12 from Respondent as severance pay. At the out-
set of the hearing the Backpay Specification was
amended to provide that the severance pay was deducti-
ble from the net backpay due for the second quarter of
1964. Adopting this provision of the amended Specifica-
tion ,22 to which Respondent did not object, the Examiner
finds that there is no backpay due Knaak for the first
quarter of the backpay period; i.e., 1964-2.
(2) The major issue between the parties concerns
Knaak's claim for vacation pay for the third quarters of
1964 and 1965. Respondent concedes that if Knaak had
remained in Respondent's employ he would have been
granted a vacation with pay in the amount of $242.64 in
each of these years. Respondent also concedes that
Knaak did not receive paid vacations at his subsequent
places of employment.
The General Counsel has proposed a method of com-
putation designed to give Knaak the benefit of his having
worked through periods which would have been vaca-
tions had Respondent not discharged him. For the third
quarter of each of the years involved, the General Coun-
sel has eliminated 2 weeks from both the gross backpay
and the interim earnings calculations. To the net backpay
for each of those quarters he has added the 2 weeks' vaca-
tion pay Knaak would have received had he remained
with Respondent. In this way, Knaak, rather than
21 According to the Backpay Specification , net backpay due Knaak was
$875 25 exclusive of vacation pay and bonus Presumably the Board per-
sonnel had some factual basis for the original decision to "settle" for
$392 07. The Examiner believes that considerations of fairness dictate
that the facts be made available to Respondent , even though the opinions
or conclusions reached therefrom by Board personnel are not binding and
probably would be inadmissible
22 The parties have not furnished any information concerning the basis
for paying or computing severance pay it appears that both Cira and
Knaak received a little more than twice their average weekly earnings,
although the lengths of their employment differed substantially The Ex-
aminer has some question whether severance pay constitutes interim
earnings to be credited to the particular quarter in which it was paid
Hearst Consolidated Publications, Inc., 10 NLRB 1299, 1316, allowing
severance pay as a credit to the employer, antedated F W Woolworth
Co, 90 NLRB 289, and thus sheds no light on the timing of the credit
HEINRICH MOTORS, INC. 793
Respondent, secures the benefit of working time in ex-
cess of that he would have worked for Respondent.23
Respondent contends that, because Knaak was em-
ployed and receiving compensation throughout those
periods, to grant him vacation pay in addition without
crediting his actual interim earnings against his gross
backpay would amount to double compensation and
would be improper. In support of its position, Respond-
ent cites Hill Transportation Co., 102 NLRB 1015, and
Story Oldsmobile, Inc., 145 NLRB 1647. In the Ex-
aminer's opinion, these cases do not support Respond-
ent's contentions. In Hill the Examiner computed
"gross backpay" for the entire period, added vacation
pay, and then subtracted net interim earnings as com-
puted under a formula (102 NLRB at 1030 (App. E)) and
1032 (App. I). In Story, the discriminatee's gross
backpay had been computed by reference to the earnings
of two other employees who had remained in the Re-
spondent's employ. The Trial Examiner disallowed any
addition for vacation pay, stating that the earnings of those
employees used for computing the discriminatee's poten-
tial earnings "must have included and vacation pay given
them during the period." So far as appears, there was no
evidence as to whether the discrimiii!atee had received a
paid vacation at his subsequent employment during the
backpay period, which would have been reflected in his
interim earnings.
In the present case the General Counsel has shown
that Knaak did not receive any paid vacations at his new
job. Thus, to credit Respondent with Knaak's total
earnings without then adding vacation pay would be to
give Respondent the "product of [Knaak's] working time
in excess of the total time he would actually have worked
for the Respondent." Underwood Machinery Co., supra,
95 NLRB at 1400. Respondent 's method of calculation
would be sound only if Knaak had not worked steadily
throughout the periods involved, as was the situation
presented in the Underwood case.24
The Examiner finds that backpay is due Knaak for va-
cations as claimed in the Backpay Specification.
There is no substantial disagreement as to the claim for
$10 as a net bonus for the fourth quarter of 1964. This is
based on the admitted facts that at Respondent's Knaak
would have received a bonus of $25, whereas he received
only $15 at Taylor's Chevrolet, where he was then work-
ing.
