Algoma Plywood Veneer Company v. Wisconsin Employment Relations Board/Opinion of the Court

The Algoma Plywood & Veneer Co. manufactures in Kewaunee County, Wisconsin, the products for which it is named. Ninety-five per cent of its output is sold in interstate commerce. In 1942 the National Labor Relations Board held an election at the plant, the outcome of which was the certification of Local 1521 of the Carpenters and Joiners Union as bargaining representative for all production employees, about 650 in number. In 1943, under pressure from the Department of Labor and the War Labor Board, Algoma agreed to a maintenance-of-membership clause in its contract with Local 1521. That clause was carried over from year to year and was part of the contract effective for the year following April 29, 1946. One Victor Moreau refused to pay dues, and on Jan. 7, 1947, the Union notified him that unless he paid up by Jan. 13, he would be discharged. On Jan. 14, 1947 in the presence of representatives of the Company and the Union, he said that he would rather quit than pay dues to the Union. And so the Vice-President of the Company told him to collect his pay and go home.

On Jan. 27, 1947, Moreau filed with the Wisconsin Employment Relations Board a complaint charging the Company with an unfair labor practice under Wis.Stat. § 111.06(1)(c) 1, which provides:

'It shall be an unfair labor practice for an employer * *  * to encourage *  *  * membership in any labor organization *  *  * by discrimination in regard to hiring, tenure or other terms or conditions of employment; pr vided, that an employer shall not be prohibited from entering into an all-union agreement with the representatives of his employees in a collective bargaining unit, where at least two thirds of such employes voting *  *  * shall have voted affirmatively by secret ballot in favor of such all-union agreement in a referendum conducted by the board. * *  * '

No referendum had been conducted at the Algoma plant. The Board, accordingly, on April 30, 1947, ordered the Company to cease and desist from giving effect to the maintenance-of-membership clause, to offer Moreau reinstatement, and to make him whole for any loss of pay. The Company and the Union petitioned the Wisconsin Circuit Court of Kewaunee County for review of the order, and the Board petitioned for its enforcement. In its judgment of Nov. 21, 1947, the Circuit Court modified the order by striking the award of back pay, but otherwise affirmed it. On May 11, 1948, the Wisconsin Supreme Court affirmed the judgment of the Circuit Court insofar as it sustained the jurisdiction of the Board to issue its cease and desist order and to require an offer of reinstatement but directed enforcement of the back-pay award. 252 Wis. 549, 32 N.W.2d 417.

At every stage of the proceedings the Company and the Union contested the jurisdiction of the Employment Relations Board on the ground of the exclusive authority of the National Labor Relations Board under § 10(a) of the National Labor Relations Act, 49 Stat. 453, 29 U.S.C. § 160(a), 29 U.S.C.A. § 160(a), and asserted the repugnancy of Wis.Stat. § 111.06(1)(c) 1 to § 8(3) of the National Labor Relations Act, 49 Stat. 452, 29 U.S.C. § 158(3), 29 U.S.C.A. § 158(3). We granted certiorari under 28 U.S.C. § 1257(3), 28 U.S.C.A. § 1257(3), because of the important bearing of these issues upon the distribution of power in our federal system. 335 U.S. 812, 69 S.Ct. 55.

The discharge of Moreau and the orders of the Wisconsin Board preceded the Labor Management Relations Act, 1947, colloquially known as the Taft-Hartley Act, 61 Stat. 136, 29 U.S.C. § 141 et seq., 29 U.S.C.A. § 141 et seq. The judgments of the Circuit Court for Kewaunee County and the Supreme Court of Wisconsin were rendered after it came into force. If the National Labor Relations Act gave affirmative protection to the employer in discharging an employee under a union-security agreement for failure to maintain union membership, it would be necessary to decide whether adoption of the Taft-Hartley Act retroactively removed that protection and whether it equally gave effect to a reinstatement order, an award of back pay, and a cease and desist order which would previously have been invalid. Since, however, we do not find conflict between the Wisconsin law under which the orders were issued and either the National Labor Relations Act or the Taft-Hartley Act, we are relieved from defining the respective applicability of the federal Acts.

