National Labor Relations Board v. Erie Resistor Corporation/Opinion of the Court

The question before us is whether an employer commits an unfair labor practice under § 8(a) of the National Labor Relations Act, 61 Stat. 136, 29 U.S.C. § 158, when he extends a 20-year seniority credit to strike replacements and strikers who leave the strike and return to work. The Court of Appeals for the Third Circuit in this case joined the Ninth Circuit, National Labor Relations Board v. Potlatch Forests, Inc., 189 F.2d 82 (and see National Labor Relations Board v. Lewin-Mathes Co., 285 F.2d 329, from the Seventh Circuit), to hold that such super-seniority awards are not unlawful absent a showing of an illegal motive on the part of the employer. 303 F.2d 359. The Sixth Circuit, Swarco, Inc., v. National Labor Relations Board, 303 F.2d 668, and the National Labor Relations Board are of the opinion that such conduct can be unlawful even when the employer asserts that these additional benefits are necessary to continue his operations during a strike. To resolve these conflicting views upon an important question in the administration of the National Labor Relations Act, we brought the case here. 371 U.S. 810, 83 S.Ct. 48, 9 L.Ed.2d 53.

Erie Resistor Corporation and Local 613 of the International Union of Electrical Radio and Machine Workers were bound by a collective bargaining agreement which was due to expire on March 31, 1959. In January 1959, both parties met to negotiate new terms but, after extensive bargaining, they were unable to reach agreement. Upon expiration of the contract, the union, in support of its contract demands, called a strike which was joined by all of the 478 employees in the unit.

The company, under intense competition and subject to insistent demands from its customers to maintain deliveries, decided to continue production operations. Transferring clerks, engineers and other nonunit employees to production jobs, the company managed to keep production at about 15% to 30% of normal during the month of April. On May 3, however, the company notified the union members that it intended to begin hiring replacements and that strikers would retain their jobs until replaced. The plant was located in an area classified by the United States Department of Labor as one of severe unemployment and the company had in fact received applications for employment as early as a week or two after the strike began.

Replacements were told that they would not be laid off or discharged at the end of the strike. To implement that assurance, particularly in view of the 450 employees already laid off on March 31, the company notified the union that it intended to accord the replacements some form of super-seniority. At regular bargaining sessions between the company and union, the union made it clear that, in its view, no matter what form the super-seniority plan might take, it would necessarily work an illegal discrimination against the strikers. As negotiations advanced on other issues, it became evident that super-seniority was fast becoming the focal point of disagreement. On May 28, the company informed the union that it had decided to award 20 years' additional seniority both to replacements and to strikers who returned to work, which would be available only for credit against future layoffs and which could not be used for other employee benefits based on years of service. The strikers, at a union meeting the next day, unanimously resolved to continue striking now in protest against the proposed plan as well.

The company made its first official announcement of the super-seniority plan on June 10, and by June 14, 34 new employees, 47 employees recalled from layoff status and 23 returning strikers had accepted production jobs. The union, now under great pressure, offered to give up some of its contract demands if the company would abandon super-seniority or go to arbitration on the question, but the company refused. In the following week, 64 strikers returned to work and 21 replacements took jobs, bringing the total to 102 replacements and recalled workers and 87 returned strikers. When the number of returning strikers went up to 125 during the following week, the union capitulated. A new labor agreement on the remaining economic issues was executed on July 17, and an accompanying settlement agreement was signed providing that the company's replacement and job assurance policy should be resolved by the National Labor Relations Board and the federal courts but was to remain in effect pending final disposition.

Following the strike's termination, the company reinstated those strikers whose jobs had not been filled (all but 129 were returned to their jobs). At about the same time, the union received some 173 resignations from membership. By September of 1959, the production unit work force had reached a high of 442 employees, but by May of 1960, the work force had gradually slipped back to 240. Many employees laid off during this cut back period were reinstated strikers whose seniority was insufficient to retain their jobs as a consequence of the company's super-seniority policy.

