National Labor Relations Board v. Katz – Oral Argument – March 22, 1962 (Part 1)

Media for National Labor Relations Board v. Katz

Audio Transcription for Oral Argument – March 22, 1962 (Part 2) in National Labor Relations Board v. Katz

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Earl Warren:

Number 222, National Labor Relations Board, Petitioner, versus Benny Katz et al.

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

This is a Labor Board case hereon certiorari to review a judgement of the Court of Appeals for the Second Circuit.

The order of the Board found the respondent guilty of the unfair labor practice of refusing to bargain collectively and of interfering with the employee’s rights of self-organization and collective bargaining.

The order directed the respondent to cease-and-desist and also required to bargain with the union as the representative of the employees for reasonable period.

The question presented in this case stated in general terms is whether it violates Section 8 (a) (1) or Section 8 (a) (5) of the National Labor Relations Act, for an employer during negotiations with a labor union chosen as their representative by a majority of the employees to take unilateral action changing the terms and conditions of employment, without notifying or consulting the Union and at a time when it goes with the Union desires to bargain on those subjects.

And takes this action I should add before there was an impasse in the negotiations.

The facts upon which this question is presented were all found by the trial examiner and the Board and were accepted by the Court of Appeals.

Also respondent’s brief sets forts quite a different version based on its reading of the evidence.

The findings of the Board I think are supported by substantial evidence and in any event that question is not here.

The employer manufactures metal doors and the frames and I guess the panels, things of that kind in which they are set and admittedly ships its product in interstate commerce.

Among its employees, there was a group of about 50 draftsmen and technicians whom the Board found to be an appropriate bargaining unit.

It’s certified a labor union, Local 66 of the American Federation of Technical Engineers as the exclusive representative of the employees in that unit after an election.

There was a delay in starting negotiations because the employers did not of course reply to the Union’s levy.

But on the 30th of August, negotiations began.

It’s unnecessary to describe the negotiations in any great detail because the Board’s findings rested on three specific acts.

It’s enough to say I think that there were beginning in August and running on through October and November, for the first part of December, a series of bona fide meetings.

Then there was a long interruption at the suggestion of the New York State Mediation Board and there were a series of additional bargaining meetings beginning in the end of March and running through the end of May when negotiation reached an impasse.

During that time and according to the findings of both the trial examiner and the Board accepted by the Court of Appeals, there was no impasse in the negotiations.

But the employer nevertheless took three steps which were found by the Board to violate Section 8 (a) (1) and (5).

The first related to sick leave.

This employer had had a plan for the benefit of its employees before the Union came, of granting sick leave with pay up to 10 days a year.

If at the end of a calendar year, an employee hadn’t used up that sick leave, he could carry it forward into — into the next year up to a total of 20 accumulated days.

If you had more than 20 days of accumulated sick leave, you began to loose it.

You were paid for 50% of the excess days, but you lost the other 50% so that an employee carried forward say 30 days, he could accumulate 20.

He would be paid for five and he would lose the other five.

On March 11, during a recess in the negotiations, but during the general period in which negotiations were admittedly going forward and there had been no break down.

The respondent made a unilateral change having the sick leave.

It reduced the days of sick leave that could be carried forward.

Archibald Cox:

It did liberalize the — and it reduced the days of sick leave per year, but it did liberalize up on the amounts of payment for accumulated and unused sick leave.

That’s — that action was taken as I have said without any notice to the Union, without any consultation to the Union and indeed when the Union objected, the employers said there is no need for us to consult for you about this.

We’re denying your right to be notified or to be heard.

This was one of the actions which the trail examiner and the Board found to violate Sections 8 (a) (1) and (5).

Second in April, as negotiations were still in progress and according to the findings still before there was any impasse, the employer put into effect somewhat higher wage rates, more favorable wage trades perhaps I should say than had prevailed before, and is true and frequently in paying engineering employees, draftsmen and other technicians.

This company had a rather broad range of wage rate rather typical event might be for an employee to be hired in comparatively untrained and unfamiliar with this employer’s need, at the bottom of the scale, say around $55 or $60 a week.

And as he learned the employer’s needs, as he demonstrated the skill and was put on more responsible work, he might be increased.

The practice had apparently been to review the status of employees and this unit every six months or so and to grant them increases up to a considerably higher level.

