NLRB v. Dalton Brick & Tile Corporation, 18765.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation301 F.2d 886
Docket NumberNo. 18765.,18765.
Decision Date13 April 1962



Marcel Mallet-Prevost, Asst. Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Melvin J. Welles, Atty., Stuart Rothman, Gen. Counsel, Richard J. Scupi, Atty., N.L.R.B., Washington, D. C., for petitioner.

Erle Phillips, John Bacheller, Jr., Fisher & Phillips, Atlanta, Ga., for respondent.

Before TUTTLE, Chief Judge, and CAMERON and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

The question presented here is whether, during the time bargaining for a collective bargaining contract is going on, an Employer may engage in a lockout as an economic weapon to enhance the acceptance of its, rather than the Union's, proposed terms. The Board held it could not. We disagree and deny enforcement of the Order.

The Board, adopting fully the report of the Examiner as its own, held that the Employer by the lockout interfered with § 7 rights (including the right to strike) of the employees1 thus committing a § 8(a) (1) unfair labor practice,2 discriminatorily encouraged or discouraged Union membership in violation of § 8(a) (3),3 and failed to bargain in good faith, thus violating § 8(a) (5)4 of the Act.

Apart from these sweeping fact-legal conclusions and similar underlying ones of like import, the subsidiary facts are either virtually undisputed or sufficient to support the version credited by the Board. Hence our differences are essentially ones of the correct applicable legal principles and the legal significance of the facts or some of the fact findings. This approach considerably simplifies the summary of the situation.

The Employer is a manufacturer of bricks in Dalton, Georgia. Because of outmoded equipment, its president characterizes the plant as marginal. Despite marked deficiences, it has to compete with large, modern and efficient plants in two nearby metropolitan centers. At the time of the lockout, the business was at a low ebb. It had a substantial overdraft at the bank, an inventory of about 1½ million unsold bricks, current liabilities of nearly $50,000 and accounts receivable of $31,000.

It was not, therefore, in shipshape to weather any extended or severe storm. Part of this was not altogether unexpected. Weather is an important factor since it bears directly on the ability of builders to use bricks. Because of this, there was a slack season from about November to the first of March. Consequently, the paid vacation generally came as a one or two-week Christmas furlough in December, although in some recent years the men had worked and had received the furlough pay in addition to regular wages. During this slack season, the plant produced brick for inventory against probable orders in the spring. As a general impression we understand that with common brick no longer a major item of production it once was, this plant's principal business came from specific construction projects in which orders were placed long in advance for later manufacture and delivery, but at specified fixed bid prices. In view of this, a collective bargaining contract being negotiated currently could markedly affect costs and especially if a settlement of any prolonged labor dispute called for retroactive increases.

But in this relative unprosperity the Employer enjoyed cordial and apparently quite happy labor relations with its employees and the Union5 whose actions over the years reflected both a conscious awareness of the economic plight of the company and a willingness to forego improvement in wages or working conditions which might add crippling burdens to the business. There had been no strikes or strike threats for a number of years, and only two isolated, and Union repudiated, wildcat momentary work stoppages. It was also usual for the renewal contract to be consummated long after the expiration of the current term. In other words, there was usually a period of quite some length in which — whatever the legal rights of each might have been for "No Contract, No Work"the parties nevertheless continued normal operations during bargaining.

The contract was to expire November 30, 1958. Within the time permitted the Union gave the 60-day notice of intention to change the terms. The first meeting was held December 5, 1958. The Union's demands included a wage raise of 12¢ per hour amounting to a 10 to 12% increase, premium pay for Saturday and Sunday work and all in excess of 8 hours, increased group health and life insurance benefits and changes in technical workloads. Stressing its precarious financial position and inability to increase costs, the Employer urged the Union to renew the contract without change.6 The implication of this and related discussions about attempting to continue the plant in full operation was, so the Board held, that "rejection of the Union's proposal would be met by a suspension of operations and a consequent loss of earnings by employees."

The next meeting was December 22, 1958. In the meantime, the usual 5 days' notice if the plant were to be shut down for a Christmas vacation furlough was not given. The indication was, therefore, that the plant would operate for all save Christmas Day. Just shortly before the meeting of December 22 commenced, the Manager laid off the crew then working. The Board did not, nor could it, find that this was the beginning of a lockout. Its sole significance was to afford a background for the conversations pointing to the Employer's purposes. To inquiries whether they would return to work after the meeting, the Manager stated, or implied, that agreement to renew the old contract would mean work for all save for Christmas Day.

At the meeting the Employer countered with a renewal of the existing contract plus certain improvements in insurance benefits and a reduction in specified workloads. The Union responded by a willingness to settle for a 5¢, rather than a 12¢, increase. Management rejected this as financially impossible. After a caucus of the employees during a recess, the Union countered with an offer to settle on the Employer's proposal plus only the Union's overtime demands. The Employer, again stressing financial conditions, declined. At the Employer's urging, this meeting was then adjourned to permit an immediate vote by the employees. An overwhelming majority of the employees — Union and nonunion alike — voted to reject the Employer's proposal. To the rhetorical inquiry made by the Employer's representative, "Where do we go from here?", the Union's negotiator replied that if further concessions could not be made, then "* * * it appears to me that we are deadlocked and we should call in the Federal Mediation and Conciliation and see if they can start negotiations to moving."

Shortly after the meeting adjourned, the Employer's plant manager laid off all of its hourly paid production and maintenance employees except one retained for shutdown and watchman purposes. This shutdown, and statements made by management, justified an inference by the employees that the plant was closed because agreement had not been reached and, more important, that the plant would reopen when and as a new contract was made.

At the Employer's request, the next meeting was held January 5, 1959. Neither party yielded in its demands. A few days later, the Employer's representative, convinced presumably from informal discussion with employees that the men were anxious to accept the Employer's terms and return to work, sought to obtain a vote by them. It was fully recognized that Union consent to such a vote would be required. Such a meeting was held January 12 with the Union negotiator giving his express permission for the vote. Again a large majority of the employees voted for rejection. This, in the words of the Employer's Manager, was interpreted to mean that "it doesn't look like the men want to go back to work as they said they did."

The next meeting was held in Atlanta with a Conciliator at the Federal Mediation and Conciliation Service office and a follow-up meeting was held two days later, February 8, without a conciliator present. At this meeting the parties, unaided by any outside mediator, reached agreement on all terms of a 3-year contract save the expiration date. The Union won substantial advantages including an ultimate 10¢ hourly (nearly 10%) increase, premium pay for Sunday plus the increases previously proposed by the Employer. The story ends, and perhaps the legal problem begins, with this description by the Board. "The very next day — February 24, 1959 — the Employer resumed operations, recalling all its laid off employees to work, although the contract was not actually ratified by the employees and signed until some days later."

The Board specifically rejected the five reasons urged by the Employer as the basis of its plant shutdown: (1) the financial condition, unrelated to contract negotiations, compelled it; (2) continued production during negotiations exposed the Company to unpredictable, but retroactive, cost increases; (3) it avoided likely embarrassment with customers from possible circulation of talk in the trade concerning its union troubles; (4) it was a defensive counter measure to possible future strikes if negotiations were prolonged into or near the busy spring season; and (5) a bargaining impasse had been reached prior to the lockout. It then made the crucial, affirmative finding that the shutdown was for the primary purpose of enhancing the Employer's bargaining position and the ultimate acceptance of its terms by the Union.

We accept the finding in the main. But in so doing, the Board's affirmative finding cannot be divorced entirely from these four overpowering economic factors which, without a doubt, had so much to do with the Employer's decision that these conditions made it essential ...

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