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Vesuvius Crucible Co. v. National Labor Relations Board

decided: November 30, 1981.



Before Seitz, Chief Judge, and Adams and Garth, Circuit Judges.

Author: Adams


In this appeal, Vesuvius Crucible Company petitions for review of a final order of the National Labor Relations Board and the Board cross-petitions for enforcement of its order. The Board determined that the employer violated sections 8(a)(1) and (3) of the National Labor Relations Act when it refused to pay accrued vacation benefits to its striking employees. Because we conclude that there is insufficient evidence in the record to support the Board's decision, we grant the petition for review and decline to enforce the order.


Vesuvius Crucible Company is a steel manufacturer with a facility located in Swissvale, Pennsylvania. For many years, Local 3730 of the United Steelworkers Union has represented the company's production and maintenance employees. The two parties have executed a number of collective bargaining agreements; the agreement at issue in this case extended from November 2, 1973 to October 31, 1976.

During September and October of 1976, the union and the company began negotiations for a new collective bargaining contract. When no agreement was reached prior to the October 31, 1976 expiration date, the union commenced a strike, which lasted until July 11, 1979.

On June 28, 1977, the union requested that the company pay accrued vacation benefits, based on work done for the ten months before the strike, to all eligible employees. The request, made pursuant to Section VII of the 1973-1976 agreement,*fn1 coincided with the customary date of the company's annual plant shutdown. At that time all eligible employees normally would have received at least a portion of their vacation pay, in accordance with the company's requirement that vacations be scheduled during the shutdown.

The company refused to grant the union's request. In a letter dated June 28, 1977, the company's counsel wrote to Caleb Scott, the union staff representative:

We have carefully reviewed Section VII of the 1973-76 Labor Agreement and have concluded that no vacation pay is yet due to any Vesuvius Bargaining Unit employee.

Section VII, B-1 reads as follows:

"1. An eligible employee who has attained the years of continuous service indicated in the following table in any calendar year, on the anniversary of his employment with the Company, during the term of this Agreement shall receive a vacation corresponding to such years of continuous service as shown in the following table: ..."

As we interpret this Section there was vacation due for the three years which constituted the "term of this agreement." Unless and until a new agreement is reached specifying terms and conditions for vacation during its term, I do not believe that any payment is required.

Joint Appendix at 225.

On September 13, 1977, the union filed a charge with the NLRB, alleging that the refusal by Vesuvius to pay the vacation benefits in question violated sections 8(a)(1) and (3) of the National Labor Relations Act, 29 U.S.C. ยงยง 158(a)(1), (3) (1976).*fn2 After the NLRB issued a complaint, Vesuvius moved for deferral to arbitration. It argued that the determination of the validity of the union's claim for vacation benefits involved the interpretation of the expired 1973-1976 collective bargaining agreement, and that the parties were bound by Section X of that agreement to arbitrate disputes concerning "the interpretation or application of, or compliance with, the provisions of this Agreement." The company's motion was denied.

After a hearing, the presiding administrative law judge found that vacation benefits had not accrued and that therefore Vesuvius had violated neither sections 8(a)(1) nor (3). In a footnote, the administrative law judge noted that a "similar conclusion follows from the conclusion that the vacation pay obligation, even if it could be said to have accrued, was impossible of calculation in the absence of a new agreement." Joint Appendix at 331-32.

The Board disagreed. Finding that the employees' right to 1977 vacation benefits had accrued on the basis of work performed in the first ten months of 1976, the Board concluded that the company had violated sections 8(a)(1) and (3) of the Act. It ordered Vesuvius to "cease and desist" from the unfair labor practices found; to grant accrued vacation pay, plus interest, in accordance with the 1973-1976 agreement, to those striking employees who had worked in 1976; to make its payroll records available to the Board for determination of amounts due; and to post appropriate notices.

After the Board denied the company's motion to reconsider its decision, Vesuvius filed a petition for review in this Court. Shortly thereafter, the Board filed a cross-petition for enforcement of its order.


In its brief filed with this Court, Vesuvius challenged both the merits of the NLRB decision and the failure of the Board to defer to arbitration. At oral argument, however, the parties informed the Court that vacation benefits for the time period in question eventually were awarded under the new 1979 contract. This effectively moots the deferral issue, as no arbitrable dispute now remains. We nonetheless are left with the question whether the refusal of the company to pay the benefits when they were first requested, in June of 1977, itself constituted an unfair labor practice under the Act.

Our analysis begins with the Supreme Court's decision in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 87 S. Ct. 1792, 18 L. Ed. 2d 1027 (1967). There, the employer refused to pay vacation benefits to strikers-while continuing to pay such benefits to non-strikers-because it asserted "that all contractual obligations had been terminated by the strike and, therefore, none of the company's employees had a right to vacation pay." Id. at 29, 87 S. Ct. at 1795. The Court declared that this was "discrimination in its simplest form." Id. at 32, 87 S. Ct. at 1796. It then outlined the following principles:

First, if it can reasonably be concluded that the employer's discriminatory conduct was "inherently destructive" of important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on employee rights is "comparatively slight," an antiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct. Thus, in either situation, once it has been proved that the employer engaged in discriminatory conduct which could have ...

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