Now what the employer did in April was to guarantee the review of wages at certain periods, was to guarantee certain step increases automatically, all of which were favorable than any offer which had previously been made to the Union.

The trail examiner and Board found that this unilateral action violated the statute and was therefore an unfair labor practice.

The third subject on which unilateral action taken was the so-called merit increases, that is increases given to individual employees within the wage rate.

During October and again in January, this employer gave wage increases, first to roughly 30 and then in January roughly 20 of the employees without consulting the Union, knowing that the Union wished to bargain about the subject.

I would emphasize that these were not just few employees.

The merit increases ran to approximately 50 which were all the employees of the unit and therefore we think amounted very closely to a general wage increase during the negotiations and before an impasse was reached.

The trial examiner found that each of these three instances of unilateral action was a refusal to bargain collectively and was an interference with the rate of the employees to bargain collectively.

He went on and said that these instances of unilateral action demonstrated that the respondent had been marked — merely going through the motions of collective bargaining without a genuine intention of trying to negotiate an agreement.

And he rejected as I have said the notion that any impasse had been reached prior to May of this year, and held that the Act had been violated.

He went on and recommended an order directing the employer to cease-and-desist from such unilateral action and to bargain with the Union which been while either as a result of the unfair labor practices or otherwise had lost the support of the majority of the employees.

When the matter came before the Board, it approved for the most part the trial examiner’s finding.

Specifically, it found that no impasse was reached until sometime in the middle of May after these instances of unilateral action had occurred.

It found that there was no misconduct on the part of the Union which was responsible for the difficulty in the negotiations as had the trial examiner.

And it ruled that the unilateral action was a violation of the Act.

Its finding is differed from those of the trial examiner in that it rejected specifically the trial examiner’s finding that the respondent had merely been going through the motions of collective bargaining.

It’s said that that finding was not permissible to be made, because the complaint had not been drafted on the theory that the respondent was not acting in good faith.

And it ruled that this conduct was a violation of Section 8 (a) (1) and (5), regardless of the employer’s subjective state of mind.

It approved on the basis of its finding the order that had been recommended by the trial examiner.

The essence of the decision below which set aside the Board’s order appears in Volume 2 of the record, at page 439.

The Court said, at the top of the page and I think it’s worth calling this Court’s attention to it, where opinion for unilateral action here complained of occurring as they did during the negotiating of a collective bargaining agreement do not per se constitute a refusal to bargain collectively and per se are not violative of Section 8 (a) (5).

While the subject is not generally free from doubt our conclu — it is our conclusion that in the posture of this case, a necessary requisite of the Section 8 (a) (5) violation is a finding that the employer failed to bargain in good faith.

Circuit Judge Lumbard, one of the three members of the panel, dissented from this opinion and would in substantial — to a substantial degree have enforced the Board’s order.

Felix Frankfurter:

May I — just going to ask whether you want a full enforcement, you don’t — you disagree with the qualification of Judge Lumbard?

Archibald Cox:

Yes.

We want a full enforcement.

But we there find his reasoning is under main issue substantially correct.

We think that the court below is wrong and that it misconceived the essential duties, lay down employers and to a degree labor unions also that was not involved, by Sections 8 (a) (5) and 8 (b) (3) of the National Labor Relations Act.

In our view, the gist of the duty imposed on an employer by those provisions and on a union where the Union’s duty to bargain collectively is involved, is to established terms and conditions of employment jointly.

The whole thrust of the statute is an effort to substitute for what had previously been the employer’s fight either because he took unilateral action or because of individual bargaining a regime founded on mutual consent.

And any conduct which like unilateral action reject his totalling inconsistent with the notion of substituting a foundation of agreement for the employer’s hipsy-dixy in fixing terms and conditions of employment is in our view a violation of the Act.

The fundamental error of the Court of Appeal — majority of the Court of Appeals I think was in a quite — in supposing that all duties under Section 8 (a) (5) were determined simply by the employer’s good faith by his subjective state of mind.

That’s a useful, indeed an essential test in determining whether he is just going through the motions, whether the bargaining is a sham.

But the fact that is important in some instances does not make it the sole touchdown by which to measure the legality of all conduct.

And I shall give the Court in the course of my argument a number of instances in which it is quite plain that the question of good faith is not involved and that an employer or indeed a labor union maybe guilty of a refusal to bargain collectively regardless of its subjective state of mind.

