Fibreboard Paper Products Corporation v. National Labor Relations Board

PETITIONER:Fibreboard Paper Products Corporation
RESPONDENT:National Labor Relations Board
LOCATION:Criminal District Court, Parish of New Orleans

DOCKET NO.: 14
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 379 US 203 (1964)
ARGUED: Oct 19, 1964
DECIDED: Dec 14, 1964

Facts of the case

Question

Audio Transcription for Oral Argument – October 19, 1964 in Fibreboard Paper Products Corporation v. National Labor Relations Board

Earl Warren:

Fibreboard Paper Products Corporation, Petitioner, versus National Labor Relations Board.

Mr. Plant, you may proceed with your argument.

Marion B. Plant:

May it please the Court.

This case is here on certiorari to the District of Columbia Circuit.

The certiorari was granted on two questions which were set forth in the petition as follows:

One, was petitioner required by the National Labor Relations Act to bargain with a union representing some of its employees about whether to let to an independent contractor for legitimate business reasons, the performance of certain operations in which those employees had been engaged.

Two, was the Board in a case involving only a refusal to bargain empowered to order the resumption of operations which had been discontinued for legitimate business reasons and reinstatement with back pay of the individuals formally employed therein.

The petitioner is Fibreboard Paper Products Corporation, and to avoid myself getting mixed up between petitioner and respondent, I will, if it please the Court, refer to the petitioner as Fibreboard.

Fibreboard owns or did own in 1959 a number of manufacturing plants on the Pacific Coast and in some offshore states.

One of those plants was located at Emeryville, California.

There were 13 unions in the plant.

Five of them represented one or another unit of maintenance workers.

The largest unit of maintenance workers was represented by a local of the steel workers, which is the union involved in this case.

For some years, Fibreboard had been concerned about the high cost of its maintenance work, the work of maintaining that plant.

In 1957 and again in 1958, it had sought to persuade the union to modify its wage and other contract demands, so as to permit Fibreboard to operate and carry on these maintenance operations at the cost which would not be too high.

Those efforts had been unsuccessful.

Thereafter, it commenced a study of the possibility of affecting savings and costs by letting this work to an independent contractor specializing in plant maintenance.

The collective bargaining contract which was in effect in 1959 and by the way, Fibreboard had had collective bargaining contractual relationships with its union for 22 years, the current contract was to — expired or at least the termination date was on July 31st, 1959.

The required 60 days before that date, the union gave notice of desire to modify that contract and shortly thereafter served upon Fibreboard proposals involving changes in every provision of the contract which affected costs, and each of those changes would have increased the costs.

Fibreboard thereafter brought its study up to date of the question of letting this work to an independent contractor and decided to do so.

It reached that decision on July 27th, 1959.

On that date, it had not yet decided who the contractor would be, but it had satisfied itself by getting figures from several and considering the problem with several, that savings and cost could be affected by that means.

Immediately and I mean within the hour, after that decision was made, the Fibreboard director of industrial relations called the local and international business agents of the union and arranged a meeting with them or a meeting with them later that day.

At that meeting he handed them a letter stating that Fibreboard had reached its decision that in view of the decision which had been reached, Fibreboard considered that negotiation of a renewed contract would be pointless but that nevertheless Fibreboard would be glad to discuss any questions the union might have.

During the course of the meeting, the director, Mr. Tuman (ph), told the business agents that he had in mind a plan for severance pay which he outlined, they had no comments upon that or any suggestions to make with respect to that question.

The conversation on that occasion was pretty much limited to assertions by the business agents that Fibreboard couldn’t do it and by Tuman that Fibreboard could.

The business agents without specifying what provision of the National Labor Relations Act they have referenced too, I guess they didn’t know their claim that if Fibreboard did this it would be violating the National Labor Relations Act.

At the conclusion of the meeting, Tuman was asked if he would meet with the union’s negotiating committee and he said that he would.

That meeting was held on July 30.

In the meantime on July 29th, the union wrote Fibreboard a letter taking the position that its contract have been automatically renewed subject only to an obligation upon the part of Fibreboard to bargain about all of these contract changes.

Marion B. Plant:

At the meeting of July 30th with the negotiating committee, Tuman took the position that that wasn’t so.

He of course repeated that Fibreboard had reached this position.

He explained the reasons for it, namely, the high cost of the present operation and again repeated that he would be glad to discuss any questions that the union might have.

In the course of the conversation, he again outlined the plan for severance pay, no objections were raised to it.

Now, he did say that he was not there for the purpose of negotiating a renewed contract but that because he thought that would be pointless.

He did not, however, cutoff discussion regarding the contract.

On the contrary, the union certainly didn’t understand that.

It proposed for example that there — and contained in the renewed contract a provision to the effect that a Fibreboard should contract out work.

The contractor should be required to employ members of the union.

Tuman said that that wouldn’t be acceptable because he wouldn’t want to tie a contractor’s hands.

If he were a lawyer, he probably would’ve added that would be illegal.

The union also proposed that the question whether the contract should be let — be submitted to arbitration.

Tuman replied that the company would not want to place a business decision such as that in the hands of an arbitrator.

There were some objection — two occasions by members of the union to the shortness of the notice.

This contract with the independent contractor was to take effect as of August 1st.

In reply to that, Tuman said that the — if the union wished to further time to consider the problem, they would entertain a proposal that the contracting be deferred in order to give the union that time.

Advantage was not taken of that suggestion.

Earl Warren:

Time for what Mr. Plant?

Marion B. Plant:

For further discussion of the problem of the contracting out the work or anything else —

Earl Warren:

Yes.

Marion B. Plant:

— the union might —

Earl Warren:

And not in connection —

Marion B. Plant:

— want to talk about.

Earl Warren:

— not in connection with any contract — future contract of —

Marion B. Plant:

It might have been involved.

Earl Warren:

(Inaudible)

Marion B. Plant:

Might have been involved.

I suppose if the union had come in with a contract proposal which would have involved changes in demanding requirements, lower wage cost, that would have been given very serious consideration, but the union never saw fit to make such a proposal.

Well, at midnight, July 31st Fibreboard had a picket line and thereafter the union filed the unfair labor practice charges which brought about the present case.

Fibreboard was charged with a multitude of sins.

Marion B. Plant:

One was discrimination against the union alleged that it was — purpose was discriminatory, other charges embraced refusal to bargain.

The hearing was had before the Trial Examiner in which attention was focused mostly upon the question whether there had been a discriminatory motive.

There was also attention given to the question whether Fibreboard had refused to bargain about severance pay.

The Trial Examiner rendered a report in which he found against the union and general counsel on all issues and recommended that the complaint be dismissed.

The case then went up in the normal course to the Board itself.

The Board adopted the Trial Examiner’s findings and dismissed the case.

In the course of its opinion however, it noted that general counsel in his exceptions to the Trial Examiners had report had complained that the Trial Examiner did not pass upon an issue claimed to be of primary importance in the case.

Namely, the question whether Fibreboard was under a duty to bargain about the decision to let the contract, in other words, about whether or not it should let the contract to this independent contracting.

At that time, there were a long line of Board decisions which had received a congressional approval as I will demonstrate a little bit later.

And there were a number of court decisions all based upon the hypothesis that there was no duty to bargain about whether you let a contract, whether you discontinue a business, whether you sell it.

Those cases regarded the act as requiring and not let you bargain about the operations which are going to carry on, but only about the wages, hours and terms and conditions upon which manner to be employed in those operations upon which you decide.

And accordingly they had held that there was no duty to bargain over a question such as this.

However, shortly after that decision was rendered the membership of the Board changed.

The union and general counsel both moved for reconsideration and the Board after sitting on those motions for a year and a half vacated its — no, that’s not true — modified its prior decision to the extent of holding that there was a duty to bargain about whether or not you can let work to an independent contractor.

Now, there were several peculiarities about this.

In its first decision, the Board had said that you were under no such duty and never considered or passed upon the question whether Fibreboard had in fact bargained.

In the second decision, the Board or rather the panel of the Board likely assumed that the Board in its first decision had held that Fibreboard did not in fact bargained and proceeded to decide the case on that basis.

A few months before the second decision, there had come before the Board, the Town & Country Manufacturing Company case.

That was a case in which the employer had contracted out work for the purpose of frustrating unionization, of avoiding his bargaining obligation and he was guilty of an unfair labor practice for this reason.

The Board went out of its way however to say that even if this had not been true, it considered that there was a duty to bargain that its first Fibreboard decision was wrong, and that that the employer would have been guilty of a refusal to bargain even though there have been no improper motivation.

It based that decision upon the ground that after all, the decision to contract out work has impact and effect upon the employment in the plant.

The reason for that long delay of year and a half in deciding Fibreboard number two was that one of the members of the Board had been the regional director who issued the complaint and was therefore disqualified.

The Board therefore, those who were qualified to participate were evenly divided, two to two.

