CARPENTERS LOCAL v. LABOR BOARD
Legal provision: National Labor Relations, as amended
Argument of Bernard Dunau
Chief Justice Earl Warren: Number 68, Local 60, United Brotherhood of Carpenters and Joiners of America, AFL-CIO, et al., Petitioners, versus National Labor Relations Board.
Mr. Bernard Dunau: May it please the Court.
The question in this case is whether predicated exclusively upon a finding that the employment of workers is based upon a discriminatory hiring procedure.
The Board may require the refund to those workers of the union dues and fees they pay to the unions which represented them and of which they are members.
The refund order may, as in this case, run against the unions alone.
It may, as in the preceding case and the case which follows, run against the employer and the union.
It may, as in other cases, run against the employer alone, whether it runs against the union alone, the employer alone or both together, depends upon the fortuity whether the person filing the unfair labor charge has filed it against the union alone, the employer alone or both together.
In all these cases, we deal with unions which are freely chosen by the employees to represent them in collective bargains.
It is unquestioned and unquestionable that the Teamsters Union, the Carpenters Union, the Typographical Union are the rightful representatives of the employees for whom they act and to whom the dues and fees were paid.
Now, the question in this case arises in these circumstances.
The United Brotherhood of Carpenters, the International Union, has an agreement with an employer called Mechanical Handling Systems by which the employer agrees to work the hours, pay the wages and abide by the rules and regulations established by the local union of the carpenters and employ members of the United Brotherhood of Carpenters and Joiners.
This employer, Mechanical Handling Systems, started a construction job on the premises of the Ford Motor Company in Indianapolis.
A few days after the job was started, the business representative of the district council came to the job and met with the superintendent of the Company on the job.
They agreed that the wages, hours and other working conditions on that job were to be governed by an agreement between the local construction association, the local employer construction association and the district council.
They also agreed that the millwrights and carpenters that the employer would need on the job would be obtained by referral from either the district council or Local 60, which is a constituent local of the district council.
Now, by the rules of the district council and Local 60, referral was restricted to union members, nonmembers would not be referred on the job.
In practice, the millwrights and carpenters working on this job were restricted to those who were union members.
There were two applicants for employment who came to this job seeking work.
They were members of a local union of the carpenters in Louisville, Kentucky.
They travelled to Indianapolis, they applied for work at the job, they were denied work because they could not get a working permit from the district council and they could not get a working permit from the district council because unemployment in the Indianapolis area was widespread and the union's policy was not to refer persons from out of the area, if there were unemployment within the area.
Now, the Board found that the union and the employer were operating under a closed-shop preferential hiring system and this was illegal.
We do not contest that finding.
The Board also found that the two applicants for employment were discriminatorily denied work.
We do not contest that finding.
The Board ordered the unions to cease and desist from this activity including execution of such agreements.
We do not contest that part of the order.
The Board ordered that the two workers who were denied employment are to be made whole.
We do not contest that part of the order.
But the Board went further and said that the unions were to return to the employees who have worked on the job, all the union dues and fees they had paid beginning with a period of six months preceding the filing of the unfair labor practice charge, it is that part of the order which is an issue in this case.
Now, the Board supports this kind of a refund order on two theories.
Both are essential to its reason for imposing a refund order.
The first is what I think we can call the notion of inevitable coercion.
Now, I think it can be fairly paraphrased in these sentences.
Given a discriminatory hiring procedure, employees are inevitably coerced to pay moneys to the union.
The existence of an unlawful contract is sufficient in and of itself to establish the element of coercion.
The refund remedy is, therefore, without more applicable to all closed-shop and exclusive hiring agreements, whether or not proof of actual exaction of payments is established.
The only operative fact in the Board's thinking is a finding of a discriminatory hiring procedure.
I think I can show -- I shall try to show in a moment that this is the rationalization for the order, that the real reason for the order is something else.
The real reason, I think, was expressed by the Board in these words, “We believe that a mere cease and desist order will have little impact in an industry where illegal hiring practices are widespread.
The reimbursement order more properly effectuates the purposes of the Act because it provides not only a deterrent to future violations, but an incentive to future compliance."
In our view, the heart of the refund remedy, as currently used, is to coerced compliance with the Board's conception of a valid hiring agreement.
Let's begin with the notion of inevitable coercion.
I think the Board's argument can be reduced to two sentences.
Men on the job must be union members.
Therefore, men on the job were forced to join the union against their will.
This is like saying that men who practice law must have LL.B. degrees.
Therefore, men who practice law went to law school against their will.
Now, the fallacy is obvious.
The premise is simply inadequate to support the conclusion.
The conclusion states, but the premise does not establish that the only reason employees join unions is to escape the discrimination presumably exercised by unions against nonmembers.
Now, most of us have thought that the reason that employees join unions is somewhat different.
Most of us have thought that the reason was properly identified in the preamble to the statute, stating the policy of the statute, in which the condition which the statute identifies as the reason for union membership, is the inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract and employers who are organized in the corporate or other forms of ownership association.
And the policy continues that the statute is designed to promote union organization and collective bargaining for the purpose of restoring equality of bargaining power between employers and unions.
And what the statute identifies as the reason for union membership was given expression by this Court almost 40 years ago.
And at that time, this Court was stating what was already been a commonplace.
Labor unions were organized out of the necessities of the situation.
A single employee was helpless in dealing with an employer.
Union was essential to give laborers opportunity to deal on equality with their employer.
Now, if it is true, as I think it demonstrably is, that people join unions in order to have the strength that comes from group action.
It is also demonstrably true that they pay and willingly pay union dues and fees to the organization.
Everyone knows and employees know that no organization can exist without money.
If you want a union, you have to have dues in order to run a union.
And what everybody knows was proven beyond cavil during the four-year period between 1947 and 1952.
During that time, there was a provision in the Taft-Hartley Act which stated that before an employer and a union could validly enter into a union shop agreement, there must first be an election among the employees at which the employees were to decide whether or not, they wish to authorize the union to enter into a union shop agreement, an agreement which would obligate the employees to pay union dues and fees.
