Redcaps Cases and Dishworkers Union v. National Labor Relations Board Briefs
Public Court Documents
January 1, 1940 - January 1, 1944
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Brief Collection, LDF Court Filings. Redcaps Cases and Dishworkers Union v. National Labor Relations Board Briefs, 1940. 0cfd6178-ca9a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/b34c8e82-eb54-4ca7-8c30-6ef2a21eafd1/redcaps-cases-and-dishworkers-union-v-national-labor-relations-board-briefs. Accessed July 30, 2025.
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October T erm, 19M
T he W allace Corporation, petitioner
v.
N ational L abor R elations B oard
R ichwood Clothespin & D ish W orkers’ U nion,
PETITIONER
V.
N ational L abor Relations B oard
ON WRITS OF CERTIORARI TO THE UNITED STATES CIRCUIT
COURT OF APPEALS FOR THE FOURTH CIRCUIT
BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD
I N D E X
Page
Opinions below _ ______________________________________________ 1
Jurisdiction__________________________________________________ 2
Questions presented_________ 2
Statute involved_____
Statement____________
Summary of argument________________________________________ 14
Argument:
Introduction__________________________________________________ 16
I. The Board did not abuse its administrative discretion
in considering and basing findings of unfair labor
practices upon petitioner’s entire course of conduct
both before and after the settlement agreements and
certification of the Independent___________________ 19
II. The closed-shop agreement was invalid under Section
8 (3) of the Act because petitioner entered into and
gave effect to the terms of the agreement when it
knew that the Independent intended to refuse mem
bership to employees because they had previously
engaged in activities in behalf of the Union_______ 33
A. The proviso to Section 8 (3) does not counte
nance an encroachment upon the basic
rights the statute guarantees to employ
ees ----------------------------------------------------------- 35
The purpose of the Act______________ 42
The legislative history_______________ 44
Understanding as to the meaning of
the closed-shop____________________ 55
Court decisions______________________ 59
Conclusions_________________________ 63
B. Petitioner violated Section 8 (3) of the Act in
executing the closed-shop agreement and in
discharging employees pursuant thereto. _ 69
III. Petitioner dominated, interfered with, and supported
the Independent in violation of Section 8 (2) and (1)
of the Act__________________ _________________ _ _ 72
Since petitioner dominated, interfered with, and
supported the independent in violation of Sec
tion 8 (2) of the Act, the closed-shop agree
ment was invalid_____________________________ 76
Conclusion___________________________________________________ 78
Appendix A __________________________________________________ 79
Appendix B __________________________________________________ 86
Appendix C ___________________________________________ ______ 117
615265— 44 -1 (I)
^
C
O
II
CITATIONS
Cases: p<lge
Amalgamated Utility Workers v. Consolidated Edison Co.,
309 U. S. 261______________________________ __________ 30
American News Company, Inc., Matter of, 55 N. L. R. B.
1302___________________________________________________ 64
American Smelting & Refining Co. v. National Labor Re
lations Board, 126 F. (2d) 680---------------------------------------- 71
Arbitration between Ford Motor Company and U A W (CIO),
In re, 14 L. R. R. 219________________________________ 66, 117
Bethlehem-Alameda Shipyard, Inc., and Bethlehem Steel
Company, Shipbuilding Division, Alameda Yard, Matter
of, 53 N. L. R. B. 999_________________________________ 67
Brotherhood of Railway and Steamship Clerks et al. v. United
Transport Service Employees of America, 137 F. (2d) 817,
reversed, 320 U. S. 715-------------------------------------------------- 60
Brown v. Spofford, 95 U. S. 474__________________________ 27
Cameron v. International Alliance, etc., 118 N. J. Eq. 11— 38, 64
Canyon Corp. v. National Labor Relations Board, 128 F.
(2d) 953_______________________________________________ 23
Carpenter’s & Joiners Union of America, et al. v. Ritter’s
C afeeta l., 315 U. S. 722.______________________________ 65
Case Co., J . I. v. National Labor Relations Board, 321 U. S.
