Compulsory Arbitration and the NLRB: A Study of Congressional Intent and Administrative Policy 9781512813937

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LABOR RELATIONS AND PUBLIC POLICY SERIES Report No. 1

COMPULSORY ARBITRATION AND THE NLRB A Study of Congressional Intent and Administrative Policy

by Paul A. Abodeely

UNIVERSITY

of

PENNSYLVANIA

The Wharton School of Finance and Commerce INDUSTRIAL RESEARCH UNIT

Copyright 1968 by the Trustees of the

UNIVERSITY

of

PENNSYLVANIA

Library of Congress Catalog Card Number 68-23583 Manufactured in the United States of America

Fomord The original draft of this study was written by Paul A. Abodeely in the Spring of 1967 as an advanced study project in industrial relations, in partial fulfillment of the requirements for the degree of Master of Business Administration, Graduate Division, Wharton School of Finance and Commerce, University of Pennsylvania. Mr. Abodeely previously received his LL.B. from Boston College. The study was financed by an unrestricted grant to the Industrial Research Unit, the research organization of the Department of Industry, by the Labor Policy Association, Inc., Washington, D.C. After Mr. Abodeely graduated and joined the industrial relations staff of the St. Regis Paper Company, he rewrote the study and updated it. The author accepts full responsibility for the opinions expressed. Thanks are due Mrs. Helen S. White for typing with her usual great care and accuracy both the study project and the final work, and to Mrs. Margaret E. Doyle, Administrator of the Department's office, for handling numerous details. Also, the author appreciates the technical assistance in research offered by John E. Abodeely. Chairman Department of Industry Wharton School of Finance and Commerce University of Pennsylvania

HERBERT R . NORTHRUP,

Philadelphia January 1968

(iii)

Table of

Contents Page

Foreword

iii

Table of Cases Cited

vii

Chapter I. INTRODUCTION

1

II. THE PUBLIC INTEREST IN LABORMANAGEMENT RELATIONS: COLLECTIVE BARGAINING AND GOVERNMENT POLICY

5

Nature of Collective Bargaining The Role of the Government National Labor Policy on Collective Bargaining... Legislative Intent—The Wagner Act Section 8(5) Legislative Intent—The Taft-Hartley Act Legislative Intent—The Landrum-Griffin ActThe Duty to Bargain—Comment and Perspective

18

III. REGULATION AND CONTROL OF BARGAINING TACTICS

21

Good Faith Bargaining Per Se Violations Conduct Evidencing Bad Faith The Supreme Court Decisions NLRB and Court Decisions

5 6 8 8 10 12 17

22 22 26 26 29

The General Electric Case and Employer Free Speech Regulation of Employer Lockouts

39

The American Ship and Brown Cases NLRB Restrictions Regulation of Multi-Employer Bargaining

40 41 45

34

vi

TABLE OF CONTENTS (Continued)

Page Chapter IV. CONTROL OF THE SCOPE AND CONTENT OF COLLECTIVE BARGAINING Mandatory Subjects of Bargaining

49

Mandatory Bargaining on Changes in Business Operations Continuation of the Mandatory Bargaining Trend Impact of the Mandatory Bargaining Concept.. Nonmandatory Subjects of Bargaining V. GOVERNMENT REGULATION TRACT ADMINISTRATION

48

OF

51 56 59 61

CON65

The Supreme Court and Arbitration

66

Grievance Arbitration and the National Labor Relations Board

69

The Multiple Jurisdiction The Role of the NLRB When an Award Has Been Issued When No Award Has Been Issued When No Provision for Arbitration Is Involved

69 71 71 75 79

Arbitration or the Board

82

VI. CONCLUDING COMMENTS

85

BIBLIOGRAPHY

91

Table of Cases Cited

vii

Page

Acme Markets, 156 NLRB 1452 (1965) 43 Adams Dairy, Inc., 137 NLRB 815 (1962) 53 American Greetings Corporation, 146 NLRB 1440 (1964) 35 American National Insurance Company V. NLRB, 343 U.S. 395 (1952) 26,27,29 American Ship Building Company v. NLRB, 380 U.S. 300 (1965) 40,41,42,43,44 American Stores Packing Company, 158 NLRB 620 (1966) 41 Beacon Journal Publishing Company, 164 NLRB No. 98 (1967) 51 Borg-Warner Corporation, 113 NLRB 1288 (1955) 61, 64 Butcher Boy Refrigerator Door Company, 127 NLRB 1360 (1960), enforced, 290 F.2d 22 (7th Circuit, 1960) 31 C & C Plywood Corporation, 148 NLRB 414 (1965) 80 C &D Coal Company, 93 NLRB 799 (1951) 31 Carey V. Westinghouse Electric Corp., 375 U.S. 261 (1964) 70, 74 Cloverleaf Division of Adams Dairy Co., 147 NLRB 1410 (1964) 75-76 Cooper Thermometer Co. v. NLRB, 376 F.2d 684 (2nd Circuit, 1967) 59 Darlington Manufacturing Company, 139 NLRB 241 (1962), enforcement denied, 325 F.2d 682 (4th Circuit, 1963), affirmed, 380 U.S. 263 (1965) 56, 57, 58 David Friedland Painting Company, 158 NLRB 571 (1966) 42 Denton Company, 106 NLRB 1335 (1953), enforced, 217 F.2d 567 (5th Circuit, 1954) 30 Dubo Manufacturing Corporation, 148 NLRB 1114 (1964) 72 Duro Fittings Company, 121 NLRB 52 ( 1 9 5 8 ) 3 0 Edward E. Gurian & Company, 128 NLRB 473 31 (1960)

viii

TABLE OF CASES CITED (Continued)

Page Evening News Association, 154 NLRB 1494 (1965) 45,46 Evening News Association, 166 NLRB No. 6 (1967) 43 Fafnir Bearing Company v. NLRB, 362 F.2d 716 (2nd Circuit, 1966) 78 Fibreboard Paper Products Corporation, 130 NLRB 1558 (1961), reversed on rehearing, 138 NLRB 550 (1962) 54, 55, 56, 57, 58, 60, 61 Fibreboard Paper Products Corporation V. NLRB, 322 F.2d 411 (D.C. Circuit, 1963), affirmed, 379 U.S. 203 (1964) 54,55,56,57,58,60,61 Fleming Manufacturing Company, 119 NLRB 452 (1957) 49 Ford Motor Company, 131 NLRB 1402 (1961) 72 Gateway Transportation Company, 137 NLRB 1763 (1962) 73 Generac Corporation, 149 NLRB 980 (1964) 24 General Electric Company, 150 NLRB 192 (1964).. 36, 38, 39, 60, 64 General Shoe Corporation, 77 NLRB 124 (1948) _ 35 Gravenslund Operating Company, d/b/a. Washington Hardware and Furniture Co., 168 NLRB No. 72 (December, 1967) 77 Gulf Power Company, 156 NLRB 622 (1966) 51 Hawaii Meat Company, 139 NLRB 966 (1962), enforcement denied, 321 F.2d 397 (9th Circuit, 1963 ) 54 Hearst Consolidated Publications, 156 NLRB 210 (1965) 46 Independent Petroleum Workers v. American OU Co., 379 U.S. 130 (1964) 68 Inland Steel Company v. NLRB, 170 F.2d 247 (7th Circuit, 1948), cert, denied, 336 U.S. 960 (1949) 49, 50 Insulating Fabricators, Inc., 144 NLRB 1325 (1963), enforced, 338 F.2d 1002 (4th Circuit, 1964 ) 23 J. S. Dillon & Sons Stores Co., Inc. v. NLRB, 338 F.2d 395 (10th Circuit, 1964) 36

TABLE OF CASES CITED (Continued)

ix Page

Marley Company, 150 NLRB 919 (1965) 31 Marshall Field & Company, 98 NLRB 886 (1952) _ 35 May Department Stores Company V. NLRB, 316 F.2d 797 (6th Circuit, 1963) 35 Metal Processors' Union V. NLRB, 337 F.2d 114 (D.C. Circuit, 1964) 33 Montgomery Ward & Company, 145 NLRB 846 (1964 ) 35 NLRB V. Bemis Bro. Bag Co., 206 F.2d 33 (5th Circuit, 1953) 50 NLRB v. Borg-Warner Corporation, 236 F.2d 898 (6th Circuit, 1956), affirmed in part, 356 U.S. 342 (1958) 61, 64 NLRB V. Brown Food Stores, 380 U.S. 278 (1965 ) 40, 41, 42, 43, 44 NLRB V. Butcher Boy Refrigerator Door Company, 290 F.2d 22 (7th Circuit, 1960) 31 NLRB V. C & C Plywood Corporation, 351 F.2d 224 (9th Circuit, 1965), reversed, 385 U.S. 421 (1967) 80 NLRB V. Denton Company, 217 F.2d 567 (5th Circuit, 1954) 30 NLRB V. Fitzgerald Mills, Inc., 313 F.2d 260 (2nd Circuit, 1962) 31 NLRB V. Florida Citrus Canners Co-op, 288 F.2d 630 (5th Circuit, 1961) 31 NLRB v. Golden State Bottling Company, 353 F.2d 667 (9th Circuit, 1965) 43 NLRB v. Hawaii Meat Company, 321 F.2d 397 (9th Circuit, 1963) 54 NLRB v. Highland Park Manufacturing Company, 110 F.2d 632 (4th Circuit, 1940) 23 NLRB V. H. K. Porter Company, Inc., 153 NLRB 1370 (1965), enforced, 363 F.2d 272 (D.C. Circuit, 1966) 32,39,60 NLRB v. Insulating Fabricators, Inc., 338 F.2d 1002 (4th Circuit, 1964) 23 NLRB v. Insurance Agents' International Union, 361 U.S. 477 (1960) 27,28,29 NLRB V. Katz, 369 U.S. 736 (1962) 23

X

TABLE OF CASES CITED

(Continued)

Page NLRB V. Laars Engineers, Inc., 332 F.2d 664 (9th Circuit, 1964) NLRB V. Montgomery Ward & Company, 133 F.2d 676 (9th Circuit, 1943) NLRB v. Neiderman, 334 F.2d 601 (2nd Circuit, 1964) NLRB v. Niles-Bement-Pond Co., 199 F.2d 713 (2nd Circuit, 1952) NLRB v. Park Edge Sheridan Meats, Inc., 341 F.2d 725 (2nd Circuit, 1965) NLRB v. Reed & Prince Manufacturing Company, 205 F.2d 131 (1st Circuit, 1953) NLRB v. Royal Plating & Polishing Company, 350 F.2d 191 (3rd Circuit, 1965), denying enforcement of 152 NLRB 619 (1965) NLRB v. Thor Power Tool Company, 351 F.2d 584 (7th Circuit, 1965) NLRB v. Town & Country Manufacturing Company, 316 F.2d 846 ( 5th Circuit, 1963) NLRB v. Truck Drivers Local Union No. -U9, 335 U.S. 87 (1957) (Buffalo Linen) 41, NLRB v. Truitt Manufacturing Company, 224 F. 2d 869 (4th Circuit 1955), reversed, 351 U.S. 149 (1956) NLRB v. United Clay Mines Corporation, 219 F.2d 120 (6th Circuit, 1955) NLRB v. United Steelworkers of America, 357 U.S. 357 (1958) NLRB v. Western Wirebound Box Company, 356 F.2d 88 (9th Circuit, 1966) NLRB v. William J. Burns International Detective Agency, Inc., 346 F.2d 897 (8th Circuit, 1965)_ New Orleans Typographical Union V. NLRB, 368 F.2d 755 (5th Circuit, 1966) Ozark Trailers, Inc., 161 NLRB No. 48 (1966), P. R. Mallory and Co., Inc. V. NLRB, 67 LRRM 2119 (7th Circuit, December, 1967) Procter & Gamble Manufacturing Company, 160 NLRB No. 36 (1966)

36 21 54 49 36 29 57 77 53, 55 44, 45 24,25 32 35 25 54 74 57, 58 35 38,39

TABLE OF CASES CITED (Continued)

xi Page

Publishers' Association of New York City V. NLRB, 364 F.2d 293 (2nd Circuit, 1966) Raytheon Company, 140 NLRB 883 (1963) Roanoke Iron & Bridge Works, Inc., 160 NLRB No. 17 (July, 1966) Royal Plating & Polishing Company, 152 NLRB 619 (1965) San Antonio Machine & Supply Corp. V. NLRB, 363 F.2d 633 (5th Circuit, 1967), enforcing 147 NLRB 1112 (1964) Shipowners' Association of the Pacific Coast, 7 NLRB 1002 (1938) Sinclair Refining Company V. NLRB, 306 F.2d 569 (5th Circuit, 1962) Smith v. Evening News Association, 371 U.S. 195 (1962 ) Spielberg Manufacturing Corporation, 112 NLRB 1080 (1955) 71, 72, 73, 74, Star Baby Company, 140 NLRB 678 (1963) Steelworkers V. NLRB, _ _ F.2d , 66 LRRM 2761 (D.C. Circuit, December, 1967) Teamsters Local No. 7U, Case No. 19-CB-1092, TXD-(SF)-4-67 (January 22, 1967) Texas Boot Manufacturing, Inc., 143 NLRB 264 (1963) Texas Industries, Inc. V. NLRB, 336 F.2d 128 (5th Circuit, 1964) Textile Workers V. Darlington Manufacturing Company, 325 F.2d 682 (4th Circuit, 1963), affirmed 380 U.S. 263 (1965) 56, Textile Workers Union V. Lincoln Mills, 353 U.S. 30 (1957) Thor Power Tool Company, 148 NLRB 1379 (1964), enforced, 351 F.2d 584 (7th Circuit, 1965) Timken Roller Bearing Company, 70 NLRB 500 (1946) Tonkin Corporation of California, 158 NLRB 1223 (1966)

47 72 34,39 57 31 45 77,78 70 76, 83 54 33 82 35 36 57, 58 66 77 52

41

xii

TABLE OF CASES CITED (Continued) Page Town & Country Manufacturing Company, 136 NLRB 1022 (1962), enforced, 316 F.2d 846 (5th Circuit, 1963) 53,54,55 Truitt Manufacturing Company, 110 NLRB 856 (1954), enforcement denied, 224 F.2d 869 (4th Circuit, 1955), reversed, 351 U.S. 149 (1956) _ 24,25 Union Carbide Corporation v. NLRB, 310 F.2d 844 (6th Circuit, 1962) 35 United States Rubber Company, 160 NLRB No. 64 (August 26, 1966) 81 United States Rubber Company V. NLRB, 373 F.2d 602 (5th Circuit, 1967) 36 United Steelworkers V. American Manufacturing Co., 363 U.S. 564 (1960) 66, 67 United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960) 66, 67 United Steelworkers v. Warrior and Gulf Navigation Co., 363 U.S. 574 (1960) 66, 68 Western Wirebound Box Company, 145 NLRB 1539 (1964), enforced, 356 F.2d 88 (9th Circuit, 1966 ) 25 Westinghouse Electric Corp. v. NLRB, 369 F.2d 891 (4th Circuit, 1966), reversed by full membership, F.2d (4th Circuit, December, 1967 ) 50 Weyerhaeuser Company, et al., 166 NLRB No. 7 (1967) 44 White d/b/a. White's Uvalde Mines V. NLRB, 255 F.2d 564 (5th Circuit, 1958) 32 William J. Burns International Detective Agency, Inc., 148 NLRB 1267 (1964), enforced, 346 F.2d 897 (8th Circuit, 1965) 54

Chaptet I INTRODUCTION In years to come, historians may look back upon the passage of the National Labor Relations Act (Wagner Act) in 1935 as the first major step toward the imposition of compulsory arbitration in labor disputes in America. 1 This may be, to many, a surprising statement because this Act was overtly designed, and widely touted by its sponsors, as a law to encourage collective bargaining. Proponents of this law steadfastly maintained at the time of its enactment that it was concerned only with forcing the employer to meet with representatives of his employees, and not at all with agreement content or even with whether an agreement was reached. 2 Nevertheless, the National Labor Relations Act of 1935, with the Taft-Hartley and Landrum-Griffin amendments of 1947 and 1959, inaugurated and carried forward a process which has inevitably nudged the United States industrial relations system toward government-directed settlement of labor disputes. Indeed today, the Act has been the vehicle by which the government has injected itself into every vital aspect of union-management relations—the establishment of union representative status, the negotiation of collective bargaining agreements, the content of such agreements, and the administration of union-management relations under such agreements. What is of particular interest is first, that this everincreasing role of government has resulted not from Congressional action or even intent, but by administrative reare indebted to Dr. Gordon F. Bloom for this succinct statement. Herbert R. Northrup and Gordon F. Bloom, Government and Labor (Homewood, 111.: Richard D. Irwin, Inc.), p. HO. 2 See the oft-quoted statement by the late Senator David I. Walsh and other evidence, quoted in Chapter II, below. That, as some labor historians have noted, some of the Wagner Act proponents believed their bill to be more encompassing may be correct, but they were careful not to stress their views till after the Act became law.

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structuring of the law; and second, that much of the great increase in extent and intensity of government involvement has occurred since appointees of the late President Kennedy assumed control of the National Labor Relations Board in 1961 3 —appointees whom President Johnson both kept in office and supplemented by replacing Eisenhower holdovers with men favorable to the New Frontier point of view. The net effect has been such a fast pace toward compulsory arbitration that the Solicitor of the Board could propose that the agency be given a statutory right to penalize parties for not reaching agreement—something that the Board has already administratively assumed, although in Aesopian rather than clear language.4 That these developments have occurred is perhaps as little surprising as they are understood. What in effect Congress did with the passage of the Wagner Act was to commence to alter the locale of collective bargaining from the private economic to the public political arena. Collective bargaining provides a medium, however imperfect, for employees to voice their needs, wishes, and objections with respect to their working lives. Assuming an inherent conflict of interests between employer and employee, motivated by competing needs and goals, some form of adversary system was required to reconcile the conflict. Although collective bargaining provided the process, the ultimate determinant proved to be the relative economic power of each side. The ability to strike to force employer capitulation to its demands provided the union with the tool to effectuate its representative function. The lockout along with the ability to take a strike, allowed management to exercise its right to resist a given set of union demands. On both sides, the knowledge that this power existed and the desire to avoid the consequences of its exercise provided the incentive to compromise and to recede from otherwise extreme positions. 8

For a scholarly analysis of the changes wrought by the Kennedy appointees in their first two years, see Kenneth C. McGuiness, The New Frontier NLRB (Washington: Labor Policy Association, Inc.,

lybo).

4 William Feldesmann, "Another Approach to Strikes: Inducements to Voluntary Arbitration," 33 George Washington Law Review, 457-466 (December, 1964).

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From the beginning, it was apparent that a third interest —that of the public—was involved and required consideration in the resolution of any conflict developing from the union-management confrontation. The public interest, it was realized, was not necessarily protected by the operation of market forces. The most serious public disenchantment was with the recognition strike by which unions sought to coerce employer acceptance of outside representation for its employees. The National Labor Relations Board was established to hold representation elections and thus remove economic power as the basis for determination of this issue. Later the use of economic power in daily contract administration and interpretation was curtailed by the rapid growth of grievance procedures culminating in arbitration, partly through voluntary action of the parties but more often because of administrative and judicial government pressures. Today, more than at any previous time, the federal government, under the all encompassing mantle of the public interest, is acting to regulate collective bargaining. Through its administrative agencies and its courts, the government has stepped into the very substance of private agreementmaking. And the disturbing nature of this regulation is that it has been accomplished, in general, administratively, through the perversion of Congressional intent as expressed in our national labor laws. The problem has been two-fold: the laws themselves were drafted and passed without a complete awareness of their consequences; and the NLRB, with support from some courts, has interpreted these laws to extend its powers to regulate ever-increasing aspects of collective bargaining. The thesis of this study is that government regulation, from whatever source, is a hindrance to a workable system of industrial jurisprudence, that the public interest requires reversal of the evident trend toward greater regulation, and that a conscious concerted effort to maintain voluntary agreement-making and agreement-administration within the context of free collective bargaining and with a minimum of government regulation, is essential to our economic growth. That the NLRB, the courts, and, in part, the Congress have failed to recognize this thesis is apparent in three areas of collective bargaining: regulation of bargaining tactics, con[3]

trol of the scope and content of bargaining and determination of the terms of the collective agreement. It is essential first to develop a background for this study; for in few areas of contact between the public interest and the private enterprise is it as important to develop a conceptual basis for a critical analysis of the relationship of labor, management, and the government. The next chapter will seek to provide this conceptual basis, and will show how the statutory intent of Congress has attempted to effectuate a concept of free collective bargaining while protecting the third party interests of the public. The succeeding chapters will describe what the Board and the courts have done with this Congressional mandate.

