Fibreboard Paper Products Corp.

National Labor Relations Board - Board Decisions

Sep 13, 1962

138 N.L.R.B. 550 (N.L.R.B. 1962)

550 DECISIONS OF, NATIONAL LABOR. RELATIONS BOARD
Fibreboard Paper Products Corporation and East Bay Union
of, Machinists, Local 1304; United Steelworkers of America,
AFL-CIO and United Steelworkers of America , AFL-CIO.
Case No. 20-CA-1682: September 13, 1962
SUPPLEMENTAL DECISION AND ORDER
On March 27, 1961,, the Board issued a Decision and Order in this
proceeding,' finding that the Respondent, Fibreboard Paper Products
Corporation, had not committed unfair labor practices within the,
meaning of Secton 8(a) (1), (3), and (5) or Section 8(d) of the
Act as alleged in the complaint, and dismissing the complaint.
On May 15, 1961, the Charging Unions filed a petition for recon-
sideration of the Board's Decision and Order, and on June 7, 1961,
the General Counsel filed a motion for reconsideration and clarifica-
tion. On May 25, 1961, the Respondent filed an answer to the Charg-
ing Party's petition for reconsideration, and on June 15, 1961, filed
an answer to the General Counsel's motion.
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, the Board has delegated its'powers in connection with
this case to a three-member panel [Chairman McCulloch and Mem-
bers Rodgers and Fanning].
Upon consideration of the petition filed by the Charging Unions,
the motion filed by the General Counsel, the answers filed by the
Respondent, and the entire record in the case, including the exceptions
and briefs heretofore filed, the Board hereby grants the Charging
Unions' petition for reconsideration to the extent indicated below .2
In its original Decision and Order, a majority of the Board con-
cluded that the Respondent did not violate Section 8(a) (5) when
it unilaterally subcontracted its maintenance work for economic rea-
sons without first negotiating with the duly designated bargaining
agent over its elecision.to do so. In their view, Respondent's decision
to subcontract was a management prerogative having no impact on
the conditions of employment within the existing maintenance unit,
and hence need not have been submitted to the Charging Unions before
that decision was effectuated. The dissenting opinion, relying on the
Supreme Court's decision in Order of Railroad Telegraphers v.
Chicago and Northwestern Railway Co., 362 U.S. 330, and related
1 130 NLRB 1558 Member Fanning dissented ; Chairman McCulloch and Member
Brown took no part in that Decision.
2 The Respondent 's request for oral argument is denied as the record of the prior pro-
ceeding , together with the documents filed since issuance of the Decision and Order, ade-
quately present the issues and the positions of the parties . On July 11, 1962 , Respondent
filed a petition to reopen the record for the introduction of further evidence relating to
the reduction of its maintenance department work force On July 16. 1962, the Charging
Unions filed an opposition thereto. The Respondent ' s petition is denied as the issues
raised therein are basically matters of compliance which are more properly treated at the
compliance stage of the proceedings
138 NLRB No. 67.
FIBREBOARD PAPER PRODUCTS CORPORATION 551
'court and Board cases, held that an economic decision to subcontract
unit work was encompassed within the term "wages, hours and other
terms and conditions of employment" and was a mandatory subject
of-collective bargaining under-the Act.
In the recent Town di Country Manufacturing Company, Inc., 136
NLRB 1022, the Board had occasion to reexamine this issue. A ma-
pority of the Board in that case concluded that a management deci-
sion to subcontract work out of an existing unit,. albeit for economic
reasons, was a mandatory bargaining subject. To the extent that the
majority opinion in Fibreboard held otherwise, that holding was over-
ruled. Accordingly, for the reasons and considerations expressed in
Town di Country, and in the dissenting opinion in the original Fibre-
board case, we find that Respondent's failure to negotiate with the
,Charging Unions concerning= its decision to subcontract its mainte-
nance work constituted a violation of Section 8(a) (5) of the Act.
The issue in this case is not, as stated in the dissent, "whether busi-
ness management is free to subcontract work in the interest of the
more efficient operation of its business." Nor is the Board majority
holding, anymore than it did in the Town de Country case, that a
,decision to subcontract is foreclosed to management unless it is a
negotiated decision satisfactory to the union.