During this period, the provision was repealed 1952, during this period, 46,119 elections were conducted.
In 44,795 of them or 97% of the cases, the employees authorized unions to enter into union shop agreements obligating the payment of dues.
In those elections, about 5,300,000 employees were polled, 4,800,000 of them or 91.5% authorized the union to negotiate union shop agreements obligating the payment of dues.
So it seems to us that the premise upon which the Board starts, that union dues and fees are involuntarily paid, unwillingly paid, is in defiance of what everybody in this field knows.
And it's a particularly odd assumption when it is entertained, as in this case, in the building and construction industry.
Because if the building and construction industry is and has been highly unionized for a long time, in 1927, well before the Wagner Act either, a careful study in this field stated that in many large cities, the building construction workers are, for all practical purposes, completely organized.
In other cities, their claim to an organized strength varying from 60% to nearly 100% of building workers cannot seriously be disputed.
In 1958, the Bureau of Labor Statistics reported that 2.6 million workers in the building and construction industry, 2.3 million of them were union members.
And yet we have in this case, a refund order predicative on the notion that the workers on this job were inevitably coerced into paying dues to the union.
Interestingly, what the Board disregards, Congress in 1959 recognized.
In 1959, Congress enacted Section 8 (f) which in the building and construction field validated what we call a pre-hire agreement.
A pre-hire agreement is one which authorizes an employer and a union to enter into an agreement, covering employment on a particular job, before any employees are hired for work upon that job.
Absent 8 (f), it has been the Board's view and is the Board's view, that you cannot validly enter into a collective bargaining agreement before a representative number of employees have been hired, because in the absence of a representative number of employees, you cannot know whether a majority within the unit choose union representation.
This rule was eliminated by Congress in Section 8 (f) and one of the important reasons supporting the elimination was recognition that in this industry, there was no question but that the people working on construction jobs would be union men who had chosen the union to represent them.
The Senate Report put it this way.
A substantial majority of the skilled employees in this industry constitute a pool of help centered about their appropriate craft union.
If the employer relies upon this pool of skilled craftsmen, members of the union, there is no doubt under these circumstances that the union will, in fact, represent a majority of the employees eventually hired.
Now, what is there in this case to suggest that the employees on this job were not part of this long standing voluntary tradition of union membership in the building and construction field?
And the answer is nothing.
All these employees were members of the union before they began working on the job.
There is no evidence that a single one of them joined for the purpose of seeking or securing work on this job.
For the all the Board knows or cares, they could all have been union members, members of the Carpenters Union, for every single day of their working life.
The Board says, "Well, even assuming that they weren't -- they were all voluntary union members when the job began, they couldn't leave the union during the period that the job was going on and still continue to work on the job.
And so their continuance in the membership was coerced and hence, their payment of union dues and fees is coerced."
Now, this is a pretty silly argument because it requires us to believe that if there hadn't been a closed-shop agreement on this job, these employees after they began working on the job would've all left the union for the period of this job and would've all ceased paying dues.
Well, as I say, this is silly.
People in the building and construction industry are union members by tradition.
What is unthinkable to them is leaving the union, not being coerced into the union.
The conception that a closed-shop agreement coerces employees in the building and construction trade is simply not responsive to what employees in this industry themselves feel for they regard a system of employment based on union membership as a service to them, not coercive of them.
It seems to us fair to say, that if we are talking about exaction of payments in any realistic sense, the Board is simply without -- the beginning of a solid foundation upon which to predicate an argument that the fees and dues were unwillingly paid.
And that the fees and dues were not -- if the employees were not coerced in paying them, there is obviously no basis for requiring a return of moneys which were voluntarily paid.
I think it is fair to say what the Board has itself said.
It doesn't really care about exaction of payments.
It imposes this remedy as it says whether or not proof of actual exaction of payments is established.
Justice John M. Harlan: Do they allow proof to find it there?
Mr. Bernard Dunau: No, sir.
They will not allow a proof.
They have, in more than one case, rejected an offer of proof by which the union proposed to show that each of the employees paid union dues and fees willingly and that the payment was unrelated to the hiring procedure found by the Board to be discriminatory.
The Board said, “We are indifferent to that offer of proof, given the discriminatory hiring procedure that is all we care about."
Now, if one reads the Board's decisions in this field and if one knew nothing about labor unions and how they work, one would not have the least idea that union dues and fees do not repost in depositories accumulating compound interest.
If one came down from Mars and read the Board's decisions, one wouldn't have the least idea that dues and fees go to pay the cost of negotiating agreements.
They go to pay the cost of arbitrating grievances.
They go to pay for lawyers, economists, actuaries and other professional personnel.
They go towards maintaining a staff.
They go towards paying intra-union benefits.
If you read the Board's decisions, you would not know that this was a factor which existed.
The Board requires the refund of union dues and fees utterly and different to the fact that those fees and dues paid for services.
Now, it is not enough to say that the Board would give these employees the benefit of union representation which we -- without requiring a contribution to defrayal of the expense.
It goes beyond that.
Because if it is true, as it is, that the fees go towards payment of the expenses for services, the moneys have been spent.
If you require a refund of moneys, where do you get them?
Money has to come from somewhere.
So what reimbursement really comes down to at least and so far as unions are concerned, is that the employees on this job will have the benefits they receive from union representation paid for by the fees and dues paid by employees on other jobs.
We find it hard to believe that this effectuates any policy of the Act.
We find it hard to believe that draining the union's treasury and to the extent of the drain, detracting from its capacity to function in collective bargaining, in adjustment of grievances, in administering intra-union benefit programs, effectuates any policy of the Act.
Now, we have to assume, I think, that the Board must know all of these.
It must know that you -- people join unions because they need the bargaining power that come from unions.
It must know that services are gotten from union dues.
It must know that union dues and fees, once they are spent that you require them refunded, have to come from the coffers of other employees.
What then if it knows all these is the actual reason for this refund remedy?
And the actual reason, it seems to me, is what I have quoted before.
This is an in terrorem device by which the Board would compel unions and employers to acquiesce in its version of what constitutes a valid hiring agreement.
