National Labor Relations Board v. Exchange Parts Company

PETITIONER:National Labor Relations Board
RESPONDENT:Exchange Parts Company
LOCATION:Alabama State Capitol

DOCKET NO.: 26
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 375 US 405 (1964)
ARGUED: Dec 11, 1963
DECIDED: Jan 13, 1964

Facts of the case

Question

Audio Transcription for Oral Argument – December 11, 1963 in National Labor Relations Board v. Exchange Parts Company

Earl Warren:

Number 26, National Labor Relations Board, Petitioner, versus Exchange Parts Company.

Mr. Manoli.

Dominick L. Manoli:

May it please the Court.

This case is here on writ of certiorari to the Fifth Circuit.

The case arises of course under the National Labor Relations Act Section 8 (a) (1) of that Act makes it unlawful for an employer to interfere with or restrain or coerce the employer’s employees in the exercise of their right to engage in self-organization and to select bargaining representatives of their own choosing.

Our problem here is whether an employer violates the statutory prohibition when in the course of a union’s organizing efforts, campaign and immediately prior to a board election, he grants to the employees economic benefits for the purpose of inducing them to reject the union but without expressly conditioning the benefits upon the employees voting against the union.

The facts which underlie this controversy are not in dispute and I shall summarize them briefly.

On October of 1959, the Boilermakers union began a campaign to organize the company’s employees which numbered approximately 230.

On November 9th of that year, the Boilermakers wrote to the company stating that the majority employees had designated it as their — as the bargaining representative and requesting the company need to meet for the purpose of negotiating a collective bargaining agreement.

The company apparently did not respond to this letter.

And on November — November 16th — on November 16th, the union filed a petition with the Labor Board asking the Board to hold an election for the purpose of formally determining whether the employees wish to be represented by the Boilermakers union for purpose of collective bargaining.

On February 19th, the Board, after customary proceedings, directed that an election be held and the election was scheduled for March 18th.

Now, in the inner goal, the company made no secret of its hostility to the union and sought to persuade and induce the employees to reject the union.

On February 25th of 1960, some three weeks, approximately three weeks before the election, the company’s Vice-President had a company sponsored dinner, spoke to the employees about the — the pending election.

He called attention — he attacks — he criticized the union.

He attacks the union for having allegedly misrepresented certain benefits that the company had given to the employees.

He also call attention to various benefits, which the company had to given to the employees in the past when there was no union in the picture, and he urged the employees, he urged the employees to vote — to vote because as he quoted, the issue before them was whether they were going to retain the right — their right to speak and act for themselves or whether they wanted to surrender that right to the union.

On March 4, on March 4, two weeks before the election which had been ordered by the Board, the company sent to its employees a letter together with a pamphlet and a cartoon.

And in this — in this communication, the company announced two changes in the employment conditions which would benefit the employees.

And these two changes are the subject matter of this litigation.

Now, before I describe, before I describe these two changes, which the company made in the employees — in the employees’ employment conditions, I think it would be appropriate for the Court to take note of the context in which these benefits were announced by the company.

The letter, the pamphlet and the cartoon to which I have made reference are reprinted at pages 90 to 97 of the record.

And the opening paragraphs, the opening paragraphs of the company’s letter of March 4th, I think, are fairly indicative of the tenure of the entire letter.

But I doubt if I can do justice of the company’s stylistic bait and if I may, I should like to take a moment of the Court’s time and read these opening paragraphs.

The letter said, “To our fellow employees, you’ve got an envelope from us through the mail yesterday an empty envelope.

You may have thought that we goofed, that we forgot to put something in it.

But we didn’t forget, we didn’t intend to put anything in it.

That empty envelope had everything that the Boilermakers have done for you and everything it can do for you.

That empty envelope brought home to you the empty promises of the union and the fact that it is the company that puts things in your envelope.

Your paycheck, your vacation pay, your holiday pay, your insurance, etcetera.

Dominick L. Manoli:

The union can’t put any of those things in your envelope, only the company can do that.”

And then, the third whole — opening paragraph, “Those of you who have been with us for some time, know the improvements had been made in your job, the benefits should now enjoy employees that make your job a good job.”

The fact that it didn’t take the union to get any of those things and that it won’t take a union to get additional improvements in the future.

Now, the pamphlet then went on to say how well the employees at fair in the past without the benefit of the union.

And it listed numerous benefits.

It listed numerous benefits which the company had given to the employees from 1949 to 1960 including the two benefits which they say are the subject matter of this — of this litigation here.

And finally, the — the pamphlet found up on page 96 with a preemptory “Vote no, grow with (Inaudible).”

And then, there was attached to the pamphlet a cartoon, which I think which is reproduced at page 97, and the cartoon very dramatically and graphically illustrates, I think, the entire thrust of the message.

That cartoon said, “When all the shouting is done, remember, it’s the company that has the jobs and pays the money, not the union.”

Now —

Arthur J. Goldberg:

(Inaudible) confirmed by the Board and confirmed by the Court of Appeals as to these defendants.

I read the Court of Appeals’ opinion in some point of the record, either for (Inaudible) the Board’s findings or how (Inaudible)

Dominick L. Manoli:

That’s right.

That’s correct sir.

Arthur J. Goldberg:

So there is no disagreement or objection.

Dominick L. Manoli:

Not at all.

Arthur J. Goldberg:

(Inaudible) Court of Appeals to reverse the Board.

Dominick L. Manoli:

None at all.

Arthur J. Goldberg:

There’s no disagreement with the Board’s findings.

Dominick L. Manoli:

Correct.

Arthur J. Goldberg:

(Inaudible)

Dominick L. Manoli:

That’s correct.

Arthur J. Goldberg:

But the sense of the matter is the question of law.

Dominick L. Manoli:

Yes, sir.

Arthur J. Goldberg:

Unless (Inaudible) review of the finding.

