J. S. GARMON et al., Respondents, v. SAN DIEGO BUILDING TRADES COUNCIL et al., Appellants, 45 Cal. 2d 657

EDMONDS, J. — The Garmons, while engaged in business as partners under the name of Valley Lumber Company, became involved in a dispute with union labor organizations. The appeal is from a judgment which enjoins the unions and their members from carrying on certain activities and awards damages in the amount of $1,000 against them. Following a trial, the court made these findings of fact: Valley Lumber Company is engaged in the business of selling lumber and building materials, and its operations affect interstate commerce.

In the previous year it sold materials originating and manufactured out of California of a value exceeding $250,000. None of its employees belong to any of the defendant unions and none have designated either of them as a labor representative. The employees have indicated that they do not desire to join, or be represented by, a union. The National Labor Relations Board has not certified either of the unions as the representative of the employees and the company has not recognized any union as such.

The union demanded a labor agreement containing a clause which would require the company to employ, and continue in employment, only such persons as are, or immediately become, members of the defendant unions. The company refused to execute the agreement, upon the grounds that it would be a violation of the National Labor Relations Act to do so before the employees, or an appropriate unit thereof, designated a union as its collective bargaining agent. Shortly thereafter, the unions placed pickets at the company’s place of business.

The intent of the unions was not to induce the employees to join one of them, nor to provide education or information as to the benefits of unionization. The only purpose was to force the company to execute the agreement or suffer destruction of its business. In addition to picketing, union agents followed the company’s trucks and threatened persons about to enter its place of business with economic injury.

By this conduct, and the use of language calculated to instill fear of such injury, the unions induced building contractors to discontinue their patronage of the company, with consequent damage to the business amounting to $1,000.

The National Labor Relations Board, “ . . . pursuant to a policy declared by it, refused to take jurisdiction of the controversy between plaintiffs and defendants for the purpose of determining whether defendants should be designated as the collective bargaining representative of the employees of plaintiffs. ’ ’ Upon these findings a judgment was entered which awards the company $1,000 damages and enjoins the unions “ . . . from picketing the places of business of plaintiffs, from following the trucks of the plaintiffs, from preventing or attempting to prevent, by means of threats, express or implied, persons having business with the plaintiffs from entering the premises of the plaintiffs, from inducing or attempting to induce by such means potential customers of plaintiffs to refuse to purchase from plaintiffs or to refuse to accept delivery of goods from plaintiffs or in plaintiffs’ trucks, and from doing any other acts tending or intended to injure plaintiffs’ business, in order to compel plaintiffs to execute any contract with the defendants, or any of them, requiring plaintiffs to discriminate with respect to conditions of employment by reason of membership, or lack thereof, in any labor organization unless and until defendants, or any one or more of them, have been properly designated as the collective bargaining representative of plaintiffs’ employees or an appropriate unit thereof.” The unions contend that jurisdiction of the controversy is exclusively in the National Labor Relations Board.

They also attack the judgment upon the gronnd that the company did not exhaust its administrative remedies. Other points presented are: the evidence does not support the findings; the findings do not include all issues tendered; the award of damages is based upon evidence entirely speculative; and, the record shows no violation of any state law. In support of the judgment, the company asserts that the jurisdiction of the national board is not exclusive, or if it is, the state court may enjoin unlawful conduct when the board has declined to act.

Another point relied upon is that, regardless of state jurisdiction to enjoin the unions, the superior court’s award of damages for violation of the state’s public policy is not contrary to any federal law. The National Labor Relations Board has exclusive primary jurisdiction to prevent unlawful demands. (Weber v. Anheuser-Busch, Inc., 348 U.S. 468 [75 S.Ct. 480, 99 L.Ed. 546]; Garner v. Teamsters, Chauffeurs & Helpers Local Union No. 776, 346 U.S. 485 [74 S.Ct. 161, 98 L.Ed. 228] ; United Const. Workers v. Laburnum Const. Corp., 347 U.S. 656 [74 S.Ct. 833, 98 L.Ed. 1025] ; Bethlehem Steel v.

