NLRB v. M & M OLDSMOBILE, INC.

• Citation: 377 F.2d 712
• Decision Date: 03 May 1967
• Docket Number: Docket 30852.,No. 299,299
• Court: U.S. Court of Appeals — Second Circuit
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. M & M OLDSMOBILE, INC., Respondent.

377 F.2d 712 (1967)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. M & M OLDSMOBILE, INC., Respondent.

No. 299, Docket 30852.

United States Court of Appeals Second Circuit.

Argued February 20, 1967.

Decided May 3, 1967.

Lawrence M. Joseph, Atty., National Labor Relations Board (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Francis Flannery, Atty., Washington, D. C., on the brief), for petitioner.

Benjamin Mandelker, New York City, for respondent.

Richard A. Weinmann, New York City (Sipser, Weinstock & Weinmann, New York City), for intervenor, Local 259, United Automobile Workers, AFL-CIO.

Before FRIENDLY, ANDERSON and FEINBERG, Circuit Judges.

FEINBERG, Circuit Judge:

In August 1964, after bargaining with a duly certified union,¹ respondent M & M Oldsmobile, Inc. arrived at an agreement which granted substantial economic benefits to its employees. For almost three years, M & M has refused to put the agreement into effect, claiming that it was not ratified by the employees. The National Labor Relations Board petitions to enforce its order which requires, inter alia, respondent to give effect to the agreement. The Board held that respondent's action was a refusal to bargain under section 8(a) (5) of the National Labor Relations Act, 29 U.S. C. § 158(a) (5). We enforce the Board's order.

The findings of the Board were as follows: In a consent election in June 1964, a majority of respondent's twenty-eight employees in the unit designated the Union as their bargaining representative. By August, respondent and the Union had come to terms, and a handwritten draft of a collective bargaining agreement was signed by representatives of each. After the signing, the Union's president requested a ratification clause to satisfy the Union's internal requirements of its constitution and bylaws.² Respondent acceded, and this sentence was added to the agreement and initialed for all parties:

It is understood that this agreement is subject to ratification by the employees of M & M.

The first meeting called by the Union for ratification proved inconclusive; although twenty or twenty-two members attended, only twelve voted, with seven opposing the contract. At the second, seventeen employees attended; the contract and a strike were discussed as alternatives. Five or six employees were in favor of a strike, and the rest opposed. The Union president then asked if anyone was opposed to the contract. Seven men raised their hands; the president then declared that under the circumstances the contract was ratified. No employee at the time indicated any dissatisfaction with the result of the meeting or the way in which it was conducted. The Union thereupon sent a telegram to respondent advising it that the contract had been ratified and was in effect.

Later that night, respondent's president, Mr. Martin, received a telephone call from two employees, who said that a ratification meeting had been held and that eleven of the seventeen employees present had voted against ratification. Martin told them to put this in writing and see him the next day. The next morning, Martin received the Union's telegram; the letter, signed by eleven employees, also arrived. It stated that there had been a fraudulent vote count at the meeting, and asked the company not to sign the contract. Thereafter, although respondent's chief negotiator, a management consultant, advised it that the Union had a contract, respondent accepted the advice of two attorneys that the contract was not binding because it had not been ratified and notified the Union of its position. The Union denied this, and after some abortive correspondence, requested arbitration; respondent refused, on the ground that there was no contract requiring arbitration. These facts found by the examiner were later adopted by the Board; the examiner's findings rested heavily on the lack of credibility of key witnesses for respondent, who offered a different version of some significant events.

On this record, the Board held that respondent's refusal to effectuate the contract was a refusal to bargain, 29 U.S.C. § 158(a) (5), and an interference with employees in their rights under the Act, 29 U.S.C. § 158(a) (1). 156 N.L.R.B. 903 (1966). The Board reasoned that:

If, as claimed by Respondent, an employer were free to challenge the union\'s assertion that ratification had taken place, it would be difficult, if not impossible, for the parties to a collective-bargaining agreement to arrive at a final settlement without the fear of being forced into protracted litigation regarding the union\'s compliance with its own procedures, clearly a collateral issue. The encouragement of such industrial instability could not have been within the intendment of the Act.

It held that:

Where, as here, the parties have agreed that their contract shall be made contingent upon ratification by the employees, a vote is held showing majority approval which is not challenged at the time, and the union certifies to the employer that such ratification has been achieved, the employer may not avoid its contract by challenging the validity of the internal union procedures by which it was ratified. Footnotes omitted.

