General Finance Corp.

National Labor Relations Board - Board Decisions

Mar 29, 1946

66 N.L.R.B. 1359 (N.L.R.B. 1946)

In the Matter of CLIMAX ENGINEERING COMPANY DIVISION OF
GENERAL FINANCE CORPORATION and INTERNATIONAL ASSOCIATION OF
MACHINISTS
Case No. 18-C-107.-Decided March 29, 1946
AMENDED DECISION
AND
ORDER *
On March 29,1946, this Board issued its Decision and Order herein.
Upon further consideration thereof, the Board hereby amends said
Decision and Order, nunc pro tune as of March 29, 1946, to read as
follows, instead of as issued on March 29, 1946:
On June 13, 1945, the Trial Examiner issued his Intermediate
Report in the above-entitled proceeding, finding that the respondent
had engaged in and was engaging in certain unfair labor practices
affecting commerce, and recommending that it cease and desist there-
from and take certain affirmative action, as set forth in the copy of
the Intermediate Report attached hereto. Thereafter, counsel for the
respondent duly filed exceptions to the Intermediate Report and a
supporting brief. No request was made for oral argument before the
Board in Washington, D. C., and none was held.
The Board has considered the rulings of the Trial Examiner at the
hearing, and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and,brief, and the entire record in
the case, and hereby adopts the findings, conclusions, and recommen-
dations of the Trial Examiner, with the following modifications and
additions :
The Trial Examiner found that the respondent demoted Meyer
and Engstrom from their supervisory positions, and thereafter re-
fused to reinstate them, because of their membership in the Union.
Relying on the principle announced by the Board in the 8038 case,'
* Issued July 30, 1946.
Matter of Boss Manufacturing Company, et at , 56 N L. R. B. 348, 352.
66 N. L. R. B., No. 165.
13S9
1360 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the Trial Examiner found that by such conduct the respondent vio-
lated Section 8 (1) and (3) of the Act.
The respondent excepts to this finding, principally on the ground
that its demotion of Meyer and Engstrom was an appropriate step
to preserve its neutral position. We find no merit in the respondent's
contentions. Meyer and Engstrom maintained their membership in
the Union after becoming supervisory employees because of their de-
sire to enjoy certain legitimate union benefits and to qualify for work
in other plants should the occasion arise. This they had a right to do.
Section 7 of the Act protects the right of supervisory employees as
well as of rank and file employees to become and remain members of
and to bargain collectively with their employer through any labor
organization of their own free choice.' Because, under given circum-
stances, organizational activity by supervisors may unduly influence
the rank and file by reason of the supervisors' economic power over
subordinates, we are often required to balance the needs and interest
of supervisory employees in self-organization and collective bargain-
ing against the needs of the rank and file for unfettered freedom in
their self-organizational endeavors, and to arrive at an accommoda-
tion between them.3 But that problem is not present where super-
visors do no more than join a labor organization or authorize it to
represent them for collective bargaining purposes. For we do not
believe that normally rank and file employees could justifiably con-
clude, from the mere fact that a supervisor is a member of a labor
organization, that his allegiance to the organization might affect his
judgment concerning subordinates who favor or oppose that organi-
zation.
In the instant case, it is true, Meyer and Engstrom also wore but-
tons indistinguishable from those worn by rank and file employees,
thereby superimposing upon mere passive membership an open and
active support of the Union among rank and file employees. We are
therefore here faced with the need of balancing the right of super-
visors to self-organization under Section 7 of the Act against the
right of rank and file employees to be free bf supervisory interference.
We conclude on the facts of this case 4 that, in contrast with mere
2 Matter of Jones & Laughlin Steel Corporation, Vesta-Shannopin Coal Division, 66
N L. R. B 386.
8 We were not required to do so in the Jones cf Laughlin case, supra, which involved
only selection by supervisors of a labor organization to bargain for them.
' Each case must be determined on its own state of facts. Activity by supervisors
which may appear coercive if undertaken in behalf of or against organizations admitting
rank and file employees to membership niav be entirely non-coercive if undertaken in
relation to an organization composed only of supervisors. See Matter of American Steel
Foundries, Indiana Ha? bat Works, 67 N. L R B. 27; Matter of Edward G Budd Mann-
factiuing Company, 65 N L. It. B 612; Matter of The B. F. Goodrich Company, 64
N. L R. B 1303. Al.. relevant in determining the normal effect of supervisory activit}
upon the freedom of the rank and file is the history of self-organization in the particuhu
industry. See Matter of K. R. Donnelley and Sons Co., 60 N. L. It. B. 635; Matter of
Jones & Laughlin Steel Corporation, Vesta-Shannopin Coal Division, supra.
CLIMAX ENGINEERING COMPANY 1361
passive membership, the wearing of union buttons by supervisors,
indistinguishable from those worn by rank and file employees, may
form a barrier, though no doubt a slight one, to the full exercise by
subordinates of their freedom of choice. The respondent would con-
sequently have been entitled to take appropriate steps to protect its
neutrality. It would have been appropriate, for example, for the re-
spondent to have required Meyer and Engstrom to remove and there-
after refrain from wearing the rank and file union buttons and to
have demoted them if they failed to comply with its request.
On the other hand, Meyer and Engstrom did not, merely by wear-
ing rank and file union buttons, forfeit their right to remain members
of the Union, nor did they forfeit the protection of Section 8 (3) of
the Act which shields their exercise of that right from employer
reprisal. The respondent, by requiring the foremen to resign from
the Union or suffer demotion, interfered with their right to remain
members of the Union, thus violating Section 8 (1). By thereafter
demoting them when they refused to resign from the Union, the re-
spondent violated Section 8 (3).
Moreover, the evidence shows, and we find, contrary to the respond-
ent's contention, that the respondent, in putting the alternative of
resignation from the Union, or demotion, to Meyer and Engstrom,
was not motivated by a desire to preserve its neutrality, but rather by
opposition to union membership as such by its supervisory employees.