Thus, the following is a tabulation of the backpay due
Knaak under the Backpay Specification, and the Ex-
aminer's findings:
1964-3 $181.21
1964-3(vacation) 242.64
1964-4 111.16
1964-4 (bonus) 10.00
1965-3 (vacation) 242.64
Less: $787.65
Paid per settlement 392.07
Net due $395.58
"-3 The Examiner is not looking behind the Backpay Specification How-
ever, it might well be proper to compute backpay due for the entire period
on the basis of actual gross backpay and actual net interim earnings and
then simply add the vacation pay, giving the discruninatee monetary com-
pensation in lieu of the time off with pay which he was deprived of as a
result of the Respondent's misconduct . This simple method of computa-
tion appears best suited to the concept of vacation pay as "deferred
wages ." Mooney Aircraft, Inc., 148 NLRB 1057, 1059. The suggested
method appears to have been used in Barberton Plastics Products, Inc,
Subpena of the Board' s Regional Compliance Officer
In view of the Examiner's conclusions that both Cira
and Knaak were chargeable with willful loss of earnings,
Respondent's objections to the General Counsel' s motion
to revoke the subpena of Mr. Dishner and its motion to
reopen the record are moot. However , since the Board
may disagree with the Examiner 's factual conclusions on
the present record , some discussion may be in order.
On March 25, 1966, Respondent addressed a request
to the General Counsel for permission under Section
102.118 of the Board 's Rules and Regulations for permis-
sion to have Hymen Dishner, regional compliance of-
ficer, appear and produce records and give testimony at
the hearing . On March 28 , 1966 , Respondent served a
subpoena duces tecum on Mr. Dishner. The General
Counsel then filed a petition to revoke the subpena,
which petition was referred to the Trial Examiner for
disposition at the hearing.
During the hearing, Respondent called Mr. Dishner,
who was present throughout the hearing. Counsel for the
General Counsel produced a letter dated April 5, 1966,
by the General Counsel addressed to Respondent. It
reads, in pertinent part, as follows:
. permission is hereby granted for Compliance
Officer Dishner to testify only with respect to the
gross backpay computation in the instant case, and
to produce those documents listed in the subpoena
which are identifiable , in our possession, and rele-
vant to the issues in the case. This permission, how-
ever, is subject to the rulings of the Trial Examiner
and the Board on a pending petition to revoke the
subpoena as well as other appropriate objections
which may be offered. Insofar as your request relates
to permission for Compliance Officer Dishner to tes-
tify concerning any other issue in this case or to
produce interagency memoranda, working papers, or
memoranda, reflecting thought processes contained
in the Regional Office file, your request is hereby de-
nied.
Respondent 's counsel stated that he sought to elicit
from Mr. Dishner testimony (1) that Cira had early in-
dicated that he did not want reinstatement with Respond-
ent; and (2) that $392 in backpay previously paid to
Knaak, at the direction of or with the agreement of the
Regional Director, had been computed on the basis of
Knaak's failure to seek employment between April 18,
1964, the date of his discharge, and June 10, 1964, when
he commenced work for Keystone Auto Mart.
It might be argued, with considerable force, that, since
"withdrawal from the labor market" cuts off the backpay
period, the evidence which Respondent sought to elicit
from Mr. Dishner, particularly that with respect to Cira,
was relevant to "the gross backpay computation" and
therefore came within the limited permission which the
General Counsel granted for Dishner to testify. How-
146 N LRB 393, 394, reversed, 354, F.2d 66 [C.A 6], and Hill Transpor-
tation Co., 102 NLRB 1015,1030,1032.
Applied in this case the suggested method would increase the total due
Knaak by $32 90.
24 The same situation appears to have prevailed in Moss Planing Mill
Co., 110 NLRB 933, 934, reversed 224 F.2d 702 (C A 4), in which the
Board reversed the Examiner's allowance of vacation pay in addition to
the difference between gross backpay and net interim earnings
794 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ever, the Examiner believes that, against the background
of the pleadings and the apparent purpose of the General
Counsel's restriction on the testimony, the phrase "the
gross backpay computation" referred only to the figures
shown as "Gross Backpay" in the Backpay Specification,
i.e., the earnings which the discriminatees would have
realized had they remained in Respondent's employ.
Counsel for the General Counsel so construed Mr. Ord-
man's letter and counsel for Respondent apparently
agree, saying in the course of the hearing:
... We are not questioning the gross backpay com-
putation, right, but I think we are not getting the
basic truths in this matter and it's holding up
everything, . .
Since the "Gross Backpay" figures contained in the
Specification were agreed to at the outset of the hearing,
there was no occasion or need for Mr. Dishner to testify
on that issue, which was the only matter as to which he
was permitted to testify. Accordingly, the Examiner
granted the General Counsel's petition to revoke the sub-
pena and refused to require Mr. Dishner to testify. This
ruling was based solely on the Board's Regulation and the
General Counsel's restriction of permissible testimony by
Mr. Dishner to "the gross backpay computation." She
declined to rule on the General Counsel's contention that
Mr. Dishner's testimony would be "irrelevant and im-
material to the issues to be resolved at a backpay hear-
ing." Under Section 102.118 the Examiner was required
to refuse to permit Mr. Dishner to testify beyond the
limited scope of the permission granted by the General
Counsel; she was not at liberty to follow N.L.R.B. v.
