Court of Appeals for the Ninth Circuit

National Labor Relations Board v. Merner Lumber and Hardware Company

345 F.2d 770

June 22, 1965 · Docket 19349

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Headnotes

Generated summaries

Headnote 1
49.14.11 Labor and Employment Law > Labor and Employment Administrative Enforcement Law > NLRB Enforcement Law
The court applied this rule to the Board’s findings regarding refusal to recognize the union and the discharge of employees, concluding the record met the substantial‑evidence threshold.
Headnote 2
49.15.1 Labor and Employment Law > Labor Law > Bargaining Unit Determination Law
The appellate court found the Board’s conclusion that the Palo Alto store was the appropriate unit was not arbitrary or capricious, so the determination stands.
Headnote 3
49.15.20 Labor and Employment Law > Labor Law > Refusal to Bargain Law
The Board held the company’s December 7, 1962 refusal to recognize Retail Store Employees Union, Local 428, at the Palo Alto store violated the NLRA.
Headnote 4
49.15.4 Labor and Employment Law > Labor Law > Discriminatory Discipline for Union Activity Law
The Board found the December 8 and 10, 1962 discharges of four employees (and an attempted fifth) were motivated by anti‑union animus, violating the Act.
Headnote 5
49.14.10 Labor and Employment Law > Labor and Employment Administrative Enforcement Law > Judicial Review of Labor and Employment Agency Action Law
Applying the substantial‑evidence rule and the arbitrary‑or‑capricious test, the court granted the petition for enforcement and ordered the company to cease the unfair‑labor practices.
Headnote 6
49.15.8 Labor and Employment Law > Labor Law > Employer Speech and Captive Audience Meeting Law
The court reviewed the Board’s finding that the Palo Alto store was the appropriate bargaining unit and, applying the arbitrary‑and‑capricious test, found no abuse of discretion, citing Dewey Portland Cement.
Headnote 7
49.15.9 Labor and Employment Law > Labor Law > Employer Unfair Labor Practices Law
The court found the Board exercised its wide discretion under § 9(b) and did not act arbitrarily or capriciously in defining the Palo Alto store as the appropriate unit.

Opinion

PER CURIAM:

The National Labor Relations Board seeks enforcement of its order directing Merner Lumber and Hardware Company to cease and desist from certain asserted unfair labor practices and to take specified corrective action. The order in question resulted from agency proceedings in which it was found that the company had engaged in two unfair labor practices.

One of these unfair labor practices, the Board found, was in refusing, on December 7, 1962, to extend recognition to, and bargain with, Retail Store Employees Union, Local 428, Retail Clerks International Association, AFL-CIO (Union), as the representative of sales personnel and clerical workers at the company’s hardware store in Palo Alto, California. This was held to be a violation of section 8(a) (5) and (1) of the National Labor Relations Act (Act), 49 Stat. 452 (1935), as amended, 29 U.S.C. § 158(a) (5) and (1) (1958).

The other unfair labor practice, the Board found, was the action of the company in discharging four employees on December 8, 1962, and one on December 10, 1962. All of these employees, the Board found, had been active in promoting the organizing attempt of the Union at the Palo Alto store. The Board concluded from this that the company discriminated in regard to the hire and tenure of employment of these employees to discourage membership in the Union. This was held to be a violation of section 8(a) (3) and (1) of the Act, 29 U.S.C. § 158(a) (3) and (1) (1958).

The Board order requires the company to cease and desist from engaging in such practices, requires the company to post the customary notices, and directs the company to reinstate and make whole four of the discharged employees, the fifth having been reinstated shortly after his discharge and having thereafter resigned.

Resisting the petition for enforcement, the company argues that the trial examiner’s findings of fact, adopted by the Board, are not supported by substantial evidence on the record considered as a whole. Quite to the contrary, the company asserts, the substantial evidence required findings that: (1) the company refused to bargain because of its good faith doubt as to the appropriateness of the Palo Alto store as the bargaining unit, the company having another unorganized hardware store at Redwood City, California, four miles away; (2) the company also refused to bargain because of its good faith doubt as to whether the Union represented a majority of the sales personnel and clerical workers at the Palo Alto store; and (3) the company discharged the five employees in question because of economic necessity and also, in three cases, for cause, and not for the purpose of discouraging membership in the Union. With regard to the first of these issues, the company also contends that the Board acted arbitrarily and capriciously in determining that the Palo Alto store is an appropriate bargaining unit.

