American Ship Building Company v. National Labor Relations Board, 255

CourtUnited States Supreme Court
Citation13 L.Ed.2d 855,380 U.S. 300,85 S.Ct. 955
Docket NumberNo. 255,255
Decision Date29 March 1965

380 U.S. 300
85 S.Ct. 955
13 L.Ed.2d 855



No. 255.
Argued Jan. 21, 1965.
Decided March 29, 1965.

William S. Tyson, Washington, D.C., for petitioner.

Norton J. Come, Washington, D.C., for respondent.

Page 301

Mr. Justice STEWART delivered the opinion of the Court.

The American Ship Building Company seeks review of a decision of the United States Court of Appeals for the District of Columbia enforcing an order of the National Labor Relations Board which found that the company had committed an unfair labor practice under §§ 8(a)(1) and 8(a)(3) of the National Labor Relations Act.1 The question presented is that expressly reserved in National Labor Relations Board v. Truck Drivers Local Union, etc., 353 U.S. 87, 93, 77 S.Ct. 643, 646, 1 L.Ed.2d 676; namely, whether an employer commits an unfair labor practice under these sections of the Act when he temporarily lays off or 'locks out' his employees during a labor dispute to bring economic pressure in support of

Page 302

his bargaining position. To resolve an asserted conflict among the circuits2 upon this important question of federal labor law we granted certiorari, 379 U.S. 814, 85 S.Ct. 69, 13 L.Ed.2d 27.

The American Ship Building Company operates four shipyards on the Great Lakes—at Chicago, at Buffalo, and at Toledo and Lorain, Ohio. The company is primarily engaged in the repairing of ships, a highly seasonal business concentrated in the winter months when the freezing of the Great Lakes renders shipping impossible. What limited business is obtained during the shipping season is frequently such that speed of execution is of the utmost importance to minimize immobilization of the ships.

Since 1952 the employer has engaged in collective bargaining with a group of eight unions. Prior to the negotiations here in question, the employer had contracted with the unions on five occasions, each agreement having been preceded by a strike. The particular chapter of the collective bargaining history with which we are concerned opened shortly before May 1, 1961, when the unions notified the company of their intention to seek modification of the current contract, due to expire on August 1.

At the initial bargaining meeting on June 6, 1961, the company took the position that its competitive situation would not allow increased compensation. The unions countered with demands for increased fringe benefits and some unspecified wage increase. Several meetings were held in June and early July during which negotiations focussed upon the fringe benefit questions without any substantial progress. At the last meeting, the parties resolved to call in the Federal Mediation and Concilia-

Page 303

tion Service, which set the next meeting for July 19. At this meeting, the unions first unveiled their demand for a 20-cent-an-hour wage increase and proposed a six-month extension of the contract pending continued negotiations. The employer rejected the proposed extension because it would have led to expiration during the peak season.

Further negotiations narrowed the dispute to five or six issues, all involving substantial economic differences. On July 31, the eve of the contract's expiration, the employer made a proposal; the unions countered with another, revived their proposal for a six-month extension, and proposed in the alternative that the existing contract, with its no-strike clause, be extended indefinitely with the terms of the new contract to be made retroactive to August 1.3 After rejection of the proposed extensions, the employer's proposal was submitted to the unions' membership; on August 8 the unions announced that this proposal had been overwhelmingly rejected. The following day, the employer made another proposal which the unions refused to submit to their membership; the unions made no counteroffer and the parties separated without setting a date for further meetings, leaving this to the discretion of the conciliator.

Thus on August 9, after extended negotiations, the parties separated without having resolved substantial differences on the central issues dividing them and without having specific plans for further attempts to resolve them—a situation which the trial examiner found was an impasse. Throughout the negotiations, the employer displayed anxiety as to the unions' strike plans, fearing that the unions would call a strike as soon as a ship entered the Chicago yard or delay negotiations into the winter to

Page 304

increase strike leverage. The union negotiator consistently insisted that it was his intention to reach an agreement without calling a strike; however, he did concede incomplete control over the workers—a fact borne out by the occurrence of a wildcat strike in February 1961. Because of the danger of an unauthorized strike and the consistent and deliberate use of strikes in prior negotiations, the employer remained apprehensive of the possibility of a work stoppage.