Capitol Fish, 294 F.2d 868 (C.A. 5), and General En-
gineering Inc v. N L R B., 341 F.2d 367 (C.A. 9), on
which Respondent relies. See, e.g., Harvey Aluminum
(Inc.), 142 NLRB 1041, 1042 fn. I Iowa Beef Packers,
Inc., 144 NLRB 615, 616-617 modified 331 F.2d 176
(C.A. 8); The Great Atlantic & Pacific Tea Co., 145
NLRB 361, 385-386 enfd. in part 340 F.2d 690(C.A 2);
Campbell Soup Co., 152 N LRB 1645, fn. 1.25
Since the close of the hearing in this case, however, the
Board appears to have ruled that Section 102.118 of its
Regulations is not applicable in backpay proceedings. In
an opinion affirming the Trial Examiner ' s ruling in a situa-
tion essentially similar to the present, the Board, in J. H.
Rutter-Rex Manufacturing Co., supra, 158 NLRB 1414,
1417, said:
. in contrast with the General Engineering case
[supra, 341 F.2d 367], here the Trial Examiner in
his rulings did not rely upon the Board rule men-
tioned above Thus, although the General Counsel in
Cf Harvey Aluminum (Inc ) 147 NLRB 1287, 1288, In 2, Id, 156
N LRB 1353, Id, 139 NLRB 151, 155, Singer Serving Machine Co, 140
NLRB 1061, 1063, enforcement denied 329 F 2d 200(C A 4)-all limit-
ing the Capital Fish decision to cases where evidence is sought to
establish impiopriety or misconduct by Boaid agents No such limited
reading of General Engineering seems possible
2 Contrary to Respondent 's contention , an Examiner has jurisdiction
to revoke subpoenas dices terum Herman Bias Pet Supply, Inc v
NLRB,360F2dl76(CA 6)
'T The General Counsel's permission to produce documents appears
bioadei than that to give testimony Not having seen the subpena, the Ex-
aminer is in no position to pass on the General Counsel's contentions that,
except for the documents already produced and those not in his posses-
sion, the items listed are not relevant or are not described with sufficient
his letter of March 8, 1963, to the Respondent de-
nied permission to representatives of the Board in
New Orleans to produce any of the items listed in the
subpoenas duces tecum, the Trial Examiner did
require the production of many of the items listed in
both subpenas and they were in fact produced at the
hearing. During the hearing, the Trial Examiner ex-
hibited concern lest the Respondent be prejudiced in
its cross -examination of witnesses by the General
Counsel's withholding of documents under a strict
interpretation of Section 102.118 of the Rules. For
this reason, the Trial Examiner required the General
Counsel to produce material , including affidavits,
from files containing information about the claimants
without regard to whether or not the claimants were
called to testify. In this respect, the Trial Examiner
expressed the view that the Board 's general procedu-
ral rules were not designed to cover backpay
proceedings, and his conduct of the hearing was con-
sistent with this view.
If the present Examiner correctly understands the deci-
sion in Rutter-Rex as holding the Board ' s procedural
regulations inapplicable in backpay proceedings, she
would reconsider her rulings revoking the subpoenas
duces tecum26 and refusing to permit Mr. Dishner to tes-
tify. It would then be necessary to consider the matters
from the point of view of relevancy, the primary ground
advanced by the General Counsel for his petition to
revoke the subpena.27
As previously indicated supra, the evidence which
Respondent ' s counsel stated he hoped to elicit from Mr.
Dishner would have been relevant to the issues in this
case. Thus, had the Examiner not relied on Section
102.118 of the Board ' s Regulations , she would have per-
mitted Respondent to call Mr. Dishner as a witness.211
Accordingly, the Examiner recommends that, if the
Board should disagree with the substantive conclusions
here reached, the order vacating the subpoena duces
tecum should be set aside and the record should be
reopened for receipt of testimony by Mr. Dishner.
CONCLUSION
Upon all the evidence, the Examiner finds that the
obligation of Respondent to make whole the dis-
criminatees pursuant to the Board ' s order will be
discharged by the payment to Edward Knaak of
$395.58.2}
RECOMMENDED ORDER
It is recommended that the Board adopt the foregoing
findings and conclusions.
particularity At the hearing , Respondent 's counsel did not specifically
seek any documents but attempted only to secure testimony by Dishner
'" Any questions as to "disclosure of analysis memoranda and similar
memoranda and reports prepared by various agents for the Board or
General Counsel in the course of their investigation" (Rutter-Rex, supra,
1417) would be dealt with if and when they arose in the course of Dish-
nei's testimony , as would any possible questions concerning the expres-
sion of "opinions" or "conclusions" by Dishner
20 The Examiner questions whether the addition of interest in this case
would "achiev [ e] a more equitable result [and ] encourag [ e] compliance
with Board Orders" (Isis Plumbing & Heating Co, 138 NLRB 716, 720)
in view of Respondent 's conduct in accepting the Board 's order and pay-
ing Knaak pursuant to agreement with Board personnel