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Chptw

II

THE PUBLIC INTEREST IN LABOR-MANAGEMENT RELATIONS: COLLECTIVE BARGAINING AND GOVERNMENT POLICY Collective bargaining embodies the traditional concepts of representatives of employees facing employer spokesmen over a bargaining table within the framework established by our national labor policy. Although none could, or should, presume definitively to structure the exact relation of each party in a particular bargaining situation to the other parties involved, some basic idea of the role this confrontation must provide, and the constraints within which it takes place, is a prerequisite to understand not only the place of collective bargaining but also to focus on the very serious threat to this relationship presented by its increasing complexities. Nature of Collective Bargaining Free collective bargaining, by which we mean the establishment of employment terms by private contract, leans heavily on the concept of industrial self-government. Through this, the inherent desire of each individual to participate in determining the conditions and rules under which he must work becomes manifested in his joining together in labor organizations whose primary objective is the formulation of the most advantageous private contract that it can negotiate with the employer. The intensely political labor organization against the authoritarian company is unique to private collective bargaining; yet it can be analogized to a system of political government in general. The collective agreement can be viewed as a constitution within which the parties must act. Arbitrators and grievance procedures are similar to courts and the state, and the parties must appeal their positions to them or face the consequences of public pressure, strikes, and economic sanctions. Of course, as is true in most analogies, the danger is to extend this analysis too far. Although relationships under private contract can be characterized as a form of self-

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government, and the relative economic power of labor and management the motivating force for agreement, the conflict has been channeled away from the political arena and toward the bargaining table, where it must be carried on within the larger social system. There then exists a sub-system of industrial jurisprudence, as suggested by Prof. John Dunlop, which envisions the "actors" (labor or its representatives and management) meeting together within the context of the given society and economic system to formulate a "web of rules." It is here that collective bargaining is brought into focus, as one alternative to any number of methods of determining these rules. Thus, we have the concept of a co-determination of the rules governing wages, hours, and working conditions with the economic power of labor organizations facing the economic power of the employer within the procedural framework established by the parties and the government. The process operates, however, within a large area of constraints including technological, market and budgetary, and community parameters in conjunction with, and determinative of, the relative economic power of the parties. These affect not only the development of this power, i.e., how a union is or is not powerful vis-à-vis a company, but also the use to which this power may be put at the bargaining table, i.e., the degree each party must be cognizant of and account for the interest of the public. The Role of the Government If we accept the concept of two powers seeking their respective goals in a free and open market and reconciling them by private agreement, it necessarily follows that government regulation should be limited to establishing procedures for this process rather than regulating the substantive issues themselves. And this procedural regulation, whether by legislative, judicial or administrative declaration, must be aimed clearly at facilitating the agreement-making process. Thus, the determination of the appropriate bargaining unit, the identity of the employees' bargaining representative, if any, and the manner in which bargaining will be conducted, must be confined to encouraging settlement without outside interference. [6]

Collective bargaining cannot exist if government regulates the substance of the "web of rules." Even the most ardent exponent of laissez-faire economics, however, sees the role for government in terms of the breakdown of the open market system. Thus, Adam Smith talked of "externalities" requiring government taxation to build schools and bridges, or government legal sanctions to protect the public interest such as conserving natural resources from the polluting effect of industry waste materials. But in each case the test of government intervention was its necessity to re-establish the functioning of market forces. If we were to examine the law of contracts in general, we find with respect to the role of government a desire to maintain freedom of individual contract. The courts and laws are designed to provide a forum for preventing wrongful breach or unjust enrichment. The choice of parties, terms, and procedures is left to the individuals. Although the freedom of collective contract in the labor field cannot be considered a true example of this concept, freedom of contract has a relevance to this discussion. As Professor Harry H. Wellington of Yale Law School has written: In labor relations there is a freedom of contract ideal. It is that the parties should be free to write their own terms and conditions of employment.1 Thus in labor law, the doctrine of freedom of contract must be balanced against the need for government regulation of labor relations to maintain industrial peace and to allow the parties to "write their own terms and conditions of employment." Government has a role in eliminating abuses by the parties, both when the power of either side is misused and when the so-called public interest is unprotected by the operations of the market. But this role is not a result of a desire to change the form of collective bargaining but to preserve it. Thus, it should be exercised when collective bargaining breaks down, such as in public emergency strikes or corruption 1

Harry H. Wellington, "Freedom of Contract and the Collective Bargaining Agreement," 14 Labor Law Journal 1016, 1017 (December, 1963).

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within the leadership of either side, or, even more, when the conflict itself breaks down and collusion appears. It thus takes two basic forms: a positive role in the formulation of a framework within which the parties can act, such as representation elections to select a bargaining agent; and a negative role in the ex post facto regulation of situations by which the process breaks down and the public interest is threatened, such as strikes involving violence or unnecessary interference with neutral employees, employers and the public. National Labor Policy on Collective Bargaining How does this view of collective bargaining and the role of government comport with the federal policy as expressed by the Congress? An examination of the National Labor Relations Act of 1985 (Wagner Act) and its amendments shows a clear intent to encourage collective bargaining with minimal government regulation. The legislation subjects the process of collective bargaining to government control in the form of the National Labor Relations Board and its unfair labor practice jurisdiction. But an examination of the words of the statutes and the expressions of legislative intent accompanying them reveals clearly the Congressional purpose to keep governmental regulation at a minimum and a prophetic concern that its purpose would be misapplied by the Board. But the important point is the fact that the Congress emphasized in 1935 and re-emphasized in 1947 and in 1959 that free collective bargaining is in the national interest, and that the terms of work and conditions of employment must be determined by private contract with a minimum of government regulation. Legislative Intent—The Wagner Act Viewed against the background of the early 1930's, the Wagner Act emerges as one of the efforts to combat the severe economic depression of that period. In its most idealistic expressions, the Act has been viewed as an effort "to make the worker a free man," to encourage industrial peace which "rests upon freedom, not restraint," and to combat the economic ills by equalizing the bargaining power of the worker and his company in order to increase wages and

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consumer buying power.2 As enacted, the statute was the answer propounded by the Congress to the problem of industrial strife resulting from the refusal of employers voluntarily to recognize representatives of their employees. Henceforth, the question of representation would be decided by peaceful procedures, regulated by the government and recognized by the employer, although the resort to the strike to force employer recognition was not outlawed and was used with little restraint by some unions thereafter. In order to make his choice of unions meaningful, the employee must be allowed to have this representative bargain with his employer. But collective bargaining was to be selfeffectuating and government was to step out of the picture once the parties had been "introduced." Thus, the "Findings and Policies" of the Wagner Act stated that the policy of the United States was to encourage "the practice and procedure of collective bargaining" and to protect "the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing for the purpose of negotiating the terms and conditions of their employment." The encouragement of collective bargaining, then, was a natural continuation of the regulated representation elections. Much evidence exists that Congress intended this form of self-government and private agreement-making without government regulation. The oft-quoted words of Senator Walsh clearly and unambiguously declare the policy of the Act: Let me emphasize again: When the employees have chosen their organization, when they have selected their representative, all the bill proposes to do is to escort them to the door of their employer, and say, "Here they are, the legal representatives of your employees." What happens behind those doors is not inquired into, and the bill does not seek to inquire into it. It anticipates that the employer will deal reasonably with the employees, that he will be patient, but he is obliged to 2

Quotes from a radio speech and newspaper articles by Senator Wagner, as quoted by Leon Keyserling, "The Wagner Act: Its Origin and Current Significance," 29 George Washington Law Review 199, 215-18 (December, 1960).

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sign no agreements; he can say, "Gentlemen, we have heard you and considered your proposals. We cannot comply with your request; and t h a t ends it." 3 Throughout the hearings and later discussions on the bills presented, the legislators expressed doubts as to w h e t h e r or not agreement-making could in f a c t be legislated a t all. The judicial history of the r i g h t to contract was f o r e i g n to any such attempt. To force the employer, in the interest of industrial peace and economic well-being, to recognize a labor union demanded by the m a j o r i t y of his employees w a s a f a r cry f r o m forcing the parties to live with a contract on which each did not voluntarily agree. N o r was this to ignore the play of competitive forces. The use of economic power, of relative b a r g a i n i n g positions, was an integral p a r t of t h e W a g n e r Act policy. The Senate R e p o r t recognized t h a t t h e r e would be some f o r m s of labor disputes. "Disputes about wages, hours of work, and other working conditions should continue to be resolved by the play of competitive forces, so f a r as the provisions of codes of f a i r competition a r e not controlling. This bill in no respect regulates or even provides f o r supervision of wages or hours, nor does it establish any f o r m of compulsory a r b i t r a t i o n . " 4 Section

8(5)

As finally enacted into law, t h e N L R A contained Section 8 ( 5 ) . P e r h a p s no other section of any labor law h a s caused so much concern and discussion before passage. As subsequent events have borne out, this concern was well-placed, f o r the National Labor Relations Board, w i t h some help f r o m t h e courts, has used this section to inject the government into the collective agreement to a n extent never intended by Congress. The words of the section a p p e a r to c a r r y out the expressed need, as found by Congress, to encourage collective b a r g a i n ing in order to make the representation election and f r e e unionism viable. " I t shall be an u n f a i r labor practice f o r an employer to r e f u s e to b a r g a i n collectively w i t h t h e rep3 National Labor Relations Board, II Legislative History of the National Labor Relations Act, 1935, pp. 2373, 2374. 4

S. Rep. No. 573, 74th Cong., 1st Sess. (1935).

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resentatives of his employees, subject to the provisions of Section 9(a) [dealing with election procedures and the concept of exclusive representation]." With a forcefulness born of long hours of debate on the advisability of including this as an unfair labor practice, the Senate Report contained the committee's desire "to dispel any possible false impression that this bill is designed to compel the making of agreements or to permit governmental supervision of their terms." It insisted that "the essence of collective bargaining is that either party shall be free to decide whether proposals made to it are satisfactory." However, and with utmost caution, after much deliberation, the committee has concluded that this fifth unfair labor practice should be inserted in the bill. It seems clear that a guarantee of the right of employees to bargain collectively through representatives of their own choosing is a mere delusion if it is not accompanied by the correlative duty on the part of tne other party to recognize such representatives as they have been designated (whether as individuals or labor organizations) and to negotiate with them in a bona fide effort to arrive at a collective bargaining agreement. Furthermore, the procedures of holding governmentally supervised elections to determine the choice of representatives of employees, becomes of little worth if after the election its results are for all practical purposes ignored. 5 Once again the emphasis is that the encouragement of collective bargaining is a continuation of the establishment of election procedures. No intent to regulate the substance or terms of the agreement is shown. When Chairman Biddle of the original National Labor Relations Board introduced the need for a section, such as 8(5), he talked in terms of "bona fide genuine effort to come to an agreement," Senator Walsh questioned this meaning and suggested the words "to refuse to meet and confer for the purpose of collective bargaining with his employees." Neither man spoke of good faith or restricting the use of bargaining power during such meetings. Walsh commented: " A man sailing direct in the face of his employees, certainly 5

Ibid.

[11]

would be committing an unfair practice if it was so defined, if after they entered into his presence he refused to talk with them. It would be an unfair practice under such conditions, but if he sat in conference with them and permitted, them to present their views and made an effort to confer with them it would not be an unfair practice." (Emphasis supplied.) 6 On the floor of the House of Representatives, the debate on duty to bargain revolved around the fear of too much government regulation. Congressman Welch declared that "the board created in the bill is not empowered to settle labor disputes; nothing in the bill allows the Federal Government or any agency to fix wages, regulate rates of pay, limit hours of work, or to effect or govern any working condition in any establishment or place of employment." 7 And the House Report emphasized the purposes of the bill to help peaceful organization of employees by encouraging the "friendly adjustment of such disputes" as wages, hours and working conditions.8 Legislative Intent—The Taft-Hartley

Act

Between 1935 and 1947 drastic changes took place in the United States and in the world. Unionism thrived as bargaining power shifted in times of prosperity to the seller's market. A tripartite National War Labor Board had altered labor relations from a struggle for union recognition and survival to a situation in which wages were only the starting point for negotiations. Fringe benefits, hours and working conditions, and co-determination of a widening scope of hitherto exclusively management functions were thrown into the bargaining arena. The problem shifted from a concern for the right to organize and bargain collectively to whether there had been created in a hothouse of federal power a type of unionism in which public interests were ignored along with the subversion of management interests. The cry be9

National Labor Relations Board, I Legislative

National Labor Relations Act, pp. 1455, 1456. 7 Ibid., Volume II, p. 3183. 8

History

H.R. Rep. No. 1147, 74th Cong., 1st Sess. (1935).

[12]

of the

came equality of bargaining power, "individual" rights not to join a union, and regulating labor as well as management. As a result, the Taft-Hartley amendments were passed in 1947. The "Declaration of Policy" thereto stated that the purpose of this Act was to "prescribe" the rights of both employees and employers, to provide peaceful procedures for protecting these rights, to protect the individual employee with respect to his labor organization, and to "define and proscribe" practices by both labor and management inimical to the general welfare. Thus, the Wagner Act policy of establishing free collective bargaining as an adjunct of free unionism and of restraining government regulation to the barest possible minimum became one of prescribing rights and proscribing inimical practices of the parties. Throughout the hearings held on the several bills proposed for changing the Wagner Act, one theme continuously recurred: the need to limit the practices of the National Labor Relations Board of defining good faith bargaining to require proposals and concessions and the tactical use by the parties of recourse to the Board to supplement a lack of bargaining power. Theodore Iserman, a leading management attorney, testified that a company may bargain "only with the utmost care, with one eye on the bargain it wishes to reach and the other on what the Board might regard in the end as a refusal to bargain." 8 He strongly favored the inclusion of an amendment (Section 8 ( d ) ) defining the good faith bargaining obligation to make specific that neither party would be compelled to agree to a proposal or to make a concession. Harold W. Story, Vice President of Allis-Chalmers Manufacturing Company, called such an amendment "a sound preventative of the possibility of maladministration." In the absence of such clarifying amendment, the Board will continue to invade the area of actual collective bargaining by using the Board's appraisal of the bargaining value of the proposal of the employer as a basis for 9

Statement of Theodore R. Iserman, Hearing Before the Comm. on Labor and, Public Welfare, U.S. Senate, 80th Cong., 1st Sess. at 156 (1947).

[13]

making a decision on a charge of failure to bargain in good faith. 10 Each witness for management testified on the dangers he foresaw from allowing the Board to continue unchecked by specific legislative command, and from the failure to provide for comparable bargaining requirements for unions. Each statement was designed to ward off what the witness saw as dangers to free collective bargaining, not per se to inject the government further into the process. It was prophetic when C. E. Wilson, President of General Motors, declared himself in favor of requiring unions to bargain and of defining a minimum procedure of collective bargaining and its scope in order to remove the necessity of the NLRB to determine what collective bargaining is. After suggesting the procedures he felt would accomplish this, Wilson stated: The alternative to this proposed change is to make 8(5) of the National Labor Relations Act apply equally both to unions and employers or to eliminate it in its entirety. This would have the great advantage of removing the necessity for defining the legal requirement of collective bargaining and of eliminating any interference by the NLRB in and during the actual process of collective bargaining. This would leave the matter of the actual bargaining to the parties themselves. This is the most effective way to remove from the government the responsibility for policing the process of collective bargaining in detail, an administrative job of great magnitude and of very doubtful value. It would make the parties responsible for their own negotiations and restore real collective bargaining. (Emphasis supplied.) 11 Thus, several avenues were open to the Congress. It could set up elaborate procedures to define in minute detail the process of bargaining and just how much was required of each side, or it could apply Section 8(5) to both sides and define collective bargaining to help avoid the dangers of NLRB determinations. A final alternative was simply to eliminate Section 8(5) entirely. In fact, Congress chose to 10

Statement of Harold W. Story, ibid., p. 862.

11

Statement of C. E. Wilson, ibid., pp. 477-478.

[14]

apply 8(5) to both sides and add Section 8(d). But the point is that all were considered alternatives to accomplishing the same result. Congress could have chosen to strike out Section 8(5), to limit the Board from continuing its intrusion on free collective bargaining, but instead it chose further legislation as the answer. When the House reported out of committee a bill including a minutely specific definition of collective bargaining, the accompanying report pointed to the abuses of the NLRB which had been brought out in the testimony. In a clear manifestation of its disillusionment with current Board practices, the committee stated that "the present Board has gone very far in the guise of determining whether or not employers bargained in good faith, in setting itself up as the judge of what concessions an employer must make and of the proposals and counterproposals that he may or may not make." 12 A review of refusal to bargain cases was put forth as evidence of what the committee saw as unwarranted intrusions on private agreement-making. The Senate report indicated a similar conclusion. "The committee bill is predicated upon our belief that a fair and equitable labor policy can best be achieved by equalizing existing laws in a manner which will encourage free collective bargaining. Government decisions should not be substituted for free agreement, but both sides . . . must recognize that the rights of the general public are paramount." To "equalize existing laws" the Senate chose the final form of the amendments; Section 8(5) would be extended to cover unions and Section 8(d) would be added in place of the extensive definition of collective bargaining contained in the House report. Thus, it was hoped that the administration of the Act, which "itself has tended to destroy the equality of bargaining power necessary to maintain industrial peace," would be forced to accept the limitations the committee found necessary.13 The final form of the Act as reported out of the committee of conference and as passed in June, 1947, paralleled closely 12

H.R. Rep. No. 245 on H.R. 3020, 80th Cong. 1st Sess. (1947).

13

S. Rep. No. 105 on S. 1126, 80th Cong. 1st Sess. (1947).

[15]

the Senate version. Section 8(b) (3) made it an unfair labor practice for unions to refuse to bargain collectively; Section 8(d) defined collective bargaining as: . . . the performance of the mutual obligation of the employer and the representatives of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession. The amendment followed the Senate choice but the Conference Report made clear that, in the view of the conferees: . . . the Senate amendment, while it did not prescribe a purely objective test of what constituted collective bargaining as did the House bill, had to a very substantial extent the same effect as the House bill in this regard, since it rejected, as a factor in determining good faith, the test of making a concession and thus prevented the Board from determining the merits of the positions of the parties. One important change was a further delimiting of the duty to bargain by not construing it to require discussion or agreement to any modification of the terms and conditions contained in a contract for a fixed period, if such modification is to become effective before such terms and conditions can be reopened under the provisions of the contract. 14 Thus, the Taft-Hartley amendments were designed to accomplish certain needed reforms. They placed new and increased emphasis on the protection of employee freedom of choice and the public in general. But the point was made and remade: if employees wanted to be represented by a bargaining agent the bargaining which followed was to be as free of government interference as possible. And, in order to translate this basic concept, the Congress felt it was nec14

House Conference Rep. No. 510 on H.R. 3020, 80th Cong., 1st Sess. (1947).

[16]

essary specifically to legislate the command. Aware that "in drafting laws we sometimes make the mistake of thinking that fair-minded men will use them in good faith to resolve their differences with justice to both sides," Representative Allen of Illinois pointed out that "Congress must define and spell out the details of such laws so that they cannot be misunderstood or misinterpreted." 15 Unfortunately, the misunderstanding and misinterpretation have occurred. But Congress failed to discuss the problems or to attempt to work out the needed results. The failure lies in ignoring the admonition of Senator Hatch: The intention of Section 8(d) is admirable. However, I have some doubt that its intent will be realized. We can urge employers and unions to bargain collectively, but we cannot legislate good faith into such bargaining.16 Had Congress fully realized that its purpose would be thwarted by administrators it seems likely that it would have followed the advice of those who desired to strike from the unfair labor practice jurisdiction of the NLRB the duty of the employer to bargain. Legislative

Intent—The

Landrum-Griffin

Act

In 1959 after several years of Congressional hearings and investigations, the Landrum-Griffin Act was passed. The law was based upon the Congressional finding of a need "to eliminate or prevent improper practices on the part of labor organizations, employers, labor relations consultants and their officers and representatives which distort and defeat the policies of the Labor Management Relations Act, 1947, as amended, and the Railway Labor Act, as amended." Through its provisions, emphasis was placed on the individual employee and his rights not only to be represented by a labor organization but by one which must represent him honestly and without corruption. The national interest 15

Proceedings in the House of Representatives, 80th Cong., 1st Sess. (April 15, 1947). 16 Proceedings in the Senate, 80th Cong., 1st Sess. (May 12, 1947).