Now, as this Court knows from its own practice normally, what has done in that situation is to deny release by an equally divided court.

In that case, it should’ve been to deny relief by an equally divided Board but the Board didn’t do that.

The reason is explained by the Solicitor General in his answer to the petition for certiorari as follows.

Both the general counsel and the union sought reconsideration.

Due to changes in the membership of the Board and the disqualification of one member to participate in the case, the agency was equally divided even though a majority of the Board as then constituted was of the view that an employer has an obligation to bargain about a decision to contract out an operation.

In these circumstances, the agency did not abuse its discretion in postponing its decision on the motions of reconsideration and until as a result of another decision, the majority view could be applied in the case.

In other words, until the view of a member who was disqualified could be applied in the case.

Had to disqualify it under the position (Inaudible)

Marion B. Plant:

Yes.

Now, and the Board found favorable — Fibreboard not only guilty of a refusal to bargain but for the first time in the history of the Act in a case involving only a refusal to bargain, it ordered reinstatement with back pay.

It ordered that Fibreboard resume performance of the maintenance operations which had been discontinued as too costly and that the individuals who had been employed therein be reinstated with back pay to the date of the order.

It didn’t order back pay all the way back because they recognized that after all Fibreboard had received a pretty bad treatment problem.

Now, as I have said, there was a long line of Board decisions to the contrary and what the Board did in the Town & Country case and in the present case was simply to change the law.

The earliest decision and dealing with this question of contracting was rendered in 1941.

It was the case of Brown McLaren Manufacturing Company.

In that case, the company had a contract with Sears, Roebuck for the performance of certain manufacturing operations.

It was losing money on that contact, it conceived that the reason that it was losing money was that its wage cost were too high.

It sought wage relief from the union and manning relief, it was unable to obtain it, and then contracted out to another contractor, the Sears, Roebuck work.

Now, in connection with that aspect of the case, the Board said that if there was any duty to bargain about reduced wages as an alternative to contracting out, that duty had been satisfied.

But that wasn’t the end of the matter.

The employer then proceeded to contract out other work in the plant and moved work to another plant which it had ultimate — which it ultimately acquired.

The union asked that the employer bargain about this matter of letting work to other contractors or moving it out of the plant, the employer denied doing it.

Some more time went by, the same request was made, the employer still denied doing it.

The third time, it still denied doing it but when confronted with some facts by the union, admitted it, and refused to discuss the matter.

Thereafter on several occasions, the request was made that it bargained about removal of work in the future from the plant, the union offered to talk about a wage decrease, the employer refused to negotiate, refused to discuss the matter.

The Board held that in these circumstances, the employer was not guilty of a refusal to bargain.

However, the Board do a distinction which is significant in later cases that said that although it was not guilty of a refusal to bargain about letting the contract, it should have bargained with the union upon the union’s request that employees be transferred to the new plant.

In other words, should have bargained about their tenure of employment.

Now, counsel say that it is doubtful that that case really held that there was no duty to bargain.

Now, if it was equivocal and that maybe, I don’t know, there certainly was nothing equivocal about the decisions which followed.

In Mahoning Mining Company decided in 1945, the owner of three mines let the operation of two of them to independent contractors, did not consult the union about it.

First, the union knew about it was went to negotiate a renewed contract with the employer and he said that he no longer operated those two mines, they were operated by independent contractors.

The Trial Examiner was of the opinion that the employer should have required the contractors to the — adhere to the terms of the bargaining contract.

The Board reversed.

Now, there is a case squarely presenting the question whether the employer was bargained the — it was required by law to bargain about letting the contracts and the Board squarely decided that question.

It said that the Board has never held that an employer may not in good faith without regard to union organization of employees change his business structure, sell or contract out a portion of his operations or make any like change which might affect the constituency of the appropriate unit without first consulting the bargaining representative of the employees affected by the proposed business change.

The next case was decided in 1949, Walter Holm & Company.

Marion B. Plant:

There, the employer had leased its truck to its drivers and thereafter entered into an arrangement under which its former employee drivers were to operate its trucks as independent contractors.

The Trial Examiner held that the employer have been guilty of a refusal to bargain in failing to consult the union before doing this.

The Board held that it was not guilty of such a refusal that there was no duty to consult.

It equated the case with the case where a man goes out of business and said, “Section 8 (a) (5) does not require an employer to consult with his employees’ representative as a prerequisite of going out of business for nondiscriminatory reasons.

The next case in 1951, was Celanese Corporation of America.

Now, everything I’ve quoted so far has been the Board’s own language.

It’s the Board itself talking.

In the Celanese case, the Board adopted a Trial Examiner’s report without itself writing any real opinion.

There, it was a case in which the employer had contracted out maintenance work and the Board adopted the Trial Examiner’s opinion in which he said, “The company was not required to consult with the union as the representative of its employees before entering into this contract anymore than if it was going out of business for nondiscriminatory reasons”.

Now, that is enough for the quotations.

There are more cases like that.

There was one in 1952, Trans Wire (ph) & Manufacturing Company and there was one in 19 — another in 1952, the National Gas Company.

And finally, there was the original decision in this case in which the Board said that you — the obligation to bargain is pretty broad but is not so broad as to require that a employer bargain about what operations he’s going to engage in.

Now, during this long period, there were court decisions, many of them, bearing upon the subject.

There was a long line of Board decisions and court decisions which made the questions whether there had been a breach of the duty to bargain, depend entirely upon the employer’s motivation that his motive was to frustrate unionization or union organization to avoid his bargaining obligation then he was held guilty of a refusal to bargain.

If his motives were pure, if he was motivated simply by legitimate business considerations, then he was held not guilty of a refusal to bargain.

William J. Brennan, Jr.:

The finding — was the finding of good faith made in the first Board decisions in this case?

Marion B. Plant:

And was never disturbed.

William J. Brennan, Jr.:

(Inaudible)

Marion B. Plant:

That’s correct.

It was not disturbed.

Marion B. Plant:

It was not disturbed.

The only question considered in the second case was whether there was a duty to bargain.

The Fibreboard’s good faith was not impugned after all, it had been dealing with this union for 22 years.

Its motivation was purely good business.

Now, the fact that this matter of motivation is important, is illustrated by the cases that I have just cited.

One of which cited in either the Board’s or the union’s brief, I forget which, it was Brown Duncan Company.

There, the Court holding that there was improper mu — motivation said that the company may not discontinue a part of an integrated operation merely because the employees engaged in the particular work — in the particular unit, seek union representation.

In circumstances like these, (Inaudible) — motivation becomes important, indeed decisive.

There was another long line of cases which drew the distinction between bargaining about the decisions to let work to a contractor or sell a business or discontinue a business and bargaining about measures designed to ease the impact of that decision upon employees majors such as severance pay wages or supplying other employment, tenure of employment.

Marion B. Plant:

They held that there was a duty to bargain about those latter questions.

But in those cases, again the distinction was clearly drawn, and for example, in the case of Rapid Bindery Inc. likewise cited in either the Board or the union’s brief and perhaps both, the — or after finding the employer guilty of a refusal to bargain about transferring employees went on to say this.

And we are also the opinion that in as much as the move, this was the case of moving operations from one plant to another, we’re also of the opinion that in as much as the move was made through a legitimate exercise of managerial discretion, the issue of whether it was the — whether it was to — whether it was to be made need not have been submitted by respondents for discussion at the bargaining table.

Now, while all these cases were being decided, the Congress subjected the Act to two general revisions.

The first was the Taft-Hartley Act in 1947.

Up to that time, Section 9 (a) of the Act had contained a provision to the effect the certified union was to be the exclusive representative of employees for the purpose of bargaining about rates of pay, wages, hours of employment or conditions of employment.

And it was under that provision that the first two of the Board cases that I have referred to were decided.

In 1947, Congress subjected the Act to a general revision and in Section 8 (d) the new section defined the duty to bargain.

And in defining the duty to bargain, it used substantially this same language which had been interpreted by the Board in the manner which I have set forth.

In 1959, the Act again was subjected to a general revision.

In that interval there had been four more of these Board decisions to which I have referred.

Congress used the same language and apparently adopted and approved the interpretation which had been placed upon that language.

Is there any specific reference to the (Inaudible)

Marion B. Plant:

No.

But —

(Inaudible)

Marion B. Plant:

Now, let me get that question straight.

The revision in the legislative history to the Board cases, no.

William J. Brennan, Jr.:

Or even to the subject matter?

Marion B. Plant:

The nearest — the legislative debates or discussions came to the subject matter was this.

In 1947, the House Bill contained a provision defining bargaining which was very detailed.

It just laid out, you do, one this, two this, three this, four this, and it was very specific and the subjects which it specified as subjects of bargaining.

Congressman Kennedy and a few others wrote a minority committee report in which they made a lot of objections to this language, one was that it would eliminate contracting from bargaining.