The Board majority stated explicitly in the Town i Country case 3
that the duty to bargain about a decision to subcontract work-
in nowise restrains an employer from formulating or effectuating
an economic decision to terminate a phase of his business opera-
tions. Nor does it obligate him to yield to a union's demand that
a subcontract not be let, or that it be let on terms inconsistent with
management's business judgment. Experience has shown, how-
,ever, that candid discussion of mutual problems by labor and man-
agement frequently results in their resolution with attendant ben-
.efit to both sides. Business operations may profitably continue
and jobs may be preserved. Such prior discussion with a duly
designated bargaining representative is all that the Act contem-
plates. But it commands no less.4
Our dissenting colleague suggests that the Board should exercise its
-discretion in this case by finding that an employer's decision to subcon-
tract work theretofore performed by its employees is not a mandatory
8136 NLRB 1022, 1027.
41n the original Fibreboard case, Member Fanning similarly said in his dissent (130
NLRB 1558, 1565) :
Clearly, this duty to bargain [about the decision to subcontract ] Is not an order re-
straining the employer from subcontracting such work The duty to bargain does not
include an obligation to yield. Had the employer bargained about its decision to sub-
contract the maintenance work in the instant case , it is entirely possible that the
parties could have arrived at a solution to the problem short of subcontracting the
entire maintenance operation . It seems to me that this possibility Is the goal of
sound collective bargaining , which the Act is designed to foster and encourage
552 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
subject of bargaining. We do not, however, believe that the issue
pte'serited is one withirl',the Board's'' discretion. In our opinion, the
question is foreclosed by the Supreme Court's decision in the Teleg-
raphers s and other cases.6
In Telegraphers, the union notified the railroad under Section 6 of
the Railway Labor Act, 45 U.S.C. § 156,1 that it, wanted to negotiate
with the railroad to amend the current bargaining agreement by add-
ing the following rule :
No position in existence on December 3, 1957, will be abolished
or discontinued except by agreement between the carrier and the
organization.
Insofar as here pertinent, the railroad contended that the union's
demand did not raise a bargainable issue and refused to negotiate.
The district court held that the contract proposal related to the statu-
tory "rates of pay, rules and working conditions" and was therefore
subject to the bargaining obligations under the Railway Labor Act."
On appeal the court of appeals reversed, holding that the finding that
the proposed contract change related to "rates of pay, rules or work-
ing conditions" and was thus a bargainable matter was clearly errone-
ous.' The Supreme Court, in turn, reversed the court of appeals and
endorsed the finding of the district court. The Supreme Court said
(363 U.S. at 336) :
Plainly the controversy here relates to an effort on the part of
the union to change the "terms" of an existing collective bargain-
ing agreement. The change desired just as plainly referred to
"conditions of employment" of the railroad's employees who are
represented by the union. The employment of many of these
station agents inescapably hangs on the number of railroad sta-
tions that will be either completely abandoned or consolidated
with other stations. And, in the collective bargaining world to-
day, there is nothing strange about agreements that affect the
permanency of employment....
We cannot agree with the Court of Appeals that the union's ef-
fort to negotiate about the job security of its members "represents
6 Order of Railroad Telegraphers v. Chicago & Northwestern Railway Co, 362 U.S. 330
6 Local 24, International Brotherhood of Teamsters , Chau f eurs, Warehousemen & Help-
ers of America, AFL-CIO, et al v. Oliver, 358 U S. 283; 362 U . S. 605; United Steel-
workers of America v . Warrior & Gulf Navigation Co, 363 U S. 574.
7 "Carriers and representatives of the employees shall give at least thirty days' written
notice of an intended change in agreements affecting rates of pay, rules, or working con-
dittions . . . (Emphasis supplied.]
"The Railway Labor Act, 45 U.S .C. § 152, First, provides.
It shall be the duty of all carriers , their officers , agents, and employees to exert every
reasonable effort to make and maintain agreements concerning rates of pay, rules,
and working conditions . . . [Emphasis supplied ]
6 Chicago & Northwestern Railway Co v. Order of Railroad Telegraphers , 264 F. 2d
254, 260 (CA 7)
FIBREBOARD PAPER PRODUCTS CORPORATION 553
an attempt to usurp legitimate managerial prerogative in the ex-
ercise of business judgment with respect to the most economical
and efficient conduct of its operations."
In describing the scope of collective bargaining required under the
Railway Labor Act, the Court used language equally applicable to
the bargaining obligation under the National Labor Relations Act.
