321 U.S. 332 (1944), 67, J. I. Case Co. v. National Labor Relations Board

Docket Nº:No. 67
Citation:321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762
Party Name:J. I. Case Co. v. National Labor Relations Board
Case Date:February 28, 1944
Court:United States Supreme Court

Page 332

321 U.S. 332 (1944)

64 S.Ct. 576, 88 L.Ed. 762

J. I. Case Co.


National Labor Relations Board

No. 67

United States Supreme Court

Feb. 28, 1944

Argued January 3, 1944




1. In view of the continuing character of the obligation imposed on the employer by the order of the National Labor Relations Board, the subsequent expiration of the contracts in question and the employer's entry into a collective bargaining agreement did not render the case moot. P. 334.

2. That an employer has individual contracts of employment, covering wages, hours and working conditions, with a majority of his employees, which contracts were valid when made and are unexpired, does not preclude exercise by the employees of their right under the National Labor Relations Act to choose a representative for collective bargaining, nor warrant refusal by the employer to bargain with such representative in respect of terms covered by the individual contracts. P. 339.

The relation in general of individual contracts to collective bargaining is discussed.

3. The Board has no power to adjudicate the validity or effect of the contracts here in question, except as to their effect on matters within its jurisdiction. P. 340.

4. Since the desist order literally goes beyond what the Board intended, its language is modified accordingly. P. 341.

134 F.2d 70 modified and affirmed.

Certiorari, 320 U.S. 210, to review a decree which granted enforcement of an order of the National Labor Relations Board, 42 N.L.R.B. 85.

Page 333

JACKSON, J., lead opinion

MR. JUSTICE JACKSON delivered the opinion of the Court.

This cause was heard by the National Labor Relations Board on stipulated facts which, so far as concern present issues, are as follows:

The petitioner, J. I. Case Company, at its Rock Island, Illinois, plant, from 1937, offered each employee an individual contract of employment. The contracts were uniform, and for a term of one year. The Company agreed to furnish employment as steadily as conditions permitted, to pay a specified rate, which the Company might redetermine if the job changed, and to maintain certain hospital facilities. The employee agreed to accept the provisions, to serve faithfully and honestly for the term, to comply with factory rules, and that defective work should not be paid for. About 75% of the employees accepted and worked under these agreements.

According to the Board's stipulation and finding, the execution of the contracts was not a condition of employment, nor was the status of individual employees affected by reason of signing or failing to sign the contracts. It is not found or contended that the agreements were coerced, obtained by any unfair labor practice, or that they were not valid under the circumstances in which they were made.

While the individual contracts executed August 1, 1941, were in effect, a CIO union petitioned the Board for certification as the exclusive bargaining representative of the production and maintenance employees. On December 17, 1941, a hearing was held at which the Company urged the individual contracts as a bar to representation proceedings. The Board, however, directed an election, which was won by the union. The union was thereupon certified as the exclusive bargaining representative of the employees in question in respect to wages, hours, and other conditions of employment.

Page 334

The union then asked the Company to bargain. It refused, declaring that it could not deal with the union in any manner affecting rights and obligations under the individual contracts while they remained in effect. It offered to negotiate on matters which did not affect rights under the individual contracts, and said that, upon the expiration of the contracts, it would bargain as to all matters. Twice the Company sent circulars to its employees asserting the validity of the individual contracts and stating the position that it took before the Board in reference to them.

The Board held that the Company had refused to bargain collectively, in violation of § 8(5) of the National Labor Relations Act, and that the contracts had been utilized, by means of the circulars, to impede employees in the exercise of rights guaranteed by § 7 of the [64 S.Ct. 579] Act, with the result that the Company had engaged in unfair labor practices within the meaning of § 8(1) of the Act. It ordered the Company to cease and desist from giving effect to the contracts, from extending them or entering into new ones, from refusing to bargain and from interfering with the employees, and it required the Company to give notice accordingly and to bargain upon request.

The Circuit Court of Appeals, with modification not in issue here, granted an order of enforcement. The issues are unsettled ones important in the administration of the Act, and we granted certiorari. In doing so, we asked counsel, in view of the expiration of the individual contracts and the negotiation of a collective contract, to discuss whether the case was moot. In view of the continuing character of the obligation imposed by the order, we think it is not, and will examine the merits.

Contract, in labor law, is a term the implications of which must be determined from the connection in which it appears. Collective bargaining between employer and the representatives of a unit, usually a union, results in an

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accord as to terms which will govern hiring and work and pay in that unit. The result is not, however, a contract of employment except in rare cases; no one has a job by reason of it, and no obligation to any individual ordinarily comes into existence from it alone. The negotiations between union and management result in what often has been called a trade agreement, rather than in a contract of employment. Without pushing the analogy too far, the agreement may be likened to the tariffs established by a carrier, to standard provisions prescribed by supervising authorities for insurance policies, or to utility schedules of rates and rules for service, which do not of themselves establish any relationships, but which do govern the terms of the shipper or insurer or customer relationship whenever and with whomever it may be established. Indeed, in some European countries, contrary to American practice, the terms of a collectively negotiated trade agreement are submitted to a government department, and, if approved, become a governmental regulation ruling employment in the unit.1

After the collective trade agreement is made, the individuals who shall benefit by it are identified by individual hirings. The employer, except as restricted by the collective agreement itself and except that he must engage in no unfair labor practice or discrimination, is free to select those he will employ or discharge. But the terms of the employment already have been traded out. There is little left to individual agreement except the act of hiring. This hiring may be by writing or by word of mouth or may be implied from conduct. In the sense of contracts of hiring, individual contracts between the employer and employee

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are not forbidden, but indeed are necessitated by the collective bargaining procedure.

But, however engaged, an employee becomes entitled by virtue of the Labor Relations Act somewhat as a third party beneficiary to all benefits of the collective trade agreement, even if on his own he would yield to less favorable terms. The individual hiring contract is subsidiary to...

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