Dominick L. Manoli:

I would doubt it very much that the Court would want to do so.

Now, as I said it was in this context and that the two changes, the two changes in the employers’ working additions were made.

Now, these two changes, these two changes, one dealt with the computation of overtime pay and the other dealt with vacations.

Now, prior to the announcement that was made of the change by the company, the company, in computing overtime pay, had not treated a working holiday — a paid holiday, had not treated a paid holiday as working time for the purpose of computing overtime.

Now, under the new plan, which the company announced two weeks before this election was be held by the Board, under this new plan, a working holiday would be counted, a working holiday would be counted for purposes of computing the overtime pay if the employee worked the day before and the day after the working holiday, and this meant as the company’s communication stated to the employees that the employees would receive an additional $5 to $6 extra compensation for any week in which there was a paid holiday.

Dominick L. Manoli:

And the company, at this time, had approximately six paid holidays for the year.

Now, the other change, the other benefit, the other benefit, which the company announced as I said, had to do with vacations.

Prior to this announcement, the employees’ vacation — paid vacation leave would start on a Friday and end on the Thursday of the following week.

So there was only one weekend intervening during that — during that period.

Under the new plan, under the new plan that company in effect increased the vacation from seven — from seven to — to eight and a half days.

Under the new plan, the employee could start — would quit work at Saturday noon, his vacation would begin on the following Monday and then he wouldn’t have to return until a week from that Monday.

So the result of this change, although there — the company did not pay any more than — paid previously that many for one week, the result of this change was that the employee got an additional one-half days vacation, two weekends in fact instead of one.

And as the court below noted, this was a substantial fringe benefit to the employees.

Now, the election was held as scheduled and the union lost the election by a vote of 121 to 94.

Now, as I — as Mr. Justice Goldberg has indicated, both the Board and the court below agree that these benefits were made by the employer that they were introduced for the purpose, for the purpose of inducing the employees to reject the union.

The Board held that in view of their timing and their motivation that these — that the introduction of these benefits constituted the illegal interference and restraint on coercion with the employees right to engage in self-organization and their right to select bargaining representatives of their own choosing.

The court below on the other hand although agreeing that the — the Board as for the purpose of the employer had in introducing the benefits, nevertheless, concluded that since the benefits were put into effect unconditionally and without any strings attached, any visible strings, without any visible strings attached, that this constituted a form of legitimate persuasion rather an illegal interference or restraint.

Arthur J. Goldberg:

You know it’s not correct that the Supreme — the Court of Appeals in that before this Court’s decision during the district.

Dominick L. Manoli:

Yes, sir.

Arthur J. Goldberg:

(Inaudible)

Dominick L. Manoli:

Well, we think it has a good deal to do it.

Arthur J. Goldberg:

Business language.

Dominick L. Manoli:

The other is a very good language, yes, that’s right.

The — now, as I’ve said the court below thought that this was a form of legitimate persuasion rather than illegal interference.

We think the Court was wrong in arriving at this conclusion.

And well, it might be said that money does talk, that it does more than merely persuade.

We think that it restraints and coerces the employees’ judgment.

Now, one of the principle cornerstones of our National Labor Relations policy is embodied in the Act is the right of the employees to engage in self-organization and to select bargaining representatives of their own choosing.

Section 8 (a) (1) of the Act, Section 8 (a) (1) of the Act seeks to implement this guarantee.

And as this Court long ago confirmed in the Republic Aviation case, its dominant purposes to protect the exercise of this right against employer interference, restraint or coercion.

Now, an employer may impair that freedom, impair those rights, impair those rights either through favors or through reprisals.

As the Seventh Circuit once putted in fairly classic form, interference has no less interference because it is accomplished through allureness rather than through coercion.

Now, we are all agreed, we are all agreed that if an employer expressly conditions, expressly conditions benefits to employees upon their refraining from engaging in concerted activities or the — from their refraining from joining a union or repudiating a union that if he so conditions these benefits, that this is a clear invasion, an illegal invasion of their statutory right.

As this Court said in the Medo Photo case a number of years ago, that could be no — this is — there could be no more obvious way of interfering with the employees’ rights because the employer’s action is put the employees in an economic squeeze and the freedom which he acts seeks to extend to the employees would be illusory indeed if the employer could condition the exercise upon rewards or punishment.

Now, the court below, of course, if we would — with the position of this Court in Medo Photo, but it thought there was a difference into this case because the employer, in granting the benefits, all the way granted them for the purpose of influencing this — them to reject the union, nevertheless, since the benefits had been granted unconditionally and without any strings attached that such benefits could not influence the employees’ judgment with respect to either job tenure or compensation.

Dominick L. Manoli:

Now, we submit that in taking this position, the court below, the court below has misconceived the broad base upon which cases, like Medo Photo, are rest.

Now, the underlie — the thesis — the underlying thesis of cases like Medo Photo and they are many of them in the Court of Appeals, the underlying thesis in that case is not merely that an employer violates the Act when he insist upon, when he expressly insist upon a quid pro quo for the benefits.

The (Inaudible) thrust, the bar thrust of those cases is that the Act bars an employer from using his econ — the economic power which he alone has all that the employees in order to influence their judgment and to induce them to adjure — to refrain from engaging in — in concerted activities or to reject the union because the announcement of the benefits by an employer at a time when it’s critical time in a union’s organizing efforts or before a board election.

And where it’s apparent as it was in this case that the employer’s purpose, that the employer’s purpose is to induce them to reject the union in that kind of a setting dealing introduction of such benefits necessarily we asserting, necessarily carries in the eyes of the employees either the threat, either the threat that these benefits will be withdrawn if they fail to exceed to their — their employer’s manifest desires and wishes or that if they do comply with those manifest desires and wishes and reject the union that they will retain them and perhaps that it maybe even more coming in the future.

An employer would — we believe, would have to be obtuse indeed not to anticipate.

It appears in the pressures which his action in these circumstances here would engender the minds of the employees.