The union filed a charge with the National Labor Relations Board alleging that awarding super-seniority during the course of the strike constituted an unfair labor practice and that the subsequent layoff of the recalled strikers pursuant to such a plan was unlawful. The Trial Examiner found that the policy was promulgated for legitimate economic reasons, not for illegal or discriminatory purposes, and recommended that the union's complaint be dismissed. The Board could not agree with the Trial Examiner's conclusion that specific evidence of subjective intent to discriminate against the union was necessary to finding that super-seniority granted during a strike is an unfair labor practice. Its consistent view, the Board said, had always been that super-seniority, in circumstances such as these, was an unfair labor practice. The Board rejected the argument that super-seniority granted during a strike is a legitimate corollary of the employer's right of replacement under National Labor Relations Board v. Mackay Radio & Tel. Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381, and detailed at some length the factors which to it indicated that 'superseniority is a form of discrimination extending far beyond the employer's right of replacement sanctioned by Mackay, and is, moreover, in direct conflict with the express provisions of the Act prohibiting discrimination.' Having put aside Mackay, the Board went on to deny 'that specific evidence of Respondent's discriminatory motivation is required to establish the alleged violations of the Act,' relying upon Radio Officers Union of Commercial Telegraphers Union, A.F.L. v. National Labor Relations Board, 347 U.S. 17, 74 S.Ct. 323, 98 L.Ed. 455; Republic Aviation Corp. v. National Labor Relations Board, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372, and Local 357, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. National Labor Relations Board, 365 U.S. 667, 81 S.Ct. 835, 6 L.Ed.2d 11. Moreover, in the Board's judgment, the employer's insistence that its overriding purpose in granting super-seniority was to keep its plant open and that business necessity justified its conduct was unacceptable since 'to excuse such conduct would greatly diminish, if not destroy, the right to strike guaranteed by the Act, and would run directly counter to the guarantees of Sections 8(a)(1) and (3) that employees shall not be discriminated against for engaging in protected concerted activities.' Accordingly, the Board declined to make findings as to the specific motivation of the plan or its business necessity in the circumstances here.

The Court of Appeals rejected as unsupportable the rationale of the Board that a preferential seniority policy is illegal however motivated.

'We are of the opinion that inherent in the right of an     employer to replace strikers during a strike is the      concomitant right to adopt a preferential seniority policy      which will assure the replacements some form of tenure,      provided the policy is adopted SOLELY to protect and continue      the business of the employer. We find nothing in the Act     which proscribes such a policy. Whether the policy adopted by     the Company in the instant case was illegally motivated we do      not decide. The question is one of fact for decision by the     Board.' 303 F.2d, at 364.

It consequently denied the Board's petition for enforcement and remanded the case for further findings.

We think the Court of Appeals erred in hold that, in the absence of a finding of specific illegal intent, a legitimate business purpose is always a defense to an unfair labor practice charge. Cases in this Court dealing with unfair labor practices have recognized the relevance and importance of showing the employer's intent or motive to discriminate or to interfere with union rights. But specific evidence of such subjective intent is 'not an indispensable element of proof of violation.' Radio Officers Union of Commercial Telegraphers Union,A.F.L. v. National Labor Relations Board, 347 U.S. 17, 44, 74 S.Ct. 323, 98 L.Ed. 455. 'Some conduct may by its very nature contain the implications of the required intent; the natural foreseeable consequences of certain action may warrant the inference. * *  * The existence of discrimination may at times be inferred by the Board, for 'it is permissible to draw on experience in factual inquiries." Local 357, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. National Labor Relations Board, 365 U.S. 667, 675, 81 S.Ct. 835, 839, 6 L.Ed.2d 11.