In seeking to show that the Wisconsin Board had no power to make the contested orders, petitioner points first to § 10(a) of the National Labor Relations Act, which is set forth in the margin. It argues that the grant to the National Labor Relations Board of 'exclusive' power to prevent 'any unfair labor practice' thereby displaced State power to deal with such practices, provided of course that the practice was one affecting commerce. But this argument implies two equally untenable assumptions. One requires disregard of the parenthetical phrase '(listed in section 8)'; the other depends upon attaching to the section as it stands, the clause 'and no other agency shall have power to prevent unfair labor practices not listed in section 8.'

The term 'unfair labor practice' is not a term of art having an independent significance which transcends its statutory definition. The State are free (apart from pre-emption by Congress) to characterize any wrong of any kind by an employer to an employee, whether statutorily created or known to the common law, as an 'unfair labor practice.' At the time when the National Labor Relations Act was adopted, the courts of many States, at least under some circumstances, denied validity to union-security agreements. See 1 Teller, Labor Disputes and Collective Bargaining § 170 (1940). Here Wisconsin has attached conditions to their enforcement and has called the voluntary observance of such a contract when those conditions have not been met an 'unfair labor practice.' Had the sponsors of the National Labor Relations Act meant to deny effect to State policies inconsistent with the unrestricted enforcement of union-shop contracts, surely they would have made their purpose manifest. So far as appears from the Committee Reports, however, § 10(a) was designed, as its language declares, merely to preclude conflict in the administration of remedies for the practices proscribed by § 8. The House Report, after summarizing the provisions of the section, adds, 'The Board is thus made the paramount agency for dealing with the unfair labor practices described in the bill.' H.R. Rep. No. 969, 74th Cong., 1st Sess. 21. See also the identical language of H.R. Rep. No. 972, 74th Cong., 1st Sess. 21 and H.R. Rep. No. 1147, 74th Cong. 1st Sess. 23. And the Senate Report describes the purpose of the section as 'intended to dispel the confusion resulting from dispersion of authority and to establish a single paramount administrative or quasi-judicial authority in connection with the development of the Federal American law regarding collective bargaining.' S. Rep. No. 573, 74th Cong., 1st Sess. 15.

The contention that § 10(a) of the Wagner Act swept aside State law respecting the union shop must therefore be rejected. If any provision of the Act had that effect, it could only have been § 8(3), which explicitly deals with membership in a union as a condition of employment. We now turn to consideration of that section.

Section 8(3) provides that it shall be an unfair labor practice for an employer

'By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act * *  * or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization *  *  * to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9(a), in the appropriate collective bargaining unit covered by such agreement when made.'

It is argued, therefore, that a State cannot forbid what § 8(3) affirmatively permits. The short answer is that § 8(3) merely disclaims a national policy hostile to the closed shop or other forms of union-security agreement. This is the obvious inference to be drawn from the choice of the words 'nothing in this Act * *  * or in any other statute of the United States,' and it is confirmed by the legislative history.

The Senate Report on the bill which was to become the National Labor Relations Act has this to say about § 8(3):

'The proviso attached to the third unfair-labor practice deals with the question of the closed shop. Propaganda has been wide-spread that this proviso attaches special legal sanctions to the closed shop or seeks to impose it upon all industry. This propaganda is absolutely false. The reason for the insertion of the proviso is as follows: According to some interpretations, the provision of section 7(a) of the National Industrial Recovery Act, 48 Stat. 198, assuring the freedom of employees 'to organize and bargain collectively through r presentatives of their own choosing,' was deemed to illegalize the closed shop. The Committee feels that this was not the intent of Congress when it wrote section 7(a); that it is not the intent of Congress today; and that it is not desirable to interfere in this drastic way with the laws of the several States on this subject.

'But to prevent similar misconceptions of this bill, the proviso in question states that nothing in this bill, or in any other law of the United States, or in any code or agreement approved or prescribed thereunder, shall be held to prevent the making of closed-shop agreements between employers and employees. In other words, the bill does nothing to facilitate closed-shop agreements or to make them legal in any State where they may be illegal; it does not interfere with the status quo on this debatable subject but leaves the way open to such agreements as might now be legally consummated * *  * .' S. Rep. No. 573, 74th Cong., 1st Sess. 11-12.