The thing which makes this an in terrorem device, which makes it coercive, is the staggering financial liability which is entailed in such a remedy.
In the employer's brief in the next case, on page 3, we are told, "The potential liability of this respondent under the Board's order now exceeds $350,000 and it's growing at the rate of close to $7000 as each month passes.”
This already staggering liability is fantastically multiplied where a union is a party to a multi-employer agreement.
For the Board tells us this when a union is a party to a multi-employer agreement in cases involving multi-employer contracts, in which the contracting union and one or more employers are named respondent parties to the contract, the union's liability for reimbursement of sums unlawfully exacted, all social extend to all the employees covered under such contract found unlawful.
So that if the union should be administering a multi-employer contract of 10 employers or 100 employers, according to the Board, it should read from the dues and fees paid by the employees, working for those 10 employers or 100 employers, based exclusively upon a finding that the Board find something in this agreement which constitutes it says a discriminatory hiring procedure.
Now, we can trace the actual purpose and the actual use to which this remedy has been put in relationship to the history of a preceding case, Number 85, the hiring hall case.
The Board's refund remedy in its current posture was enunciated in the case called Brown-Olds and that's the name by which this remedy now goes.
That case came down in February of 1956.
About two years later, the General Counsel, the then General Counsel of the Board, sent an open letter to employers and unions in the building and construction industry.
He said to them, "You have three months within which to collect -- in which to correct your hiring agreements.
If you correct them within the three months, we will not impose this refund remedy.
If you do not correct them within these three months, we will impose this remedy."
Justice Hugo L. Black: Is that in your brief, Mr. Dunau?
Mr. Bernard Dunau: Yes, sir, this is on page 35 of our brief and we trace this history from page 35, Rule 40 of our brief, Your Honor.
Now, after this letter would come out, the Board decided the Mountain Pacific Chapter case on April 1st, 1958.
That is the case in which for the Board for the first time said that in order to validate an exclusive referral system of employment, you have to incorporate into the agreement, these three magic requirements.
Three weeks later, the Board -- the General Counsel of the Board sends another letter, open letter to the employers and unions in the building and construction trade.
He says, “Well, now, you know that the Board has decided Mountain Pacific Chapter and you know you have to include in your agreements these three requirements.
To give you a chance to negotiate into your agreements these three requirements, I will extend the deadline.
I will give you now until September 1st, 1958 to fix up your agreements.
If you do it within that time, no refund remedy.
If you don't, a refund remedy will be imposed.”
Then the last open letter was sent by the General Counsel.
This time on August 19th, 1958, in which he said, “I'm not going to extend this deadline any further except to this extent.
If employers and unions are currently in the process of making genuine efforts to correct their agreements and if they had consummate their efforts by November 1st, 1958, no refund remedy.
If you fail to do so by November 1st, 1958, a refund remedy will be imposed.”
Justice John M. Harlan: What determined as to whether the remedy is applied against the union or against the employer?
Mr. Bernard Dunau: Nothing determines it except whether the person filing the charge --
Justice John M. Harlan: Charge against.
Mr. Bernard Dunau: -- has happened to file it against one or the other or both.
That's the only thing.
If the charge is filed against both, the Board will impose it against both.
Justice Charles E. Whittaker: Well, I suppose the Board controls that because if not, should've been the judges (Inaudible) be bound to sign in against the union simply because the conflicted values, (Inaudible) would it?
Mr. Bernard Dunau: It would not in law, be required to say that it must run against both.
It could, if it had sound reasons to choose one against the other.
But what it does do is have it run against both, simply upon the finding that both were parties to the procedure.
Justice Charles E. Whittaker: What have you to say upon the question of whether (Inaudible)
Mr. Bernard Dunau: Well, I can say that, I think in -- in -- very briefly, Virginia Electric pertained to a case in which the finding was that the company -- that the union was company-dominated and that the union dues and fees paid to this company-dominated union were paid pursuant to a closed-shop agreement.
The order required the dissolution of that union and in conjunction with the dissolution of that union, it required the refund of dues and fees.
Now, it seems to us that day, one can say that the Teamsters Union or the Carpenters Union or the Typographical Union is a company-dominated union on that day Virginia Electric would be relevant to our problem.
On the day that the Board could validly enter an order requiring the dissolution of the Teamsters Union or the Carpenters Union or the Typographical Union, on that day, Virginia Electric would become relevant to our problem.
But until that day comes, if the distinguishing characteristic of lawyers and law is the capacity to draw relevant distinctions, it seems to us that one mark of the invalidity of the refund remedy in this case, is that the fact that the Board draws on Virginia Electric to support it.
It seems to us to be poles apart to have an order requiring the refund of dues in conjunction with a union which is not a fit representative and is ordered dissolved, that seems to us to be of the opposite extreme from a refund order running against -- pertaining to a union whose right to exist and to function and to represent employees is altogether unquestioned.
Now, going back to this open letter, this last one --
Justice Charles E. Whittaker: May I ask you, Mr. Dunau.
Mr. Bernard Dunau: Yes, sir.
Justice Charles E. Whittaker: If the company union situation in Virginia Electric & Power case (Inaudible)
Mr. Bernard Dunau: That's correct, sir.
Justice Charles E. Whittaker: Here, you agree that your hiring hall (Inaudible) this is likewise a need, but you don't defend it.
Mr. Bernard Dunau: That's correct, we do not defend it.
Justice Charles E. Whittaker: Now, then, do you, at the same time, say that, nevertheless, the Board impotent to impose sanctions --
Mr. Bernard Dunau: We --
Justice Charles E. Whittaker: -- that would be effective to eliminate that evil?
Mr. Bernard Dunau: We agree that the Board can require a cessation of this kind of an activity, require the employer and the union to stop entering into such contracts.
We agree that anybody who's lost a job by virtue of the operation of this kind of a system, may have -- may be made whole for the loss of moneys.
What we do not agree here, is that the sanction can go so far as to require a refund of union dues and fees because, as we see it, the only valid foundation for requiring a refund of union dues and fees would be a solid finding that those fees and dues were involuntarily paid.
