Capital Service v. National Labor Relations Board

• Decision Date: 12 May 1953
• Docket Number: No. 13416.,13416.
• Parties: CAPITAL SERVICE, Inc. et al. v. NATIONAL LABOR RELATIONS BOARD.
• Court: U.S. Court of Appeals — Ninth Circuit

204 F.2d 848 (1953)

CAPITAL SERVICE, Inc. et al. v. NATIONAL LABOR RELATIONS BOARD.

No. 13416.

United States Court of Appeals Ninth Circuit.

January 30, 1953.

As Amended on Rehearing May 12, 1953.

COPYRIGHT MATERIAL OMITTED

Hill, Farrer & Burrill, Hyman Smith, Los Angeles, Cal., for appellants.

George J. Bott, Gen. Counsel, David P. Findling, Associate Gen. Counsel, A. Norman Somers, Asst. Gen. Counsel, N.L.R.B., Washington, D. C., Charles K. Hackler, Chief Law Officer, 21st Region, N.L.R.B., Los Angeles; Cal., Norton J. Come and Duane Beeson, Attys., N.L.R.B., Washington, D.C., for respondent.

Stevenson & Richman, Los Angeles, Cal., Todd & Todd, San Francisco, Cal., for Bakery Drivers Local Union No. 276, amicus curiae.

Before DENMAN, Chief Judge, and ORR and POPE, Circuit Judges.

DENMAN, Chief Judge.

This is an appeal by Brashears and Capital Service, Inc., hereafter Service, manufacturers of bakery products in non-union plants, and selling them to retail dealers merchandising such products in and around Los Angeles, California. The appeal is from a preliminary injunction of the district court¹ granted on the complaint of the National Labor Relations Board, hereafter called the Board, enjoining Service from "Enforcing or seeking to enforce or in any other manner giving continued effect to or availing themselves of the benefits of, the preliminary injunction issued on April 7, 1952, by the Superior Court of California, Los Angeles County, in Case No. 595892; and from taking or applying for any further proceedings in said Superior Court the effect of which would be to enjoin or restrain the defendant labor organizations in Superior Court Case No. 595892 from engaging in peaceful picketing or other concerted activities affecting the customers of Capital Service, Inc., and their suppliers, and which are carried on pursuant to a labor dispute with Capital Service, Inc."

Service had filed a charge with the Regional Director of the Board alleging the acts of the unions hereafter described and the Board has issued a complaint against the unions. The purpose of the preliminary injunction sought for the granted below is to hold the situation in the status quo until the Board determines whether it will consider Service's charge.

The complaint below for a preliminary injunction alleges a cause under Section 8(b) (4) (A) of the Act, 29 U.S.C.A. § 158 (b) (4) (A); and describes the conduct of the labor unions in picketing the stores in which the goods manufactured by Service's employees were sold, hereafter considered, and states as a conclusion of law that the picketing and other activities of this labor organization at the retail stores, insofar as it was limited to acquainting ultimate consumers with defendant's nonunion working conditions, was not an unfair labor practice.

As will be seen, the acts alleged and proved show that the unions did much more than acquaint the ultimate consumers of the goods manufactured by Service's employees of the latter's non-union status. They urged a boycott by the public of the employee-manufactured goods and successfully persuaded the retail sellers to cease selling such goods.

The Board assumes that the successful boycott of the goods manufactured by Service's employees, thus to a large extent restraining them from such manufacture and tending to coerce them to abandon their non-union status, is not an unfair labor practice within Section 7 of the Act, 29 U.S.C.A. § 157. It nevertheless contends that the Act pre-empts to the federal government this field of consumer boycott to the exclusion of any rights of the states to regulate in that field.

We find it unnecessary to consider this contention of the Board since we regard the Board as having the power to consider the instant consumer boycott and on the facts hereafter shown to issue its cease and desist order, if in its discretion, it determines so to act.