Though the intent necessary for an unfair labor practice may be shown in different ways, proving it in one manner may have far different weight and far different consequences than proving it in another. When specific evidence of a subjective intent to discriminate or to encourage or discourage union membership is shown, and found, many otherwise innocent or ambiguous actions which are normally incident to the conduct of a business may, without more, be converted into unfair labor practices. National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 46, 57 S.Ct. 615, 628, 81 L.Ed. 893 (discharging employees); Associated Press v. National Labor Relations Board, 301 U.S. 103, 132, 57 S.Ct. 650, 655, 81 L.Ed. 953 (discharging employees); Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S.Ct. 845, 85 L.Ed. 1271 (hiring employees). Compare National Labor Relations Board v. Brown-Dunkin Co., 10 Cir., 287 F.2d 17, with National Labor Relations Board v. Houston Chronicle Publishing Co., 5 Cir., 211 F.2d 848 (subcontracting union work); and Fiss Corp., 43 N.L.R.B. 125, with Jacob H. Klotz, 13 N.L.R.B. 746 (movement of plant to another town). Such proof itself is normally sufficient to destroy the employer's claim of a legitimate business purpose, if one is made, and provides strong support to a finding that there is interference with union rights or that union membership will be discouraged. Conduct which on its face appears to serve legitimate business ends in these cases is wholly impeached by the showing of an intent to encroach upon protected rights. The employer's claim of legitimacy is totally dispelled.

The outcome may well be the same when intent is founded upon the inherently discriminatory or destructive nature of the conduct itself. The employer in such cases must be held to intend the very consequences which foreseeably and inescapably flow from his actions and if he fails to explain away, to justify or to characterize his actions as something different than they appear on their face, an unfair labor practice charge is made out. Radio Officers Union of Commercial Telegraphers Union, A.F.L. v. National Labor Relations Board, supra. But, as often happens, the employer may counter by claiming that his actions were taken in the pursuit of legitimate business ends and that his dominant purpose was not to discriminate or to invade union rights but to accomplish business objectives acceptable under the Act. Nevertheless, his conduct does speak for itself-it is discriminatory and it does discourage union membership and whatever the claimed overriding justification may be, it carries with it unavoidable consequences which the employer not only foresaw but which he must have intended. As is not uncommon in human experience, such situations present a complex of motives and preferring one motive to another is in reality the far more delicate task, reflected in part in decisions of this Court, of weighing the interests of employees in concerted activity against the interest of the employer in operating his business in a particular manner and of balancing in the light of the Act and its policy the intended consequences upon employee rights against the business ends to be served by the employer's conduct. This essentially is the teaching of the Court's prior cases dealing with this problem and, in our view, the Board did not depart from it.

The Board made a detailed assessment of super-seniority and, it its experienced eye, such a plan had the following characteristics:

(1) Super-seniority affects the tenure of all strikers     whereas permanent replacement, proper under Mackay, affects      only those who are, in actuality, replaced. It is one thing     to say that a striker is subject to loss of his job at the      strike's end but quite another to hold that in addition to      the threat of replacement, all strikers will at best return      to their jobs with seniority inferior to that of the      replacements and of those who left the strike.

(2) A super-seniority award necessarily operates to the     detriment of those who participated in the strike as compared      to nonstrikers.

(3) Super-seniority made available to striking bargaining     unit employees as well as to new employees is in effect      offering individual benefits to the strikers to induce them      to abandon the strike.

(4) Extending the benedfits of super-seniority to striking     bargaining unit employees as well as to new replacements      deals a crippling blow to the strike effort. At one stroke,     those with low seniority have the opportunity to obtain the      job security which ordinarily only long years of service can      bring, while conversely, the accumulated seniority of older      employees is seriously diluted. This combination of threat     and promise could be expected to undermine the strikers'      mutual interest and place the entire strike effort in jeopardy. The history of this     strike and its virtual collapse following the announcement of      the plan emphasize the grave repercussions of      super-seniority.

(5) Super-seniority renders future bargaining difficult, if     not impossible, for the collective bargaining representative. Unlike the replacement granted in Mackay which ceases to be     an issue once the strike is over, the plan here creates a      cleavage in the plant continuing long after the strike is      ended. Employees are henceforth divided into two camps: those     who stayed with the union and those who returned before the      end of the strike and thereby gained extra seniority. This     breach is reemphasized with each subsequent layoff and stands      as an ever-present reminder of the dangers connected with      striking and with union activities in general.