[17]

was expressed in clear terms that collective bargaining and the policies of the Wagner and Taft-Hartley Acts must not be defeated by "improper practices" from whatever source. The Act, including its reporting procedures, the Bill of Eights of union members and the fiduciary obligations of union leaders, is aimed at correcting the flagrant violations Congress saw resulting from the organization of American labor. The collective bargaining process remained a vital part of federal labor laws and the 1959 additions served to underscore the concern of government that it have a strong framework within which to work. The Duty to Bargain—Comment and Perspective Few areas of our labor policy have been examined and commented upon with such frequency and heated invective as the duty to bargain which the Board must administer. This serves only to underscore the significance of the issues, not only to labor-management relations but to many of our most cherished freedoms. They highlight that the inconsistency presented by the Wagner and Taft-Hartley laws stems from the desire to achieve industrial peace and yet preserve free collective bargaining. Thus, although free collective bargaining requires economic power as a final arbiter, industrial peace requires some curtailment of this power. In its effort to reduce the areas of labor-management disputes by defining good faith, and the scope of joint determination, the NLRB has chosen to sacrifice that freedom of contract and collective bargaining which formed the basis of our labor laws. Students of labor relations have recognized the paradox and have pointed up the costs involved. Trial Examiner Frederick Reel, while on the staff of the General Counsel, summed up the paradox by pointing out that effective collective bargaining is the best means of securing industrial peace, while preservation of the weapons of industrial warfare is the best means of preserving effective collective bargaining.17 But in the pursuit of industrial peace, a sacrifice must be made. Professor Wellington questions the wisdom " Frederick U. Reel, "The Duty to Bargain and the Right to Strike," 29 George Washington Law Review 479-489 (December,

[18]

of making such a sacrifice "which might be tolerable if there were reason to suppose that the government knows better than the parties what the substantive terms of the collective bargaining agreement should be. But all relevant experience suggests that this is not the case." 18 In fact, states Dr. George W. Taylor, "the mere provision for ultimate compulsory arbitration in itself discourages the making of those offers and counteroffers without which there is no negotiation." 19 Nor can the higher costs be ignored—those to our democracy which is based on the concepts of private agreementmaking and individual rights free of government interference which would be sacrificed for industrial peace. For it is a matter of historical certainty that once a policy of government regulation is begun, the areas of coverage will increase. Again we are warned by Dr. Taylor, a distinguished spokesman in the labor field for many years: Should that policy be extended as respects additional issues perfectly resolved in collective bargaining, complete control over industrial relations would soon be in the hands of the government. The issues would, moreover, then be no nearer to a perfect solution.20 The duty to bargain has become part of our daily labor relations vocabulary. Its meaning is being developed and expanded constantly by decisions of the NLRB and the courts. Some would fault the national labor laws themselves with the increasing role of government. Professor Dunlop insists that our "national policy encourages litigation rather than settlement. Litigation fosters unreality in the ex18 Harry H. Wellington, "Freedom of Contract and the Collective Bargaining Agreement," 17 Labor Law Journal 1016, 1021 (December, 1963). 19

George W. Taylor, "Is Compulsory Arbitration Inevitable?" Proceedings, Industrial Relations Research Association, First Annual Meeting (Cleveland, Ohio, December 29-30, 1948), pp. 64-77. 20

, "Our National Labor Policy," in Labor Problems: and Readings, Shultz and Coleman (1953), pp. 441-453.

[19]

Cases

treme." 21 Others would f a u l t the Board and, in some cases, the courts. A labor lawyer writing in U. S. News and World Report recently questioned the responsibility of t h e Board f o r effectuating w h a t he saw as the national policy of f r e e collective bargaining. "Given a labor policy of f r e e collective bargaining and legislation providing f o r the s t a t u t o r y f r a m e work within which management and labor can meet on an equal footing, the N L R B was established by Congress t o fulfill our national labor policy. . . . I t m a y be seriously questioned, however, in the light of disturbing Board decisions unsettling the balance of power between labor and management, t h a t the Board has fulfilled this responsibility." 22 The stage is set and the questions have been posed. The succeeding chapters will seek to analyze the decisions of courts and the Board in the a r e a of collective bargaining, and will question whether t h e legislative intent h a s in f a c t been carried out. The efforts a t government regulation of the terms of the contract, t h e tactics of negotiations and t h e scope of b a r g a i n i n g can serve as a w a r n i n g to those who would d r a w upon the help of the government as a substitute f o r their own lack of power. The very institution t h a t they seek to reinforce may inevitably be destroyed.

21

John T. Dunlop, "Consensus and National Labor Policy," in Labor: Readings on Major Issues, Richard A. Lester, ed. (New York: Random House, 1965), pp. 482-495. 22 Harry L. Browne, "Is the Labor Board Biased?" U. S. News and World Report (November 28, 1966), p. 72.

[20]

Chzptef III R E G U L A T I O N A N D CONTROL O F BARGAINING TACTICS Although the original command of the Wagner Act was aimed a t forcing employers to recognize labor unions chosen by employees, the subsequent definition of collective bargaining by the National Labor Relations Board and its concept of "good f a i t h b a r g a i n i n g " were aimed at implementing the representation process. The problem of a strong employer m a k i n g a mockery of the election of employee representatives by r e f u s i n g to engage in meaningful negotiations, knowing the union was too weak to strike, called f o r an immediate solution. The N L R B sought this answer through declarations of u n f a i r labor practices whenever employers refused to b a r g a i n in "good f a i t h , " and, with support f r o m t h e courts, Section 8 ( 5 ) came to mean "the obligation to participate actively in the deliberations so as to indicate a present intention to find a basis f o r agreement." 1 But t h e answer to this problem served only to create other problems. As soon as the issue is "intention of the parties" or "good f a i t h bargaining," the difficult problem becomes the state of mind of these parties. And as soon as state of mind requires definition, the determining body, in this case the courts and the NLRB, becomes the judge of a highly subjective m a t t e r not susceptible to precise definition. Even a f t e r Section 8 ( d ) was included in the 1947 amendments, subjective determination was required, despite the intention of Congress to define more precisely the authority delegated to t h e Board. An i m p o r t a n t aspect of collective bargaining often involves tactics and strategy a p a r t f r o m the simple give and take across t h e b a r g a i n i n g table. Negotiating contracts involves methods and procedures as varied as the participating representatives. The Board has moved vigorously in its regulations of these procedures and tactics. Not only w h a t was 1

NLRB V. Montgomery Circuit, 1943).

Ward & Company, 133 F.2d 676 (9th

[21]

said b u t how it was said is important, and such issues as good f a i t h bargaining, freedom of speech, use of the strike and lockout and multi-employer b a r g a i n i n g are the subject of Board legal doctrine.

Good Faith Bargaining Board decisions controlling the tactics of collective b a r gaining can be divided into two broad categories. I n the first, actions by the p a r t y are violations of the Act r e g a r d less of subjective state of mind. Per se violations of the Act are held illegal on the basis of the one violation alone and do not require determinations of bad f a i t h . The second category includes activity which m a y be evidence of bad f a i t h . These cases require subjective Board determination of all the circumstances and cover every area of collective b a r g a i n ing. I t is in this second category t h a t the Board h a s most flagrantly substituted its determinations f o r those of the parties. The line of discussion shall be limited to those instances where t h e parties have entered into negotiation. Board rulings requiring b a r g a i n i n g immediately a f t e r representation elections f o r m the bulk of refusal-to-bargain cases, and are often r e f e r r e d to by defenders of the Board as evidence of its usefulness in c a r r y i n g out the intent of the Act. 2 I t is, however, a f t e r negotiation h a s begun t h a t Board rulings violate Congressional intent and t h e concept of f r e e collective bargaining. And it is in this context t h a t we m u s t examine and evaluate Board decisions.

Per Se Violations The evolution of Board decisions h a s been in the direction of extending those actions which a r e per se violations of the 2

See,_ for example, Professor Philip Ross' arguments that the NLRB is making collective bargaining work as Congress intended and as it never could without Board regulation. His vast documentation, however, misses the issue. Recalcitrant employers must be made to recognize employee representatives once freely chosen. But once negotiation is begun, the parties must be left to their own means, within the limits of Congressional regulation, and the Board should not be a convenient forum to which the parties appeal their lack of bargaining power. Ross, The Government as a Source of Union Power (Providence: The Brown University Press, 1965).

[22]

duty to bargain. In 1940 the courts upheld the rule that a refusal to sign a written agreement after oral agreement had been reached was violative of the Act.3 Since that time the development of the per se doctrine has primarily followed two lines: cases involving mandatory subjects of bargaining and those involving requests for financial data. In the mandatory bargaining cases, the Board has seized upon the language of 8(d) requiring bargaining on "wages, hours, and other terms and conditions of employment" to define an area about which the parties must confer at the request of either. Any unilateral change in such subjects, or any refusal to discuss them, may lead to a finding that the party has refused to bargain despite the best of faith and the absence of any other evidence of refusal to bargain. Further, the extension of the areas of mandatory bargaining,4 along with the ad hoc manner in which the Board has chosen to apply the per se doctrine, has forced the parties to consider these regulations as part of their tactics, yet has left them unable to know exactly what the Board has now held illegal. Thus, for many years, making unilateral changes in wages and other conditions of employment was only evidence of the employer's bad faith; only when such changes were accompanied by other employer actions evidencing an intention not to reach an agreement did they operate to substantiate a finding of refusal to bargain. Soon after the 1960 election, however, the Board held that an employer violated the Act, regardless of his good faith, when he made unilateral wage increases during negotiations. The court of appeals reversed, preferring to retain some semblance of stare decisis. The Supreme Court upheld the Board in NLRB v. Katz,s saying that although there did exist a possibility that circumstances might cause the Board to excuse or to justify 3

NLRB v. Highland Park Manufacturing 632 (4th Circuit, 1940).

Company,

110 F.2d

4

The following chapter will explore Board regulations of the scope of collective bargaining and analyze Board decisions on mandatory subjects under its interpretation of the law. 5

369 U.S. 736 (1962). See also Insulating Fabricators, Inc., 144 NLRB 1325 (1963), enforced, 338 F.2d 1002 (4th Circuit, 1964).

[23]

the unilateral change, such circumstances did not exist here. The employer had reduced the number of sick leave days per year, called for merit increases for several employees and increased wages. The Court felt that all three changes were violations of Section 8(a) (5) without any finding of overall bad faith. Other rulings involving unilateral change include a holding that reduction in employee working hours along with a plant shutdown and layoff was a per se violation. In Generac Corporation,6 the Board said that such a decision, made and implemented without consulting the union, was per se an unfair labor practice. The Board construed the Act to restrict an employer's right to go out of business and to make employment reductions as a consequence of this right. Thus, it has not only extended the phrase "wages, hours and other terms and conditions of employment" to include plant shutdowns, but also has held this illegal regardless of the motive of the employer. 7 Also prior to this decision (1964), the controlling law had been that such activity was only evidence of bad faith, and then only over the strenuous objections of dissenting justices. Refusal to furnish economic data requested by the union can lead to a per se violation of the Act. The union requests the information as necessary to formulate and present its bargaining demands. When the employer refuses to comply on the grounds that the information is unnecessary and its confidentiality f a r outweighs any use to the union, the union can file unfair labor practice charges with the Board. Despite all good faith and the completely give-and-take bargaining contemplated by the Act, the Board has consistently ruled against the employer. The Supreme Court, moreover, has given its imprimatur to these cases, while refusing to face the issue head-on. In the Truitt Manufacturing Company case 8 the company offered a two and one-half cent an hour increase which the union rejected, asserting the company could afford at least ten cents an hour. The union called f o r 6 7

149 NLRB 980 (1964). Ibid.

8

110 NLRB 856 (1954), enforcement denied, 224 F.2d 869 (4th Circuit, 1955), reversed, 351 U.S. 149 (1956).

[24]

an examination of the company's books to determine ability to pay, Truitt refused, and the union struck. After the company refused to yield the strike ended and the union filed unfair labor practice charges. The Board held that the obligation existed to furnish the union with sufficient information to bargain intelligently, to understand and discuss the issues raised by the employer against the union's demands and to administer the contract. The Supreme Court agreed, holding that if an argument by the employer of inability to pay is raised to answer a union demand for increased wages, the employer can be required to produce some sort of proof of its accuracy. But the Court limited its decision, saying: We do not hold that in every case in which economic inability is raised as an argument against increased wages it automatically follows that the employees are entitled to substantiating evidence. Each case must turn on its own facts. 9 Thus, the decision, while limited to the facts, enabled the Board to continue its excursion into negotiations and encouraged unions to utilize this excursion fully. The questions for the future are many. Where inability to pay is not claimed by the employer, can he avoid the harsh results of Truitt? The effect of Truitt seems to preclude the result. In Western Wirebound10 the employer was ordered to supply financial data despite a claim that a competitive disadvantage would stop it from granting a wage increase. In upholding the Board, the appeals court felt that the Truitt principle was "not confined to cases where the employer's claim is that he is unable to pay the wages demanded by the union." The employer, it seems, must be prepared to support every financial claim it makes by statistics and other data. 11

8

Ibid., at 153.

10

Western Wirebound Box Company, 145 NLRB 1539 (1964), enforced, 356 F.2d 88 (9th Circuit, 1966). 11

See Max J. Miller, "Employer's Duty to Furnish Economic Data to Unions—Revisited," 17 Labor Law Journal 272-279 (May, 1966).

[25]

Conduct Evidencing Bad Faith When the Board examines an unfair labor practice charge resulting from a union's complaint that the employer refused to bargain in good faith, it may either find a -per se violation or find that the conduct in question evidenced bad faith. An examination of the vast area of Board decisions dealing with the latter category leads to several conclusions: The Board in general has tended to view "hard bargaining" as bad faith bargaining. It will look at the "totality of conduct" surrounding the activities of the employer and then, using a debit-credit type of reasoning, balance the conduct to find the relevant state of mind. Further, it has too frequently circumvented judicial reversals, especially in the area of forcing counterproposals and concessions. Finally, the Board has adamantly rejected the concept of minimal government intervention in collective bargaining, and has adopted the principle that settlements on terms it considers equitable take precedence over allowing freedom of contract in deciding the terms of agreement. The Supreme Court

Decisions

Two landmark cases decided by the Supreme Court have set the guidelines for Board doctrines. In 1952, the Court decided that insistence on a management rights clause was not an unfair labor practice. 12 The Board had found that American National Insurance Company could not justify its refusal to bargain by stating that Section 8(d) allowed it to insist on a position and not recede from it, regardless of the fact 8(d) did not require a party to make concessions. Employers could not maintain "a position which is inconsistent with the bargaining rights of the other party." The Fifth Circuit reversed, finding that the provisions of the contract American insisted upon were not illegal or prohibited. The Supreme Court ruled that the duty of an employer to bargain in good faith does not require it to yield positions fairly maintained, nor does this duty allow the Board to require the employer to contract in a way which the Board itself might deem proper, under the guise of a 12

American National Insurance Company v. NLRB, 343 U.S. 395

[26]

finding of bad faith. I n significant language the Court condemned Board efforts to "compel concessions or otherwise sit in judgment upon the substantive terms of the collective bargaining agreement." Whether the contract should contain a clause fixing standards f o r such m a t t e r s as work scheduling or should provide f o r more flexible t r e a t m e n t of such m a t t e r s is an issue f o r determination across the bargaining table, not by the Board. If the latter approach is agreed upon, the extent of union and management participation in the administration of such m a t t e r s is itself a condition of employment to be settled by bargaining. 1 3 The m a t t e r was dealt with firmly, but was not settled. The Board in t h e American National Insurance case had found the bargaining a per se u n f a i r labor practice. Despite its strong language, the actual decision of the Supreme Court was t h a t bargaining f o r a management rights clause was not per se illegal. The question of conduct evidencing bad f a i t h was not put to rest, despite the unmistakable warning to the Board to r e f r a i n f r o m regulating bargaining tactics. In 1959 the Supreme Court again moved against the NLRB's decisional p a t t e r n s regulating bargaining tactics. In the Insurance Agents' case 1 4 the Court decided t h a t the Board may not find t h a t a union, which has conferred with an employer with the desire of reaching an agreement, has refused to bargain collectively simply because during the negotiations it puts economic pressure on the employer to yield to its bargaining demands. I n this case the Board had found activity such as r e f u s a l to seek new insurance business, refusal to comply with reporting procedures, and other harassing tactics to be u n f a i r labor practices. Justice Brennan spoke f o r the m a j o r i t y and deliberately traced the n a t u r e of the duty to bargain, concluding t h a t it was "not sweepingly conceived." The purpose of this duty was "the making effective of the duty of management to extend recognition to the union; the duty of management to bargain in good f a i t h is essentially a corollary of its duty 13

Ibid,., at 409.

14

NLRB v. Insurance Agents' International Union, 361 U.S. 477 (1960).

[27]

to recognize the union." And when Congress added Section 8(d) it was expressing its intent that the Board should not exercise its powers to arbitrate the parties' substantive solutions of their bargaining issues. It remains clear that Section 8(d) was an attempt by Congress to prevent the Board f r o m controlling the settling of the terms of collective bargaining agreements. What then is the Board's duty? The mainstream of cases before the Board and in the courts reviewing its orders, under the provisions fixing the duty to bargain collectively, is concerned with insuring that the parties approach the bargaining table with this attitude (of settlement). But apart f r o m this essential standard of conduct, Congress intended that the parties should have wide latitude in their negotiations, unrestricted by any governmental power to regulate the substantive solution of their differences. 15 Thus, the control of collective bargaining through controlling bargaining tactics was expressly condemned. The Court recognized the place of the strike and slowdown as the arbiter of economic power forcing the parties to come to an agreement. According to the Court, the balance of industrial peace at the expense of free collective bargaining had been tilted away from Congressional intent and the dictates of sound union-management* relations by the Board. The Board sought to answer a question Congress had not even asked. We see no indication here that Congress has put it to the Board to define through its processes what economic sanctions might be permitted negotiating parties in an "ideal" or "balanced" state of collective bargaining. In his concurring opinion Justice F r a n k f u r t e r disagreed with the broad scope of the majority opinion. The duty of the Board does not end at drawing inferences of a party's particular conduct. It must weigh that inference as p a r t of the totality of inferences which may appropriately be drawn from the entire conduct of the respondent, particularly its 15

Ibid., at 488.

[28]

conduct at the bargaining table. The state of mind with which the party charged with a refusal to bargain entered into and participated in the bargaining process is the ultimate issue upon which alone the Board must act in each case, and on the sufficiency of the whole record to justify its decision the courts must pass. Thus to F r a n k f u r t e r the "state of mind" of the party is important, and in determining this the harassing techniques can be considered as evidence—a middle position between the Board's per se approach and the majority's refusal to consider the tactics at all. NLRB

and Court

Decisions

An investigation of decisions after the American National Insurance case and the Insurance Agents' case shows a consistent trend toward ignoring the Supreme Court's mandate. Especially a f t e r 1959, the Board has attempted to follow Justice F r a n k f u r t e r ' s state of mind and totality of conduct approach. But as each situation is analyzed several disturbing realizations become evident. What is relied on to uphold the unfair labor practice charge in one case might be completely consistent with what the Board set out as acceptable standards in another. Also, in attempting to rationalize its conclusion in a particular case, the Board is given to fallacious expressions of objective criteria to support what must be subjective determinations—and all in the name of fulfilling legislative intent. Decisions of the Board manifest this deficiency most patently in efforts to distinguish between legitimate "hard" bargaining and hard bargaining with no intent to reach an agreement. Although entering bargaining with no intention of ever reaching an agreement is illegal, the question becomes one of degree. Does intent to reach no other agreement but one including specific terms, themselves clearly bargainable and arrived at in good faith, violate the Act? In the Reed and Prince Manufacturing Company 16 case the Board held that the employer refused to bargain in good faith by presenting a series of counterproposals which were not aimed at reaching an agreement. In upholding its deci16

NLRB v. Reed and Prince Manufacturing Company, 205 F.2d 131 (1st Circuit, 1953). [29]

sion the court of appeals, Judge Magruder writing, felt that the employer was obliged to make some reasonable effort in some direction "to compose its differences with the union." The test, felt Judge Magruder, is "whether it is to be inferred from the totality of the employer's conduct that he went through the motions of negotiation as an elaborate pretense with no sincere desire to reach an agreement." If not, and if the employer "bargained in good faith but was unable to arrive at an acceptable agreement with the union," the charge could not be sustained. It is submitted, however, that Judge Magruder's test is not workable as administered by the NLRB. No body of labor lawyers can presume to determine subjectively whether negotiations were merely "an elaborate pretense." The only answer appears to be economic force—either the employer must simply be forced to meet formally with the union and let bargaining power determine the result, or else we must abandon free collective bargaining and allow the government to determine the contract terms. But it is useless to fool ourselves into thinking free collective bargaining can be served by Board regulation of bargaining tactics. Thus, in the Duro Fittings Company17 case the Board ruled that the employer did not bargain in good faith simply because it reached its final proposal after only two bargaining sessions. Therefore it had a "predetermined and inflexible" position, felt the Board, despite company counterproposals on wages and insurance and despite the fact that it tried to explain its position on union security, which it refused to compromise. If the Board is forcing the employer to make counterproposals, it is violating Section 8(d). If it is saying that the counterproposals themselves mean nothing but it is the lack of good faith, it is attempting to define what the employer's state of mind was without any factual basis whatsoever. The fact is irrefutable, however, that the Board has found it difficult, if not impossible, to refrain from inferring bad faith from strong, stubborn, but often clever, collective bargaining. 18 17

121 NLRB 52 (1958).

18

See, for example, Denton Company, 106 NLRB 1335 (1953), enforced, 217 F.2d 567 (5th Circuit, 1954), where the Board held

[30]

The Board has sought to define types of employer activities upon which it frowns in attempting to adduce evidence of bad faith. Such activities, for example, are changing position after tentative agreements have been reached,19 adopting tactics designed to slow down the entire negotiation process,20 and breaking off or belaboring talks and meetings over unsettled issues.21 A recent example of NLRB watchdog service occurred when it applied its unfair labor practice jurisdiction to the new management of a recently purchased company. The union had already proposed contract changes to the employer's predecessor, some of which had been tentatively accepted. On the advice of a professional consultant, the company reversed its position and made several new proposals. The Board, with subsequent court approval, rejected the company's contention that such tentative agreements are not contracts and were simply part of the bargaining process. Bad faith bargaining caused the failure to agree and thus was an unfair labor practice.22 The implication is obvious— changing or reversing a position is evidence of bad faith, even when accompanied by new proposals established by a successor management. The courts of appeals have varied in supporting or rejecting Board regulation of bargaining tactics. The Fifth Circuit has had several occasions to review Section 8(d) rulings that the employer's concessions on bulletin board and overtime pay was insufficient to offset a refusal to recede from its position concerning grievance procedures and union security matters. 19

C & D Coal Co., 93 NLRB 799 (1951); Marley Company, 150 NLRB 919 (1965). 20

Butcher Boy Refrigerator Door Company, 127 NLRB 1360 (1960), enforced, 290 F.2d 22 (7th Circuit, 1960); Edward E. Gurian & Company, 128 NLRB 473 (1960). 21

NLRB V. Fitzgerald Mills, Inc., 313 F.2d 260 (2nd Circuit, 1962). And see NLRB v. Florida Citrus Canners Co-op, 288 F.2d 630 (5th Circuit, 1961), where the court recognized that talks could be suspended by the employer when it is obvious that the union was going to strike that day if agreement was not reached and when a freeze was threatening employer's crops. 22 San Antonio Machine & Supply Corp. v. NLRB, 363 F.2d 633 (5th Circuit, 1967), enforcing 147 NLRB 1112 (1964).