I questioned the accuracy that it was eliminated, never been there.

And they wrote a minority report.

The Senate Bill which as — was finally enacted, contained a somewhat broader language.

I don’t think it had any bearing upon a particular question for us now.

And that Congressman Kennedy and the others would sign the minority report in the House, voted against that as well.

Now, I don’t think it proves anything and I have placed no reliance upon legislative history.

Now, since the Board’s decision in the Town & Country case and in this case, the second decision, it has is applied this doctrine which to develop in those two cases to employer’s decisions to ship by common carrier or contract carrier trucks rather than by his own trucks to a decision to go out of business because he was broke, to a decision to sell three of several stores that he owned, to a decision to purchase a cheese product already packaged rather than packaging it himself, to a decision to move a certain operation from one plant to another, and to — well, that’s enough I guess, there are more but I can’t think of them on hand.

(Inaudible)

Marion B. Plant:

Yes.

Yes, they are.

Now, the Board takes in its brief an extremely broad decision.

It says that you got to bargain about any thing that either party chooses to propose.

Let me just quote a couple of passages.

“Thus, the terms and conditions of employment to which Sections 8 (d) and 9 (a) referred —

William J. Brennan, Jr.:

What page is it?

Marion B. Plant:

Page 21.

William J. Brennan, Jr.:

Thank you.

Marion B. Plant:

Down toward to the bottom of the text.

“The terms and conditions to which Sections 8 (d) and 9 (a) referred are any stipulations under which the workers agreed to be employed and the management to employ them, except as other language or the policy of the Act may confine the meaning, they verbally embraced any provision which either party wishes to put in the agreement”.

And again over in page 23 down toward the bottom.

“They include any stipulation which either party considers so vital as they wish to make it part of the bargain”.

Now, that is the far extreme from the one which the gentleman on my right was arguing for back in 1948 when in the Harvard Law Review, he said that the duty to bargain meant only that you couldn’t bargain with individuals.

It did not meant only that if you did any bargaining.

It had to be with the exclusive bargaining representative, and didn’t mean that you had to bargain on any particular subject.

The Board is now contending that not that there is no subject about which bargaining is mandatory, but that there is no subject about which bargaining is not mandatory.

Now, that contention I submit run squarely into the teeth if that’s the proper metaphor of this Court’s decision in the Worcester Division of Board Warner Company where this Court held that not all subjects are subjects upon which bargaining is mandatory.

There are some subjects upon which bargaining is not mandatory which is — upon which bargaining is permissible but upon which it is not required.

Now, the Board’s decision in this case as well as its brief necessarily mean that there are no subjects upon which bargaining is required — is not required because there is no subject which does not have an impact or effect upon wages, hours, terms or conditions of employment.

Hugo L. Black:

What language would you substitute for the suggestion that you’ve just read?

How would you draw the line?

Marion B. Plant:

I would draw the line between the question — a question as to the business operations in which an employer maybe — may engage and a question as to the wages, hours, terms and conditions upon which men are to be employed in those operations upon which he decides.

I don’t think that the phrase wages, hours, terms and conditions of employment embraces the question whether an employer may go out of business because he’s broke, may contract out an operation because he is losing money on it, may move it to another plant because that is more economic.

Hugo L. Black:

What language would we find in the Act to draw that line?

Marion B. Plant:

Well, the language we’d find Your Honor is the definition of the duty to bargain which says that you must bargain about wages, hours and other terms and conditions of employment.

It certainly does not say that you must bargain about the business operations what you’re going to carry on.

I realize squarely on the language of the Act.

Now, this is true Your Honor between the position which I take and the extreme position which the Board takes, the language of the Act permits of no stopping point.

Marion B. Plant:

Once you start down that path along which the Board seeks to entice you, there is no stopping point short of the position which the Board here takes.

And just what does that position mean, well, let’s refer again to the Board’s brief.

“It may be objected” — and I’m quoting —

William J. Brennan, Jr.:

(Inaudible)

Marion B. Plant:

On page 22, I’m sorry.

“It may be objected that the literal reading would give labor unions a statutory right to bargain about a host of subjects heretofore regarded as management prerogatives including prices, types of product, volume of production and even methods of financing”.

Such is doubtless of the logical theoretical consequence of the giving effect to the literal sweep of the words although the Board has never gone so far.

Now, that is the path, that is the point to which this path leads and I submit that the Taft-Hartley Congress would have had a conniption test if anyone had suggested to it that this was what it was enacting in the law.

Now, there are no decisions of this Court on this question, there are decisions which depending upon your point of view will be cited as bearing this way upon it or that way upon it.

William J. Brennan, Jr.:

I don’t think Oliver has any bearing on this, Mr. Plant?

Marion B. Plant:

I don’t think so Your Honor.

Arguably, it does by way of dicta but that question really wasn’t involved in the Oliver case.

If the Court’s decisions — if the Court’s decisions along about that time are still law, that was a matter for the Board to decide.

It was sufficient to deprive this Court of jurisdiction that is what it termed its power to decide, that the matter was arguably subject covered or protected by the National Labor Relations Act.

I’m sure —

Byron R. White:

But —

Marion B. Plant:

— it touches —

Byron R. White:

How about —

Marion B. Plant:

— on it.

Byron R. White:

How about the Labor Group?

Marion B. Plant:

Same thing.

Byron R. White:

Wasn’t that a straight definition of wages, hours and working (Inaudible)

Marion B. Plant:

No.

That was a Norris-LaGuardia Act case.

Byron R. White:

Well, I know but I — a straight definition of the word (Voice Overlap) —

Marion B. Plant:

To this extent (Voice Overlap) —

Byron R. White:

— whatever the source of the words or whatever the Act (Voice Overlap) —

Marion B. Plant:

To this extent Your Honor, the Norris-LaGuardia Act defines a strike as a — or a labor dispute is some — is a dispute arising out of terms or conditions of employment but it goes on with a lot more.

In —

Byron R. White:

Or whatever the words were in the Norris-LaGuardia Act, the Court held that the labor group that contracting out was within those words.

Marion B. Plant:

I don’t think it was contracting out, no.

Byron R. White:

What was it?

Marion B. Plant:

It was a case where the railroad was going to eliminate some stations.

Byron R. White:

Yes.

Marion B. Plant:

And the Court —

Byron R. White:

But the contract, it was a — not contracting out, it was just contracting work.

Marion B. Plant:

That’s — that’s right.

The Court held that that was a strike going out of a labor dispute within the meaning of the Norris-LaGuardia Act.

But bear this in mind, the Norris-LaGuardia Act was a remedial statute which way back in (Inaudible), this Court held was to be very liberally construed.

I don’t think it can be equated with the National Labor Relations Act notwithstanding some similarities in wording.

Now, this Court has touched upon this question quite recently in Wiley & Brothers versus Livingston — or Wiley & Sons versus Livingston.

That was the case in which you will recall there had been a corporate merger and the question was whether the surviving corporation was bound by the provisions in the collective bargaining contract of the corporation which lost its identity.

The Court held that it was and in the course of its discussion, it said this, it said that unions ordinarily do not take part in negotiations leading to a change in corporate ownership.

And it then referred and I quotes, “To the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers”.

Now, that is the latest expression of the Court bearing upon this question.

Now, I’ve got five minutes to get these employees unreinstated.

So, with the Court’s permission I will proceed to the second question.

As I have stated that — this is the first case in the history of the Act which in reinstatement has been ordered in the case involving only a refusal to bargain.

Counsel have taken issue with me on that, pointing to the unfair labor practice strike situations in which a strike has been induced by a refusal to bargain and in which employees are ordered reinstated.

Well, the theory of those decisions is that by refusing to take the striking workers back, the employer discriminates against them upon account of their legitimate union activity and violates Section 8 (a) (3) of the Act.

And I repeat that this is the first case in the history of the Act which an employer has been ordered to reinstate employees in a case involving only a refusal to bargain.

I suggest to the Court that the order violates Section 10 (c) of the Act which explicitly deprived the Board of power to reinstate an employee terminated or discharged of cause.

Now cause doesn’t mean just misconduct that is demonstrated by the legislative history in which Senator Taft explained on the floor of the Senate that there were two kinds of discharge, discharges for union activity and discharges for cause.

But in the case of a discharge for a union activity, the Board could reinstate.

But in the case of a discharge for a cause, it could not, and by cause it was obviously the embraced discharges for all — any reason other than union activity.

And in that connection, he said that his — no provision was merely setting forth what was the existing law.

And the existing law had been declared by this Court in at least three cases to be exactly what I have stated that an employer cannot discharge for union activity or for the purpose of coercing union members or people who want to be union members, but it can discharge for any other reason that it wants, good or bad.

Now, my time is short, those cases are in my brief.

We also think that the order that we resume operations which have been discontinued because they were too costly, reinstate employees with back pay and then start bargaining about whether we can do the same thing over.