Byron R. White:

But Mr. Manoli, I — you’re not suggesting that — that there must be proved that the employees realize what the employer’s intent was.

Dominick L. Manoli:

Well, we do — no, well, no.

No, we’re not suggesting that but we do — well, our position here is that when an employer, when an employer puts into effect benefits here for the purpose, for the purpose of inducing the —

Byron R. White:

Well, assuming the only evidence — assuming that this is — that — what he — what he puts into effect is that something — some normal increment that happened every year but — but there is various evidence that he is — he is told people and not his employees but he’s told people and it is admitted that my purpose for doing this is to — is to influence this election.

There’s no question that’s what my purpose is.

You’ve got solid evidence that that was his intent.

But the employees don’t know anything about that intent.

And it reflects something that puts the normal thing to do.

I suppose you’d still argue there was a violation.

Dominick L. Manoli:

Yes, we would.

Byron R. White:

Irregardless of what the employees know.

Dominick L. Manoli:

I — it’s true.

But I don’t think we can ignore all the — I — I don’t —

Byron R. White:

That isn’t this case.

Dominick L. Manoli:

I’m sorry?

Byron R. White:

That isn’t this case.

Dominick L. Manoli:

It isn’t this case to begin with because here, it was fairly evident, it fairly evident what the employer was trying to do when he introduced these benefits at least on the finding has made by the Board and confirmed by the Court of Appeals that these benefits were introduced at this time solely for the purpose of inducing these employees to eject the union, and it was apparent to the employees.

It was apparent to the employees that this was the employer’s motive because at the — both — at the company sponsor dinner of February 25th, the employer had sought — had talked to the employees to induce them to reject the union.

And indeed, these benefits were made in the context of the letter, which I have called to the Court’s attention, which the employer is inviting employees.

Almost in preemptory fashion you might say commanding them, commanding them to vote against the union.

Now —

Byron R. White:

Did the Board — the Board spells out the finding of intent from the very facts that are evident to everybody?

Dominick L. Manoli:

From the very fact?

Byron R. White:

From the — from the facts that are — that are evident to everyone.

Dominick L. Manoli:

Yes.

Byron R. White:

Evident to the employees.

Dominick L. Manoli:

The Board took these matters into consideration.

The trial examiner took these matters into consideration.

He was affirmed by the Board in a short form decision.

And on the basis of this entire picture here, the trial examiner where the Courts — where the Board and the Court approved or concluded that this was the purpose of inducing these employees to eject the union.

And as I say, the introduction of such benefits, even though there are no strings attached, even though there are no conditions, that necessarily creates in the employees’ mind fears and pressures that they will either be able retain the benefits only if they exceed to their employer’s wishes or that they will lose them if they ignore those wishes and vote for the union.

The very fact that the employer has left the question — these questions unanswered in the minds of the employees, that very fact, it seems to us, only serves to intensify, only serves to intensify the fears and the pressures which the employers actually would generate in the minds of the employees.

Now, we believe that in a setting of this kind, in a setting of this kind, the employees are very likely to infer that the defeat of the union will preserve the benefits which the employer has given them and that they run the risk of jeopardizing their economic well-being if they ignore those expressed wishes despite the fact, despite the fact that the employer has attached no conditions — no conditions to the — to the benefits.

Now —

Potter Stewart:

Now, in this communications, which you told us about at the onset of the argument, there was a long review of previous benefits —

Dominick L. Manoli:

Yes, sir.

Potter Stewart:

— had been given over the years voluntarily by the employer that is that no union that use — makes the point they voluntary, if — if this case involved just that kind of review, if this case involve everything that you now have except for the two benefits given contemporaneously, would you — would you have a violation of the Act?

Dominick L. Manoli:

I don’t think the Board would have found a violation on those circumstances where the employer is primarily reciting what he has done in the past.

Potter Stewart:

And strongly expressing his view to better not for the — for the union.

Dominick L. Manoli:

(Voice Overlap) the Board probably holds that such a communication in and of itself would probably be protected by its seat and this will get permissible — permissible expression.

Potter Stewart:

Although presumably, in the absence of a collective bargaining agreement, if — if benefits have been voluntarily conferred, they could’ve been voluntarily withdraw could they not?

Dominick L. Manoli:

Yes, sir.

Potter Stewart:

And so therefore wouldn’t the same argument that you’re now making would be applicable?

Dominick L. Manoli:

Well, except that in one — in the first instance, he is merely — he is merely indicating to them what the past — what the past has been.

And here, however though, where he, at the very moment, on this might say were two weeks, two weeks before the election.

He throws into — he throws into the scale, he throws into scale these — these additional benefits, these additional benefits, then I think that the employers under those circumstances may well feel, may well feel that they may lose those benefits if they ignore the employer’s wishes or his wishes or they may possibly even get more if they exceeded those — if they exceeded those — to those wishes.

Now, when we think that there really is no meaningful distinction between a case of this kind where there are no strings express — no — no expressed conditions attached to the gifts in the case like Medo Photo because in both cases, in both cases, the employees — the employees have a very real fear, have a — may have a very — will have a very real fear that unless they exceed to the employer’s desires, these manifest desires, that they run their risk of jeopardizing — of jeopardizing their — their economic well-being.

And to put it very bluntly — to put it very bluntly, I think what you have in both cases is an attempt on the party employer to buy votes, to the — to buy votes.

And as the Court said in Medo Photo, it is difficult to concede of a more obvious way of interfering with the employees’ freedom of choice which the statute seeks to guarantee to them.

Arthur J. Goldberg:

(Inaudible)

Dominick L. Manoli:

That they had original and be put in.

Yes, sir, that’s correct.

Arthur J. Goldberg:

But the subject of (Inaudible)

Dominick L. Manoli:

Exactly.

Arthur J. Goldberg:

— that the Court of Appeals would refer —

Dominick L. Manoli:

Yes, sir.

