WALLACE CORPORATION v. NATIONAL LABOR RELATIONS BOARD, 323 U.S. 248

Mr. Justice Black delivered the opinion of the Court. In an attempt to settle a labor dispute at the plant of petitioner company, an agreement approved by the Board was signed by a C. I. O. union, an Independent union, and the company. At a consent election held pursuant to this agreement, Independent won a majority of the votes cast, and was certified by the Board as bargaining representative. The company then signed a union shop, contract with Independent, with knowledge — so the Board has found — that Independent intended, by refusing membership to C. I. O. employees, to oust them from their jobs.

Independent refused to admit C. I. O. men to membership and the company discharged them. In a subsequent unfair labor practice proceeding the Board found that

(1) Independent had been set up, maintained, and used by the petitioner to frustrate the threatened unionization of its plant by the C. I. O., and (2) the union shop contract was made by the company with knowledge that Independent intended to use the contract as a means of bringing about the discharge of former C. I. O. employees by denying them membership in Independent. The Board held that the conduct of the company in both these, instances constituted unfair labor practices.

It entered an order requiring petitioner to disestablish Independent, denominated by it a “company union”; to cease and desist from giving effect to the union shop contract between it and Independent; and to reinstate with back pay forty-three employees, found to have been discharged because of their affiliation with the C. I. 0., and because of their failure to belong to Independent, as required by the union shop contract. The Circuit Court of Appeals ordered enforcement of the Order. We granted certiorari because of the importance to the administration of the Act of the questions involved. 322 U. S. 721.

The Board’s findings if valid support the entire order. This is so because § 8 (3) of the Act does not permit such a contract to be made between a company and a labor organization which it has “established, maintained, or assisted.” The Board therefore is authorized by the Act to order disestablishment of such unions and to order an employer to renounce such contracts. Nor can the company, if the Board’s findings are well-grounded, defend its discharge of the C. I. O. employees on the ground that the contract with Independent required it to do so.

It is contended that the Board’s findings are not supported by substantial evidence. As shown by its analysis, the Board gave careful consideration to the evidence before it relating to the unfair labor practices which occurred both before and after the settlement agreement and the certification. The Circuit Court of Appeals unreservedly affirmed the Board’s findings, and we find ample substantiating evidence in the record to justify that affirmance. We need therefore but briefly refer to the circumstances leading to the Board’s order.

The findings of the Board establish the fact of an abiding hostility on the part of the company to any recognition of a C. I. O. union. This hostility we must take it extended to any employee who did or who might affiliate himself with the C. I. O. union. The company apparently preferred to close down this one of its two plants rather than to bargain collectively with the C. I. O. It publicly proclaimed through one of its foremen that “. . . the ones that did not sign up with the C. I.

O. didn’t have anything to worry about . . . the company would see that they was taken care of.” The settlement agreement plainly implied that the old employees could retain their jobs with the company simply by becoming members of whichever union would win the election. Nevertheless, the company entered into an agreement with Independent which inevitably resulted in bringing about the discharge of a large bloc of C. I. O. men and their president. The contract was executed after notice to the company by the business manager of Independent that Independent must have the right to refuse membership to old C. I.

O. employees who might jeopardize its majority. This business manager, who had himself originally been recommended to Independent by a company employee, wrote the company, prior to the making of the contract, that Independent insisted upon a closed-shop agreement because it wanted a “legal means of disposing of any present employees” who might affect its majority, and “who are unfavorable to- our interests.” The contract further significantly provided that the company would be released from the clause requiring it to retain in its employ union men only, if Independent should lose its majority and the C. I.

O. win it. Neither the Board nor the court below found that the company engaged in a conspiracy to bring about the discharge of former C. I. O. members. Both of them, however, have found that the contract was signed with knowledge on the part of the Company that Independent proposed to refuse to admit them to membership and thus accomplish the very same purpose. By the plan carried out the company has been able to achieve that which the Board found was its object from the beginning, namely, to rid itself of C. I.

