Einsohn, Ira D.

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NLRB v. Strong: The Board Versus the Courts and the Arbitration

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SMU Law ReviewVolume 23 | Issue 4 Article 131969NLRB v. Strong: The Board Versus the Courts andthe ArbitrationIra D. EinsohnFollow this and additional works at: https://scholar.smu.edu/smulrThis Case Note is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted for inclusion in SMU Law Reviewby an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu.Recommended CitationIra D. Einsohn, NLRB v. Strong: The Board Versus the Courts and the Arbitration, 23 Sw L.J. 756 (1969)https://scholar.smu.edu/smulr/vol23/iss4/13SOUTHWESTERN LAW JOURNALviding definite guidelines to be followed. 1 Now that Texas is leading thisnew trend, its courts should continue to protect the unwary home buyerand even the innocent neighbor from the defective work of a carelessbuilder-vendor who has been able to hide behind the outdated doctrine ofcaveat emptor too long.Clyde R. WhiteNLRB v. Strong: The Board Versus the Courts and ArbitrationRespondent sought to withdraw from a multi-employer bargaining as-sociation five days after the effective date of an agreement negotiated onhis behalf.' He refused repeated demands from the union that he sign thecontract. The National Labor Relations Board found that his refusal tosign the contract was an unfair labor practice in violation of sections 8 (a)(1) and 8 (a) (5) of the National Labor Relations Act.' The Board orderedrespondent to sign the contract, cease and desist from unfair labor prac-tices, post notices, and pay any back fringe benefits provided for in thecontract.' The court of appeals' refused to enforce that part of the Board'sorder requiring payment of back fringe benefits.' Held, reversed: When anemployer repudiates a contract negotiated by his bargaining association,the NLRB's remedies may include an order to pay back fringe benefitsdue under the contract. NLRB v. Strong, 393 U.S. 357 (1969).I. LANGUAGE vs. LEGISLATIVE HISTORYConfusion exists in determining the NLRB's power to provide a com-plete remedy for an unfair labor practice when the remedy requires theenforcement by the Board of collective bargaining contract provisions. Thestatutory language grants the Board broad powers to provide relief, while" See Bearman, Caveat Emptor in Sales of Realty-Recent Assaults Upon the Rule, 14 VAND.L. REv. 541, 576-78 (1961).' Respondent Strong was a regular member of the Roofing Contractors Association of SouthernCalifornia. The Association's bylaws provided: "Any . . . labor contract negotiated . . . shall bebinding upon the regular members of this Association separately and collectively." On August 14,1963, the Association and the Union (Roofers Local 36, United Slate, Tile and Composition Roof-ers, Damp and Waterproof Workers Association) agreed on a new four-year contract, to be effectiveAugust 15, 1963.On August 20, 1963, Strong wrote to a grievance board composed of contractor and Unionrepresentatives, requesting termination of the contract and the refund of his security deposit. InSeptember 1963, Strong asked the Association to change his status to that of an associate con-tractor not covered by the Association's collective bargaining agreement. He continued, however,to pay regular member's dues until December 1963, and also paid fringe benefits in September andOctober of 1963.2 29 U.S.C. §§ 158(a) (1), (5) (1964). "It shall be an unfair labor practice for an employer-(I) to interfere with, restrain or coerce employees in the exercise of the rights guaranteed insection 157 of this title; ....(5) to refuse to bargain collectively with the representatives of his employees .... "8In re Strong, 152 N.L.R.B. 14 (1965).4NLRB v. Strong, 386 F.2d 929 (9th Cir. 1967).s That part of the order, the court said, "is an order to respondent to carry out provisions ofthe contract and is beyond the power of the Board." Id. at 933.