United States Steel Corporation v. Nichols, 12332.

• Decision Date: 25 January 1956
• Docket Number: No. 12332.,12332.
• Parties: UNITED STATES STEEL CORPORATION, Appellant, v. Sim L. NICHOLS, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

229 F.2d 396 (1956)

UNITED STATES STEEL CORPORATION, Appellant, v. Sim L. NICHOLS, Appellee.

No. 12332.

United States Court of Appeals Sixth Circuit.

January 25, 1956.

James C. Davis, Cleveland, Ohio (Laurence E. Oliphant, Jr., Squire, Sanders & Dempsey, Cleveland, Ohio, on the brief), for appellant.

Arnold S. Levin and Jacob Levin, Lorain, Ohio (Levin & Levin, Lorain, Ohio, on the brief), for appellee.

Before ALLEN, MARTIN and MILLER, Circuit Judges.

SHACKELFORD MILLER, Jr., Circuit Judge.

The appellee, Sim L. Nichols, filed this action for damages resulting from an alleged breach of a collective bargaining contract between the Union, of which he was a member, and the National Tube Company, by which he was employed. Following the merger of the National Tube Company with the United States Steel Corporation, the Steel Corporation was substituted as defendant. The case was heard by the District Judge without a jury. The District Judge gave judgment for the appellee in the amount of $25,000, from which this appeal was taken.

The facts for the most part are undisputed.

Nichols was first employed by the Company at its Lorain, Ohio, Plant on August 22, 1918, and thereafter was continuously employed from February 20, 1919 until May 31, 1946. He was one of the employees for whom the United States Steelworkers of America was the duly certified collective bargaining agent under the National Labor Relations Act, 29 U.S.C.A. § 151 et seq. On March 13, 1945, the Union entered into a collective bargaining contract with the Company which was in full force and effect until after May 31, 1946. Under the terms of this contract, employees such as Nichols could be discharged only for proper cause and through a procedure set out in the contract. On May 17, 1946, the Company notified Nichols that having attained the age of 65 years he was being retired on May 31, 1946 in accordance with the Company's plan of compulsory retirement. Pursuant to such notice, Nichols' employment was terminated effective May 31, 1946.

Nichols filed this action on July 17, 1950, charging in his amended complaint that the Company did "without proper cause or legitimate reason therefor discharge the plaintiff on May 31, 1946," and that said discharge was "for the reason that plaintiff had then attained the age of 65 years and for no other reason." The amended complaint also alleged that at the time of the discharge Nichols was physically fit and able to perform his work, and that the discharge constituted a breach of the contract of May 13, 1945.

The appellant, by its answer, admitted that the Union was the duly certified bargaining agent of the appellee, the execution of the contract of March 13, 1945, that the contract was in effect until after May 31, 1946, and that under the terms of the contract the plaintiff could be discharged only for cause and through the procedure specified in the contract. It claimed, however, that the appellee was not discharged, but was retired on May 31, 1946, in accordance with a plan of compulsory retirement of its employees which it had put into effect many years before the execution of the collective bargaining contract of May 13, 1945, and which it had openly enforced upon a uniform and non-discriminatory basis both before and after March 13, 1945, with the knowledge of the Union; that the appellee was barred from bringing this action because the collective bargaining contract provided a detailed administrative remedy, by way of a grievance and compulsory arbitration procedure, which the appellee had not used and which constituted a condition precedent to appellant's right to invoke the jurisdiction of the Court; and that appellee's claim was settled by the execution of an agreement on March 1, 1950, between the appellant and the Union as his bargaining agent.

Appellee by his reply denied that prior to May 31, 1946, there was in force and effect at appellant's plant at Lorain, Ohio, a plan of compulsory retirement of employees. While admitting that he had not invoked the grievance and arbitration procedure provided by the contract, he alleged that the appellant had always taken the position that compulsory retirement of an employee at the age of 65 was a right retained by the Company which was not subject to the arbitration and grievance procedure provided by the bargaining contract, and that the Board of Conciliation and Arbitration established by the contract was without jurisdiction in the matter, by reason of which it was useless procedure on his part to attempt to arbitrate the claim.