O. members, categorized by its foreman as “agitators.” It is contended that the Board’s finding as to company domination has no support in the evidence because the evidence as to company domination antedated the settlement and certification, and hence was improperly admitted. The argument is that the Board cannot go behind the settlement and certification. The petitioner does not argue that any language appearing in the Labor Relations Act denies this power to the Board, but relies upon general principles on which the judicial rule governing estoppel is based.

Only recently we had occasion to note that the differences in origin and function between administrative bodies and courts “preclude wholesale transplantation of the rules of procedure, trial, and review which have evolved from the history and experience, of courts.” Federal Communications Commission v. Pottsville Broadcasting Co., 309 U. S. 134, 143. With reference to the attempted settlement of disputes, as in the performance of other duties imposed upon it by the Act, the Board has power to fashion its procedure to achieve the Act’s purpose to protect employees from unfair labor practices.

We cannot, by incorporating the judicial concept of estoppel into its procedure, render the Board powerless to prevent an obvious frustration of the Act’s purposes. To prevent disputes like the one here involved, the Board has from the very beginning encouraged compromises and settlements. The purpose of such attempted settlements has been to end labor disputes, and so far as possible to extinguish all the elements giving rise to them. The attempted settlement here wholly failed to prevent the wholesale discard of employees as a result of their union affiliations.

The purpose of the settlement was thereby defeated. Upon this failure, when the Board's further action was properly invoked, it became its duty to take fresh steps to prevent frustration of the Act. To meet such situations the Board has established as a working rule the principle that it ordinarily will respect the terms of a settlement agreement approved by it. It has consistently gone behind such agreements, however, where subsequent events have demonstrated that efforts at adjustment have failed to accomplish their purpose, or where there has been a subsequent unfair labor practice.

We think this rule adopted by the Board is appropriate to accomplish the Act’s purpose with fairness to all concerned. Consequently, since the Board correctly found that there was a subsequent unfair labor practice, it was justified in considering evidence as to petitioner’s conduct, both before and after the settlement and certification. The company denies the existence of a subsequent unfair labor practice. It attacks the Board’s conclusion that it was an unfair labor practice to execute the union shop contract with knowledge that Independent at that time intended to deny membership to C. I.

O. employees because of their former affiliations with the C. I. O. It admits that had there been no union shop agreement, discharge of employees on account of their membership in the C. I. O. would have been an unlawful discrimination contrary to § 8 (3) of the Act. But the proviso in § 8 (3) permits union shop agreements.

It follows therefore, the company argues, that, inasmuch as such agreements contemplate discharge of those who are not members of the contracting union, and inasmuch as the company has no control over admission to union membership, the contract is valid and the company must discharge non-union members, regardless of the union’s discriminatory purpose, and the company’s knowledge of such purpose. This argument we cannot accept. The duties of a bargaining agent selected under the terms of the Act extend beyond the mere representation of the interests of its own group members.

By its selection as bargaining representative, it has become the agent of all the employees, charged with the responsibility of representing their interests fairly and impartially. Otherwise, employees who are not members of a selected union at the time it is chosen by the majority would be left without adequate representation. No employee can be deprived of his employment because of his prior affiliation with any particular union. The Labor Relations Act was designed to wipe out such discrimination in industrial relations.

Numerous decisions of this Court dealing with the Act have established beyond doubt that workers shall not be discriminatorily discharged because of their affiliation with a union. We do not construe the provision authorizing a closed shop contract as indicating an intention on the part of Congress to authorize a majority of workers and a company, as in the instant case, to penalize minority groups of workers by depriving them of that full freedom of association and self-organization which it was the prime purpose of the Act to protect for all workers.

It was as much a deprivation of the rights of these minority employees for the company discriminatorily to discharge them in collaboration with Independent as it would have been had the company done it alone. To permit it to do so by indirection, through the medium of a “union” of its own creation, would be to sanction a readily contrived mechanism for evasion of the Act. One final argument remains. The company, it is said, bargained with Independent because it was compelled to do so by law.

The union shop contract to which the company at first objected, but into which it entered against the advice of counsel, was the result of that bargaining. The company, it is pointed out, persistently though unsuccessfully sought to persuade Independent to admit C. I. O. workers as members of Independent. Hence, we are told, the company did all in its power to prevent the discharges and should not be held responsible for them.