Arthur J. Goldberg:

— so at least in epithet, there’s a (Inaudible) aside to the question of whether both (Inaudible)

Dominick L. Manoli:

Yes, sir.

Arthur J. Goldberg:

So that one assumes that (Inaudible)

Dominick L. Manoli:

Exactly.

Now, this does not mean, this does not mean that the Board’s position in this case does not mean that if an employer, during the course of a union’s organizing campaign, has to freeze employment conditions or during the pendency of a board election that he has to — that he has to freeze employment conditions.

The Board has repeatedly said that the Act does not bar an employer from making changes in employment conditions either during the pendency — during — during organizational campaign or during the pendency of a board election.

The controlling factor, the controlling factors intent, timing and intent motivation.

An employer does have a business to run and the Act does not bar an employer from making such changes as legitimate business considerations require or — or indicate to him.

But where he does that and it’s apparent to the employees that the changes are being made by their employer or due to legitimate business considerations that — they’re not likely to infer.

They’re not likely to —

William J. Brennan, Jr.:

(Inaudible) in other words, necessary —

Dominick L. Manoli:

Yes, sir.

William J. Brennan, Jr.:

— they might have a legitimate business consideration but at the same time that you can’t (Inaudible) the mere fact that there’s a taint (Inaudible) insufficient to this case (Inaudible)

Dominick L. Manoli:

The Board is — the Board and the courts have held, Your Honor, that where an employer has two motives, two – two intents, a good and a bad one, he’s stuck with the bad one.

William J. Brennan, Jr.:

(Inaudible)

Dominick L. Manoli:

Well, Your Honor, I’m — it puzzled me too.

I haven’t been quite sure.

Apparently, they think that the objective evidence that when there is a condition, when the employer expressly conditions his gift upon the employees rejecting the union that this — this is objective taint.

But when there is no such condition, there is no objective —

William J. Brennan, Jr.:

(Inaudible) have to prove, I — I believe, this (Inaudible)

Dominick L. Manoli:

Didn’t have to prove what, sir?

William J. Brennan, Jr.:

They do not have (Inaudible) the employer did appeal (Inaudible)

Dominick L. Manoli:

I don’t think it suggest —

William J. Brennan, Jr.:

(Inaudible)

Dominick L. Manoli:

It — what the employer succeeds or doesn’t succeed as we’ve often said with respect to numerous types of unfair labor practices is relevant.

William J. Brennan, Jr.:

Well, I assume (Inaudible)

Dominick L. Manoli:

Sir, I can only say I join in your — in your wonders what the Court meant.

I’m not sure what –what is precisely meant there.

Dominick L. Manoli:

But it seems like the heart of its — the heart of its position is, that is on page 127, that where the Court says here, “The benefits were put into effect unconditionally on a permanent basis and no one suggest there was any implication that benefits would be withdrawn.

If the work is voted for the unions, the employees were as free after the establishment of the new benefits as they were beforehand to vote for or against the union according to their own wishes untrammelled by considerations of the impact your decision would have on their job security, compensation or relations with the employer.

And as I said earlier in the argument, I think that the Court has — has misconceived not only the basis upon which the Medo Photo case rest, that once the employer throws into the scales, his economic way even though he has not said to the employees “In terms, you’ll be punished if you don’t follow me, if you don’t exceed to my manifest desires.”

Once he has thrown that into the scales, they’re inevitably the employees’ judgment will be trampled by considerations of job compensation and job — and job security.

William J. Brennan, Jr.:

I got your point (Inaudible)

Dominick L. Manoli:

No cuts — there was no — there was no bargaining representative in this case.

The union — there was pending an election so we don’t have the — you are allowed election on the part of an employer, on the part of an employer in this regard.

William J. Brennan, Jr.:

(Inaudible)

Dominick L. Manoli:

8 (a) (5).

And of course, in Medo Photo in which where I’m placing considerable reliance, in Medo Photo, you had an employer there who — who told the employees, “If you get rid of the union,” there was a bargaining representative there, “If you get rid of the union, I will increase your wages.”

But this Court found not only the employer violate 8 (a) (5) by dealing directly with the employees but it also found an independent 8 (a) (1), 8 (a) (1) and saying the language, which I quoted a moment ago, there could be no more obvious way for an employer interfere with his employees’ rights by seeking to persuade them to reject the union or abandon the union by offering them — by offering them increase wages.

Now, the further argument that has been made in connection with this type of case and that is that — that surely, an employer doesn’t have to stand still when the union is trying to organize employees, and so what’s wrong if he tries to meet the union by giving them the employees’ benefits for the very purpose of beating the union.

But I suggest, Your Honor, that the argument is really wide of the mark.

It’s not really a question of whether or not it’s going to be easy or tough for a union.

The question that we have, the question that we have whether — whether the — an employer’s use of the economic power, which he alone has over the employees, for the purpose, for the purpose of inducing them to reject the union whether that kind of an action in the part of the employer is incompatible, is incompatible with their freedom of choice that the statutes seeks to guarantee.

And we submit that it is, that Congress meant to preclude, that Congress meant to preclude an employer from using that power, which I say which he alone has, to influence the judgment because, as I’ve said and I will close on this note, there could be no more obvious way of restraining the employees from the exercise of their freedom.

Earl Warren:

Mr. Mueller.

Karl H. Mueller:

Mr. Chief Justice, may it please the Court.

One may be given to wonder, I think, how it is that it took more than 25 years for this question to reach this Court.

I think the answer lies in the fact that while it penetrates to the very roots of the Act, the cut is very narrow.

We think that is because the facts of this particular case bring the question to a very sharp point.

We found no case like this one and neither did the Court of Appeals.

I suppose all of us would be reluctant to say there is no case but certainly, we are unable to find it.

And that probably accounts for the fact that we’re here today.

This case is readily distinguished, we think, from the cases that have involved the conferring of economic benefits on employees in the context of a pending representation of the case.