It serves no purpose and disunity.

Marion B. Plant:

We wouldn’t have a chance of getting employees to quit their present jobs, to come back to work for us, at 1959 wage rates with no assurance that three weeks later after appropriate bargaining, we’d contract out the work and they’d be out of the job again.

Obviously, if we have been guilty of a refusal to bargain, the remedy is a simple order that we bargain.

We have no interest in discriminating against these people that has been found, our interest is in saving money.

And if they can work out a bargain with us that we’ll save his money, we’d be delighted that they come back.

But the bargain has to be worked out first, both from our stand point and from theirs, no man is going to leave his present job to return to Fibreboard unless he has assurance of a bargain made in advance.

Now, my time is up and I’m about out of words.

Byron R. White:

Well, Mr. Plant doesn’t the — isn’t it clear from Town & Country that the Board would have issued the same kind of an order in that case because that’s been the only unfair labor practice out?

Marion B. Plant:

Yes, it went way out of its way to say that and delay the groundwork for its decision in this case by the —

Byron R. White:

(Inaudible) Town & Country — Town & Country is really the source of the decision in this case.

Marion B. Plant:

A dictum in Town & Country, yes sir.

So, I say it was a dictum —

Byron R. White:

Well, it depends on what you called a dictum, the 8 (a) (3) case or the 8 (a) (5) case?

Marion B. Plant:

No.

The 8 (a) (5) order was based primarily upon the ground that they had contracted out the work to avoid bargaining, to avoid —

Byron R. White:

There they had two grounds with the reem — for the resumption — for the reinstatement in the (Voice Overlap) —

Marion B. Plant:

Right.

Byron R. White:

— and Town & Country may use both of them?

Marion B. Plant:

Right.

Byron R. White:

The 8 (a) (5) and 8 (a) (3).

Marion B. Plant:

And it went out of its way to say even if there hasn’t been illegal motivation, still we now say — announced it as the law, that an employer has to bargain about these things.

Byron R. White:

Well now, what good would a simple order to bargain the —

Marion B. Plant:

In this case?

Byron R. White:

And who the order — who the company bargains, assume that’s all that had happened here.

Marion B. Plant:

We bargain with the union involved in this case.

Byron R. White:

But that local is gone now, isn’t it?

Marion B. Plant:

No.

No, its alive and kicking.

Byron R. White:

Well, was the local — what was the local, several companies or what?

Marion B. Plant:

Oh, yes its — represents a lot of employees in that area.

Byron R. White:

It just didn’t happen to have any employees in this —

Marion B. Plant:

That’s right.

We terminated the employees that they represented in our plant along with employees represented by other unions.

They weren’t alone in this, but they’re the only ones that filed charges.

If I would bargain with them, and if they had a good proposition to make, we’d certainly consider it, why not?

Thank you.

Earl Warren:

Alright.

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

I think it would be well in the beginning to go back for a moment and look at exactly what it is that petitioner decided to do without consulting the union in this case, and exactly what it is that it claims the right to do without bargaining collectively.

In practical terms as applied to the employer and to the employees, petitioner’s decision to contract out this maintenance work meant four things.

In the first place, Fluor, a labor contractor was tech — was intruded between petitioner and the men in the plant who would be doing the maintenance work and by that I include the work in the power plant.

Now, the minor supervision would be done by Fluor.

Fluor would be technically the person who hired and fired the employees all subject to petitioner’s ultimate direction.

Second, the same work would continue to be done, the same labor in petitioner’s plant, according to petitioner’s need, with petitioner’s tools, at petitioner’s expense that this was a (Inaudible) contract, and subject to petitioner’s ultimate direction.

The wages, hours, and working conditions under which the work was done would be changed so as to reduce labor cost and out of that reduction of labor cost, petitioner would achieve according to the estimates a very substantial saving.

But I would estimate and I would emphasize that according to the offer that Fluor made to petitioner, we may judge by that, merely all the savings were anticipated to come out of a reduction in labor standards.

They said I’m on — in the proposal on page 146 of the record, they eliminate most of the fringe benefits such as travel times, subsistence, vacation pay, sick pay, termination pay, paid holidays and so forth.

That they get the right to terminate employees or reduce work forces at any time, that they’d eliminate any work orders or in the working men’s language, they had imposed his freedom.

They get the maxim — they’d reduced high rate, they (Inaudible) — get the right to enforce high rates of production from all maintenance employees.

Again, a matter of how much work you do for an hour and how much work you do for a buck.

These and other things are the things that they emphasized they would achieve and they were certainly contemplated to be the source most of the savings.

Then the fourth thing that happened was that as a result, 70 maintenance employees including all 50 employees in the bargaining unit lost their jobs and new men were brought in to take their places.

I think its no exaggeration to say that the core of what was done here was the change in the manner of obtaining labor.

It substituted one group of workers for another, it changed compensation and then other changed working condition.

And that this is what petitioner claims a right to do without consulting the bargaining representative and that it — still it asserts, it had the right to do without consulting the bargaining representative.

Whether it had is of course the only legal question presented in this case.

I want to say just a word if I may at this point about the scope of the issue presented.

It seems to me that it might be defined in anyone of three ways.

First, it might be confined to the exact kind of contracting out that I have just described, this would cover almost any case where workers were brought into the same plant to supply labor in that plant.

And there, as here I think, it’s fair to say that the gist of the change is in the method of obtaining services that that’s the practical thrust of it whatever the legal characterizations are.

Archibald Cox:

And that would seem to be all it is necessary to dispose of the present case for the Court to hold.

Now, our brief goes one step farther.

It argues that what I have called contracting out is a statutory subjection of collective bargaining.

And we used the term contracting out to cover not only bringing the employees of a labor contractor into the plant, to take men’s jobs but also shipping work that has normally been done in the bargaining unit out of the plant where it will be done by someone else and his employees.

I should point out that there is this difference where you’re bringing men into the plant, this weight of the whole thing is on labor conditions alone.

They’re not exclusively but that is certainly the weight.

And some of the shipping of work out of the plant may involve in addition to depriving men of the work may involve problems of scheduling, of what tools you have or what tools you have available and what capital you were invested so forth.

There’s a bit more management in it and I think one has to recognize that difference.

Now, there’s a third way one could define the issue, and that is to say that the phrase, terms and conditions of employment covers anything that has to do with the elimination of jobs, the elimination of work that directly and necessarily affects tenure of employment or as this Court said in the Telegraphers case, permanency of employment.

And that appears to be what the Board has done in extending the doctrine of the Town & Country case to cover these shutting down of plant or moving a plant to another area.

That type of question it seems to me is a — not necessarily involved here and we made no argument in this case with respect to it.

But I should acknowledge that the Board has carried it that far.

Byron R. White:

And the mergers for the — and the mergers were — it involves a (Inaudible) issue?

Archibald Cox:

I don’t recall whether the Board has so held.

The case is in our brief, I don’t remember a merger case, but I wouldn’t say there wasn’t one either, Mr. Justice.

Byron R. White:

But I suppose if the principle would apply, if it — it involved termination of tenure.

Archibald Cox:

It would seem that if that were made, the exclusive test that it then would apply, yes.

But I — we don’t have to go merely that far in this case.

We don’t go merely that far in this case.

We submit that this change in the manner in which petitioner obtained labor is a mandatory subject of collective bargaining for three reasons.

First, we say its well within the plain meaning of the words of the statute.

Section 8 (d) on page 74 of our brief states the duty to bargain collectively is to meet and confer in good faith with respect to wages, hours and other terms and conditions of employment.

And Section 9 (a) says that the representative chosen by the majority is the representative for the purposes of bargaining with respect to rates of pay, wages, hours of employment or other conditions of employment.

Now, it seems to me that there are two ways confining myself now simply to the entomological meaning of the words, the literal meaning of the word, there are two ways in which they might be interpreted.

First, if one looks it up in the dictionary, the terms of a contract are simply the provisions of the bargain and the conditions of the contract are simply the stipulations prerequisite to agreement or prerequisite to performance on your side and prerequisite to performance on the other side.

So that literally the terms and conditions of an employment contract are simply the stipulations on which the workers agree to be employed and that the management agrees to appoint.

Now, I do not advance here and I do not think it fairly read, we advanced in our brief, the proposition that the duty to bargain extends to anything.

I did point out that under this literal meaning of the words, it would extend to anything.

But we went on and indicated that the practices of industry and the policies of the Act might produce a limitation.

We most emphatically pointed out that the Board not only has never adopted that view but in cases cited in our brief has rejected that view and there are number of things which it is held are not mandatory subject of collective bargaining, not only because they maybe contrary to policy of the Act, but also because it thinks they aren’t sufficiently related to conditions of employment.

Archibald Cox:

One of these is an industry promotion file.

Potter Stewart:

Right up until this case or its immediate predecessor, the Court — the Board had held the same thing with respect to this?

