NLRB v. Cone Mills Corporation

• Decision Date: 06 February 1967
• Docket Number: No. 10585.,10585.
• Citation: 373 F.2d 595
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CONE MILLS CORPORATION, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

373 F.2d 595 (1967)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CONE MILLS CORPORATION, Respondent.

No. 10585.

United States Court of Appeals Fourth Circuit.

Argued November 1, 1966.

Decided February 6, 1967.

COPYRIGHT MATERIAL OMITTED

Gary Green, Atty., N. L. R. B. (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Wayne S. Bishop, Atty., N. L. R. B., on brief), for petitioner.

Thornton H. Brooks, Greensboro, N. C. (McLendon, Brim, Holderness & Brooks, Greensboro, N. C., on brief) for respondent.

Before BOREMAN, BELL and CRAVEN, Circuit Judges.

CRAVEN, Circuit Judge:

The Company and the Union¹ have negotiated and executed successive collective bargaining contracts at the Minneola plant since November 1955. The most recent contract, renewed in 1961, included a seniority provision that all layoffs and recalls would be determined on the basis of departmental seniority, provided only that an employee exercising his seniority right must be adequately qualified to fill the position sought. The contract also provided that five shop stewards, as designated by the Union, would be given superseniority for the purpose of layoffs and recalls.

In the fall of 1962 the Union notified the Company that it wished to terminate the existing contract upon its expiration date, and the contract thereby expired on November 10, 1962. Since then, the parties have engaged in efforts to negotiate the terms of a new collective bargaining agreement, and it is not suggested that their efforts have been other than in good faith.²

During January 1964, more than a year after contract termination by the Union, the Company, for economic reasons, laid off several weaver trainees. Estelle Dunn was laid off on January 3, 1964. Another weaver trainee was laid off a "few days"³ later. Layoffs were in order of normal juniority in disregard of the superseniority status of shop steward Estelle Dunn under the terminated contract. The filing of her grievance resulted, and the question of her right to superseniority is now presented to this court.

From the standpoint of Estelle Dunn, who has lost a "few days" employment, if the Company's conduct is adjudged unlawful, this case will be another "one of the least consequential unfair labor practices in the Act's history."⁴ Although the outcome is of trivial monetary significance, the larger question presented is said to be of considerable importance. As framed by Board counsel, it is: "Whether the Board properly found that the company violated Section 8(a) (5) and (1) of the Act by unilaterally terminating superseniority rights for shop stewards while engaged in negotiations with a certified bargaining representative."⁵

I.

It is axiomatic in contract law that parties to an agreement are relieved of their mutual obligations upon termination of the agreement. Restatement, Contracts § 386 (1932). A collective bargaining agreement is not, of course, an ordinary contract. See, e. g., J. I. Case Co. v. NLRB, 321 U.S. 332, 334, 64 S.Ct. 576, 88 L.Ed. 762 (1944); Kennedy v. Westinghouse Electric Corp., 16 N.J. 280, 108 A.2d 409, 47 A.L.R.2d 1025 (1954); see generally Cox, The Legal Nature of Collective Bargaining Agreements, 57 Mich.L.Rev. 1 (1958). Since parties to a collective bargaining agreement normally contemplate a subsisting contractual relationship of indefinite duration with not infrequent renewals or renegotiations, and since the employment relationship generally continues beyond expiration or termination of the agreement, it has been said that some rights created by collective bargaining agreements survive the termination of the agreement. 61 Colum.L.Rev. 1363, 1364 (1961). It is necessary, however, to carefully define what is meant by "survive."

We think it conceptually correct to say that an employer is always free after termination of the contract to unilaterally change conditions previously established by the contract. In this sense there is no "survival." In American Ship Building, in enumerating the powers of employers that exist in counterbalance of the employee's power to strike, the Court said: "Similarly, the employer can institute unilaterally the working conditions which he desires once his contract with the union has expired." American Ship Building Co. v. NLRB, 380 U.S. 300, 316, 85 S.Ct. 955, 966, 13 L.Ed.2d 855, 866 (1965).