The Court said (363 U.S. at 338) :
In an effort to prevent a disruption and stoppage of interstate
commerce, the trend of legislation affecting railroads and railroad
employees has been to broaden, not narrow, the scope of subjects
about which workers and railroads may or must negotiate and
bargain collectively. Furthermore, the whole idea of what is
bargainable has been greatly affected by the practices and customs
of the railroads and their employees themselves. It is too late
now to argue that employees can have no collective voice to in-
fluence railroads to act in a way that will preserve the interests of
the employees as well as the interests of the railroad and the public
at large.
The dissent's attempt to distinguish the Telegraphers decision on the
basis that railroads are "impressed with a public interest" is completely
misplaced. There is no evidence that the obligation to bargain with
respect to "wages, hours and other terms and conditions of employ-
ment" imposed by Section 8(d) of the National Labor Relations Act
was intended to be more restrictive than the same obligation with re-
spect to "rates of pay, rules, and working conditions" under the Rail-
way Labor Act. The evidence is to the contrary. The Supreme
Court has said that : "No distinction between public utilities and na-
tional manufacturing organizations has been drawn in the administra-
tion of the Federal Act...." 10 The courts have also specifically held
that the bargaining obligation under the National Labor Relations
Act is broader in scope than that under the Railway Labor Act."
Moreover, a priori there would seem to be less need for imposing a
broader obligation under the latter act than under the former inas-
much as there are public agencies specifically created to protect the
public interest in railroad cases. Finally, it is clear the "public in-
terest" argument was not controlling in Telegn pliers inasmuch as
that argument was basic to the dissent which the majority in Tele-
graphers rejected.12
10 Amalgamated Association of Street , Electric Railway & Motor Coach Employees v.
WER,B, 340 U S 383, 391.
" Inland Steel Company v . N L.R.B , 170 F. 2d 247 (CA. 7), cert. denied 336 U S. 960
The substantial identity of the bargaining obligation under the two acts is manifested in
Elgin Railway v . Railroad Trainmen, 302 F. 2d 540 (C.A. 7), where the court held that
pensions were a bargainable matter under the Railway Labor Act citing the Inland Steel
decision, where a similar holding had been made under the National Labor Relations Act.
12 See the dissenting opinion of Mr Justice Whittaker , 362 U . S 345-364.
554 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Further, in.Local 24, International Brotherhood of Teamsters, etc.
v. Oliver, 358 U.S. 283, decided before Telegraphers, the Supreme
Court cited with approval the Board's decision in the Timken Roller
Bearing is case with specific reference. to the holding therein that
subcontracting was a mandatory subject of bargaining. And in the
Warrior c i Gulf case," decided after Telegraphers, the Supreme Court
held that a union complaint against an employer's contracting out of
work was subject to the contract grievance procedure, including ar-
bitration, notwithstanding a provision in the contract which excluded
from arbitration "matters which are strictly a function of manage-
ment." The Court pointed out that "Contracting out work is the
basis of many grievances; and that type of claim is grist in the mills
of the arbitrators." 15
We conclude that the dissent is wrong in its reasoning, wrong in
its interpretation of the Telegraphers case, and wrong in its prediction
of the dire results which may be expected to flow from the present
decision. As the Supreme Court has noted, subcontracting or con-
tracting out is a subject extensively dealt with in today's collective
bargaining.16 The present decision does not innovate; it merely rec-
ognizes the facts of life created by the customs and practices of
employers and unions." Contrary to our dissenting colleague, we
are confident that those employers and unions who are bargaining in
good faith will find it neither difficult nor inconsistent with sound
business practices to include questions relating to subcontracting in
their bargaining conferences.
THE REMEDY
We have found that Respondent violated Section 8(a) (5) by uni-
laterally subcontracting its maintenance work without bargaining
with the Charging Unions over its decision to do so. We shall there-
fore order that Respondent cease and desist from unilaterally sub-
contracting unit work or otherwise making unilateral changes in
their terms and conditions of employment without consulting their
designated bargaining agent. As we stated in Town & Country, "It
would be an exercise in futility to attempt to remedy this type of
violation if an employer's decision to subcontract were to stand. No
13 The Timken Roller Bearing Company, 70 NLRB 500, 518, reversed on other grounds,
161 F. 2d 949 (CA. 6).
United Steelwor leers of America v Warrior & Gulf Navigation Co , 363 U.S. 574.
16 363 U.S. at 584
le See Lunden, "Subcontracting Clauses in Major Contracts," 84 Monthly Labor Rev.
579-584, 715-723; note, "Arbitration of Subcontracting Disputes: Management Discretion
vs Job Security," 37 New York University Law Rev. 523.