Archibald Cox:

I — a little later Mr. Justice Stewart, we’ll respectfully disagree.

Potter Stewart:

Well, I know in your brief you do.

Archibald Cox:

Well, as I do here most emphatically.

Potter Stewart:

Well, I’m not pressing it but —

Archibald Cox:

So I don’t think it could be said that right up till this case —

Potter Stewart:

But —

Archibald Cox:

— the Board is —

Potter Stewart:

That’s what Mr. Plant has told us in (Voice Overlap) —

Archibald Cox:

That’s what Mr. Plant has told you.

Potter Stewart:

— told us in that way.

Archibald Cox:

He omitted to mention the one clear decision to the contrary, the case that was cited by approval — cited with approval by this Court in Teamsters against Oliver’s.

The case that was the outstanding decision at the time the Taft-Harley amendments were enacted.

The Timken Roller Bearing case which is cited and quoted extensively in our brief.

So, I really don’t think that the course of decisions without quarreling about what other cases may have held is anywhere near — as clear as Mr. Plant says.

He — his argument founders on the Timken case so far as it’s an argument based on consistent administrative interpretation or on what Congress must have known when it reenacted these provisions in the Taft-Hartley Act.

But coming back, I’ve suggested one way of reading the words.

Another way of reading the words is to say that terms or conditions of employment means — let’s say terms or conditions relating to the employment status or relating to the ongoing relationship between employer and employee.

And then I suppose determining what they are by considering where the weight of the particular practice runs, how closely it affects employment.

If that be the reading and for the present purposes, we can perfectly well accept it.

Certainly, employment includes such questions as to whether men will be employed, who will be employed, when will that — when they’ll be laid off or what causes they’ll be laid off and so forth.

In other words, things related to the fact or tenure or permanency as this Court put it over the employment.

Could that embrace the right of an employer to go out of business?

Archibald Cox:

I should take that if that alone were made the test, it would include the right to go out of business.

I would —

Potter Stewart:

You mean it would include —

Archibald Cox:

If they —

Potter Stewart:

— the necessity to bargain about whether or not (Voice Overlap)

Archibald Cox:

They would if you rested on the literal meaning of the words alone.

Archibald Cox:

But now speak — but all I’m saying for the moment is really two things Mr. Justice Harlan, one is that whichever or what seem to me to be the two possible etymological meanings of the words we’re within it.

I don’t say that’s conclusive, I say we’re within it.

And I even acknowledge that it extends — carries one relying on the words alone, much farther than we have to go here.

And I think that’s what led Mr. Plant to say we took a different position than we do take.

Because if one then has to look to the policies of the Act and to the practices in collective bargaining, to see what content he will give the dictionary meaning.

Potter Stewart:

I still don’t quite see in your etymological argument if I have the right word.

Incidentally, I thought that it had something to do with insects but I guess that — just your verbal dictionary argument —

Archibald Cox:

One entomological and the other is etymological.

Potter Stewart:

I see.

Archibald Cox:

I’m not sure which is which.

But we don’t — we’re talking about it —

Potter Stewart:

Yes.

Your dictionary verbal —

Archibald Cox:

Yes.

Potter Stewart:

— literal —

Archibald Cox:

Yes.

Potter Stewart:

— argument.

Why does terms and conditions employed here, issues as to terms and conditions of employment necessarily embrace the question of whether or not there shall be employment at all?

Archibald Cox:

Well, (Inaudible) — it’s — I can’t think of any thing that is more a term than whether you will be laid off.

(Inaudible)

Archibald Cox:

Nor can I think of anything that has been more universally treated as a condition of employment and is bargainable.

Think of all the cases dealing with the close shop, the union shop, substitution of men from machines, work assignment, jurisdictional disputes, seniority and promotions and layoffs, mandatory retirement, all those things — well, always been regarded as bargaining.

Potter Stewart:

Well, the question of whether or not there shall be any employees —

Archibald Cox:

Well, the question of whether —

Potter Stewart:

— to me is quite a separate one from the issue of what the terms and conditions of the employment shall be if there are employees.

Archibald Cox:

Well, I suppose — I would think that the fact of employment was the very heart of the matter.

I don’t know if I can say, you know, anything more than that.

I think it (Inaudible) persuades a dozen.

While I’m on the — what I call the etymological meaning and referring to the practices of bargaining about things relating to tenure of employment.

Let me point out, if there are at least two cases in which this Court has held that employer practices rechanging the business methods that result in the layoff of employees are terms and conditions of employment.

Archibald Cox:

One — a case that all of us forgot about is United States against American Federation of Musicians in 318 U.S. 741, 318 U.S. 741, the per curiam opinion affirming 47 Federal Supplement 304.

There, this Court held that a dispute over whether radio stations would use tamed music rather than live orchestras was a dispute over terms and conditions of employment under the Norris-LaGuardia Act.

And of course in the Telegraphers case, the Chicago North Western case, this Court held that closing stations reorganizing the setup for the business in that sense.

And pursuant thereto, laying off employees was a dispute over terms and conditions of employment and it said in the course of the opinion that this was something that the union and the management has a fair to bargain about.

If you look at the language of the Railway Labor Act and what was to be bargained about, it’s a great deal narrowed in words than the language of this Act.

Now, Mr. Plant —

Potter Stewart:

But all — it was necessary to the decision in that case, you tell me if I’m wrong, was the holding that that was a labor dispute within the meaning of the Norris-LaGuardia Act.

Archibald Cox:

I think so.

The rest were (Voice Overlap) —

Potter Stewart:

It would be (Voice Overlap) —

Archibald Cox:

— (Inaudible) that it answered to arguments made but I don’t believe it was absolutely essential.

Potter Stewart:

Essential to the decision of (Voice Overlap) —

Archibald Cox:

No, but let me point —

Potter Stewart:

Excuse me, let me just do a little further in this case.

I think it’s correct that what’s involved here is the question of whether or not these things are required to be bargained about the — this decision.

This decision to contract out rather than whether or not there’s permissive bargaining about it?

Is that correct?

Archibald Cox:

That’s certainly true.

Potter Stewart:

Using the Baird & Warner —

Archibald Cox:

Yes.

Potter Stewart:

— as a distinction?

Archibald Cox:

Yes.

Potter Stewart:

(Inaudible)

Archibald Cox:

I want to say a word, if I have time about what’s meant by required to be bargained about —

Potter Stewart:

I —

Archibald Cox:

— because that I think is — can be over simplified the moment I am simply discussing.

The question under 8 (d) and 9 (a) whether this is a term or condition of employment, it does not automatically follow that on every occasion whatever the circumstances are is the statutory duty to bargain about such a thing.

If you answer this question no, it’s not a term or condition of employment.

There will never be a duty to bargain about.

On the other hand, if you answer it yes, then one has to go on and to inquire on what were the employer’s duties under the particular circumstances, and they may vary a good deal as we have sought to explain in our brief.

Archibald Cox:

But it seems to be Mr. Justice Stewart, that one can’t dispose of those cases simply by saying that they rest under Norris-LaGuardia Act.

The National Labor Relations Act has a definition of labor dispute.

It is the identical definition it found in the Norris-LaGuardia Act and it includes the phrase — in fact it says the controversy about terms and conditions of employment or the association of representation of persons in seeking to arrange terms and conditions of employment.

And it seems incredible to me to suppose that the definition of labor dispute in the National Labor Relations Act differs from its parent in the Norris-LaGuardia Act.

And even more incredible to suppose that the word “terms or conditions of employment” in one section of the National Labor Relations Act has a different meaning than it had in other sections of the National Labor Relations Act.

Now, so much for the words, our second reason and I think this is important as a limiting factor in some cases as well as an affirmative factor helping us with this case and this is why I say I don’t rely on the words alone.

Second, we think that the established practices in collective bargaining show that contracting out as here involved — is regarded as involving terms and conditions of employment, or the business practices the industrial practices I should say, the practice in collective bargaining, are certainly relevant under this Court’s repeated holding that the term collective bargaining as used in the Labor Act, is considered to absorb and give effect to the philosophy of collective bargaining as worked out in the labor movement in the United States.

Or in the phrase that is always seemed to me a very happy one also take it for the tax case, we think that what is involved here as Justice Cardozo said of the phrase ordinary and necessary expenses of a business in a tax case is not a role of our law, not words of art, but a reference to a way of life and that it’s proper to look at that way of life, not to find, as he put it, the answer to the riddle.

Now here, experience shows that contracting out or subcontracting has been widely and effectively brought within the framework of collective bargaining.

Now, the evidence is all in our brief and I referred to it very briefly, a study of 1700 major contract showed that almost repeatedly, 18% I think, contain some kind of restriction on the employer’s freedom to contract out or subcontract work and those contract cover around three quarters of a million employees.

And this of course does not include any of the instances in which there was bargaining and the union was unable to get a term put in the contract.