The House Report contains similar language:

'The proviso to the third unfair labor practice, dealing with the making of closed-shop agreements, has been widely misrepresented. The proviso does not impose a closed shop on all industry; it does not give new legal sanctions to the closed shop. All that it does is to eliminate the doubts and misconstructions in regard to the effect of section 7(a) upon closed-shop agreements, and the possible repetition of such doubts and misconstructions under this bill, by providing that nothing in the bill or in section 7(a) or in any other statute of the United States shall illegalize a closed-shop agreement between an employer and a labor organization, provided such organization has not been established, maintained, or assisted by any action defined in the bill as an unfair labor practice and is the choice of a majority of the employees, as provided in section 9(a), in the appropriate collective bargaining unit covered by the agreement when made. The bill does nothing to legalize the closed-shop agreement in the States where it may be illegal; but the committee is confident that it would not be the desire of Congress to enact a general ban upon closed-shop agreements in the States where they are legal. And it should be emphasized the no closed shop may be effected unless it is assented to by the employer.' H.R.Rep.No. 969, 74th Cong., 1st Sess. 17. See also the identical language in H.R.Rep. No. 972, 74th Cong., 1st Sess. 17, and H.R.Rep. No. 1147, 74th Cong., 1st Sess. 19, 20.

In his major speech to the Senate in support of the bill, Senator Wagner said:

'While outlawing the organization that is interfered with by the employer, this bill does not establish the closed shop or even encourage it. The much-discussed closedshop proviso merely states that nothing in any Federal law shall be held to illegalize the confirmation of voluntary closed-shop agreements between employers and workers.' 79 Cong.Rec. 7570.

The Senator went on to explain the purpose of the section as dispelling misunderstanding of § 7(a) of the National Industrial Recovery Act, 48 Stat. 198, denied either advocacy or disapproval of the closed shop, then added:

'The virulent propaganda to the effect that this bill encourages the closed shop is outrageous in view of the fact that in two respects it actually narrows the now-existing law in regard to the closed-shop agreement.' Ibid.

Later, during discussion of proposed amendments, Senator Wagner answered a question from the floor about the effect of the proviso in the following words:

'The provision will not change the status quo. That is the law today; and wherever it is the law today that a closedshop agreement can be made, it will continue to be the law. By this bill we do not change that situation.' Id. at 7673.

Equally conclusive is the answer by Representative Connery, manager of the bill in the House, to a statement by Representative Taber in support of an amendment which would have entirely stricken the prov so. Representative Taber charged that the proviso would make it possible for 51% of the employees of any organization to bring about the discharge of the other 49%. Representative Connery said:

'Mr. Chairman, I merely rise to say this in opposition: The closed-shop proposition in this bill does not refer to any State which has any law forbidding the closed shop. It does not interfere with that in any way.' Id. at 9726.

No ruling by the courts or the National Labor Relations Board, the agency entrusted with administration of the Wagner Act, has adopted a construction of § 8(3) in disregard of this legislative history. It is suggested, however, that the interpretation given the section of the War Labor Board supports petitioner's position. The Board, it is true, in view of the practical desirability of the maintenance-of-membership clause in settling wartime disputes over union security found authority to order contracts containing such clauses despite inconsistent State law. It found such authority, however, not in § 8(3) but in the conclusion that 'its power to direct the parties to abide by the maintenance-of-membership provision in such a case as this one stems directly from the war powers of the United States Government.' Greenebaum Tanning Co., 10 War Lab. Rep. 527, 534. The Supreme Court of Wisconsin itself acknowledged the supremacy of the war power in a decision suspending an order directing the reinstatement of an employee discharged under a maintenance-of-membership clause ordered by the War Labor Board. International Brotherhood of Paper-Makers Local No. 66 (A.F.L.) v. Wisconsin Employment Relations Board, 245 Wis. 541, 15 N.W.2d 806. When the orders of the Wisconsin Board in the present case were entered, the War Labor Board had ceased to exist, Exec. Order No. 9672, 50 U.S.C.A.Appendix, § 964 note, 11 Fed.Reg. 221, and, with the occasion that had called it into being, the necessity for suppression of State law had also come to an end.

Since we would be wholly unjustified, therefore, in rejecting the legislative interpretation of § 8(3) placed upon it at the time of its enactment, it is not even necessary to invoke the principle that in cases of concurrent power over commerce State law remains effective so long as Congress has not manifested an unambiguous purpose that it should be supplanted. See, e.g., Sinnot v. Davenport, 22 How. 227, 16 L.Ed. 243; Missouri, K. & T.R. Co. v. Haber, 169 U.S. 613, 18 S.Ct. 488, 42 L.Ed. 878. Nor need we, if Congress in enacting § 8(3) did not mean to enlarge the right to bargain for union security, consider contentions based on Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782, to the effect that in guaranteeing the right to collective bargaining the National Labor Relations Act also guaranteed the right to contract upon any terms which are commonly the subject of collective bargaining.

