National Labor Relations Board v. Baldwin L. Works

Citation128 F.2d 39
Decision Date06 May 1942
Docket NumberNo. 7639.,7639.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)



Bertram Edises, of Washington, D.C. (Robert B. Watts, Gen. Counsel, Laurence A. Knapp, Associate Gen. Counsel, and Ernest A. Gross, Asst. Gen. Counsel, all of Washington, D. C., on the brief), for petitioner.

William Clarke Mason, of Philadelphia, Pa. (Gilbert H. Montague, of New York City, and Frederick H. Knight and Morgan, Lewis & Bockius, all of Philadelphia, Pa., on the brief), for respondent.

Before BIGGS, MARIS, CLARK, JONES, and GOODRICH, Circuit Judges.

JONES, Circuit Judge.

The National Labor Relations Board petitions for the enforcement of its order which directs Baldwin Locomotive Works, the respondent, to cease and desist from certain unfair labor practices, to disassociate a company-dominated union, and to post the notices usual in such circumstances. The order eventuated in a proceeding which had been formally initiated by the Board's complaint on charges filed by the Steel Workers Organizing Committee (S. W. O. C.).

Some of the respondent's labor practices which the complaint alleged to be unfair had been committed while the respondent was operating its business as debtor in possession under an order of the United States District Court for the Eastern District of Pennsylvania in a reorganization proceeding under Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207. A plan of reorganization was approved therein by the District Court and a decree and order discharging the respondent from bankruptcy was thereafter entered. Several months later the complaint herein was filed.

A hearing on the complaint was duly had before a trial examiner. The respondent appeared in the hearing and was represented throughout by counsel, as were also the Board, the S. W. O. C., and a local labor organization known as the Federation of Baldwin Employees, which was formally granted leave to intervene. The hearing extended over a number of months during which time more than sixteen thousand pages of testimony were taken.

The respondent opposes the entry of a decree enforcing the Board's order on the ground that (1) the respondent is not chargeable with unfair labor practices which occurred while its property and business were being managed and operated by it as the debtor in possession under order of the District Court in the reorganization proceeding, (2) the Board's findings of fact are not supported by substantial evidence, (3) the Board's order is invalid and improper, and (4) the respondent was denied the full and fair hearing which due process requires.

The Board's jurisdiction of the subject-matter of the complaint (except for what occurred during the reorganization proceeding) is not questioned, nor could it well be. The Board found, and it is undisputed, that the respondent, a Pennsylvania corporation, having its principal offices and plant at Eddystone, Pennsylvania, was engaged in interstate commerce throughout the period covered by the complaint and was, therefore, subject to the provisions of the National Labor Relations Act. The legal conclusion gave proper effect to the fact thus competently found.1

On the merit of the charges in the complaint as supported by the evidence, the case is a relatively simple one in the narrowness of the questions involved. But the mistaken zeal of respondent's trial attorney in endeavoring to obfuscate the matter which the complaint had properly put in issue succeeded to the point where the consequent voluminous record bristles with exceptions. Many of these are now urged upon us by reference to numerous record-page citations in support of the respondent's contentions that the trial examiner was biased and prejudiced and that he denied the respondent an opportunity to litigate justiciable issues.

The respondent also complains that the Board availed itself of the services of subordinates in assembling from the record the matter which it accepted as the factual basis for its findings. From this, the respondent argues that the Board's method of arriving at its decision amounted to a denial of due process. Before coming to the merits of the Board's order we shall treat first with the question as to whether the respondent is chargeable with the labor practices pursued by it while debtor in possession of its plant and business in bankruptcy, as well as the respondent's assault on the trial examiner's conduct and the course pursued by the Board in deciding the matter.

The complaint, which was filed on December 21, 1938, alleged the commission, inter alia, of unfair labor practices by the respondent between February 25, 1935 (the date of the filing of the respondent's petition for reorganization in bankruptcy) and September 23, 1938 (the date of the respondent's discharge from the bankruptcy proceeding). A plan of reorganization, approved by the District Court on September 1, 1937, had been duly effectuated.