New York State Labor Relations Board, 330 U.S. 767, 769 [67 S.Ct. 1026, 91 L.Ed. 1234].) The purpose of the picketing was to compel the company to sign an agreement which included a clause requiring the employer to encourage membership in the unions. In the circumstances here shown, under the Labor Management Relations Act, this was an unfair labor practice. In the Garner case, a Pennsylvania court enjoined picketing which, contrary to a state statute, was being carried on for the purpose of coercing an employer to compel or “influence” employees to join the union.

The state Supreme Court reversed the judgment upon the ground that the employer’s sole remedy was that provided by the National Labor Management Relations Act. (Garner v. Teamsters, 373 Pa. 19 [94 A.2d 893].) The United States Supreme Court agreed, holding “that petitioner’s grievance fell within the jurisdiction of the National Labor Relations Board to prevent unfair labor practices. ...” However, the board need not accept every controversy of which it has jurisdiction. (Haleston Drug Stores v. National Labor Relations Board, 187 F.2d 418.

See discussion by Philip Feldblum, Jurisdictional “Tidelands” in Labor Relations, 3 Labor Law Journal 114.) It hears and determines controversies only in connection with “enterprises whose operations have, or at which labor disputes would have, a pronounced impact upon the flow of interstate commerce. ’ ’ (National Board Press release dated October 6, 1950.) In the present case, the employer’s position is that, when the National Labor Relations Board refuses to take jurisdiction of a dispute because the effect of the company’s business on interstate commerce is not substantial, the state courts may act.

The United States Supreme Court has not decided this question. In the Garner case it pointed to the lack of any indication that “the federal Board would decline to exercise its powers once its jurisdiction was invoked.” (Garner v. Teamsters, Chauffeurs & Helpers Local Union No. 776, 346 U.S. 485 [74 S.Ct. 161 at 164, 98 L.Ed. 228].) Later in Building Trades Council v. Kinard Const.

Co., 346 U.S. 933 [74 S.Ct. 373, 98 L.Ed 423], in reversing a state court’s affirmance of an injunction on the authority of the Garner case, it said: “Since there has been no clear showing that respondent has applied to the National Labor Relations Board for appropriate relief, or that it would be futile to do so, the Court does not pass upon the question suggested by the opinion below of whether the state court could grant its own relief should the Board decline to exercise its jurisdiction.” The reason for prohibiting state courts from acting in eases in which the board has jurisdiction is to obtain uniform application of the substantive rules as expressed by Congress, and to avoid diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies. (Garner v.

Teamsters, Chauffeurs & Helpers Local Union No. 776, 346 U.S. 485 [74 S.Ct. 161,166, 98 L.Ed. 228].) A remedy under federal laws available to an injured party may justify preemption of the field of labor relations, but when the application of that rule would result in the loss of all protection, there is no reason to bar state courts from providing relief. There is no conflict of jurisdiction when the federal board determines not to adjudicate the issues.

Furthermore, a refusal to accept jurisdiction upon the ground that the issue presented does not sufficiently affect the national welfare to justify the board’s attention, in effect, is a declaration that the national labor policy will not be jeopardized if the state assumes jurisdiction. When Congress enacted the applicable statutes, it must have been aware that an unfair labor practice may affect management and labor in a small business to the same extent as in a large industry. The difference is only the effect on the national labor and economic level.

Certainly Congress did not intend to deprive a business having only a limited effect on interstate commerce of all protection in a labor-management controversy. By giving the board discretion to accept or refuse jurisdiction, the legislative purpose must have been to give the state courts jurisdiction when the board specifically determines that the controversy will not affect the national economy. (Accord; Your Food Stores v. Retail Clerks’ Local No. 1564,124 F.Supp. 697, 703; Truck Drivers, Chauffeurs, W. & Helpers Local No. 941 v.

Whitfield Transportation, Inc., -Tex. - [273 S.W.2d 857, 860] ; but cf.: New York State Labor Relations Board v. Wags Transp. System, 130 N.Y.S.2d 731; Universal Car & Service Co. v. International Assn. of Machinists, 27 C.C.H. Labor Law Reporter 68, 825.) In the present case, the employer filed a petition for determination of representation, pursuant to the provisions of the National Labor Relations Act.