[31]

and has generally refused to frustrate the Supreme Court decisions limiting the NLRB. In White v. NLRB 23 the Board had held that an employer who insisted on a contract containing a broad clause on management functions without any arbitration clause, leaving the union in effect "in no better position than if it had no contract," was guilty of not bargaining in good faith. Interpreting 8(d) as requiring that no item need be agreed upon or concession made, the court reversed the NLRB and its reasoning. The basis of the Board's ruling was simply that refusal to concede on the management rights clause was evidence of bad faith. Examining the totality of conduct, the court felt the employer was engaging in hard bargaining but was not couching such bargaining in untenable proposals or objectionable language. The thrust of the court's objection was that the company's failure to concede "anything substantial" did not amount to bad faith. The Sixth Circuit also rebuked the Board's requirements of employer concessions and its findings that the Act forces employers to recede from settled positions "because of either the quantity or quality of the concessions offered by the union in the hope of getting such abandonment." 24 A flagrant example of Board and Court imposition of an employer concession is found in the decision of the Circuit Court for the District of Columbia in NLRB v. H. K. Porter Company.25 There the employer had refused to agree to a union proposal for a dues check-off provision. The union contended, the trial examiner and Board agreeing, that this refusal was for the purpose of frustrating agreement and was thus bad faith bargaining. In affirming this decision, the court rejected the employer's argument that, while Section 8(d) requires good faith bargaining, it does not compel either party to agree to a proposal or make a concession. This was not the issue at hand, felt the court. Instead it was the company's adamant refusal to consider a union dues 23 White d/b/a. White's Uvalde Mines v. NLRB, 255 F.2d 564 (5th Circuit, 1958). 24 NLRB v. United Clay Mines Corporation, 219 F.2d 120 (6th Circuit, 1955). 25 NLRB v. H. K. Porter Company, Inc., 153 NLRB 1370 (1965), enforced, 363 F.2d 272 (D. C. Circuit, 1966).

[32]

check-off for those employees who individually requested it. The confusing and frustrating aspect of this decision, and the element which formed the basis of a vigorous dissent, was that the union was just as adamant in refusing to sign a contract which did not contain a check-off clause or some other means of company aid in collecting dues. The "antiunion animus" which the Board attributed to the management of H. K. Porter may have been real. The important consideration is that an unfair labor practice must be based upon more—such animus is not per se illegal.26 The gist of this ruling is essentially to force the company to agree to the proposal in order to have bargained in good faith. This was brought forcefully home in the subsequent course of this case. The charging union, the Steelworkers, sought and received a clarification of the Circuit Court opinion when a disagreement arose as to whether or not H. K. Porter was forced to grant an actual dues check-off provision.27 On December 8, 1967, the D. C. Circuit made manifestly clear that the Board could order the company to grant a check-off clause "in return for a reasonable concession by the union on wages or insurance. . . . Indeed, it is possible that in an appropriate case the Board could simply order the company to grant a check-off." Further, the Board appears ready to extend this reasoning to a point which has led many to warn that we are already at the doorstep of compulsory government abritration. In July of 1966 the Board adopted a trial examiner's finding that an employer refused to bargain in good faith when it rejected a check-off provision, despite the fact that agreement was reached and a contract accepted. As the examiner stated: If an employer or a union avows a position and the facts establish that the position was taken because the party adopting it knew it would frustrate negotiations, and for 26 Metal Processors' 1964). 27

Union V. NLRB, 337 F.2d 114 (D. C. Circuit,

Steelworkers v. NLRB, Circuit, December, 1967).

F.2d

[33]

, 66 LRRM 2761 (D. C.

no other reason, a finding of bad faith bargaining would follow. . . .28 But this was not the situation in this case. The company desired to reach an agreement and in fact "did not use its position on checkoffs to prevent reaching a contract." But, said the examiner and subsequently the Board, . . . frustrating negotiations is not the only key to a finding of bad faith. This can be clearly perceived if we realize "bad faith" has as its necessary antithesis "good faith." To bargain in good faith, the bargainer must advance his contentions and reject the other party's contentions (when he does) for legitimate reasons of self-interest, and out of what appear to him to be sound considerations of business (or union) judgment. The employer had forced the union to accept its refusal to include a union dues check-off. In return it doubtless had to make concessions, allow benefits and in general "bargain" with the union. As an aid to its bargaining, the employer adopted certain tactics; it would concede on some points but remain firm on others. To be confronted with a completed agreement which was the product of such bargaining and to reverse the result by calling bad faith the activity by which the dues check-off was excluded, the Board was arbitrating the dispute and deciding in favor of the union. Further, it based the rationale of this decision on its definition of "legitimate reasons of self-interest" and "sound considerations of business judgment." Neither sound common sense nor legislative enactment can provide the authority for the N L R B to so decide. The General Electric Case and Employer Free Speech

Section 8(c) of the Taft-Hartley amendments provides that the ". . . expressing of any views, argument or opinion, or the dissemination thereof, whether in written, printed, graphic or visual form, shall not constitute or be evidence of an unfair labor practice, . . . if such an expression contains no threat of reprisal or force or promise of benefit." The First Amendment to the Constitution of the United 28

Roanoke Iron & Bridge

1966).

Works, Inc., 160 N L R B No. 17 ( J u l y ,

[34]

States establishes the principle that Congress shall make no laws abridging the freedom of speech or of the press. Traditionally, it has been the courts rather than the Board that have overseen this freedom and insisted upon its impartial and unequivocal application to employer-employee relations. The rule has been conditioned only upon relatively clear manifestations of coercion and restraint by the employer, and the courts have allowed what might be called a "rule of reason" in examining labor practices to ensure that actual coercion is not being sought protection in the guise of cries for free speech.29 The Board has historically limited application of Section 8(c), especially in election cases where it has propounded the concept of "laboratory conditions" for elections.30 Regulations have been devised, limiting what the employer may say,31 and where and when he may say it.32 With few exceptions the courts have insisted upon the coequal right of employers as well as employees and unions to freedom of 29

See, for example, P. R. Mallory and Co., Inc. v. NLRB, 67 LRRM 2119, (7th Circuit, December, 1967), where the court reversed a Board ruling that an employer had violated Section 8 ( a ) ( 1 ) by threatening adverse economic consequences if the union won the election. The test in this case where there were no direct threats of reprisal is whether there is a subtle, indirect threat and the statements must be considered "in light of the totality of employer communications." 30 General Shoe Corporation, 77 NLRB 124 (1948). The Board stated its duty was "to provide a laboratory in which an experiment may be conducted, under conditions as nearly ideal as possible, to determine the uninhibited desires of the employees." 31 See, for example: Union Carbide Corporation V. NLRB, 310 F.2d 844 (6th Circuit, 1962); Texas Boot Manufacturing, Inc., 143 NLRB 264 (1963) ; American Greetings Corporation, 146 NLRB 1440 (1964). 32

of America, The leading case is NLRB V. United Steelworkers 357 U.S. 357 (1958), sustaining the right of employers to address employees during working hours while imposing a no-solicitation rule against the union. See also: May Department Stores Company V. NLRB, 316 F.2d 797 (6th Circuit, 1963); Marshall Field & Company, 98 NLRB 886 (1952); Montgomery Ward & Company, 145 NLRB 846 (1964).

[35]

speech, and have often sharply rebuked the Board for failure to recognize this right impartially. 33 Probably the most extreme case of NLRB regulation of bargaining tactics, both with respect to the good faith bargaining requirement and the free speech provision, is the 1964 General Electric 34 case. The case arose out of the 1960 G.E. negotiations with the International Union of Electrical Workers.35 The company followed its usual policy of offering a complete package of what it thought fair and proper to the 100-odd unions with which it deals, after several weeks of negotiations. Later, the company modified its offer in several ways, and most of the unions accepted it as the basis for a three-year contract. The IUE, however, following the leadership of its later deposed president, James B. Carey, who had declared, "I owe G.E. a strike," declined the offer, struck, but returned on substantially the pre-strike terms three weeks later. The IUE then filed a charge with the National Labor Relations Board claiming that G.E. had not "bargained in good faith." Four and one-half years after the 1960 three-year agreement was signed, and 18 months after G.E., the IUE, and 100 other unions had peacefully arrived at successor three-year agreements, the NLRB ruled that G.E. was guilty 33 For examples of court reversal of Board error, see: NLRB v. Laars Engineers, Inc., 332 F.2d 664 (9th Circuit, 1964); J. S. Dillon & Sons Stores Co., Inc. v. NLRB, 338 F.2d 395 (10th Circuit, 1964) ; NLRB v. Park Edge Sheridan Meats, Inc., 341 F.2d 725 (2nd Circuit, 1965); Texas Industries, Inc. v. NLRB, 336 F.2d 128 (5th Circuit, 1964). The Board has not been impartial in applying its requirements to both unions as well as employees. See, e.g., United States Rubber Company v. NLRB, 373 F 2 d 602 (5th Circuit, 1967), where the court reversed a Board decision refusing to hold a hearing to listen to company evidence of union misstatements and falsifications within the 24-hour period preceding an election. The Board "has acted arbitrarily and unreasonably," said the court, since "there were substantial and material issues which could be determined properly only by a hearing." 34

General Electric Company, 150 NLRB 192 (1964).

35

For a discussion of G.E. policy and the conditions surrounding the 1960 negotiations, see Herbert R. Northrup, Boulwarism: The Labor Policies of the General Electric Company (Ann Arbor: Bureau of Industrial Relations, University of Michigan, 1964),

[36]

of an unfair labor practice in 1960 by refusing to bargain in good faith! The NLRB's reasoning is particularly extraordinary because it also found that (1) G.E. was not seeking to eliminate the union as a bargaining agent; (2) G.E. was at all times willing and even anxious to sign a new agreement; (3) G.E. did not engage in individual bargaining, as such; (4) G.E.'s conduct at the bargaining table was not unlawful; and (5) G.E.'s communications to its employees constituted legally protected activity. Then the NLRB applied its "totality of conduct" doctrine, added up all the legalities, and produced an illegality, carefully refraining from explaining how G.E.'s conduct could be illegal with the IUE and not with all the other unions with which G.E. reached peaceful agreement on the same basic terms. The NLRB arrived at its conclusion principally by finding that communications to the employees by the company "froze" the company's stance at the bargaining table despite the fact that the company altered its offer several times and despite the clear wording of the Taft-Hartley Act which prohibits the NLRB from interfering with communications which bear no taint of coercion or promise of betterment. The NLRB also charged that the company derogated the President of the IUE, whereas the company pointed out that it merely communicated the truth of this person's actual words and conduct at the bargaining table—a company claim that on the record is actually an understatement. Six months after the NLRB decision, Mr. Carey, the long-time IUE President, resigned his presidency because the U. S. Department of Labor had disclosed, pursuant to an investigation under the Landrum-Griffin Act, that his "re-election" had in fact been fraudulent and that he had actually lost by 23,316 votes. The NLRB's case on the 1960 bargaining has yet to be passed upon by the Court of Appeals, Second Circuit, where the appeal was lodged after much legal maneuvering. The court should have great difficulty supporting the NLRB's G.E. decision. For if the basis of the decision is lack of concessions by the employer, it cannot be supported under Section 8(d). If the ruling intends to condemn the highly developed communications system of the employer, Section 8(c) must be ignored. If, on the other hand, the real ra[37]

tionale is to be found in the trend toward Board monitorship over the substantive terms of collective bargaining, the bargaining process "is in danger of becoming more a lawyer's dream than the useful social mechanism f o r settling disputes which it was originally designed to be." 36 The f e a r expressed by so many concerned with the field of labor-management relations and the survival of the "social mechanism" is a very real one because the parties to all m a j o r disputes will come to expect government intervention and build their bargaining techniques around this expectation. Much discussion can be found concerning the impact of this case on the industrial relations policies of management and unions. 37 The Board has claimed t h a t G.E.'s pending appeal is f a r less significant than the warnings of compulsory arbitration would imply. In an attempt to n a r r o w its holding while the appeal decision is forthcoming, the Board has distinguished a f a c t situation very similar to t h a t in the G.E. case. Procter & Gamble insisted upon a management-rights clause and arbitration limitation, and also carried out a series of communications with its employees during negotiations. The Board distinguished the fact situations and found no violation by the employer. Although a noncoercive communications campaign is not a per se violation of the act, according to the Board the General Electric case is an example of utilizing such a campaign as an instrument f o r bypassing the union and engaging in direct dealing with t h e employees. In t h a t case, said the Board, G.E. coupled this instrument with a firm non-negotiable contract offer and a fixed position at the bargaining table. Procter & Gamble did no such thing. Although it insisted on a management-rights clause, it was willing to make other concessions. 38 Speculation as to the intent of the Board actually to limit t h e General Electric case to its facts f o r f u t u r e rulings or 36

Guy Farmer, "Compulsory Arbitration—A Management Lawyers View," 51 Virginia Law Review 396, 408 (April, 1965). " S e e the article by David L. Benetar, "G.E.—Unique Situation or Broad Impact," 17 Labor Law Journal 160 (March, 1966) The author was one of the attorneys representing G.E. before the Board. as Procter & Gamble Manufacturing

[38]

Company, 160 NLRB No. 36

merely in Procter & Gamble to set up a basis for its argument on appeal that the broad impact of the General Electric case is in fact imaginary, can only be resolved by future decisions in this area. It should be noted, however, that the General Electric decision was used as a main prop of the NLRB finding in the H. K. Porter case. One may even conclude that the Procter & Gamble case is a temporary respite to bolster the Board's case to gain support for its repeated claim that General Electric is unique—a claim not borne out by citations to the Board's decisions in such cases as H. K. Porter and Roanoke Iron Works (see note 28). Of vital concern to employers is the actual effect the General Electric decision and the H. K. Porter case have had on what they can, in practice, safely communicate to their employees and insist on at the bargaining table. In this area there are tangible eifects. An example is the report of the National Restaurant Association and American Motor Hotel Association sent to its 18,000 members. Widely publicized and hard-nosed bargaining appears to be dead. . . . The foremost lesson of the General Electric case to this point is not to try to pressure the union through its members. Don't wage an extensive campaign to discredit the union. . . . In some areas your first offer can be your final offer, but you should have a few meaningful concessions to point to should you be accused of refusing to bargain. The regulation of bargaining tactics in violation of legislative intent has become a fact of life. What the Board has done by deciding in General Electric that the employer must be prepared to bargain with counterproposals and an open mind, and, in H. K. Porter by requiring the reaching of an agreement satisfactory to the Board, is to dictate the attitudes, the subject-matter and the result of collective bargaining. In so doing, it has turned the private agreement-making system into a tripartite government arbitration process. Regulation of Employer Lockouts In some respects the employer's right to lock out his employees may be thought of as paralleling the employees'

[39]

right to withhold their services through strike action. Just as the right to strike has been subjected to restrictions where it contravenes certain purposes, so the employer's right to shut down operations has been held to be a limited managerial prerogative. Although, with minor exceptions, there are no statutory prohibitions against use of the lockout, nevertheless, as a result of decisions of the NLRB and the courts, the lockout has been so circumscribed by restrictions that an employer involved in a labor dispute would be ill advised to shut down or move his plant without first obtaining competent legal advice. The American Ship and Brown Cases In the American Ship 39 case the union and employer were unable to reach an agreement on a proposed modification of their collective bargaining agreement. The employer then notified its employees that, because of the dispute, they were laid off until further notice. Negotiations finally achieved a settlement, but the union filed an NLRB charge, alleging a violation of Sections 8(a) (1) and (3) based on the lockout and its use, solely to bring bargaining pressure on the union. The Board and the District of Columbia Court of Appeals upheld the charge. In reversing this decision, the Supreme Court held that an employer does not violate the Act when he temporarily shuts down his plant and locks out his employees, if (1) a bargaining impasse has been reached and (2) the employer's sole purpose is to bring economic pressure to bear on the union. Thus, in an apparent effort to force a Board re-evaluation of its lockout rulings, the Court gave its approval to the concept of bargaining lockouts, at least under the conditions of the American Ship case. The Court went further and in the companion case of NLRB v. Brown Food Stores 40 considered the problems of hiring replacements during a lockout called to avoid a whipsaw situation. The Board had refused to permit the combination of allowing the lockout (though 39

American

.965). 40

Ship

Building

Company

380 U.S. 278 (1965). [40]

v. NLRB,

380 U.S. 300

a type held legal in Buffalo Linen41) and also hiring replacements. Again the Supreme Court reversed and viewed these actions as defenses to the power of unions to call a strike, rather than as anti-union discriminatory practices. The power of the non-struck members of the multi-employer unit to hire temporary replacements after locking out their employees was established. Viewed in conjunction with American Ship, it appears that the Court will also sustain the hiring of temporary replacements by a single employer when the lockout is employed after a bargaining impasse. NLRB

Restrictions

However optimistic employers became after these Supreme Court pronouncements, any hope of a serious Board reappraisal to give effect to the emphasis placed by Congress on free collective bargaining without Board regulation was shortlived. The NLRB insisted that either a multi-employer situation be present or that the exact conditions of American Ship be met and a definite impasse reached. The resort to legal casuistry to circumvent the conceptual basis of both the statute and the Supreme Court decisions offends all who believe in the necessity for freedom to determine privately the terms of employment. The Board has ignored the important fact that, as in the Brown case, "there are many economic weapons which an employer may use that either interfere in some measure with concerted employee activities, or which are in some degree discriminatory and discourage union membership, and yet the use of such economic weapons does not constitute conduct that is within the prohibition of either 8(a) (1) or 8(a) (3)." Several important cases illustrate recent NLRB anti-employer sentiment in this area as it acts to limit the effects of American Ship and Brown. In American Stores Packing Company 42 the Board reheard a case it had already decided was an illegal lockout, but before the Supreme Court decisions. On remand the Board still believed the employer refused to bargain in good faith and locked out its employees 41 NLRB v. Truck Drivers (1957) (Buffalo Linen).

Local Union No. U9,

42

335 U.S. 87

158 NLRB 620 (1966). See also, Tonkin Corporation of California, 158 NLRB 1223 (1966).

[41]

discriminatorily. First, it noted that in the American Ship case the Court held that an employer does not violate the Act when, after an impasse has been reached, he shuts down his plant and lays off his employees for the sole purpose of bringing economic pressure to bear in support of his legitimate bargaining position. Here, felt the Board, the employer unlawfully refused to bargain from the beginning of negotiations, after which a strike and lockout followed. Thus, since the dispute developed from the company's unlawful insistence that bargaining be limited to exclude mandatory and proper subjects, it was not over a legitimate economic position. By reading into the Supreme Court's ruling of "legitimate bargaining impasse" its own interpretations of Section 8(a) (5) good faith bargaining, the Board has taken a step backward toward outlawing again the bargaining lockout. In David Friedland Painting Company,43 the Board again distinguished American Ship and Brown and refused to face the economic reality of an employer doing business at several sites at which more than one union is involved. In this case the employer laid off several employees, members of a union local with which he was having no trouble, but which was involved in a dispute in another bargaining area in which the employer did business. The employer argued that in economic reality it was vitally affected by the dispute since it was trying to prevent a sister local from getting higher benefits in a nearby bargaining jurisdiction. The Board refused to treat the employer as being, in practice if not theory, part of a multi-employer unit with the other employers involved. Rather, the employer was "seeking to intrude in a labor dispute not its own, involving a union other than the one with which it was then in untroubled relationship," and that this was a "collateral or indirect interest" insufficient to support a lockout. The Ninth Circuit recently reviewed a post-American Ship decision and sharply reminded the Board that its unfair labor practice jurisdiction entails more than protecting union activity from a strong employer wisely using its legally protected bargaining tactics. The court, reversing the Board, held that the law did not provide for regulation of collective « 1 5 8 NLRB 571 (1966).

