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National Labor Relations Board v. Hershey Chocolate Corp.

December 1, 1961


Author: Mclaughlin

Before GOODRICH, MCLAUGHLIN and HASTIE, Circuit Judges.

MCLAUGHLIN, C.J.: The Board held that Local 464, American Bakery and Confectionery Workers International Union, AFL-CIO (ABC Local 464) was not the successor union to Local 464, Bakery and Confectionery Workers International Union of America (BCW Local 464). Consequently, said the Board, the attempt by ABC 464 to enforce the employment agreement maintenance of membership clause through the employer was unfair labor practice. ABC Local 464 was ordered to desist from that practice and reimburse the employees who had paid union dues as a result of the local's action.

The Board's order is based on the theory that ABC Local 464 is not the continuing identity of BCW Local 464. Accordingly the Board held that employees who had originally joined the BCW local did not automatically become members of the ABC local. Therefore the Board, refusing to accept the Arbitrator's decision to the contrary, found ABC Local had been guilty of unfair labor practice in requiring that all members of Local 464 maintain themselves in good standing through paying their dues to ABC Local 464. Factually, the Board's position is impossible to accept from the record.

In December 1957 Local 464, Bakery and Confectionery Workers International Union of America was the bargaining representative of the Hershey production and maintenance employees. An employment contract was in being which had as its expiring date December 31, 1958. On or about December 11, 1957 the International was expelled from the AFL-CIO because of internal corruption. Immediately thereafter the AFL-CIO chartered a new international union, American Bakery and Confectionery Workers International Union, AFL-CIO. On the 17th of the same month the BCW Local 464 executive board, with one dissent, voted to call a special membership meeting to consider the adoption of a resolution to disaffiliate from BCW and affiliate with ABC. Notice of the meeting for December 28th was mailed the members of the Local. The notice stated specifically that questions of disaffiliation, affiliation, disposition of assets and status of collective bargaining agreements would be considered. At the meeting, after a review of the pertinent events and discussion, the membership by a vote of 829 to 1*fn1 adopted a resolution to disaffilate from BCW; to affiliate with ABC; to transfer all property and contract rights from BCW Local 464 to ABC Local 464; to continue all present officers as officers of ABC Local 464 and otherwise to function as before with only those changes as were necessitated by the shift in affiliation. The resolution stated the reasons for the local's action were (1) the expulsion of BCW from AFL-CIO and (2): "the notoriety and stigmas of dishonesty and unethical dealings which have attached to certain officials of the present International and to the International itself, as an organization." The local's request to ABC International for a charter was granted December 30, 1957. That day it advised Hershey of its change in affiliation, of its intention to maintain the preexisting contractual relationship and that it expected the employer to do the same.

At the time the local left the BCW International Union there were about 2,800 employees in the Hershey unit involved. Two thousand of these were members of the local and of that number, 1,700 had authorized checkoffs. After ABC Local 464 took over, about 1,350 employees executed new checkoff authorizations in its favor.All the old officers and executive board members except one and about 90 out of 92 departmental representatives continued in office. ABC 464 assumed administration of the employment contract and, except for dues involved in state court litigation being held in escrow by Hershey, as the Board itself found "* * * the change in affiliation has apparently produced no change in the bargaining relationship with the Employer." The same bargaining relation between Hershey and ABC 464 continued but because the old international union, Bakery and Confectionery Workers, asserted a claim to represent the employees, Hershey filed a representation petition. The Board first held hearings on the particular problem. Later, as various disaffiliation situations nation-wide arose from the corruption findings concerning the BCW International, the Board had a special hearing in order to formulize rules for general use. Applying these to its Hershey case the Board, on September 18, 1958, found that a schism had taken place within the local. It directed that there be an election.The latter was held October 14, 1958 and ABC Local 464 won by a four to one margin. The Board certified the local as bargaining representative on October 22, 1958. The next day the local and the employer by agreement accepted and assumed the terms of the March 26, 1957 employment contract. Since then down to the present time ABC Local 464 and Hershey have functioned on collective bargaining in the same manner as since the inception of Local 464. Thereafter there were no intra local membership difficulties except that the employees named in the Board's decision of December 29, 1960 now before us, did nothing. There was no contention by them that ABC Local 464 was not a continuation of the original local in which they held membership. They simply did not pay the union dues for November and December 1958 despite requests for payment. This practice dragged over into 1959. Finally the union, in accordance with the union security clause in the employment contract, asked Hershey to discharge the employees in question. Hershey refused and under the contract the dispute was submitted to arbitration.