Under section 10(e) of the Act, 29 U.S.C. § 160(e) (1958), the findings of the Board with respect to questions of fact is supported by substantial evidence on the record considered as a whole, shall be conclusive. Applying that test, we conclude that the challenged findings are supported by substantial evidence.

Under section 9(b) of the Act, 29 U.S.C. § 159(b) (1958), the Board has wide discretion in determining an appropriate bargaining unit. The Board’s determination in this regard will not be set aside in the absence of a showing that such determination was arbitrary and capricious. See N. L. R. B. v. Dewey Portland Cement Co., 10 Cir., 336 F.2d 117, 119. We conclude that the Board did not act arbitrarily or capriciously in determining that the company’s Palo Alto store is an appropriate bargaining unit.

A recitation of the evidence which we regard as substantial, considering the record as a whole, and of the considerations which lead us to conclude that the Board did not act arbitrarily and capriciously, will not add precedent value to this opinion and is therefore omitted.

The petition for enforcement is granted.

Case brief

Citation data as of July 29, 2026

Summary

The National Labor Relations Board held Merner Lumber & Hardware Co. liable for two unfair‐labor‐practice violations: refusing to recognize and bargain with Retail Store Employees Union, Local 428, and unlawfully discharging five employees who were active in the Union’s organizing campaign, ordering the company to cease the conduct, post statutory notices, and reinstate and make whole four of the discharged workers. Merner appealed, contending that the Board’s findings were unsupported by substantial evidence, that its refusal to bargain stemmed from a good‐faith doubt about the appropriateness of the Palo Alto store as a bargaining unit and about majority support, that the terminations were justified by economic necessity or unrelated cause, and that the unit determination was arbitrary and capricious. The Court of Appeals applied the § 10(e) “substantial‐evidence” standard to the Board’s factual findings and the § 9(b) “arbitrary‐and‐capricious” test to the unit‐determination. It concluded that the record, taken as a whole, demonstrated that the company’s refusal to bargain was not based on a legitimate doubt and that the discharges were motivated by anti‐union animus, satisfying the substantial‐evidence requirement. The Court also found that the Board’s analysis of community‐of‐interest factors showed the Palo Alto store was a proper bargaining unit and that the determination was not arbitrary or capricious. Accordingly, the appellate court affirmed the Board’s remedial order and granted the petition for enforcement. No separate concurring or dissenting opinions were filed.

Updated July 29, 2026

Statement of Facts

The National Labor Relations Board (the Board) brought a petition for enforcement against Merner Lumber and Hardware Company (the Company), the employer of sales personnel and clerical workers at its Palo Alto, California hardware store. The Board had previously found that the Company, as an employer, committed two unfair‐labor‐practice violations under the National Labor Relations Act: (1) on December 7, 1962, it refused to recognize and bargain with Retail Store Employees Union, Local 428, Retail Clerks International Association, AFL‐CIO, as the exclusive representative of those employees, in violation of §§ 8(a)(1) and 8(a)(5); and (2) on December 8 and 10, 1962, it discharged five employees who had been active in promoting the Union’s organizing effort, a discharge the Board held to be motivated by anti‐union animus and therefore a violation of §§ 8(a)(1) and 8(a)(3). The Board’s order required the Company to cease and desist from the unlawful conduct, to post the statutory notices, and to reinstate and make whole four of the discharged employees (the fifth had been reinstated and subsequently resigned). The Company appealed, contending that the Board’s factual findings were not supported by substantial evidence. It asserted that its refusal to bargain stemmed from a good‐faith doubt that the Palo Alto store constituted an appropriate bargaining unit—given the existence of an unorganized Redwood City store nearby—and from uncertainty that the Union represented a majority of the affected workers. Regarding the discharges, the Company claimed economic necessity and, in three instances, cause unrelated to union activity. It also argued that the Board acted arbitrarily and capriciously in deeming the Palo Alto store an appropriate bargaining unit. The petition sought judicial enforcement of the Board’s remedial order; the Company raised the foregoing defenses in opposition. The appellate court considered whether the Board’s findings were supported by substantial evidence and whether its unit determination was arbitrary or capricious.

Updated July 29, 2026

Procedural History

National Labor Relations Board (initial adjudicative body).
– The Board, after its own administrative hearing, entered an order finding Merner Lumber & Hardware Co. liable for two unfair‐labor‐practice violations (refusal to recognize and bargain with the Union and unlawful discharge of five employees) and directing the company to (a) cease and desist the unlawful conduct, (b) post the statutory notices, and (c) reinstate and make whole four of the discharged employees. No monetary damages were awarded; the relief was purely remedial.