[42]

bargaining simply because the union was experiencing internal disruptions accentuated by the lockout. Weakening the union was not the reason motivating the employer's lockout; and the right to lockout must be preserved despite this "possible result of a legal lockout." 44 The Board itself recently decided in favor of a lockout on the basis of economic analysis of the fact situation where the employer contended that in reality he was part of a group of employers. In Acme Markets,45 the employer operated 51 stores, 23 of which were union. Acme belonged to a multi-employer group which was involved in a bargaining dispute with the union. The union struck Acme and the other unit members locked out their employees as per their agreement. However, this left Acme's 28 non-union stores still operating in the same areas as many of the unit members which had shut down. When Acme laid off these employees, the Board concluded that it was designed to serve the legitimate business end of protecting the integrity of the multi-employer unit and was therefore justified. Still more recently, the Board had occasion to interpret American Ship and Brown in two cases which had been returned to it by the courts. In the Detroit Newspapers 46 case an agreement was made by two newspapers that in the event the union struck one of them over a demand of mutual interest, the other would support the first and not publish. When the union struck one, the other locked out its employees. The Board, on remand, changed its original holding and upheld the lockout. The American Ship case has apparently obliterated distinctions between offensive and defensive lockouts and, in this case, the Board felt that the facts "plainly warrant the conclusion that Respondent's lockout was preponderantly designed to force the union to accept the company's bargaining proposals." The test of a lockout's legality, assuming no motive to discourage union activity or to evade bargaining exists, is "whether the lockout is inherently so prejudicial to union interest and so devoid 44

NLRB V. Golden State Bottling Circuit, 1965). 45

156 NLRB 1452 (1965).

46

Evening News Association,

Company, 353 F.2d 667 (9th

166 NLRB No. 6 (1967).

[43]

of significant economic justification that no evidence of intent is necessary." In the other case, Weyerhaeuser,47 the Board was forced to go one step further in recognizing the validity of the employer lockout. Here the Board had originally upheld the lockout but had refused to rule whether the multi-employer group was a formal, legal one. The decision was based on the facts of the case. Here six lumber companies had formed an Association to bargain on their behalf and the unions had accepted the unit. The employers were entitled to engage in a lockout when the unions struck two of the members, both because the Buffalo Linen case allowed tactical lockouts and because American Ship loosened the requirements for valid lockouts in a multi-employer situation. A n ironclad, formal bargaining group need not exist to establish a legal lockout under the Supreme Court rulings. ^ Many issues are left unanswered by the subsequent Board limitations on the Supreme Court rulings. If an employer cannot utilize at least temporary replacements in much the same manner as the striker can obtain temporary employment elsewhere, the lockout will put as much pressure on the employer as on the union. Since Brown was based on a multi-employer situation, it is entirely possible that the Board will limit it to its facts and refuse a single employer the same right. Also, the limitation placed on American Ship requiring both subjective good faith bargaining and the reaching of an impasse prior to use of the lockout impairs the availability of this weapon. The Board's concept of what constitutes "good faith" and "impasse" is frequently difficult to predict. In any case, the employer must be very careful m using the lockout and running the risk of committing an unfair labor practice. Clearly the employer's choice must be tempered by the pervasive attitude of the Labor Board to mother-hen the parties and determine what the subject matter of collective bargaining should be," « and to effectuate union bargaining objectives to the exclusion of the employers^nght of economic sanction as a bargaining tactic. "Weyerhaeuser Company, et al, 166 NLRB No. 7 (1967). Th,%7ZgrtW' "Collective Bargaining in Transition" in The Structure of Collective Bargaining, Weber (ed.) (New YorkThe Free Press of Glencoe, Inc., 1961) p. 348

[44]

Regulation of Multi-Employer Bargaining Multi-employer bargaining associations have been a widelyused form of collective bargaining, recognized by both labor and management representatives as uniquely suited to meet the specific structural problems of many bargaining situations. As long ago as 1938 the Board recognized them as constituting appropriate bargaining units,49 and more recently the Supreme Court has emphasized the interests of employers in such bargaining tactics.50 However, in the 1965 Evening News Association 51 case, the Board rendered a decision calculated to cripple the effectiveness of association bargaining. For a number of years the Detroit newspapers which employ members of the same Printing Pressman's local were represented in collective bargaining by a local publishers' association. This had resulted in a series of contracts over a 25-year period, each of which covered all the press depart ment employees of the different newspapers involved. In 1963, however, when the association contract was about to expire, the union served a 60-day notice of termination and proposed thereafter to conduct negotiations for a new contract on an individual employer basis. The newspapers refused to negotiate, except on the basis of the usual multiemployer unit, and the Board held this a violation of Section 8(a) (5). Prior to this decision it had been taken for granted that if an association unit had previously been established by mutual consent, a union that declined to negotiate with one or more of the employer members as part of the association group was guilty of a refusal to bargain under Sections 8(b) (3) and 8(b) (1) (B) which forbid labor organizations from restraining employers in their choice of bargaining representatives. According to the majority opinion, any other result would have meant the application of "more restrictive rules govern49

Shipowners' (1938).

Association

50

NLRB v. Truck Drivers (1957) (Buffalo Linen). 51

of the Pacific Coast, 7 NLRB 1002 Local Union No. U9,

154 NLRB 1494 (1965).

[45]

335 U.S. 87

ing union withdrawal from multi-employer bargaining units than are applicable to employers." The Board stressed the point that an employer can withdraw from an association unit when the contract terminates, provided he has given notice in advance of negotiations. This analysis is invalid, and illustrates a marked unfamiliarity with the multi-unit setup. As the dissenting member pointed out: The term union withdrawal is misleading, for a union does not withdraw unilaterally, but compels an employer to forego group action and pursue an independent course. Thus when a union withdraws, it remains unaffected as an entity while requiring a change in the very identity, nature and composition of the employer with whom bargaining is to be conducted. In contrast, an employer's withdrawal has no impact on the union as an entity in any way. In this respect one could equate an employer's participation in multiemployer bargaining with a single union's engagement in multiunion (e.g., through a Council) bargaining. Where a group of unions representing different units of a single employer wish to consolidate, a single combined unit can be achieved only with the employer's agreement. Once a broad unit is established by mutual consent, an employer could not refuse to bargain with the multiunion group as the representative of his employees.52 Nevertheless, the Board has continued to espouse the doctrine of Evening News and in Hearst Consolidated Publications 53 reaffirmed the rule and disregarded the employer's contention that the long history of multi-employer bargaining rendered the separate units inappropriate. The union effectively withdrew since it gave "timely and unequivocal notice of its desire to withdraw from such unit and to bargain with each employer individually." And, to cement this new principle while at the same time pointing up the plethora of problems it could uncover, the Second Circuit upheld the decision on the basis of the advantage of simplicity the Board's position has and the "apparent equality of treatment 82

Ibid., at 1503.

53

156 NLRB 210 (1965).

[46]

of parties on both sides of t h e table." 54 The court stressed t h a t the Board was correct in determining t h a t Congress did not intend to instruct it to require an unwilling union to continue in the consensual relationship if it unequivocally w i t h d r e w its consent. The court acknowledged t h a t allowing the union to w i t h d r a w might substantially affect the balance of economic power on the side of the union, but t h a t Congress h a s not attempted to destroy the economic weapons of either side in such labor disputes. Thus, t h e court recognized the limitation of government enactment by which the delegation of power to t h e Board left intact the r i g h t to use economic weapons "without authorizing the Board to p u t its thumb on the scale in the b a r g a i n i n g process." ' W h a t it ignored is the extreme hardship this places on the employer and the vulnerability to such tactics as whipsaw strikes, which perhaps more t h a n any f a c t o r caused the Board to realize suddenly its limitations in the b a r g a i n i n g process. Failure to act here, as much as positive restrictions placed directly on the employer, manifests Board union bias. By its r e f u s a l to project itself into t h e b a r g a i n i n g tactics of the parties in this situation, the Board has disrupted the history of "more t h a n 50 years of multiemployer b a r g a i n i n g . . . upon the whim of one of the parties without any reasons assigned and with more abrasiveness sure to follow as a result." 55 In r e f u s i n g to limit union b a r g a i n i n g tactics, it has severely restricted those of employers who had themselves joined together as a bargaining tactic.

54

Publishers' Association of New York City v. NLRB, 364 F.2d 293 (2nd Circuit, 1966). 55

Judge Kaufman, concurring in Publishers' Association of New York City V. NLRB, footnote 54.

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Chapter IV CONTROL OF THE SCOPE AND CONTENT OF COLLECTIVE BARGAINING The good faith bargaining requirement has been developed, as we have seen, to define the practices and procedures of the parties during bargaining. But the extent of government regulation does not end with control of the tactics employed by each side. Good faith bargaining cannot remain in suspension. The subjects over which each party must bargain, or is able to bargain, invoke other issues to which Congress, the courts and National Labor Relations Board have addressed themselves. The Taft-Hartley amendments specifically excluded certain areas from collective bargaining. Congress, in so doing, simply decided that despite the intent of either or both parties, as a matter of public policy these subjects cannot be included in the private agreement. These prohibited or illegal areas preclude agreements whereby the employer ceases or refrains from handling, using, selling or transporting the products of any other employer or to cease doing business with any other person. Also, it became an unfair labor practice for the union and employer to agree to a closed shop or preferential hiring provision. Also Section 14(b) proscribes agreements to require membership in a labor organization as a condition of employment where state law prohibits it. The most troublesome problems arose because of what the law did not say, rather than what it did say. Although the prohibited bargaining area offered no ambiguities and precisely told the employer and union what to refrain from doing, the phrase "wages, hours and other terms and conditions of employment" used in Section 8 ( d ) was extremely broad, requiring interpretation by both judicial and administrative tribunals. The NLRB subsequently developed areas of mandatory bargaining, encompassed by the statutory phrase, about which the parties must bargain, and areas of non-mandatory but permissible bargaining, which the parties could include if they wished. [48]

Mandatory Subjects of Bargaining With Sections 8(a) (5) and 8(b) (3) again being used as its weapons, the Board characterized as unfair labor practices the refusal to bargain, defined as we have discussed, over areas which it felt were encompassed by the wages, hours and conditions of employment clause of Section 8 ( d ) . If the Board decided that the particular actions of the accused party did not comport with what it deemed were the necessary conditions of good faith bargaining, that party "refused" to bargain. If the particular subject matter of this refusal was a mandatory subject, the failure to bargain was per se an unfair labor practice. Thus, the Board struck with a two-pronged attack on the agreement-making process. Its rationale was to limit the areas of industrial strife by first defining what must be bargained about followed by the techniques which may or may not be utilized during such bargaining. Use of the strike and lockout would only be made when the parties bargained to an impasse over the issues, not when they were attempting to define the area of discussion. Furthermore, the Board limited the ability even to bargain to an impasse to those subjects it defined as mandatory. Other, permissible areas of bargaining could not be insisted upon to the point of impasse. Thus, the Board has completely rejected the concept of free collective bargaining unrestricted by government interference, which the Congress thought it was adopting in 1947. Ever broadening areas have been included as mandatory subjects of collective bargaining. Since 1948 and the Inland Steel1 case the Board, generally with court sanction, has expanded by its own definition the scope of collective bargaining. In that case the court unequivocally held that a pension plan is part of the wages about which the Act required bargaining. The language of the court was based on a deferred wages approach and opened the way for a wide range of retirement plans, merit increases, bonuses and stock purchase plans. 2 Said the Court: 1

Inland Steel Company V. NLRB, 170 F.2d 247 (7th Circuit, 1948), cert, denied, 336 U.S. 960 (1949). 2 Examples of mandatory subjects are: NLRB v. Niles-BementPond Co., 199 F.2d 713 (2nd Circuit, 1952) (Christmas bonuses); Fleming Manufacturing Company, 119 NLKB 452 (1957) (time for

[49]

It surely cannot be seriously disputed but that such a pledge on the part of the company forms a part of the consideration for the work performed, and we see no reason why an employee entitled to the benefit of the plan could not, upon the refusal of the company to pay, sue and recover such benefits. In this view, the pension thus promised would appear to be as much a part of his wages as the money paid to him at the time of the rendition of his services.3 The most utilized part of the statutory area of bargaining has been the ambiguous term "conditions of employment." By seizing upon this as a general reference to all conditions affecting an employee's working day, unions, with help from the Board, can cut away traditional areas of management prerogatives. Although the essence of free collective bargaining presumes co-determination of whatever the parties are able to include or exclude from the process, it does not mean subjecting such issues to arbitration by the Board. If an employer is asked to bargain over safety rules, for example, but refuses, a union has several alternatives. It may accede to the employer's wish and not insist upon the matter; it may insist upon it to the point of calling a strike over the refusal; or it may run to the mother-hen NLRB to force the employer to co-determine the safety rules. Not only does the last course involve the least risk, but also it has worked. Despite the company's contention that since state law required certain safety rules, it must have complete control coffee breaks during working hours) ; NLRB v. Bemis Bro. Bag Co., 206 F.2d 33 (5th Circuit, 1953) (rental of company-owned houses); Westinghouse Electric Corp. v. NLRB, 369 F.2d 891 (4th Circuit, 1966), reversed by full membership, F.2d (4th Circuit, December, 1967) (price levels of food and drink at company cafeteria). Also see, Leon M. Despres and Samuel D. Golden, "The Duty to Bargain," University of Illinois Law Forum (Spring 1955), p. 15. The Westinghouse case was recently reviewed by the full membership of the Fourth Circuit and the holding that bargaining about » n c e l e v e l s w a s m a n d a t ° r y was reversed. To equate the _ trifles involved in this case with subjects such as wages, hours, job security, pensions, insurance or other subjects directly and materially affecting conditions of employment is "sheer nonsense," felt the court. (4th Circuit, December, 1967) -,nllfan!li,Steel 1948), at 253.

Com

Vany

V. NLRB,

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170 F.2d 247 (7th Circuit,

over its public utility operations, the Board recently ruled 4 that safety regulations are a mandatory subject of bargaining and not within management's prerogative to determine on its own. The state law, like other laws pertaining to wages and hours, merely set out minimum requirements below which the employer could not go. Whether the union must concede to the employer's interpretation of the minimum requirements of the law, or indeed must be available for emergency changes to meet the requirements, was not considered. Even if a union has waived the right to bargain over a subject, the NLRB, under its present orientation toward determining the content of collective bargaining, will penalize an employer for acting unilaterally. In the Beacon Journal Publishing Company 5 case, the Akron Beacon Journal had paid Christmas bonuses over the years. In 1962 several unions tried to make the bonus a contractual commitment, but failed, and it continued to be paid entirely at management's discretion and in amounts determined by management. The contract of the company with each of its unions contained a clause stating that it "was complete in itself and sets forth all the terms and conditions of the agreement between the parties hereto." Nevertheless, when the bonus was not paid in 1965, the NLRB, upon complaint of the unions, found the company guilty of bargaining in bad faith and ordered it to "make whole the eligible employees . . . for any loss they may have suffered by reason of . . . unilateral modification or alteration of . . . Christmas bonus in December 1965." Mandatory

Bargaining

on Changes in Business

Operations

The most disturbing issues of mandatory bargaining to many are those involving restrictions on employers who seek to change their business operations, either by plant removal, plant closing or contracting out of work. The importance of this problem has increased with the rapid changes in technological displacement of workers and with changing theories of business organizational structure. The line of cases com4 5

Gulf Power

Company,

156 NLRB 622 (1966).

1 6 4 NLRB No. 98 (1967).

[51]

ing before the Board and the courts illustrate the magnitude of the problems raised by such issues, and are a further manifestation of government regulation of collective bargaining. Complicated by social and economic considerations reflecting employee concern for job security and employer needs for reasonable discretion in the delicate task of operating a profitable business, the subcontracting and plantchange cases show the struggle between management and labor in its most classic form. Yet, the disturbing element is that the resolution of these problems is coming not from collective bargaining but from the government in the form of the NLRB and the courts. In examining the decisions, the question must be asked whether the price of peace is not too great which takes away the right of the employer to refuse to compromise a position it feels essential to its existence. If resort to the strike is the only way a union can force a co-determination process that is workable, it is submitted that this is better than the alternative of government arbitration to which neither side has voluntarily agreed. Early Board rulings in this area dealt with Section 8(a) (5) violations in terms of failure to give notice to unions of contemplated changes in business operations and failure to allow them the opportunity of discussing the effects of these changes on the members of the unit. An example of these cases is Timken Roller Bearing6 where the Board ruled that an employer must discuss the subcontracting of work which was identical to that done by members of the unit represented by the union. The Board's rationale was that discussion with the union might clarify the problem the employer was attempting to solve, allowing more work to be done by the employees, "or some other and presently unthought of solution agreeable to both parties may suggest itself." But the Board emphasized that the only requirement is that the employer consult with the union—no emphasis was placed on reaching an agreement. The issues of whether the employer must in fact "bargain with the union, as that term was defined by the Board, or whether economic motives must be present to sustain any decision was not considered until 1962 in the Town & Coun«70 NLRB 500 (1946). [52]

try Manufacturing Company 7 case. There the Board ruled that a decision to subcontract work must be bargained about, whether the employer is motivated by anti-union animus or purely economic motives. For the first time the question of a Section 8(a) (5) refusal to bargain charge became intertwined with an 8 ( a ) ( 3 ) anti-union discrimination charge. The employer decided to cease doing his own trucking of manufactured trailers and subcontract the work instead. Without notifying the union, it released the truck drivers and subcontracted the deliveries. The Board held this a violation of 8(a) (5) because "the elimination of unit jobs, albeit for economic reasons, is a matter within the statutory phrase 'other terms and conditions of employment' and is a mandatory subject of collective bargaining." The Board emphasized that its decision did not require an employer to yield to a union's demand with respect to the subcontract, nor did it restrain an employer "from formulating or effectuating an economic decision to terminate a phase of his business operations." Although the Board ruled on the basis of its finding of anti-union animus, it volunteered that, since 8(a) (5) required that this subject be bargained about, it would have decided the same way if economic motives were the only controlling considerations. Town & Country marks a significant expansion of prior Board policy. It had now become a per se violation of the law to refuse to bargain over decisions to subcontract work which would eliminate jobs in the unit represented by the charging union. Of further importance was the remedy imposed by the Board—invalidation of the subcontract, a return to the employer's previous hauling practice, reinstatement of the drivers and payment of back pay. The result, therefore, was to force the employer to bargain over the actual decision to subcontract prior to making that decision. Later, the Board extended this doctrine to cases where no 8(a) (3) issue was raised and anti-union animus was not charged. In Adams Dairy, Inc.6 the employer attempted to sell the delivery aspect of its business and discharge its employees without bargaining with the union. Again the Board acted to stop the sale and reinstate the discharged empolyees with 7

1 3 6 NLRB 1022 (1962), enforced, 1963). 8 1 3 7 NLRB 815 (1962).

[53]

316 F.2d 846 (5th Circuit,

back pay, relying on the argument t h a t unit work was being eliminated and thus the decision to do so must be a subject of collective bargaining. The Board continued with this line of cases, r e f u s i n g to allow any type of unilateral management decision where the union requests bargaining over decisions which would eliminate work in its unit. The Town & Country principles were applied to situations involving the partial termination of the business, 9 subcontracting work performed by employees who were then on strike, 10 and complete termination of the employer's business. 11 In the latter case, the Board ordered that, should the business be recontinued, the discharged employees must be rehired with any back pay they were unable to make up by finding other employment. I t was not until 1964 t h a t the issue reached the Supreme Court in the Fibreboard Paper Products case. 12 This decision marked both the high-water point of government regulation of contracting out work, and also a significant t u r n i n g point in judicial concern over Board impingement on management's right to manage. The Board first considered the Fibreboard case in 1961 when the union filed an u n f a i r labor practice charge against the employer f o r refusing to bargain about the decision to contract out its maintenance operations. The employer, on the basis of extensive studies and motivated by purely economic considerations, decided to subcontract this work, gave notice to the union when it tried to reopen the existing contract, and agreed to discuss the effects of the change. The Board originally held t h a t there was no violation of Section 8 ( a ) (5) since the duty to bargain extended to existing b a r gaining units and not to the question of whether or not 9

William J. Burns International Detective Agency, Inc., 148 NLRB 1267 (1964), enforced, 346 F.2d 897 (8th Circuit, 1965). 10 Hawaii Meat Company, 139 NLRB 966 (1962), denied, 321 F.2d 397 (9th Circuit, 1963).

enforcement

11 Star Baby Company, 140 NLRB 678 (1963), enforced sub nom., NLRB v. Neiderman, 334 F.2d 601 (2nd Circuit, 1964). 12

Fibreboard Paper Products Corporation, 130 NLRB 1558 on ill™reversed rehearing, 138 NLRB 550 (1962), enforced, 322 F.2d 411 (D. C. Circuit, 1963), affirmed, 379 U.S. 203 (1964). [54]

there should be a bargaining unit at all. The employment relationship ended, there was no "condition of employment" to discuss, and the duty to bargain was not involved. In 1962 a f t e r a change in Board membership and the reversal of policy illustrated by the subsequently decided Town & Country case, the case was reheard and the decision changed. The reason f o r finding a violation of 8(a) (5), held the Board, was the simple fact that management's decision eliminated unit work (in fact, the whole unit) and thus must be a subject of bargaining. In his strong dissent, Member Rodgers pointed up the awesome effect this decision must have on the ability to make "those economic decisions necessary to the improvement, or indeed the survival, of the business concern with which [the employer] is identified." A f t e r an enforcement order of the District of Columbia appeals court was issued in broad terms of the Board's expertise under the labor laws, the Supreme Court granted review. The Court unanimously upheld the order of the Board. Section 8(a) (5) did indeed require an employer to discuss subcontracting of unit work since these are "terms and conditions of employment." The Court appears to have confused bargaining over the effects of a decision with bargaining about the decision itself. But the majority opinion offers dicta which apparently evidences an awareness of this distinction. The change contemplated by the company's decision to contract out did not affect the basic operation of the business, felt the Court. No capital investment was contemplated and the result of requiring bargaining "would not significantly abridge his freedom to manage the business." The concurring opinion of Justice Stewart registers a f u r ther note of warning. The distinction he would make is that here the decision to contract out the work directly or immediately affects the represented employees' conditions of employment. When the decisions impinge only indirectly upon employment security, he would exclude them from the area of mandatory bargaining. "Decisions concerning the commitment of investment capital and the basic scope of the enterprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate employment." In either case, the Fibreboard case injects the admonition that all refusals to

[55]

discuss decisions to change business operations are not per se illegal. The next important Supreme Court case in the development of mandatory bargaining was the Darlington13 case. Here,. the employer decided that it would close one of its seventeen plants, allegedly for economic reasons but coincidentally with the fact that a union had just won an election. Finding violations of Section 8 ( a ) ( 1 ) , (3) and (5) the Board looked at the vehement anti-union animus to order the employer to bargain with the union. The court of appeals refused to enforce the order and the Supreme Court agreed. The Court held that it is not a violation of the Act for an employer to go out of business completely, regardless of the anti-union motivation behind its actions. Nor, held the Court, is it illegal to close down one plant of many, as long as there is no purpose to "chill unionism" at the remaining plants. The Supreme Court thus eliminated anti-union motivation as a factor in plant closings except when its purpose is to chill unionism in the remaining parts of the business. It should be noted that the Court did not deal with the Fibreboard fact situation, nor did it hold that Section 8 ( a ) ( 5 ) could not be violated by refusing to bargain over changes in business operations, standing alone. In other words, the Fibreboard ruling still stands on the 8(a) (5) question, while Darlington controls on 8(a) (8) questions of anti-union animus. The tenor of the Supreme Court rulings in both cases is, however, significant. The Board is warned that purely business decisions which only indirectly affect conditions of employment are not per se illegal, and also that in only limited circumstances can anti-unionism invalidate a plant closing. Continuation of the Mandatory Bargaining

Trend

Despite the warnings from the Supreme Court, the Board has continued to expand the scope of mandatory bargaining subjects,^ further injecting itself into a determination of the substantive results of the collective bargaining process. "Darlington Manufacturing Company, 139 NLRB 241 (1962), enforcement denied, 325 F.2d 682 (4th Circuit, 1963), affirmed, 380 U.S. 263 (1965).

