404 U.S. 157 (1971), 70-32, Allied Chemical & Alkali Workers of America, Local Union No. 1

Docket Nº:No. 70-32
Citation:404 U.S. 157, 92 S.Ct. 383, 30 L.Ed.2d 341
Party Name:Allied Chemical & Alkali Workers of America, Local Union No. 1
Case Date:December 08, 1971
Court:United States Supreme Court
 
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404 U.S. 157 (1971)

92 S.Ct. 383, 30 L.Ed.2d 341

Allied Chemical & Alkali Workers of America, Local Union No. 1

No. 70-32

United States Supreme Court

Dec. 8, 1971

v. Pittsburgh Plate Glass Co., Chemical Division

Argued October 20, 1971

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

A labor organization that was the exclusive bargaining agent for employees "working" on hourly pay rates at one of respondent Company's facilities had negotiated with the Company an employee health insurance plan in which retired employees participated. Upon enactment of Medicare, the Union sought mid-term bargaining to renegotiate the insurance benefits for retired employees. The Company, maintaining that Medicare made the insurance program useless, and that retirees' benefits were not a mandatory subject of collective bargaining, stated that it would offer each retiree a stated monthly amount toward supplemental Medicare coverage. When, despite Union objections, the Company made the offer, the Union filed unfair labor practice charges with the National Labor Relations Board (NLRB). The NLRB concluded that the Company was guilty of unfair labor practices in violation of §§ 8(a)(5) and (1) of the National Labor Relations Act (NLRA) and issued a cease and desist order. The NLRB held that the benefits of already retired employees were a mandatory subject of bargaining as "terms and conditions of employment" of the retirees themselves and, alternatively, of the active bargaining unit employees. It also held that the Company's "establishment of a fixed, additional option, in and of itself, changed the negotiated plan of benefits" contrary to §§ 8(d) and 8(a)(5) of the Act. The Court of Appeals for the Sixth Circuit disagreed with the NLRB and refused to enforce its cease and desist order.

Held:

1. Retirees' benefits are not, within the meaning of §§ 8(a)(5) and 8(d) of the NLRA, a mandatory subject of bargaining as "terms and conditions of employment" of the retirees. Pp. 163-176.

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(a) The collective bargaining obligation extends only to the "terms and conditions of employment" of the employer's "employees," and the term "employee" has its ordinary meaning, i.e., someone who works for another for hire, which excludes retirees. Pp. 165-171.

(b) The collective bargaining obligation is limited to the "terms and conditions of employment" of the "employees" in the bargaining unit appropriate for the purpose of collective bargaining. Retirees were not members of the unit represented by the Union, because they were no longer "working." Nor could they be members, since they lack a substantial community of interests with the active employees in the unit. Pp. 171-175.

(c) Even if an industry practice of bargaining over retirees' rights exists, which is disputed, that cannot change the law and make into bargaining unit "employees" those who are not. Pp. 175-176.

2. Retirees' benefits are not a mandatory subject of bargaining as "terms and conditions of employment" of the active employees remaining in the bargaining unit, although their own future retirement plans are. Retirees' benefits do not "vitally" affect the "terms and conditions of employment" of current employees. The benefits that active workers may reap by including retired employees under the same health insurance contract as themselves are speculative and insubstantial, at best. The relationship that the NLRB asserted exists between bargaining in behalf of retirees and the negotiation of active employees' retirement plans is equally too speculative a foundation on which to base an obligation to bargain. Pp. 176-182.

3. Even if the Company's offering the retirees an exchange for their withdrawal from the already negotiated health insurance plan was a unilateral mid-term "modification" of the plan within the meaning of § 8(d) of the Act, which is disputed, it did not constitute an unfair labor practice, since it related to a permissive, rather than a mandatory, subject of bargaining. Pp. 183-188.

427 F.2d 936, affirmed.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, MARSHALL, and BLACKMUN, JJ., joined. DOUGLAS, J., dissented.

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BRENNAN, J., lead opinion

MR. JUSTICE BRENNAN delivered the opinion of the Court.