The District Judge was of the opinion that a bargaining agreement expressed the complete obligations and rights of the parties relating to employees, including conditions and tenure of employment and conditions respecting means for termination of employment; that if some undisclosed rights in respect to employment are not included, or without notice to the employee are withheld, on the theory that they are not the subject of bargaining the contract does not express the full coverage of employment rights; that if management intended to retain a compulsory retirement practice it should have reserved that method of termination of employment in the contract or notified its employees of its purpose and intention in respect of such policy; and that it was not to be supposed that the employer could withhold an employment right not recorded or reserved by the contract. He found that while there was evidence that the appellant had a somewhat flexible retirement policy from 1931 to 1941, the policy of compulsory retirement at 65 was adopted in 1941 and was suspended or modified during the war emergency; that no representative of the Company or of the Union notified the appellee of such policy before the notice on May 17, 1946; that there was not sufficient evidence to charge the appellee with knowledge of the existence of the policy or to support a claim of his acquiesce in any such policy; and that the appellee was not bound by the acquiescence of Union leaders or representatives in such a policy which was not brought to his knowledge. He ruled that there was no question that the word "discharge" had a different meaning than "compulsory retirement"; that the appellee was not "discharged" in the usual and ordinary sense of the term; that the legal and practical effect of compulsory retirement was the same as a discharge and that appellee's employment was effectively and forcibly terminated without any cause expressed or contemplated by the labor agreement; and that there was no contractural ground upon which appellant could base the forcible termination of appellee's contract. On the basis of these rulings he entered judgment for the appellee computing damages on the basis of what he would have earned under continued employment during his life expectancy of approximately seven years, credited by what amounts he had been able to earn since his retirement. Nichols v. National Tube Co., D.C., 122 F.Supp. 726.

The first question presented by the foregoing analysis of the rights of the parties is whether it was necessary for the appellant in order to keep in effect its policy of compulsory retirement for age to provide in the contract for the retention of such right. That requires a consideration of the fundamental principles of the law of master and servant as changed or affected by the National Labor Relations Act.

The relationship of master and servant or employer and employee is not dependent upon a collective bargaining contract. It has existed for innumerable years, long before the origin of the modern-day collective bargaining agreements as provided and made effective by the National Labor Relations Act. The common law rights inherent in such relationship still exist except to the extent that they may be modified by legislation or by the specific contract between the employer and the employee. One of such common law rights is the right of the employer to select and hire his employees and to terminate the employment at will. That right was not abridged by the National Labor Relations Act or by any other statute applicable to the present case. N. L. R. B. v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45, 57 S.Ct. 615, 81 L.Ed. 893; N. L. R. B. v. West Ohio Gas Co., 6 Cir., 172 F.2d 685, 688; N. L. R. B. v. Tennessee Coach Co., 6 Cir., 191 F.2d 546, 550; N. L. R. B. v. Superior Co., 6 Cir., 199 F.2d 39, 42.

It was the purpose of the National Labor Relations Act, as amended by the Labor Management Relations Act, that the execution of collective bargaining agreements between employers and employees would result through the process of good faith collective bargaining. It is well settled, however, that the Act does not compel the making of any agreement whatsoever between the employer and employees, nor does it regulate the substantive terms governing wages, hours and working conditions which are involved in the bargaining and about which an agreement may be reached. N. L. R. B. v. Jones & Laughlin Steel Corp., supra, 301 U.S. at page 45, 57 S.Ct. at page 628; N. L. R. B. v. American National Insurance Co., 343 U.S. 395, 402, 72 S.Ct. 824, 96 L.Ed. 1027; N. L. R. B. v. United Clay Mines Corp., 6 Cir., 219 F.2d 120, 124-125. The Labor Management Relations Act in defining the phrase "to bargain collectively" expressly provides * * * "but such obligation does not compel either party to agree to a proposal or require the making of a concession." Sec. 158(d), Title 29, U.S. C.A. It would seem to logically follow that the common law right on the part of the employer to select his employees and to terminate their employment at will continues to exist except to the extent that it may be modified by the bargaining contract with the Union. Instead of making this right dependent upon a provision to that effect in the contract, it is a right which an employer normally has unless it has been eliminated or modified by the contract. Accordingly,...