National Labor Relations Bd. v. Truitt Mfg. Co.

Decision Date30 July 1955
Docket NumberNo. 6989.,6989.
CourtU.S. Court of Appeals — Fourth Circuit

Duane Beeson, Atty. National Labor Relations Board, Washington, D. C. (Theophil C. Kammholz, Gen. Counsel, Chicago, Ill., David P. Findling, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Frederick U. Reel, Atty., National Labor Relations Board, Washington, D. C., on brief), for petitioner.

R. D. Douglas, Jr., Greensboro, N. C., and Whiteford S. Blakeney, Charlotte, N. C. (Douglas, Douglas & Ravenel, Greensboro, N. C., and Pierce & Blakeney, Charlotte, N. C., on the brief), for respondent.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

PARKER, Chief Judge.

This is a petition to enforce an order of the National Labor Relations Board which found the Truitt Manufacturing Company guilty of an unfair labor practice in refusing to bargain with a union representing its employees in that, although bargaining with respect to all matters as to which it was asked to bargain, the company refused a request of the union that it allow an accountant to examine its books and records for the purpose of ascertaining whether it was financially able to grant the wage increase demanded by the union. The Board held that because the company had represented in the course of bargaining negotiations that it was not able to pay the wage increase demanded, a refusal to comply with the request of the union amounted to a refusal to bargain in good faith. The company contends that it bargained in good faith, and that it was not required to disclose to the union, as an incident of such bargaining, the books and records showing its financial condition and involving confidential matters such as manufacturing cost which it would be harmful to its business to make public. We think that the position of the company is correct and that it may not be held guilty of an unfair labor practice because of refusal to furnish such information to the union or to allow its books and records to be examined at the union's request.

The facts are that the company had duly recognized the union as the bargaining representative of its employees and had been bargaining with it for a period of three years. In the summer of 1953, the union made demand for a 10 cents per hour increase in wages and representatives of the union and the company met and negotiated with respect to the matter. The company offered a 2½ cents per hour increase and the union called a strike which lasted for a week. After the strike was ended the union renewed its demand for the 10 cents increase, and the company again refused to accede to the demand but granted a 2½ cents raise, which was put into effect. During the course of these negotiations, the company made statements on a number of occasions to the effect that it could not afford a 10 cents increase, that it was paying wages as high or higher than competitors and that it had lost contracts to lower bidders because of bids based on the wages that it was paying. The union asked to see its books and records in substantiation of these statements. The company offered to produce all records relating to bids and wages paid but refused to permit examination of its books and records with respect to other matters. The letters of the union making the first demand was a letter of September 2, 1953, which contained the following paragraph:

"Representatives for the Truitt Mfg. Company have claimed, during our lengthy negotiations, the inability to grant an increase in excess of two and one-half (.02½c) cents per hour, therefore Shopmen\'s Local Union No. 729 respectfully requests permission to have a certified public accountant examine such books, records, financial data, etc. to ascertain or substantiate the Company\'s position or claim of being unable to meet the Union\'s proposal and/or counter proposals of a wage increase in excess of two and one-half (.02½c) cents per hour."

Counsel for the company in a letter of September 4, 1953, said in answer to this:

"I have been authorized to state to you that the Company takes the position that confidential financial information concerning the affairs of this Company is not a matter of bargaining or discussing with the Union. The Company\'s position throughout the recent negotiations and in previous sessions with you and the Union, has been that the question of granting a wage increase concerns our competitive bidding for jobs to keep the plant operating.
"We have endeavored to point out to you that the average wage of Truitt Manufacturing Co. is already higher than the average wage of all our competitors in this area. We have stated many, many times that in bidding for contract work, our bids must be made on the basis of what the labor will cost to perform these jobs and that we simply cannot get the work if our labor costs used in our estimates are higher than those of our competitors. The Union committee has persistently ignored our comparative rates, has made no answer to our exhibits of how we compare with our competitors, and has continued to ask for higher pay, on the grounds that the employees need it, and that we are under the general average of the `Industry\', which you apparently define as being all steel plants in the United States.
"We will be glad at any time to show you our books and records regarding the wages we pay to our employees whom you represent, although we think you have this information already."

In reply to this letter the union under date of September 14, 1953, wrote a letter repeating its demand in the following language:

"If the Company still contends that it cannot afford to grant the wage increase of ten cents (10c) per hour requested by the Union, we respectfully request that the Company submit full and complete information and evidence of its financial status to substantiate its claim, including bonafide evidence as to dividends paid by the Company during the past ten (10) years and the breakdown of its manufacturing costs."

It was failure to comply with these demands which the Trial Examiner and the Board held to be refusal to bargain in good faith. The basis of the conclusion by the Examiner was stated by him as follows: "An employer cannot refuse a demanded wage increase on the grounds that such increase would put him out of a competitive position, even though he were paying the prevailing area wage scale, unless he factually documents this conclusion." The Board refused to adopt this holding of the Trial Examiner but held that: "When an employer seeks to justify the refusal of a wage increase upon an economic basis, as did the Respondent herein, good faith bargaining under the Act requires that upon request the employer attempt to substantiate its economic position by reasonable proof." The Board was, of course, clearly right in rejecting the holding of the Trial Examiner. We think it equally clear that the Board was wrong in holding that good faith bargaining under the act requires that an employer substantiate its economic position by submitting its books for examination by the union with which it is bargaining.

One of the first decisions upholding the statutory requirement of collective bargaining was the decision of this court in Virginian Ry. Co. v. System Federation No. 40, 4 Cir., 84 F.2d 641, 646, affirmed 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789. In upholding a mandatory injunction requiring the parties to bargain collectively under the terms of the Railway Labor Act, we said:

"We think it clear that the act of 1934 did more than express a pious hope on the part of Congress that the carriers would deal with the representatives which their employees might choose. In providing that `the carrier shall treat with the

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3 cases
  • United States v. Stevens
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 4 Agosto 1955
  • National Labor Relations Board v. Truitt Manufacturing Co
    • United States
    • U.S. Supreme Court
    • 7 Mayo 1956
    ...that it could not be held guilty of an unfair labor practice because of its refusal to furnish the information requested by the union. 4 Cir., 224 F.2d 869. In National Labor Relations Board v. Jacobs Mfg. Co., 196 F.2d 680, the Second Circuit upheld a Board finding of bad-faith bargaining ......
  • Metlox Manufacturing Company v. NLRB
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 5 Mayo 1967
    ...of the Board's order in its present form. The parties here are in substantial accord as to the applicable law. NLRB v. Truitt Mfg. Co., 4 Cir., 224 F.2d 869, stands for the proposition that where an employer claims inability to pay, he may be required to substantiate that claim. The Court i......

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