United States v. Montgomery Ward & Co.

• Decision Date: 05 November 1945
• Docket Number: No. 8765.,8765.
• Citation: 150 F.2d 369
• Parties: UNITED STATES v. MONTGOMERY WARD & CO., Inc., et al.
• Court: U.S. Court of Appeals — Seventh Circuit

150 F.2d 369 (1945)

UNITED STATES v. MONTGOMERY WARD & CO., Inc., et al.

No. 8765.

Circuit Court of Appeals, Seventh Circuit.

June 8, 1945.

Writ of Certiorari Granted November 5, 1945.

Paul Freund, Sp. Asst. to the Atty. Gen., Robert Barnard, John P. Frank, Charles Fahy and Hugh B. Cox, Sol. Gen., all of Washington, D. C., Fowler Hamilton, Asst. Atty. Gen., and J. Albert Woll, U. S. Atty., of Chicago, Ill., for appellant.

Stuart S. Ball, John A. Barr, Harold A. Smith, and Charles J. Calderini, all of Chicago, Ill., and Guy A. Gladson and Arthur D. Welton, Jr., both of Chicago, Ill., for appellees.

Before EVANS, SPARKS, and KERNER, Circuit Judges.

Writ of Certiorari Granted November 5, 1945. See 66 S.Ct. 140.

EVANS, Circuit Judge.

In this declaratory judgment suit, the United States seeks to establish the legality of the Presidential order of seizure of several of Ward's retail stores and properties, and to enjoin interference with its possession thereof.

The complaint was supported by affidavits. Defendants in turn filed an answer, supported by their affidavits. There was a single hearing on the temporary and permanent injunction applications. No oral testimony was offered. Judge Sullivan filed a carefully prepared opinion and made findings of fact and conclusions of law. 58 F.Supp. 408. The final decree, based thereon was a dismissal of the suit with costs, and a determination that the United States was not entitled to an injunction; that its seizure was not justified and its possession of defendants' property unauthorized.

The court then entered an order staying judgment, pending final disposition of the suit on appeal. Plaintiff sought a writ of certiorari from the Supreme Court, which was denied "for the reason that application has been made prior to judgment of the Circuit Court of Appeals." 65 S.Ct. 862.

The Facts: The facts are presented by many affidavits of officers of the Government and of the defendants, of army officers, of union officials, and of employees of Ward's. Very briefly stated, they disclose that Ward's, an Illinois corporation, is the second largest business of its kind (mail order) in the United States, its net sales for the year ending January 31, 1944, being $595,932,821. It has over 600 retail stores, and over 30,000,000 customers. It operates three factories (not here involved) making less than 2% of the products it sells. It has 70,000 employees. It sells, inter alia: auto supplies, building materials, farm machinery, equipment and supplies including repair parts; heating apparatus; electrical supplies; clothing and shoes; drugs; furniture; hardware; home furnishings; dry goods; and groceries.

Its sales of farm machinery and farm equipment to farmers aggregate $35,000,000 a year. Its catalogue lists 130,000 items. It has filed 35,466 applications for priority distribution of articles. These applications state Ward's requires the articles for the war effort. It has commitments under lend lease equipment totaling $250,000, and contracts aggregating $1,215,000 for wearing apparel for use in liberated countries.

Historical Background of War Labor Disputes Act and the Instant Executive Order. The predecessor of the War Labor Board, the National Defense Mediation Board, was established, March 19, 1941, by the Presidential Executive Order No. 8716. It heard many disputes involving thousands of employees, most of which were settled amicably. The President ordered the seizure of a few plants which were relinquished upon settlement of the disputes.

On December 17, 1941, after Pearl Harbor, the President convened a conference of twelve representatives of industry and twelve representatives of labor, which reached unanimous agreement on three points: There should be no strikes or lockouts for the duration of the war; all labor disputes should be settled by peaceful means; a tripartite War Labor Board should be set up to handle the disputes.

The President effectuated the report of the conference by establishing the National War Labor Board, January 12, 1942, by Executive Order No. 9017, 50 U.S.C.A.Appendix § 1507 note¹

This executive order recited the fact that "national interest demands there shall be no interruption of any work which contributes to the effective prosecution of the war."