The existence of a discriminatory hiring procedure does not establish a solid basis for finding that the dues and fees were involuntarily paid.
In other words, as we see it, the wrong exists, but the remedy is totally unrelated to the wrong.
It is not enough to -- to say that the Board should not be impotent, is to say that the Board has been given by Congress the power to impose fines, money fines to deter violations or to compel compliance.
If the Board had been given the power to impose fines, there would be more to be said on behalf of this remedy, but we have to take it, and I think the Board would agree, that the Board were to say, upon a finding of a discriminatory hiring procedure, the employer and the union are fined $1000, $10,000, $100,000, the Board would have no power to say that.
That the Board has done just that in this type of case, the Board imposes a fine and it measures the fine by the number of employees subject to procedure and it multiplies that number by the dues they have paid and the initiation fees they have paid.
Justice John M. Harlan: You would not quarrel with this remedy, I suppose, if it were applied on an individual basis after finding X, Y and Z employees have been misled or coerced into joining the union because of the improper agreement.
Mr. Bernard Dunau: A -- a finding based on substantial evidence that a particular employee made him -- coerced onto paying dues --
Justice John M. Harlan: You say he doesn't fit the crime.
Mr. Bernard Dunau: Is a -- an order based on such a finding is one we would not contest.
We think that would be within the Board's power.
What we -- what we say here is the findings that were made are simply not commensurate with the order that was (Inaudible).
There is no relationship between the two.
This -- what the Board is -- in -- in terms of the Board's justification, it says, it wants to deter violations.
You can deter violations too, I presume, if the Board were to enter an order requiring that employer and union representatives that engaged in discriminatory hiring were to be flogged.
This, I presume, would deter violations.
People don't like to be flogged.
Well, the Board wouldn't have any power to enter that kind of an order and it seems to us, it has no more power to enter an order which requires financial flogging, rather than physical flogging.
It seems to us that the history of the use of this remedy discloses precisely that the purpose of it is not to make employees whole for dues which they unwillingly pay.
The purpose rather is to compel unions and employers to do what the Board wants them to do with respect to their hiring procedures.
Justice William J. Brennan: How the Circuits work (Inaudible)
Mr. Bernard Dunau: Except for the court below, every Court of Appeals, which has considered this remedy, has denounced it.
Justice William J. Brennan: How many of those?
Mr. Bernard Dunau: The Second, the Third, the Fifth, the Sixth, the Ninth and the District of Columbia Circuits.
The Tenth has not had it.
The First has had it in equivocal postures.
The Seventh Circuit, the one we have here in a subsequent case, it seems to us, to have already began to withdraw from what it said in this case.
I should say that the --
Justice William J. Brennan: Will not pass on only one Circuit Court (Voice Overlap) --
Mr. Bernard Dunau: At past, there's only one Circuit as we see it which has approved the Board's refund remedy in this part of a situation when it has had it on the merits.
Now, as I said, November 1 was the deadline that the General Counsel imposed for getting these agreements in the compliance.
Then, on October 31st, 1958, one day before the expiration of the deadline, down comes the order in Number 58, the preceding case in which a refund remedy is imposed.
The first time that a refund remedy is imposed based upon a finding that a hiring hall provision is illegal because of the failure to improve these three requirements.
The Board (Inaudible) point to which General Counsel's threat, “If you don't put your agreements into the shape that we think they ought to be in, you're going to pay by the refund of dues and fees.”
We don't even have to infer this from these, the course of these letters and what happened.
The General Counsel and board members have been quite open about what they were doing.
I read from page 40 what had then General Counsel of the Board have said, “The subsequent history of the Mountain Pacific decision."
That's the hiring hall decision.
Justice Potter Stewart: 40 -- 40 of what?
Mr. Bernard Dunau: At page 40 of our brief, Your Honor.
Justice Potter Stewart: Of your brief, thank you.
Mr. Bernard Dunau: The subsequent history of the Mountain Pacific decision has been, in large part, a concerted program by this agency to encourage appropriate affirmative action by the contracting parties to conform their collective agreements and hiring practices to the requirements of Mountain Pacific.
In this respect, the major spur has been the so-called Brown-Olds remedy.
They identified the spur as imposing a liability which may involve substantial sums of money.
He stated deterrence as the underlying consideration and did this.
And he described the period of the moratorium as a period of reprieve.
In another instance, he spoke of this remedy as a sword of Damocles, which hung over the heads of employers and unions.
And he said in using the sword of Damocles, mixing a metaphor somewhat, we paid he to the only adage of one of our very own citizens, who practiced what he preached at the turn of this 20th century.
I refer to President Teddy Roosevelt.
He carried a big stick and with it, he went far.
We spoke softly and carried a big sword and the results to date had been heartily.
A board member described this remedy as putting teeth into the law.
I read from page 42 in -- of our brief.
We refer to it as the stinger.
Another board member said, "We use this remedy to interest companies and unions in the problem of observing the law."
They said, “We want them to pay some attention to what we are saying.”
Justice Charles E. Whittaker: Don't you -- they -- they should pay for?
Mr. Bernard Dunau: I think they should pay attention to the law which is frequent to something very different from what we believe the Court expounds it to be.
Justice Charles E. Whittaker: You do not think it should be done by a slap on the wrist?
Do you think the same kind which you relate to eliminate this type of a reason that it took to eliminate the reason of company unions?
Mr. Bernard Dunau: The basis for a refund remedy in a company-dominated union situation was that the employees unwillingly pay their moneys to the company-dominated union.
When such a finding can be made in the case of the kind that we have here, which is typical of these kinds of cases, then one can make a finding on a record that will stand that the dues and fees were -- willingly paid, then the remedy that was appropriate in the company-dominated union situation, would be appropriate here.
But until one can equate the two, until one can say that dues and fees paid under a closed-shop agreement to a company-dominated union are the same as dues and fees paid by employees to freely chosen unions, there is no parallel between the two situations.
I would like to mention this.
