National Labor Relations Board v. Bell Aerospace Company Division of Textron Inc 8212 1598, No. 72

CourtUnited States Supreme Court
Writing for the CourtPOWELL
Citation416 U.S. 267,94 S.Ct. 1757,40 L.Ed.2d 134
Docket NumberNo. 72
Decision Date23 April 1974
PartiesNATIONAL LABOR RELATIONS BOARD, Petitioner, v. BELL AEROSPACE COMPANY DIVISION OF TEXTRON INC. —1598

416 U.S. 267
94 S.Ct. 1757
40 L.Ed.2d 134
NATIONAL LABOR RELATIONS BOARD, Petitioner,

v.

BELL AEROSPACE COMPANY DIVISION OF TEXTRON INC.

No. 72—1598.
Argued Jan. 14, 1974.
Decided April 23, 1974.

Syllabus

On a petition by a labor union for a representation election, the National Labor Relations Board (NLRB) held that the buyers employed by respondent company constituted an appropriate collective-bargaining unit and directed an election. The NLRB stated that even though the buyers might be 'managerial employees' they were nevertheless covered by the National Labor Relations Act (NLRA) in the absence of any showing that union organization of the buyers would create a conflict of interest in labor relations. Subsequently the buyers voted for the union, and the NLRB certified it as their exclusive bargaining representative. The company refused to bargain, however, and was found guilty of an unfair labor practice and ordered to bargain. The Court of Appeals denied enforcement on the grounds that (1) it was not certain that the NLRB's decision rested on a factual determination that the buyers were not true 'managerial employees' rather than on a new, and in the court's view, erroneous holding that the NLRB was free to regard all managerial employees as covered by the Act unless their duties met the conflict-of-interest touchstone, and (2) in view of its previous contrary decisions, the NLRB was required to proceed by rulemaking rather than by adjudication in determining whether buyers are 'managerial employees.' Held:

1. Congress intended to exclude from the protections of the NLRA all employees properly classified as 'managerial,' not just those in positions susceptible to conflicts of interest in labor relations. This is unmistakably indicated by the NLRB's early decisions, the purpose and legislative history of the Taft-Hartley amendments to the NLRA in 1947, the NLRB's subsequent construction of the Act for more than two decades, and the decisions of the courts of appeals. Pp. 274—290.

2. The NLRB is not required to proceed by rulemaking, rather

Page 268

than by adjudication in determining whether buyers or some types of buyers are 'managerial employees.' Pp. 290—295.

(a) The NLRB is not precluded from announcing new principles in an adjudicative proceedings, and the choice between rulemaking and adjudication initially lies within the NLRB's discretion. SEC v. Chenery Corp., 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995; NLRB v. Wyman-Gordon Co., 394 U.S. 759, 89 S.Ct. 1426, 22 L.Ed.2d 709. P. 294.

(b) In view of the large number of buyers employed in manufacturing. wholesale, and retail units, and the wide variety of buyers' duties, depending on the company or industry, any generalized standard would have no more than marginal utility, and the NLRB thus has reason to proceed with caution and develop its standards in a case-by-case manner with attention to the specific character of the buyers' authority and duties in each company. P. 294.

475 F.2d 485, affirmed in part, reversed in part, and remanded.

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

Richard E. Moot, Buffalo, N.Y., for respondent.

Mr. Justice POWELL delivered the opinion of the Court.

This case presents two questions: first, whether the National Labor Relations Board properly determined

Page 269

that all 'managerial employees,' except those whose participation in a labor organization would create a conflict of interest with their job responsibilities, are covered by the National Labor Relations Act; 1 and second, whether the Board must proceed by rulemaking rather than by adjudication in determining whether certain buyers are 'managerial employees.' We answer both questions in the negative.

I

Respondent Bell Aerospace Co., Division of Textron, Inc. (company), operates a plant in Wheatfield, New York, where it is engaged in research and development in the design and fabrication of aerospace products. On July 30, 1970, Amalgamated Local No. 1286 of the United Automobile, Aerospace and Agricultural Implement Workers of America (union) petitioned the National Labor Relations Board (Board) for a representation election to determine whether the union would be certified as the bargaining representative of the 25 buyers in the purchasing and procurement department at the company's plant. The company opposed the petition on the ground that the buyers were 'managerial employees' and thus were not covered by the Act.