The record is clear, and we find, that President Deacon told the fore-
men that they were part of management and therefore would be re-
quired to resign from the Union or relinquish their positions as fore-
men. According to the testimony of Superintendent Alfred R. Lorenz,
a witness called by the respondent, Deacon's injunction to the fore-
men was to "resign from the Union immediately or take a demotion
immediately as foremen." When Meyer and Engstrom refused to
resign from the Union, they were demoted. According to Engstrom's
testimony, which we, like the Trial Examiner, credit, Lorenz told him
on the day of his demotion that Deacon had said that if the foremen
"don't want to resign from the Union, they [the respondent] would
have to take the foremanship away." Obviously, the respondent re-
garded the wearing of the buttons as an offense, not because it might
have influenced the rank and file, but because it indicated Meyer's and
Engstrom's own adherence to the Union, an adherence to which the
respondent was opposed.
Finally, it is clear that by forcing Meyer and Engstrom to the
alternative of resigning from the Union or accepting demotion, the
respondent discouraged union membership among the rank and file
employees. The supervisors here became and remained members of
686572-46-87
1362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the Union, not necessarily to secure collective bargaining rights, but
rather to retain benefits built up as rank and file workers or to pro-
tect their opportunity to secure work should they, at some future date,
return to the rank and file.5 To demote a foreman because he insists
on remaining a member of the Union for such purposes indicates to
the rank and file that retention of union membership is a bar to pro-
motion and constitutes a serious impediment to the exercise by them
of the rights which the Act guarantees.6
Accordingly, we find, in agreement with the Trial Examiner, that
by demoting Meyer and Engstrom from their supervisory positions,
and thereafter refusing to reinstate them, because of their member-
ship in the Union, the respondent discriminated with respect to their
terms and conditions of employment, thereby discouraging member-
ship in the Union in violation of Section 8 (1) and (3) of the Act.
ORDER
Upon the entire record in the case, and pursuant to Section 10 (c)
of the National Labor Relations Act, the National Labor Relations
Board hereby orders that the respondent, Climax Engineering Com-
pany Division of General Finance Corporation, Clinton, Iowa , and its
officers, agents, successors, and assigns shall:
1. Cease and desist from discouraging membership in International
Association of Machinists, or any other labor organization of its
employees, by demoting any of its supervisory employees, by refusing
to reinstate thelh to supervisory positions, or by discriminating in any
other manner in regard to their hire or tenure of employment or any
term or condition of their employment.
2. Take the following affirmative action, which the Board finds will
effectuate the policies of the Act :
(a) Offer Harry Meyer and Howard J. Engstrom immediate and
full reinstatement to their former or substantially equivalent posi-
tions, without prejudice to their seniority or other rights and privi-
leges;
5Thus, Meyer testified that he retained his membership in the Union in older to ietnin
both the "benefits [he had] built up in there " and also the right to carry at union card,
which would qualify him for other emplo\ment in case of need; Engstrom sunilaii
testified that be wanted to keep the advantages and benefits of mmnbeiship in the Union
and particularly the union card, which would prove valuable in the event of seeking
employment elsewhere . Membership in the Union carried the following advantages
death benefits , strike benefits, "victinuzing" benefits , opportunity for employment at
plants haNlug -closed -shop agreements v,ith the Union or affiliated labor organizations
and the light to carry a union card which was generally considered in the industry n,
establishing the member ' s trade , skill, and experience.
8 Matter of Skinner and Kennedy Stationer y Co , 13 N. L . it. B. 1186, enf 'd 113 F. (2d)
(167 (C C A 8 ) ; of Matter of Eagle-Picker Mining t S9neltsng Co., 16 N. L . R. B. 727
enf'd 119 F . ( 2d) 903 (C. C. A. 8).
CLIMAX ENGINEERING COMPANY 1362A
(b) Make whole Harry Meyer and Howard J. Engstrom for any
loss of pay they have suffered by reason of the respondent's discrimi-
nation against them, by payment to each of them of a sum of money
equal to the amount which he normally would have earned as wages
during the period from the date of his demotion to the date of the
respondent's offer of reinstatement, less his net earnings during such
period;
(c) Post at its plant at Clinton, Iowa, copies of the notice attached
hereto, marked "Appendix A." Copies of said notice, to be furnished
by the Regional Director of the Eighteenth Region, shall, after being
duly signed by the respondent's representative, be posted by the re-
spondent immediately upon receipt thereof, and maintained by it for
sixty (60) consecutive days thereafter, in conspicuous places, includ-
ing all places where notices to employees are customarily posted.
Reasonable steps shall be taken by the respondent to assure that said
notices are not altered, defaced, or covered by any other material ;
(d) Notify the Regional Director of the Eighteenth Region in
writing, within ten (10) days from the date of this Order, what steps
the respondent has taken to comply herewith.
APPENDIX A
NOTICE TO ALL EMPLOYEES
PURSUANT TO
A DECISION AND ORDER
of the National Labor Relations Board, and in order to effectuate
the policies of the National Labor Relations Act, we hereby notify
our employees that :
We will offer to the employees named below immediate and full
reinstatement to their former or substantially equivalent positions,
without prejudice to any seniority or other rights and privileges previ-
ously enjoyed, and make them whole for any loss of pay suffered as
a result of the discrimination.
Harry Meyer
Howard J. Engstrom
We will not discourage membership in International Association of
Machinists, or any other labor organization, by demoting any of our
supervisory employees, by refusing to reinstate them to supervisory
1362E DECISIONS OF NATIONAL LABOR RELATIONS BOARD
positions, or by discriminating in any other manner in regard to hire
or tenure of employment or any term or condition of employment.
CLIMAX ENGINEERING CoMrANY
Division of General Finance Corporation
Employer
Dated.................... By..... ... .......