The notion that the Board should not be impotent, assuming that its present remedies make it so, is something that ought to be, it seems to us, addressed to Congress.
The Board ought to go to Congress and say, "Cease and desist orders and make whole orders are just not enough."
We ought to be able to fine employees.
These things ought to be made criminal for violations of criminal laws, so we can put some people into jail.
But the Congress has not doubt in that.
The remedial scheme under this Act is just that, remedial.
The only justification for reimbursement orders under this statute is to make somebody whole, to give him back that which was wrongfully taken from him, unless that precondition can be established.
Unless a finding on substantial evidence can be made that something was taken from another which he would not have given up but for the unfair labor practice, there is no basis within the limitations of this remedial scheme for a reimbursement order.
As Judge Goodrich put to the Third Circuit, "Imposition of fines or jail sentences upon employers and unions would also be a deterrent so far as such sanctions can act as a deterrent.
But a fine is clearer than the imposition of a penalty and the Labor Board is not authorized to impose penalties."
Chief Justice Earl Warren: Mr. Come.
Argument of Norton J. Come
Mr. Norton J. Come: May it please the Court.
The question presented is whether the Board is a remedy for a hiring arrangement which is illegal.
Either because it requires union membership as a condition of employment as in Number 68 here or because it leads employees to believe that this is so as in the preceding case.
They order that the parties to the arrangement not only cease and desist from giving effect toward in the future, but also to refund to the employees dues and initiation fees paid to the union under that arrangement, the purpose of maintaining or acquiring membership in good standing.
It is the Board's position -- I should like to make clear at the outset that on this issue, I speak only for the Board and not for the Solicitor General.
Chief Justice Earl Warren: Not for what?
Mr. Norton J. Come: Not for the Solicitor General.
Justice William J. Brennan: Does he disagree or I noticed that the Solicitor General merely approved the filing of your petition for certiorari.
Mr. Norton J. Come: That is correct.
Justice William J. Brennan: Well, what's that -- what's that reflect?
Disagreement or just not taking a position?
Justice John M. Harlan: It's probably a privilege of communication.
Justice William J. Brennan: I think that you could infer disagreements.
It is the Board's position that this reimbursement remedy, the Brown-Olds remedy, is an allowable exercise of the power conferred on the Board by Section 10 (c) of the Act, to take such affirmative action including reinstatement of employees with or without back pay as will effectuate the policies of this Act.
Now, I recognized that I have a heavy burden to sustain.
As my adversary has pointed out, the question in the posture in which it is presented in the two cases now before the Court, namely, where the employees involved where union members before being subjected to the illegal arrangement, has been considered by a number of Circuits and the Board's position has been rejected except in two instances.
One is by the Seventh Circuit in this case and the First Circuit as indicated that it would not reject the Board's position in the said posture in which it arises in this case, namely, where there are closed-shop practices.
However, the other Circuits which have considered the problem have rejected the Board's position.
I shall, nevertheless, attempt to persuade this Court that the Board has not exceeded the limits of its remedial authority for the reimbursement remedy was devised to meet and it has been successful in alleviating a serious problem in the administration of the Act.
Chief Justice Earl Warren: Mr. Come, before you get in to that, may I ask you, if under your theory, the -- the Board would've had the power in the cases that have just been argued prior to this one to do the same thing --
Mr. Norton J. Come: Yes, Your Honor.
Chief Justice Earl Warren: -- because of the illegal --
Mr. Norton J. Come: Yes, Your Honor.
I think -- I think, to be candid with you, that that is a weaker case than -- than this one, but I think that the principle would cover both cases.
Chief Justice Earl Warren: And -- and in that case because there were a thousand employers that were -- were a party to this hiring hall agreement, they could have required all the -- the union dues of that entire thousand to -- to turn --
Mr. Norton J. Come: Had we got the charges against them.
Chief Justice Earl Warren: Beg your pardon.
Mr. Norton J. Come: All that's it turned out, we only -- they're actually involved in that case.
There is only one employer and the union.
Chief Justice Earl Warren: Yes.
But you found -- you found that the entire thing was wrong that all the -- all the procedures that all the thousand employers had engaged in were really -- didn't you?
Mr. Norton J. Come: That is correct, Your Honor.
Chief Justice Earl Warren: And wouldn't the same -- couldn't the same sanctions be applied to them?
Mr. Norton J. Come: It -- it could -- it could be in -- in their issue.
Chief Justice Earl Warren: And do you think that's clearly given to the -- that power is clearly given to the Labor Board?
Mr. Norton J. Come: The principle that I am arguing for would sustain it in -- in that situation.
However, we do not have that before the Court in this case nor do we actually have it in the -- in the preceding case.
In this case, you have one employer and one union and you have concededly closed-shop practices.
I should like to concentrate on this factual situation because if I can't make out here, I obviously cannot sustain it in the other case.
Justice Hugo L. Black: You startle -- just sought to it.
How many people are affected by this?
As I see it, for only two years?
Mr. Norton J. Come: As I say, there -- in this particular case, the Number 68, the closed-shop practice --
Justice Hugo L. Black: Yes.
Mr. Norton J. Come: -- involves Local 60 and mechanical handlers who were engaged in putting in a conveyer system for the Ford Motor Company and they used millwrights from Local 60.
And they are the ones that are involved in this thing and according to the record, the job lasted about a sixth-month period and there were some 25 millwrights involved.
So in this particular case, it's a relatively small amount that -- that would be involved.
Justice Hugo L. Black: In order to refund dues to, as I understand you, 25 members --
Mr. Norton J. Come: As --
Justice Hugo L. Black: -- covering the sixth month period.
That's the scope of this?
Mr. Norton J. Come: Yes.
Yes, Your Honor.
Justice Charles E. Whittaker: There's some place in the brief, I recall, seeing figure of $525, is that right?
Mr. Norton J. Come: That's as nearly as I could figure out what it would amount to in this case.
Assuming that the assumption that there were that many employees involved in -- on petitioner's premise that they were old-time union members, who had already paid initiation fees.
So the only thing would be involved the -- would be the dues payments during the period that they worked on the job.