332________________________________________________ 60, 65, 71
Chicago Casket Co., Matter of, 21 N. L. R. B. 235_________ 22
City of Columbus v. Mercantile Trust and Deposit Co. of
Baltimore, 218 U. S. 645_______________________________ 26
City of Memphis v. Brown, 20 Wall. 289__________________ 27
Corn Products Refining Co., Matter of, 22 N. L. R. B. 824__ 22
Eliza Lines, The, 199 U. S. 119------------------------------ -------- 26
Farmers’ Loan and Trust Co. v. Galesburg, 133 U. S. 156____ 26
Federal Communications Commission v. Poltsville Broad
casting Co., 309 U. S. 134__*__________________________ 29
First National Bank of Arkansas City v. Leech, 94 Fed. 310_ 27
Fore River Shipbuilding Co. v. Southern Pacific Co., 219 Fed.
387___________________________________________________ 26
Gamble-Robinson Co. v. National Labor Relations Board,
129 F. (2d) 588___________________________________ 76
General Committee of Adjustment of the Brotherhood of Lo
comotive Engineers for the Southern Pacific Co. v. Southern
Pacific Co., 320 U. S. 338______________________________ 61
General Committee of Adjustment of the Brotherhood of Lo
comotive Engineers for the Mrssouri-Kansas-Texas Rail
road v. Missouri-Kansas-Texas Railroad Co., 320 U. S.
323______ 61
Godchaux Sugars, Inc., Matter of, 12 N. L. R. B. 568_____ 22
H alf, Harry A., Matter of, 16 N. L. R. B. 667_ _________ 22
Heinz, H. J. Co. v. National Labor Relations Board, 311 U. S.
514_________ ____ ________ ________ ___________________74,76
I l l
Houde Engineering Corp., Matter of, 1 N. L. R. B. (old) 35_ 52, 53
Humble Oil and Refining Co., In re, 15 W. L. R. 380-------- 65
International Ass’n of Machinists v. National Labor Re
lations Board, 311 U. S. 72_______________ 40, 69, 74, 76, 77, 78
Jefferson Electric Co. v. National Labor Relations Board,
102 F. (2d) 949________________________________________ 29
The Joy, 290 Fed. 407------------------------------------------------------- 27
Kansas City Power & Light Co. v. National Labor Relations
■ Board, 111 F. (2d) 340_________________________________ 72
Kauffman v. Raeder, 108 Fed. 171, certiorari denied, 191
U. S. 567______________________________________________ 26
Knutson v. Metallic Slab Form Co., 128 F. (2d) 408----------- 26
Lamborn v. National Bank of Commerce, 276 U. S. 469____ 26
Larus & Brother Company, Inc., Matter of, 5—R—1413,
5-R-1437______________________________________________ 68
Locomotive Finished Material Co., Matter of, 52 N. L. R. B.
922____ 22
Los Angeles Steel Casting Co., In re, 4 W. L. R. 214_______ 66
Louisville & Nashville R. R. Co. v. Mottley, 219 U. S. 467__ 30
Magnolia Petroleum Co. v. National Labor Relations Board,
115 F. (2d) 1007______________________________________ 23
McQuay-Norris Mfg. Co. v. National Labor Relations Board,
116 F. (2d) 748, certiorari denied, 313 U. S. 565________ 30, 71
Medo Photo Supply Corp. v. National Labor Relations Board,
321 U. S. 678__________________________________________ 60, 65
Monsieur Henry Wines, Ltd., Matter of, 44 N. L. R. B.
1310______________________________________________ _ 41, 52, 68
National Labor Relations Board v. Aintree Corp., 132 F.
(2d) 469, certiorari denied, 318 U. S. 774_______________ 76
National Labor Relations Board v. American Mfg. Co., 106 F.
(2d) 61, affirmed 309 U. S. 629_________________________ 35, 74
National Labor Relations Board v. Brashear Freight Lines,
119 F. (2d) 379________________________________________ 60
National Labor Relations Board v. Christian Board of
Publication, 113 F. (2d) 678___________________________ 76
National Labor Relations Board v. Cities Service Oil Co.,
129 F. (2d) 933________________________________________ 76
National Labor Relations Board v. Electric Vacuum Cleaner
Co., 315 U. S. 685___________________________ 42, 59, 69, 77, 78
National Labor Relations Board v. Fansteel Metallurgical
Corp., 306 U. S. 240___________________________________ 64
National Labor Relations Board v. General Motors Corp.,
116 F. (2d) 306________________________________________ 23
National Labor Relations Board v. Germain Seed & Plant
Co., 134 F. (2d) 94____________________________________ 74, 75
National Labor Relations Board v. Gluek Brewing Co.,
decided August 7, 1944 (C. C. A. 8) __________________ 37, 71
National Labor Relations Board v. Hawk & Buck Co., 120
F. (2d) 903
Cases—Continued. Page
23
IV
Ciises—Continued. Page
National Labor Relations Board v. Hudson Motor Car Co.,
128 F. (2d) 528__________________________________ 30, 36, 60, 71
National Labor Relations Board v. Jones & Laughlin Steel
Cory., 301 U. S. 1--------------------------------------------------------- 43
National Labor Relations Board v. Killoren, 122 F. (2d) 609. 43
National Labor Relations Board v. Link-Belt Co., 311 U. S.