17 See International Union, United Automobile, Aircraft if Agricultural Implement Work-
ers, Local 391 v. Webster Electric Co, 299 F. 2d 195 (CA. 7), where the court held that
an employer violated its collective-bargaining contract by subcontracting janitorial work
and laying off its janitorial employees even though the contract contained no prohibition
against subcontracting. The court implied such an agreement from the union shop clause
in the contract is applicable to janitors.
FIBREBOARD PAPER PRODUCTS CORPORATION 555
genuine bargaining over a decision to terminate a phase of operations
can be conducted where that decision has already been made and im-
plemented." To adapt the remedy "to the situation which calls for
redress," 18 we shall order the Respondent to restore the status quo
ante by reinstituting its maintenance operation and fulfilling its statu-
tory obligation to bargain.'9 Where that obligation has been satisfied
after the resumption of bargaining, Respondent may, of course, law-
fully subcontract its maintenance work.
As we further stated in Town cf Country, "it would be equally futile
to direct an employer to bargain with the exclusive bargaining rep-
resentative of his employees over the terminatino of jobs which they
no longer hold. Since the loss of employment stemmed directly from
their employer's unlawful action in bypassing their bargaining agent,
we believe that a meaningful bargaining order can be fashioned only
by directing the employer to restore his employees to the positions
which they held prior to this unlawful action." Accordingly, we
shall order that Respondent offer reinstatement to the employees en-
gaged in the maintenance operation to their former or substantially
equivalent positions without prejudice to their seniority or other rights
and privileges. We shall also order that Respondent make them whole
for any loss of earnings suffered as a result of Respondent's unlawful
action in bypassing their bargaining agent and unilaterally subcon-
tracting their jobs out of existence 20 Backpay shall be based upon
the earnings which they normally would receive from the date of this
Supplemental Decision and Order to the date of Respondent's offer
of reinstatement, less any net interim earnings, and shall be computed
on a quarterly basis in the manner set forth in F. W. Woolworth Com-
pay, 90 NLRB 289; N.L.R.B. v. Seven-up Bottling Company of
Miami, Inc., 344 U.S. 34421
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, Fibreboard
"See NL.R.B. v. Mackay Radio & Telegraph Co., 304 U.S 333, 348.
"We do not believe that requirement imposes an undue or unfair burden on Respond-
ent. The record shows that the maintenance operation is still being performed in much
the same manner as it was prior to the subcontracting arrangement . Respondent has a
continuing need for the services of maintenance employees ; and Respondent 's subcontract
is terminable at any time upon 60 days ' notice
20 See West Boylston Mdnufactursng Company of Alabama , 87 NLRB 808 , 812-813.
Compare Piasecki Aircraft Corporation v. N L R B , 280 F. 2d 575, 591-592 (C.A. 3)
Editorial "El Imparcial" Inc. v. N.L.R.B , 278 F. 2d 184 , 187 (C.A 1).
21 In the special circumstances of this case where the Board, upon reexamination of the
relevant legal principles , has reversed its own prior determination that Respondent had
not by its conduct violated the Act, we believe it would be wholly inequitable to hold
Respondent liable for backpay from the date it initially terminated the employment of
the individuals here involved Accordingly, we find here the "unusual circumstances" to
which reference was made in A. P. W Products Co, Inc, 137 NLRB 25 , which would
otherwise dictate more extended relief by way of backpay
556 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Paper Products Corporation, Emeryville, California, its officers,
-agents, successors, and assigns, shall :
1. Cease and desist from :
(a) Refusing to bargain collectively with East Bay Union of
Machinists, Local 1304, United Steelworkers of America, AFL-CIO,
and United Steelworkers of America, AFL-CIO, as the exclusive
bargaining representative of the Respondent's employees in the appro-
priate maintenance and powerhouse unit with respect to wages, hours,
and other terms and conditions of employment; and from unilaterally
subcontracting unit work or otherwise unilaterally changing the
wages, hours, and other terms and conditions of employment of unit
employees without prior bargaining with the above-named Unions
or any other union they may select as their exclusive bargaining
representative.
(b) In any other manner interfering with, restraining, or coercing
employees in the exercise of their rights to self-organization, to form
labor organizations, to join or assist the above-named Unions, or any
other labor organization, to bargain collectively through representa-
tives of their own choosing, and to engage in other concerted activities
for the purpose of collective bargaining or other mutual aid or pro-
tection, and to refrain from any and all such activities, except to the
extent that such right may be affected by an agreement requiring
membership in a labor organization as a condition of employment, as
authorized in Section 8 (a) (3) of the Act, as modified by the Labor-
Management Reporting and Disclosure Act of 1959.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Reinstate the maintenance operation previously performed by
its employees represented by East Bay Union of Machinists, Local
1304, United Steelworkers of America, AFL-CIO, and offer to those
employees immediate and full reinstatement to their former or sub-
stantially equivalent positions without prejudice to their seniority or
other rights and privileges, and make them whole for any loss of pay
suffered by them in the manner set forth in the section above entitled
"The Remedy."