And in this industry, of course, they probably didn't even work for a full six months.
I mean, the nature of construction projects is such that you will these men in and out, they don't keep -- keep listed in.
Justice William J. Brennan: Well, Mr. Come, could you -- do you now say what's in the next case, you said involved with the (Voice Overlap) --
Mr. Norton J. Come: Well, that is correct in the -- in the News Syndicate case.
Now, I have no way of knowing whether that is true or not.
But we won't be able to ascertain that until we get to -- to compliance proceeding.
I -- it -- it may be theoretically possible, however, that is due to the fact that the company and the union preferred to take the chance of maintaining what the Board found to be a closed-shop contract.
That they cleaned up that contract at anytime within the moratorium period or even after the moratorium period.
It would have at least told the -- the running of the --
Justice William J. Brennan: Well, I am correct though that you said --
Mr. Norton J. Come: That is correct.
Justice William J. Brennan: -- that about $350,000.
Mr. Norton J. Come: That's what he said in -- in that case, but I would like to -- like to --
Justice Hugo L. Black: What -- what union is that?
Mr. Norton J. Come: That was the International Typographical Union.
That will be involved in the next case.
Chief Justice Earl Warren: I thought you told me in the -- in the prior case, Mr. Come, that there was no administrative procedure that could be used to -- to bring this Mountain or Pacific Mountain doctrine to bear on everybody in the industry.
And you say in this case that the General Counsel merely told these people that if you don't do it by such and such a time, we're going to do so and so to you.
Mr. Norton J. Come: Well --
Chief Justice Earl Warren: And you -- you call that -- you, yourself, call that a moratorium.
I'd -- I was thinking of something like that when I asked you the question.
Did you -- did you -- did the Board apply any such pressure to -- to the industries that used the hiring hall in those other cases?
Mr. Norton J. Come: Well, I -- I misunderstood your question, Mr. Chief Justice.
I answered it from this point of view and I think that my answer is still correct, namely, that -- assuming that there had been no cleaning up of the contract within a moratorium period, there is nothing that the Board could do about any particular employer or -- or union arrangement, unless the Board got a charge filed by somebody alleging that there was an illegal arrangement.
That was what I thought you would have in -- in mind.
And that would still hold even with this moratorium.
I mean we couldn't go out and -- and pick up any arrangement at -- at random, whether they had complied or not complied.
We have to have a charge and whether you do or not, remains problematically, of course, but --
Chief Justice Earl Warren: Now, could I ask you one more question --
Mr. Norton J. Come: Surely, Your Honor.
And I'll --
Chief Justice Earl Warren: -- and I hope not to bother you.
Mr. Norton J. Come: Well, I -- I --
Chief Justice Earl Warren: Could they instead of -- of requiring the payment of these dues just assessed the fine against -- against the union and a fine against the employer?
Mr. Norton J. Come: No, Your Honor.
I think that this refund remedy is different from applying --
Chief Justice Earl Warren: That's what I would like to get (Voice Overlap) --
Mr. Norton J. Come: Well, I -- I realize that I also have to try to show that in order to stay on my feet and I shall try to do so.
I hope you'll pardon me, however, if I defer that, though I --
Chief Justice Earl Warren: Oh, oh, you don't -- take your time in your own -- we don't have reach that now.
Mr. Norton J. Come: I -- I wanted to say that the reimbursement remedy was devised to -- to meet and has been successful in alleviating what has been a serious problem in the administration of the Act.
The Board found, and it isn't only the Board, there have been numerous impartial students in this field.
Some of whom we have quoted in our brief, that that covers the -- the Board's conclusion.
That 10 years after Congress had outlawed the closed-shop, it was still rampant in industries of short-term employment such as the building and construction industry, where the union controlled the hiring process.
The Board had some of these cases that imposed cease and desist orders.
And they were just not affecting the situation at all.
You had closed-shop practices continuing in these industries.
As Haber and Levinson pointed out in their study in 1956, which is set forth at the bottom of page 18 of our brief, in all of the strongly unionized areas studied during the summer of 1952, employment arrangements equivalent to those under a closed-shop were in effect.
Membership in the union was almost universally regarded as a prerequisite for obtaining employment.
Both parties viewed this as standard practice and showed little or no concern for the illegality of the arrangement.
Petitioner says if that was the situation, well then the Board should have gone to Congress.
The Board felt, however, that the remedial power that it had under Section 10 (c) of the Act, which as I have indicated to Your Honors, empowers it to provide such remedy as would effectuate the policies of the Act, was adequate to cover the problem.
Whether the Board has overstepped the bounds, of course, is the question that we have in this case.
And I shall try to demonstrate that we have stayed under remedial side of the line, although we may have gotten pretty close at the edge.
Chief Justice Earl Warren: We'll recess now.
Argument of Norton J. Come
Chief Justice Earl Warren: -- United Brotherhood of Carpenters and Joiners of America, AFL-CIO, et al., Petitioners, versus National Labor Relations Board.
Mr. Come, you may continue your argument.
Mr. Norton J. Come: May it please the Court.
As I concluded yesterday, I was -- I had finished outlying -- outlining the practical problem that the -- that the Board had before it, which prompted it to device the Brown-Olds refund remedy.
The practical problem being that despite the fact that Congress had 10 years ago outlawed the closed-shop, those practices were continuing to persist in industry's short-term employment for the union controlled the hiring process, such as in industries like the building construction industry and the trucking industry.
The Board believes that such a remedy is authorized by Section 10 (c) of the Act and by the holding, although concededly the facts here are different, by the holding of this Court in the Virginia Electric Power case, sustaining a Board refund remedy, the Board's power to order refund of dues and fees.
The majority of the Court there, in sustaining that remedy, enunciated this test, namely, that such a remedy should stand unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.
Now, I'm going to try to show if I can that this refund remedy in situation such as we have in -- in these cases falls within that test.
Now, one of the declared policies of the Act is to protect the exercise by workers of full freedom of association, self-organization and this policy is reflected in the guarantee of this right in Section 7 of the Act, which specifically guarantees these rights to employees and adds that they include the right to refrain from any or all such activities.