Under the National Labor Relations Act, as amended, mandatory subjects of collective bargaining include pension and insurance benefits for active employees,1 and an employer's mid-term unilateral modification of such benefits constitutes an unfair labor practice.2 This cause

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presents the question whether a mid-term unilateral modification that [92 S.Ct. 388] concerns, not the benefits of active employees, but the benefits of already retired employees, also constitutes an unfair labor practice. The National Labor Relations Board, one member dissenting, held that changes in retired employees' retirement benefits are embraced by the bargaining obligation, and that an employer's unilateral modification of them constitutes an unfair labor practice in violation of §§ 8(a)(5) and (1) of the Act. 177 N.L.R.B. 911 (1969).3 The Court of Appeals for the Sixth Circuit disagreed, and refused to enforce the Board's cease and desist order, 427 F.2d 936 (1970). We granted certiorari, 401 U.S. 907 (1971). We affirm the judgment of the Court of Appeals.

I

Since 1949, Local 1, Allied Chemical and Alkali Workers of America, has been the exclusive bargaining representative for the employees "working" on hourly rates of pay at the Barberton, Ohio, facilities of respondent Pittsburgh Plate Glass Co.4 In 1950, the Union and the Company negotiated an employee group health insurance plan in which, it was orally agreed, retired employees could participate by contributing the required

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premiums, to be deducted from their pension benefits. This program continued unchanged until 1962, except for an improvement unilaterally instituted by the Company in 1954 and another improvement negotiated in 1959.

In 1962, the Company agreed to contribute two dollars per month toward the cost of insurance premiums of employees who retired in the future and elected to participate in the medical plan. The parties also agreed at this time to make 65 the mandatory retirement age. In 1964 insurance benefits were again negotiated, and the Company agreed to increase its monthly contribution from two to four dollars, applicable to employees retiring after that date and also to pensioners who had retired since the effective date of the 1962 contract. It was agreed, however, that the Company might discontinue paying the two-dollar increase if Congress enacted a national health program.

In November, 1965, Medicare, a national health program, was enacted, 79 Stat. 291, 42 U.S.C. § 1395 et seq. The 1964 contract was still in effect, and the Union sought mid-term bargaining to renegotiate insurance benefits for retired employees. The Company responded in March, 1966, that, in its view, Medicare rendered the health insurance program useless because of a "non-duplication of benefits" provision in the Company's insurance policy, and stated, without negotiating any change, that it was planning to (a) reclaim the additional two-dollar monthly contribution as of the effective date of Medicare; (b) cancel the program for retirees; and (c) substitute the payment of the three-dollar monthly subscription fee for supplemental Medicare coverage for each retired employee.5

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The Union acknowledged that the Company had the contractual right to reduce its monthly contribution, but challenged its proposal unilaterally to substitute supplemental Medicare coverage for the [92 S.Ct. 389] negotiated health plan. The Company, as it had done during the 1959 negotiations without pressing the point, disputed the Union's right to bargain in behalf of retired employees, but advised the Union that, upon further consideration, it had decided not to terminate the health plan for pensioners. The Company stated instead that it would write each retired employee, offering to pay the supplemental Medicare premium if the employee would withdraw from the negotiated plan. Despite the Union's objections, the Company did circulate its proposal to the retired employees, and 15 of 190 retirees elected to accept it. The Union thereupon filed unfair labor practice charges.

The Board held that, although the Company was not required to engage in mid-term negotiations, the benefits of already retired employees could not be regarded as other than a mandatory subject of collective bargaining. The Board reasoned that

retired employees are "employees" within the meaning of the statute for the purposes of bargaining about changes in their retirement benefits. . . .

177 N.L.R.B. at 912. Moreover, "retirement status is a substantial connection to the bargaining unit, for it is the culmination and the product of years of employment." Id. at 914. Alternatively, the Board considered "bargaining about changes in retirement benefits for retired employees" as "within the contemplation of the statute because of the interest which active employees have in this subject. . . ." Id. at 912. Apparently in support of both theories, the Board noted that "[b]argaining on benefits for workers already retired is an established aspect of current labor-management relations." Id. at 916. The Board also held that the

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Company's "establishment of a fixed, additional option, in and of itself, changed the negotiated plan of benefits" contrary to §§ 8(d) and 8(a)(5) of the Act. Id. at 918. Accordingly, the Company was ordered to cease and desist from refusing to bargain collectively about retirement benefits and from making unilateral adjustments in health insurance plans for retired employees without first negotiating in good faith with the Union. The Company was also required to rescind, at the Union's...

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