Counsels made repeated reference to Medo.

And Medo is pulls apart from this case as we view it.

As a matter of fact, if I thought that Medo was even within citing distance of this case, I wouldn’t presume on the Court to be here.

And I think that if I may be bold enough to suggest an answer to the question, “What did the Fifth Circuit have in mind when it talked in terms of objective evidence?”

I think it was talking in those terms has confer distinguish which from subjective.

Karl H. Mueller:

And my own (Inaudible) way —

William J. Brennan, Jr.:

(Inaudible)

Karl H. Mueller:

Yes.

William J. Brennan, Jr.:

(Inaudible)

Karl H. Mueller:

Yes.

This — this, to me, is quite simple.

And — and this may be a case of ignorance being blitz.

On — subjective as I understand it, as Judge Wisdom used it and I started thinking it should be used in this case, was the employer’s state of mind something that would require omissions to fair it out absent and objective expression of that subject you state.

That sounds rather involved and pre-profound.

I hope I know what it means, I think I do.

I think that the thing becomes objective.

Here is your intent locked within the mind of the one whose conduct is under scrutiny.

Unless he errs expression to it, it’s never known.

It maybe inferred, it can be confessed.

But it becomes known, I think, when that intent takes objective form.

And to me it did that in Medo.

One would assume that the employer in that case had in mind to buy the employees out of voting for the union.

Such was his intent but it didn’t remain locked in his mind as we think ours did in our mind.

Arthur J. Goldberg:

Are you informing that the finding of the Court of Appeals that there wasn’t intent to influence the outcome of the election because the Court said —

Karl H. Mueller:

I think I could, Mr. Justice Goldberg, but I don’t think I’m in position to do it at this stage of the case.

Arthur J. Goldberg:

In other words, to this day, you have to assume on this at the (Inaudible) Court of Appeals has (Inaudible) finding that there was an intent to (Inaudible) the outcome of the representation election.

Karl H. Mueller:

Yes.

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

Yes.

And I wouldn’t want to quibble or dodge the matter.

Arthur J. Goldberg:

Well, your (Voice Overlap)–

Karl H. Mueller:

The thing that I come to, Mr. Justice —

Arthur J. Goldberg:

— argument being related to Judge Wisdom (Inaudible) understand but you don’t go beyond persuasion.

Karl H. Mueller:

Exactly.

And —

Arthur J. Goldberg:

Would you say what was done will go beyond persuade?

Karl H. Mueller:

Persuade.

Precisely.

I think Your Honors come — come right to the — to the crux of the thing.

The only objective evidence that thing which was brought to the employees’ attention that might affect them and dispose to them, our subjective intent is not attacked in this case.

Counsels made reference to the little letter that we wrote.

It was a piece of literature designed to sell.

It must have been recognized by the Board as coming within the limits of permissible, not only permissible but protected free speech under 8 (c).

No findings have been made of what we said went beyond the bounds of propriety.

And we assume, we hope rightly so that under the National Labor Relations Act as amended, it is not unlawful for an employer to express opposition to a union.

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

It’s — yes.

And that’s all we did.

And the Board has not said otherwise.

Arthur J. Goldberg:

Well, he did as to benefits.

He went beyond the thing (Voice Overlap) —

Karl H. Mueller:

Oh, I’ll come to those.

I’m talking about free speech now, if Your Honor please.

I’m talking about the pamphlets, the cartoon are importuning.

That was simply the other side of the street in this selling campaign with the union trying to sell the employees on the benefits it claimed it could get for them.

We try to sell among the fact that didn’t need a union to get good things.

They hadn’t needed one in the past and didn’t need one now.

Now, we think you’ve got to accept — I should put it in that way, excuse me.

I think one must accept the fact that what we said to the employees, what we communicated to the employees, laying to one side for a moment, these two benefits was not unlawful, hasn’t been found to be unlawful so — that this case comes to the Court —

Potter Stewart:

That — that kind of thing that’s expressly covered by 7 (c), isn’t it?

Karl H. Mueller:

8 (c), yes.

Potter Stewart:

8 — 8 (c) (Voice Overlap)

Karl H. Mueller:

Yes, Your Honor.

Yes, we think that’s exactly right.

And we think this, we think that the Board has undertaken to — to find us guilty of an unfair labor practice because of the lawful exercise of our right of free speech.

Karl H. Mueller:

And we say, I hope you pardon me for the way in which I put it but I — I can’t resist, that if that’s true, the right to a free speech under the National Labor Relations Act in the hands of an employer becomes nothing more than a license to grab a wildcat by the tail.

William J. Brennan, Jr.:

(Inaudible)

Karl H. Mueller:

I’m coming to that.

William J. Brennan, Jr.:

(Inaudible)

Karl H. Mueller:

This is — this is true.But these things, if Your Honor please, in a context that is as clean as any case were found — to be found.

In this case, no threats of reprisal, no unlawful promises of benefit, as we communicated with the employees, no conditions as in Medo.

And as I say, if we were anywhere close in Medo, I wouldn’t presume on the Court’s time.

But here, unlike Medo, we didn’t say to the employees, “We’re giving you this.

We hope you’re grateful.

We’re giving you this if you’ll stay out of the union.

We will give you this if you stay out of the union.”

And here’s the difference that the Court of Appeals saw and that I’ve seen all the time and I hope were both right.

There’s a vast difference between promising someone in the context of an election and making an outright absolute unconditional ground of some benefit.

Arthur J. Goldberg:

But does that mean, Mr. Mueller, that this employer could (Inaudible) against the union in this case, outright (Inaudible)

Karl H. Mueller:

Oh, no.

Oh, no, if Your Honor please.

These were the things —

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

— seizes to be subjective and becomes objective.