And this Court made clear in the Radio Officers case that one of the corner stones of the Section 7 right to refrain from assisting the union was the right to get a job without having to be a union member or in full conformity with union policies.
Now, there can be no more flagrant impairment of this freedom and the type of practice which is conceded in Number 68, the closed-shop practice.
The Board found and the court below agreed that mechanical handlers, the employer and Local 60 entered into an agreement whereby the Company would obtain all their millwrights from Local 60 and abide by its rules and under the rules of the union, only members of Local 60 and those who are obtaining work permits from it, could get a job.
And as a result, two employees were referred -- were denied the jobs because Local 60 did not give them work permits.
Similarly, the hiring arrangement in the preceding case, under the Board's view of it, likewise, unlawfully encourages union membership, albeit and not as traumatic or fashion as a closed-shop.
Now, a refund of dues and fees paid to the union by employees as a price for getting jobs under these illegal hiring arrangements, in the Board's view, vindicates the policies of the Act which have been negated by -- by that arrangement for this reason.
The question is why has the union been willing to persist in maintaining a hiring arrangement such as we have in Local 68, a blatant form of closed-shop practice that is clearly outlawed by the Act.
The reason, it is fair to say, is because it assures that a regular flow of dues and fees will come to the union.
It maybe that these employees would have paid anyhow, but the union certainly has not been willing to risk that chance because they have continued to maintain the closed-shop practices for years after Congress outlawed them in the Taft-Hartley Amendments.
Now, a refund of dues and fees, in the Board's view, removes the incentive for continuing these illegal closed-shop practices.
And it differs from a jail sentence or a fine in that it is commensurate what the incentive for maintaining the illegal arrangement.
It is not some figure picked at -- picked at random, it is measured by what the union is benefiting as a result of continuing these closed-shop practices.
This Court said in the Virginia Electric Power that an order such as this, of course, they were talking about a different set of facts, which deprives an employer of the advantages accruing from a particular method of subverting the Act, is a permissible method of effectuating the statutory policy.
We think that a refund of dues and fees in the circumstances that we have here does no more than that.
And the Board has been careful to restrict the refund remedy to just situations where it would have the effect of removing the incentive for violating the Act because it has not applied this remedy in situations where a union security provision has been illegal for only technical reasons such as a failure to comply with Sections 9 (f), (g) and (h) or where employees were not required to be a union a member in order to get a job, but instead of giving them 30 days, as the statute requires, they were given only 29 days, let's say.
Moreover, the Board has not applied the remedy in cases where the parties have cleaned up their agreements during the moratorium period provided by the General Counsel, which was in March 1st to November 1st, 1958, as a recent case.
It makes that clear, which I do not think is cited in our brief, namely, Booth & Flinn Company, 129 NLRB, Number 89.
Now, we believe that if we have shown that the refund order meets the test in Virginia Electric Power, the fact that it was devised as a more effective means of deterring illegal hiring arrangements, does not impair its validity.
We think that purpose of a -- of a refund -- of a -- of a Board remedy, if otherwise, appropriate, is a measure of -- of deterrence under the -- for the Board to look around to modify its -- its remedies in order to -- to make them more effective, is not in its itself -- does not in itself, make the remedy invalid.
We think that the Seven-Up case before this Court indicates that.
This Court will recall, that was a situation where the Board found that as a result of computing back pay over the entire period between discharge and offer of reinstatement, it found that the employers were tending to delay offers of reinstatement and the hope that the employee would get a better paying job and thus, reduce its back pay liability.
As a result of its experience, whit this situation, the Board found that it would have to take a step in order to make the -- the reinstatement remedy more effective.
That it was not having its full effect and therefore, it devised the procedure of computing back pay on a quarterly basis.
And this Court sustained that, though in some cases, it might have resulted in an employee being made more than whole or putting in another way, and the employer having to pay more back pay than he would had to pay had the employee remained on the job.
It was sustained because that modification in the remedy was reasonably related to effectuating the statutory policy which was to ensure that employees that had been unfairly discharged would be promptly reinstated.
Now, the big argument that -- that petitioner advances is that we cannot show that the dues were coerced here.
These are union members longstanding -- belong to the union before they were subjected to this particular unlawful hiring arrangement.
And there's no reason to believe that they wouldn't have continued to pay dues even without the arrangement.
Well, that maybe so, although one wonders is that, if that is so sure, why, as I indicated earlier, unions, particularly in the building trades, would continue to take no chances and persist in their closed-shop practices.
My opponent pointed out that the building trades industries are very highly unionized industry.
That's very true.
It also has been the leading practitioner of the closed-shop.
And it has continued to engage in those practices long after Congress outlawed them.
And Congress in 8 (f), I might point out, although it did permit the building trades unions to enter into pre-hire contracts, it did not give them the closed-shop.
It limited them to a union shop and although it cut down the time from the 30 days to 7, it still did not authorize or sanction, even in that industry, a closed-shop.
But beyond that, we submit that a showing of -- of coercion is not necessary to sustain the refund remedy as we read Virginia Electric Power.
Indeed, as we read it, we think that was the issue which divided the Court in that case.
As this Court may recall, there were three sets of opinions in Virginia Electric Power.
It was the opinion of the three dissenters who did not sustain the refund remedy on the ground that was no showing, no proof that the employees were actually coerced in the payment of dues.
Mr. Justice Frankfurter wrote a separate opinion concurring with the majority of the Court sustaining a refund remedy.
He did so on the ground that he agreed that coercion had to be shown but that sufficient coercion was shown by the fact that there was a closed-shop contract in that case, which required the employees to join the union.
They had no choice about whether they wanted to join or not.
The remaining five members of the Court, however, in an opinion by Mr. Justice Murphy, sustained the refund remedy on the ground under -- under the test that I enunciated earlier.
They did not rest the holding, as we read it, upon a showing or requirement that you show that the dues were actually exacted under coercion.
Now, I should like to say a word about petitioner's reading of the Virginia Electric to limited -- limit it to a company-dominated union situation.