Two answers suggest themselves: First, that the company was not compelled by law to enter into a contract under which it knew that discriminatory discharges of its employees were bound to occur; second, the record discloses that there was more the company could and should have done to prevent these discriminatory discharges even after the contract was executed. Immediately after the discharge of this large group of employees, the Labor Board complained to the company. The company appealed in writing to Independent’s business manager to admit the men to membership, and thus make possible their reinstatement.

This appeal was rejected. The Board then called to the company’s attention our decision in Labor Board v. Electric Vacuum Cleaner Co., 315 U. S. 685, asserting that under its authority the men had been illegally discharged and should be reinstated. In subsequent correspondence, the Board suggested to the company that if it should later be required to reinstate the discharged employees, it would have only itself to blame, since it had voluntarily dispensed with their services.

It insisted that the company was taking a needless risk of liability because if the Board should hear charges and dismiss them, the men could then be discharged, but if on the other hand, the Board should sustain the complaint, the discharged employees “would have retained their positions and your client would have no further liability because of their wrongful discharge.” The Board’s representative at that time wrote the company, “I again beseech you to return them to work pending a decision by the National Labor Relations Board on this question.” It follows from what we have said that we affirm the judgment of the court below approving the order of the Board in its entirety.

Affirmed. Of 207 eligible employees, 98 voted for Independent, 83 for the C. I. O., and 26 did not vote. 50 N. L. R. B. 138. 141 F. 2d 87. Section 8 (3) contains a proviso to the effect that nothing in the Act “shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this Act as an unfair labor practice) to require as a condition of employment membership therein. . . .” (Italics added.) Labor Board v. Electric Vacuum Cleaner Co., 315 U. S. 685, 694. I. A. of M. v. Labor Board, 311 U. S. 72, 81-2; Labor Board v.

Falk Corp., 308 U. S. 453, 461. The contract reads: “It is mutually agreed by both parties hereto that should the Union at any time become affiliated in any way with any labor organization or federation having membership or local union affiliations in more than one town outside of the City of Richwood, West Virginia, this clause (

E) of

Article I shall immediately become null and void, . . .” Apparently more than 50% of all cases before it have been adjusted under its supervision. See First Annual Report of the National Labor Relations Board (1936), pp. 30-31; Second Annual Report (1937), pp. 15-17; Third Annual Report (1938), pp. 20-22; Fourth Annual Report (1939), pp. 19-22; Fifth Annual Report (1940), pp. 14, 16-18, 20, 26; Sixth Annual Report (1941), pp. 14-15, 25, 26, 27, 29; Seventh Annual Report (1942), pp. 22-25, 28-30, 80-86; Eighth Annual Report (1943), pp. 20-23, 91, 92. Matter of Corn Products Refining Co., 22 N. L. R.

B. 824, 828-829; Matter of Wickwire Brothers, 16 N. L. R. B. 316, 325-326; Matter of Godchaux Sugars, 12 N. L. R. B. 568, 576-579; Matter of Shenandoah-Dives Mining Co., 11 N. L. R. B. 885, 888; cf. Matter of Locomotive Finished Material Co., 52 N. L. R. B. 922, 927. Matter of Locomotive Finished Material Co., supra, 926-928; Matter of Chicago Casket Co., 21 N. L. R. B. 235, 252-256; Matter of Harry A. Halff, 16 N. L. R. B. 667, 679-682; cf. Matter of Wickwire Brothers, supra. The courts have approved the Board’s practice in this respect. Labor Board v. Phillips Gas & Oil Co., 141 F. 2d 304, 305-6 (C. C.

A. 3); Labor Board v. Hawk & Buck Co., 120 F. 2d 903, 904-5 (C. C. A. 5); Labor Board v. Thompson Products, 130 F. 2d 363, 366-67 (C. C. A. 6); Canyon Corp. v. Labor Board, 128 F. 2d 953, 955-956 (C. C. A. 8); Sperry Gyroscope Co. v. Labor Board, 129 F. 2d 922, 931 (C. C. A. 2). See Warehousemen’s Union v. Labor Board, 121 F. 2d 84, 92-94 (App. D. C.) cert. den. 314 U. S. 674.