National Labor Relations Board v. Brown/Opinion of the Court

The respondents, who are members of a multiemployer bargaining group, locked out their employees in response to a whipsaw strike against another member of the group. They and the struck employer continued operations with temporary replacements. The National Labor Relations Board found that the struck employer's use of temporary replacements was lawful under National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381, but that the respondents had violated § 8(a)(1) and (3) of the National Labor Relations Act by locking out their regular employees and using temporary replacements to carry on business. 137 N.L.R.B. 73. The Court of Appeals for the Tenth Circuit disagreed and refused to enforce the Board's order. 319 F.2d 7. We granted certiorari, 375 U.S. 962, 84 S.Ct. 484, 11 L.Ed.2d 413. We affirm the Court of Appeals.

Five operators of six retail food stores in Carlsbad, New Mexico, make up the employer group. The stores had bargained successfully on a group basis for many years with Local 462 of the Retail Clerks International Association. Negotiations for a new collective-bargaining agreement to replace the expiring one began in January 1960. Agreement was reached by mid-February on all terms except the amount and effective date of a wage increase. Bargaining continued without result, and on March 2 the Local informed the employers that a strike had been authorized. The employers responded that a strike against any member of the employer group would be regarded as a strike against all. On March 16, the union struck Food Jet, Inc., one of the group. The four respondents, operating five stores, immediately locked out all employees represented by the Local, telling them and the Local that they would be recalled to work when the strike against Food Jet ended. The stores, including Food Jet, continued to carry on business by using management personnel, relatives of such personnel, and a few temporary employees; all of the temporary replacements were expressly told that the arrangement would be discontinued when the whipsaw strike ended. Bargaining continued until April 22 when an agreement was reached. The employers immediately released the temporary replacements and restored the strikers and the locked-out employees to their jobs.

The Board and the Court of Appeals agreed that the case was to be decided in light of our decision in the so-called Buffalo Linen case, National Labor Relations Board v. Truck Drivers Union, 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676. There we sustained the Board's finding that, in the absence of specific proof of unlawful motivation, the use of a lockout by members of a multiemployer bargaining unit in response to a whipsaw strike did not violate either § 8(a)(1) or § 8(a)(3). We held that, although the lockout tended to impair the effectiveness of the whipsaw strike, the right to strike 'is not so absolute as to deny self-help by employers when legitimate interests of employees and employers collide. * *  * The ultimate problem is the balancing of the conflicting legitimate interests.' 353 U.S., at 96, 77 S.Ct. at 647. We concluded that the Board correctly balanced those interests in upholding the lockout, since it found that the nonstruck employers resorted to the lockout to preserve the multiemployer bargaining unit from the disintegration threatened by the whipsaw strike. But in the present case the Board held, two members dissenting, that the respondents' continued operations with temporary replacements constituted a 'critical difference' from Buffalo Linen-where all members of the employer group shut down operations-and that in this circumstance it was reasonable to infer that the respondents did not act to protect the multiemployer group, but 'for the purpose of inhibiting a lawful strike.' 137 N.L.R.B., at 76. Thus the respondents' act was both a coercive practice condemned by § 8(a)(1) and discriminatory conduct in violation of § 8(a)(3).

The Board's decision does not rest upon independent evidence that the respondents acted either out of hostility toward the Local or in reprisal for the whipsaw strike. It rests upon the Board's appraisal that the respondents' conduct carried its own indicia of unlawful intent, thereby establishing, without more, that the conduct constituted an unfair labor practice. It was disagreement with this appraisal, which we share, that led the Court of Appeals to refuse to enforce the Board's order.

It is true that the Board need not inquire into employer motivation to support a finding of an unfair labor practice where the employer conduct is demonstrably destructive of employee rights and is not justified by the service of significant or important business ends. See, e.g., National Labor Relations Board v. Erie Resistor Corp., 373 U.S. 221, 83 S.Ct. 1139, 10 L.Ed.2d 308; National Labor Relations Board v. Burnup & Sims, Inc., 379 U.S. 21, 85 S.Ct. 171, 13 L.Ed.2d 1. We agree with the Court of Appeals that, in the setting of this whipsaw strike and Food Jet's continued operations, the respondents' lockout and their continued operations with the use of temporary replacements, viewed separately or as a single act, do not constitute such conduct.