It is true that the -- that the union in Virginia Electric was company-dominated.
Since the closed-shop, however, was legal under the Wagner Act, you had to have something more than the closed-shop to give the Board any predicate for finding an unfair labor practice.
Company domination was the particular predicate in Virginia Electric Power.
The Courts, however, have not viewed Virginia Electric as limited to the company-dominated union situation.
We have had refund orders sustained by many of the same courts, which have not sustained them in this particular case, in situations where you had nothing more than a grant of recognition to a minority union with a union security clause and the unions were -- such unions as the Teamsters and the machinists, which were not in the company-dominated union character, our pledge.
We have set forth those decisions in our -- in our brief and I'd like to call the Court's attention particularly to the Revere Metal Art case, which is set forth at page 33 of our brief.
I could take the Court's time for a moment to just read a moment briefly from that case.
The Court in sustaining the refund order in that situation, which was a minority union which had been granted exclusive recognition in the union's security clause, sustaining the refund of dues there, even though there had been no proof that the employees had -- had paid the dues under coercion.
The Second Circuit in an opinion by Judge Friendly said, "For the courts to require a determination of the attitude of each employee in every case would impose impossible administrative divergence."
"We've been admonished that although orders requiring reimbursement to employees for dues paid to unions unlawfully forced upon them, both somewhat resemble compensation for private injury, we must not consider them solely in that light seems they vindicate public not private rights," quoting from Virginia Electric Power.
The fact the union imposed in Virginia Electric was company-dominated, does not appear to be a valid distinction here.
Now, to be sure, the facts even in these cases that I'm referring to where a refund order has been de-sustained, even though there has been no company domination, differ from the situation that we have here, because they did not involve old-time union members in an inference of coercion as possible from the -- form the union security clause.
I think they illustrate, however, that Virginia Electric Power cannot be put to one side, simply on the ground that it involved a company-dominated union.
I think that they indicate that there is more to Virginia Electric in this factor and that the decisive consideration that Virginia Electric leaves you with is the test that I alluded to at the outset, namely, whether or not, the refund order can be shown to be a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.
And I have tried to -- to indicate why the Board believes that a refund order in the circumstances here satisfies that test and fall short of a penalty, a jail sentence or an arbitrary fine.
In conclusion, I would like to give the Court one more citation, if I may, which I find is not in our brief.
Yesterday, Mr. Justice Black asked for decisions in which the Board's rationale in Mountain Pacific had been set forth.
Now, of course, there is the Mountain Pacific case itself which is cited in our brief.
I find it there has -- is some discussion of the basis for the safeguards at 123 N.L.R.B. at page 1887.
Unfortunately, that case was not cited in our brief, it is the concurring opinion of Mr. -- of Board Member Jenkins in one of these Mountain Pacific cases, which sets forth, I think, better than our brief does, the rationale for the safeguards.
I would like to call that to the Court's --
Justice Hugo L. Black: Is that named the Mountain Pacific case?
Mr. Norton J. Come: No, it is a case called the Boilermakers case.
Justice Hugo L. Black: Boilermakers case.
Mr. Norton J. Come: Boilermakers case.
That is 123 N.L.R.B. at 1887.
Chief Justice Earl Warren: Thank you, Mr. Come.
Argument of Bernard Dunau
Mr. Bernard Dunau: May it --
Chief Justice Earl Warren: Mr. Dunau.
Mr. Bernard Dunau: May it please the Court.
We are told that the reason for a closed-shop practice is to compel payment of dues which would otherwise not be paid.
This is a novel reading of industrial history.
The reason for a closed-shop practice is to safeguard for members of the unions, the available work opportunities.
It -- in the competition forward between members and nonmembers, members are favored.
This is a wrong, but the wrong is not one which is designed to collect dues.
We would -- to follow the argument that a closed-shop practice has for its purpose to collect the dues and if closed-shop practices were only eliminated, the conclusion we would have that there would be no building and construction trade unions in this country.
If only building -- if only closed-shop practices were eliminated, the 2.3 million people who are now members of building and construction trade unions, which ceased to be.
Now, if the purpose, as we are told, of this refund remedy is to restore dues that would not have been paid, there would be not the slightest reason for having that remedy run for a period in excess of 30 days.
Because with respect to any union which has not assisted or company-dominated, there is the power legally to compel the payment of dues once the 30-day period has passed.
So in all these cases, if the collection of dues were the truly the objective of this refund remedy, the refund should be limited to a 30-day period that the employee was on the job.
Justice Potter Stewart: Under the Brown-Olds remedy, when is the starting point?
Is that the time the charge is filed or the time of --
Mr. Bernard Dunau: Six months preceding the filing of the charge.
Justice Potter Stewart: Six months preceding the filing of the charge.
Mr. Bernard Dunau: That is correct, sir.
Justice Potter Stewart: Thank you.
Mr. Bernard Dunau: Now, it is actually, of course, untrue that the refund remedy is confined to situations were you have closed-shop agreements.
The preceding case illustrates this precisely.
In the preceding case, there was no invalid closed-shop agreement.
There was a hiring hall agreement.
There was a separate union security provision which required the payment of dues, but that separate union security provision was entirely valid.
It left a 30-day period.
And in fact that separate union security provision in Number 68 -- in the preceding case, could not have compelled the payment of any dues because what the Board in that case requires is the refund of dues to casual employees.
They never work a period of 30 days.
Their payment to dues never could have been coerced even by a valid union security agreement.
So, it is utterly inaccurate to say that the remedy is designed to compel the return of dues which otherwise would not had been paid.
We are told that Virginia Electric says, "It doesn't matter that dues were not coercively paid:" On page 30 to 31 of the Board's brief, there is a quote from Virginia Electric.
I think it suffices to read from that quote, one part of it, on page 30."
The reimbursement order does restore to the employees in some measure what was taken from them because of the Company's unfair labor practices.
The heart of the vice of the remedy in this case is that though a wrong exists, the Board cannot show that the payment of dues was because of that wrong.
In the absence of a connection between the wrong and the payment of dues, there is no valid basis for a requirement of a refund of dues."