The Board ordered respondent to cease and desist from refusing to bargain with the Union, and from similarly interfering with the employees in the exercise of the right to self-oragnization. Affirmatively, respondent was ordered — but only upon the request of the Union — to give effect retroactively to the terms of the August 1964 agreement, and to make employees whole for losses suffered by reason of the refusal to effectuate the agreement. However, if the Union so chose, the order required respondent to negotiate with the Union anew.

Respondent opposes the Board's petition on several grounds. Respondent first argues that there could be no violation of section 8(a) (5), citing the Supreme Court's observation that "breach of contract is not an `unfair labor practice,'" see Association of Westinghouse Salaried Employees v. Westinghouse Elec. Corp., 348 U.S. 437, 443-444 n. 2, 75 S.Ct. 489, 492, 99 L.Ed. 510 (1955). Although Mr. Justice Frankfurter was there speaking for only three justices, we accept the dictum,³ but we understand it to mean simply that failure to accord with a contractual provision is not ipso facto an unfair labor practice. However, respondent apparently offers a more extreme proposition — that no breach of contract can also be an unfair labor practice. We do not so read the law. In NLRB v. C & C Plywood Corp., 385 U.S. 421, 87 S.Ct. 559, 17 L.Ed.2d 486 (1967), an employer's unilateral institution of a premium pay plan violated a collective bargaining agreement, yet was held to be an unfair labor practice — indeed, as here, a refusal to bargain. See also Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 76 S.Ct. 349, 100 L.Ed. 309 (1956); NLRB v. Hyde, 339 F.2d 568, 572 (9th Cir. 1964). As a variant of this approach, respondent claims that the proper forum for resolution of this dispute was not the Board, but the courts; the argument is couched in jurisdictional terms. Once again, if all this means is that the Board does not have general jurisdiction to police collective bargaining agreements, we agree. C & C Plywood Corp., supra, 385 U.S. at 427, 87 S.Ct. 559. But respondent seeks the broad rule that a question of contract interpretation must divest the Board of power, thus turning around the preemption argument that the possibility of an unfair labor practice ousts the judicial forum. See generally Sovern, Section 301 and the Primary Jurisdiction of the NLRB, 76 Harv.L.Rev. 529 (1963). We reject this suggestion. An employer's duty to bargain under section 8(a) (5) would be empty, indeed, if after reaching agreement the employer could treat the contract as a scrap of paper. The disavowal of the entire contract by respondent — on a ground the Board and we hold unjustified — made the prior bargaining worse than useless. In terms of effect on the rights of employees, the Union's position as bargaining agent, and the purpose of the Act to substitute collective bargaining for economic warfare, it is difficult to distinguish the total repudiation here practiced from the employer's refusal in H. J. Heinz Co. v. NLRB, 311 U.S. 514, 525-526, 61 S.Ct. 320, 85 L.Ed. 309 (1941), to put an oral agreement into writing. Cf. 29 U.S.C. § 158(d).

That other remedies may be available to the Union is not controlling, any more than it was in NLRB v. Acme Industrial Co., 385 U.S. 432, 87 S.Ct. 565, 17 L.Ed.2d 495 (1967). In that case, the Board found an employer's refusal to furnish certain information to a union to be an unfair labor practice, even though the union might have obtained relief through arbitration (a remedial route attempted here by the Union but resisted by respondent).⁴ In Smith v. Evening News Ass'n, 371 U.S. 195, 197, 83 S.Ct. 267, 269, 9 L.Ed.2d 246 (1962), the Court pointed out that: "The authority of the Board to deal with an unfair labor practice which also violates a collective bargaining contract is not displaced by § 301 * * *."⁵ We do not hold that the Board has "generalized power to determine the rights of parties under all collective agreements," see C & C Plywood Corp., supra, 385 U.S. at 427, 87 S.Ct. at 563. But where the charge is made that an employer has violated the statutory rights of employees by refusing to honor in any manner an agreement which was the product of collective bargaining, the Board can review the facts to determine whether the repudiation was justified. As a final version of its jurisdictional point, respondent says that the Board is powerless to direct performance of a contract. The short answer is that the Board had jurisdiction to find an unfair labor practice and to remedy it. Cf. NLRB v. Warrensburg Board & Paper Corp., 340 F.2d 920 (2d Cir. 1965) (employer directed to execute contract...