We begin with the proposition that the Act does not constitute the Board as an 'arbiter of the sort of economic weapons the parties can use in seeking to gain acceptance of their bargaining demands.' National Labor Relations Board v. Insurance Agents, 361 U.S. 477, 497, 80 S.Ct. 419, 4 L.Ed.2d 454. In the absence of proof of unlawful motivation, there are many economic weapons which an employer may use that either interfere in some measure with concerted employee activities, or which are in some degree discriminatory and discourage union membership, and yet the use of such economic weapons does not constitute conduct that is within the prohibition of either § 8(a)(1) or § 8(a)(3). See, e.g., National Labor Relations Board v. Mackay Radio & Telegraph Co., supra; National Labor Relations Board v. Dalton Brick & Tile Co., 5 Cir., 301 F.2d 886, 896. Even the Board concedes that an employer may legitimately blunt the effectiveness of an anticipated strike by stockpiling inventories, readjusting contract schedules, or transferring work from one plant to another, even if he thereby makes himself 'virtually strikepproof.' As a general matter he may completely liquidate his business without violating either § 8(a)(1) or § 8(a)(3), whatever the impact of his action on concerted employee activities. Textile Workers v. Darlington Mfg. Co., 380 U.S. 263, 85 S.Ct. 994. Specifically, he may in various circumstances use the lockout as a legitimate economic weapon. See, e.g., National Labor Relations Board v. Truck Drivers Union, supra; National Labor Relations Board v. Dalton Brick & Tile Corp., supra; Leonard v. National Labor Relations Board, 9 Cir., 205 F.2d 355; Betts Cadillac Olds, Inc., 96 N.L.R.B. 268; International Shoe Co., 93 N.L.R.B. 907; Pepsi-Cola Bottling Co., 72 N.L.R.B. 601, 602; Duluth Bottling Assn., 48 N.L.R.B. 1335; Link-Belt Co., 26 N.L.R.B. 227. And in American Ship Building Co. v. Labor Board, 380 U.S. 300, 85 S.Ct. 955, we hold that a lockout is not an unfair labor practice simply because used by an employer to bring pressure to bear in support of his bargaining position after an impasse in bargaining negotiations has been reached.

In the circumstances of this case, we do not see how the continued operations of respondents and their use of temporary replacements imply hostile motivation any more than the lockout itself; nor do we see how they are inherently more destructive of employee rights. Rather, the compelling inference is that that was all part and parcel of respondents' defensive measure to preserve the multiemployer group in the face of the whipsaw strike. Since Food Jet legitimately continued business operations, it is only reasonable to regard respondents' action as evincing concern that the integrity of the employer group was threatened unless they also managed to stay open for business during the lockout. For with Food Jet open for business and respondents' stores closed, the prospect that the whipsaw strike would succeed in breaking up the employer association was not at all fanciful. The retail food industry is very competitive and repetitive patronage is highly important. Faced with the prospect of a loss of patronage to Food Jet, it is logical that respondents should have been concerned that one or more of their number might bolt the group and come to terms with the Local, thus destroying the common front essential to multiemployer bargaining. The Court of Appeals correctly pictured the respondents' dilemma in saying, 'If * *  * the struck employer does choose to operate with replacements and the other employers cannot replace after lockout, the economic advantage passes to the struck member, the nonstruck members are deterred in exercising the defensive lockout, and the whipsaw strike *  *  * enjoys an almost inescapable prospect of success.' 319 F.2d at 11. Clearly respondents' continued operations with the use of temporary replacements following the lockout were wholly consistent with a legitimate business purpose.