[Vol. 231969] NOTESthe legislative history of the statute indicates congressional intent to limitsuch power. The NLRB's authority to fashion remedies for unfair laborpractices rests on section 10(c) of the National Labor Relations Act,'which empowers the Board, upon finding an unfair labor practice, to orderthe guilty party "to take such affirmative action including reinstatementof employees with or without back pay as will effectuate the policies ofthis subchapter."' The NLRA also states that the Board's authority is not"affected by any other means of adjustment or prevention that has beenor may be established by agreement, law, or otherwise . . . ," The UnitedStates Supreme Court has repeatedly emphasized the breadth of the Board'spower to fashion remedies." In addition, the Court has said that the Board'sremedy should put the parties where they would have been "but for" theunfair labor practice." In light of these considerations the Board has actedin many cases to remedy unfair labor practices which were also breaches ofcontract. Often it has provided for the compensation reserved by the con-tract.1 Of course, the Act specifically provides for back pay as a Boardremedy, but the Board has defined "back pay" rather broadly."Despite the breadth of the Board's power under 10 (c)," legislative in-tent and several Supreme Court decisions indicate that the jurisdiction ofthe Board does not displace that of arbitrators and the courts in interpretingand enforcing collective bargaining agreements. The legislative history629 U.S.C. § 160(c) (1964).I d .8 National Labor Relations Act S 10(a), 29 U.S.C. § 160(a) (1964). However, clear limita-tions on the Board's power to adjudicate unfair labor practices have developed: The action mustbe remedial rather than punitive. Consolidated Edison v. NLRB, 305 U.S. 197 (1938). See alsoRepublic Steel Corp. v. NLRB, 311 U.S. 7 (1940). Also, the action must be appropriate to theparticular situation confronting the Board at the time. See NLRB v. Bradford Dyeing Ass'n, 310U.S. 318 (1940).'See Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 216 (1964) (employer orderedto resume maintenance work "contracted out" without bargaining with the union, and to re-instate affected employees with back pay); International Ladies' Garment Workers' Union v.NLRB, 366 U.S. 731 (1961) (employer ordered to withdraw recognition from union that lackedmajority when originally recognized, and to cease giving effect to collective bargaining agreementexecuted with that union after it had secured majority); Frank Bros. v. NLRB, 321 U.S. 702(1944) (employer ordered to bargain with union, notwithstanding its loss of majority, wheresuch loss was attributable to employer's unfair labor practices); Virginia Elec. & Power Co. v.NLRB, 319 U.S. 533 (1943) (dues paid to employer-dominated union reimbursed to employeesfrom whose wages they had been withheld under closed-shop, checkoff arrangements); NationalLicorice Co. v. NLRB, 309 U.S. 350 (1940) (employer ordered to cease giving effect to in-dividual contracts secured through unfair labor practices, and to notify employees they werereleased from obligations imposed by those contracts); NLRB v. Newport News Shipbuilding &Dry Dock Co., 308 U.S. 241 (1939) (disestablishment ordered of labor organization in whoseformation employer had unlawfully interfered)."Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941)."See NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967); Mastro Plastics Corp. v.NLRB, 350 U.S. 270 (1956); Wallace Corp. v. NLRB, 323 U.S. 248 (1944).2In NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967) the Board included vacationbenefits in its definition of "back pay." The Board has also included in its orders to reinstatewith back pay: tips (Club Troika, Inc., 2 N.L.R.B. 90 (1936)); Christmas gifts (Moss PlanningMill Co., 110 N.L.R.B. 933 (1954), enforcement denied on other grounds, NLRB v. Moss Plan-ning Mill Co., 224 F.2d 702 (4th Cir. 1955)); shift differentials (Brown & Root, Inc., 132N.L.R.B. 486 (1961), enforced, NLRB v. Brown & Root, Inc., 311 F.2d 447 (8th Cir. 1963));safety awards (Miami Coca-Cola Bottling Co., 151 N.L.R.B. 1701 (1965), remanded on othergrounds, NLRB v. Miami Coca-Cola Bottling Co., 360 F.2d 569 (5th Cir. 1966)); and bonuses(International Trailer Co., 150 N.L.R.B. 1205 (1965)). If back pay is required, the NLRB hasthe power to compute it. See Nathanson v. NLRB, 344 U.S. 25 (1952); Note, A Survey of LaborRemedies, 54 VA. L. REv. 38 (1968)."2 National Labor Relations Act § 10(c), 29 U.S.C. § 160(c) (1964).SOUTHWESTERN LAW JOURNALbehind section 301 of the Taft-Hartley Act'4 indicates a preference forforums other than the Board for adjudication of contract disputes. Theearly version of the bill passed by the Senate in 1947 contained a provi-sion which called for the inclusion of breach of contract among the unfairlabor practices subject to the jurisdiction of the NLRB.'" In conference,however, this provision was dropped in favor of contract enforcement bythe