Even though some of the unfair labor practices with which the respondent is charged were committed while it was managing and operating its business and properties as the debtor in possession under court order, it will hardly be denied that a debtor in possession is responsible for the unfair labor practices which occur during a reorganization. Its status as an employer is no different, so far as the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., is concerned, than that of any other employer. Court supervision of corporate reorganization affords the operating possessor no freedom from its statutory duty to its employees.2 And, where managerial control and economic interest of the debtor in possession and the reorganized company are the same, it could be only the blindness of formalism that would suggest separately instituted proceedings against the predecessor and the successor for the redress of their respective but continuous unfair labor practices. In National Labor Relations Board v. Colten, 6 Cir., 105 F.2d 179, 183, it was said that "* * * the strife which is sought to be averted is no less an object of legislative solicitude when contract, death, or operation of law brings about change of ownership in the employing agency." Nor is the legislative solicitude any the less where the ownership of the employing agency undergoes no substantial change upon reorganization. "An employer cannot be permitted, by reorganization or transfer, to nullify the Board's order and make it necessary to start new proceedings against the new owner of the business." Bethlehem Steel Co. v. National Labor Relations Board, App.D.C., 120 F.2d 641, 650, 651. In Southport Petroleum Co. v. National Labor Relations Board, 62 S.Ct. 452, 456, 86 L.Ed. ___, the Supreme Court recently held a Board order against a predecessor in interest to apply equally to the successor, proof of "a bona fide discontinuance and a true change of ownership" being wanting. Indeed, the respondent concedes, as it must, that, where a complaint for unfair labor practices has issued against a predecessor, the proceeding may be continued against the successor.3 Can the successor be any less responsible for the predecessor's unfair labor practices where the complaint issues against the successor? We think not. The crucial matters are the commission of the unfair labor practices and the identity of interest of the employing agencies which perpetrated them.

In the present instance, the only change effected in the debtor by the reorganization was a readjustment of its bond and capital structures.4 The claims of creditors (other than bond) were unaffected; and, except for the retirement of one officer, the respondent's executive personnel and management were of the same group as they had been while the company was the debtor in possession.5 In no legally significant sense, therefore, can the respondent be differentiated from the debtor in possession so far as the employer-employee relationship is concerned. Manifestly, this works no injustice to the present respondent. As already pointed out, even the claims of general creditors were wholly unimpaired by the reorganization and the same employing corporation which entered that proceeding emerged therefrom with the same management and control intact.

In reality, except for the back pay provisions of the Board's order, the question of the reorganized company's responsibility for its unfair labor practices while debtor in possession is presently academic. The record discloses conduct on the part of the respondent, following its emergence from the reorganization proceeding, of itself sufficient to sustain the charges of the complaint. The question therefore is merely what effect did the debtor's discharge in the reorganization proceeding have upon the reorganized company's liability for back pay. The answer is that it had none.

The Board's order of reparation constitutes something other than an ordinary debt. The power to award back pay, which the statute authorizes, exists for and is exercised in the public interest. See Agwilines, Inc., v. National Labor Relations Board, 5 Cir., 87 F.2d 146, at page 150, where the Court of Appeals aptly said that "The procedure the statute outlines is not designed to award, the orders it authorizes do not award, damages as such. The proceeding is not, it cannot be made, a private one to enforce a private right. It is a public procedure, looking only to public ends. The statute has in mind the maintenance and furthering of industrial amity, and therefore peace, the prevention of industrial war." See also National Labor Relations Board v. Newark Morning Ledger Co., 3 Cir., 120 F.2d 262, 267, 268, 137 A.L.R. 849. The deterrent function of the back pay award in inducing general obedience to the Labor Relations Act has been noted.6 In the very nature and purpose of the power which the Board exercises in...

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