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Edward G. Budd Mfg. Co. v. National Labor Relations Board.

September 7, 1943


On petition to Review the Order of the Natinal Labor Relations Board.

Author: Biggs

Before BIGGS, MARIS, and GOODRICH, Circuit Judges.

BIGGS, Circuit Judge.

On charges filed by International Union, United Automobile, Aircraft and Agricultural Workers of America, an affiliate of the Congress of Industrial Organizations, with the National Labor Relations Board, a complaint issued dated November 26, 1941, alleging that the petitioner was engaging in unfair labor practices within the meaning of Section 8(1), (2), (3) of the National Labor Relations Act, 49 Stat. 449, 29 U.S.C.A. ยง 158(1), (2), (3). The complaint, as subsequently amended, alleges that the petitioner, in September, 1933, created and foisted a labor organization, known as the Budd Employee Representation Association, upon its employees and thereafter contributed financial support to the Association and dominated its activities. The amended complaint also alleges that in July, 1941, the petitioner discharged an employee, Walter Weigand, because of his activities on behalf of the union, and in October of that year refused to reinstate another employee, Milton Davis, for similar reasons.*fn1 The petitioner denies these charges as does the Association which was permitted to intervene. After extensive hearings before a trial examiner the Board on June 10, 1942 issued its decision and order, requiring the disestablishment of the Association and the reinstatement of Weigand and Davis.

Until the creation of the Association in 1933 no labor organization had existed in the petitioner's Philadelphia plant. Upon the passage of the National Industrial Recovery Act of June 16, 1933, 48 Stat. 195, some of the petitioner's employees desired to form a labor organization. Alminde, who worked in the petitioner's shipping department, tried to get a charter from the American Federation of Labor for a union to be composed of shipping department employees. This was refused. Thereupon he and some other members of the shipping department decided to form a labor organization. To facilitate this purpose Alminde went to Sullivan who was an assistant works-manager and requested a meeting with Harder, the works-manager. On August 24, 1933, Sullivan, Harder, McIlvain, the chief personnel officer, and Mahan, another assistant works-manager, met with Alminde and his committee from the petitioner's shipping department. At Alminde's request Sullivan produced a plan for employees representation which with some substantial modifications remains in effect today. Sullivan read the plan to Alminde and the other employees present, who felt, to use Alminde's words " * * * that they hadn't heard anything new, that in principle it was practically what they had in mind all the time, * * * ." After some discussion, conducted by the employees in the absence of the management representatives, Alminde on behalf of his committee requested the management group to prepare and present a plan similar to that read by Sullivan to all employees and suggested also that an election be held for the purpose of electing representatives under the plan.

A notice of the proposal was posted in the plant on September 1, 1933.*fn2 On September 5th the management caused to be placed in the time card rack of each employee the following: a pamphlet entitled "Proposed Plan of Employee Representation", a folder entitled "Preliminary Announcement of the Establishment of a Budd Employee Representation Association"*fn3 signed by President Edward G. Budd, and a ballot to be used for nominating employee representatives. On September 7th the election was held and nineteen employee representatives were elected. The expenses of this election were paid by the petitioner and it was held on company time and on company property.

The plan provided a method according to which the representatives should represent their constituents, the workmen, and divided the plant geographically into eleven election districts. Each of these elected representatives. The plan provided that all workmen who had been on the payroll for ninety days might vote for representatives and that any employee (save the supervisory employees) who was at least twenty-one years of age and had been employed for a period of a year, was entitled to stand for election as a representative. The representatives were to vacate their offices upon becoming officials, foremen or "leaders" of the company. Five management representatives were appointed by the petitioner and these sat with the employee representatives at meetings, but were not entitled to vote except on amendments to the plan. A clause of the plan provided that "Any method of procedure" set out in the plan could be amended at any time by a vote of a majority of the employee representatives with the concurrence of a majority of the management representatives.*fn4 Numerous committees were set up and these negotiated with the management in respect to wages, grievances and conditions of employment. The company paid $2 to each representative per month for attending meetings of the representatives.

The Association was in fact considered to be composed of all the workmen at the petitioner's Philadelphia plant. The representatives elected officers for the Association precisely as if they had been a board of directors electing officers for a corporation. There was no formal enrollment of members in the Association by membership applications and no dues. The plan contained no specific provision that the representatives should serve as a collective bargaining agency for the employees.

We think that the Board was entitled to assume as it has that the plan was put into operation on September 11, 1933, when, following the election of employee representatives on September 9th, an organization meeting was held by the employee representatives and the management representatives. After introductions the management representatives left the conference. Alminde was elected the first chairman of the Association.

Meetings of the representatives were held from time to time; the committees which had been appointed functioned actively. The management adopted a most cooperative attitude toward the Associatioin. This was to be expected. What had happened was that the management had found a group of its own employees who desired to create a labor organization and the company had soponsored and created the Association at their request. The petitioner's attitude toward its employees seems to have been one of friendly interest. Nevertheless, we entertain no doubt that the plan and the Association were in fact sponsored, largely created and supported by the petitioner. The Association could not have continued to exist had the Budd Company withdrawn its support.