We find support for this position which I have tried to summarize very briefly in the words of the statute, in the philosophy of collective bargaining, which some of the opinions of this Court tell us, has been incorporated into the statute and in the precedent not only of this Court, but of the Court of Appeals and of the Board, which I would — should’ve supposed it settled the precise question involved here for at least 20 years.

The words of the statute to which I shall direct myself first, appear conveniently at page 39 of our brief.

Section 8 (a) (5), it shall be an unfair labor practice for an employer to refuse to bargain collectively with the representatives of his employees subject to the provisions of Section 9 (a), 9 (a) appears over on page 41.

Representatives designated or selected for the purposes of collective bargaining by a majority of the employees in the unit appropriate for such purposes shall be the exclusive representatives of all the employees in such unit, for the purposes of collective bargain with respect to rates of pay and so forth.

This principle of majority rule imposes what Justice Stone called certain negative obligation, the negative obligation to refrain from fixing terms and conditions of employment by other methods than through collective bargaining with the majority representative.

Let me interpolate once again that I am speaking of the situation before an impasse is reached.

Once there has been an impasse the duties of the employer and the date of the Union maybe changed.

But there is the negative duty as Chief Justice Stone said to refrain from other conduct inconsistent with collective bargaining that just established by the principle of majority rule.

It’s a duty to refrain not only from bargaining with other unions but to refrain from bargaining with individuals and we think quite plainly also a duty to refrain from unilateral action since that attempt to fix terms and conditions of employment by a different method than the statute ordains and describes as exclusive.

In addition, we think that the Section 8 (d) which defines the duty to bargain collectively gives literal support to our view.

Section 8 (d) at the bottom of page 39, for the purposes of this Section to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and conferred good faith with the respect to wages, hours and other terms and conditions of employment.

That — those words to me at reasonable times in conferring good faith with respect to wages, hours and other terms and conditions of employment applies to each and every subject of collective bargaining.

For example, it is well-settled that for an employer to refuse to bargain about sick leave would be an unfair labor practice even though he was bargaining incomplete good faith about each and every other subject of employment.

It’s equally well-settled that to refuse to bargain about bare increases even though the employer is bargaining in good faith about other subjects is an unfair labor practice.

This is well-settled by decisions of this Court and others.

Now, I submit too that it is equally plain that the duty to meet and confer involves meeting and conferring about what might be called temporary terms and conditions of employment.

Supposed for example the Union said, but I think it is arising most naturally in a large establishment, it’s going to take us six months before we can workout all the details of a contract.

Meanwhile, we want a temporary sick leave arrangement, something that will operate in the interim.

Archibald Cox:

If the employer said, “No, I won’t bargain about the temporary sick leave arrangement to operate in the interim regardless of his good faith in meeting and discussing sick leave to begin six months.”

Hence, I submit that there would be a violation of the statute under the plain words of Section 8 (d).

Now, if you add those two together, the duty to bargain on every subject and the duty to bargain about temporary terms and conditions of employment, it follows by inevitable logic I think that there has been a failure to bargain about sick leave, a failure to bargain about this wage increase and about the merit increases here, because the employer whether had and put something into effect without consulting the Union, which certainly a failure to meet and confirm and when he knew that the Union was seeking to bargain on this subject, there was in effect a refusal in the most literal sense of the word.

Furthermore, I may point out the employer knew perfectly well in this case that he was rejecting the Union’s right to participate with respect to the change in sick leave.

When the Union letter — wrote a letter protesting the change of sick leave in March, the employer replied by a letter dated March 16, 1957, which appears in Volume 1 of the record.

I’m reading from page 270, “We do not feel obligated to explain the matter to you or anyone else since we are not as yet to bound to you until an agreement has been reached between us.

And with the actions that you have used thus far is doubtful when such agreement will be consummated.”

Over toward the end of the letter, “There is no need to explain to you what we have done.

We have no obligation to you.”

Well, of course the statute does impose an obligation to consult with the Union about these benefits.

I rested thus far on the words.

We also find support for dispute and perhaps more importance support in the philosophy of collective bargaining.

The philosophy of collective bargaining has always condemned unilateral action for three reasons.

In the first place as I suggested at the outset, the basic postulate of collective bargaining is the right of employees to participate in decisions.