(b) Bargain collectively with East Bay Union of Machinists, Local
1304, United Steelworkers of America, AFL-CIO, and United Steel-
workers of America, AFL-CIO, as the exclusive bargaining repre-
sentative of the Respondent's employees in the appropriate mainte-
nance and powerhouse unit with respect to wages, hours, and other
terms and conditions of employment.
(c) Preserve and, upon request, make available to the Board and
its agents, for examination and copying, all payroll records, social
security payment records, timecards, personnel records and reports,
and all other records necessary or useful to determine the amount of
FIBREBOARD PAPER PRODUCTS CORPORATION 557
backpay due and the rights of reinstatements under the terms of this
Order.
(d) Post at its plant in Emeryville, California, copies of the notice
.attached hereto marked "Appendix." 22 Copies of said notice, to be
furnished by the Regional Director for the Twentieth Region, shall,
after being duly signed by the Respondent's representatives, be posted
by Respondent immediately upon receipt thereof and maintained by
it for a period of 60 consecutive days thereafter, in conspicuous places,
including all places where notices to employees are customarily posted.
Reasonable steps shall be taken by Respondent to insure that said
-notices are not altered, defaced, or covered by any other material.
(e) Notify the Regional Director for the Twentieth Region, in
writing, within 10 days from the date of this Supplemental Decision
and Order, what steps have been taken to comply herewith.
MEMBER Rol iERS, dissenting :
I did not agree to the belated reconsideration by the Board of the
previously issued and published decision in this case. I do not now
,agree to the reversal of that prior decision.
We are dealing here with a matter of basic import to the economy
generally, and one of immediate concern to every person or group of
persons engaged in private business in this country-the matter of
how far and to what extent, if any, business management is free to
make those economic decisions necessary to the improvement, or in-
'deed the survival, of the business concern with which it is identified.
More specifically, this case, like the recently issued Town d Country 23
,case, poses the question of whether business management is free to
subcontract work in the interest of the more efficient operation of its
business.
In Town ct G'ourti y, the majority has held, and here holds, in effect,
that such decision is foreclosed to management; that such decision,
if made at all, must be a negotiated decision, satisfactory to the union 24
For any decision made solely by management and based solely on
economic factors constitutes a violation of this law, which violation
must be remedied by this Agency's ordering the concern involved to
reinstitute an uneconomic, outmoded, or obsolete operation, and to
remit back wages to all former employees "adversely affected" by such
managerial action." This is a drastic penalty.
22 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals, Enforcing an Order."
22 Town & Country Manufacturing Company, Inc, 136 NLRB 1022.
24 Contrary to the majority's assertion, I am by no means suggesting that this is an
area where the Board has "discretion" to exercise as they see fit. My view is that it is
not within the province of the Board to compel management to bargain over one of its
prerogatives.
25 In Town & Country, supra, the majority ordered the employer to reinstitute its truck-
ing operations, reemploy its former drivers, and to pay them back wages. In the instant
case, the majority is ordering the employer to reestablish its maintenance department,
reemploy the former employees of that department, and to pay them back wages.
558 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
To be sure, in describing what is required by business management
in such circumstances as these, my colleagues have sought to -soften
the impact of their ruling by such statements as the following: "This
obligation to bargain in no wise restrains an employer from .. .
effectuating an economic decision to terminate a phase of his business
operations . . . [a] prior discussion with a duly designated bargain-
ing representative is all that the Act contemplates." 26 [Emphasis
supplied.]
If the foregoing social niceties represented all that is involved, one
could not object. But the fact remains that by making such manage-
ment decisions the subject of mandatory rather than permissive bar-
gaining, my colleagues have, as they well know, thrust the entire
question squarely into the arena of economic struggle and industrial
turmoil where strikes, picket lines, charges, countercharges, protracted
litigation, and many other aspects of economic power possessed by a
union are "protected" by this Board 27 and are, therefore, legally avail-
able to a union to compel a complete abandonment by management of
its proposal, on pain of suffering irreparable damage to every aspect
of its business. That such a power, in pursuit of mandatory bargain-
ing objectives, is effectively employed by many modern unions is mani-
fest in countless cases which come to public attention and to the
attention of this tribunal day by 28 day.