In the light of this analysis, super-seniority by its very terms operates to discriminate between strikers and non-strikers, both during and after a strike, and its destructive impact upon the strike and union activity cannot be doubted. The origin of the plan, as respondent insists, may have been to keep production going and it may have been necessary to offer super-seniority to attact replacements and induce union members to leave the strike. But if this is true, accomplishment of respondent's business purpose inexorably was contingent upon attracting sufficient replacements and strikers by offering preferential inducements to those who worked as opposed to those who struck. We think the Board was entitled to treat this case as involving conduct which carried its own indicia of intent and which is barred by the Act unless saved from illegality by an overriding business purpose justifying the invasion of union rights. The Board concluded that the business purpose asserted was insufficient to insulate the super-seniority plan from the reach of § 8(a)(1) and § 8(a)(3), and we turn now to a review of that conclusion.

The Court of Appeals and respondent rely upon Mackay as precluding the result reached by the Board but we are not persuaded. Under the decision in that case an employer may operate his plant during a strike and at its conclusion need not discharge those who worked during the strike in order to make way for returning strikers. It may be, as the Court of Appeals said, that 'such a replacement policy is obviously discriminatory and may tend to discourage union membership.' But Mackay did not deal with super-seniority, with its effects upon all strikers, whether replaced or not, or with its powerful impact upon a strike itself. Because the employer's interest must be deemed to outweigh the damage to concerted activities caused by permanently replacing strikers does not mean it also outweighs the far greater encroachment resulting from super-seniority in addition to permanent replacement.

We have no intention of questioning the continuing vitality of the Mackay rule, but we are not prepared to extend it to the situation we have here. To do so would require us to set aside the Board's considered judgment that the Act and its underlying policy require, in the present context, giving more weight to the harm wrought by super-seniority than to the interest of the employer in operating its plant during the strike by utilizing this particular means of attracting replacements. We find nothing in the Act or its legislative history to indicate that super-seniority is necessarily an acceptable method of resisting the economic impact of a strike, nor do we find anything inconsistent with the result which the Board reached. On the contrary, these sources are wholy consistent with, and lend full support to, the conclusion of the Board.

Section 7 guarantees, and § 8(a)(1) protects from employer interference the rights of employees to engage in concerted activities, which, as Congress as indicated, H.R.Rep. No. 245, 80th Cong., 1st Sess. 26, include the right to strike. Under § 8(a)(3), it is unlawful for an employer by discrimination in terms of employment to discourage 'membership in any labor organization,' which includes discouraging participation in concerted activities, Radio Officers Union of Commercial Telegraphers Union, A.F.L. v. National Labor Relations Board, 347 U.S. 17, 39-40, 74 S.Ct. 323, 335, 98 L.Ed. 455, such as a legitimate strike. National Labor Relations Board v. Wheeling Pipe Line, Inc., 8 Cir., 229 F.2d 391; Republic Steel Corp. v. National Labor Relations Board, 3 Cir., 114 F.2d 820. Section 13 makes clear that although the strike weapon is not an unqualified right, nothing in the Act except as specifically provided is to be construed to interfere with this means of redress, H.R.Conf.Rep. No. 510, 80th Cong., 1st Sess. 59, U.S.Code Congressional Service 1947, p. 1135, and § 2(3) preserves to strikers their unfilled positions and status as employees during the pendency of a strike. S.Rep. No. 573, 74th Cong., 1st Sess. 6. This repeated solicitude for the right to strike is predicated upon the conclusion that a strike when legitimately employed is an economic weapon which in great measure implements and supports the principles of the collective bargaining system.

