Co v. National Labor Relations Board

• Decision Date: 05 December 1949
• Docket Number: COLGATE-PALMOLIVE-PEET,No. 47,47
• Citation: 94 L.Ed. 161,338 U.S. 355,70 S.Ct. 166
• Parties: CO. v. NATIONAL LABOR RELATIONS BOARD et al
• Court: U.S. Supreme Court

338 U.S. 355

70 S.Ct. 166

94 L.Ed. 161

COLGATE-PALMOLIVE-PEET CO.

v NATIONAL LABOR RELATIONS BOARD et al.

No. 47.

Argued Nov. 17, 1949.

Decided Dec. 5, 1949.

Mr. Ricardo J. Hecht, San Francisco, Cal., for petitioner.

Miss Ruth Weyand, Washington, D.C., for respondent.

Mr. Justice MINTON delivered the opinion of the Court.

The question we have here is whether a closed-shop contract, entered into and performed in good faith, and valid in the state where made, protects an employer from a charge of unfair labor practices under the National Labor Relations Act.¹

Petitioner was found by the National Labor Relations Board to have violated §§ 8(1) and 8(3) of the Act.² On petition for review and cross-petition of the Board for enforcement of its order, the Court of Appeals for the Ninth Circuit entered a decree enforcing the Board's order.³ We granted certiorari limited to the question of the construction of § 8(3) of the Act in relation to this case,⁴ i.e., to examine the applicability of the so-called Rutland Court doctrine,⁵ here applied by the Board. The doctrine has been approved in the Second,⁶ Third,⁷ and Ninth Circuits,⁸ but disapproved in the Seventh Circuit.⁹

At the period of time in question in 1945, petitioner company was engaged in producing glycerin for war purposes. Petitioner has no record of antiunion or anti-organizational activities. Its employees were first organized and represented in 1936 by a union affiliated with the American Federation of Labor. In 1938 the International Longshoremen's and Warehousemen's Union, affiliated with the Congress of Industrial Organizations, became the representative of petitioner's employees. On July 9, 1941, the C.I.O. entered into a collective bargaining contract with petitioner which contained a closed-shop provision in these words:

'Section 3. The Employer agrees that when new employees are to be hired to do any work covered by Section One (1), they shall be hired through the offices of the Union, provided that the Union shall be able to furnish competent workers for work required. In the event the union is unable to furnish competent workers, the Employer may hire from outside sources, provided that employees so hired shall make application for membership in the Union within fifteen (15) days of their employment. The employees covered by this agreement shall be mem- bers in good standing of the Union and the Employer shall employ no workers other than members of the Union subject to conditions herein above prescribed. In the hiring of new help (for the warehouses), they shall be hired through the offices of the Warehouse Union, Local 1—6, I.L.W.U.'

This contract was entered into in good faith by the parties and served as a foundation for amicable labor relations for over four years. It was of indefinite duration. On July 24, 1945, the C.I.O. and petitioner entered into a supplemental agreement that their contract of July 9, 1941, 'shall remain in full force and effect' pending approval of certain agreed-upon items, other than the closed-shop provision, by the War Labor Board. In the instant proceedings, the closed-shop contract, as extended by the supplemental agreement, was found by the National Labor Relations Board to have been made in compliance with the proviso of § 8(3) of the Act.¹⁰

On July 26, 1945, shortly after the making of the supplemental agreement, open agitation for a change of bargaining representative began. On July 31 an unauthorized strike occurred which was participated in by a substantial majority of the employees and lasted two and one-half days, although the C.I.O. had pledged its membership not to strike during war-time. A group of employees formed an independent organization which later sought to affiliate with the A.F. of L. There was much propagandizing among the employees and warnings were issued by the C.I.O. that its members would be disciplined for rival union activity, and would if disciplined be discharged from their jobs under the closed-shop contract with petitioner.

Altogether some 37 employees were suspended and expelled by the C.I.O. for their activities in behalf of the A.F. of L. union during the fight between the two unions for control, and because of their participation in the strike contrary to C.I.O. policy. These suspended and expelled employees were discharged by petitioner, with the advice of counsel, upon demand by the C.I.O. The ground of the demand was that they were no longer 'members in good standing' of the C.I.O. as required by the closed-shop contract. Petitioner knew, as the Board found, that the discharge of these employees was demanded by the C.I.O. because of their rival union activity.