Unlike my colleagues, I can find no authority for such a ruling as
this in the statute which guides our labors. Reliance on Order of
Railroad Telegraphers v. Chicago & Northwestern Railway Co., 362
2a Town d Country, supra We are not here considering the terms of an existing
collective-bargaining agreement . Enforcing the terms of an existing contract is a far
different consideration from establishing, as here, the terms which may be demanded for
inclusion in such an agreement under penalty of law.
An illustiative, but by no wean, exhaustive, picture of the extent to which this
Board and the courts have gone in recognizing and protecting a union 's right to strike
and to engage in other forms of concerted activity to force an agreement on mandatory
issues of bargaining may be gained from the following : N.L.R.B v. Mackay Radio &
Telegraph Co, 304 U.S. 333; International Union of United Automobile , etc., Workers v
O'Brien, 339 U S. 454; N L.R B v. United States Cold Storage Corporation, 203 F. 2d
924 (C.A 5 ) ; N.L.R.B. v. Industrial Cotton Mills, 208 F. 2d 87 ( C.A. 4) ; Collins Baking
Company v. N .L.R B , 193 F . 2d 483 (CA. 5).
Indeed, even when bargaining has been carried forward to an impasse , this Board and
the courts have further protected the right to strike by holding that, in such event, the
strike itself breaks the impasse and thus requires further bargaining about the same sub-
ject matter See Boeing Airplane Company, 80 NLRB 447; N.L.R.B . v. Reed & Prince
Manufacturing Company, 118 F. 2d 874 ( CA. 1) ; Texas Gas Corporation, 136 NLRB 355
28 As I stated in my dissenting opinion in Town it Country, supra, "[w]hether to con-
tinue or terminate an operation is a prerogative of management not subject to collective
bargaining . To hold, therefore , that an employer can be forced to bargain over the effects
of a decision to terminate necessarily renders that prerogative meaningless . For, obvi-
ously, to require an employer to bargain over this aspect of his decision does not leave
him free to make the decision ; in such a situation he is left, for all practical purposes, in
no better position than he would have been in had he been required to negotiate with the
union the whole subject of termination "
Moreover, it is to be noted in this case that the so-called termination rights and termi-
nation benefits of the affected employees were fully covered by an existing collective-
bargaining agreement of the parties and were not therefore subject to further mandatory
bargaining It is also worthy of note that the employer herein assured the union of its
intention to abide by the terms of that agreement.
FIBREBOARD PAPER PRODUCTS CORPORATION 559
U.S. 330, which turned on the construction of the Railway Labor Act
and the Interstate Commerce Act, is, I believe, completely misplaced.
By the statutes there involved, Congress sought to, and did, place
'certain monopolistic industries in a status of being "impressed with
a public interest." 29 No such concepts were embodied in, or even
seriously suggested for embodiment in, either the Wagner Act or
the Taft-Hartley Act. Nor, in my opinion, does this Board have the
power, as a matter of policy, to place such a "public interest" im-
primatur on every business enterprise in the United States, without
the prior approval of Congress and the courts 30
Nor do I agree that the Supreme-Court's decision in United Steel-
workers of-America v. Warrior d Gulf Navigation'Co., 363 U.S. 574,
aids the majority's cause. The Court in that case was concerned with
whether by an arbitration clause in an existing contract the Com-
pany had agreed to arbitrate the subject of contracting out. It is
one thing to say that any employer may be compelled to arbitrate
where he had so bound himself by agreement ; however, it is an en-
tirely different thing to hold that he can be compelled to negotiate
on that subject for inclusion in the agreement. Likewise I cannot
read into the Supreme Court's passing reference in Local 24, Inter-
national Brotherhood of Teamsters, etc. v. Oliver, 358 U.S. 283, to
the Timken Roller Bearing case any conclusion that the Court was
thereby adopting the view that subcontracting was a mandatory
subject of bargaining.