584____________________________________________________ 76
National Labor Relations Board v. Norfolk Shipbuilding &
Drydock Corp., 109 F. (2d) 128----------------------------------------- 74
National Labor Relations Board v. Pacific Gas & Electric
Co., 118 F. (2d) 780____________________________________ 76
National Labor Relations Board v. Pennsylvania Greyhound
Lines, 303 U. S. 261__>-_________________________________ 40
National Labor Relations Board v. T. W. Phillips Gas &
Oil Co., 141 F. (2d) 304_______________________________ 23, 24
National Labor Relations Board v. Prettyman, 117 F. (2d) 786. 23
National Labor Relations Board v. Rath Packing Co., 115
F. (2d) 217____________________________________________ 43
Nitional Labor Relations Board v. Remington Rand, Inc., 130 F.
(2d) 919___________________________________________________ 72
National Labor Relations Board v. Sands Mfg. Co., 306
U. S. 332______________________________________________ 64
National Labor Relations Board v. Skinner & Kennedy
Stationery Co., 113 F. (2d) 667--------------------------------------- 76
National Labor Relations Board v. Southern Bell Telephone
Co., 319 U. S. 50__________________________ 75
National Labor Relations Board v. Standard Oil Co., 142 F.
(2d) 676, enforcing with modifications 47 N. L. R. B. 517,
petition for certiorari pending, No. 204, this Term--------- 23
National Labor Relations Board v. Star Publishing Co., 97 F.
(2d) 465,__________________________________________ 30, 36, 72
National Labor Relations Board v. Stone, 125 F. (2d) 752,
certiorari denied, 317 U. S. 649_________________________ 23
National Labor Relations Board v. Sun Shipbuilding and
Dry Dock Co., 135 F. (2d) 15__________________________ 23
National Labor Relations Board v. Swift & Co., 127 F. (2d)
30_____________________________________________________ 23
National Labor Relations Board v. Thompson Products, Inc.,
130 F. (2d) 363________________________________________ 23
National Labor Relations Board v. Waumbec Mills, Inc.,
114 F. (2d) 226________________________________________ 43
National Licorice Co. v. National Labor Relations Board, 309
U. S. 350______________________________________________ 65, 71
New Idea, Inc. v. National Labor Relations Board, 117 F.
(2d) 517_______________________________________________ 74
New York Life Insurance Co. v. Viglas, 297 U. S. 672_____ 26
Norman v. Baltimore & Ohio R. Co., 294 U. S. 240_______ 70
Norrington v. Wright, 115 U. S. 188_______________________ 26
y
Omnia Co. v. United States, 261 U. S. 502------------------------ 70
Order of Railroad Telegraphers v. Railway Express Agency,
Inc., 321 U. S. 342_____________________________________ 55
Phelps Dodge Corp. v. National Labor Relations Board, 313
U. S. 177________________________________________ 40, 43, 64, 65
Phillips & Colby Construction Co. v. Seymour, 91 U. S. 646-_ 26
Pittsburgh Plate Glass Co. v. National Labor Relations Board
313 U. S. 146_______________ i __________________________43, 65
Pullman Standard Car Manufacturing Co., In re, 10 W. L. R.