A. Jurisdiction by effect on interstate commerce.

The reduction by the consumers' boycott and other acts of the unions of the amount of goods manufactured by Service's employees necessarily reduces substantially the amount of materials used in such manufacture. The findings of fact by the court below show that during 1951 Service made purchases totaling approximately $500,000. Of this amount, $30,000 was received directly from sources outside California and $175,000 was received indirectly from such sources. See Wickard v. Filburn, infra, on indirect effect on interstate commerce. Thus, if Service were to be put out of business, approximately $205,000 worth of goods would cease flowing in interstate commerce. This is a substantial amount and not so slight as to bring into play the maxim of de minimis. See N. L. R. B. v. Fainblatt, 306 U.S. 601, 606, 307 U.S. 609, 59 S.Ct. 668, 83 L.Ed. 1014; Santa Cruz Fruit Packing Co. v. N. L. R. B., 303 U.S. 453, 467, 58 S.Ct. 656, 82 L.Ed. 954; N. L. R. B. v. Townsend, 9 Cir., 185 F.2d 378, 383.

Nor does it matter that Service is essentially a local business, supplying bakery goods for stores in the Los Angeles area. In Wickard v. Filburn, 317 U.S. 111, 124-125, 63 S.Ct. 82, 89, 87 L.Ed. 122, the Court stated:

"But even if appellee\'s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as `direct\' or `indirect.\'"

Thus it is the factor of substantial economic effect upon interstate commerce and not the nature of the business that determines federal jurisdiction. As has been shown, there is such substantial economic effect effect present here. See N. L. R. B. v. Denver Building & Construction Trades Council, 341 U.S. 675, 683-685, 71 S.Ct. 943, 95 L.Ed. 1284.

B. The boycott of the product of Service's bakers to restrain their opposition to and to compel their unionization is prohibited by Section 8(b) (1) of the Taft-Hartley Act.

One of the labor unions is the Bakery and Confectionery Workers International Union of America, Local No. 37, hereafter called the Bakery Union. This union is seeking to force the workers in Service's bakery manufacturing to join the Bakery Union. In this effort it was joined by a union organization, the Los Angeles Food Council and the Los Angeles Central Labor Council.

Their method of enforcing their demand for unionization of the Service's bakery workers was to persuade the public not to buy the products manufactured by Service's bakers by a secondary boycott of the sale of these products by retail food stores to which they were sold by Service. They established picket lines at the retail customers' entrances of the stores displaying placards stating:

"To The Public Danish Maid Bakery Products Sold Here Are Made And Delivered By A Bakery That Is Non - Union And On The We Do Not Patronize List Of The Los Angeles Central Labor Council Los Angeles Food Council Joint Council Of Teamsters' Union 42 Bakery Drivers' Local 276 Bakers' Local Number 37"

Against this the Superior Court in a suit brought by Service made its preliminary injunction enjoining all the unions from:

"1. Inducing or seeking or attempting to induce any person to refrain from purchasing plaintiff's merchandise by picketing plaintiff's customers or prospective customers."

We think Congress has pre-empted this function to the National Labor Relations Board and that the state court is without jurisdiction to issue such an injunction. Such a boycott to enforce unionization is prohibited by the Taft-Hartley Act, Section 8(b) (1) (A).

The pertinent portions of that Section are: (b) (1) "It shall be an unfair labor practice for a labor organization * * * to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 7 of this title."

The rights guaranteed by Section 7 as they were in the Wagner Act are:

"Right of employees as to organization, collective bargaining, etc.

"Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection".

To these the Taft-Hartley Act significantly added the following right of employees:

"* * * and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in Section 8(a) (3) of this title."

The language of 8(b) (1) (A) prohibiting restraint and coercion by a labor organization is the same in this regard as Section 8(a) (1) providing for an EMPLOYER, that (a) "It shall be an unfair labor practice for an employer — (1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 of this title".

The Supreme Court has held of Section 8(a) (1) of the Wagner Act, which is the same as in the Taft-Hartley Act, that the test whether the employer has violated the "restrain" provision is whether "the words or deeds * * * taken in their setting, were reasonably likely to have restrained the employees' choice and whether the employer may fairly be said to have been responsible for them * * *." N. L. R. B. v. Link-Belt Co., 311 U.S. 584, 599, 61 S.Ct. 358, 366, 85 L.Ed. 368.²

It is inconceivable that the Taft-Hartley Act intended the identical words "restrain or coerce" of 8(a) (1) and 8(b) (1) to have a different meaning when applied to a labor organization from that when applied to an employer. As stated by Senator Taft,

"The act for years has contained the provision:

"It shall be an unfair labor practice on the part of an employer —

"To interfere with, restrain, or coerce employees in the exercise of the

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