If this ruling of the majority stands, it is difficult to foresee any
economic action which management will be free to take of its own
20 Indicative of the broad and permeating degree of governmental regulations and con-
trol which Congress imposed upon the railroad industry in the public interest by the
Interstate Commerce Act and the Railway Labor Act are the following excerpts from the
Supreme Court ' s opinion in the Telegrapher 's case: "In pertinent part it [the Interstate
Commerce Act] provides : 'It is hereby declared to be the national transportation policy
of the Congress to provide for fair and impartial regulation of all modes of transporta-
tion subject to the provisions of this Act . . . to promote safe, adequate. economical, and
efficient service and foster sound economic conditions in transportation and among the
several carirers . ' "Congress has long made the maintenance and development of an
economical and efficient railroad system a matter of primary national concern . Its legis-
lation must be read with this purpose in mind" ; "For the fair and firm effectuation of
these policies , Congress has provided that issues respecting the propriety of [abandon-
ment, combinations , and consolidations ] all railroads be determined by a public regulatory
body, the Interstate Commerce Commission" : "Congress , in the Interstate Commerce Act,
has expressly required that before approving such . . . the Interstate Commerce Com-
mission 'shall require a fair and equitable arrangement to protect the interest of the rail-
road employees affected' "; "The Interstate Commerce Commission has power to include
conditions for the protection of displaced persons in deciding what the public convenience
and necessity may require."
ii Moreover , it has been judicially recognized that managerial decisions such as that in
issue here are not mandatory subjects of bargaining under our Act. See Jays Foods,
Inc. v. N .L.R.B., 292 F 2d 317 (C.A 7); N.L.R.B . v. Rapid Bindery , Inc, 293 F 2d
170, 176 (C A. 2) See also N L.R.B. v. New Madrid Manufacturing Company, 215 F. 2d
908, 914 (C A 8) ; NLRB. v J M Lassing at al . d/b/a Consumers Gasoline Stations,
284 F. 2d 781, 783 (C A 6) ; N L.R B v. Houston Chronicle Publishing Company, 211
F. 2d 848, 851 (CA 5) ; N L.R.B v. R. C. Mahon Company , 269 F. 2d 44 , 47 (CA. 6) ;
NLRB. v. Adkins Transfer Company, 226 F. 2d 324 , 327-328 (C.A. 6) ; and cases
annotated at 152 A.L R. 149.
560 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
volition and in its own vital interest (whether it be the discontinuance
of an unprofitable line, the closing of an unnecessary facility, or the
abandonment of an outmoded procedure) which would not be the
subject of mandatory bargaining.
In the final analysis, the subjecting of such management decisions
as this to the ambit of the Board's processes, and particularly to the
mandatory bargaining requirements, simply means that short of
complete union agreement, any action taken by management must
hereafter be taken at its peril.3t
The time involved in extensive negotiations and in-protracted liti-
gation before the Board, together with the numerous technical vaga-
ries, practical uncertainties, and changing concepts which abound
in the area of so-called "good faith bargaining," make it impossible-
for management to know when, if, or if ever, any action on its part
would be clearly permissible. These factors, together with the crush-
ing, burdensome remedy, which this Agency will retroactively impose
upon a given enterprise, should the National Labor Relations Board
determine that the action of management was (for whatever reason)
improperly taken, will serve effectively to retard and stifle sound
and necessary management decisions. Such a result, in my opinion,
is compatible neither with the law, nor with sound business practice,
nor with a so-called free and competitive economy.
Accordingly, I would dismiss the complaint.
a The following cases demonstrate that management acts at its peril in a bargaining
context notwithstanding the existence of an impasse , a strike, or the absence of bad faith
in the circumstances : Boeing Airplane Company, supra, holding it is incumbent upon
the respondent to explore the changed situation arising from strike action by resuming
negotiations with the union . Failure to do so resulted in the finding of bad -faith bargain-
ing. To the same effect , see N.L R.B. v. United States Cold Storage Corporation, 203-
F. 2d 924 (CA. 5). Tom Thumb Stores, Inc ., 123 NLRB 833, 835 (holding that employer
relies on contention of inappropriate unit at his peril) ; Cone Brothers Contracting Com-
pany v. N.L.R B., 235 F. 2d 37, 41 (C.A. 5) (unlawful refusal to bargain despite em-
ployer's genuine belief that election and certification were invalid) ; Art Metals Con-
struction Company v. N L R B., 110 F. 2d 148 , 150 (C A. 2) (in finding refusal to bargain,
court stated employer questions majority -status at his peril).
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to a Supplemental Decision and Order of the National
Labor Relations Board, and in order to effectuate the policies of the
National Labor Relations Act, as amended, we hereby notify our
employees that :
WE WILL NOT refuse to bargain collectively with East Bay
Union of Machinists, Local 1304, United Steelworkers of America,
AFL-CIO and United Steelworkers of America, AFL-CIO as
the exclusive representative of our maintenance and powerhouse
employees in the appropriate unit.