[56]

After the Darlington decision, the Third Circuit remanded a case in which the Board had previously found a violation by the employer who had closed one of its two plants without prior notice to the union and without bargaining over the decision. The Board upheld its prior decision, holding that Darlington was not applicable because this case involved a partial closing, and nothing in Darlington dealt "with the discriminatory partial closing of a business." The reaffirmation depends on two factors: first, that the Board was not dealing with the question of partial termination with the purpose of chilling unionism but rather with the question of an 8(a)(5) closing without bargaining about the decision; and second, that the Darlington case was solely concerned with this 8 (a) (3) situation and was not concerned with an 8(a)(5) violation. The Third Circuit reversed this decision." What the Board neglected to do was to consider the Fibreboard case as well as Darlington. In that case, the Court recognized the unilateral management control of decisions "concerning the commitment of investment capital." Thus, the employer did not have to bargain over its decision to close down one of its two plants, under the reasoning of both Fibreboard and Darlington. The court ordered the employer to give notice of its intentions, however, in order for the union to have an opportunity to bargain over the rights of the employees whose employment status would be altered by the decision. A recent example of Board substantive determination is its requirement that Ozark Trailers, Inc. bargain over its decision to close down one plant of a three-plant integrated operation.15 First, felt the Board, the company violated the law by failing to give notice to the union concerning its intention to shut down, thus not allowing the opportunity of discussing the effects of its decision. Furthermore, held the Board, the employer committed an unfair labor practice 14

NLRB v. Royal Plating & Polishing Company, 350 F.2d 191 (3rd Circuit, 1965), denying enforcement of 152 NLRB 619 (1965). 15 Ozark Trailers, Inc., 161 NLRB No. 48 (1966). See also the editorial "Closing Down in a Crossfire," The Wall Street Journal, November 16, 1966, where the comment is made about the Ozark case, that "a company in economic trouble surely suffers enough without winding- up in a costly crossfire between the regulators and the courts."

[57]

when it did not bargain over the decision itself. Distinguishing the Darlington fact situation by referring to the fact that the employer was not going out of business permanently, but only partially, the Board felt that this case did not involve an issue of whether or not there was a discriminatory partial closing in violation of Section 8(a) (B). In fact there was no finding of any attempt to chill unionism in the remaining plants. The issue here, it ruled, was whether the closing was a "condition of employment" and a mandatory subject of collective bargaining under Section 8(a) (5). The controlling case was Fibreboard and Ozark's change required bargaining as much as the contracting out in that case. In the Ozark case, the Board rejected all interpretations of Fibreboard which emphasized its language limiting the bargaining requirement to direct and primary impingements on employee rights. The test of "commitment of investment capital" was also rejected by the NLRB. For just as the employer has invested capital in the business, so the employee has invested years of his working life, accumulating seniority, accruing pension rights, and developing skills that may or may not be salable to another employer. And just as the employer's interest in the protection of his capital investment is entitled to consideration in our interpretation of the Act, so too is the employee's interest in the protection of his livelihood. But the Board has badly confused the whole concept of decision-making and the responsibility of union co-determination. What it seeks to protect in Ozark is the employee interests in the effects of the decision to close down, not the decision itself. Each matter with which the Board dealt can be bargained about after the decision has been decided upon, when the effects of this decision are being discussed. The continuation of the mandatory bargaining trend, however, is not limited to Board substantive determinations. The scope of the remedial orders issued by the Board has recently come under judicial scrutiny. Once the determination has been made that an employer was guilty of an unfair labor practice and should have bargained with the union, what the Board provides to remedy this "wrong" becomes of vital importance. [58]

In Cooper Thermometer Co. v. NLRB 16 the Second Circuit Court of Appeals agreed with the Board that the employer should have bargained with the union concerning the removal of a plant to a new location 27 miles away. The court and Board also agreed that information should have been provided on the new jobs that would be available and that the employer should have bargained about the transfer of the old employees to his new plant. But at this point the court and Board part ways. The Board's remedy was to order the employer to recognize the union as bargaining agent at the new plant. Further, it ordered the company to offer the employees at the old plant reinstatement to former or equivalent positions at the new plant at the old wage scale to all employees and to pay back pay. The court rejected this remedy, basing its reasoning on the fact that the Board assumed too much. It assumed that a majority of employees from the old plant would have moved to the new plant if the company bargained about the transfer. Nothing appeared on the record to warrant this assumption. The entire remedy, felt the court, is based on this assumption and, further, reflects a Board substitution of its conclusions for results that might be reached during collective bargaining. Impact of the Mandatory

Bargaining

Concept

Two points have become the subject of much criticism aimed at the Board cases in this area. The complaint is made that the whole concept of defining mandatory bargaining subjects is, first, practically unworkable and, second, legally unsound. The practical implication of defining what a particular company and a particular union must discuss is that the Board presumes to dictate a complex, delicate relationship on the basis of a law based on the premise that the parties themselves must be free to work out a viable relationship. By ruling that a given issue must be discussed with the union, the Board in effect says that Congress meant the employer to do so regardless of its desire and the ability of the union to force it to bargain. Also, when the Board's rulings on what constitutes good faith bargaining are read together with such decisions as 16

376 F.2d 684 (2nd Circuit, 1967).

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Fibreboard, a pattern of complete regulation emerges. By essentially requiring concessions, and, moreover, invalidating agreements reached after long hours of bargaining often followed by a strike, as in the General Electric case, the N L R B has become the arbitrator of those terms it deems necessary to the agreement it then incredulously calls "collectively bargained." The combination of the subcontracting and plant closing decisions with the General Electric and H. K. Porter cases discussed in Chapter I I I show the extent to which the N L R B has actually gone in its trend to final arbitration of contract making. Not only are these management decisions subject to co-determination, but management cannot reach a fixed position on these issues because this would be bad faith. Further, even an agreement reached by the parties is not sufficient to disprove a later union charge of bad faith bargaining; the employer apparently is forced to accept the determination of the Board in this vital management area. His only sure escape from N L R B censure is to concede to all union demands! By such decisions as those regulating changes in business operations and subcontracting, the N L R B has attempted to grant the union a form of security to which it is not entitled under the law. The result of requiring bargaining in these situations is to read into the statute a prohibition against an employer's acts reducing the size or scope of the bargaining unit. As Professor Russell A. Smith has remarked: "Neither the duty to bargain, nor the other obligations resting on the employer under section 8 ( a ) create a statutory duty applicable under all circumstances to keep intact the full dimensions of the unit as originally defined." 17 The second criticism centers around the legal interpretations of the Board. The most common complaint is the constant disregard of stare decisis and the ad hoc treatment of each case decided. Another comment frequently made is that the courts are being given little help in deciding complex cases cutting near the core of national labor policy. Professor Clyde Summers, reviewing recent Supreme Court decisions in labor relations, concluded that the Court "does not rely on the N L R B for enlightenment or counsel. In its 17 Russell A. Smith, "Subcontracting and Union-Management Legal and Contractual Relations," 17 Western Reserve Law Review 1272, 1277 (June, 1966).

[60]

opinions during the last term, the Court has plainly displayed a marked lack of confidence in the Board." 18 Held out for particular notice is the Fibreboard case where the Board originally declared the subcontracting not a mandatory subject, reheard it after a change of administration had produced a change in Board membership, and found it was a mandatory subject. Finally, in the opinion of many labor lawyers and practitioners, the reasoning and legal analysis by the Board has served "too seldom to illuminate and too often to obscure." 19 The result has often been remand from the courts to clear up the basis for its rulings for judicial review to be based on something more than guesswork as to the meaning of the decision. Meanwhile the parties spend substantial monies and many years litigating instead of getting on with the business of bargaining to finality. Nonmandatory Subjects of Bargaining Collective bargaining is utilized to arrive at an agreement fixing the conditions under which each member of the bargaining unit agrees to work and the employer agrees to hire. This involves more than those areas designated as mandatory by the Board and those prohibited by Congress. The issues that do not fall within these categories are not free of regulation. The Board had begun to develop the doctrine that, although nonprohibited, nonmandatory subjects could be bargained about, a party could not insist upon these to the point of impasse and that to do so was an unfair labor practice. In 1958 the Supreme Court placed its imprimatur on this doctrine. In NLRB v. Borg-Warner Corporation20 the employer, after hearing the union bargaining demands, offered two counterproposals. One called for a ballot clause, requiring a pre-strike vote by the employees on the company's last offer. The other sought a clause recognizing the local as the bargaining agent to the exclusion of the international which hfl,d been certified by the Board. The NLRB ruled that it 18

Clyde Summers, "Labor Law in the Supreme Court: Term," 75 Yale Law Journal 59, 84 (November, 1965). 19 Ibid., p. 86. 20

1964

3 56 U.S. 342 (1958), reversing in part 236 F.2d 898 (6th Circuit, 1956), modifying in part 113 NLRB 1288 (1955).

[61]

was an unfair labor practice for the employer to insist on either of these clauses. The appeals court set aside the order with respect to the ballot clause, but agreed with the Board on the recognition clause. The Supreme Court upheld the Board on both, holding that neither clause comes within the scope of mandatory bargaining and therefore that insistence upon either clause as a condition precedent to accepting any contract was illegal. The recognition clause offered little problem to either court. The international was certified by the Board and the law regards it as the exclusive representative of the members of the bargaining unit for purposes of collective bargaining. The ballot clause, however, was the subject of much controversy. The company had made it clear that it would not sign an agreement without this clause. Its experience with strikes and militant union leadership had taught it the necessity for some type of protective measure. The clause provided that as to all nonarbitrable issues, including modification, amendment or termination of the contract, there would be a 30-day negotiation period after which there would have to be a secret ballot of the employees in the unit (union and nonunion) on the company's last offer, before a strike could be called. The union vehemently opposed the clause and struck to have it excluded. Eventually a contract was signed containing both of the controversial clauses. The Court read Sections 8 ( a ) ( 5 ) and 8(d) together to establish an obligation on both employers and employee representatives to "bargain with each other in good faith with respect to 'wages, hours and other terms and conditions of employment.' The duty is limited to those subjects, and within that area neither party is legally obligated to yield." As to the other areas, felt the Court, either party is free to agree or not to agree, to bargain or not to bargain. The good faith of an employer is not enough, however, to allow him to refuse to enter an agreement because it does not include some proposal which is not a mandatory subject of bargaining. The company can propose these lawful clauses, because bargaining is not limited to the statutory subjects, but it cannot lawfully insist upon them as a condition to any agreement. To do so is per se illegal. The Court was divided on the issue of the ballot clause. Justice Harlan, dissenting in part, felt that the decision of

[62]

the m a j o r i t y "proceeds on assumptions which I deem incompatible with the basic philosophy of the original labor Act, which has retained its vitality under the amendments affected by the T a f t - H a r t l e y Act. I f e a r t h a t t h e decision may open t h e door to an intrusion by the Board into the substantive aspects of the bargaining process which goes beyond anyt h i n g contemplated by the National Labor Relations Act or suggested in this Court's prior decisions under it." W h a t bothered the dissenter, and w h a t immediately must concern anyone who analyzes this decision, is the practical result of allowing the parties to bargain if they choose, but to deny the real basis of bargaining—the strike or lockout. I t is only t h r o u g h economic power t h a t the final determination can be reached, f o r it is the ability of the union to strike and the employer to take a strike t h a t forces each side to recede f r o m its position and accommodate the other's view. As Justice H a r l a n observed: . . . I am unable to g r a s p a concept of " b a r g a i n i n g " which enables one to "propose" a particular point, but not to "insist" on it as a condition to agreement. The r i g h t to b a r g a i n becomes illusory if one is not f r e e to press a proposal in good f a i t h to the point of insistence. Surely adoption of so inherently vague and fluid a standa r d is a p t to inhibit the entire bargaining process because of a p a r t y ' s f e a r t h a t strenuous a r g u m e n t might shade into forbidden insistence and thereby produce a charge of an u n f a i r labor practice. . . . To me all of this adds up to saying t h a t the Act limits effective " b a r gaining" to subjects within the three fields r e f e r r e d to in Section 8 ( d ) , t h a t is "wages, hours, and other t e r m s and conditions of employment," even though the Court expressly disclaims so holding. 2 1 The dissent searched in vain to find authority f o r the Board to prohibit b a r g a i n i n g in good f a i t h over subjects not within Section 8 ( d ) . Its affirmative obligation to administer the duty to b a r g a i n requires it to insist upon the good f a i t h of the parties, but once this is found and the subject m a t t e r is not prohibited by the Act, the Board's authority is ended. Any f u r t h e r intrusion is illegal and against the intent of 21

Ibid., at 352.

[63]

Congress. By regulating such substantive matters as the ballot clause in question, the Board sets itself up as the ultimate determiner of what the parties must and must not agree upon. Yet, as Justice Harlan recognizes, "the bargaining process should be left fluid, free from intervention of the Board leading to premature crystallization of labor agreements into any one pattern of contract provisions, so that these agreements can be adapted through collective bargaining to the changing needs of our society and to the changing concepts of the responsibilities of labor and management." What the Board has done is to change the results of a particular bargaining situation. After Borg-Warner decided what it wanted in its contract with the union, it bargained in good faith to achieve it, taking and winning a severe strike. By its decision the Board reversed the result, ordering the company not to insist upon the ballot clause. The scope of collective bargaining had become a matter for Board determination rather than the voluntary resolution by the parties, by agreement either with or without a strike. The disturbing aspect is that there is almost no limitation to this power, nor to its application to both parties. Further, when read in conjunction with the Board's trend toward forcing concessions, we are at the point where not only must the employer offer concessions to prove its good faith, but concessions acceptable to the Board and its view of what constitutes "terms or other conditions of employment." 22 As for the union, under the Borg-Warner doctrine, as under the General Electric case, it gets two bites at the apple. If it loses at the bargaining table or cannot sustain a strike, it signs the agreement, but also runs to mother-hen NLRB. The Board then reverses the results. That this procedure is the essence of bad faith never seems to occur to a bureaucracy intent on regulating employer conduct, collective bargaining, and agreement content. 22 An excellent discussion of the Borg-Warner case and the practical implications to both unions and employers, especially when analyzed with the subcontracting and good faith bargaining cases, is, Robben W. Fleming, "The Obligation to Bargain in Good Faith," in Shister, Aaron and Summers (eds.), Public Policy and Collective Bargaining, Industrial Relations Research Association Publication No. 27 (New York: Harper and Row, 1962), pp. 60-87.

[64]

Chapfet 1/ GOVERNMENT REGULATION OF CONTRACT ADMINISTRATION Collective bargaining does not end at the formalization of the collective agreement between the parties, unless required by the express or implied command of the written contract. If by express language or through a highly detailed and minutely specific agreement the parties limit the total agreement between themselves to that expressed in the written contract, the sole relation between them must be one of administering and interpreting this contract, and any arbitration engaged in pursuant thereto must also be so limited. Grievance arbitration, then, is a manifestation of the collective bargaining process itself; it is a reflection of the relative economic power of the parties operating within the specific context of their relationship to each other and to the public. As Dr. George W. Taylor has continually pointed out: "Arbitration is a tool of industrial self-government for unions and companies. It should be developed by them to meet their needs." 1 Since arbitration is developed by the parties during collective bargaining and, apparently, as an integral part of it, several important issues must be raised and dealt with in any discussion of the role of the Board in collective bargaining. First, does the Supreme Court's view of the role of the government in this process comport with the public interest in maintaining free collective bargaining? A second issue is the role of the arbitrator. How must he perform his function in voluntary arbitration as the choice of the parties who have decided that procedures for settling grievances must be substituted for the costly strike and lockout? 1

George W. Taylor, "The Effectuation of Arbitration by Collective Bargaining" in Critical Issues in Labor Arbitration, 10th Annual Proceeding, National Academy of Arbitrators, 1957 (B.N.A., Washington, D. C.), PP- 151-160.

[65]

The Supreme Court and Arbitration The Supreme Court has thrown itself into this aspect of labor-management relations with uncharacteristic inconsistency. In 1957 the Court decided the Lincoln Mills2 case where it declared that Section 301 of the LMRA gave federal courts jurisdiction to entertain an action to compel arbitration of a grievance in accordance with the terms of a collective bargaining agreement and to enforce arbitration awards. In this case the Court first enunciated its view that the employer's promise to arbitrate grievances was the quid pro quo for the union's promise not to strike during the life of the contract. In 1960 the Court seemed to back away from its earlier view that federal courts should "fashion a body of law from the policy of our national labor laws," and in the Trilogy of arbitration cases 3 seems to favor arbitration as a means of conflict resolution. In the Warrior and Gulf case, the first of these three, the Court stated that the attempt to exclude a general area of activity from arbitration would fail unless written in the most explicit language. In this case the union protested the contracting out of certain maintenance work clearly encompassed by the bargaining unit. The agreement was silent on the subject of contracting out, although it did contain a recognition clause as well as wage and seniority clauses. A no-strike provision was agreed to, but, under the otherwise broad arbitration clause, those matters "strictly a function of management" were excluded from the arbitrator's jurisdiction. The agreement provided that should differences arise between the parties "as to the meaning and application of the provisions of this agreement . . . there shall be no suspension of work on account of such differences, but an earnest effort shall be made to settle such differences" in the grievance procedure as set out. The Court found that since subcontracting was not specifically excluded, it was arbitrable. Further, the arbitrator was free to use 2

Textile

Workers

Union v. Lincoln Mills, 353 U.S. 30 (1957).

s

United Steelworkers v. American Manufacturing Co., 363 U.S. 564 ( 1 9 6 0 ) ; United Steelworkers v. Warrior and Gulf Navigation Co., 363 U.S. 574 (1960) ; United Steelworkers v. Enterprise Wheel

& Car Corp., 363 U.S. 593 (1960).