It was informed by letter that “The amount of business done by Valley Lumber Company in interstate commerce is insufficient for the Board to assert jurisdiction on the basis of previous Board decisions. ’ ’ Later, after a careful investigation, the regional director of the board dismissed the petition.

He stated that “in view of the scope of the business operation involved, it would not effectuate the purposes of the National Labor Relations Act to institute further proceedings at this time. ...” It appears without conflict that only $250,000 of the.company’s business during the preceding year was in interstate commerce, either directly or indirectly.

In view of the general pronouncement by the board (Press Releases dated October 6, 1950 and July 14,1954) that it will exercise jurisdiction only when an 11 enterprise” has a direct inflow of material valued at $500,000 a year, or an indirect flow valued at $1,000,000, a request for review of the Regional Director’s action would have been futile. The general policy of the board in regard to jurisdiction makes no distinction between an application to determine representation and one complaining of an unfair labor practice.

A refusal to take jurisdiction of a controversy concerning representation constitutes a refusal to accept jurisdiction of a complaint against that employer which charges an unfair labor practice. In C. A. Braukman, etc. and International Union of Operating Engineers, 94 N.L.R.B. 234, the board said, “True, the Board has not heretofore considered the instant complaint case.

However, because the Board does not, with respect to the question of jurisdiction, differentiate between representation and complaint cases, we believe that dismissal of the . . . representation case on jurisdictional grounds . . . was in effect, notice to all parties concerned that any complaint case based on alleged unfair labor practices . . . would similarly be dismissed.” (Also see: National Labor Relations Board v. Guy F. Atkinson Co., 195 F.2d 141.)

Section 10(

a) of the Taft-Hartley Act (29 U.S.C. § 160(a)), gives the board the power to prevent any person from engaging in an unfair labor practice when it affects interstate commerce. That

section also empowers the board, by agreement, to cede jurisdiction of cases affecting such commerce to state agencies so long as the state law is not inconsistent with the national labor policy as expresesd in the federal laws. But Congress has not prohibited the state from assuming jurisdiction of conduct which would amount to an unfair labor practice under the federal law when the board refuses to take jurisdiction. When jurisdiction is declined by the board, the legislative mandate that nothing shall affect the board’s power to enforce the act is not infringed upon.

The basis for refusing to allow a state court to take jurisdiction of a dispute within the cognizance of the board in advance of action by it is the purpose to avoid a possible conflict between state policy and that of the board in an area in which the federal body has not had an opportunity to act. “Coincidence” of policy, the United States Supreme Court has declared, is not sufficient to avoid the danger of a possible conflict. (Bethlehem Steel v.

New York State Labor Relations Board, 330 U.S. 767, 769 [67 S.Ct. 1026, 91 L.Ed. 1234].) However, if the state court should refuse to assume jurisdiction when the board has affirmatively declined to act, one party to the labor controversy might be able to flout the policy expressed by Congress in the national legislation. The unions complain of the court’s asserted failure to make a finding on their allegation that there was no unfair labor practice because, as clearly stated, the contract was not to be signed, and if signed, would not be accepted by the union unless the employees became members of it.

But the findings that the unions presented the agreement to the company with a demand for its signature, followed by picketing and other activity with the purpose to compel the employer to execute the agreement although it would be illegal to do so, was a determination against the unions upon this defense. The company argues that the trial court properly gave both damages and injunctive relief. It relies upon the rule stated in James v.

Marinship Corp., 25 Cal.2d 721 [155 P.2d 329, 160 A.L.R 900], that “the object of concerted labor activity must be proper and that it must be sought by lawful means, otherwise the persons injured may obtain damages or injunctive relief.” (P. 728.) They assert that damages were a proper redress for the injuries previously suffered from the picketing and concerted activities by defendants and an injunction is proper to avoid further injury.

The appellants take the position that “the conduct of the labor union was lawful and proper in the light of both federal and state law.” One argument is that since the ultimate objective of the concerted economic pressure was to obtain a closed shop, which is a proper labor objective under the law of California (McKay v. Retail Auto Salesmen’s Local Union No. 1067, 16 Cal.2d 311, 327 [106 P.2d 373]; Shafer v. Registered Pharmacists Union Local 1172, 16 Cal.2d 379, 387-388 [106 P.2d 403]), the purpose of the picketing was not “unlawful” and hence not within the rule of the Marinship case.

