Korn Industries, Inc. v. NLRB
| Citation | 389 F.2d 117 |
| Decision Date | 11 December 1967 |
| Docket Number | No. 11041.,11041. |
| Parties | KORN INDUSTRIES, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. International Union, United Furniture Workers of America, AFL-CIO, Intervenor. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
Karl W. McGhee, Wilmington, N. C. (Ellis L. Aycock, and Stevens, Burgwin, McGhee & Ryals, Wilmington, N. C., on brief), for petitioner.
Alan D. Eisenberg, Attorney, N.L.R.B. (Arnold Ordman, General Counsel, Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel, and George B. Driesen, Attorney, N.L.R.B., on brief), for respondent.
Martin Raphael, New York City, for intervenor.
Before SOBELOFF, BRYAN and BUTZNER,* Circuit Judges.
This case is before the court upon Korn Industries' petition to review and set aside an order of the National Labor Relations Board and the Board's cross petition to enforce its order. The first question is whether the company refused to bargain in good faith by:
(a) unilaterally instituting, without first bargaining to impasse during negotiations, a wage system which included a general wage increase and a merit plan rating;
(b) refusing to furnish the union relevant information relating to the wage system, job standards, and performance records of employees;
(c) informing its employees that the presence of the union would not affect wage policies in any way.
The trial examiner found for the company on all issues. The Board disagreed. It concluded that the company violated Section 8(a) (1) and (5) of the Act.1 We hold substantial evidence supports the Board's finding that the company refused to bargain in good faith by unilaterally instituting a general wage increase and a merit plan. The Board's findings on the other issues are not supported by substantial evidence.
The second question pertains to the discharge of Charles W. Campbell, an employee, for distributing union literature in the doorway of the plant building. The trial examiner found that the company's no-distribution rule was a valid fire prevention measure and that Campbell's discharge was lawful. The Board concluded that the rule was invalid and consequently Campbell's discharge was an unfair labor practice within the meaning of Section 8(a) (1) and (3)2 of the Act. We hold the evidence is insufficient to sustain the Board's decision.
The union, after being certified in 1963, entered into a one year contract that expired in February, 1965. The union then gave notice of its intention to renew and modify the agreement. The company filed a petition for an election which was held June 2, 1965. The employees voted to retain the union as bargaining representative. A bargaining session was scheduled for June 30, 1965.
On June 26, 1965 the company's attorney informed the union's representative that the company had prepared some material to comply with Title VII of the Civil Rights Act,3 which was to become effective July 2, 1965. The attorney asked the union's representative to review the company's proposal before the June 30 bargaining session. On June 28 the union's agent received a three page "Explanation of Job Evaluation and Category System" and a thirty-four page document that classified employees by name into nine separate job categories. The company established a minimum and maximum wage scale for each category. Employees with more than eight months' service were granted a five cents an hour increase. Employees in several other categories received larger increases. The plan also provided for evaluation of employees for wage increases as stated intervals over approximately the next four years. The plan provided that the company could revise the job classifications from time to time as conditions warranted.
At the June 30 bargaining session both the company and the union submitted proposals for a new contract. The company requested union approval of the wage plan, asserting that it was designed to comply with Title VII of the Civil Rights Act and Section 6(d) of the Fair Labor Standards Act.4 The company said that an investigation by the Wage and Hour Division of the Department of Labor disclosed the company's failure to comply with Section 6(d).
The company stated that after the plan went into effect bargaining would continue with regard to wages.
The union replied it was willing for the company to make any adjustments required by the Civil Rights and Fair Labor Standard Acts, but denounced the plan as providing a general wage increase coupled with merit increases on a periodic basis over the next four years or more. The union protested that these provisions of the plan should be the subject of bargaining along with other terms of the contract. The union's request that the plan be made subject to grievance and arbitration procedure was refused by the company.
During the bargaining session, the union referred to previous negotiations when the company granted a general increase of 10 cents an hour on the ground that the minimum wage law required an upward revision of pay scales. At that time the company declined to make any further concessions, and the union believed the company's action was disadvantageous to the union and its bargaining position. The union told the company that it did not want to be maneuvered into that kind of a position again. At this point the company attorney said "that union bargaining had never had any influence on wages in the plant and would not have any in the future."
To counter the criticism that the plan would be disadvantageous, the company stated the union could take credit for the good features of the plan. The union declined to do this. The company announced that it would put the plan in effect on July 2, 1965, which it did.
It is settled law that an employer violates the duty to bargain collectively imposed by § 8(a) (5) of the Act when it institutes changes in subjects of mandatory bargaining under § 8(d) without first consulting a union with which it is carrying on bona fide contract negotiations that have not yet reached an impasse. NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). Substantial evidence supports the Board's finding that the company alone, without negotiation, consultation, or conference with the union, planned a general wage increase and a system for evaluating employees and awarding additional merit increases over a period of approximately four years. This plan was made known shortly before the bargaining sessions began, and at the first bargaining session the company announced that it would put it into effect within three days with or without the consent of the union. The finding of the Board that the company would not provide information on the criteria for the merit increases emphasizes the lack of consultation. The company's plea that it had no information to supplement its plan provided a defense to a separate charge of unfair labor practices, but it did not excuse the company's failure to consult and negotiate with the union.
In NLRB v. Katz, 369 U.S. 736, 745, 82 S.Ct. 1107, n. 12 (1962), the Court observed that an employer did not violate the Act when, after notice and consultation, it "unilaterally" instituted a wage increase identical with the one which the union has rejected as too low, citing NLRB v. Bradley Washfountain Co., Inc., 192 F.2d 144, 150-152 (7th Cir. 1951), and NLRB v. Landis Tool Co., 193 F.2d 279 (3rd Cir. 1952). However, neither case factually resembles the situation the Board found at Korn, and the principles they express are not controlling.
In Bradley Washfountain the union had requested 16 cents and pay for holidays. The parties had bargained over this request. The company, after notice to the union, allowed 15 cents and part of the relief prayed as to pay for holidays. In holding that the company did not commit an unfair labor practice, the court pointed out that its action was not unilateral — that, on the other hand, it was compliance with the request of the union to the extent made.
In Landis Tool Co. the company allowed an increase of 7 cents an hour to 15 pattern makers with whose union it was currently bargaining at the same time that the wage increase was allowed to some 900 other employees in the plant. The court emphasized that the plant's over-all increase was granted the pattern makers in accordance with an understanding reached by the union and the company.
In neither case was the wage increase made without prior consultation and negotiation with the union in bargaining sessions on the issue of wages, and in neither case did the company attempt without consultation and negotiation to institute a merit plan.
Korn's wage increase was inextricably linked with its merit system for evaluating employees and awarding additional increases over a period of approximately four years. Bargaining does not take place in isolation and a proposal on one point serves as leverage for positions in other areas. Had the union been offered an opportunity to consult and negotiate with the company on the wage increase, it could more adequately have responded with counter proposals on the merit system and other matters. The interdependence of issues in a bargaining situation is recognized in NLRB v. Crompton-Highland Mills, Inc., 337 U.S. 217, 223, 69 S.Ct. 960, 963, 93 L.Ed. 1320 (1949):
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