[66]

as a source of law not only the labor contract itself but also "the industrial common law." In the American Manufacturing case the court re-emphasized its view that the arbitration clause was bargained for in return for the no-strike clause and held that, since no exception was put into the arbitration clause, the employer must arbitrate a grievance arising out of an award received by an employee under workmen's compensation. Nor were the merits of a grievance for the courts to determine, including claims that may appear frivolous to some people. In the third of these cases, Enterprise Wheel and Car, the union was granted specific enforcement of an arbitration award, and the Court indicated that only in cases of fraud or the like would this be refused and the arbitrator's decision upset. Thus in these cases the Supreme Court seems to be caught between conflicting evaluations of the process of collective bargaining and voluntary arbitration. On the one hand, it espouses the concept of collective bargaining continuing beyond the negotiation of the contract and the place of arbitration as adding meat to the "skeleton understanding" of the parties. Yet, it does not suggest that this is the ideal relation, or even that in these cases the parties intended to establish this type of relationship. Rather, the High Court in its far-reaching dicta established a government policy that as long as there exists a valid collective agreement with an arbitration clause and the company has violated some provision of the agreement, the Court will require arbitration. By these decisions the Court forces upon the parties a concept of collective bargaining and arbitration which can be a viable, workable tool if, and only if, the parties voluntarily fashion it at the bargaining table. Only when arbitration and grievance procedures are voluntarily substituted for strikes and lockouts and only when the parties agree to be so limited, can the sought-after industrial peace be achieved. Further, if the Court adopts the theory that collective bargaining continues on a daily basis, and if there is a valid no-strike clause, it must be recognized that the remaining alternative is arbitration, but only when in fact the contract evidences an intent of the parties to include the subject at

[67]

issue within these provisions. Indeed, it is a giant step toward compulsory arbitration for any judicial body to force the parties to arbitrate an issue which one party, or both, is unable or unwillng for any number of bargaining reasons to include in the contract. A clear example of this concern is illustrated by the Warrior and Gulf case. The union had consistently been unable to include a subcontracting provision in the labor agreement and the company attempted to rely on this bargaining history to show a deliberate intent to omit such a restraint on its practices. The company logic was unmistakable: A collective agreement was reached by the parties excluding as well as including certain rights and obligations; these rights and obligations of necessity must be interpreted and perhaps even "filled in" when the language was not specific enough; arbitration was provided f o r such purposes and to bind the parties to the extent of their agreement; since subcontracting was excluded from the agreement the contractual duty to arbitrate could not have been breached because there could have been no breach of any actual provision of the agreement. In 1964 the Court was faced with a similar situation when in the American Oil4 case the agreement contained a broad arbitration clause and a no-strike provision, but also stated that the company would bargain with the union with respect to matters "which are not covered in this Agreement," but that "each party shall have the right to refuse to arbitrate any such matter." In the event of such refusal the no-strike obligation was suspended as to that matter. Despite this seemingly obvious intention to continue voluntary collective bargaining when the contract failed to provide for any matter and to resurrect the strike as an alternative to arbitration, the District Court held (based on the Warrior and Gulf case) that the employer was required to arbitrate a subcontracting question. The Seventh Circuit reversed, but apparently based the decision on collateral estoppel since the union had lost an earlier decision before the Trilogy and did not appeal. The Supreme Court affirmed per curiam by an equally divided court sitting without Justice Goldberg. 4

Independent

130 (1964).

Petroleum

Workers

[68]

v. American

Oil Co., 379 U.S.

Although a per curiam decision has no mandatory connotations, one may speculate that this equally divided court must have been torn by the dilemma into which it had blundered in 1960. How could it preserve free collective bargaining and extend its preference for arbitration? We can hope the Court decided that its desire for industrial peace through arbitration must give way to the more realistic view of allowing the voluntary actions of the parties to determine their relationship, and that the inconvenience of economic sanctions are a necessary evil the public must endure to preserve the freedom to bargain. Grievance Arbitration and the National Labor Relations Board With the increasing attention on arbitration as a method of settling labor-management disputes and the consequent pressure on the parties to take more care in the framing and administering of arbitration and no-strike clauses, a new area of concern became crystallized in the already troubled waters of collective bargaining. After 1960 the possibility became magnified that a dispute would be not only subject to the broadened arbitration procedures under most contracts, but also would be subject to the unfair labor practice jurisdiction of the National Labor Relations Board. This possibility had always existed but the focus of attention on arbitration and a series of Supreme Court cases underscoring the multiple jurisdiction of the Board, arbitrators and courts served to intensify the problem. The Multiple

Jurisdiction

Although the expression of government policy is very seldom easy to put into practice in the field of federal labor law, as perhaps in few other aspects of legislative or judicial expression, national labor policy has played a paramount role in guiding those who interpret not only the statutes but also private agreements and decisions of the various tribunals. Congress attempted in 1947 to create a policy in favor of dispute-settlement procedures adopted by the parties in the construction and administration of their agreements. 5 B

Section 203 (d) of the Taft-Hartley amendments states: "Final adjustment by a method agreed upon by the parties is hereby de-

[69]

Yet, in the same Act the jurisdiction of the NLRB to regulate and restrain unfair labor practices was deemed to be unaffected by any private or public means of adjusting disputes. 6 Further, as we have seen, Section 301 of the Act thrusts the courts into grievance arbitration as another forum of contract interpretation. It is these rather inconsistent provisions which have formed the basis of the controversy between the Board, arbitrators and the courts. However, while this provided the ammunition, it was the Supreme Court which loaded the gun and the Board which pulled the trigger, albeit at times unavoidably. In Smith v. Evening News Association7 the Court faced the idea of dual jurisdiction when the conduct in question was both a breach of the collective bargaining agreement and an unfair labor practice. In an apparent continuation of its Trilogy preference for a grievance-arbitration system the Court held that such conduct was both subject to the arbitration clause and court remedies flowing f r o m that clause and to the NLRB unfair labor practice procedures. In 1964 the Court in Carey v. Westinghouse Electric Corp.6 went a step f u r t h e r and held that concurrent jurisdiction by the Board and arbitrators is proper even though the issue involved dealt with representation or work jurisdiction and not all of the various unions claiming the work were before the arbitrator. A preference was expressed by the Court that, although the Board could invoke "at any time" its authority, the "therapy of arbitration" should first be given a chance to settle the dispute. The problems created by these decisions were inevitable as were those created by the attempt to regulate all the clared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective bargaining agreement." «Section 10(a) of the Act states: "This power (over unfair labor practices) shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law or otherwise." 7

371 U.S. 195 (1962).

8

375 U.S. 261 (1964).

[70]

other aspects of collective bargaining. Again the concept of free and voluntary agreement-making clashed head-on with the attempt at government regulation on a particularized level, too specific to do anything but create a myriad of court and Board decisions leaving the parties in a quandary as to the correct form in which to settle their disputes. The Role of the NLRB Into this rather muddled policy situation we find the administrative agency of the government placed in the unenviable position of, on the one hand, attempting the extremely difficult task of investigating and ruling on ever-broadening areas of unfair labor practices while, on the other, of being forced to decide if, when and how it will defer to the private contract. The very nature of the Board's unfair labor practice jurisdiction often brings it into extreme criticism as attempting to interject too much government into the private agreement-making process. As we have seen, particularly in its rulings on good faith bargaining and its attempts to define the very substance of the terms on which the parties must bargain, the Board has been taken to task for failure to heed Senator Walsh's admonitions in 1935 that the government does not seek to inquire into what happens behind the doors of the bargaining room. Now, the Board is placed in the position of interpreting the actual terms of the contracts agreed upon by the parties. It must consider the grievancearbitration machinery, if any, rehear the fact situation giving rise to the dispute, and make a policy decision on whether to preempt jurisdiction or bow to the authority of the arbitrator or the courts. The Board as grievance-arbitrator of private agreements may arise in three main areas: when private arbitration procedures have been set up and an award issued, when no award has been made, and when no provision for arbitration is involved but the Board is called upon to interpret the contract in order to decide whether an unfair practice has been committed. When an Award Has Been Issued. In 1955, in the Spielberg 9 case, the Board set out three tests which if satisfied B

Spielberg

Manufacturing

Corporation,

[71]

112 NLRB 1080 (1955).

will cause it to adopt an award by an arbitrator pertaining to the same issue: 1. Have all parties agreed to be bound by the arbitrator's award? 2. Were the arbitration proceedings fair and regular? 3. Was the decision consistent with and not "clearly repugnant to the purposes and policies of the Act"? The Spielberg tests are workable only if an award has been made prior to the Board hearing and only as applied subjectively by the Board, despite the objective characteristics of the tests. Cases applying the Spielberg tests indicate that the Board will insist that the arbitrator expressly consider the statutory issue along with the question of contract violation, and also that the award is consistent with what it feels the Act would require. Thus, in Ford Motor Company 10 the Board rejected the arbitrator's award because he failed to explore the statutory issue and merely decided on the basis of contract violation. He upheld the discharge of several employees who were guilty of causing work stoppages and slowdowns in direct violation of the collective agreement, but did not decide whether the NLRA protected these activities as a protest to employer activity. In the Dubo Manufacturing Corporation11 case the Board refused to accept the arbitration award simply because the three-member panel was not unanimous. The 1963 Raytheon Company 12 case illustrates the difficult situation with which the Board is faced, and the unsatisfactory manner in which it has chosen to extricate itself. Employees of Raytheon were discharged for inciting and encouraging other employees to violate the collective bargaining contract by engaging in work stoppages. The arbitrator who heard and decided the case was encouraged by the company's attorney to limit his decision to an interpretation of the contract and whether it in fact had been violated. The Board, in a split ruling, decided that the arbitration was a 10

131 NLRB 1402 (1961).

" 1 4 8 NLRB 1114 (1964). 12

140 NLRB 883 (1963).

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pretext to circumvent its authority to administer the Act. Rehearing the case, the Board held that the real reason for the discharge was certain union activity protected by law. The dissenting opinion struck to the heart of the problem. The contracting parties' desires to settle their own problems must be considered. In failing to do so the Board has relegated the arbitrator's function to a meaningless formality, especially since the record indicated a thorough coverage of all the issues surrounding the discharge, including the protected union activities. The Spielberg standards can serve a useful purpose. A s a framework of "rules" within which the arbitration process must be conducted, they can at least forewarn the parties as to what the Board demands, repugnant as this regulation is to voluntary arbitration. However, the danger is in attributing the certainty born of objectivity often associated with a "list" of standards, which is not present in the Spielberg tests. In Gateway Transportation Company 13 the trial examiner had found that the arbitrator's award upholding the company's discharge of a driver was based on a protected activity and not on the violation claimed. The Board did not follow the trial examiner's decision, although it agreed with his conclusion. The Board decision was based on the due process standard set out in Spielberg, and not satisfied because of an inadequate notice to the employee and a failure by both the union and the company to represent him properly at the hearing. But the important point is that the trial examiner's ruling was sustained and the arbitrator ousted of jurisdiction. The rule applied is apparently "one mistake and you lose." In no such case has the Board refused jurisdiction with a warning to the parties to observe ordinary standards of fair play. In no way has it attempted to make meaningful the arbitration procedures set up by the terms of the private contract. Introducing multiple parties serves to increase the difficulty facing the Board and courts. Suppose a company's workers are represented by two different unions and a work dispute arises. Employer assigns the work to union A. Union B feels it should get the work and strikes to get it. Employer 13 137

NLRB 1763 (1962).

[73]

calls in the NLRB to determine whether the strike violates the Act. Meanwhile arbitration is forced on the employer by B, pursuant to its contract, and the award is made to B. The Board then issues its order that A should get the work. The problem becomes one of protecting the rights of the second union, not a party to the contract, while preserving the arbitration procedures of the first union and the employer. Such a problem faced the Fifth Circuit court of appeals in the New Orleans Typographical Union14 case. Deciding in favor of the Board decision, the court ignored completely the parallel situation facing the Supreme Court in Carey v. Westinghouse (see page 70) where the "therapy of arbitration" was preferred. Further, it ignored the Spielberg tests and ruled that "the matter is not to be determined by the contract alone." Rather, since the employer had to be compelled to arbitrate and did not do so voluntarily, the TaftHartley Act and the Board work disputes jurisdiction must prevail. The court's reasoning failed to balance the competing interest in protecting the private contract. A resolution could have been found whereby arbitration was reinstituted with all parties present. The importance of a work jurisdiction dispute on the company and unions, both in interpreting the contract and establishing a precedent for an unusual case, seems to outweigh any pervasive interest the law might seek to protect. This is especially true when the Board can withhold its jurisdiction pending the new arbitration award. The due process requirement of Spielberg and its insistence on consistency with the labor laws are easily preserved by a court sincerely interested in also giving effect to the private agreement-making process. Thus, it would seem that the tendency of the Board to uphold arbitration awards is based solely on its own determination of the decision after a full de novo hearing on the dispute. If it decides that the arbitrator's award was inconsistent with its own view of the proceedings or the Act, it will redecide the case. It is submitted that this represents a dangerous step toward injecting a third party into the 14

368 F.2d 755 (5th Circuit, 1966). [74]

grievance procedures set up by private agreement. The Board has the authority to interpret the relevant clauses of the agreement pursuant to its jurisdiction to interpret the unfair practice law; it must be aware of its obligation not to arbitrate grievances while it is so acting. When No Award Has Been Issued. A second general problem area results when there is no arbitration award issued prior to the unfair labor practice hearing, but there exists a provision in the agreement for grievance-arbitration procedures. When either party argues that the other should have resorted to these procedures, a difficult situation confronts the Board. Should it defer to the private disputesettling format as urged by the Supreme Court and allow the "therapy of arbitration" to be utilized? If so, how can it refrain f r o m shirking the statutory duty to administer the Act and prosecute violations thereunder? The position of the majority on these questions is set out clearly in the 1964 Cloverleaf case: It is quite clear that the Board is not precluded from resolving an unfair labor practice issue, which may call for appropriate relief under the Act, simply because as an incident to such violation it may be necessary to construe the scope of a contract which an arbitrator is also empowered to construe. Section 10(a) of the Act expressly provides with respect to the Board's power to prevent unfair labor practices "this power shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law or otherwise." Nor in our view is the situation presented by this case such as to move us in the exercise of our discretion to withhold our own remedial processes in deference to the arbitration processes the parties have agreed upon for the settlement of contract disputes. . . . It does not appear that there is already in existence an arbitration award passing on matters that bear on the ultimate issue we must decide, and to which we are asked to give weight and effect. . . . Nor is this a case involving an alleged unfair labor practice, the existence of which turns primarily on an interpretation of specific contrac[75]

tual provisions, unquestionably encompassed by the contract's arbitration provisions, and coming to us in a context that makes it reasonably probable that arbitration settlement of the contract dispute would also put at rest the unfair labor practice controversy in a maner sufficient to effectuate the policies of the Act.15 Thus it would appear that the majority of the Board would adhere to the Spielberg tests, and when finding the absence of an arbitration award, refuse to defer to an established grievance-arbitration procedure which is available but not previously invoked in the particular case. Pointing out the dangerous inflexibility involved in such a rigid application of these tests, Board Member Brown, while concurring in Cloverleaf, felt that the Board should decide each case more carefully and where the "subject matter of the dispute appears to be regulated by the terms of the agreement" defer to the parties' arbitration procedures even where no grievance had been filed. The test for deferral, according to Brown, is whether the parties to the dispute had as part of their collective bargaining relationship "consciously by contract, bargaining history or past practice waived statutory rights, bargained such rights away, or bargained to agreement with respect to the subject matter of the dispute." In this case he would leave to the arbitrator the resolution of the dispute and the determination of the "nature of their bargain and the respective rights and obligations of each party." This minority view would result in more nearly effectuating the contractual intent of the parties and perpetuating the ideals of free collective bargaining. Rather than opening a Pandora's box of grievance disputes to the Board's jurisdiction, before the private procedures have been utilized, the Brown theory would stay government intervention while not renouncing its valid duty to administer the Act. Although the Spielberg approach has the attraction of stability and predictability, it renders the concept of arbitration useless, or at best a crippled appendage of the private agreement, rather than the vital "tool of industrial self-government" so necessary to collective bargaining. a£\°Velle,af

Division

°f Adams Dairy Co., 147 NLRB 1410 [76]

Thus, in Thor Power Tool Company 16 the Board rejected the employer's argument that the discharge issue was subject to the contract's arbitration procedures and that the union had in fact filed and was processing a grievance when the employee filed the unfair practice charge. The reasoning of the majority was apparently based on the fact that the employee did not have the right to compel arbitration under the agreement and showed little concern for the private relationship established by the company and the union. In his emphatic dissent Member Brown again stated his theory that the Board should defer to the arbitration procedures where the dispute can be handled under the contract. The Fifth Circuit in 1962 was confronted with a case involving a union request for information from the employer. The employer refused to honor the request on the grounds that the collective bargaining contract gave it the exclusive right to reassign employees because of lack of work. This it proceeded to do by demoting two employees, and offered to arbitrate the matter. The union instead filed an unfair labor practice charge with the Board which found that the employer's construction of the contract was invalid. The union needed the information to evaluate the grievance itself, felt the Board, and the employer's refusal to supply it frustrated the contract's interpretation. The intent of the parties was to effectuate the arbitration procedures by allowing for availability of information. The court of appeals disagreed and in Sinclair Refining Company v. NLRB17 declared that "the Board proceeding may not be used to secure data for use in a grievance where determination of relevance and pertinency requires determination of the initial substantive issue of the grievance it16

148 NLRB 1379 (1964), enforced, 351 F.2d 584 (7th Circuit, 1965). Also see the recent case, Gravenslund Operating Company, d/b/a. Washington Hardware and Furniture Co., 168 NLRB No. 72 (December, 1967), where Member Brown again dissented to the Board's intrusion into the arbitration process. Holding its jurisdiction in abeyance pending utilization of this process, he feels "would best effectuate the statutory policy of promoting industrial peace and stability through the collective bargaining process." " 3 0 6 F.2d 569 (5th Circuit, 1962).

[77]

self." The court recognized the fallacy of Board determination of the issue of information availability, itself arbitrable, under the guise of preventing an unfair labor practice with respect to the original arbitrable issue concerning the demotion of the two employees. The warning was sent to the Board that interpreting contractual intent provided for by arbitration was not only bad law but unsound labor relations as well. The Board has persisted in interpreting contract provisions when arbitration has been provided in the agreements, and has repeatedly refused to defer to these private procedures. Unfortunately, the courts have not uniformly condemned this intrusion. As recently as June of 1966 the Second Circuit was faced with a fact situation closely resembling the Sinclair Refining case. In Fafnir Bearing Company v. NLRB18 the employer had in fact furnished requested data to the union which had grieved a piece rate arrived at independently by the company. Insisting that this was insufficient, the union sought permission to make its own time studies. The employer refused on the basis that the union did not need this to determine whether to seek arbitration and, further, that the arbitrator himself would conduct such studies as he had in past cases. Again the Board upheld the union's unfair labor practice charge, but the court ignored the Sinclair Refining case reasoning and affirmed the Board's decision. Rather than insisting that the arbitrator determine the need for time studies and, if any, by whom they should be made, the court accepted the Board interpretation of the contract. The need was "to determine whether to take the grievance to arbitration in the first place." The Second Circuit, unlike the Fifth, failed to distinguish the function of the arbitrator from the Board's duty to administer the laws. The Board need not completely relinquish jurisdiction; it merely should defer to the arbitrator's interpretation of the contract. Similarly, the arbitrator can always make a determination of the union's need for the requested information, and then make a final disposition of the substantive grievance after time for compliance with his first order. In either case, the parties have set up the griev«362 F.2d 716 (2nd Circuit, 1966). [78]

ance-arbitration process; surely they will more easily be able to live with the results of this process without the specter of Board intervention at the behest of a dissatisfied party. 19 When No Provision for Arbitration is Involved. A third area of Board grievance arbitration occurs when the unfair labor practice decision requires an interpretation of contract provisions, where no specific arbitration procedure has been utilized or is required. Here, the jurisdictional issue brings the Board into conflict with the courts under Section 301 of the LMRA or simply requires it to sit as a permanent arbitrator of the parties' disputes. The trend illustrated by the most recent cases is toward Board arbitration. The Supreme Court has addressed itself to this question in reviewing a 1965 Ninth Circuit case. The C & C Plywood Corporation made a mid-contract change in its method of wage payments to certain employees. The union charged the company with an unfair labor practice in refusing to bargain over the change. The Board ruled that it must interpret a wage clause before determining the merits of the charge, and held that the clause authorized only a limited type of unilateral wage change, not that made by the employer. The Circuit Court sharply rebuked the Board, holding that where the controversy is such that the existence or nonexistence of the unfair labor practice charge does not turn entirely upon the provisions of the Act, but arguably upon a good faith dispute between the parties as to the correct meaning of certain provisions of the contract over which the courts have jurisdiction, the NLRB does not have jurisdiction. The court stated: We note, moreover, that the rationale of the Board majority, in construing the contract as it did, was as 19

An excellent discussion of the problem of Board-arbitrator jurisdiction was recently reported in the Labor Law Journal. Morris L. Myers, General Counsel of the Federal Mediation and Conciliation Service, would go further than Brown in deferring to the arbitrator's authority. Where an action is within the scope of the grievance procedure of the agreement, the parties, including the employees, should be required to utilize that procedure, feels Myers. The Board should defer its process at least until the grievance machinery has completed its work. Morris L. Myers, "Duplication of Arbitration with Other Litigation," 18 Labor Law Journal 103-111, 109 (February, 1967).

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unique as it was circuitous. The course of reasoning was t h a t the provisions of the collective b a r g a i n i n g agreement are "so contrary to labor relations experience" t h a t the union should never have executed such a contract; and since the provisions in question should never have been agreed to by the union, it m u s t be presumed t h a t the union did not intend them, since the union's " p r o m p t protest against Respondent's posting of the new wage schedule . . . belies any such i n t e n t . " 2 0 The Supreme Court upheld the Board decision. 21 The Circuit Court recognized the need f o r Board jurisdiction to define forbidden conduct but required a contract interpretation to decide whether "it positively sanctions the action complained of." In this event arbitration or court jurisdiction should prevail, t h a t court felt. The Supreme Court, however, rejected the employer's contention t h a t the contract provision must be interpreted by a court under Section 301 to determine whether it was allowed to act unilaterally. The Board had the power to i n t e r p r e t the contract p u r s u a n t to its u n f a i r labor practice jurisdiction, and did so to t h e extent necessary to determine whether the union had waived the statutory protection the Board m u s t administer. The Court, unfortunately, avoided the real issue in the case—the exercise of Board discretion to take jurisdiction of the case when the resolution was better l e f t to t h e courts empowered to interpret and administer collective agreements. Two recent trial examiner decisions have been made in this area of grievance arbitration, indicating increasing awareness of the responsibility of the Board to balance the need f o r preserving the integrity of t h e collective agreement. The first involved several dismissals and suspensions by U. S. Rubber Company. A f t e r long hearings on the f a c t s surrounding each action, Trial E x a m i n e r F u n k e dealt with the question whether the company actively violated section 8 ( a ) (3) 20

NLRB v. C & C Plywood Corporation, 351 F.2d 224 (9th Circuit, 1965), at 227, denying enforcement of 148 NLRB 414 (1965). 21

NLRB v. C & C Plywood Corporation, 385 U.S. 421 (1967).