United States Court of Appeals (appellate review).
– Merner Lumber & Hardware Co. appealed the Board’s order, contending that the Board’s factual findings were not supported by “substantial evidence” and that the Board’s determination that the Palo Alto store constituted an appropriate bargaining unit was “arbitrary and capricious.” The appellate court applied the § 10(e) substantial‐evidence standard and the § 9(b) deference standard, concluded that the Board’s findings were supported by substantial evidence and not arbitrary, and granted the Board’s petition for enforcement, thereby affirming the Board’s remedial order. No additional monetary award was made; the same remedial relief ordered by the Board was upheld.

The opinion does not indicate any intervening district‐court decision or other intermediate appellate review; the procedural record consists of the Board’s order and the direct appeal to the Court of Appeals.

Updated July 29, 2026

Issues

Substantive Issues

Recognition and bargaining – Did the National Labor Relations Board’s finding that Merner Lumber & Hardware Co. unlawfully refused to recognize and bargain with Retail Store Employees Union, Local 428, in violation of §§ 8(a)(1) and 8(a)(5) of the NLRA rest on substantial evidence, despite the company’s claim of a good‐faith doubt that the Palo Alto store was an appropriate bargaining unit and that the Union represented a majority of the sales‐personnel and clerical workers?

Unlawful discharge – Did the Board’s finding that the discharge of four (and the attempted discharge of a fifth) employees was motivated by anti‐union animus, thereby violating §§ 8(a)(1) and 8(a)(3) of the NLRA, rest on substantial evidence, notwithstanding the company’s contention that the terminations were based on economic necessity or unrelated cause?

Bargaining‐unit determination – Was the Board’s determination that the Palo Alto hardware store constituted an appropriate bargaining unit arbitrary and capricious, or did the Board exercise its statutory discretion under § 9(b) of the NLRA in a manner supported by the record?

Procedural Issue Did the Board err procedurally by failing to apply the statutory “substantial‐evidence” standard to its factual findings and by acting arbitrarily and capriciously in its determination of the appropriate bargaining unit, thereby warranting reversal of its remedial order?

Updated July 29, 2026

Judgment

The United States Court of Appeals granted the National Labor Relations Board’s petition for enforcement, thereby affirming the Board’s order directing Merner Lumber & Hardware Co. to cease and desist from the unlawful conduct, post the required statutory notices, and reinstate and make whole the four discharged employees.

Updated July 29, 2026

Holding

Recognition and bargaining – An employer’s refusal to recognize and bargain with a union is an unfair‐labor‐practice violation when the National Labor Relations Board, after a proper hearing, finds that the refusal was not based on a legitimate doubt about the appropriateness of the bargaining unit or the union’s majority status and the Board’s finding is supported by substantial evidence.

Unlawful discharge – The discharge of employees for the purpose of discouraging union membership violates §§ 8(a)(1) and 8(a)(3) of the NLRA whenever the Board determines, on a substantial‐evidence basis, that the terminations were motivated by anti‐union animus, even if the employer asserts economic necessity or other non‐union reasons.

Bargaining‐unit determination – The Board’s determination of the appropriate bargaining unit is entitled to deference; it will be set aside only if a party shows that the determination was arbitrary, capricious, or contrary to the evidence.

Procedural standard of review – On appellate review, the Board’s factual findings are conclusive if supported by substantial evidence under § 10(e) of the NLRA, and its unit‐determination decisions are upheld unless shown to be arbitrary or capricious under § 9(b); therefore, an appellate court must affirm the Board’s remedial order when those standards are satisfied.

Updated July 29, 2026

Rule of Law

Substantial‐evidence standard for reviewing the Board’s factual findings.
Under § 10(e) of the National Labor Relations Act, a finding of fact made by the NLRB “shall be conclusive if it is supported by substantial evidence on the record considered as a whole.” 29 U.S.C. § 160(e) (1958).

Deference to the Board’s bargaining‐unit determination; review for “arbitrary or capricious.”
§ 9(b) of the NLRA grants the Board “wide discretion” in defining an appropriate bargaining unit, and its determination will not be set aside “unless a showing is made that such determination was arbitrary and capricious.” 29 U.S.C. § 159(b) (1958). The appellate court’s application of this standard follows the precedent that the Board’s unit‐determination is reviewed under the arbitrary‐and‐capricious test. N.L.R.B. v. Dewey Portland Cement Co., 336 F.2d 117, 119 (10th Cir. 1964).