This has been set forth in the literature in the field going back at least to a Dr. William (Inaudible) writing in 1920, when he spoke of collective bargaining as achieving a partnership.

When we have such a partnership, he said, two equal partners then one partner cannot do anything without consulting the other.

This basis was carried on through into the enactment of the statute and one finds, we’ve quoted some on our brief many expositions of the same period later.

The second reason that the philosophy of collective bargaining has always rejected unilateral action is that unilateral action is inconsistent with the practicalities of collective bargaining.

One can’t build a house on shifting sands.

One can’t negotiate a contract if the basis, the taking off place is subject to sudden changes without notice to the other side, consider the difficulties of trying to negotiate a pension plan or health and welfare plan covering sickness, accident insurance and the like, if the employer were free following a long night of negotiation suddenly to announce the next morning, well I put a plan into effect and while we’ll go on talking, we’ll have to start all over again.

Again of course for the employer to take unilateral action, greatly lessens the flexibility of collective bargaining and the employee’s opportunities to participate.

If the employer increases his unit labor cost, let’s say 5 cents an hour by putting a pension plan into effect that the employee’s opportunities to bargain for increase vacations or for higher wages or for some other benefit are necessarily reduced.

True in theory the pension plan may be revoked.

But as a practical matter, one doesn’t wipe out, afraid to comply so easily.

Third, unilateral action necessarily disparages the bargaining process and undermines the union.

If the employer advanced the employer when he makes a unilateral change is saying to the employees, “See, this union certification makes no difference.

I’m going out on in conducting myself as before.”

If this happened here with the sick leave, he takes away some of the employee’s benefits, this will look and often be an act of reprisal for bringing the union.

If he gives more than he is ever offered the union as happened here in the case of the wage increase in April which exceeded what he had offered the union, he’s in effect saying, “See, I will give you more alone than you can obtain and collective bargaining through the union.”

Third, we submit that this question has been decided in the decisions of this Court.

Archibald Cox:

And that they did as I said earlier settled the question many years ago.

The leading cases on the subject are J.I. Case Company and the Medo Photo Supply case.

In the Medo Photo Supply case, there were the employees, it was rather small bargaining unit went directly to the employer after a majority had chosen a bargaining representative and indeed filed a representative who was still acting for them.

And they said, “We would like you to give us directly as employees a wage increase.

And if we get the wage increase, we won’t want the union.”

The employer replied after thinking it over, “You can do it what you like about the union, but I’m happy to give you the wage increase.”

In an opinion by Justice Stone, it was held that this was a violation of the Act and I think his words are important enough to impose on the Court by reading a short passage.

That it is a violation of the essential principle of collective bargaining and an infringement of the Act for the employer to disregard the bargaining representative by negotiating with individual employees whether a majority or a minority with respect to wages, hours and working conditions which recognized by this Court in the Case case.

Bargaining carried on by the employer directly with the employees whether a majority or minority who had not revoked their designation of a bargaining issue would be subversive of the mode of collective bargaining which the statute has ordained such conduct is therefor an interference with the rights guaranteed by Section 8 (1) of the Act.

Unilateral action I submit is exactly the same in this respect as bargaining with individual employees.

Indeed, that very question came before the Court in the May Department Stores case.

A case which can be distinguished because it could have gone on the ground that the employer refused even to meet and negotiate with the union.

But he had taken unilateral action and it’s significant that the Court dealt with the unilateral action as such, saying employer action to bring about changes in wage scales without consultation and negotiation with the certified representative of its employees cannot we think logically or realistically be distinguished from bargaining with individuals or minorities, and then went on again to interfere — point out that this interferes with the right of self-organization.

And finally the point was squarely ruled on in the Crompton-Highland Mills case a few years later where an employer had done very much with this employer here did granted a wage increased to the employees when negotiations have gotten difficult.

Indeed, they’d rate something of an impasse in that case which was greater than any increase it had been willing to offer through the union.

Now I said that the basic fallacy of the court below in my judgement was attempting to make the employer’s state of mind that the sole test of whether what is complied with Section 8 (a) (1) and 8 (a) (5).

I would like to dwell on that just a moment and to show where it seems to me that this question of subjective good faith is relevant and where it is not relevant.

Section 8 (a) (5) is a short provision.