(Representative ) ( Title)
NOTE : Any of the above-named employees presently serving in the
armed forces of the United States will be offered full rein-
statement upon application in accordance with the Selective
Service 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.
MR. GERARD D. REILLY, dissenting :
Although I agree with the reasoning of my colleagues insofar as
they hold that the wearing of union buttons by supervisors tends to
influence unduly free choice by their subordinates,7 the evidence pre-
sented compels me to disagree with their ultimate conclusion. There
is no question that Meyer and Engstrom wore badges of the rank and
file union into the respondent's plant and that this action jeopardized
the respondent's neutrality. There is a .question, however, as to
whether the respondent required them to remove the buttons or resign
from .the Union as an alternative to losing their supervisory. posi.-
tions. In these circumstances, where the initial act in the sequence
of events was committed by the employees, it was incumbent upon
them to desist from wearing the buttons. Instead they persisted in
wearing them in the face of the respondent's disapproval. It is obvi-
ous that if the respondent had demanded only the removal of the
T It will be noted that the implicit premise in this reasoning is that the Board has the
right to place limitations upon concerted activity by supervisory employees . While I have
always been of the opinion that the Labor Relations Act should not be so rigidly construed
as preventing the Board from drawing distinctions between the rights of supervisors and
the rights of ordinary employees ( see my dissenting , opinions in Union Collieries, 41
N. L. R. B. 961, Supp . Dec., 44 N. L. R. B. 165; Packard, 61 N. L. R. B. 4; and Jones &
Laughlin, 66 N. L. R. B. 386, as well as the majority opinion in Maryland Drydock, 49
N. L. R. B. 733 ), such a concession on the part of the majority is difficult to reconcile with
the language In Chairman Herzog's concurrence in Packard (64 N. L. R. B. 1212) and
the majority . opinion in . Jones & Laughlin . ( 66 N. L. R. B. 386) to the effect ' that once
a supervise has been determined to be an employee , the only discretion remaining to the
Board is to decide in which unit he might appropriately be classified.
CLIMAX ENGINEERING COMPANY 1363
buttons that demotion on refusal would not have constituted a viola-
tion of Section 8 (3). Therefore, as Meyer and Engstrom refused to
remove the buttons, and as the alternative course of action offered
them is not clear, it cannot be said that the respondent's action in
demoting them was for reasons other than the protection of its neu-
trality.8 I would therefore dismiss the complaint insofar as it alleges
that the discharges herein discussed constitute unfair labor practices.
INTERMEDIATE REPORT
Mr. Stephen M. Reynolds, for the Board.
Messrs. L. F. White and Harry F. Pape, of Clinton, Iowa, and Mr. Stanley
Jenkins, of Chicago, Ill., for the respondent.
Mr. James Ashe, of St. Paul,-Minn., and Mr. lVilliam H. Clawson, of Moline,
Ill., for the Union.
STATEMENT Or, THE CASE
Upon a charge duly filed on July 17, 1944, by International Association of
Machinists, affiliated with the American Federation of Labor, herein called the
Union, the National Labor Relations Board, herein called the Board, by the
Regional Director for the Eighteenth Region (Minneapolis, Minnesota), issued
its complaint dated March 12, 1945, against Climax Engineering Company Divi-
sion of General Finance Corporation, herein called the respondent, alleging that
it had engaged in and was engaging in unfair labor practices affecting commerce
within the meaning of Section 8 (1) and (3) and Section 2 (6) and (7) 01
the National Labor Relations Act, 49 Stat. 449, herein called the Act. Copies
of the complaint, accompanied by notice of hearing thereon, were duly served
upon the respondent and the Union.
With respect to the unfair labor practices, the complaint alleged, in substance.
that, by demoting Harry Meyer and Howard J. Engstrom,' on or about April
BIn the Hatter of Cleveland Electric Illuminating Company, 49 N. L. R. B. 300, 310,
a portion of the Board's Order was predicated on the wearing of buttons of a rank and
file union by supervisory employees. This conduct was considered by the Board to be
indicative of employer support for the union thus indicated and therefore violative of
Section 8 (2) of the Act. The position of the Board was clearly expressed by our General
Counsel in a letter to the respondent which was introduced in, and became a part of, the
enforcement proceedings in the case. The relevant part of the letter reads:
* * in view of the fact that union membership by foremen tends to create an
atmosphere in which a union preference may be readily promoted, the Company is
required under the Order reasonably to observe that this threat to an independent
choice is strictly confined and is not furthered by conduct which creates in the minds
of the employees an .impression of employer approval of that union which is the
foremen's choice or of any other union. Under this Order the Company must,
therefore, exercise care that its foremen do not: 1. Express a preference, directly
or indirectly, for any union ; wear union inslynia on company time or property; or
solicit union membership. (Emphasis supplied.)
i Named in the complaint as Harry Meyers and Howard Engstrom.
1364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
27, 1944, from their positions as foremen and refusing to restore them to the
said positions because of their membership in and activities in behalf of the
Union and their refusal to resign therefrom at the demand of the respondent,
the respondent has discouraged membership in the Union and has interfered
with, restrained, and coerced its employees in the exercise of the rights guar-
anteed in Section 7 of the Act.
The respondent filed no formal answer, but, through its counsel, made an
oral statement on the record in lieu thereof, admitting the allegations of the
complaint concerning the nature and extent of its business as well as its opera-
tion in interstate commerce, and denying the commission of any unfair labor
practices.
Pursuant to due notice, a hearing was held at Clinton, Iowa, on April 5, 1945,
before Irving Rogosin, the undersigned Trial Examiner, duly designated by the
Chief Trial Examiner. The Board and the respondent were represented by
counsel and the Union by its representatives. All parties participated in the
hearing and were afforded full opportunity to be heard, to examine and cross-
examine witnesses, and to introduce evidence bearing upon the issues. At the
close of the hearing, counsel for the Board moved to conform the pleadings to
the proof with respect to formal matters. The motion was granted without
objection. Counsel for the Board and the respondent argued orally upon the
record, Although afforded an opportunity to do so, none of the parties filed
briefs with the undersigned.