Updated July 29, 2026

Reasoning

The court first identified the governing standard for reviewing the Board’s factual findings: under § 10(e) of the NLRA, a finding of fact “shall be conclusive if it is supported by substantial evidence on the record considered as a whole.” The court therefore framed its analysis as a determination of whether the Board’s conclusions regarding refusal to recognize the Union and the motive for the discharges met that evidentiary threshold.

Applying the § 10(e) standard, the court examined the record of the Board’s hearing and found that the evidence—testimony, documents, and the circumstances surrounding the employer’s actions—sufficiently demonstrated that the company’s refusal to bargain was not based on a legitimate doubt about unit appropriateness or majority status, and that the terminations were motivated by anti‐union animus. Because the record, taken as a whole, supported those conclusions, the court held the Board’s findings were backed by substantial evidence.

The court then turned to the statutory deference owed to the Board’s unit‐determination under § 9(b) of the NLRA, which grants the Board “wide discretion” to define an appropriate bargaining unit and limits judicial review to a showing that the determination was “arbitrary and capricious.” This established the legal test the court must apply to the employer’s challenge.

Relying on the precedent N.L.R.B. v. Dewey Portland Cement Co., 336 F.2d at 119, the court explained that the “arbitrary and capricious” inquiry is narrow: the court must look for a clear error in judgment or a decision contrary to the evidence, not merely a disagreement with the Board’s reasoning. The court therefore assessed whether the Board’s conclusion that the Palo Alto store constituted a proper unit was unsupported or irrational.

After reviewing the evidence concerning the store’s workforce composition, the proximity of the unorganized Redwood City store, and the Board’s analysis of community of interest factors, the court concluded that the Board’s unit determination was reasonable and grounded in the record. Consequently, the court found no basis to deem the decision arbitrary or capricious.

Because the Board’s factual findings satisfied the substantial‐evidence requirement and its unit‐determination survived the arbitrary‐and‐capricious test, the court inferred that the Board acted within the scope of its statutory authority and that judicial review could not overturn the agency’s conclusions.

Accordingly, the court affirmed the Board’s remedial order, granting the petition for enforcement and directing Merner Lumber & Hardware Co. to cease the unlawful conduct, post the required notices, and reinstate and make whole the four discharged employees, thereby implementing the holding that the Board’s order was proper and enforceable.

Updated July 29, 2026

Concurring/Dissenting Opinions

Authoring Justice: None (the Court issued a per curiam opinion)
Type of Opinion: No concurring or dissenting opinions were filed.
Summary of Reasoning: The Court affirmed the National Labor Relations Board’s order, finding the Board’s factual findings supported by substantial evidence and its unit‐determination not arbitrary or capricious; no Justice authored a separate concurrence or dissent.

Updated July 29, 2026

Case Relevance

National Labor Relations Board v. Merner Lumber & Hardware Co. is authoritative because it crystallizes the dual standards that govern appellate review of NLRB decisions: (1) factual findings must be upheld when supported by “substantial evidence” under § 10(e) of the NLRA, and (2) the Board’s bargaining‐unit determinations are reviewed only for “arbitrary or capricious” error under § 9(b), a narrow test that requires a clear mistake or contrary evidence. By applying those standards, the Court resolved the core issues—affirming the Board’s finding that Merner’s refusal to recognize the union and the discharge of four employees were not based on legitimate doubts or economic necessity but on anti‐union animus, and confirming that the Palo Alto store was a proper unit—thereby establishing a clear, binding rule that an appellate court may not overturn a Board finding absent a lack of substantial evidence or a demonstrable arbitrary‐and‐capricious determination. The holding’s reach is broad: it applies to any appellate review of NLRB factual findings or unit‐determinations regardless of the specific industry or factual context, so long as the procedural posture is a petition for enforcement or similar review under the NLRA. Consequently, the case is a go‐to citation for practitioners and courts seeking to demonstrate that the Board’s conclusions are insulated from reversal when the statutory evidentiary thresholds are met, and it is especially useful for closing arguments that an employer’s “good‐faith doubt” or alleged economic justification can defeat an unfair‐labor‐practice finding. What the decision does not resolve are the substantive standards for defining a “community of interest” in unit‐determinations or the evidentiary specifics of majority‐support tests; those remain fact‐intensive inquiries left to the Board and lower courts.