I also think if the law of collective bargaining is something standing like an inverted pyramid on that various small base because this is a large, complicated body of law and it doesn’t reduce itself to one simple touch of it.

I should say that there were at least three groups of problems which it was important to have in mind in aligning of the decisions of this Court.

The first to those cases, cases of the kind that I’ve been talking about that deal with the status of the union and they established one of the collective bargaining as the exclusive method of fixing terms and conditions of employment upon a foundation of mutual consent.

In this area, the concept of good faith has just no — or almost no role to play.

The only case I can think of where it comes has any pertinent is where the employer when there’s been no election and certification refuses to bargain on the ground that he doubts whether the union has majority.

Then it is said if he’s doubt, he’s entertained in good faith.

He’s not guilty of unfair labor practice even if it happened that the Union had the majority.

But in all other cases, good faith does — doesn’t have anything do with it.

Suppose for example, if the employer as in the May Department Stores case, challenges the Board’s determination of the appropriate unit in complete good faith.

That’s not a defense if he is wrong.

If the employer refuses to bargain with the union — with a particular union official on the ground that he’s personally objected — objectionable to the employer, but he’s willing to bargain in good faith with other union official.

That has been held to be an unfair labor practice in enforcing the negative duties.

Archibald Cox:

As I suggested earlier, the duty to refrain from bargaining was a minority unit, good faith has nothing to do with it.

In — if the employer bargains with individuals when there’s a majority representative he violates the Act regardless of his good faith otherwise in talking to the union.

Similarly, when one deals with the questions in the area which can be defined by asking a question, what are the required subjects of collective bargain?

As I suggested earlier, the employer, he refuses to bargain on a statutory subject is guilty of a violation of Section 8 (a) (5) regardless of his subjective state of mind.

And indeed in the Borg-Warner case, this Court held that if he insists on bargaining on something outside the statutory subject he violates Section 8 (a) (5) regardless of the good faith in which he carried on the negotiations on the other subject.

So in this area I suggest on the good faith is immaterial.

Now, it becomes important in a class of cases that came to the attention of lower courts into a lesser degree to this Court of very early after the enactment of the Act.

Some employers would meet and confer with the union and negotiate, and negotiate, and negotiate and gradually talk the union to death.

It became important to distinguish the sham from the real.

Now, that is a type of problem in which an inquiry into one subjective state of mind is meaningful and the test to achieve great importance in this area.

The third group of cases arose from what I conceive to be the tendency of the National Labor Relations Board and comparative to the recent years to restrict the substantive position an employer might take on statutory subjects of collective bargain.

Or to attempt to regulate the way he should conduct himself in carrying on the negotiations looking to a joint determination of terms and conditions of employment.

The first of those cases was the American National Insurance Company case where it was held by a majority of the Court that an employer was free in response to a union’s request for an arbitration clause to bargain for managements’ prerogatives to make certain decisions in the area of collective bargaining for itself.

The Board held — the Board argued that for the employer to take that position was per se an unfair labor practice.

The Court responded, “No, the Board is not set up to police the substantive positions that an employer may take.”

If it has accepted collective bargaining, if it is negotiating with the Union then the test with respect to its positions is whether it is acting in good faith.

Now, the Insurance Agents case of which the court below seems considerably to have relied on dealt not with the substantive position but with — if I were to put it bluntly, the weapons that the union might use in attempting to gain its bargaining demand.

And the Court held that the weapons that the Union used weren’t — could not because they were contrary to traditional ways or were — might be thought against public policy or otherwise undesirable or indefensible on the Board phrase was not a ground for per se branding a refusal to bargain collectively.

The concurring opinion by Mr. Justice Frankfurter, in additioning — the questioning some of the breadths of the majority opinion emphasizes I take it to point that while this could not be held to be per se a violation of Section 8 (a) (5), the tactics that the Union resorted to, the timing with which it resorted to such tactic might in a proper context lay the foundation for a finding that the union did not have the proper subjective state of mind.

There is nothing in our position here that quarrels in any with that reasoning because —

Potter Stewart:

What was the reasoning?

The reasoning of the concurring opinion or of the —

Archibald Cox:

Either opinion —

Potter Stewart:

— court?

Archibald Cox:

— both, both.

I was referring to the concurrent opinion.

Potter Stewart:

That’s what I thought.

Archibald Cox:

I don’t think it end up a fortiori.