Upon the entire record in the case and from his observation of the witnesses,
the undersigned makes the following :
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
Climax Engineering Company Division of General Finance Corporation, it
Michigan corporation, with its principal office and place of business in Clinton,
Iowa, is engaged in the manufacture and sale of gasoline engines, generating
sets and switchboards, pumping and drilling machines, industrial power units,
and gray iron castings During the calendar year 1944, the respondent pur-
chased raw materials valued in excess of $3,000,000, approximately 90 percent
of which was shipped to the plant from points outside the State of Iowa. Dur-
ing the same period, the respondent sold and shipped finished products valued
in excess of $10,000,000, approximately 95 percent of which was shipped to
points outside the State of Iowa. The respondent concedes that it is engaged
in commerce within the meaning of the Act?
II. TILE ORGANIZATION INVOLVED
International Association of Machinists, affiliated with the American Federa-
tion of Labor, is a labor organization admitting to membership employees of
the respondent.
2 The above findings are based upon the testimony of Personnel Director L. F. White,
upon the respondent' s oral admissions to the allegations in the complaint respecting com-
mwree and, finally , upon a stipulation between the parties at the hearing.
CLIMAX ENGINEERING COMPANY
III. THE UNFAIR LABOR PRACTICES
A. Interference, restraint , and coercion
1. Background
1365
In May 1942, the Union commenced organizing the production and mainte-
nance employees at the respondent's plant. Following an election in February
1943 the respondent recognized the Union as the exclusive collective bargaining
representative of its production and maintenance employees, and entered into
an agreement with Local 1623, District #102 of the Union, dated July 8, 1943,
and expiring January 1, 1944. Foremen, supervisory, and other employees
whose status is not here material, were excluded from the appropriate unit 3
The respondent has since bargained collectively with the Union and in about
I iecember 1944, entered into a neni agreement which was dated and made
retroactive to July 1, 1944 The recognition clause and the definition of the
appropriate unit under this contract remained the same, foremen and supei-
i i,or} employees continuing to be excluded from the unit This contract also
contained a provision for maintenance of membership.
Prior to the execution of this contract, however, a dispute had arisen between
the tespondent and the Union retarding the right of employees to retain rueln-
bership in the union upon promotion to supervisory positions The alleged
diserintuiatory treatment of employees Meyer and Engstioni, discussed herein-
atiet, stems from this controversy No previous policy on the part of the
respondent had existed with respect to this issue, but with the execution of
this contract, a new provision was inverted coveting the contingency referred
to above `
2 The disci iminatory treatment of Meyer and Engstrom
Itai t U _ilcycr was employed by the respondent as an assembler on July 16.
1941, and continued in its employ until October 14, 1944, when he left volun-
tarily In May 1942, lie undertook to organize the Union at the respondent's
plant soliciting members and procuring signatures to authorization cards
Front about November 1942 until October 1943, following his promotion to the
position of foreman, lie was president of the local union.
According to the testimony of Personnel Duector White, the respondent has also had
collective bargaining relations with the International Molders and Foundry Workers
l nion of North America since 1941. Both unions are presently represented at the plant
undei coutiacts which exclude snpeivisoi3 employees fiom the appropriate unit
The peitinent section follows:
ARTICLE I
RECOGNITION
Section 2 It is agieed, lioweNer, that any employee subject to this collective bar-
gaining agreement and who is a member of the Union, may retain his or her member-
,hip in the Union upon promotion to a supeivisory position with the understanding
that the Union can no longer bargain for said employee and further that the eni-
plocee so promoted shall have no lotce or vote on matters pertaining to the con-
tiactual agreement between this Company and the Union nor shall such employee
bold any office or position in the Union
1366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Sometime in June 1942, Meyer was summoned to the office of Edward F.
Deacon, president of the respondent. In the presence of former Superintendent
Fred Neubauer, Deacon "read a paragraph out of some labor book" and then
told Meyer to "cut * * * out [his union activity] * * *, that he didn't
want [him] to organize a union in the plant " Although Meyer agreed that he
would cease his union activity, he nevertheless persisted in the same.,
On September 28, 1943, Meyer was promoted to the position of night foreman
on the assembly line,' at an hourly base rate of 90 cents plus a 5 cents an hour
differential for night work. On February 2, 1944, his base rate was increased
to 95 cents per hour, a differential of about 20 cents over the rate of the highest
paid employee under his supervision.
During this entire period, Meyer was under the immediate supervision of
General Foreman Jones or his successors. Although Meyer directed and super-
vised the work of his employees, he also performed manual work, the actual
extent of his supervision varying with the amount of work to be completed
at a given time. According to Meyer. whose testimony was uncontradicted, he
ne\er received explicit instructions from management as to the scope of his
supervisory duties. On one occasion he was requested by one of his superiors
to discharge an employee, but saw no reason for doing so and declined to do so.
He had no occasion to request that eunploNees be transferred or laid off, but
did recommend promotions and wage increases for employees which recom-
mendations were generally favorably acted upon. He attended meetings of
foremen and other supervisory employee,
Meyer resigned as president of the Union in Oelober 1943, following his
promotion to the position of foreman. but retained his membership in the Union.
He was no longer active in the Union except for such retention of membership.
Howard J. Engstrom was first employed by the respondent in January 1937,
as an electric welder in the welding department and continued in the respond-
ent's employ until August 15, 1937 1-le was recalled on August 15, 1939, at
which time there was only one other welder in the department. When this
welder left, Engstrom, the only remaining employee in the department, was
requested by Superintendent Neubauer to "take charge" and "do all welding in
the shop" under the supervision of the general foreman of the machine shop.