400____________________________________________________ 66
Roehm v. Horst, 178 U. S. 1--------------------------------------------- 26
Rutland Court Owners, Inc., Matter of, 44 N. L. R. B. 587,
46 N. L. R. B. 1040____________________________________ 41
Shenandoah-Dives Mining Co., Matter of, 11 N. L. R. B. 885- 22
Shubert v. Rosenberger, 204 Fed. 934______________________ 27
South Atlantic Steamship Co. v. National Labor Relations
Board, 116 F. (2d) 480, certiorari denied, 313 U. S. 582— 37
Southern Steamship Co. v. National Labor Relations Board,
316 U. S. 31___________________________________________ 64
Sperry Gyroscope Co., Inc. v. National Labor Relations
Board, 129 F. (2d) 922_________________________________ 23
. Stonewall Cotton Mills v. National Labor Relations Board,
129 F. (2d) 629_______________________ ________________ 35
Switchmen’s Lnion of North America, etal. v. National Labor
Relations Board, 320 U. S. 297_________________________ 61
Sylvania Industrial Corp. v. Lilienfeld’s Estate, 132 F. (2d)
887____________________________________________________ 26
Tennessee, Coal, Iron and R. R. Co., In re, 15 W. L. R. 15__ 66
Thornhill v. Alabama, 310 U. S. 88________________________ 65
U. S. Bedding Company, Matter of, 52 N. L. R. B. 382___ 68
United States v. City and County of San Francisco, 310 U. S.
16_____________________________________________________ 23, 70
United States v. Dickson, 15 Pet. 141_____________________ 42
United States v. McElvain, 272 U. S. 633_________________ 42
United States v. Scharton, 285 U. S. 518__________________ 42
Untermyer v. Bowers, 79 F. (2d) 9_________________________ 27
Utah Copper Co. v. National Labor Relations Board, 139 F.
(2) 788, certiorari denied, 64 S. Ct. 946, sub nom Inde
pendent A ss’n of M ill Workers v. National Labor Rela
tions Board____________________________________________ 23
Utah Power & Light Co. v. United States, 243 U. S. 389___ 23
Virginia Electric & Power Co. v. National Labor Relations
Board, 319 U. S. 533___________________________________ 43
Warehousemen’s Union v. National Labor Relations Board,
121 F. (2d) 84, certiorari denied, 314 U. S. 674_________ 23, 72
Wickwire Brothers, Matter of, 16 N. L. R. B. 316_________ 22
Woods, S. A ., Machine Co., In re, 2 W. L. R. 159________ 66
Cases— Continued. Page
VI
Statutes: Page
National Industrial Recovery Act (48 Stat. 195), Sec.
7 (a)_________________________ ________________________ 45
National Labor Relations Act (Act of July 5, 1935, 49 Stat.
449, 29 U. S. C. 151, et seq):
Sec. 1___________________________________________ 21, 42, 79
Sec. 7_______________________________________________ 80
Sec. 8_____________________________________ 35, 38, 39, 40, 45
Sec. 9_________________________________ 40, 47, 48, 55, 63, 81
Sec. 10_______________________________________ 19, 43, 61, 82
Railway Labor Act, 44 Stat. 577, 48 Stat. 1185___________60, 61
Congressional Material:
79 Cong. Rec.:
7571, 7671-7673, 9686-9687__________________________ 49
7571- 9691____________________ 50
7650________________________________________________ 48
Hearings, House Committee on Labor, 74th Cong., 1st
sess., on H. R. 6288___________________________________ 49
Hearings, Senate Committee on Education and Labor,
73d Cong., 2d sess., on S. 2926_________________________ 49, 55
Hearings, Senate Committee on Education and Labor,
74th Cong., 1st sess., on S. 1958_______________________ 48, 49
H. Rep. No. 1147, 74th Cong., 1st sess__ 45, 46, 48, 49, 50, 51, 52
S. Rep. No. 573, 74th Cong., 1st sess_ 45, 46, 48, 50, 51, 52, 53, 67
Miscellaneous:
Brooks, Robert R. R., Unions of Their Own Choosing, New
Haven (1939), pp. 185-187____________________________ 98
Bryan, W. E., “ Open” and “ Closed” Shops, American
Federationist April, 1912, p. 321_______________________ 91
Carlton, Frank T., The History and Problems of Organized
Labor, Boston, 1911, pp. 126-128______________________ 90
Catlin, Warren B., The Labor Problems, New York, 1926, p.