Nor are we persuaded by the Board's argument that justification for the inference of hostile motivation appears in the respondents' use of temporary employees rather than some of the regular employees. It is not commonsense, we think, to say that the regular employees were 'willing to work at the employers' terms.' 137 N.L.R.B., at 76. It seems probable that this 'willingness' was motivated as much by their understandable desire to further the objective of the whipsaw strike-to break through the employers' united front by forcing Food Jet to accept the Local's terms-as it was by a desire to work for the employers under the existing unacceptable terms. As the Board's dissenting members put it, 'These employees are willing only to receive wages while their brethren in the rest of the associationwide unit are exerting whipsaw pressure on one employer to gain benefits that will ultimately accrue to all employees in the associationwide unit, including those here locked out.' 137 N.L.R.B., at 78. Moreover, the course of action to which the Board would limit the respondents would force them into the position of aiding and abetting the success of the whipsaw strike and consequently would render 'largely illusory,' 137 N.L.R.B., at 78-79, the right of lockout recognized by Buffalo Linen; the right would be meaningless if barred to nonstruck stores that find it necessary to operate because the struck store does so.

The Board's finding of a § 8(a)(1) violation emphasized the impact of respondents' conduct upon the effectiveness of the whipsaw strike. It is no doubt true that the collective strength of the stores to resist that strike is maintained, and even increased, when all stores stay open with temporary replacements. The pressures on the employee are necessarily greater when none of the union employees is working and the stores remain open. But these pressures are no more than the result of the Local's inability to make effective use of the whipsaw tactic. Moreover, these effects are no different from those that result from the legitimate use of any economic weapon by an employer. Continued operations with the use of temporary replacements may result in the failure of the whipsaw strike, but this does not mean that the employers' conduct is demonstrably so destructive of employee rights and so devoid of significant service to any legitimate business end that it cannot be tolerated consistently with the Act. Certainly then, in the absence of evidentiary findings of hostile motive, there is no support for the conclusion that respondents violated § 8(a)(1).

Nor does the record show any basis for concluding that respondents violated § 8(a)(3). Under that section both discrimination and a resulting discouragement of union membership are necessary, but the added element of unlawful intent is also required. In Buffalo Linen itself the employers treated the locked-out employees less favorably because of their union membership, and this may have tended to discourage continued membership, but we rejected the notion that the use of the lockout violated the statute. The discriminatory act is not by itself unlawful unless intended to prejudice the employees' position because of their membership in the union; some element of antiunion animus is necessary. See Radio Officers' Union v. National Labor Relations Board, 347 U.S. 17, 42-44, 74 S.Ct. 323, 98 L.Ed. 455; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, at 46, 57 S.Ct. 615, 81 L.Ed. 893. We have determined that the 'real motive' of the employer in an alleged § 8(a)(3) violation is decisive, Associated Press v. National Labor Relations Board, 301 U.S. 103, 132, 57 S.Ct. 650, 81 L.Ed. 953; if any doubt still persisted, we laid it to rest in Radio Officers' Union v. National Labor Relations Board, supra, where we reviewed the legislative history of the provision and concluded that Congress clearly intended the employer's purpose in discriminating to be controlling. Id., at 44, 74 S.Ct. 323. See also Textile Workers v. Darlington Mfg. Co., 380 U.S., at 275, 276, 85 S.Ct., at 1002; American Ship Building Co. v. National Labor Relations Board, 380 U.S., at 311-313, 85 S.Ct., at 963-965; Local 357, International Brotherhood of Teamsters v. National Labor Relations Board, 365 U.S. 667, 674-676, 81 S.Ct. 835, 6 L.Ed.2d 11.

We recognize that, analogous to the determination of unfair practices under § 8(a)(1), when an employer practice is inherently destructive of employee rights and is not justified by the service of important business ends, no specific evidence of intent to discourage union membership is necessary to establish a violation of § 8(a)(3). This principle, we have said, is 'but an application of the common-law rule that a man is held to intend the foreseeable consequences of his conduct.' Radio Officers' Union v. National Labor Relations Board, supra, at 45, 74 S.Ct. 323. For example, in National Labor Relations Board v. Erie Resistor Corp., supra, we held that an employer's action in awarding superseniority to employees who worked during a strike was discriminatory conduct that carried with it its own indicia of improper intent. The only reasonable inference that could be drawn by the Board from the award of superseniority-balancing the prejudicial effect upon the employees against any asserted business purpose-was that it was directed against the striking employees because of their union membership; conduct so inherently destructive of employee interests could not be saved from illegality by an asserted overriding business purpose pursued in good faith. But where, as here, the tendency to discourage union membership is comparatively slight, and the employers' conduct is reasonably adopted to achieve legitimate business ends or to deal with business exigencies we enter into an area where the improper motivation of the employers must be established by independent evidence. When so established, antiunion motivation will convert an otherwise ordinary business act into an unfair labor practice. National Labor Relations Board v. Erie Resistor Corp., supra, 373 U.S. at 227, 83 S.Ct. 1139, and cases there cited.

