National Labor Relations Board v. Servette, Inc./Opinion of the Court

Respondent Servette, Inc., is a wholesale distributor of specialty merchandise stocked by retail food chains in Los Angeles, California. In 1960, during a strike which Local 848 of the Wholesale Delivery Drivers and Salesmen's Union was conducting against Servette, the Local's representatives sought to support the strike by asking managers of supermarkets of the food chains to discontinue handling merchandise supplied by Servette. In most instances the representatives warned that handbills asking the public not to buy named items distributed by Servette would be passed out in front of stores which refused to cooperate, and in a few cases handbills were in fact passed out. A complaint was issued on charges by Servette that this conduct violated subsections (i) and (ii) of § 8(b)(4) of the National Labor Relations Act, as amended, which, in relevant part, provide that it is an unfair labor practice for a union

'(i) * *  * to induce or encourage any individual employed by      any person *  *  * to engage in *  *  * a refusal in the course      of his employment to *  *  * handle *  *  * commodities or to      perform any services; or'

'(ii) to threaten, coerce, or restrain any person * *  * where      in either case an object thereof is-

'(B) forcing or requiring any person to cease * *  * dealing      in the products of any other producer, processor, or      manufacturer, or to cease doing business with any other      person *  *  *.

'Provided further, That for the purposes of this  paragraph (4) only, nothing contained in such paragraph   shall be construed to prohibit publicity, other than   picketing, for the purpose of truthfully advising the   public *  *  * that a product or products are produced by   an employer with whom the labor organization has a   primary dispute and are distributed by another employer   *  *  * .'

The National Labor Relations Board dismissed the complaint. The Board adopted the finding of the Trial Examiner that 'the managers of McDaniels Markets were authorized to decide as they best could whether to continue doing business with Servette in the face of threatened or actual handbilling. This, a policy decision, was one for them to make. The evidence is persuasive that the same authority was vested in the managers of Kory.' 133 N.L.R.B. 1506. The Board held that on these facts the Local's efforts to enlist the cooperation of the supermarket managers did not constitute inducement of an 'individual' within the meaning of that term in subsection (i); the Board held further that the handbilling, even if constituting conduct which 'threaten(s), coerce(s), or restrain(s) any person' under subsection (ii), was protected by the quoted proviso to amended § 8(b)(4). 133 N.L.R.B. 1501. The Court of Appeals set aside the Board's order, holding that the term 'individual' in subsection (i) was to be read literally, thus including the supermarket managers, and that the distributed products were not 'produced' by Servette within the meaning of the proviso, thus rendering its protection unavailable. 310 F.2d 659. We granted certiorari, 374 U.S. 805, 83 S.Ct. 1697, 10 L.Ed.2d 1030. We reverse the judgment of the Court of Appeals.

The Court of Appeals correctly read the term 'individual' in subsection (i) as including the supermarket managers, but it erred in holding that the Local's attempts to enlist the aid of the managers constituted inducement of the managers in violation of the subsection. The 1959 statute amended § 8(b) (4)(A) of the National Labor Relations Act, which made it unlawful to induce or encourage 'the employees of any employer' to strike or engage in a 'concerted' refusal to work. We defined the central thrust of that statute to be to forbid 'a union to induce employees to strike against or to refuse to handle goods for their employer when an object is to force him or another person to cease doing business with some third party.' Local 1976, United Brotherhood of Carpenters and Joiners of America, A.F.L. v. Labor Board, 357 U.S. 93, 98, 78 S.Ct. 1011, 1015, 2 L.Ed.2d 1186. In the instant case, however, the Local, in asking the managers not to handle Servette items, was not attempting to induce or encourage them to cease performing their managerial duties in order to force their employers to cease doing business with Servette. Rather, the managers were asked to make a managerial decision which the Board found was within their authority to make. Such an appeal would not have been a violation of § 8(b)(4)(A) before 1959, and we think that the legislative history of the 1959 amendments makes it clear that the amendments were not meant to render such an appeal an unfair labor practice.