Arthur J. Goldberg:

Now, you’re — I think, leaving the (Inaudible) Court of Appeals and if that there was an intent to these benefits to influence the result of the election and the Court of Appeals said that the reason of that intent is not part of the statute is that (Inaudible) not coercive, in fact there was no indication that the benefits were promised (Inaudible) the statement that (Inaudible) withdrawn if they voted against (Inaudible)

Now, if, I ask you the question, assuming the Court of Appeals possibly that you’re the manager, you gave $1000 to each men, outright, the question withdrawn —

Karl H. Mueller:

Yes, sir.

Arthur J. Goldberg:

— there’s no logic of your position on the Court of Appeals that that’s perfectly alright under the statute, that’s persuasive and not a coercion?

Karl H. Mueller:

I hope the Court of Appeals didn’t say that.

I would want to.

Arthur J. Goldberg:

But when you read the Court of Appeals then (Inaudible)

Karl H. Mueller:

Yes.

I can’t.

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

I — I guess, Mr. Justice Goldberg, it’s because — I — I guess the Court being staff that just man can’t answer every conceivable question that might arise in the case.

Karl H. Mueller:

I think almost every court’s opinion leaves some area that one may flash back, and I’m not suggesting Your Honors doing that, but there maybe an area too which the Court didn’t address itself.

Arthur J. Goldberg:

(Inaudible) in 127 of the record?

Karl H. Mueller:

I’ll be pleased to do that.

Earl Warren:

We’ll recess now, Mr. —

Karl H. Mueller:

Just before we took our recess, Mr. Justice Goldberg can be invited me to direct my attention for a moment to a part of the opinion of the Court of Appeals.

Your Honor, I think you’ve indicated page 127.

Arthur J. Goldberg:

Yes.

Karl H. Mueller:

I’m not sure I have my finger on the particular sentence.

I suspect it’s the one as it not where the Court says here the benefits were put into effect unconditionally on a permanent basis.

And no one has suggested that there was any implication the benefits would be withdrawn if the workers voted for the union.

Is that the point?

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

Thank you.

Well, I don’t mean to try to over simplify the thing but it poses no difficulties for me.

I think what the Court says is true.

I think the Court said what it meant.

I don’t think that it had in mind the question that Your Honor has suggested of what would have been the case, had the employer gone to each employee and handed him a package as it were saying to him along with the gift, “Please vote against the union or vote for me.”

I just don’t think that — that occurred to — to Judge Wisdom.

I would hesitate to assume the role of a prophet.

I know so far as I’m personally concern, I think to do that would be to violate the law.

I really don’t have any question about it.

There — there you would have an objective tie between the gift and the expressed wish of the giver or grantor.

And — and I don’t think that, for whatever it’s worth, I don’t think that I would want to assume the burden of establishing an employer’s right to hand an employee a $10 bill and say, “Here Joe, this is all yours.

I hope you stick with me or I hope you’ll vote against the union”.

I think you have a coupling there.

I think there you have a case of economic power born of the desperation of the moment calculated the influence and interfere with notwithstanding its — its unconditional.

I think that their implication is that go with it in those circumstances that would condemn, certainly it would in my mind.

Earl Warren:

May we put it in this context just for a moment just for the sake of argument, Mr. Mueller?

The company sends a blank envelope to him one day.

The next day, it sends another envelope to him with a — with a letter in it in which it says, “We didn’t do this by mistake.

Earl Warren:

We — we sent you that because we wanted to — you to understand that that was what the Boilermakers union had done for you.

They have done nothing.

They can do nothing for you.

We are the only ones who have ever done any — anything for you.

We’re the only ones who can do anything for you and we offer you — we — we now offer you for the purpose of — of influencing the election this — this fringe benefit.”

Karl H. Mueller:

Yes, it did not —

Earl Warren:

Is that distorted?

Karl H. Mueller:

It is distorted, if Your Honor please.

Earl Warren:

It is.

But would —

Karl H. Mueller:

Yes.

Earl Warren:

— would you correct me, please —

Karl H. Mueller:

Yes.

Earl Warren:

— because I had those things in mind.

Karl H. Mueller:

Yes.

I think one has to view the thing in context just as I would suggest this language has been referred to as good in an area resist or can’t be considered outside the factual situation in that case out of context when we begun lifting choice passages and separating them from context, I think we can be let off into — by wilderness.

In this situation, I — I would like to come back to if I may and I think, Mr. Chief Justice, that your question invites that and I don’t mean to go to feel about it.

Earl Warren:

Well, if — if this — if the facts were, as I have — as I have put in them and I said I put them for the sake of argument, would that be coercion?

Karl H. Mueller:

Well, I’m not sure.

I think that gets pretty close.

I think that it readily of course distinguishable as Your Honor had in mind to do from the employer handed somebody a $10 bill and say, “Here it is.”

Earl Warren:

Yes.

Karl H. Mueller:

Now, I think that — if on — on March 4, we had said we are announcing additional benefits and suggesting in consideration of this additional grant, we appeal to you to vote against the union.

I — I wouldn’t do that.

I — I think that would be getting across the line.

I think it would be a transgression we need do.

I think there — there he get away from — from the persuasion, effective persuasion at free speech for this.

And — and you get over into an area that may apply what the Court referred to and I think maybe Judge Wisdom was borrowing from words of this Court, puts the employees in a squeeze.

Out of which comes interference or which constitutes interference, restraint or coercion.

Where the employee actually feels that he is faced with the necessity of deciding to exercise his rights freely under the Act as he wishes to do on the one hand or refraining from doing that because of a fear that he will offend his employer and may have injure himself.

William J. Brennan, Jr.:

Which it says that this — out of gratitude for the (Inaudible)

Karl H. Mueller:

I — I don’t think, to my way of thinking if I may say so.

Ingratitude is one of the great sense, if not the chief one.

I don’t think that for an employee to say that my boss has been good to me.

And times pass, he didn’t want this.

I’m not going to vote for him.

Now, that’s — that’s what happens in these things.