But the more important question is not whether the employer is free to abolish a contractually derived right after contract termination. Clearly he may do so. The question is how and when he may do so, i. e., whether he must give reasonable opportunity to bargain before he acts. The obligation, to the extent there is one, to give notice and opportunity to bargain derives not from the contract but from the National Labor Relations Act. That there may be such an obligation is what is meant by "survival." For this reason, it is not helpful to analysis to speak of superseniority rights having become "vested."⁶ If "vested," it should be added that such rights are subject to being "divested" by the employer after affording reasonable opportunity to bargain. To a less extent, the use of the term "survive" can be misleading. Rights that survive contract termination do not live forever and can be destroyed after affording the opportunity to bargain.

Not all rights created by a collective bargaining agreement "survive" termination. Some union security provisions, e. g., union shop and check-off, do not. An employer may unilaterally discontinue them without affording the union opportunity to bargain. See Industrial Union of Marine and Shipbuilding Workers v. NLRB, 320 F.2d 615 (3rd Cir. 1963).

Estelle Dunn's superseniority is closely related to union security. The primary purpose of superseniority is to help the union further establish itself by policing the contract and rewarding union leadership. Even so, it cannot be said that it is not a condition of Estelle Dunn's employment. Not without difficulty, we conclude that this type of superseniority, is one of those rights which "survive" contract termination, i. e., the employer may abolish superseniority — but only after affording the union an opportunity to bargain. See Industrial Union of Marine and Shipbuilding Workers v. NLRB, supra.

II.

It is urged by the employer that whether a contract right "survives" depends upon whether it was under negotiation at the time of unilateral action. On January 3, 1964, when the Company laid off Estelle Dunn, superseniority was not under negotiation with the Union.⁷

It was said by the Supreme Court in Katz "that an employer's unilateral change in conditions of employment under negotiation is * * * a violation of § 8(a) (5)." NLRB v. Katz, 369 U.S. 736, 743, 82 S.Ct. 1107, 1111, 8 L.Ed.2d 230 (1962). (Emphasis added.) We do not think the Court meant to imply that an employer is always free to make unilateral changes with respect to conditions of employment that are not "under negotiation" without affording the union opportunity to bargain with respect to such changes. See Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964). It seems to us that the predominant factor is not whether the subject was "under negotiation," nor even whether general negotiations are then being conducted, but whether in the light of all of the circumstances there existed reasonable opportunity for the Union to have bargained on the question before unilateral action was taken by the employer. Notice is important only as it bears upon whether there actually was such opportunity. Common law conceptions of notice, including formality and specificity, are no more helpful in this area than are traditional contract notions.

III.

Section 8(a) (5) of the National Labor Relations Act provides that it shall be an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of his employees * * *." 29 U.S.C.A. § 158(a) (5). The statute itself imposes a duty to bargain "in good faith." 29 U.S.C.A. § 158(d). Recently "the story is one of decisions transforming the simple requirements of union recognition and bona fide negotiation into doctrines through which the NLRB * * * has come to condemn * * * conduct which sharply departs from good bargaining practice." Cox, The Duty to Bargain in Good Faith, 71 Harv.L.Rev. 1401, 1403 (1958).

In this case, the Labor Board has condemned unilateral action by the Company as a per se⁸ violation of the Act. It is well to remember that the per se doctrine originated as simply a rule of evidence, arising out of a felt necessity to relieve the Board of the sometimes heavy burden of proving want of good faith. Such a prima facie rule of evidence has unquestionably been approved by the Supreme Court in Katz. NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L. Ed.2d 230 (1962). But we do not read that decision as an adoption of the per se doctrine. The Court held that the Board "may" hold such unilateral action to be an unfair labor practice in violation of Section 8(a) (5), but it did not hold that the Board must in every instance do so, and it recognized that such unilateral action may, although rarely, be justified by reasons of substance. We do not think Katz leaves us free to disregard the "record as a whole" in reviewing the question of whether or not unilateral action amounts to a refusal to bargain. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). The Court specifically did not "foreclose the possibility that there might be circumstances which the Board could or should accept as excusing or justifying unilateral action * * *." NLRB v. Katz, supra, 369 U.S. at 748, 82 S.Ct. at 1114, 8 L.Ed.2d at 238-39.

Thus, we think it is incorrect to say that unilateral action is an unfair labor practice per se. See Cox, The Duty to Bargain in Good Faith, 71 Harv. L.Rev. 1401, 1423 (1958). We think it...