FIBREBOARD PAPER PRODUCTS CORPORATION 561
WE WILL NOT unilaterally subcontract unit work or otherwise
uhilaterally make changes in the wages, hours , and other terms
and conditions of employment for the employees in the appro-
priate unit without prior bargaining with East Bay Union of
Machinists , Local 1304 , United Steelworkers of America, AFL-
CIO, United Steelworkers of America, AFL-CIO, or any
other union which they may select as their exclusive bargain-
ing representative.
WE WILL NOT in any other manner interfere with, restrain, or
coerce our employees in the exercise of their rights to self-
organization , to form labor organizations , to join or assist East
Bay Union of Machinists, Local 1304 , United Steelworkers of
America, AFL-CIO, or any other labor organization , to bargain
collectively through representatives of their own choosing, and
to engage in other concerted activities for the purpose of col-
lective bargaining or other mutual aid or protection , and to re-
frain from any and all such activities, except to the extent that
such right may be affected by an agreement requiring membership
in a labor organization as a condition of employment, as au-
thorized in Section 8(a) (3) of the Act , as modified by the Labor-
Management Reporting and Disclosure Act of 1959.
WVE WILL reinstitute our maintenance operations previously
performed by our employees represented by East Bay Union
of Machinists , Local 1304 of United Steelworkers of America,
AFL-CIO.
WE WILL bargain collectively with East Bay Union of Ma-
chinists, Local 1304, United Steelworkers of America, AFL-CIO
and United Steelworkers of America , AFL-CIO , as the exclusive
bargaining representative of our employees in the appropriate
maintenance and powerhouse unit with respect to wages, hours,
and other terms and conditions of employment.
WE WILL offer to those employees discharged as a result of the
subcontracting of the maintenance operations immediate and full
reinstatement to their former or substantially equivalent posi-
tions without prejudice to their seniority or other rights and
privileges , and make them whole for any loss of pay suffered by
them as a result of our bypassing the above -named exclusive bar-
gaining representative and unilaterally subcontracting our main-
tenance operation.
FIBREBOARD PAPER PRODUCTS CORPORATION,
Employer.
Dated---------------- By-------------------------------------
(Representative) (Title)
NOTE.-We will notify any of the above employees presently serv-
ing in the Armed Forces of the United States of their right to full
562 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
reinstatement upon application in accordance with the Selective Serv-
ice Act after discharge from the Armed Forces.
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
Employees may communicate directly with the Board's Regional
Office, 830 Market Street, Room 703, San Francisco 2, California,
Telephone Number, Yukon 6-3500, Extension 3191, if they have any
questions concerning this notice or compliance with its provisions.
South-East Coal Company and United Mine Workers of America,
Petitioner. Case No. 9-RC-4851. September 13, 1962
DECISION ON REVIEW
On April 13, 1962, the Regional Director for the Ninth Region
issued a Decision and Direction of Election in the above-entitled
proceeding. Thereafter, the Petitioner, in accordance with Section
102.67 of the Board's Rules and Regulations, as amended, filed with
the Board a timely request for review of such Decision and Direction
of Election on the ground that the Regional Director's findings were
in error and that, in the circumstances of this case, an overall bar-
gaining unit of Employer's mining and processing plant employees
is appropriate. The Board by telegraphic order dated May 4, 1962,
granted the request for review. Thereafter, briefs were filed by both
the Petitioner and the Employer.
Pursuant to the provisions of Section 3(b) of the Act, the Board
has delegated its powers in connection with this case to a three-member
panel [Chairman McCulloch and Members Rodgers and Leedom].
The Board has considered the entire record with respect to the issue
under review, and the briefs of the parties, and makes the following
findings :
The Petitioner requested a unit of all employees of the Employer at
its three coal mines at Seco, Polly, and Millstone, Kentucky, and its
processing plant at Irvine, Kentucky. The Regional Director found
a unit of employees at the three mines to be appropriate on the basis
of several factors, including a long history of bargaining for such
employees. As to the processing plant employees, he found that the
Irvine plant was a new operation, that its employees were newly
hired, and that the Petitioner's contract never covered this operation.
He concluded that a separate unit of such employees is appropriate.
However, he did not direct an election in such unit because the Peti-
tioner's showing of interest among processing plant employees was
insufficient. As above-indicated, the Petitioner disputed the Regional
Director's findings as to the processing plant employees.
138 NLRB No. 71.