344------------------------------------------------------------------------------- 93
Clark, Marjorie R. and Simon, S. Fanny, The Labor Move
ment in America, New York, 1938, p. 32_______________ 97
Commons, John R. and Andrews, John B., Principles of
Labor Legislation, New York, 1936, p. 391_____________ 92
Cooke, Morris Llewellyn aud Murray, Philip, Organized
Labor & Production, New York, 1940, pp. 47-48______ 100
Cummins, E. E., The Labor Problem in the United States,
New York, 1932, p. 231_______________________________ 94
Harrow, Clarence S., The Open Shop, Social Economic
Series, Vol. 1, No. 2, Hammersmark Publishing Co.,
Chicago (1940)________________________________________ 86
Daugherty, Carroll R., Labor Problems in American In
dustry, New York, 1936, pp. 557, 558__________________ 96
Daugherty, Carroll R., Labor Problems in American In
dustry, New York, 1941, p. 464___________________________ 102
VII
Miscellaneous—Continued. Page
Golden, Clinton S., and Ruttenberg, Harold J., The Dy
namics of Industrial Democracy, Harpers, 1942___ 56, 58, 109
Gompers, Samuel, The Union Shop is Right, American Fed-
erationist, April 1905, p. 221__________________________ 87
Gompers, Samuel, The Union Shop and Its Antithesis
(pamphlet), July 1920, quoted in Beman, Lamar T., The
Closed Shop, New York, 1922, p. 49___________________ 92
56 Harv. Law Rev. 613, Effect of a Closed-shop Contract
on Employer Practices Otherwise Unfair under the Na
tional Labor Relations Act (Jan., 1943)________________ 66
Lester, Richard A., Economics of Labor, New York, 1941,
p. 622_________________________________________________ 101
Lord, James, The “ Open Shop,” American Federationist,
January 1921, p. 49______________________________________ 93
Lusky, Minority Rights and the Public Interest, 52 Yale
Law Jour., pp. 1-41 (Dec., 1942)______________________ 66
Moffett, E. H., The “ Open Shop,” The American Federa
tionist, March 1904, p. 214____________________________ 86
National Industrial Conference Board, Inc., Studies in
Personnel Policy, No. 12, The Closed Shop, New York
(1939), p. 7___. __________________________________________ 98
National Labor Relations Board:
First Annual Report (1936), pp. 30-31_________________ 21
Second Annual Report (1937), pp. 15-17_____________ 21
Third Annual Report (1938), pp. 20-22______________ 21
Fourth Annual Report (1939), pp. 19-22_____________ 21
Fifth Annual Report (1940), pp. 14, 16-18, 20, 26___ 21
Sixth Annual Report (1941), pp. 14-15, 25, 26, 27, 29. 21
Seventh Annual Report (1942), pp. 22-25, 28-30, 80-86. 21
Eighth Annual Report (1943), pp. 20-23, 91, 92_____ 21
Padway, Joseph A., The Closed Shop is Upheld, The
American Federationist, December 1943, Vol. 50, No. 12,
pp. 12-13______________________________________________ 116
Perlman, Selig and Taft, Philip, History of Labor in the
United States, 1896-1932, Vol. IV, p. 9________________ 95
Restatement of the law of Contracts, Vol. II, Sec. 608____ 70
Stockton, Frank T., The Closed Shop in American Trade
Unions, 1911, pp. 130, 162, 176__________________________ 88
Taylor, A. G., Labor Problems and Labor Law (New
York, 1938), pp. 90-92___________________________________ 59
Tead, Ordway and Metcalf, Henry C., Labor Relations
Under the Recovery Act, New York and London, 1933,
p. 172------------------------------------------------------------------------------- 94
Toner, Jerome L. The Closed Shop, Washington, 1942. 56,59,102
Twentieth Century Fund, Inc., Labor and Government
(New York, 1935) pp. 245-246___________________________ 54
Williston, Contracts (Rev. E d.):
Vol. 3, Secs. 813, 831, 841___________________________ 25
Vol. 6, Sec. 1759_______________________________________ 70
Vol. 6, Sec. 1848_______________________________________ 25
djmtrt of Ife M nltd States
October Term, 1944
Nos. 66, 67
The W allace Corporation, petitioner
v.
N ational L abor R elations B oard
Rich wood Clothespin & D ish W orkers’ U nion,
PETITIONER
V.
National L abor Relations B oard
ON WRITS OF CERTIORARI TO THE UNITED STATES CIRCUIT
COURT OF APPEALS FOR THE FOURTH CIRCUIT
BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD
OPINIONS BELOW
The opinion of the court below (R. 345-352)
is reported at 141 F. (2d) 87. The findings of
fact, conclusions of law, and order of the National
Labor Relations Board (R. 1-31) are reported at
50 N. L. R. B. 138.
( i )
2
JU RISDICTION
The cleerees of the court below were entered on
February 3, 1944 (R. 352, 371). Petitions for
rehearing filed by The Wallace Corporation
(herein called petitioner) and by Richwood
Clothespin & Dish Workers’ Union (herein called
the Independent) were denied on March 13, 1944
(R. 353-356, 371-375). The petitions for writs
of certiorari were filed April 24, 1944, and were
granted May 29, 1944 (R. 376). The jurisdiction
•of this Court is invoked under Section 240 (a)
of the Judicial Code, as amended by the Act of
February 13, 1925, and under Section 10 (e) of
the National Labor Relations Act.
