INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT NO. 8, AFL-CIO, Plaintiff-Appellee, v. J. L. CLARK COMPANY, Defendant-Appellant, 471 F.2d 694

KILEY, Circuit Judge. This is an appeal by J. L. Clark Company (Company) from a

summary judgment for International Association of Machinists and Aerospace Workers, District No. 8, AFL-CIO (Union) in the Union’s suit under

Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to enforce an arbitration award. We reverse and remand. The vital issue presented is whether an employee who abandoned a general strike against the Company and returned to work should be entitled to retain the position he now occupies despite the fact that his level of seniority is inferior to a -worker who, having participated in the strike until a settlement was reached, now seeks reinstatement to the same position. The principles of law governing this question are well settlfed.

Section 2(3) of the National Labor Relations Act (61 Stat. 137, 29 U.S.C. § 152(3)) provides that a striking employee remains an employee unless he has obtained regular and substantially equivalent employment. It is incumbent upon an employer at the conclusion of a strike to reinstate striking employees. Refusal to reinstate has the effect of discouraging employees in the exercise of their

Section 7 right to organize and strike, 61 Stat. 140 and 151, 29 U.S.C. §§ 157 and 163, and is therefore an unfair labor practice. N.L.R.B. v. Fleetwood Trailer Co., 389 U.S. 375, 378, 88 S.Ct. 543, 19 L.Ed.2d 614 (1967). However, where an employer can show that “legitimate and substantial business justification” exists which prevents reinstatement, he will be excused from the requirement. N.L.R.B. v. Great Dane Trailers, 388 U.S. 26, 34, 87 S.Ct. 1792, 18 L.Ed.2d 1027 (1967).

One business justification now recognized to be “legitimate and substantial” results when an employer hires “permanent replacements” to perform the work of striking employees. In this situation, the employer’s interest in continuing his business during an economic strike, coupled with the necessity of offering the inducement of permanent employment to secure employees willing to violate a picket line, justifies the exception of the reinstatement requirement. See N.L.R.B. v. Mackay Radio & Telegraph Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381 (1938); N.L.R.B. v.

Fleetwood Trailer Co., supra, 389 U.S. at 379, 88 S.Ct. 543; N.L.R.B. v. Plastilite Corp., 375 F.2d 343 (8th Cir. 1967); N.L.R.B. v. Colonial Manor Convalescent & Nursing Home, (7th Cir. decided August 3, 1972). Simply stated, the question before us is whether the employee who abandoned the strike and returned to work resumed work as a “permanent replacement.” If so, he is clearly entitled to retain his present position despite his inferior seniority level.

To resolve this controversy, the trial court had before it the following facts: On January 20, 1970, having failed to reach agreement on a new collective bargaining agreement, the Union called a general strike against the Company. During the course of the ensuing five month strike, employee Hinsch abandoned the strike and returned to his position as a machinist in the Company’s Tool Room Department. On April 7, 1970, employee Cinelli, a tool and die maker, engaged in several acts of picket line misconduct which resulted in his discharge by the Company.

Further: Agreement was reached on a new collective bargaining agreement in June, 1970, and the strike was settled. Under the settlement the Company agreed to submit the question of Cinelli’s discharge to arbitration and to reinstate striking employees on a seniority basis. The arbitrator found that while Cinelli had in fact been guilty of misconduct, his long and distinguished service with the Company as employee and Union steward mitigated his behavior to the extent that discharge was too harsh a punishment for his misconduct.

The effect of the award was to convert the discharge to a disciplinary suspension without pay which was to end no later than November 27, 1970. Cinelli’s seniority rights were left unimpaired. Immediately after the disciplinary suspension period had expired, Cinelli notified the Company that he intended to report for work. However, when he reported he was told by the plant manager that there was no position available for him.

The Union made inquiries concerning the basis for the Company’s refusal to reinstate Cinelli and upon learning that Hinsch, whose seniority level was lower than Cinelli’s, was employed, demanded that the Company replace Hinsch. The Company refused, taking the position that Cinelli’s greater seniority did not entitle him to the position occupied by Hinsch since Hinsch was being treated as a “permanent replacement.” Based upon the Company’s refusal to reinstate Cinelli, the Unión brought this