Byron R. White:

Mr. Solicitor General, I suppose you’ll come in upon the — what the impact of a holding in your favor would have upon all those cases in which there is a provision of the contractors?

Archibald Cox:

I would have — I’d answer it — could answer that right now.

It would have no effect whatsoever on those cases.

Byron R. White:

What about on — well, certainly, it would on the cases that didn’t have the provision (Inaudible)

Archibald Cox:

We would then have to — I think that what happens Mr. Justice, during the term of a contract, goes to the question I sought to distinguish a moment ago and tell it to Mr. Justice Stewart.

The two distinct questions here, one is what is within a statutory subject of bargaining and the second is what is the meaning of the duty to bargain under particular circumstances and one of the most important of those circumstances is the existence of a contract.

Byron R. White:

So if a contract —

Archibald Cox:

Now, if a contract for example, reserved to the employer the right to contract out without consulting the union, during the term of that contract he would have that right and there could be no question about it.

Byron R. White:

So that’s the — the contract out of your duties so to speak, but —

Archibald Cox:

Absolutely.

Byron R. White:

(Inaudible)

Archibald Cox:

Not only that but you have under this Court’s decision in America National Insurance the right to bargain for this unilateral control.

Indeed that was the subject of the article that Mr. Plant quoted the small part of apparently without reading the rest.

It —

Potter Stewart:

Reads to us?

Archibald Cox:

I — well, I —

Potter Stewart:

Read it to us —

Archibald Cox:

I can’t believe he would quote it like he did if he’d read it all.

If there is a contract that contains no such (Voice Overlap) —

(Inaudible)provision —

William J. Brennan, Jr.:

What he said in 48?

Archibald Cox:

What?

William J. Brennan, Jr.:

You do not retreat from what you said in 48.

Archibald Cox:

No sir.

I don’t mean to be (Inaudible) — quite so vivid about it but I don’t.

If, Mr. Justice White, there is a contract and it says nothing about subcontracting, then we have a quite different question.

One (Inaudible) — which maybe here in the Adams Dairy case, one on which the Board has a number of roles, one which is in my judgment an intensely difficult problem.

But that’s not here, because this was at what petitioner regarded as the end of the contract and this certainly wasn’t the kind of a periodic contracting out as to which there might be an established way of doing things.

And therefore, no prohibition against unilateral action until the union desired to make a change, and lots of questions of that kind not in this case.

Byron R. White:

I take it in this particular case, however, where the contract of silence, that if — that the last — at the time of the last contracting, the union has wanted to negotiate a clause covering subcontracting, and the employer objected, (Inaudible), and finally they signed up a contract of silence.

But this case would still — if it’s decided in your favor, it would still require the employer to bargain?

Archibald Cox:

Well, when you say this case, this is the case in which the existing contract had come to an end.

Byron R. White:

Yes.

Archibald Cox:

So, it’s out of the picture.

If its — if what it seemed to me you were saying, I don’t want to put words in your mouth.

It seemed to me suppose that the union had sought to bargain about subcontractor, it had been unable to get anything in a two-year contract.

At the end of a year, the employer attempted to subcontract and the union came in and charged it as an unfair labor practice.

I say then one would have a question not under 8 (d) and 9 (a), but under 8 (a) (5) and essentially referred to some of my earlier writing, this of course of which the Board and I have been having an argument for ten or more years.

It made — but that isn’t the present case.

You might decide that either way after deciding for us here.

I was suggesting that the uniform practice (Inaudible) — excuse me, I didn’t mean uniform practice, that an establish practice in collective bargaining as shown by major collective bargaining agreements is that it is often treated as a term or condition of employment.

Now, of course petitioner says, “Well, people put all kinds of funny things in contracts”.

But these are not funny companies.

These are the Pacific Maritime Association, New York Shipping Association, Sinclair Refining Company, California Processors and Growers, AT&T, Milwaukee Brewers, the Automobile Industry, Ford, Chrysler, and American Motors, the rubber industry, U.S. Rubber, Goodyear, and Goodrich and we note from the brief of the union respondents here, that the steel industry has been heavily engaged in bargaining about this subject.

We also cite in our brief and I don’t intend to do more intentionally, a volume of arbitration decisions showing that subcontracting is part of the daily quest of the labor management relationship under arbitration.

Decisions of the War Labor Board and at least one decision of a presidential emergency board in the airline industry.

Potter Stewart:

I have a little difficulty seeing that how cases which turned on the meaning of the collective bargaining agreement, the requirement to arbitrate or something like that have much bearing on the basic issue here and that is the duty to bargain in the absence of any agreement.

Archibald Cox:

Only this I think, that they do — I don’t cite them as authority one way or another.

I simply cite it for the proposition that this is a problem that has been thought of and is a practice widely and selectively dealt with as part as something incidental to the employment relationship, so close that it’s within terms and conditions of employment.

Archibald Cox:

Some of the things that the arbitrators have said expressed the philosophy that tends to support our view.

But it doesn’t — the correctness of any of those decisions is irrelevant.

They are evidence of a fact, of a condition, of a way of life, or practice.

Now, our third reason and it’s — I might interrupt myself just for a moment to say that this seems to me may properly be the most important of the considerations taken into account by the Board in giving content to this phrase in limiting what would otherwise be the sweeping meaning of the terms.

And one of the things that perhaps will have to be argued here someday is whether these cases that Mr. Plant cites having to do with closing a factory and such are different because there you can’t show that there has been this widespread and successful practice of bargaining about the subject matter.

And to that extent, it differs and makes a somewhat different case.

Now, our third reason is that the policy of the Act is very clearly advanced by the decision of the Board and the court below.

I hardly need to argue in this Court that where there is an ambiguity in the statute, if there is one that the ambiguity should be resolved in the way that effectuates the purposes of the Act.

Nor do I need to argue that the prime purpose of this Act is to promote the resolution of conflicts of interest between employers and employees by the process of collective negotiation between the employers and the employees.

It is a fact and there’s no magic wand that will wave it away.

It is a fact that this subject today is a manner of the most intense concern to employees and it is a fact whatever the decision to this case it will remain a matter of most intense concern and they will of course be free to strike about it.

Now, the real question here is whether that conflict of interest is to be resolved within the framework that Congress has been — has provided or whether it is to be pushed outside into the same condition that other sharp issues between management and labor wherein before the National Labor Relations Act was adopted.

And I suppose that one of the most worries of things about Mr. Plant’s contention, is that in a period where employees’ attention, not employers as my brief unfortunately says, employees’ attention is riveted on changes that affect their tenure on their jobs.

The argument is made that all those changes are to be put outside the processes that have been tested and provided by Congress over a good many years.

I want to say just a word with respect to the cases.

Mr. Plant attempted to portray and he did portray a fixed course of administrative interpretation.

We disagree with his reading of most of the cases.

That’s all in the briefs.

With three parties arguing here, we all see them a little differently.

I see them as charting a rather uncertain course with a good deal of variation in the direction of the Board was looking on a given occasion.

And I think that’s quite natural because that was a period when the practices in industry were developing.

Now, as we think the evidence shows very clearly bargaining about subcontracting has become an established — a common way of doing things.

It is widely and successfully treated as a condition of employment.

So the Board then adopted a role, not breaking new ground, as it said in one of these cases but recognizing a condition that existed in the industrial world.

Whether I’m right or not in that, certainly Mr. Plant is wrong in saying that there was a consistent course of interpretation contrary to this decision because the Timken Roller Bearing case which was — as I said before cited by this Court in Teamsters against Oliver squarely held against it in 1945 or 1946, just prior to the Taft-Hartley amendments which made no change in the Act.

I indicated that there were two other issues in the case.

The question whether the employer violated Section 8 (a) (5) here turns first on whether this contracting out involved terms or conditions of employment and second, on whether he had a duty to consult with the union before making unilateral change.

We think that in this case as we argue in the brief they were done of the conditions that by excuse prior consultation with the union, and since the finding below and the limited grant of certiorari which makes irrelevant to great many things that Mr. Plant argued is, established that he didn’t bargained before he determined to do this.

And as I understand him, he doesn’t make any argument that he had no duty if this is a term or condition of employment.

The second issue — second additional issue is whether the order of reinstatement and to bargain was erroneous.

Archibald Cox:

On that, I stand on my brief except only for one point.

What Mr. Plant says in his reply brief on page 25, there will be found no case, order or agree in the statement in which the order was not supported by a finding of a Section 8 (a) (3) violation.

I think the young man in his office rather let it down.

I have here a list of 10 such cases, the principle one being NLRB against Washington Aluminum Company decided by this Court one or two terms ago in 370 U.S.

Those 10 are all cases in which there was only an 8 (a) (1) violation.

There was no 8 (a) (3) violation.

Then in the argument here he said, “Well, it’d be found no case prior to this one in which there was an order or reinstatement made where there was only a Section 8 (a) (5) violation”.