On October 16 the C.I.O. won an election held by the Board to determine the bargaining representative of petitioner's employees, and the open hostilities were substantially concluded.¹¹

Petitioner was charged with violation of § 8(1) and § 8(3) of the Act and found guilty thereof by the Board for having carried out the terms of the closed-shop con- tract at the request of the bargaining representative. The Board ordered petitioner to restore the employees discharged at the request of the C.I.O. to their former positions without loss of seniority and pay. It is this order which the Court of Appeals decreed should be enforced and that is here for review.

There is no question but that the discharges had the effect of interfering with the employees' right, given by § 7 of the Act, to self-organization and to collective bargaining through representatives of their own choosing. Nor is there any question but that the discharges had the effect of discriminating, contrary to the prohibition of § 8(3), in the tenure of the employees. It is petitioner's contention that such interference and discrimination are taken out of the category of unfair labor practices where the employees are discharged in good faith, pursuant to an employer's obligations under a valid closed-shop contract entered into in good faith with the authorized representative of the employees, as permitted by the proviso contained in § 8(3) of the Act.¹² The Board admits that petitioner's contention is supported by the proviso in § 8(3) but says that a contract of indefinite duration such as the one in the instant case is subject to the doctrine of Rutland Court Owners, Inc., 44 N.L.R.B. 587, 46 N.L.R.B. 1040. In the Rutland Court case the Board determined that an employer is not permitted to discharge employees pursuant to a closed-shop contract, even though the contract is valid under the proviso to § 8(3), when, to the employer's knowledge, the discharge is requested by the union for the purpose of eliminating employees who have sought to change bargaining representatives at a period when it is appropriate for the employees to seek a redetermination of representatives. The reason for this holding by the Board will be presently discussed. The doctrine as applied to the facts in this case is stated in the Board's brief as follows:

'The Board found the closed-shop agreement to have been validly entered into in conformity with the proviso to Section 8(3) of the Act. The Board concluded, however, that, by virtue of the indefinite term of the contract, which had run for more than four years, the employees undertook to oust the C.I.O. as their bargaining representative at a period during which it was appropriate to seek a redetermination of representatives.'

The Board contends that therefore the contract no longer protected petitioner.

We take it from this conclusion of the Board that there is no dispute as to the validity of the closed-shop contract as far as the Act is concerned. In Algoma Plywood & Veneer Co. v. Wisconsin Empl. Rel. Bd., 336 U.S. 301, 69 S.Ct. 584, it was held that nothing in the Act precludes a state from prohibiting closed-shop contracts in whole or in part. We therefore also look to the law of the state where the closed-shop contract was made, here California, to determine its validity. We think it is clear, and do not understand the Board to contend otherwise, that the closed-shop contract was valid under California law. Shafer v. Registered Pharmacists Union Local 1172, 16 Cal.2d 379, 106 P.2d 403; Park & Tilford Import Corp. v. International Brotherhood of Teamsters, etc., Local 848, 27 Cal.2d 599, 165 P.2d 891, 162 A.L.R. 1426; James v. Marinship Corp., 25 Cal.2d 721, 155 P.2d 329, 160 A.L.R. 900; In the Marinship case, supra, 25 Cal.2d at page 736, 155 P.2d at page 338, the California Supreme Court explicitly recognized that a union may expel persons who 'have interests inimical to the union' because of 'the right of the union to reject or expel persons who refuse to abide by any reasonable regulation or lawful policy adopted by the union'. See also Davis v. International Alliance, etc., Employees, 60 Cal.App.2d 713, 715, 141 P.2d 486, 488, where it is stated that under California law, 'An organization has the natural right of self preservation, and may with propriety expel members who show their disloyalty by joining a rival organization.' The contract was valid under the Act and under state law.

The claimed impotency of the contract as a defense here rests not upon any provision of the Act of Congress or of state law or the terms of the contract, but upon a policy declared by the Board. That policy has for its avowed purpose the solution of what the Board conceives to be an anomalous situation, in that § 7 guarantees employees the right to select freely their representative for collective bargaining, while the proviso to § 8(3) permits a closed-shop contract with inherent possibilities for invasion of the right guaranteed by § 7. The solution arrived at in the Rutland Court case, and urged here, is that the Board may not give full effect to the proviso of § 8(3) because to do so would permit circumvention of § 7. We turn to this contention.

One of the oldest techniques in the art of collective bargaining is the...