As work increased, Engstrom instructed and trained new employees. In about
February 1942, when there were about 6 men in the department, exclusive of
Engstrom, Superintendent Neubauer informed Engstrom that the respondent
anticipated increasing its complement of employees in the welding department
and notified him that he was foreman of that department. Engstrom devoted
most of his time thereafter to training and instructing the new employees,
but his duties remained otherwise unchanged. In the spring of 1941 he was
i eceiving an hourly rate of pay of 65 cents At the time of his promotion his
base rate was increased to 75 or 80 cents an hour, and ultimately, to $1.00,
which rate he continued to receive until his demotion in April 1944. For an
interval of about 6 months, theie were about 23 employees under his super-
vision on all 3 shifts' In the spring of 1943, the number declined to about 10,
The above findings are based upon Meier's credible and uncontradicted testimony.
Neither Deacon nor Neubauer testified and them e was no showing that either was unavail-
able at the time of the hearing
6It is apparent that the respondent contended that Meyer was promoted to the position
of foreman on September 28, 1943 Although Meyer's testimony was not entirely clear
on this point, he adopted, in his testimony, the statement of respondent' s counsel as to
the date of his promotion.
7 Engstrom worked only on the day shift, but had supervision of and responsibility for
the employees in the welding department on all three shifts.
CLIMAX ENGINEERING COMPANY 1367
and in the spring of 1944, to 4. Prior to the spring of 1943, while Engstrom
had supervision of 23 men, not more than 5 to 10 percent of his time was
devoted to production, the remainder, to supervision As the number of
employees under him diminished, a correspondingly greater amount of his
time was devoted to production, until, in the spring of 1944, when his comple-
ment was reduced to 4, he was engaged almost entirely in production'
On or before April 21, 1944, Engstrom joined the Union.
The demotions of Meyer and Engstrom
On April 21, 1944, union buttons were distributed to the members of the
Union employed at the plant. On the following day, the members of the Union,
including Meyer and Engstrom, wore their union buttons at the plants During
the forenoon of that day, President Deacon summoned all the foremen's to the
cafeteria at the plant. Meyer and Engstrom were the only foremen present
wearing union buttons. After remarking that he regretted the necessity for
the meeting, Deacon announced that the respondent was under contract with
the Union and that he intended to comply with the provisions of the contract.
He then proceeded to read from the contract that portion which, in defining
the appropriate unit, excluded foremen. Deacon further remarked that he
had observed foremen wearing union badges and that he would not permit it-
that foremen were a part of management, and that these foremen would be
required to resign from the Union or relinquish their positions as foremen."
Meyer and Engstrom persisted in wearing their union buttons in the plant
and in retaining their union membership. Thereupon, on April 29, 1944, both
were demoted from their positions as foremen. Meyer was summoned to the
superintendent 's office and there informed that he was being relieved of his
position as foreman on Deacon 's orders and that his hourly rate was being
reduced 15 cents an hour. The following week he was deprived of his foreman's
badge and his reduction in rate became effective.
On the clay of Engstrom 's demotion , Assistant Superintendent Lorenz sent
6 The above findings are based upon Engstrom 's credible and uncontradicted testimony.
9 The union buttons were approximately the size of a half dollar and bore the inscrip-
tion IAIM.
1o According to Engstrom's uncontradicted testimony , group leaders were also requested
to attend this meeting. Group leaders were not specifically excluded from the unit under
either of the Union's contracts.
u The above findings are based upon a reconciliation of the testimony of Board wit-
nesses and those of the respondent Deacon did not testify and there was no showing
that he was unavailable . Although there was some variance between the versions of
witnesses on both sides , there was no substantial disagreement as to the import of
Deacon's remarks . According to Meyer and Engstrom , Deacon stated that all foremen
wearing union buttons "nould either quit wearing them or get out the gate." Engstrom
also testified that Deacon read the paragraph in the contract "which said that we were
not to belong to any Union," and stated, "I want you to understand , those [foremen)
that have joined the Union, if they want to keep their jobs , they will resign from the
Union * * * or go out the gate " Witnesses for the respondent , while generally testi-
fying either that they did not hear Deacon make any reference to "going out the gate,"
or that he made no such reference , variously quoted him as stating that "he didn't like
the idea that his foremen were wearing [ union ) badges, and that they should either take
them off or lose their foremanship " ; that the foremen "must resign from the Union or
* * * resign from their foremanship" ; "that the foremen were excluded from the
Union, and those that were wearing Union buttons please resign from the Union immedi-
ately or take a demotion immediately as foremen ." It is apparent from the foregoing
and the entire record, and the undersigned finds, that Deacon 's injunction to the foremen
was not directed solely to the wearing of union buttons in the plant, but also to their
membership in the Union , and that the foremen so understood him.
1368 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
for him and informed him that Deacon had stated that "if we didn't want to
resign from the Union, they would have to take the foremanship away."
Engstrom replied, "Well, that is all right with me." Although Lorenz told
Engstrom that his hourly rate would not be reduced, his next pay check
reflected a reduction of 10 cents per hour.
The issues; contentions; conclusions
The respondent contends, in effect, that foremen are a part of management
and that their membership in the Union Is incompatible with their status as
supervisory employees ; that the respondent, in order to protect its neutrality,
was completely justified in requiring them to elect between retaining their mem-
bership in the Union or relinquishing their supervisory positions. It is further
contended that their exclusion from the appropriate bargaining unit in the
contract results in the denial to them of the protection against discrimination
guaranteed by the Act. Furthermore, the respondent argues that the issue Is
not whether foremen may bargain collectively with an employer within the
framework of their own Union, but whether they may be members of a union
consisting of rank and file employees, where the contract expressly excludes
them from the collective bargaining unit.