The Board was composed of twelve special commissioners appointed by the President; four are representative of the public; four, of employers; and four, of employees. The order concluded by transferring the personnel and funds of the Mediation Board to the War Labor Board, and stating that nothing in the Order should be construed as being in conflict with or superseding, inter alia, the Fair Labor Standards Act.

The War Labor Board's chairman states that its decisions have been "virtually unanimously" accepted. This Board may take jurisdiction of disputes, not only on certification by the Secretary of Labor, but on its own motion, which was not true of the Mediation Board. The Board has twelve regional boards, all of which are also tripartite in character.

It was after the bituminous coal strike that the Congress enacted the War Labor Disputes Act on June 25, 1943, 50 U.S.C.A. Appendix § 1501 et seq., which Act gave the Board power to issue subpoenas, enforceable by courts, and conferred jurisdiction upon it, even in the absence of a party failing to appear, to decide a dispute, the hearing of which was initiated by the Board's own action.² The Act referred to, and sanctioned, the existing Board, established by the Executive Order No. 9017.

In the period from January 12, 1942, to October 27, 1944, the Board and its branches have handled approximately 362,000 disputes and voluntary wage cases involving approximately 24,000,000 employees. Mr. Vinson's affidavit states that "200,000 wage cases must be processed by the National War Labor Board each year."

Only 31 of the 362,000 cases involving disputes have been certified by the Board to the President for action.

Not only the Executive Order, but the War Labor Disputes Act, referred to the Fair Labor Standards Act and provided that "In making any such decision (relative to a dispute concerning wages and hours) the Board shall conform to the provisions of the Fair Labor Standards Act * *" as well as the National Labor Relations Act and the Emergency Price Control Act.

Affidavits of Government officials attest to the indispensable place the War Labor Board holds in maintaining a wartime economy uninterrupted by labor disputes and strikes. They also show that early in the war the United States sought to keep down prices and avoid inflation, and this was to be accomplished through the establishment of a maximum or ceiling wage. Maintenance of living costs was the goal which depended for success largely on the maintenance of a wage ceiling which was tied to the so-called Little Steel Formula.

The transfer of millions of wage earners to the Army created acute demands for labor which would, so it is averred, have resulted in rapid rise in wages but for the effort of the National War Labor Board and its predecessor, the National Defense Mediation Board. The basis of their success was their action in holding the maximum wage to the Little Steel Formula together with the laborers' agreement not to strike and the employers' agreement to abide by the Board's rulings.

Coming now to the history of the conflict out of which this suit arises, it appears that ever since June, 1942, a bitter controversy has been waged between defendants and the labor unions representing a large number, and allegedly a majority, of Ward's employees.

At that time, the Secretary of Labor certified to the Board, a dispute between Ward's and the Union, the certified bargaining agency of its employees, over the terms and conditions of a proposed collective bargaining agreement between them which related to union security, arbitration of employee grievances, and seniority. These issues, and the important issue of increased wages and check-off, are the elements which incite the dispute out of which the present conflict arises. The Board heard and passed on the controverted issues. It decided against the defendants. Ward's refused to obey the Board's order.

A brief statement of Ward's disputes and controversies is here set forth.

In Chicago. Local 20 had been designated the bargaining agent for certain of Ward's employees on February 19, 1942. Thereafter, the Secretary of Labor certified to the Board the existence of a labor dispute between the Union and Ward's. A report was filed respecting wages, and a directive later issued which was voluntarily accepted by Ward's. Subsequently, a report dealing with other issues — union security, seniority, arbitration — was made, and an order entered on it, which Ward's refused to obey unless ordered by the President to do so; the President wrote a letter ordering compliance, and Ward's complied. On December 8, 1942, a contract was made between the Union and Ward's, for the term of a year. It was at the expiration of this contract that the present serious trouble germinated. Ward's notified the Union it would not renew the contract because it contended the Union did not represent a majority of the employees in the unit. Over this issue a dispute arose; it was certified to the Board and a hearing had, at which the Company maintained the Union represented only a small group. The Board entered an interim order to extend the contract for a month, while ascertaining whether the Union was the proper agent; Ward's refused to extend the agreement for a month and the Board held a public hearing. The Union called a strike on April 12, 1944, and during the period of April 12 to 24, 5,500 were on strike. The Board voted to refer the case to the President. Other local unions in Chicago war plants voted to support Ward's employees, and some unionites refused to make deliveries to Ward's. The President, on the 23rd, wired Mr. Avery, the Chairman of...