National Labor Relations Board v. JH Allison Co., 10411.

Decision Date26 January 1948
Docket NumberNo. 10411.,10411.
Citation165 F.2d 766
CourtU.S. Court of Appeals — Sixth Circuit

Jack G. Evans, of Washington, D. C. (A. Norman Somers and Marcel Mallet-Prevost, both of Washington, D. C., on the brief), for petitioner.

Jac Chambliss, of Chattanooga, Tenn. (Chambliss, Chambliss & Brown, of Chattanooga, Tenn., on the brief), for respondent.

Before SIMONS, ALLEN and MARTIN, Circuit Judges.

MARTIN, Circuit Judge.

The National Labor Relations Board ordered the respondent, J. H. Allison & Company, a Tennessee corporation doing business in Chattanooga, Tennessee, to cease and desist from refusing to bargain collectively concerning so-called "merit wage increases" with a labor union (affiliated with the American Federation of Labor), as exclusive representative and bargaining agent of its production workers; and to grant no merit wage increases to such employees "without prior consultation with the Union."

Respondent was affirmatively ordered to bargain collectively with the union regarding merit wage increases; and, upon request, to furnish the union "full information with respect to merit wage increases, including the number of such increases, the amount of such increases, and the standards employed in arriving at such increases." The customary directions as to notice-posting and notification of the Regional Director were given. This court is petitioned to enter a decree enforcing the Board's order in entirety. Respondent vigorously opposes the petition.

The Labor Board agreed with the Trial Examiner that respondent had violated section 8(5) of the National Labor Relations Act, 49 Stat. 449, 29 U.S.C.A. § 158 (5); affirmed his rulings; and substantially adopted his findings, conclusions and recommendations.

The material facts are not in dispute. The respondent company for approximately five years had dealt with the union and had executed exclusive bargaining contracts with it as representative of the employees. At the time of the occurrences during 1945 upon which the complaint is based, one of these annual agreements, dated January 7, 1945, was in effect. This contract provided for a minimum wage scale; but no provision was made therein for merit increases. Indeed, the subject was not mentioned in the signed agreement. A few months after the execution of this contract, the company, in conformity with its past practice, gave some thirty-one, out of a total number of from one hundred and five to one hundred and fifteen, of its employees wage increases. Upon learning this, an official representative of the union requested respondent on May 2, 1945, to furnish the union with a list of the names of the employees who had received increased pay, together with the amount of the raise granted each. He stated that such information was necessary as a basis for further collective bargaining negotiations on wage rates. Respondent refused to divulge the desired information, and was likewise adamant to similar later requests from the union. The reasons given by the company for rejection were that merit wage increases are not proper subject matter for collective bargaining, but fall within exclusively managerial function; and that the union could obtain from its own membership the information which it sought.

In his testimony before the Trial Examiner, Vice President McCall frankly stated the company's position, thus: "We feel that the granting of these individual merit increases is a matter that is determined on the basis of an individual's performance, and that the Union is not involved in that, as a negotiated increase; that is, it isn't collective bargaining; that the fact that it is based on merit removes it from a bargaining and a negotiation, which indicates that it is something that is discussed and compromised, perhaps; but we have felt that an individual merit increase is a reward for increased production or skill, and that that has always been our policy to recognize that whenever we could, when we felt it was justified. * * * We think that it is not the function of the — the proper function of the Union under our contract to discuss individual merit increases."

Upon substantial evidence, the Labor Board found that during negotiations for 1946, the ensuing year, the union requested respondent to include in the contract a clause concerning the union's rights with respect to merit increases and other changes in wages, but that respondent "presumably adhering to its previously announced position that merit increases are not a bargainable issue," refused the request of the union, which "then dropped its request stating that the matter would probably be settled in the proceedings which it had instituted before the Board."

In its decision, the Board expressed concurrence in the Trial Examiner's conclusion that the respondent had not fulfilled its obligation to bargain collectively with the union. No merit was found in the company's contention that merit increases are a prerogative of management; but they were deemed by the Board "an integral part of the wage structure" and, as such, a proper subject for collective bargaining. The refusal of respondent, during the formulation of the 1946 contract, to negotiate with the union concerning merit wage increases and to furnish information upon the subject so that the union could adequately represent the employees, was declared to be the basis of the Board's finding that respondent had refused to bargain within the meaning of section 8(5) of the Act.

One member of the Labor Board dissented. He expressed accord with his colleagues "that merit increases are a proper subject of collective bargaining"; but considered sound the contention that "it was not incumbent upon respondent to disclose information concerning merit wage increases" when requested by the union to do so on May 2, 1945, inasmuch as the contract in effect on that date contained a minimum wage scale but was silent as to maximum wages. He pointed out that the parties had reached an agreement for a definite period of time and that "the Act does not require an employer to furnish information upon which it has based certain merit increases, not in violation of the provisions of the existing contract, after only 4 months of the contract year have elapsed."

The minority Board member stated further: "I believe it is unwise, granting that maximum as well as minimum wages are bargainable subjects, to hold that the respondent company refused to bargain in the negotiations for the new agreement. The findings of the Trial Examiner which are not in dispute reveal that the respondent and the Union, as a result of these negotiations, reached an understanding which was embodied in a collective agreement for an additional year. There is no obligation under section 8(5) for an employer to agree to anything. Consequently, it cannot be said that an employer failed in his duty under the Act when he `traded off' a demand on one issue for a substantial concession on another. Had the parties reached an impasse, then we would have been confronted by quite another question."

We think the dissent does not meet the real issue. As to the unseasonableness of the demand on May 2, 1945, it should not be overlooked that, according to the record, the demand for the information was renewed later during the negotiations for the 1946 contract. Moreover, the constant position of respondent has been and now is that merit increases are not, under the National Labor Relations Act, a proper subject for collective bargaining; and that the company will not negotiate or bargain with the union upon the subject until "ordered so to do by final authority." This pat position of the employer necessitates the course pursued by the union to enforce the rights of its membership claimed under the Act. Nor do we see logical justification in the view that in entering into a collective bargaining agreement for a new year, even though the contract was silent upon a controverted matter, the union should be held to have waived any rights secured under the Act, including its right to have a say-so as to so-called merit increases. Such interpretation would seem to be disruptive rather than fostering in its effect upon collective bargaining, the national desideratum disclosed in the broad terms of the first section of the National Labor Relations Act, 29 U.S.C.A. § 151.

In its brief, respondent states its insistence that "the ex parte giving of merit increases does not come within the scope of collective bargaining in the absence of a provision in its contract to the contrary, and that under the existing contract and usage obtaining between the Company and the Union, the merit increases were not the subject of collective bargaining." Respondent asserts that the real and sole issue in the case is whether, under the existing contract and practice, it is necessary for respondent "to affirmatively bargain with the union with respect to merit increases." Respondent argues that it is common practice for employers to grant merit increases; and that, unless there is an express stipulation in the bargaining agreement to the contrary, the employer may at any time during the term of the contract give an individual employee a merit increase within "the network" of the wage scale negotiated between the employer and the union representing its employees as bargaining agent. It is pointed out that, should there be a charge of discrimination — which there is not in this case — the matter would fall within the ambit of grievance procedure.

In our judgment, the argument of ...

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