usual processes of law rather than the NLRB.'"The congressional preference of submitting contract disputes to thecourts and arbitration has been given substantial weight by the federalcourts. In NLRB v. American National Insurance Co. " the Supreme Courtrefused to enforce a Board order directing the employer to refrain frominsisting on a broad management relations clause in a collective bargainingagreement. The Court said that the "Board may not, either directly or in-directly, compel concessions or otherwise sit in judgment upon the sub-stantive terms of collective bargaining agreements."'" In Textile Workersv. Lincoln Mills" the Supreme Court said that industrial peace can best beserved by enforcement of collective bargaining agreements in the courts."While the courts are felt to be a preferred forum for contract disputes,labor arbitrators are considered best equipped to handle the industrial com-mon law lying behind such agreements.' However, despite the preferenceshown to arbitrators and the courts the remedies available in each forumare considered cumulative, not exclusive.2'The difficult question is the scope of the Board's remedial powers whenthe unfair labor practice involves repudiation of the contract and thus is aviolation of section 8 (a) (5).'s The Supreme Court dealt with the problemof a breach of a collective bargaining agreement by repudiation in H.J.Heinz Co. v. NLRB. 4 There the Court enforced a Board order requiring anemployer to sign a written contract embodying agreed-upon terms.2' In"4Labor Management Relations Act, 29 U.S.C. § 185 (1964).'5S. 1126, 80th Cong., 1st Sess. §§ 8(a) (6), (b) (5) (1947)."H.R. CONF. REP. No. 510, 80th Cong., 1st Sess. 42 (1947). For further discussion, seeDowd Box Co. v. Courtney, 368 U.S. 502, 505-12 (1962).17343 U.S. 395 (1952).18 Id. at 404."9353 U.S. 448 (1957).'Old. at 455."' United Steelworkers Union v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960).As between the courts and arbitration, legislation and court decisions point to a preferencefor the method agreed upon by the parties. Labor Management Relations Act § 203 (d), 29 U.S.C.§ 173(d) (1964): "Final adjustment by a method agreed upon by the parties is declared to bethe desirable method for settlement of grievance disputes arising over the application or inter-pretation of an existing collective-bargaining agreement."In John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964), and the Steelworkers Trilogy[United Steelworkers Union v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960); UnitedSteelworkers Union v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); United Steel-workers Union v. American Mfg. Co., 363 U.S. 564 (1960)] the Supreme Court emphasizedthat the "preference of national labor policy for arbitration as a substitute for tests of strengthbetween contending forces could be overcome only if other considerations compellingly so de-manded." John Wiley & Sons, sufpra at 549-50."Carey v. Westinghouse Elec. Corp., 375 U.S. 261 (1967); Smith v. Evening News Ass'n,371 U.S. 195 (1962); Teamsters Local 174 v. Lucas Flour, 369 U.S. 95 (1962).aNational Labor Relations Act, 29 U.S.C. § 158(a)(5) (1964).24311 U.S. 514 (1941)."Id. at 526. The Court held that a refusal to sign was in violation of § 8(a) (5) of the Na-tional Labor Relations Act, 29 U.S.C. § 158(a)(5) (1964), and that the remedy was authorizedby § 10(c) of the Act, 29 U.S.C. § 160(c) (1964).[Vol. 23NOTES1965 the Ninth Circuit enforced a similar order, requiring the employer tohonor the contract.5 In doing so, it clarified what it meant by "honor":Read in this light, the word 'honor' has the limited role of placing theparties, with reference to the contract, back in the position which they occu-pied prior to the breach. It does not mean that specific performance wasdecreed .... Nor is it an adjudication as to the validity of any or all of thecontract provisions."In other words, "honor" meant simply to sign the contract. This was asfar as the Board had gone until it decided Schill Steel Products, Inc. 8 In-stead of merely ordering the employer to sign the contract, the Boardordered the employer to reimburse employees for the loss of any benefitsplus interest which would have accrued to them under the contract whichthe employer had refused to sign."9 The Board's decision in Schill Steelwent unchallenged and was not appealed to the courts.II. NLRB v. STRONGThe United States Supreme Court in NLRB v. Strong' approved theBoard's assertion of its authority