The respondent's position appears to be based in part, at least, upon an
erroneuos concept of the rights of supervisory employees, as well as the respon-
sibility of the employer for their conduct, under the Act. As early as the Ward
Baking Company case," cited by the respondent in its oral argument, the Board
held that "mere membership of supervisory employees in a labor organization
is not objectionable and does not constitute an unfair labor practice on the
part of the employer."" Thus, the respondent's contention that its neutrality
might be impaired by reason of mere membership in the Union of the foremen
here involved, is without merit.
As to the contention that their exclusion from the unit in the contract
deprives them of the protection of the Act, It is sufficient to point out that the
instant case does not involve the issue as to whether the Union under a con-
tract covering production and maintenance employees, which excludes super-
visors from the appropriate unit, may bargain with the employer in behalf
of its supervisory employees, but rather whether supervisory employees are
entitled to protection under the Act against discrimination by the employer.
That supervisory employees are "employees" within the meaning of the Act,
and hence entitled to the protection of Section 8 (1) and (3), had been estab-
lished even prior to the Board decisions in the Maryland Drydock, Soss, and
Packard cases." The decisions in the latter three cases reaffirmed the Board's
position in this respect after comprehensive reexamination of the issues In-
volved.16 Nevertheless, the Board has not denied the employer the right to
take appropriate steps to preserve his neutrality where by reason of the union
"Matter of Ward Baking Company, 8 N. L. It. B. 558.
13 It should be noted that In that case there were rival labor organizations Involved,
each of which admitted supervisory employees to membership.
14 See e. g., N. L. R. B. v. Skinner & Kennedy Stationery Co., 113 F. (2d) 667 (C. C.
A. 8), enf'g 13 N. L. It. B. 1186; N. L R. B v. American Potash and Chemical Corpora-
tion, 98 F. (2d) 488 (C. C. A. 9), enf'g 3 N. L. It. B. 140, cert. den. 306 U. S. 643;
Eagle-Picher Mining and Smelting Company v. N. L. R. B., 119 F. (2d) 903 (C. C A. 8),
enf'g as mod. 16 N. L. It. B. 727.
'2$ Matter of The Maryland Drydock Company, 49 N. L. It. B. 733 ; Matter of Soss
Manufacturing Company , et al ., 56 N. L. It. B. 348; Matter of Packard Motor Car Com-
pany, 61 N. L. It. B. 4.
CLIMAX ENGINEERING COMPANY 1369
activities of a supervisory employee the respondent 's position may be com-
promised as a result of a conflict in allegiance on the part of the employee to
the Union and the employer.''
In this connection, the language of the Board in the Soss case is particularly
apropos. In discussing the Maryland Drydock case, the Board said :
It is therefore much too broad an interpretation of this decision to say
that it necessarily means that any person having supervisory duties may
be discharged or otherwise discriminated against for his union member-
ship and have no recourse under the Act. For example, if a foreman in
a pattern shop or in an electrical department could be discharged because
he had retained his membership in this particular craft union for the pur-
pose of being eligible for employment in other union shops or to retain such
insurance and death benefit rights as he obtained from his payment of
union dues, it would seem on the face of it a serious discouragement to
membership in such organizations. On the other hand, if such persons
held union office or engaged in influencing the union allegiance of their
subordinates, an employer would be fully justified in taking appropriate
steps necessary to preserve his own neutral position.
The record in the instant case discloses that eligibility for death benefits
and strike and "victimizing" benefits is contingent upon continuous member-
ship in good standing in the Union. Thus, members who withdraw from the
Union forfeit all benefits which they have accumulated during their member-
ship and in the event of their application for reinstatement are required to
pay a reinstatement fee. The advantage of retention of membership is further
apparent when it is considered that it may be required as a condition of
employment in other plants with which the Union may have collective bargain-
ing relations or even in the plant here involved, especially where by reason
of reduction in force or other reasons, a supervisor may return to his former
position as a production employee. This is more especially true in view of the
fact that possession of a union membership card is quite generally considered
in the industry as evidence of qualification and experience of the employee in
his particular craft."
There are, among the members of the Union, general foremen, superintend-
ents, and even presidents of companies. General foremen and those above that
rank of supervisory status are eligible for "honorary retiring cards" or may
transfer to and affiliate with the Grand Lodge." Such persons may not retain
membership in the local union serving the particular plant in which they are
employed. This, however, does not apply to supervisors below the status of
general foremen.
Although a representative of the Union testified that he was unable to indi-
cate the number of foremen or supervisors among its members, its members
being classified merely according to crafts, he testified that the Union had a
very large number of foremen among its members, even though they were in
1' See e. g, Matter of General Motors dales Corporation (General Motors Parts Divi-
sion), 34 N. L. It. B. 1052; Matter of Marshall Field & Company, 34 N. L. It. B. 1.
17 According to the Union , applicants for membership are required to pass an examina-
tion in order to qualify as members in a particular craft . Meyer testified credibly and
without contradiction that, although the plant in which he is presently employed has
collective bargaining relations with an affiliated union other than the one here involved,
his possession of a journeyman's card in the Union was accepted as evidence of his quali-
fication for the job.
18 The possession of an honorary retiring card entitles the holder, in the event he
"returns to the trade," to become a member automatically without payment of any rein-
statement fee.
1370 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
many instances excluded from the appropriate bargaining unit in plants with
which the Union has contractual relations, and that approximately 90 percent
of its members who have been promoted from non-supervisory to supervisory
positions have retained membership in the Union.
With respect to the extent to which members who are supervisory employees
may engage in union activity, the testimony of the union representative, which
the undersigned credits, indicates that general foremen are not even permitted
to attend meetings of the local union. Supervisors below that status are not
excluded from union meetings, but may not participate in any matters which
are the subject of collective bargaining with respect to the appropriate unit.
They may participate in the "activities of the lodge itself" such as election of
officers of both the local and Grand Lodge and determination of policies in the
same manner as members of a fraternal organization?