Section 301 action to enforce the arbitrator’s award. Both parties moved for

summary judgment and supported the motions with affidavits. The district court denied the Company’s motion and granted the Union’s motion pursuant to a finding that Hinsch “is not a permanent replacement” and that his post-strike employment did not come within the “legitimate and substantial business justifications” exception to the rule in N. L. R. B. v. Fleetwood Trailer Co., supra. We find that the district court improperly granted the Union’s motion for

summary judgment. Rule 56(

c) of the Federal Rules of Civil Procedure provides that

summary judgment shall be rendered only where no genuine issue as to any material fact exists. Having reviewed all the information brought before the trial court in the various affidavits supporting the

summary judgment motions, the opinion of the arbitrator and the pleadings, we believe the substantial factual question of whether Hinsch was a “permanent replacement” remains unresolved. In considering motions for

summary judgment, courts must bear in mind that

summary judgment is a form of relief which should be applied with, caution to the end that litigants be allowed a trial on bona fide factual issues. Smoot v. Chicago, R. I. & P. Co., 378 F. 2’d 879 (10th Cir. 1967). Where, as here, inferences are drawn from admitted underlying facts, those inferences must be drawn in the light most favorable to the party against whom the motion is directed and it is the duty of the court to resolve all doubts as to the existence of genuine issues of material facts against the party moving for

summary judgment. Technograph Printed Circuits Ltd. v. Methode Electronics, Inc., 356 F.2d 442 (7th Cir.), cert. denied Croname, Inc. v. Technograph Printed Circuits Ltd., 384 U.S. 950, 86 S.Ct. 1570, 16 L.Ed.2d 547 (1966). These basic principles governing the use of

summary judgment were not complied with by the district court. Basic to the decision below is the court’s conclusion that Hinsch was not in fact a “permanent replacement.” The arbitrator did not reach the question of Hinsch’s status as an employee vis-avis other employees. The only question submitted to arbitration, as stated in the Arbitration Award and Opinion, was: [W]as . . . Cinelli discharged for good cause and/or should [he] be reinstated.

The express terms of the award are: Discharge of Cinelli is overruled and converted to a disciplinary suspension which shall end no later than the close of business November 27, 1970. It is clear that the award does not deal with Cinelli’s right to reinstatement as a compensable employee in the position now occupied by Hinsch. There is nothing in the award which aids in resolving that question. Similarly, we find nothing in the arbitrator’s affidavits, which accompanied both sides’ motions for

summary judgment, which illuminates the issues of Hinsch’s present employment status. From the record before us it is impossible to determine whether Hinsch actually returned to work as a permanent replacement for Cinelli or whether he merely returned to his pre-strike position. If Hinsch returned to his old job or took the position of one of the many employees who could not be reinstated because of the damaged economic position of the Company, he does not qualify as a “permanent replacement” and is not entitled to occupy the disputed position. See N. L. R. B. v. Mackay, supra, 304 U.S. at 346, 58 S.Ct. 904.

We think that the Supreme Court in using the term “permanent replacement” in Mackay — to describe those employees, hired during the strike, who would be protected from displacement by returning strikers — meant to restrict protection to those individual employees who actually replaced strikers in the jobs previously held by corresponding individual strikers.

In Fleetwood, on authority of Mackay, the Court pointed out one example of a legitimate and substantial business justification for refusing to reinstate striking employees, that is, “when the jobs claimed by the strikers are occupied by workers hired as permanent replacements during the strike in order to continue operations.” 389 U.S. p. 379, 88 S.Ct. p. 546. The Mackay exception to Section 2(3) of the National Labor Relations Act, however, was not intended to give an employer discretion as to which strikers he would reinstate in the jobs that were filled during the strike.

We recognize that employers during an economic strike are often forced to reorganize both their work forces and means of production in order to continue in business. We cannot, however, by our decision here, extend the Fleetwood rule to permit employers after an economic strike to refuse reinstatement to strikers when the jobs claimed by them are not “occupied” by employees hired as “permanent replacements” during the strike.

Failure to require proof in the case before us that Hinsch occupies the job previously held by Cinelli could serve as an invitation to employers to abuse the right — to protect their business during a strike — by pretextual “permanent replacement” in disregard of employees’ rights expressed in Section 2(3) and

Section 13 of the Act, as interpreted in Mackay and Fleetwood. It was incumbent upon the Company to prove that Hinsch was a “permanent replacement” in Cinelli’s job, N. L. R. B. v. Great Dane Trailers, supra, 388 U.S. at 34, 87 S.Ct. 1792; Fleetwood Trailer, supra 389 U.S. at 378, 88 S.Ct. 543. The district court by granting the Union’s motion for

summary judgment denied the Company an opportunity to present its evidence on that issue. We reverse the

summary judgment and remand the cause for a determination of this pivotal factual question. Reversed and remanded. . As a result of the long strike and the sagging economy, the Company was able to reinstate only 85 of the pre-strike labor force of 211 active employees. In the Tool Room Department, the post-strike conditions allowed the reinstatement of only four employees. Hinsch was given one of those positions despite a lower seniority level than Cinelli, and the other three were filled by reinstated strikers having greater seniority than Cinelli.