I have three of those, all Board decisions, all before this case, the earliest going back to 87 NLRB.

I’d be glad to send a letter up this afternoon giving the Court the citations without any further argument rather than reading them aloud.

I promise Mr. Feller the remainder of the time.

Earl Warren:

Mr. Feller.

David E. Feller:

Mr. Chief Justice, may it please the Court.

I think what the Solicitor General has told the Court places this case in the proper focus.

I don’t certainly want to repeat what he said but I do want to emphasize what happened in this case because Mr. Plant took so long to describe the exact sequence of events.

He did describe the fact that the employer was concerned about his maintenance cost.

What happened — he had raised the question in collective bargaining and he was unable to make a dent in the collective bargaining with the union.

When the union then reopened the contract in May of 1959, the following in suit the union, one, two, three, four times tried to arrange for a collective bargaining conference.

I think the exact sequence is set out in the Trial Examiners intermediate report and nothing happened.

The company refused to meet.

Meanwhile, they were busily scurrying around to determine whether they could save money on labor cost through the device of letting this to a subcontractor whose people would come in and perform the same work under less onerous labor conditions.

After they had determined that they could do this, on July 27, four days before the 60-day negotiating period provided under the statute had expired, they called the union in and said, “This will come as a shock to you, but there’s no point in bargaining contract.

We’d contracted out all the work”.

Now, Mr. Plant did not bring before this Court the question of whether in fact he had bargained with the union about contracting out the work.

He sought to bring the finding of the Court of Appeals that he had not before the Court in his second question in his petition for certiorari and the Court limited the grant.

So that question was not really briefed by us and is not merely here.

We operate on the assumption here that the only questions are the two questions which are before the Court is once he under a duty to bargain, and second of all was the remedy by the Board appropriate.

And I think you have to get the flavor of what happened here to understand what we mean by the duty to bargain.

Now, this case has been argued so far on kind of mixing up, I think Mr. Plant has taken two questions or maybe there are three and put them into one.

One is the duty to bargain simpliciter, that is if a union comes to an employer at the bargaining table and says, “We want to negotiate the provision about contracting out”, or the employer wants to come and said, “We would like a provision and agreement saying we have the right to contract out work at all times”.

Is this a subject which the Act requires the parties to meet and confer about in an attempt to reach agreement.

David E. Feller:

That’s the simple meaning of the duty to bargain in good faith.

Mr. Plant says, “No”.

That when the union says — comes to the employer and says, “We think our people are losing jobs because you’re sending work out of the plant or you’re bringing people in the plant to take our people’s jobs, and we want to bargain about that”.

Mr. Plant says, the employer can say, “Under the Act, I don’t have to talk to you about that subject and I won’t”.

On the brief, we say that the result of that holding would be that the union couldn’t even strike on that subject and I confess here that was a mistake.

Under the law, if Mr. Plant were correct, the union could not refuse to sign a contract on the ground that it didn’t contain a provision about contracting out.

And couldn’t go on strike under those circumstances because that would be a violation of the union’s duty to bargain.

Having reached agreement on everything else, the union could not insist on this subject.

He would take this out of that area and certainly the cases seem to indicate that the unions strike in support of a demand for some restriction on the company’s right to contract out would be an unprotected activity.

And the employer could discharge people for it.

Now, that’s the simple question.

Now, there are only two cases of the Board, this long recitation of cases that deal with that kind of case.

Byron R. White:

That kind of case is not exactly the kind of case we have before us?

David E. Feller:

No, but the first question — the question which Mr. Plant argues is that that there is no duty to bargain about contracting out.

The second question is assuming there is a duty as there their duty to bargain about wages, once we put the subject within the area, then under what circumstances does unilateral action by the employer without bargaining constitute a violation of 8 (a) (5).

That’s the second question.

He does not argue that question.

He argue — puts his whole question although this is a unilateral action case on the assumption that it is not within the duty in the first place.

But I think this Court has got to separate out those questions because they are different questions.

But the first question is, is it within the duty to bargain in the Timken case which the Solicitor General cited.

It was the only case and I think one, Hughes Tool case which arose during the term of the contract and the Board said that the union had waived the obligation to bargain because the union want — were the only two cases on that question.

And it was perfectly clear in 1947 that there was a duty to bargain about contracting out.

Potter Stewart:

That is, if one side or the other brought it up?

David E. Feller:

That’s right.

Potter Stewart:

Is that —

David E. Feller:

And indeed even in the unilateral action cases, of the three cases that have been talked about, this case, Town & Country and Adams Dairy which is pending for cert, two of those cases Adams Dairy and Town & Country, the trial examiners who were bound by Board decision had decided and said explicitly it’s well established that there is a duty to bargain about contracting out and found employer violations by unilateral action in 1960 before the Board announced the supposedly new change in doctrine and before there was the change in the membership of the Board that’s been talked about.

So, but that’s — that again gets into the unilateral action case.

Now, once we established that there is a duty to bargain, then this is just like wages or any other subject within the scope of 8 (a) (5) duty to bargain.

And the question is under what circumstances does employer’s action without prior consultation with the union can be said to be a refusal to meet and confer with the union and then violates 8 (a) (5) not because of the subject matter but because of the nature of the action.

I put aside immediately any case in which there’s a contract on the subject, as in the steel industry, we now have what we call an experimental agreement.

David E. Feller:

But sadly, the Solicitor General’s figures about the employees covered omitted 350,000 people who were not covered at the time of that study in the basic steel agreement.

Basic steel industry in which we have agreements concerning contracting out just like an agreement concerning wages.

If you have an agreement concerning wages and the employer changes the wage or doesn’t pay the wage, you file a grievance, then you violated the agreement.

You don’t file a refusal to bargain charge because he’s not suppose to bargain about wages, he suppose to comply with the agreement.

Similarly, if you have a provision in an agreement about contracting out, there is no unilateral action question.

There’s a question of violation to the agreement and that maybe true even if there is an implied provision in the agreement not only in expressed provision.

And the cases — the arbitration cases are interesting because many arbitrators have found that there are implied provisions about contracting out.

But at least the unilateral action case is only two.

One, and a very difficult one as I really would like to put it aside in view of the limitation of time, the case where there is an agreement and there is nothing in the agreement about contracting out.

And then you get the whole argument as to whether is a continuing duty to bargain about matters not covered by an agreement during the term of that agreement.

But the easiest case is this case in which the employer at least he had the view that the contract had expired seizes that moment and very carefully, this wasn’t done during the term of those agreement, seizes that moment to get rid of all of his employees and saying other people are coming in to do your job and we’ve hired an independent contractor to do it.

Now, it seems to me perfectly clear that in that case, if there is a duty to bargain about contracting out in the simple sense which I first said, equally, the employer’s action in simply doing it and then telling the union about it later and telling the people they have no jobs, and therefore as they said in writing, there is pointless to bargain about a collective bargaining agreement.

That kind of an action is the refusal to meet and confer which the Act required.

Now, it is particularly clear since Mr. Tuman, their labor relations man said, “I didn’t want to meet with the union all this time because we have to decide first whether we’re going to contract it out.

And I didn’t want to go through the useless business of negotiating with them until we’ve made a decision.

And then the minute we made the decision, it was done, then I met to tell them that there was no point in talking about their wages and working conditions because we had somebody coming in here whose wages and working conditions were cheaper.

And he would talk then about severance pay.

Potter Stewart:

But entirely consistent with the position they now take, isn’t it?

David E. Feller:

Yes.

I think that’s right.

They take the position that — and they have never claimed any savings on this other than these lower and cheaper conditions that they worked out with these — this employer had.

I think it’s interesting that the record shows not only the nature of the savings, but that part of the contract that this company made with Fluor was the wage scales which Fluor would pay to its employees.

It’s annexed as an Appendix to the contract with Fibreboard because it was a straight cost-plus deal.

And if indeed of the — the proposal said the supervision will operate under your direction, it will be — there will be an integral part of your workforce and we have these great advantages in our labor contracts, and these are the rates which we’re going to pay.

You will repay us not only labor cost, stationary, telephone, and everything, this was a straight cost-plus deal 5% over, that’s what they amounted to.

It was a kind of a brokerage fee for supplying cheap labor, that’s what it was.

Now, I think that ends the matter, I think in terms of — if this is within the subject matter and I do not conceive that this Court could hold or I suppose it could but I would — it would be a shocking thing to say that the kind of thing which is at the heart of the railroad lately (Inaudible) — dispute in the railroads which has been so much in everybody’s attention, the recent shock disputes to the railroads that almost caused a nationwide shutdown, the critical issue there was to contracting out of work.

They’ve — a little one — a little further.

There, we’ll have what they call unit exchange, you’d — our armature would go bad.

Used to have people in the shops, this happens in the steel industry too.

David E. Feller:

They have armature winders or repair armatures.