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of the Act which forbids discrimination against labor unions in hiring or firing employees: I do not know how any trial examiner could determine whether these suspensions were merited nor do I think it is his proper function to make such a determination. . . . In the absence of some evidence other than the prior violations of the Act on the part of Respondent —and the violation of Section 8 ( a ) ( 5 ) was what is known as a technical violation—that the suspensions were motivated by union animus, this zeal, while it might be unjust, is not unlawful. What the General Counsel is doing here, and I think this is an important aspect of the case, is to ask the board to sit as a permanent arbitrator and to rule upon the merits of each and every disciplinary action taken by the Company. It is not clear that such an obligation was imposed upon the Board or was within the contemplation of the Congress when it enacted Section 8(a) of the Act. It would place an intolerable burden upon the Board if it were required to substitute its judgment for that of management wherever disciplinary action is taken against union members. (Emphasis supplied.) 22 The second case involved a no-strike clause which the employer claimed the union violated by striking over an arbitrable issue. An unfair labor practice charge was filed against the union for failure to bargain in good faith. At the outset, Trial Examiner William E. Spencer sees the issue as whether the Board will construe a labor agreement in order to determine whether the union has committed an alleged unfair labor practice. The refusal to bargain here complained of is predicated upon an alleged breach of contract, and it is only after construing the said contract . . . and after a finding on 22

United States Rubber Company, Case No. 23-CA-2147, TXD288-66 (May 12, 1966), upheld by the Board on August 26, 1966, 160 NLRB No. 64, where the Board said: "Although the Board disagrees with several of the trial examiner's evidentiary rulings and also rejects certain of his extraneous comments concerning the appropriateness of the proceeding, the Board finds no prejudicial error in the circumstances of the case."

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the basis of such interpretation that it has indeed been breached, that we come to the issue of whether or not a violation of 8(b) (3) has occurred. This Mr. Spencer refuses to do for the very simple reason that there are "no circumstances peculiar to this case, such as substantial and superior advantages of remedial action here as compared with that to be obtained in other forums with undoubted jurisdiction over alleged breach of collective bargaining agreements, to require the exercise of such power by the Board." 23 The multiple jurisdiction and availability of other forums present no problem for the Board, according to this view. Since other forums are in fact specifically authorized or set up to construe collective bargaining agreements, the Board should refuse the incidental jurisdiction to do so in order to decide an unfair labor practice case it can always deal with at a later date. Arbitration or the Board Only time will tell whether the NLRB will expand its jurisdiction to cover wider areas of contract interpretation and grievance settling. Indeed, the Supreme Court's preference for arbitration and Member Brown's pressure for deferral by the Board would seem to forbode increasing awareness of its responsibilities to let the private system work before the government agency steps in. As T. C. Kammholz, former NLRB General Counsel, stated: "If the parties are left to themselves under existing grievance and arbitration procedures, they can do an enormously better job than if they are required to worry about constantly shifting and changing rules that emanate from the seemingly inexhaustible well-spring of the NLRB. . . . In short, the answer lies not in the creation of legalistic rules but rather in a practical relationship geared and tuned to the realities of day-to-day industrial life." 24 The impact on arbitration is an existing reality. To what extent the Board rules have in fact affected arbitrators' deci23 Teamsters Local No. 7U, Case No. 19-CB-1092, TXD-(SF)4-67 (January 22, 1967). (The case is presently pending before the Board.)

" Theophil C. Kammholz, "The Impact of NLKB Decisions on Arbitration," 15 Labor Law Journal 620, 622 (September, 1964).

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sions and the parties' utilization of the process can only be speculated upon. It must be clear, however, that the Board has begun to "peer over the shoulder" of the arbitrator. As a student of this area of labor relations has recently remarked: Given the right of the Board to preempt or review arbitration proceedings in cases where statutory questions are involved, if an arbitrator wishes to issue an effective award he must carefully comply with the criteria established by Spielberg. This may result in a dual standard of procedures for arbitrators since there is virtually no possibility of Board review in disputes arising solely under the collective agreement. 25 Many would seriously question the ability of arbitrators to make unfair labor practice determinations as well as the desirability of forcing them to do so. First, the degree of legal training and familiarity with Board and court dogma this would require is beyond the present competence of many arbitrators. This does not detract from the usefulness of these extremely able practitioners; a majority of them would readily renounce any obligation to adjudicate public questions more properly left to public agencies. As one arbitrator has characterized the arbitration process: "It has been (and should be) a separate system of judication representing private rights and duties resulting in final decisions— not decisions on public matters reviewable by the Board and deferred to if not repugnant to the Labor Act." (Emphasis included.) 26 The problem is clear but a solution does not quickly present itself. The objective of federal labor policy as expressed by the legislature and courts is to promote industrial peace. When in a particular area more than one way of achieving this objective becomes utilized and these methods in fact overlap, a crisis can develop. In its zeal to effectuate national labor policy the Supreme Court has magnified this 25

Allan D. Spritzer, "The National Labor Relations Board and Arbitration: The Paring and Sharing of Jurisdiction," 12 ILR Research 9, 15 (May, 1966). 26 Peter Seitz, "The Limits of Arbitration," 88 Monthly Review 763, 764 (1965).

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Labor

problem and the Board has been placed in a difficult position. But the Board itself has complicated the problem further by its continued desire to insert itself into almost every conceivable labor-management controversy. One may wonder whether this does not underscore the continued warning that government intervention in labor-management disputes must be kept at a minimum in order for any practical system of private agreement to work.

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Chuptef VI CONCLUDING COMMENTS The interest of public policy in labor-management relations is not clearly defined in the area of the place of collective bargaining in industrial relations, just as public policy issues are often abstruse, nebulous concepts offering few satisfactory relationships to the hard, daily realities of practical situations. But the fact is that we do live in a world of reality, and we must fashion our laws and legal institutions not only to reflect those realities but also to provide a method for their translation to terms understandable to the people who must live with them. By expressing American labor policy through laws and their interpretation and administration, we are continuously confronted with reconciling this policy with the needs of the parties involved in the subjects under regulation. In order for this reconciliation adequately to reflect the most current and valid expression of public opinion, Congress has chosen to endow a National Labor Relations Board with various powers over the activities of labor and management. In doing so, Congress provided statutory language by which it intended to protect the public interest at the same time that it recognized the needs of the parties. In Chapter II, legislative intent in both the Wagner and Taft-Hartley Acts was seen as embodying a concept of free collective bargaining after government provision for determining union representation. The interpretation of these laws carried them beyond the scope of attempting to maintain an atmosphere in which private agreement-making could function and into regulation of bargaining tactics, bargaining content and contract administration. This study has analyzed regulation in each of these three areas. What should be done to return collective bargaining to the parties? Any solution to this problem, as the definition of the problem initially, is a function of those conceptual foundations on which we wish to base our views of the role of the government, management and labor in the wider areas [85]

of labor-management relations in general. If we see as the basis of the problem, and a cause thereof, - the attempt at prescribing regulations on collective bargaining beyond merely requiring the meeting and conferring on subjects both can agree upon, the obvious answer is to repeal such regulation. Any other answer requires a different basic assumption as to the cause of the problem. Repealing NLRB powers and placing a court, either an existing one or a newly established labor court, in charge of its duties will only serve to replace Board regulation with judicial regulation. Extending the terms of Board members to avoid the political control of labor relations and the reversal of Board policy incident to it will not reduce government control in any way. Further, the "good" or "bad" choice of members will be accentuated and the aim of Congress to make government policy reflect current public interests will be frustrated. The suggestion that Sections 8(a) (5) and 8(b) (3) be repealed is not new. The recommendations of an Independent Study Group composed of eminent labor relations scholars include limitations on NLRB powers to regulate "good f a i t h " or to distinguish between mandatory and nonmandatory subjects of bargaining. Basically, it is unrealistic to expect that, by legislation, "good f a i t h " can be brought to the bargaining table. Indeed, the provisions designed to bring "good f a i t h " have become a tactical weapon used in many situations as a means of harassment. 1 To avoid the pitfalls of the "elaborate tests . . . to determine 'objectively' whether the proper subjective attitude prevails," the Group would emphasize government policy in the areas of structure and organization of employer-employee relations. As for collective bargaining, "agreement on the substance, the terms and conditions of employment, should remain a private responsibility to the fullest possible ext e n t . " 2 Dr. George W. Taylor, a member of the Study 1

Independent Study Group, The Public Interest in Collective Bargaining (New York: Committee for Economic Development 1961), p. 82. 2

Ibid., p. 64.

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Group, has long opposed any effort at regulation beyond the structural and organizational areas. . . . I think it was a mistake, under the Taft-Hartley Act, for a government agency to be charged with responsibility for defining the subject matter of compulsory collective bargaining as a matter of national labor policy. When the Wagner Act was passed, it seemed to me to be unwise to include Section 8(5) . . . [A] legally required obligation to "bargain" in the Act would make it necessary to define what was meant by collective bargaining and the subjects that would have to be mutually determined. 3 Other scholars agree. Dr. William Gomberg, a veteran of the labor movement, feels that NLRB rulings hinder agreement-making rather than help it. It is my conviction that the so-called good faith bargaining clause has made the NLRB an extension of the tactics of the parties. It provides a whipping boy for the frustration of a party to the bargain who refuses to face the consequences of overplaying his hand and then goes running to papa government. 4 Dr. Gomberg would confine NLRB authority to the promulgation of rules and procedures for holding representative elections, and formulating remedies for workers who are discharged by discriminatory action of either employer or union. 5 After a detailed study of compulsory arbitration in Western Democratic Countries, Dr. Herbert Northrup found that such arbitration not only destroyed the ability and propensity of the parties to settle their disputes, but did not bring labor 3

George W. Taylor, "Collective Bargaining in Transition" in Arnold Weber (ed.), The Structure of Collective Bargaining (Chicago: Free Press of Glencoe, Inc., 1961), p. 347. * William Gomberg, "Government Participation in Union Regulation and Collective Bargaining," 13 Labor Law Journal 941, 944 (November, 1962). 5

Ibid., pp. 946-947.

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peace either. Australia, for example, which has had compulsory arbitration since the turn of the century, has more strikes and more persons participating in strikes than any other country studied. Sections 8 ( a ) ( 5 ) and b ( 3 ) were found in that study, as in this one, to be moving the country toward compulsory arbitration. That study recommended abolition of Sections 8 ( a ) ( 5 ) and b ( 3 ) because "the need is to remove the raison d'etre—not to alter the method." 6 The problem of Board arbitration of the terms of collective agreements requires a similar solution. The answer does not lie in more legislation, although many serious attempts could be made to limit court jurisdiction under Section 301 to suits which are "clearly arbitrable" under express terms and which are not of a frivolous nature, and Board regulation to unfair labor practices unresolved after arbitration hearings and after interpretation of contract provisions. The problem as presented runs deeper than this solution would probe. The nature of the collective agreement is not one of a contract for sale but is more similar to a code of conduct regulating the parties. Section 301 failed to recognize this fact, and should be repealed with respect to its applicability to arbitration and no-strike clauses. Sections 8 ( a ) ( 5 ) and 8(b) (3) should be repealed in their entirety. The solution advocated embodies the adoption of economic force as the final arbitrament of relative economic power. In each area that the Board has acted to limit the tactics or power of either party, abolishing such regulation necessarily includes reinstating economic force as the basis of reaching an agreement. This is as it should be for the simple reason that this is the best way we have yet found to decide these abor-management issues. As Professor John Perry Horlacher has stated: Essentially economic disagreements between labor and management are best resolved by the arbitrament of economic facts and forces. To the extent that the disagreements are noneconomic and involve the parties' rights, prerogatives, status, emotions and fetishes—the U U N r o r t I h r u P ' Compulsory Arbitration and Government Intervention m Labor Disputes (Washington: The Labor Policy Association, Inc., 1966), p. 104.

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whole complex of unponderables in their relationship— they are best settled by mutual accommodation. Management and labor ought not to be forced by political pressures or political action to relinquish their sovereignty, their right and power to decide themselves how mutual concerns shall be adjusted between them.7 The forced agreement arrived at after compulsory arbitration from whatever source does not work because the parties themselves have not voluntarily accommodated their views to achieve the results with which they must now live. From an economic approach, no objective criteria have been developed to determine what rules and conditions of employment will be satisfactory to everyone. From the standpoint of fairness, no such criteria can be enumerated to decide once and for all what is equitable or just to both sides. Yet, in order for free collective bargaining to work, the strike and the lockout must be preserved. This is essential because without economic power, the inducement to agree is reduced. If the parties are not faced with the consequences of refusing to settle, their desire, determination, or even ability to settle dwindles. This has occurred under each and every law or procedure, federal and state, legal and extra-legal, which has been in existence.8 Therefore, it is submitted that free collective bargaining is a desirable social objective which Congress has in fact enacted into legislation, and that to preserve this objective and this legislative intent the unfair labor practice jurisdiction of the National Labor Relations Board be drastically limited. In its place, the resort to the strike and the lockout is presented as the best alternative to the problem of obtaining voluntary action through private agreement-making without government regulation. In actual fact, if parties are granted the right to strike, and compelled to live ^vith their decisions regarding it, there is every likelihood that less strikes will occur. Government 7

John Perry Horlacher, "A Political Science View of National Emergency Disputes," The Annals, Vol. CCCXXXIII (January, 1961), p. 86. 8

Northrup, op. ext., p. 183.

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intervention does not encourage labor peace. Today unions can strike, be defeated, and then run to mother-hen NLRB, where their defeat is reversed by administrative frustration of labor policy enacted by Congress. Removing mother hen will force unions to accept responsibility for their actions— and could well reduce the propensity for rash and unresponsible acta and increase the opportunities for industrial peace.

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Bibliogtaphy Books Chamberlain, Neil W. and Kuhn, James W., Collective Bargaining (New York: McGraw-Hill Book Co., 2nd edition, 1965). Independent Study Group, The Public Interest in Collective Bargaining (New York: Committee for Economic Development, 1961). McGuiness, Kenneth C., The New Frontier NLRB ton: Labor Policy Association, Inc., 1963).

(Washing-

Northrup, Herbert R., Boulwarism: The Labor Policies of the General Electric Company (Ann Arbor: Bureau of Industrial Relations, University of Michigan, 1964). , Compulsory Arbitration and Government Intervention in Labor Disputes (Washington: Labor Policy Association, Inc., 1966). Northrup, Herbert R. and Bloom, Gordon F., Government and Labor (Homewood, Illinois: Richard D. Irwin, Inc., 1963). Ross, Philip, The Government as a Source of Union Power (Providence: The Brown University Press, 1965). Articles and Periodicles Benetar, David L., "G.E.—Unique Situation or Broad Impact," Labor Law Journal, XVII (March, 1966). Browne, Harry L., "Is the Labor Board Biased?" U. S. News and World Report (November 28, 1966). Cox, Archibald, "The Duty to Bargain in Good Faith," Harvard Law Review, L X X I (June, 1958). Cox, Archibald and Dunlop, John T., "Regulation of Collective Bargaining by the National Labor Relations Board," Harvard Laiv Revieiv, LXIII (January, 1950).

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Despres, Leon M. and Golden, Samuel D., "The Duty to Bargain," University of Illinois Law Forum (Spring, 1955). Dunlop, John T., "Consensus and National Labor Policy," Labor: Readings on Major Issues, Lester, Richard A. (ed.) (New York: Random House, 1965). Farmer, Guy, "Compulsory Arbitration—A Management Lawyer's View," Virginia Law Review, LI (April, 1965). Feldesmann, William, "Another Approach to Strikes: Inducements to Voluntary Arbitration," 33 George Washington Law Review (December, 1964). Fleming, Robben W., "The Obligation to Bargain in Good Faith," Public Policy and Collective Bargaining, Shister, Aaron and Summers (eds.), Industrial Relations Research Association Publication No. 27 (New York: Harper and Row, 1962). Gomberg, William, "Government Participation in Union Regulation and Collective Bargaining," Labor Lato Journal, XIII (November, 1962). Horlacher, John Perry, "A Political Science View of National Emergency Disputes," The Annals, CCCXXXIII (January, 1961). Kammholz, Theophil C., "The Impact of NLRB Decisions on Arbitration," Labor Law Journal, XV (September, 1964). Keyserling, Leon, "The Wagner Act: Its Origin and Current Significance," George Washington Law Review, XXIX (December, 1960). Merryman, James B., Ill, "Resurrection of the Bargaining Lockout and the Role of the NLRB," George Washington Law Review, XXXIV (June, 1965). Miller, Max J., "Employer's Duty to Furnish Economic Data to Unions—Revisited," Labor Law Journal, XVII (May, 1966). Myers, Morris L., "Duplication of Arbitration with Other Litigation," Labor Law Journal, XVIII (February, 1967). [92]

Reel, Frederick U., "The Duty to Bargain and the Right to Strike," George Washington Law Review, XXIX (December, 1960). Seitz, Peter, "The Limits of Arbitration," Monthly Labor Review, LXXXVIII (1965). Smith, Russell A., "Subcontracting and Union-Management Legal and Contractual Relations," Western Reserve Law Review, XVII (June, 1966). Spritzer, Allan D., "The National Labor Relations Board and Arbitration: The Paring and Sharing of Jurisdiction," ILR Research, XII (May, 1966). Summers, Clyde W., "Labor Law in the Supreme Court: 1964 Term," Yale Law Journal, LXXV (November, 1965). Taylor, George W., "Is Compulsory Arbitration Inevitable?" Proceedings, Industrial Relations Research Association, First Annual Meeting (Cleveland, Ohio: December, 1948). . "Our National Labor Policy," Labor Problems: Cases and Readings, Shultz, George and Coleman, John (eds.) (New York: McGraw-Hill Book Co., 1953). . "The Effectuation of Arbitration by Collective Bargaining," Critical Issues in Labor Arbitration, 10th Annual Proceeding, National Academy of Arbitrators, 1957 (B.N.A., Washington, D. C.). . "Collective Bargaining in Transition," The Structure of Collective Bargaining, Weber, Arnold R. (ed.) (New York: The Free Press of Glencoe, Inc., 1961). Wellington, Harry H., "Freedom of Contract and the Collective Bargaining Agreement," Labor Law Journal, XIV (December, 1963). Public

Documents

National Labor Relations Board. Legislative History of the National Labor Relations Act, 1935. 2 vols. Washington, 1949. . Legislative History of the Labor Management tions Act, 1947. 2 vols. Washington, 1948. [93]

Rela-

U. S. Congress, House of Representatives: Proceedings in the House of Representatives, 1st Session, 1947.

80th Congress,

. House Report No. 245 on H.R. 3020, 80th Congress, 1st Session 1947. . House Report No. 1147, 74th Congress, 1st Session, 1935. . House Conference Report No. 510 on H.R. 3020, 80th Congress, 1st Session, 1947. U. S. Congress, Senate: Committee on Labor and Public Welfare. Congress, 1st Session, 1947.

Hearings,

80th

. Senate Report No. 105 on S.1126, 80th Congress, 1st Session, 1947. . Senate Report No. 573, 74th Congress, 1st Session, 1935. . Proceedings 1947.

in the Senate, 80th Congress, 1st Session,

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INDUSTRIAL RESEARCH UNIT Department of Industry Wharton School of Finance and Commerce UNIVERSITY of PENNSYLVANIA The Industrial Research Unit is the business and labor research arm of the Department of Industry, Wharton School of Finance and Commerce. Founded in 1921 after World War I as a separate Wharton School Department, the Industrial Research Unit has a long record of publication and research in the labor market, productivity, union relations, and business report fields. Major Industrial Research Unit Studies are published as research projects are completed. Advance research reports are issued as appropriate in a general or special series. Recent Major Industrial Research Unit Studies Gladys L. Palmer, et al., The Reluctant Job Changer. 1962

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Herbert R. Northrup and Gordon R. Storholm, Restrictive Labor Practices in the Supermarket Industry. 1967 —

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RESEARCH REPORT SERIES Racial Policies in American Industry Series 1. The Negro in the Automobile Industry, Northrup. 1968. $2.50

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Forthcoming Racial Policies reports will include aerospace, iron and steel, petroleum, rubber tires, pulp and paper, banking, retail stores, and insurance. Labor Relations and Public Policy Series 1. Compulsory Arbitration Abodeely. 1968. $2.50

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Forthcoming studies will deal with various aspects of government labor policy including recognition by card check, bargaining unit determination, and government intervention in labor disputes. Miscellaneous Series 14. Economics of Carpeting and Resilient Flooring: A Survey of Published Material and a Questionnaire Summary, by David C. Stewart. 1966. $1.00 15. Job Mobility and Occupational Change: Philadelphia Male Workers, 1U0-1960, by Carol P. Brainerd. 1966. $2.00

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