to order payment of back fringe bene-fits in a refusal to bargain situation. While recognizing the overlappingregimes of the Board and the courts in contract disputes and the preferencehistorically given the courts and arbitrators in such disputes, the Court rea-soned that it was necessary to interpret and give effect to the terms of thecontract in order to remedy this particular unfair labor practice. The Courtrelied on the broad language of section 10 (c) of the National Labor Rela-tions Act"' and its own language and decisions in Phelps Dodge Corp. v.NLRB"2 and NLRB v. C & C Plywood." The Court also added that thisremedy was appropriate since the "employer refused to recognize the veryexistence of the contract providing for the very arbitration on which henow insists."'4Notwithstanding the broad language of section 10 (c) the Court inStrong has removed a significant restraint upon the remedial powers of theBoard. The same language has previously been before the Court in similarsituations, but the Court has never gone beyond ordering the employer tohonor the contract. Although the workers were made whole in PhelpsDodge, the unfair labor practice there was a refusal to hire because ofunion affiliation. To remedy this the Court enforced a Board order requir-ing an offer of employment plus payment of losses suffered as a result of the26NLRB v. Hyde, 339 F.2d 568 (9th Cir. 1965).27 Id. at 572-73.28 161 N.L.R.B. 939 (1966).2"id. at 941.30393 U.S. 357 (1969)."'29 U.S.C. § 160(c) (1964).32 313 U.S. 177 (1941)." 385 U.S. 421 (1967).24 NLRB v. Strong, 393 U.S. 357, 361 (1969).35 See notes 26-29 supra, and accompanying text.36313 U.S. 177 (1941).1969]SOUTHWESTERN LAW JOURNALunfair labor practice." In C &q C Plywood8 the Court agreed that it wasnecessary for the Board to interpret a contract to discover that the em-ployer's unilateral institution of a premium-pay plan was not authorizedand thus was an unfair labor practice."3  But the Board there went only asfar as issuing a cease and desist order. 0The Board and the Court in C & C Plywood could not have closed theireyes to the contract and still have remedied the unfair labor practice. It wasnot necessary, however, for the Board or Court in Strong to interpret anyof the specific terms of the contract to remedy the refusal to bargain.They needed only to recognize the existence of the contract and to orderStrong to honor it. Such a decision would not have denied the employees achance of recovery of back fringe benefits. They still could have beenmade whole by submitting the matter to arbitration, as provided in thecontract, or to the courts. Such a course has heretofore been the preferredmethod of effectuating the policies of the Act.III. CONCLUSIONThe Strong decision raises significant questions as to the Board's innova-tive use of its section 10 (c) powers. By not deferring jurisdiction on thematter of back fringe benefits to the courts or arbitration, the Board andthe Court swept away much of the legislative and common law preferencefor these forums in matters of contract interpretation and enforcement.The language of the Act indicates that the Board has always had the powerto reach such a decision. Whether it was because of a feeling that the courtsand arbitrators were better equipped to handle these matters, or becauseit felt that any extension of its power into this area would not be supportedby the courts, the Board exercised restraint. But it asserted its power inStrong and the Supreme Court concurred.Possibly the Board's powers were expanded in the interest of efficiency.By making a full determination of all issues before it, the Board can savethe parties the time and expense of arbitration or a lawsuit. This rationalewould be easier to justify if not for the long history of recognition of ju-dicial and arbitral expertise in this area. By continued innovative use of itssection 10(c) powers there is a danger that the Board will become theprimary forum for labor contract disputes, compelling concessions, andotherwise sitting in judgment upon substantive terms of collective bar-gaining agreements."' This cannot be justified, and hopefully the SupremeCourt will not be so receptive of such Board actions.Ira D. Einsohn7id. at 194.338 5 U.S. 421 (1967).81 Id. at 428.4 0 Id. at 429.41 This was expressly forbidden by the Supreme Court in NLRB v. American Nat'l Ins. Co.,343 U.S. 395, 404 (1952). See Notes 17, 18 supra, and accompanying text.[Vol. 23

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