We agree with the Court of Appeals that respondents' conduct here clearly fits into the latter category, where actual subjective intent is determinative, and where the Board must find from evidence independent of the mere conduct involved that the conduct was primarily motivated by an antiunion animus. While the use of temporary nonunion personnel in preference to the locked-out union members is discriminatory, we think that any resulting tendency to discourage union membership is comparatively remote, and that this use of temporary personnel constitutes a measure reasonably adapted to the effectuation of a legitimate business end. Here discontent on the part of the Local's membership in all likelihood is attributable largely to the fact that the membership was locked out as the result of the Local's whipsaw strategem. But the lockout itself is concededly within the rule of Buffalo Linen. We think that the added dissatisfaction, with its resultant pressure on membership, attributable to the fact that the nonstruck employers remain in business with temporary replacements is comparatively insubstantial. First, the replacements were expressly used for the duration of the labor dispute only; thus, the displaced employee could not have looked upon the replacements as threatening their jobs. At most the union would be forced to capitulate and return its members to work on terms which, while not as desirable as hoped for, were still better than under the old contract. Second, the membership, through its control of union policy, could end the dispute and terminate the lockout at any time simply by agreeing to the employers' terms and returning to work on a regular basis. Third, in light of the union-shop provision that has been carried forward into the new contract from the old collective-bargaining agreement, it would appear that a union member would have nothing to gain and much to lose, by quitting the union. Under all these circumstances, we cannot say that the employers' conduct had any great tendency to discourage union membership. Not only was the prospect of discouragement of membership comparatively remote, but the respondents' attempt to remain open for business with the help of temporary replacements was a measure reasonably adapted to the achievement of a legitimate end-preserving the integrity of the multiemployer bargaining unit.

When the resulting harm to employee rights is thus comparatively slight, and a substantial and legitimate business end is served, the employers' conduct is prima facie lawful. Under these circumstances the finding of an unfair labor practice under § 8(a)(3) requires a showing of improper subjective intent. Here, there is no assertion by either the union or the Board that the respondents were motivated by antiunion animus, nor is there any evidence that this was the case. On the contrary, the background of the employer association's relations with the union and all the circumstances of the respondents' behavior during the dispute tend to support the contrary conclusion: the history of labor relations between the employers and the Local divulges that the relationship has always been more than amicable; union-shop provisions have been incorporated in the collective-bargaining agreement between the Local and the employers for many years; in these very negotiations, the employers' association waived the failure of the Local to give timely notice of its desire to bargain over new terms of employment and consented to hear the Local's claims at the bargaining table; the record contains undisputed testimony by the store owners that they had no bone to pick with the Local, that on the contrary they thought that unions were a good thing, but felt forced to take action in order to preserve the multiemployer group from disintegration and to save their considerable stock of perishable food produce. Even the struck member of the association did not resort to permanent replacements for the striking workers, though it could have under Mackay; rather it sought to ride out the dispute with temporary replacements to avoid depriving the regular employees of their jobs. Thus, not only is there absent in the record any independent evidence of improper motive, but the record contains positive evidence of the employers' good faith. In sum, the Court of Appeals was required to conclude that there was not sufficient evidence gathered from the record as a whole to support the Board's finding that respondents' conduct violates § 8(a)(3). See Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456.