It is not contended that either Meyer or Engstrom were general foremen.
The record discloses that although the respondent classified them as foremen,
their status was that of relatively minor supervisory employees. Hence, neither
of them would be eligible under the constitution and bylaws of the Union for
withdrawal or honorary retiring cards. To require these employees, therefore,
to withdraw from the Union, under the circumstances disclosed, would result
in depriving them of substantial benefits to which union membership entitled
them. This, as the Board pointed out in the Soss case, would result in "a
serious discouragement to membership in such organizations"
It remains to be considered whether anything in the conduct of these super-
visory employees impinged upon the rights of self-organization of the respond-
ent's production and maintenance employees or jeopardized the respondent's
neutrality. The record discloses that neither of these employees engaged in any
union activity following their promotion to the rank of foremen beyond retain-
ing their membership and wearing their union buttons in the plant. Meyer,
it will be recalled, resigned his office as president of the local. Engstrom was
not active in the Union.20 No showing was made, nor was it contended by the
respondent, that either of these supervisory employees "engaged in Influencing
the union allegiance of their subordinates," or otherwise compromised the
respondent's neutrality, unless the wearing of union buttons in the plant can
be so construed. In view, however, of the fact, as already indicated, that the
respondent went beyond merely requiring the removal by these foremen of their
union buttons in the plant, it is unnecessary to decide this point. Here, the
respondent confronted its foremen with the alternative of resigning their union
membership or relinquishing their supervisory positions. Moreover, although
the contention has not been explicitly raised, there is nothing in the record
which justifies a conclusion that mere membership in the local by the minor
supervisory employees here involved is incompatible with complete allegiance
to management, or that these foremen, by reason of their membership in the
local of production and maintenance employees, have not performed or may not
perform their supervisory duties with clue regard for their responsibilities to
management 21
19 The above findings are based upon the credible and uncontradicted testimony of
Grand Lodge Representative John J. Denny.
2° )angstrom had joined the Union only about a week prior to his demotion
The undersigned is not unmindful of the fact that under the grievance procedure
provided for in the contract with the Union, the first level at which -grievances may be
presented are at the level of the employee's foreman. The undersigned does not consider
that membership by foremen in the Union would prevent them from discharging their
duties fairly and impartially Moreover, the provision for higher levels in the grievance
procedure would serve to neutralize any possible claims of bias or prejudice on the part
of such foremen.
CLIMAX ENGINE ERING' COMPANY 1 371
Finally, it is clear from the record that the respondent, in demoting these
employees from their supervisory positions following their failure to withdraw
from the Union, was motivated not by a desire to protect its neutrality, but
because of its antipathy toward union membership among its supervisory
employees.
This is not to suggest that the respondent may not, by appropriate action,
resort to such disciplinary measures as may become reasonably necessary in
the event that supervisory employees who are members of the Union should
engage in any conduct in the future which might prejudice the respondent's
neutrality."
Upon the basis of the foregoing, and upon the entire record, the undersigned
finds that the respondent demoted Meyer and Engstrom and thereafter failed
and refused to restore them to their positions as foremen because of their
membership in the Union, thereby discouraging membership in the Union and
interfering with, restraining, and coercing its employees in the exercise of
their rights guaranteed in Section 7 of the Act. The undersigned further finds
that by the statements of President Deacon to the respondent's supervisory
employees at the meeting in the plant cafeteria on April 22, 1944, and by the
totality of the respondent's conduct, the respondent has interfered with, re-
strained, and coerced its employees in the exercise of the rights guaranteed
in Section 7 of the Act.
IV. THE EFFECT OF ME F N1 AIR LXROR PRACTICES UPON COMMERCE
The activities of the respondent set ton tii in Section 111, above, occurring in
i•onuection with the operations of the respondent described in Section I, above,
have a close, intimate, and substantial relation to trade, traffic, and commerce
among the several States, and tend to lead to labor disputes burdening and
obstructing commerce and the free flow of commerce.
V. THE REMEDY
having found that the respondent has engaged in certain unfair labor prac-
tices, it will be recommended that it cease and desist therefrom and that it take
certain affirmative action designed to effectuate the policies of the Act.
It has been found that the respondent discriininatorily demoted Harry Meyer
and Howard J Engstrom from their positions as foremen and thereafter
refused to restore them to those positions It will be recommended that the
respondent offer them immediate and full reinstatement to the former or sub-
stantially equivalent positions occupied by them 29 without prejudice to their
seniority or other rights and privileges and make their whole for any loss they
may have suffered by reason of the discrimination against them by payment
to them of a sum of money equal to the amount they normally would have
earned from April 29, 1944, the date of their demotion, to the date on which
It is significant that the respondent, in its presently existing contract with the
Union, made appropriate provision for the retention of union membeiship by employees
who are promoted to supervisory positions, subject to certain limitations upon their
union activity, apparently in Ran attempt to preserve the respondent' s neutrality. (See
footnote 4.)
23 Meyer credibly testified, and it is ieasonable to conclude, that lie left the respondent's
employ in October 1944 because he required mole money than he was then earning, fol-
lowing his demotion and consequent decrease in pay The undersigned so finds.
1372 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the respondent shall offer them reinstatement to their former or substantially
equivalent positions, less his net earnings 24 during such period.
Upon the basis of the foregoing findings of fact and upon the entire record
in the case, the undersigned makes the following:
CONCLUSIONS OF LAW
1. International Association of Machinists, A. F. of L., is a labor organization
within the meaning of Section 2 (5) of the Act.
2. By discriminating in regard to the hire and tenure of employment of Harry
Meyer and Howard J. Engstrom, the respondent has engaged in and is engaging
in unfair labor practices within the meaning of Section 8 (3) of the Act.