In light of the failure to reach an agreement and the lack of available work, the employer decided to lay off certain of his workers. On August 11 the employees received a notice which read: 'Because of the labor dispute which has been unresolved since August 1, 1961, you are laid off until further notice.' The Chicago yard was completely shut down and all but two employees laid off at the Toledo yard. A large force was retained at Lorain to complete a major piece of work there and the employees in the Buffalo yard were gradually laid off as miscellaneous tasks were completed. Negotiations were resumed shortly after these layoffs and continued for the following two months until a two-year contract was agreed upon on October 27. The employees were recalled the following day.

Upon claims filed by the unions, the General Counsel of the Board issued a complaint charging the employer with violations of §§ 8(a)(1), (a)(3), and (a) (5).4 The trial examiner found that although there had been no work in the Chicago yard since July 19, its closing was not due to lack of work. Despite similarly slack seasons in the past, the employer had for 17 years retained a nucleus crew to do maintenance work and remain ready to take such work as might come in. The examiner went on to find that the employer was reasonably apprehensive

Page 305

of a strike at some point. Although the unions had given assurances that there would be no strike, past bargaining history was thought to justify continuing apprehension that the unions would fail to make good their assurances. It was further found that the employer's primary purpose in locking out his employees was to avert peculiarly harmful economic consequences which would be imposed on him and his customers if a strike were called either while a ship was in the yard during the shipping season or later when the yard was fully occupied. The examiner concluded that the employer:

'was economically justified and motivated in laying off its employees when it did, and the fact that its judgment was partially colored by its intention to break the impasse which existed is immaterial in the peculiar and special circumstances of this case. Respondent, by its actions, therefore, did not violate sections 8(a)(1), (3), and (5) of the Act.'

A three-to-two majority of the Board rejected the trial examiner's conclusion that the employer could reasonably anticipate a strike. Finding the unions' assurances sufficient to dispel any such apprehension, the Board was able to find only one purpose underlying the layoff: a desire to bring economic pressure to secure prompt settlement of the dispute on favorable terms. The Board did not question the examiner's finding that the layoffs had not occurred until after a bargaining impasse had been reached. Nor did the Board remotely suggest that the company's decision to lay off its employees was based either on union hostility or on a desire to avoid its bargaining obligations under the Act. The Board concluded that the employer 'by curtailing its operations at the South Chicago yard with the consequent layoff of the employees, coerced employees in the exercise of their bargaining rights in violation of Section 8(a)(1) of the Act,

Page 306

and discriminated against its employees within the meaning of Section 8(a)(3) of the Act.'5 142 N.L.R.B., at 1364—1365.

The difference between the Board and the trial examiner is thus a narrow one turning on their differing assessments of the circumstances which the employer claims gave it reason to anticipate a strike. Both the Board and the examiner assumed, within the established pattern of Board analysis,6 that if the employer had shut down its yard and laid off its workers solely for the purpose of bringing to bear economic pressure to break an impasse and secure more favorable contract terms, an unfair labor practice would be made out. 'The Board has held that, absent special circumstances, an employer may not during bargaining negotiations either threaten to lock out or lock out his employees in aid of his bargaining position. Such conduct the Board has held presumptively infringes upon the collective-bargaining rights of employees in violation of Section 8(a)(1) and the lockout, with its consequent layoff, amounts to discrimination within the meaning of Section 8(a)(3). In addition, the Board has held that such conduct subjects the Union and the employees it represents to unwarranted and illegal pressure and creates an atmosphere in which the free opportunity for negotiation contemplated by Section 8(a)(5)

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does not exist.' Quaker State Oil Refining Corp., 121 N.L.R.B. 334, 337.

The Board has, however, exempted certain classes of lockouts from proscription. 'Accordingly, it has held that lockouts are permissible to safeguard against * * * loss where there is reasonable ground for believing that a strike was threatened or imminent.' Ibid. Developing this...

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