While Congress has from time to time revamped and redirected national labor policy, its concern for the integrity of the strike weapon has remained constant. Thus when Congress chose to qualify the use of the strike, it did so by prescribing the limits and conditions of the abridgment in exacting detail, e.g., §§ 8(b)(4), 8(d), by indicating the precise procedures to be followed in effecting the interference, e.g., § 10(j), (k), (l); §§ 206-210, Labor Management Relations Act, and by preserving the positive command of § 13 that the right to strike is to be given a generous interpretation within the scope of the labor Act. The courts have likewise repeatedly recognized and effectuated the strong interest of federal labor policy in the legitimate use of the strike. International Union of United Automobile, Aircraft and Agr. Implement Workers of America, CIO v. O'Brien, 339 U.S. 454, 70 S.Ct. 781, 94 L.Ed. 978; Amalgamated Ass'n of St. Elec. Ry. & Motor Coach Employees of America, Division 998 v. Wisconsin Employment Rel. Bd., 340 U.S. 383, 71 S.Ct. 359, 95 L.Ed. 364; National Labor Relations Board v. Remington Rand, Inc., 2 Cir., 130 F.2d 919; Cusano v. National Labor Relations Board, 3 Cir., 190 F.2d 898; cf. Sinclair Ref. Co. v. Atkinson, 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440.

Accordingly, in view of the deference paid the strike weapon by the federal labor laws and the devastating consequences upon it which the Board found was and would be precipitated by respondent's inherently discriminatory super-seniority plan, we cannot say the Board erred in the balance which it struck here. Although the Board's decisions are by no means immune from attack in the courts as cases in this Court amply illustrate, e.g., National Labor Relations Board v. Babcock & Wilcox Co., 351 U.S. 105, 76 S.Ct. 679, 100 L.Ed. 975; National Labor Relations Board v. United Steelworkers, 357 U.S. 357, 78 S.Ct. 1268, 2 L.Ed.2d 1383; National Labor Relations Board v. Insurance Agents, 361 U.S. 477, 80 S.Ct. 419, 4 L.Ed.2d 454, its findings here are supported by substantial evidence, Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456, its explication is not inadequate, irrational or arbitrary, compare Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 196-197, 61 S.Ct. 845, 853-854, 85 L.Ed. 1271; National Labor Relations Board v. United Steelworkers, supra, and it did not exceed its powers or venture into an area barred by the statute. Compare National Labor Relations Board v. Insurance Agents, supra. The matter before the Board lay well within the mainstream of its duties. It was attempting to deal with an issue which Congress had placed in its hands and '(w)here Congress has in the statute given the Board a question to answer, the courts will give respect to that answer.' National Labor Relations Board v. Insurance Agents, supra, 361 U.S. at 499, 80 S.Ct. at 433. Here, as in other cases, we must recognize the Board's special function of applying the general provisions of the Act to the complexities of industrial life. Republic Aviation Corp. v. National Labor Relations Board, 324 U.S. 793, 798, 65 S.Ct. 982, 985, 89 L.Ed. 1372; Phelps Dodge Corp. v. National Labor Relations Board, supra, 313 U.S. at 194, 61 S.Ct. at 852, and of '(appraising) carefully the interests of both sides of any labormanagement controversy in the diverse circumstances of particular cases' from its special understanding of 'the actualities of industrial relations.' National Labor Relations Board v. United Steelworkers, supra, 357 U.S. at 362 363, 78 S.Ct. at 1271. 'The ultimate problem is the balancing of the conflicting legitimate interests. The function of striking that balance to effectuate national labor policy is often a difficult and delicate responsibility, which the Congress committed primarily to the National Labor Relations Board, subject to limited judicial review.' National Labor Relations Board v. Truck Drivers Local Union, 353 U.S. 87, 96, 77 S.Ct. 643, 648, 1 L.Ed.2d 676.

Consequently, because the Board's judgment was that the claimed business purpose would not outweigh the necessary harm to employee rights-a judgment which we sustain-it could properly put aside evidence of respondent's motive and decline to find whether the conduct was or was not prompted by the claimed business purpose. We reverse the judgment of the Court of Appeals and remand the case to that court since its review was a limited one and it must now reach the remaining questions before it, including the propriety of the remedy which at least in part turns upon the Board's construction of the settlement agreement as being no barrier to an award not only of reinstatement but of back pay as well.

Reversed and remanded.