The 1959 amendments were designed to close certain loopholes in the application of § 8(b)(4)(A) which had been exposed in Board and court decisions. Thus, it had been held that the term 'the employees of any employer' limited the application of the statute to those within the statutory definitions of 'employees' and 'employer.' Section 2(2) of the National Labor Relations Act defines 'employer' to exclude the federal and state governments and their agencies or subdivisions, nonprofit hospitals, and employers subject to the Railway Labor Act. 29 U.S.C. § 152(2). The definition of 'employee' in § 2(3) excludes agricultural laborers, supervisors, and employees of an employer subject to the Railway Labor Act. 29 U.S.C. § 152(3). Furthermore, since the section proscribed only inducement to engage in a strike or 'concerted' refusal to perform services, it had been held that it was violated only if the inducement was directed at two or more employees. To close these loopholes, subsection (i) substituted the phrase 'any individual employed by any person' for 'the employees of any employer,' and deleted the word 'concerted.' The first change was designed to make the provision applicable to refusals by employees who were not technically 'employees' within the statutory definitions, and the second change was intended to make clear that inducement directed to only one individual was proscribed. But these changes did not expand the type of conduct which § 8(b)(4)(a) condemned, that is, union pressures calculated to induce the employees of a secondary employer to withhold their services in order to force their employer to cease dealing with the primary employer.

Moreover, the division of § 8(d)(4) into subsections (i) and (ii) by the 1959 amendments has direct relevance to the issue presented by this case. It had been held that § 8(b)(4)(A) did not reach threats of labor trouble made to the secondary employer himself. Congress decided that such conduct should be made unlawful, but only when it amounted to conduct which 'threaten(s), coerce(s) or restrain(s) any person'; hence the addition of subsection (ii). The careful creation of separate standards differentiating the treatment of appeals to the employees of the secondary employer not to perform their employment services, from appeals for other ends which are attended by threats, coercion or restraint, argues conclusively against the interpretation of subsection (i) as reaching the Local's appeals to the supermarket managers in this case. If subsection (i), in addition to prohibiting inducement of employees to withhold employment services, also reaches an appeal that the managers exercise their delegated authority by making a business judgment to cease dealing with the primary employer, subsection (ii) would be almost superfluous. Harmony between (i) and (ii) is best achieved by construing subsection (i) to prohibit inducement of the managers to withhold their services from their employer, and subsection (ii) to condemn an attempt to induce the exercise of discretion only if the inducement would 'threaten, coerce, or restrain' that exercise.

We turn finally to the question whether the proviso to amended § 8(b)(4) protected the Local's handbilling. The Court of Appeals, following its decision in Great Western Broadcasting Corp. v. Labor Board, 310 F.2d 591 (C.A.9th Cir.), held that the proviso did not protect the Local's conduct because, as a distributor, Servette was not directly involved in the physical process of creating the products, and thus 'does not produce any products.' The Board on the other hand followed its ruling in Lohman Sales Co., 132 N.L.R.B. 901, that products 'produced by an employer' included products distributed, as here, by a wholesaler with whom the primary dispute exists. We agree with the Board. The proviso was the outgrowth of a profound Senate concern that the unions' freedom to appeal to the public for support of their case be adequately safeguarded. We elaborated the history of the proviso in National Labor Relations Board v. Fruit & Vegetable Packers, Local 760, 377 U.S. 58, 84 S.Ct. 1063. It would fall far short of achieving this basic purpose if the proviso applied only in situations where the union's labor dispute is with the manufacturer or processor. Moreover, a primary target of the 1959 amendments was the secondary boycotts conducted by the Teamsters Union, which ordinarily represents employees not of manufacturers, but of motor carriers. There is nothing in the legislative history which suggests that the protection of the proviso was intended to be any narrower in coverage than the prohibition to which it is an exception, and we see no basis for attributing such an incongruous purpose to Congress.

The term 'produced' in other labor laws was not unfamiliar to Congress. Under the Fair Labor Standards Act, the term is defined as 'produced, manufactured, mined, handled, or in any other manner worked on * *  * ,' 29 U.S.C. § 203(j), and has always been held to apply to the wholesale distribution of goods. The term 'production' in the War Labor Disputes Act has been similarly applied to a general retail department and mail-order business. The Court of Appeals' restrictive reading of 'producer' was prompted in part by the language of § 8(b)(4)(B), which names as a proscribed object of the conduct defined in subsections (i) and (ii) 'forcing or requiring any person to cease * *  * dealing in the products of any other producer, processor, or manufacturer.' (Italics supplied.) In its decision in Great Western Broadcasting Corp. v. Labor Board, supra, the Court of Appeals reasoned that since a 'processor' and a 'manufacturer' are engaged in the physical creation of goods, the word 'producer' must be read as limited to one who performs similar functions. On the contrary, we think that 'producer' must be given a broader reach, else it is rendered virtually superfluous.

Finally, the warnings that handbills would be distributed in front of noncooperating stores are not prohibited as 'threats' within subsection (ii). The statutory protection for the distribution of handbills would be undermined if a threat to engage in protected conduct were not itself protected.

Reversed.