A company says, “Well, we can do this cheaper”.

We sell this armature and we would buy a rebuilt one.

They do this on a such a course of action that what it really amounts to is having the work done in little shop around the corner where there’s a nonunion shop that does the work cheap.

And that kind of thing under the steel agreement is covered in the agreement.

That kind of thing is clearly within the duty to bargain if the bargaining that takes place in the United States has anything to do with collective bargaining because that’s what people are bargaining about.

The Longshore dispute to which there is now a Taft-Hartley injunction, the whole question there is or one of the big question is crew size and under what conditions the employer will be required to hire people when we says he doesn’t need.

The short of the matter is that in today’s collective bargaining, in steel, in auto incidentally, this was an issue.

In every industry that I know, unions are interested in and bargain about to the best of their ability the question of what work the employer will provide and that is one of the terms and conditions of employment about which they bargain.

And it’s not only contracting out, sometime it is sending — it’s a make or buy question.

Will you continue to polish steel or will you send the steel out to be polished?

Will you — the number of cases are just legion in which this kind of question is what people are interested in because today, people are interested in jobs.

Now, what Mr. Plant says is that jobs are not bargainable.

How much money you get, yes but not jobs.

And what we say is the job is in the essence of bargaining.

And once we say that it comes within the scope of bargaining, then we think clearly the unilateral action which they took in this case, in this case constitute the violation of 8 (a) (5), not necessarily in the other cases which are imagined in the amicus briefs because most of those are taken care of.

In the situation there is a contract dealing with the subject expressly or impliedly, or and I think here is an important question.

Assuming no contract, if as in the electronics industry were contracting if the status quo, I think this Court in the Katz case, in Mr. Justice Brennan’s opinion dealt with the — what claimed there, there was a wage increase, a merit increase while bargaining was going on and with no contract in effect.

And the claim was that this was a merit increase in accordance with the employer’s usual practice and the Court’s opinion said, “Well, the question is, was that really the status quo, not necessary the same wage rate at each minute, but that things were done in the same way that they had been done before.

Because if that were so then there is no change in conditions, there being no changing conditions, there is no refusal to bargain them, in making the change without bargaining.

In the case in which contracting out is a matter of routine, then even in the absence of a contract pursuing that routine is not a refusal to bargain anymore than a merit increase is a refusal to bargain by make — changing in wages because both are part of the usual way of doing business.

They are part of status quo.

The only thing that is a refusal to bargain, because they do so, a violation of 8 (a) (5), in any subject coming within 8 (a) (5) is a change in the terms and conditions without first bargaining with the union.

(Inaudible)

David E. Feller:

I think that’s one of the most difficult questions.

I think that if it is most — again, in most cases, I don’t have that problem because most contracts which I’ve had had anything to do with negotiating have a management rights cost in which pretty clearly gives the management the right to go out of business or to cut down the volume of business at any time.

I should think that the Board’s cases now and that’s not this case.

I think this case is an easy case, would seem to me to indicate that the employer would have a duty to talk to the union about the matter before he did it.

Now, the amount of time he had to talk to them assuming no contract or a contract which didn’t expressly or impliedly given the right to do it, so we have a limited number of cases anyway.

I would say the amount of time he has to talk to them and the amount depends upon the facts and circumstances of the case.

David E. Feller:

Most of the cases come up are cases like Darlington which Your Honors will hear and which he goes out of business but he really isn’t going out of business.

He’s just tucking the business around in another plant for some other reasons.

I suppose if a guy is going broke, he’s going broke.

I don’t know what the Board could order and do in that case.

Well, that’s — as I — Your Honor is just a very difficult case.

I should think that the Board’s decisions as I read them say that if it’s — that their duty to bargain does include the duty to talk to the union before you go out of business.

(Inaudible)

David E. Feller:

Sometimes, they do that.

The (Inaudible) workers put up a lot of money to put or keep a business out of the thing.

The mine workers did that and for that reason and others have been sought with a very substantial antitrust judgment.

But sometimes you do put money into companies to keep them from going out of business, and sometimes, I participated in this many times where people are shutting down a plant, you cut wages.

So that you can keep that plant going.

But, you know, you’ll lose that opportunity if the employer said, “That’s it boys, it’s done”.

In any case, I think that this is clear.

Well, that isn’t this case because this case is a case where he’s going out of business but really going — not going out of business he’s just having somebody else to the business for him at lower wage rates.

Now, in the short time remaining, I want to say just a word about remedy.

I think it is clear, as the Solicitor General said that the Board has ordered reinstatement in a number of cases, it is even clearer in this case that there in fact would be no substance to the duty to bargain if these people aren’t put back to work and they start from bargaining somewhere.

It maybe very nice for Mr. Plant to say he will talk to us but we’re going to be talking in a very peculiar position.

I want to point out that in all these delay in the Board’s decision has unfortunately from the view point of the workers that I represent here, cost not Mr. Plant or his client but the workers.

The Board only ordered back pay to run from the date of its supplemental decision in this case not from the time back in 1959 when they’re thrown out on the street.

And so there is no horrendous imposition or punitive imposition on Fibreboard to the contrary under the Board’s decision as it stands.

The biggest losers were and remained the people in the steelworkers unit who were thrown out on the street in 1959 and who will get back and lose back pay for better than two years if they were unemployed in that period as a result of decision to give their work to some other people, a other union.

(Inaudible)

David E. Feller:

Well, as a matter of fact, all he has to do is offer them reinstatement.

If he offers and that they don’t come back — he’s finished, we’re finished.

But he objects even offering.

If there — if some of them don’t come back as a result of the offer, he should be relieved and perhaps we don’t have any problem.

I’m sure that they will offer — that they will come back.

Employment is not that good that this is so.

It happens that this is an amount who made it local, very unusual for the steelworkers, it’s an old machinist local and it represents people in a lot of different plants and have —

Am I right in taking the (Inaudible)

David E. Feller:

I don’t know, the — this —

(Inaudible)

David E. Feller:

Well —

Whether or not (Inaudible)

David E. Feller:

Well, Your Honor I think all it does is asking to reinstate the maintenance of whatever they’re doing.

Maintenance is something you do on machines while they’re working.

They came before the Board and wanted to show that they had cut out certain lines of manufacture in the plant.

Now, if that so there is probably less maintenance to be done there.

I don’t think that the Board has order — orders them to maintain machinery that isn’t there.

It just says, start doing the maintenance work with your people or offer these people reinstatement —

Potter Stewart:

I should think your argument though would in term to bargain before they reduce any of the machinery.

David E. Feller:

Well, we have not alleged that the elimination of some lines of manufacturer in this plant will constitute a refusal to bargain and that isn’t the question.

The only question here is maintaining the maintenance force, keeping in condition the machinery that was there.

We are not asking that we — they maintain machinery that is no longer there, obviously the Board could not order it.

This is a question that is normally worked out in compliance proceedings with the Board.

If you have ordered reinstatement with back pay of certain people who were discharged in a typical 8 (a) (3) case, and business is bad, then you go back to the employer and you say, “Well how many people are you operating with?”

And that’s the number of people you have to take back.

You don’t have to take people back to non-existing jobs.

Now in this case, these jobs, the maintenance jobs are still there, some of them.

The contracting out here was not the cutting of manufacturer.

The contracting out was bringing in somebody else to do the maintenance work.

The Board orders them to reinstate the people to the maintenance work at that plant if that happens to be less at this moment I assume that there will be somewhat less the number of jobs available.

But —

(Inaudible)

David E. Feller:

Well, I assume that that exist those — I don’t want to talk about jobs because its not jobs in the employer.

The employer said there are no jobs.

Byron R. White:

(Inaudible)

David E. Feller:

It orders that the employer to resume doing the maintenance work required in the plant with his own employees.

But what about the back pay?

David E. Feller:

I — this would get to again whether the problems will always get into compliance.

I suppose you have to figure out what point, which people would have been working if under the given circumstance — if I may have to recreate the situation.

I don’t know if this Court or not.

And I think that that’s what is normally done on back pay cases where you get people who are discharged for cause or otherwise ordered reinstatement under the Section 10 of the Act.

You go back to find out what would’ve happen were it not for the unfair labor practice and then you make the people whole.

Now, that involves a lot of very difficult computations including what the fellow worked — earned elsewhere, what unemployment compensation, you’ve got a great many other questions.

(Inaudible)

David E. Feller:

I think that’s a question for compliance reasons.

(Inaudible)

David E. Feller:

That’s correct.

(Inaudible)

David E. Feller:

As a matter of fact, there isn’t the Board — anything the Board could do about it at this stage.

It normally doesn’t.

It issues in a broad form of order and then you go in and you negotiate with the compliance people.

If there’s a problem about compliance, then I suppose it could relieve this in contempt problems but normally that never get there.

That’s the proper locus for that discussion.

Thank you.