The relevant facts adduced at the representation hearing are as follows. The purchasing and procurement department receives requisition orders from other departments at the plant and is responsible for purchasing all of the company's needs from outside suppliers. Some items are standardized and may be purchased 'off the shelf' from various distributors and suppliers. Other items must be made to the company's specifications, and the requisition orders may be accompanied by detailed blueprints and other technical plans. Requisitions often designate a particular vendor, and in some instances the

Page 270

buyer must obtain approval before selecting a different one. Where no vendor is specified, the buyer is free to choose one.

Absent specific instructions to the contrary, buyers have full discretion, without any dollar limit, to select prospective vendors, draft invitations to bid, evaluate submitted bids, negotiate price and terms, and prepare purchase orders. Buyers execute all purchase orders up to $50,000. They may place or cancel orders of less than $5,000 on their own signature. On commitments in excess of $5,000, buyers must obtain the approval of a superior, with higher levels of approval required as the purchase cost increases. For the Minute Man missile project, which represents 70% of the company's sales, purchase decisions are made by a team of personnel from the engineering, quality assurance, finance, and manufacturing departments. The buyer serves as team chairman and signs the purchase order, but a representative from the pricing and negotiation department participates in working out the terms.

After the representation hearing, the Regional Director transferred the case to the Board. On May 20, 1971, the Board issued its decision holding that the company's buyers constituted an appropriate unit for purposes of collective bargaining and directing an election. 190 N.L.R.B. 431. Relying on its recent decision in North Arkansas Electric Cooperative, Inc., 185 N.L.R.B. 550 (1970), the Board first stated that even though the company's buyers might be 'managerial employees,'2 they

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were nevertheless covered by the Act and entitled to its protections. The Board then rejected the company's alternative contention that representation should be denied because the buyers' authority to commit the company's credit, select vendors, and negotiate purchase prices would create a potential conflict of interest between the buyers as union members and the company. In essence, the company argued that buyers would be more receptive to bids from union contractors and would also influence 'make or buy' decisions in favor of 'make,' thus creating additional work for sister unions in the plant. The Board thought, however, that any possible conflict was 'unsupported conjecture' since the buyers' 'discretion and latitude for independent action must take place within the confines of the general directions which the Employer has established' and that 'any possible temptation to allow sympathy for sister unions to influence such decisions could effectively be controlled by the Employer.' 190 N.L.R.B., at 431.

On June 16, 1971, a representation election was conducted in which 15 of the buyers voted for the union and nine against. On August 12, the Board certified the union as the exclusive bargaining representative for the company's buyers. That same day, however, the Court of Appeals for the Eighth Circuit denied enforcement of another Board order in NLRB v. North Arkansas Electric Cooperative, Inc., 446 F.2d 602, and held that 'managerial employees' were not covered by the Act and were therefore not entitled to its protections.3 Id., at 610.

Encouraged by the Eighth Circuit's decision, the company moved the Board for reconsideration of its earlier

Page 272

order. The Board denied the motion, 196 N.L.R.B. 827 (1972), stating that it disagreed with the Eighth Circuit and would adhere to its own decision in North Arkansas. In the Board's view, Congress intended to exclude from the Act only those 'managerial employees' associated with the 'formulation and implementation of labor relations policies.' Id., at 828. In each case, the 'fundamental touchstone' was 'whether the duties and responsibilities of any managerial employee or group of managerial employees do or do not include determinations which should be made free of any conflict of interest which could arise if the person involved was a participating member of a labor organization'. Ibid. Turning to the present case, the Board reiterated its prior finding that the company had not shown that union organization of its buyers would create a conflict of interest in labor relations.

The company stood by its contention that the buyers, as 'managerial employees,' were not covered by the Act and refused to bargain with the union. An unfair labor practice complaint resulted in a Board finding that the company had violated §§ 8(a)(5) and (1) of the Act, 29 U.S.C. §§ 158(a)(5) and (1), and an order compelling the company to bargain with the union. 197 N.L.R.B. 209 (1972). Subsequently, the company petitioned the United States Court of Appeals for the Second Circuit for review of the order and the Board cross-petitioned for enforcement.

The Court of Appeals denied enforcement. 475 F.2d 485 (1973). After reviewing the legislative history of the Taft-Hartley Act of 1947, 61 Stat. 136, and the Board's decisions in this area, the court concluded that...

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