That’s what the employer’s campaign is.

William J. Brennan, Jr.:

But not has it here two sufficient benefits.

Karl H. Mueller:

Oh, yes.

The timing has —

William J. Brennan, Jr.:

(Inaudible) appeal is that this guy has the only vote for the union.

This does not appear —

Karl H. Mueller:

No.

It — and — and I hope it would not be one of those things that would fall in the area of a forbidden promise that would appeal to a man’s cupidity and destroy his free agency.

The court below found that after these things were done, the employees were as free as they have been before.

I barely believe that to be true.

And I think it’s true from the facts of the case.

Here’s what we find actually.

I think when you examine, the trial examiners have immediate report and the Board simply adopted it.

When they talk about what the Board found, the Board didn’t find anything except that it was going to swallow whole what the trial examiner had said out.

And I’d like to come to that for a moment here.

Earl Warren:

I wonder if you could point out to me first off.

In — in what respect, the facts I gave you, were distorted?

Karl H. Mueller:

This — this is precisely —

Earl Warren:

Yes.

Karl H. Mueller:

— the thing that I proposed to do —

Earl Warren:

Very well.

Karl H. Mueller:

— Mr. Chief Justice.

Earl Warren:

Go ahead.

Karl H. Mueller:

In so doing may I simply observe, as a preliminary thing, that one will find a sharp difference between what the Board said indeed in its decision by adopting what the trial examiner said and did, and what the Board talks about in its brief.

To me, it’s hard to recognize the two as being the same case.

In our situation here, to set this thing in context, here’s what happen.

Year after year, as this small outfit grew, it made the improvements in the working conditions of the employees in the terms of their employment.

I’ll be the last to say that in the inner recesses of the minds of management, there was not the whole.

And the purpose, perhaps, that the employees would be grateful, as has been suggested, and that because of the — the employer taking care of them before he was made to do so by an organized move, the employees would feel that there’s no need for any outside help in dealing with my boss.

My boss is going to do the right thing.

He’s going to improve things as rapidly as he can.

Nothing is wrong with that.

I — I don’t think that the access that an employer is no good unless his employees are organized.

And I don’t think it says either that unorganized employees are like mice standing around in timorous fashion under the blacksnake quip of an employer that with — being economic pressure, economic force or power here.

A few days before the union decided to try to organize this plan, this is a thing that came from without not from within, the employees didn’t move for organization.

The Boilermakers one fine day said “We’re going to try to organize that plan.”

The record is as clear as crystal on this.

A few days before that and with no notice at all that the Boilermakers were about to take picks on us as it were, our management had been to a trade meeting in district convention.

And the theme of that meeting was employee welfare and they apparently attended the meetings and came home imbued with the idea of — of devoting their attention to that very thing, seeing what they could do to make things better for the employees.

Meetings were held on the 4th and 5th of November.

It was at that time that the holiday, the added holiday was announced in keeping with the policy that had been set in 1951 — 1955 to add one each year until further notice.

The Board condemned this on a holiday and the Fifth Circuit knocked him out on that and we’re not here on that point.

But that holiday was announced.

Here was a benefit right on the eve unknowing that the union was around the corner but on the eve anyway of the union presenting itself, making its entrance on the scene, along with that, talked about a lot of other things, reviewed with the employees and the record shows all these.

All of the evidences are past acts on our part of interest in the welfare of the employees and our desire to do well by then.

Added to it, the holiday indicated the following Saturday, we were going to meet with the representatives of departments in the factory to work further on the inauguration of a wage incentive plan.

Of course, wage incentive plan went by the Boards.

And then came the union, asserted the naked claim, filed a petition in something that we think you can’t overlook or that should not be overlooked.

Forgive me for putting it that way.

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

Yes, you do, 30%, as I recall, the rule of thumbs sometimes used and sometimes not that what happened here I don’t know.

But it was a naked claim that we claim the right to represent.

And the filing of that petition set a period that lasted for 16 long months before the petition was withdrawn in March of 1961.

Karl H. Mueller:

16 long months, we were — what should I say, in this suspect category because of the fact that the union had indicated its determination to try to organize us.

It seems to us, I don’t want to take a greater burden on the case imposes but it seems to us in that connection that the Board said that the employee should be deprived of anything that we wanted to give him unconditionally until that petition was settled one way or the other for 16 months.

This course of conduct of making improvements year by year was arrested, hold and stocked, shuffled and would remain so for 16 months.

We couldn’t give anything.

The employees couldn’t have anything because the union ordered them and the union was trying to sell them.

We don’t think that’s what the extents for but anyway, here’s what we did.

The record shows that we had a payroll period that ended on Thursday and we paid on Friday each week.

Our plant had grown to such an extent.

The accounting department couldn’t close the payroll one night and make the checks the next morning so we were faced with the fact, this is in the record, I happen to be there, which adds nothing to it.

And the question was, we’ve got to give the accounting department more time.

We got to roll the payroll week back to end on Wednesday and still pay on Friday.

That then left the way in which we have been scheduling vacations beginning on Friday and in the following Thursday not to coincide with anything, and the question was, shall we will leave it hanging?

Should we move it back?

Some change has to be made that no longer bears any relationship to anything.

And I made the suggestion, I think the record indicates it but that still doesn’t make it any better than someone else has made it.

I made the suggestion that start on Monday.

And we gave them exactly the same length of vacation, exactly the same vacation pay.

And we thought that it was not actually an economic benefit but Judge Brown suggested that they were fishermen that might have an extra weekend.

But the day and a half to which counsel alludes from Saturday noon until Monday next, was there a normal regular time off not — admittedly, they could couple that with their vacation.

I believe its Saturday noon and not come back until the second Monday.

So that put their normal time off at both ends of their vacation period.

This was the first of January.

Earl Warren:

Yes.

How long was — how long was that change made after this welfare convention you spoke about?