The relations of the petitioner and its employees were disrupted to some extent when on November 13, 1933, a union affiliated with American Federation of Labor called a strike at the Philadelphia plant. About 15% of the petitioner's employees went out on this strike which was ineffective. It had happened, however, that the union had filed charges with the National Recovery Administration stating that the Association was dominated by the petitioner. On February 11, 1934, Chairman William H. Davis of the Natioinal Recovery Administration Compliance Board, came to Philadelphia and had a meeting with the employee representatives. On the advice of Mr. Davis certain changes were made in the plan. We shall not refer to all of them. The changes which were of some consequence follow. A representative might retain his status despite promotion to the position of a foreman or leader. The requirement of twelve months' previous employment in the plant in order to be eligible for election as a representative was stricken out. The Association and not the petitioner was required to provide a suitable place for the annual elections for representatives. The provision for management representatives to sit at meetings was changed so that the management representatives should attend meetings only at the request of employee representatives. The provision for the payment by the petitioner of $2 a month to representatives for attending meetings was done away with. The provision relating to amendments was itself amended to result in the confusing provisions set out below.*fn5

The plan as changed met with the approval of the Director of the National Compliance Board and was submitted in printed form to the employees. An election was scheduled for March 1, 1934 and preparation for conducting it were made by the Compliance Board. The AFL union was included as a candidate on the ballot. The holding of the election was postponed until March 9 at the request of Chairman Davis. On the evening of March 8th the National Recovery Administrator communicating with the employee representatives through the medium of the petitioner's attorney, requested that the election be postponed in order that questions relating to eligibility of voters which had been raised by the union affiliated with the AFL, might be settled. Despite this request the election was proceeded with. It was discovered that no provision had been made for election officers or tellers (vice those which were to have been supplied by the Compliance Board) and the petitioner, at the request of the employee representatives, hired and paid the accounting firm of Price, Waterhouse & Company to conduct the election.The election, which was held on company property, resulted in 3,152 votes being cast for the Association and approximately 1,995 votes being cast for the AFL union. The employees who were out on strike did not vote. The National Recovery Administration thereupon ordered another election to be held on March 20th at Pulaski Hall, but the AFL union picketed this election and very few employees voted at it.

We do not attach much significance to the fact that the election of March 9th was held despite the request of the National Recovery Administration that it be postponed. We do not doubt that this election was conducted honestly. We cannot agree, however, with the contention of the petitioner that the changes effected in the plan and the holding of the election of March 9 were sufficient to create that clean break, that "line of cleavage", required between an old union and the new in order that the new union may be considered to be free of company domination. National Labor Relations Board v. Newport News Shipbuilding & Dry Dock Co., 308 U.S. 241, 250, 60 S. Ct. 203, 84 L. Ed. 219; National Labor Relations Board v. Condenser Corp., 3 Cir., 128 F.2d 67, 73; National Labor Relations Board v. Baldwin Locomotive Works, 3 Cir., 128 F.2d 39, 49; National Labor Relations Board v. McLain Fire Brick Co., 3 Cir., 128 F.2d 393, 394; Roebling Employees Ass'n v. National Labor Relations Board, 3 Cir., 120 F.2d 289, 295, 296.Nor can we conclude that anything which transpired since March 9, 1934 constituted the break required by the National Labor Relations Act.The evidence looks the other way.

The subsequent history of the Association must be stated briefly The payment by the petitioner of employee representatives for attending meetings should have ceased on the adoption of the 1934 plan, but probably did not come to an end in fact until early in 1935. See the testimony of Alminde, p. 186a. None of the plans subsequent to the 1934 plan was submitted directly to the rank and file membership of the plant for their approval or disapproval by ballot or otherwise. None of the plans ever contained any provision for the payment of dues. The petitioner in fact did not pay any expenses of election after 1934. The Association raised funds by employee dances and beer parties until an agreement was made in 1937 for the allocation to it of a portion of the income of the Employees' Exchange to the Association. The Employees' Exchange had come into existence as a benevolent association to help the petitioner's employees during the depression. It had loaned money to the petitioner's employees without interest and had distributed parcels of food. Operating as a concessionaire on the petitioner's premises, the Exchange, then unincorporated, sold candy and tobacco to the petitioner's employees. In 1937 the Exchange was not meeting its expenses, apparently due to a withdrawal of patronage by the employees. It was suggested to Desing, the head of the Exchange and one of the petitioner's personnel directors, by one of the employee representatives that the employees would support the Exchange if the Exchange would in turn support the Association. The Exchange agreed to pay the Association (under the 1937 agreement) 50% of all profits up to $3,000 and 60% of all profits over $3,000. The petitioner was a party to some of the contracts between the Association and the Exchange. The sums received by the Association from its agreement with the Exchange were more than ...

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