379 U.S. 203 (1964), 14, Fibreboard Paper Products Corp. v. National Labor Relations Board

Docket Nº:No. 14
Citation:379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233
Party Name:Fibreboard Paper Products Corp. v. National Labor Relations Board
Case Date:December 14, 1964
Court:United States Supreme Court
 
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Page 203

379 U.S. 203 (1964)

85 S.Ct. 398, 13 L.Ed.2d 233

Fibreboard Paper Products Corp.

v.

National Labor Relations Board

No. 14

United States Supreme Court

Dec. 14, 1964

Argued October 19, 1964

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Syllabus

Respondent union, the bargaining representative for a unit of petitioner's maintenance employees, gave timely notice of its desire to modify the existing collective bargaining agreement. Four days before the expiration of the contract, petitioner informed the union that it had determined that substantial savings could be effected by contracting out the maintenance work, and that, since it had made a definite decision to do so, negotiation of a new agreement would be pointless. On the contract expiration date, the employment of employees represented by the union was terminated, and an independent contractor was engaged to do the maintenance work. The union filed unfair labor practice charges against the employer, alleging violations of §§ 8(a)(1), 8(a)(3) and 8(a)(5) of the National Labor Relations Act. The National Labor Relations Board (NLRB) found that, while petitioner's motive was economic, rather than anti-union, petitioner's failure to negotiate with the union concerning its decision to contract out the maintenance work violated § 8(a)(5) of the Act, which requires bargaining with respect to "wages, hours, and other terms and conditions of employment." The NLRB ordered reinstatement of the maintenance employees with back pay, and the Court of Appeals granted the NLRB's petition for enforcement.

Held:

1. The type of "contracting out" involved in this case -- the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment -- is a statutory subject of collective bargaining under § 8(d) of the Act. Pp. 209-215.

2. The NLRB did not exceed its remedial powers in ordering petitioner to reinstate its maintenance employees with back pay and to bargain with the union. Pp. 215-217.

116 U.S. App.D.C. 198, 322 F.2d 411, affirmed.

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WARREN, J., lead opinion

[85 S.Ct. 400] MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.

This case involves the obligation of an employer and the representative of his employees under §§ 8(a)(5), 8(d) and 9(a) of the National Labor Relations Act to "confer in good faith with respect to wages, hours, and other terms and conditions of employment."1 The primary issue is whether the "contracting out" of work being

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performed by employees in the bargaining unit is a statutory subject of collective bargaining under those sections.

Petitioner, Fibreboard Paper Products Corporation (the Company), has a manufacturing plant in Emeryville, California. Since 1937, the East Bay Union Machinists, Local 1304, United Steelworkers of America, AFL-CIO (the Union) has been the exclusive bargaining representative for a unit of the Company's maintenance employees. In September, 1958, the Union and the Company entered the latest of a series of collective bargaining agreements which was to expire on July 31, 1959. The agreement provided for automatic renewal for another year unless one of the contracting parties gave 60 days' notice of a desire to modify or terminate the contract. On May 26, 1959, the Union gave timely notice of its desire to modify the contract and sought to arrange a bargaining session with Company representatives. On June 2, the Company acknowledged receipt of the Union's notice and stated: "We will contact you at a later date regarding a meeting for this purpose." As required by the contract, the Union sent a list of proposed modifications on June 15. Efforts by the Union to schedule a bargaining session met with no success until July 27,

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four days before the expiration of the contract, when the Company notified the Union of its desire to meet.

The Company, concerned with the high cost of its maintenance operation, had undertaken a study of the possibility of effecting cost savings by engaging an independent contractor to do the maintenance work. At the July 27, meeting, the Company informed the Union that it had determined that substantial savings could be effected by contracting out the work upon expiration of its collective bargaining agreements with the various labor organizations representing its maintenance employees. The Company delivered to the Union representatives a letter which stated in pertinent part:

For some time, we have been seriously considering the question of letting out our Emeryville maintenance work to an independent contractor, and have now reached a definite decision to do so effective August 1, 1959.