Karl H. Mueller:

Well —

Earl Warren:

How long?

Karl H. Mueller:

— we made it about the first of — of January but long before we knew anything about the Board’s decision long before we knew about (Voice Overlap)–

Earl Warren:

No.

I didn’t ask you that.

I asked you —

Karl H. Mueller:

Excuse me.

Earl Warren:

— about how long after the convention was that that you made this change?

Karl H. Mueller:

On the payroll?

Earl Warren:

Yes.

Karl H. Mueller:

And — and the scheduling of vacation —

Earl Warren:

And this — this fringe benefit.

Karl H. Mueller:

— as the convention was — was the last part of October, if Your Honor please.

We met and gave the holiday on the 4th and 5th of November.

The union put us on notice about 10th.

They filed the petition about the 16th.

This was the end of December effective January 1.

The overtime change was the one that we had put into effect the preceding July and simply reinstituted.

And people were taking vacations incidentally under the new plan, scheduling vacations prior the time the Board order came out.

The timing we think is right, right important.

Now, we did mention it as something that had been done in our March communication.

Well, here’s some —

Arthur J. Goldberg:

(Inaudible)

Karl H. Mueller:

No, I — I won’t try to go behind.

I was trying as best I could to answer the question Mr. Chief Justice had put in — in connection with the timing of these things and the context in which they took place.

They didn’t take place, I think as you suggested, Mr. Chief Justice, if I may say so.

And I try to indicate we’re in the different play.

Here’s something that we think needs to be looked at.

We talked a lot about purpose but if you look at the decision of the trial examiner, you’ll find that he said motivation is not only not controlling, it’s not even a theory.

And that’s precisely where this thing set.

And this order of the Board didn’t say, “You shall not grant economic benefits for the purpose of influencing or affecting.”

It says blanket on order as one can find.

Granting economic benefits, not limited as to purpose, it just simply said don’t do anything.

The man at the union indicates that it is going to undertake to organize your employees.

We think that viewed in context, and I’m going to have to leave the case largely on brief.

There so many things we’d like to say but we recognize, of course, the time limitation.

Karl H. Mueller:

We think that, as we pointed out in the brief, the Board has made its mistake by looking at interference with the union.

It talks in terms of injury.

Our employees weren’t injured.

The union may have been by reason of the fact that the employees were rendered less susceptible to the blandishments.

And the empty envelope, if Your Honor please, was in response to the union’s constant statement by bulletin to the employees, “If you vote us in, we’ll get you this, this and this” on the very eve of our meeting to which counsel referred in March.

The union says “Whatever the company gives you, we will get you double at the bargaining table.”

It was a selling campaign.

We think it has to be viewed in that context.

And we don’t think that the Act required that we go into the ring with our hands tied behind us.

And there’s no finding that we did anything by way of overreaching free speech or anything of the sort.

There’s no background of unfair labor practices.

There are no accompanying their unfair labor practice as we did and I accept — you have suggested, Mr. Justice Goldberg, accept the fact that the Court of Appeals said, “You had in your mind that this would influence in effect the employees’ right but we never communicated it to the employees in such fashion as to constitute interference, restraint or coercion.”

We think the Court of Appeals was correct.

Thank you so much.

Byron R. White:

(Inaudible)

Karl H. Mueller:

Yes.

Byron R. White:

— didn’t the Board give the position that the hearing before the examiner — didn’t the Board take the position before the examiner and before the Board that there was an unfair — well, didn’t it take the position as motive or intent was irrelevant?

Karl H. Mueller:

It certainly did and that finds expression in the — in the trial examiner’s report (Voice overlap)–

Byron R. White:

And the trial examiner —

Karl H. Mueller:

— and there’s nothing else.

They’ve turned us out of hand on that question, Mr. Justice White.

We put on our man who made the decision.

And he testified that this was because of other considerations completely disassociated with the union, had no connection with the union at all.

The testimony, of course, is uncontradicted.

And that was turned out of hand by the trial examiner and by the Board by saying that what you intended, what you’re motive and purpose was, is not only not controlling, it’s not even material.

Byron R. White:

And that was the Board’s position that — that in any circumstances in nearly granting their benefits, pending an election, is — is not permissible —

Karl H. Mueller:

We —

Byron R. White:

— regardless of motive, that was their position.

Karl H. Mueller:

— we think that’s precisely right and that’s what I had in mind when I say that it’s difficult for me to recognize the brief and the decision as going to the same case.

Byron R. White:

But the examiner did find and the Board adopted its findings that granting the foregoing benefits — that the company granted the foregoing benefits in — in order to interfere with restraining coerce (Voice Overlap)–

Karl H. Mueller:

Yes.

Byron R. White:

The examiner did find that but he went right on and said that internal motive is irrelevant and immaterial anyway.

Karl H. Mueller:

That’s correct.

I — I don’t know.

I only left to speculate why it was that Judge Wisdom, and I was who sat with him, overlooked that the Court of Appeals didn’t address itself to this crucial finding in the decision itself.

That motive is at no consequence at all and they — they just simply throughout the undisputed evidence with respect to our own declaration of intent.

I — I sort of have a feeling, I hope I’ll be forgiven this, but I sort have a feeling that, I got it from the oral argument before the Fifth Circuit, that Judge Wisdom, I saw expressed himself in the course of the argument, that — that this — this is a strange thing.

Here, you have no surrounding unfair labor practices, no conditions, no law violations, no nothing.

Do you mean to say to me?

He says the Board’s counsel that an employer’s hands are tied, that the employees have to forego things that the employees would like to have and that the employer will be glad for them to have simply because some union has decided to undertake or organize various employees in order to make the employees more susceptible to acceptance of the union’s promises that if you’ll come with me, I’ll take you to the promise land to bring it to you.

I hope that answers it.

Earl Warren:

Very well.

Karl H. Mueller:

And I appreciate the question.

Thank you.

Earl Warren:

Thank you.