Dr. William B. Loucks was chosen arbitrator in February of 1959. After a full hearing, briefs, etc., on July 13, 1959 he filed a sixty page Decision and Opinion. From an exhaustive study of the exhibits and testimony with respect to the continuity of Local 464 the Arbitrator held:

"There can be no question about the purpose or intent of the membership action in adopting this resolution on December 28, 1957. Clearly, it was to make one, and only one, change in Local 464 - its International affiliation, along with whatever changes in 'internal structure,' 'rules,' 'regulations,' and 'procedures' were inherently necessary as a part of this change in International affiliation of the Local. The transfer of 'all property (real, personal and intangible), assets, funds and things of any value held in the name of Local 464' to Local 464, ABC, should be noted in particular. This phraseology of the resolution, in the opinion of the Arbitrator, is to be interpreted as including an intent to have the Local 464 (as affiliated with BCW) property right, or asset, inhering in the dues collections which were a part of Paragraph 6(a) of the Agreement then in effect between the Union and the Company, transferred without diminution, or infringement, or weakening in any way, to Local 464 (as affiliated with ABC).

"This intent on the part of the Local Union to have its switch in International affiliation mean just that, and that only, is further illustrated by the letter sent by its Counsel to the Company under date of December 30, 1957. (Union Exhibit :7). In this letter it was stated as follows: 'Local 464 is continuing in exactly the same manner as it has functioned hitherto with the exception of the change of International affiliation. We do not deem this as affecting in any way our relationship with you . . . We will continue to live up to our contract responsibilities and obligations and trust that you will do the same with the Local under this new affiliation. The change of International affiliation is no more than that. It is not intended to have any effect upon our contractual relationship nor upon your obligation to submit check off monies to Local 464.'

"There is no doubt in the Arbitrator's mind that it was the intent of Local 464, concurred in either actively or passively by the overwhelming majority of the members of Local 464, BCW, and that it was the intent of the Company, that Local 464's change in international affiliation should mean nothing other than just that - that everything in the Agreement made March 26, 1957, should stay precisely as it had been, including the maintenance of membership obligation upon all individual Union members. It was their mutual intent that Local 464, ABC, should perform all obligations formerly adhering to Local 464, BCW, and should possess all of the contractual rights and privileges formerly possessed by Local 464, BCW, in the same degree as would have been the case had Local 464, ABC, been the original signatory to the Agreement of March 26, 1957. The rights of the Local Union and the Company to have this intent completely effectuated without hindrance, restriction, or dilution, in the opinion of the Arbitrator, originates in the following fact fully supported by the testimony and exhibits before the Arbitrator: The negotiation and union administration of the Agreements prior to disaffiliation had always been by Local 464, BCW, without any aid, direction, or guidance from the BCW International Union."

"The Arbitrator's conclusions on the matters of the Local Union intent, the Company intent, and the intents of the individual employees involved, clearly add up to an over-all conclusion that Local 464, ABC, functioning as a party to the current Agreement at the time of the hearing, was in fact the same Union entity which was so functioning prior to the disaffiliation action of December 28, 1957."

As to evidence of the reality of a BCW Local after disaffiliation, the Arbitrator held:

"It is the considered opinion of the Arbitrator, on the basis of all of the evidence before him, that a Local 464, BCW, was maintained subsequent to December 28, 1957, on a paper or phantom basis, without substance, and solely by the International BCW as an outpost in Hershey. There is no convincing evidence before the Arbitrator indicating that a Local 464, BCW, in any realistic sense of the term existed in Hershey during that period, or that whatever so-called Local 464, BCW, did officially exist there was prepared to carry the Union obligations under, or administer the terms of, the Agreement then in effect."

"For these reasons the Arbitrator rejects the contention that there was a bona fide Local 464, BCW, existing and functioning in Hershey during the period immediately following the disaffiliation meeting of December 28, 1957. Since such a Union cannot as a fact be found to have been in existence, it is impossible to accept the contention that, subsequent to December 28, 1957, the maintenance of membership obligation as a condition of employment, under Paragraph 6(a) of the Agreement, was to that Local Union and therefore could not be to Local 464, ABC, as the Union party to this case insists. Since this argument is, in the opinion of the Arbitrator, not supported by the facts, there ...

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