[85 S.Ct. 401]

In these circumstances, we are sure you will realize that negotiation of a new contract would be pointless. However, if you have any questions, we will be glad to discuss them with you.

After some discussion of the Company's right to enter a contract with a third party to do the work then being performed by employees in the bargaining unit, the meeting concluded with the understanding that the parties would meet again on July 30.

By July 30, the Company had selected Fluor Maintenance, Inc., to do the maintenance work. Fluor had assured the Company that maintenance costs could be curtailed by reducing the work force, decreasing fringe benefits and overtime payments, and by preplanning and scheduling the services to be performed. The contract provided that Fluor would:

furnish all labor, supervision and office help required for the performance of maintenance work . . . at

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the Emeryville plant of Owner as Owner shall from time to time assign to Contractor during the period of this contract; and shall also furnish such tools, supplies and equipment in connection therewith as Owner shall order from Contractor, it being understood however that Owner shall ordinarily do its own purchasing of tools, supplies and equipment.

The contract further provided that the Company would pay Fluor the costs of the operation plus a fixed fee of $2,250 per month.

At the July 30 meeting, the Company's representative, in explaining the decision to contract out the maintenance work, remarked that, during bargaining negotiations in previous years, the Company had endeavored to point out through the use of charts and statistical information "just how expensive and costly our maintenance work was, and how it was creating quite a terrific burden upon the Emeryville plant." He further stated that unions representing other Company employees "had joined hands with management in an effort to bring about an economical and efficient operation," but "we had not been able to attain that in our discussions with this particular Local." The Company also distributed a letter stating that,

since we will have no employees in the bargaining unit covered by our present Agreement, negotiation of a new or renewed Agreement would appear to us to be pointless.

On July 31, the employment of the maintenance employees represented by the Union was terminated, and Fluor employees took over. That evening, the Union established a picket line at the Company's plant.

The Union filed unfair labor practice charges against the Company, alleging violations of §§ 8(a)(1), 8(a)(3) and 8(a)(5). After hearings were held upon a complaint issued by the National Labor Relations Board's Regional Director, the Trial Examiner filed an Intermediate

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Report recommending dismissal of the complaint. The Board accepted the recommendation and dismissed the complaint. 130 N.L.R.B. 1558.

Petitions for reconsideration, filed by the General Counsel and the Union, were granted. Upon reconsideration, the Board adhered to the Trial Examiner's finding that the Company's motive in contracting out its maintenance work was economic, rather than anti-union, but found nonetheless that the Company's

failure to negotiate with . . . [the Union] concerning its decision to subcontract its maintenance work constituted a violation of Section 8(a)(5) of the Act.2

This ruling was based upon the doctrine established in Town & Country Mfg. Co., 136 N.L.R.B. 1022, 1027, enforcement granted, 316 F.2d 846 (C.A.5th Cir. 1963), [85 S.Ct. 402] that contracting out work,

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 within the meaning of Section 8(a)(5) of the Act.

The Board ordered the Company to reinstitute the maintenance operation previously performed by the employees represented by the Union, to reinstate the employees to their former or substantially equivalent positions with back pay computed from the date of the Board's supplemental decision, and to fulfill its statutory obligation to bargain.

On appeal, the Court of Appeals for the District of Columbia Circuit granted the Board's petition for enforcement. 116 U.S.App.D.C. 198, 322 F.2d 411. Because of the importance of the issues and because of an alleged

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conflict among the courts of appeals,3 we granted certiorari limited to a consideration of the following questions:

1. Was petitioner required by the National Labor Relations Act to bargain with a union representing some of its employees about whether to let to an independent contractor for legitimate business reasons the performance of certain operations in which those employees had been engaged?

3. Was the Board, in a case involving only a refusal to bargain, empowered to order the resumption of operations which had been discontinued for legitimate business reasons and reinstatement with back pay of the individuals formerly...

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