There’s no — nothing here that quarrels to the opinion of the Court.

Potter Stewart:

Well, I don’t see why it’s a fortiori?

Archibald Cox:

Well, as long as it’s — as long as we don’t quarrel with it and —

Potter Stewart:

Alright.

Archibald Cox:

— understand that — maybe I spoken too quickly.

The point I would make Mr. Justice Stewart about the opinion of the Court, is that the opinion of the Court in the Insurance Agents case took specific note of this problem related it quite profitably to the problem of the bona fide recognition of the union as an equal participant in fixing terms and conditions of employment.

And then in the next sentence the majority opinion says, “An employer’s unilateral wage increase during the bargaining processes tends to subvert the union’s position as the representative of the employee’s in matters of this nature and has hence been condemned as a practice violative of this statutory provision.”

And we think that that statement is amply supported by the earlier decisions of the Court.

I’ve cited in my brief a wealth of Circuit Court opinions going back into the mid-1940’s squarely holding that unilateral action under these circumstances as unfair labor practice.

The Board’s own opinions consistently have reached that conclusion for quite a year and we think therefore that the judge —

Potter Stewart:

That is the refusal — they are these decisions all that — that unilateral action of this kind is a refusal to bargain?

Archibald Cox:

It’s a refusal to bargain and a violation of Section 8 (a) (1).

Potter Stewart:

Both these —

Archibald Cox:

Both.

Potter Stewart:

— decisions hold both, is that it?

Archibald Cox:

They held both.

Potter Stewart:

In each case that it’s both, is that it?

Archibald Cox:

The only qualification that I need to state to that is that there is some language in the — I see that in Medo or May Department Stores case which does speak only of 8 (a) (1) but the ensuing concluding finding and the Board’s order listed both Section and the Board has always and the Court of Appeals have always treated it as a violation of both.

We would argue just to be clear on the point Justice Stewart that this unilateral wage increase of an amount greater than was offered to the union could also be sustained independently, because whether one is satisfied that this was technically a refusal to bargain, certainly it does disparage the bargaining process, does undermine the Union’s position and therefore interferes with the right to bargain collectively under Section 8 (a) (1).

But they’ve normally been lumped together as violation of both Section.

I’d like to save anytime I have left Mr. Chief Justice.

Earl Warren:

You may Mr. Solicitor General.

Mr. Raphael.

Sidney O. Raphael:

Mr. Chief Justice and members of the Court, I think I feel privileged to argue this case especially in the light of the fact that I have an umbilical tie so to speak for this case — to this case from its very birth.

We go back to the early part of the spring of 1956 just about six years ago when this case had its inception and the demands by the Union, Local 1966 for recognition.

Having had a long experience in the field of Labor Relations and this employer having enjoyed for many, many years a history of bargaining with about seven or eight labor unions collective agreement, we did not resist the petition for recognition and there was a consent election.

There was a certification on the early part of July by the Director of the Second Region and of course as Your Honors know on the summer, people are away on vacation and we did not readily meet, it took a few weeks.

And in the interim, we received a list of demands from the Union that sounded almost as though they were ready to take over the business.

And I think that you will find this in Exhibit 10 which is —

William J. Brennan, Jr.:

Is that unusual?

Sidney O. Raphael:

This is not unusual Judge Brennan.

This happens all the time.

Sidney O. Raphael:

But this — in this case, I want to point this out particularly because I think they went a little overboard.

They asked for things which I thought meant in the field of Labor Relations, they wanted a home run the first time they were up at-bat.

And we have a lot of experts dealing in this case.

The Union’s representatives had a long field, a long background, the employer did, I did and we were all conversant with the fact that this could not be achieved by any stretch of the imagination.

However, it’s a usual thing as Your Honors know to ask for all you can get then you bargain it down and perhaps you settle for a lot less.

So then, this Exhibit 10 which appears at pages 263 through 267 of the record, and I want to point out one thing here which is going to become significant in the later portion of my argument.

And that is this —

William J. Brennan, Jr.:

That’s in Volume 1 of the record?

Sidney O. Raphael:

Yes, I think it’s in Volume 1.

William J. Brennan, Jr.:

It doesn’t seem to be right in those pages.

263 through 267, is it?

Sidney O. Raphael:

Yes.

26 —

William J. Brennan, Jr.:

Yes.