Updated July 29, 2026

Relevant Quotes

Quoted text: "One of these unfair labor practices, the Board found, was in refusing, on December 7, 1962, to extend recognition to, and bargain with, Retail Store Employees Union, Local 428, Retail Clerks International Association, AFL-CIO (Union), as the representative of sales personnel and clerical workers at the company’s hardware store in Palo Alto, Californ ia. This was held to be a violation of section 8(a) (5) and (1) of the National Labor Relations Act (Act), 49 Stat. 452 (1935), as amended, 29 U.S.C. § 158 (a) (5) and (1) (1958)."
Bluebook pinpoint citation: 345 F.2d 770
Explanation: Identifies the Board’s finding that Merner’s refusal to recognize and bargain with the Union violated sections 8(a)(1) and 8(a)(5) of the NLRA, establishing the recognition and bargaining issue.

Quoted text: "The other unfair labor practice, the Board found, was the action of the company in discharging four employees on December 8, 1962, and one on December 10, 19 62. All of these employees, the Board found, had been active in promoting the organizing attempt of the Union at the Palo Alto st ore. The Board concluded from this that the company discriminated in regard to the hire and tenure of employment of these employees to discourage membership in the U nion. This was held to be a violation of section 8(a) (3) and (1) of the Act, 29 U.S.C. § 158 (a) (3) and (1) (1958)."
Bluebook pinpoint citation: 345 F.2d 770
Explanation: Describes the Board’s conclusion that the discharge of four employees was motivated to discourage union membership, constituting violations of sections 8(a)(1) and 8(a)(3), thereby supporting the unlawful‑discharge issue.

Quoted text: "Under section 10(e) of the Act, 29 U.S.C. § 160 (e) (1958), the findings of the Board with respect to questions of fact is supported by substantial evidence on the record considered as a whole, shall be conclusiv e. Applying that test, we conclude that the challenged findings are supported by substantial evidence."
Bluebook pinpoint citation: 345 F.2d 770
Explanation: States the statutory substantial‑evidence standard under § 10(e) and the court’s determination that the Board’s factual findings satisfy that standard, providing the rule for reviewing factual findings.

Quoted text: "Under section 9(b) of the Act, 29 U.S.C. § 159 (b) (1958), the Board has wide discretion in determining an appropriate bargaining uni t. The Board’s determination in this regard will not be set aside in the absence of a showing that such determination was arbitrary and capricio us. See N. L. R. B. v. Dewey Portland Cement Co., 10 Cir., 336 F.2d 117, 119 . We conclude that the Board did not

act arbitrarily or capriciously in determining that the company’s Palo Alto store is an appropriate bargaining unit."
Bluebook pinpoint citation: 345 F.2d 770
Explanation: Explains the Board’s broad discretion in defining a bargaining unit under § 9(b) and the narrow ‘arbitrary or capricious’ test of review, and notes the court’s finding that the unit determination was not arbitrary, addressing the bargaining‑unit determination issue.

Quoted text: "Resisting the petition for enforcement, the company argues that the trial examiner’s findings of fact, adopted by the Board, are not supported by substantial evidence on the record considered as a who le. Quite to the contrary, the company asserts, the substantial evidence required findings that: (1) the company refused to bargain because of its good faith doubt as to the appropriateness of the Palo Alto store as the bargaining unit, the company having another unorganized hardware store at Redwood City, California, four miles away; (2) the company also refused to bargain because of its good faith doubt as to whether the Union represented a majority of the sales personnel and clerical workers at the Palo Alto store; and (3) the company discharged the five employees in question because of economic necessity and also, in three cases, for cause, and not for the purpose of discouraging membership in the Un ion. With regard to the first of these issues, the company also contends that the Board acted arbitrarily and capriciously in determining that the Palo Alto store is an appropriate bargaining unit."
Bluebook pinpoint citation: 345 F.2d 770
Explanation: Presents the employer’s procedural argument that the Board’s findings lacked substantial evidence and were arbitrary, illustrating the procedural challenge the appellate court rejected.

Updated July 29, 2026

Synthesis

Not available

All jurisdictions

Not available.

Additional Comments

National Labor Relations Board v. Merner Lumber and Hardware Company · 345 F.2d 770

Monetary awards

No monetary awards found.

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Metadata

Court

Court of Appeals for the Ninth Circuit

Decided

June 22, 1965

Docket

19349

Precedential status

Published

National Labor Relations Board v. Merner Lumber and Hardware Company

Citing opinions

Headnotes

Opinion