For this proposition, reliance is placed upon Park & Tilford I. Corp. v. International etc. of Teamsters, 27 Cal.2d 599 [165 P.2d 891, 162 A.L.R. 1426]. The Park & Tilford case concerned an injunction which, a majority of the court concluded, was broader than that allowed by the pleadings and the evidence. There, without having obtained the requisite majority of employees for the purposes of collective bargaining, a labor organization picketed and boycotted the employer after demanding of him that he sign a closed shop agreement with that organization.

An injunction was granted restraining the union from all interference with the sale or delivery of the plaintiff’s products and from all picketing and boycotting of its business. This relief was too broad, said a majority of the court, although the trial judge was correct in the conclusion that the demands made by the union were unlawful under the National Labor Relations Act.

The evidence as to the union’s conduct, said the court, did not support the finding that the purpose of the concerted economic pressure was to compel the employer to violate the federal law by discriminating as to his employee’s choice of union representation. Instead, it was held, the ultimate purpose of the economic pressure was to bring about a closed shop agreement, which would be lawful under both California law and the controlling federal statutes.

The court further held that, although the federal act made unlawful the employer’s signing of such an agreement before a requisite majority of his employees was obtained by the union, the statute did not proscribe the assertion of economic pressure by the unions upon both him and his employees, to compel their accession to union demands, before the time at which the employer might lawfully comply with them.

This construction of the federal act was based, in part, upon an analogy made to the Shafer and McKay cases, supra, in which quite similar provisions in sections 921-923 of the California Labor Code were construed as protecting employees from improper employer influence but not as protecting the employer from economic pressure designed to bring about a closed shop agreement.

Since those decisions, however, the federal statute has been broadened to extend protection to the employer from such activities. (29 U.S.C. § 158(b) (2).) The assertion of economic pressure to compel an employer to sign the type of agreement here involved is an unfair labor practice under

section 8(b)(2) of the act. (Cf. Great Atlantic & Pacific Tea Co. (1949) 81 N.L.R.B. 1052.) Concerted labor activities for such a purpose thus were unlawful under the federal statute, and for that reason were not privileged under the California law. (Cf. Park & Tilford I. Corp. v. International etc. of Teamsters, 27 Cal.2d 599, 604 [165 P.2d 891, 162 A.L.R. 1426] ; Lillefloren v. Superior Court, 31 Cal.2d 439, 440 [189 P.2d 265].) It is argued, however, that the purpose of the concerted activities here complained of was to invite the employees to join the union.

But the court found that the purpose of the picketing was not to induce the employees to join the unions but to compel the company to sign the proffered agreement or suffer destruction of its business. To hold that a contrary objective was intended would require this court to draw different inferences from the evidence which amply supports the finding of the trial court. Finally, it is argued that the evidence does not support the finding as to the amount of damages.

However, there is testimony that the employer, as a result of the picketing, was required to pick up and deliver its products at different yards, incurring the expense of additional man hours and trucking facilities. The record also shows that at least one prospective purchaser was induced to purchase materials at another yard because of the union activities, resulting in the loss of profits at least as great as the amount of damages awarded. This evidence amply supports the judgment insofar as damages are concerned. The judgment is affirmed.

Shenk, J., Schauer, J., and Spence, J., concurred. “Pursuant to the terms of

Section 8(a)(3) of the Labor Management Eelations Act, 1947, there shall be no limitation of the Employer as to whom he shall employ, continue in employment, or discharge, except that every employee listed under

Section III, (

A) and (B), hereof, not otherwise excluded, shall be, or shall make application within thirty (30) days, become and remain a member in good standing of Millmen’s Union, Local 2020, of the United Brotherhood of Carpenters and Joiners of America, or Building Material and Dump Truck Drivers, Local 36.” (a) "It shall he an unfair labor practice for an employer . . . (3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.'. . .” (b) "It shall be an unfair labor practice for a labor organization or its agents ... (2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a) (3) or to discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership. . . .” (29 U.S.C. § 158.)