3. By interfering with, restraining, and coercing its employees in the exercise
of the rights guaranteed in Section 7 of the Act, the respondent has engaged in
and is engaging in unfair labor practices within the meaning of Section 8 (1)
of the Act.
4. The aforesaid unfair labor practices are unfair labor practices affecting
commerce within the meaning of Section 2 (6) and (7) of the Act.
RECOMMENDATIONS
Upon the basis of the foregoing findings of fact and conclusions of law, the
undersigned recommends that the respondent, Climax Engineering Company
Division of General Finance Corporation, Clinton, Iowa, its agents, successors,
and assigns shall:
1. Cease and desist from :
(a) Discouraging membership in International Association of Machinists,
A. F. of L, or any other labor organizations of its employees, by demoting any
of its foremen and refusing to restore them to their former positions, or by
discriminating in any other manner in regard to their hire or tenure of employ-
ment or any term or condition of their employment ;
(b) In any other manner interfering with, restraining, or coercing its em-
ploy ees in the exercise of the right to self-organization, to form labor organiza-
tions, to join or assist International Association of Machinists, A. F. of L., or
any other labor organization, to bargain collectively through representatives
of their own choosing, and to engage in concerted activities for the purpose of
collective bargaining or any other mutual aid and protection as guaranteed in
Section 7 of the Act.
2. Take the following affirmative action which the undersigned finds will
effectuate the policies of the Act:
(a) Offer Harry Meyer and Howard J. Engstrom immediate and full rein-
statement to their former or substantially equivalent positions without preju-
dice to their seniority or other rights and privileges;
(b) Make whole Harry Meyer and Howard J. Engstrom for any loss of pay
they may have suffered by reason of the respondent' s discrimination against
them, by payment to them of a sum of money equal to the amount which they
$4 By "net earnings" is meant earnings less expenses , such as for transportation, room,
and board, incurred by an employee in connection with obtaining work and working
elsewhere than for the respondent, which would not have been incurred but for his un-
lawful discharge and the consequent necessity of his seeking employment elsewhere. See
Matter of Crossett Lumber Company, 8 N. L. R. B. 440. Monies received for work per-
formed upon Federal, State, county, municipal, or other work-relief projects shall be
considered as earnings. See Republic Steel Corporation Y. N L. R. B., 311 U. S. 7.
CLIMAX ENGINEERING COMPANY 1373
normally would have earned as wages from the date of their demotion, to the
date on which the respondent shall offer them reinstatement to their former or
substantially equivalent positions, less their net earnings during such period;
(c) Post at its plant at Clinton, Iowa, copies of the notice attached hereto
marked "Appendix A." Copies of said notice, to be furnished by the Regional
Director of the Eighteenth Region, shall, after being duly signed by the respond-
ent's representative, be posted by the respondent immediately upon receipt
thereof and maintained by it for sixty (60) consecutive days thereafter in con-
spicuous places, including all places where notices to employees are customarily
posted. Reasonable steps shall be taken by the respondent to insure that said
notices are not altered, defaced, or covered by any other material ;
(d) Notify the Regional Director for the Eighteenth Region in writing
within ten (10) days from the date of the receipt of this Intermediate Report
what steps the respondent has taken to comply herewith.
It is further recommended that unless on or before ten (10 ) days from the
receipt of this Intermediate Report the respondent notifies said Regional
Director in writing that it has complied with the foregoing recomnlendptions.
the National Labor Relations Board issue an order requiring the respondent
to take the action aforesaid.
As provided in Section 33 of Article II of the Rules and Regulations of the
National Labor Relations Board-Series 3, as amended, effective July 12, 1944,
any party may within fifteen (15) days from the date of the entry of the order
transferring the case to the Board, pursuant to Section 32 of Article II of said
Rules and Regulations, file with the Board, Rochambeau Building, Washington
25, D. C., an original and four copies of a statement in writing setting forth
such exceptions to the Intermediate Report or to any other part of the record
or proceeding (including rulings upon all motions or objections) as he relies
upon together with the original and four copies of a brief in support thereof.
Immediately upon the filing of such statement of exceptions and/or brief, the
party or counsel for the Board filing the same shall serve a copy thereof upon
each of the other parties and shall file a copy with the Regional Director. As
further provided in said Section 33, should any party desire permission to argue
orally before the Board, request therefor must be made in writing to the Board
within ten (10) days from the date of the order transferring the case to the
Board.
IRVING ROGOSIN,
Trial Examiner.
Dated June 13, 1945.
APPENDIX A
NOTICE TO ALL EMPLOYEES PURSUANT TO THE RECOMMENDATIONS OF A
TRIAL EXAMINER
of the National Labor Relations Board, and in order to effectuate the policies
of the National Labor Relations Act, we hereby notify our employees that:
WE WILL NOT in any manner interfere with, restrain, or coerce our em-
ployees in the exercise of their right to self-organization, to form labor
organizations, to join or assist International Association of Machinists,
A. F. of L., or any other labor organization, to bargain collectively through
representatives of their own choosing, and to engage in concerted activities
for the purpose of collective bargaining or other mutual aid or protection.
1374 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
WE WILL OFFER to the employees named below immediate and full rein
statement to their former or substantially equivalent positions without
prejudice to any seniority or other rights and privileges previously enjoyed,
and make them whole for any loss of pay suffered as a result of the
discrimination.
Harry Meyer
Howard J. Engstrom
All our employees are free to become or remain members of the above-
named union or any other labor organization. We will not discriminate in
regard to hire or tenure of employment or any term or condition of employ-
ment against any employee because of membership in or activity on behalf of
any such labor organization.
CLIMAX ENGINEERING COMPANY,
Division of General Finance Corporation,
Employer.
Dated .. .............. .. By...... . .. .. ............................
(Representative) (Title)
Nova : Any of the above-named employees presently serving in the armed
forces of the United States will be offered full reinstatement upon application
in accordance with the Selective Service 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