It is argued, finally, that the Board's decision is within the area of its expert judgment and that, in setting it aside, the Court of Appeals exceeded the authorized scope of judicial review. This proposition rests upon our statement in Buffalo Linen that in reconciling the conflicting interests of labor and management the Board's determination is to be subjected to 'limited judicial review.' 353 U.S., at 96, 77 S.Ct. 643. When we used the phrase 'limited judicial review' we did not mean that the balance struck by the Board is immune from judicial examination and reversal in proper cases. Courts are expressly empowered to enforce, modify or set aside, in whole or in part, the Board's orders, except that the findings of the Board with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive. National Labor Relations Act, as amended, §§ 10(e), (f), 29 U.S.C. §§ 160(e), (f) (1958 ed.). Courts should be 'slow to overturn an administrative decision,' National Labor Relations Board v. Babcock & Wilcox Co., 351 U.S. 105, 112, 76 S.Ct. 679, 100 L.Ed. 975, but they are not left 'to 'sheer acceptance' of the Board's conclusions,' Republic Aviation Corp. v. National Labor Relations Board, 324 U.S. 793, 803, 65 S.Ct. 982, 89 L.Ed. 1372. Reviewing courts are not obliged to stand aside and rubberstamp their affirmance of administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute. Such review is always properly within the judicial province, and courts would abdicate their responsibility if they did not fully review such administrative decisions. Of course due deference is to be rendered to agency determinations of fact, so long as there is substantial evidence to be found in the record as a whole. But where, as here, the review is not of a question of fact, but of a judgment as to the proper balance to be struck between conflicting interests, '(t)he deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia which results in the unauthorized assumption by an agency of major policy decisions properly made by Congress.' American Ship Building Co. v. National Labor Relations Board, 380 U.S., at 318, 85 S.Ct., at 967.

Courts must, of course, set aside Board decisions which rest on an 'erroneous legal foundation.' National Labor Relations Board v. Babcock & Wilcox Co., supra, at 112-113, 76 S.Ct. 679. Congress has not given the Board untrammelled authority to catalogue which economic devices shall be deemed freighted with indicia of unlawful intent. National Labor Relations Board v. Insurance Agents, supra, 361 U.S. at 498, 80 S.Ct. 419. In determining here that the respondents' conduct carried its own badge of improper motive, the Board's decision, for the reasons stated, misapplied the criteria governing the application of §§ 8(a)(1) and (3). Since the order therefore rested on an erroneous legal foundation, the Court of Appeals properly refused to enforce it.

Affirmed.

Mr. Justice GOLDBERG, whom THE CHIEF JUSTICE joins, concurring.

I agree with the Court that, given the Buffalo Linen case, National Labor Relations Board v. Truck Drivers Union, 353 U.S. 87, 77 S.Ct. 643, and applying it in light of the actualities of industrial relations, the employers' conduct here is shown to be justified and necessary to preserve the integrity of the employers' bargaining unit. After the union attempted a whipsaw strike against one member of the multiemployer bargaining unit, the other members locked out their employees. The struck employer attempted to carry on business by using management personnel, relatives of such personnel, and a few temporary employees. To avoid the whipsaw effect of the strike, the nonstruck employers then did the same. During the period of the lockout, all of the employers, struck as well as nonstruck, bargained with the union and, when agreement was reached, in all cases the temporary employees were dismissed and the union employees returned to their jobs.

As the Court seems to recognize, ante, p. 292, n. 6, this would be an entirely different case had the nonstruck employers locked out their employees and hired permanent replacements even if the struck employer had exercised his right to hire permanent replacements under the doctrine of National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 S.Ct. 904. If the Labor Board determined in such a case that the interference with employee rights was not justified by the legitimate economic interests of the employer, the Labor Board determination might well be controlling. See my concurring opinion in American Ship Building Co. v. National Labor Relations Board, 380 U.S. 300, at 327, 85 S.Ct. 955, at 972. Cf. National Labor Relations Board v. Erie Resistor Corp., 373 U.S. 221, 83 S.Ct. 1139. There would be grave doubts as to whether the act of locking out employees and hiring permanent replacements is justified by any legitimate interest of the nonstruck employers, for Buffalo Linen makes clear that the test in such a situation is not whether parity is achieved between struck and nonstruck employers, but, rather, whether the nonstruck employers' actions are necessary to counteract the whipsaw effects of the strike and to preserve the employer bargaining unit. Since in this case the nonstruck employers did nothing more than hire temporary replacements, an activity necessary to counter whipsawing by the union and to preserve the bargaining unit, I agree that, applying Buffalo Linen, the judgment of the Court of Appeals should be affirmed.

Mr. Justice WHITE, dissenting.