We come now to the question whether the Taft-Hartley Act expresses a policy inconsistent with § 111.06(1)(c) 1 of the Wisconsin Employment Peace Act.

Section 10(a) of the Taft-Hartley Act, which is set forth in the margin, contains important changes, but none requiring modification of the conclusions we have reached as to the corresponding section of the National Labor Relations Act. One phrase, however, reinforces those conclusions; that is the phrase 'inconsistent with the corresponding provision of this Act.' These words must mean that cession of jurisdiction is to take place only where State and federal laws have parallel provisions. Where the State and federal laws do not overlap, no cession is necessary because the State's jurisdiction is unimpaired. This reading is confirmed by the purpose of the proviso in which the phrase is contained: to meet situations made possible by Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 92 L.Ed. 1234. where no State agency would be free to take jurisdiction of cases over which the National Board had declined jurisdiction. See H.R.Rep. No. 245, 80th Cong., 1st Sess. 40; S.Minority Rep.No. 105, P. 2, 80th Cong., 1st Sess. 38.

Other provisions of the Taft-Hartley Act make it even clearer than the National Labor Relations Act that the States are left free to pursue their own more restrictive policies in the matter of union-security agreements. Because § 8(3) of the new Act forbids the closed shop and strictly regulates the conditions under which a union-shop agreement may be entered, § 14(b) was included to forestall the inference that federal policy was to be exclusive. It reads:

'Nothing in this Act shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.'

It is argued, however, that the effect of this section is to displace State law which 'regulates' but does not wholly 'prohibit' agreements requiring membership in a labor organization as a condition of employment. But if there could be any doubt that the language of the section means that the Act shall not be construed to authorize any 'application' of a union-security contract, such as discharging an employee, which under the circumstances 'is prohibited' by the State, the legislative history of the section would dispel it. See S.Rep. No. 105, 80th Cong., 1st Sess. 5-7; H.R.Rep. No. 245, 80th Cong., 1st Sess. 9, 34, 40, 44; H.R.Conf.Rep. No. 510, 80th Cong., 1st Sess. 60; 93 Cong.Rec. 3554, 3559, 4904, 6383-84, 6446; N.R. 3020, as reported, § 13.

It remains to consider whether certification of the Union by the National Labor Relations Board in 1942 thereby forever ousted jurisdiction of the Wisconsin Board to enjoin practices forbidden by Wisconsin law. Since the enumeration by the Wagner Act and the Taft-Hartley Act of unfair labor practices over which the National Board has exclusive jurisdiction does not prevent the States from enforcing their own policies in matters not governed by the federal law, such freedom of action by a State cannot be lost because the National Board has once held an election under the Wagner Act. The character of activities left to State regulation is not changed by the fact of certification. Certification, it is true, makes clear that the employer and the union are subject to federal law, but that is not disputed. So far as the relationship of State and national power is concerned, certification amounts to no more than an assertion that as to this employer the State shall not impose a policy inconsistent with national policy, Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782, or the National Board's interpretation of that policy, Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234; La Crosse Telephone Corporation v. Wisconsin Employment Relations Board, 336 U.S. 18, 69 S.Ct. 379. Indeed, the express disclaimer in § 8(3) of the National Labor Relations Act of intention to interfere with State law and the permission granted the States by § 14(b) of the Taft-Hartley Act to carry out policies inconsistent with the Taft-Hartley Act itself, would be practically meaningless if so easily avoided. For these provisions can have application, obviously, only where State and federal power are concurrent; it would have been futile to disclaim the assertion of federal policy over areas which the commerce power does not reach.

Since, therefore, the effect given the Wisconsin Meployment Peace Act by the judgment below does not conflict with the enacted policies of Congress, that judgment is affirmed.

Affirmed.

Mr. Justice RUTLEDGE and Mr. Justice MURPHY, concur in the result.

Mr. Justice BLACK, with whom Mr. Justice DOUGLAS joins, dissenting.