— 3 through 267.

I’m going to advert to something which appears on pages 26 — on page 265 known as general notes.

Item one, “ No employee shall lose any benefits or suffer any reduction of salary by virtue of the signing an application of agreement.”

From that moment on, we were on the horns of a dilemma for this reason.

The evidence in the case disclosed and this was a rather lengthy trial.

I tried this case before the Board, before trial examiner and the issue was controverted except that I would say with respect to what I am about to tell the Court now, I don’t believe there was any controvertible issue and that is that this company like a lot of other prominent companies in its field, without necessity, have to have and it did have a wage and salary cut, with merit reviews, promotions, classifications, etcetera.

This is especially true in the case of professional employee such as engineers, designers, draftsmen, who were within — who were in this bargaining unit.

You are unable to keep people of that caliber unless there was some sort — sort of a progression system.

Now, we had this merit review system, we have these demands and the Union says, “Do not take anything away.”

So the minute we do it, we’re charged with infringing upon the Union’s prerogative.

However, as it’s pointed out in Judge Frankfurter’s opinion in the Insurance Agents case and then Judge Waterman’s decision in the Court of Appeals in our case, an employer was torn between two poles.

He’s got to bargain with the Union collectively in good faith.

But by the same token, he’s got a business to run and you’ve got to be realistic, you’ve got to be practical.

So you’re — you’re walking a tight rope which is well-oiled and greased and God know if you fall down.

And this is the posture that we find the basic facts of this case to be framed.

Now, far from the contention which I have heard voiced by — by the Solicitor General that there might be an inference of sham bargaining.

William J. Brennan, Jr.:

Your Honors I say to you, this did not happen in this case.

There was long, intensive bargaining and many sessions that went on for a period for about nine months or 10 months.

And every time we met, we lived up to the word of Samuel (Inaudible).

We gave each and — on each and every occasion more and more until finally in April or May 1957 and this is in the record, we gave the Union improved vacations, improved holidays or 17 and a half dollar package spread over a period of three years.

We gave them progressions.

Well, you mentioned it, we gave it, that was the patent of our so-called sham bargaining.

And the reason I illustrate that is because it is not without reason that the Board refused to go along with the trial examiner’s findings and conclusions that there was an absence of good faith or let’s put it on another way that there was bad faith in the bargaining by this employer.

With this finding, the Board did not go along.

And it is in this general cradle, in this crucible that we must now draw the line between the former doctrines ever enunciated before the amendment of the Taft-Hartley Act in 1947 and those that follow.

The decision which was cited by the Solicitor General are all decisions that were pre-Taft-Hartley, Medo, all these other cases were pre-Taft-Hartley.

Section 8 (d) which was the subject matter of considerable discussion both in Congress both in the House and in the Senate and which finally there was joint conference report, both agreed.

They wanted to eliminate once and for all the tenuousness of an employer’s position when it came to collective bargaining.

In other words, how far did you have to go?

At what point could you say that there was an impasse?

At which point did you give all you could possibly give?

At what point was there good faith or bad faith?

Did you have to come to a collective agreement in order for somebody to say to you, “You’re not guilty of bad faith?”

So they enacted Section 8 (d).

So these decisions or these opinions which were referred to by the petitioner are in acts and as Judge Frankfurter roughly pointed out in his concurring opinion in the Insurance Agents case, there was a distinction between those cases which preceded and those which followed the amendment to the Taft-Hartley law, Section 8 (d).

That leads us now to the principle facet of this case, because if we conclude as I believe we should in the face of the present decisions and the amendment of the Act Section 8 (d) then there is justification for Judge Waterman’s decision, because then we cannot isolate and fractionate some — what I would call de minimis because these little violations that were committed on this case and the overall posture of all the facts was in the nature of de minimis violations, that’s exactly what it was.

They were clinging to a straw in order to sustain these charges because despite what they say that we changed the sick leave and I’ll assume arguendo that we did, and I might say that we did because the record abounds with evidence that this was not a change that diminished anything.

This was a change to prevent the constant abuses which we had not only with the professional employees but with our white collar personnel and they numbered into the hundreds.

They were simply misusing the privilege that we gave them.

So we didn’t take anything away, but we added an incentive to what they had in order to avoid the continuance of this general bad relation which we had.

Earl Warren:

We’ll recess now Mr. —