QUESTIONS PRESENTED
Petitioner, the Union,1 and the Independent
entered into agreements, with the Board’s ap
proval, purporting to settle a labor dispute, in
cluding a strike, and charges filed with the Board
by the Union alleging, inter alia, that petitioner
had dominated, interfered with, and supported
the Independent in violation of Section 8 (2) and
(1) of the Act. As the result of a consent elec
tion held pursuant to the settlement agreements,
the Independent was certified as the bargaining
representative of petitioner’s employees. There
after, petitioner entered into a closed-shop con- 1
1 Local Union Xo. 129, United Construction Workers Or
ganizing Committee, affiliated with the C. I. O.
3
tract with the Independent with knowledge that
the Independent intended to use such a contract
so that it could, by refusing membership to cer
tain employees because of their prior activities in
behalf of the Union, eliminate them from peti
tioner’s employ. Petitioner then, acting pursuant
to the closed-shop contract, discharged employees
who had been refused membership in the Inde
pendent because of their previous adherence to
the Union. The questions are:
1. Whether in the circumstances presented the
Board in a subsequent unfair labor practice pro
ceeding abused its administrative discretion in
considering, and finding unfair labor practices
based on, petitioner’s entire course of conduct both
before and after the settlement agreements and
the certification of the Independent.
2. Whether petitioner by entering into and dis
charging employees pursuant to the terms of the
closed-shop contract with the Independent vio
lated Section 8 (3) and (1) of the Act.
3. Whether the Board’s finding that petitioner
dominated, interfered with and supported the
Independent in violation of Section 8 (2) and (1)
of the Act is supported by substantial evidence.
ST A TU T E IN V O LV E D
The pertinent provisions of the National Labor
Relations Act (Act of July 5, 1935, c. 372, 49
Stat. 449, 29 U. S. C., Sec. 151 et seq.) are set
forth in Appendix A, infra, pp. 79-85.
4
STATEM EN T
Upon the usual proceedings pursuant to Sec
tion 10 of the Act, the Board issued its findings of
fact, conclusions of law, and order (R. 1-31).2
The facts, as found by the Board and shown
by the evidence, may be summarized as follows:3
Petitioner is engaged in the manufacture of
clothespins and other wood products at Richwood,
West Virginia (R. 67). From the time the Union
in July 1941 began to organize petitioner’s em
ployees, petitioner engaged in a counter-campaign
of opposition. On the day the Union held its
initial meeting Foreman Mcllwee (R. 147) told
a group of employees that M. B. Wallace, Jr.,
petitioner’s president, had declared that he would
close the plant and move it away rather than
recognize the 0. I. O. union. Foreman Mcllwee
urged the employees to attend the scheduled meet
ing and to oppose organization of petitioner’s
employees into the Union (R. 6-7; 164-166). On
another occasion Foreman Mcllwee warned em
ployee Dodrill, one of the most active supporters
of the Union and subsequently its president (R.
147, 150-151, 162), that employees who joined the
Union would lose their jobs if Dodrill did not
2 The Board issued its decision and order on June 7, 1943
(R. 1). Previously, the Board had vacated an earlier deci
sion and order issued on February 27, 1943, and had heard
reargument of the case on May 13,1943 (R. 5).
3 References preceding the semicolons are to the Board’s
findings; succeeding references are to the supporting evi
dence.
5
“ quit agitating union and getting signers” (R. 7 ;
148, 164-165). Soon after Dodrill began bis or
ganizing activities he was questioned by Foreman
Gibson about his union activities and was warned
that President Wallace had declared that he
“ would never recognize the C. I. O.” (R. 7; 147-
148, 162-163). Foreman Harry White cautioned
Dodrill that if he “ did go ahead and organ
ize * * * Wallace would not recognize the
union that we would all be out of a job, he would
shut the plant down and move it away * * * ”
(R. 7-8; 148-149, 166-167). Foreman White on
other occasions told employee Griffie, who was an
active union member, that “ the C. I. O. would
never operate in that plant” and that Mr. W al
lace had so stated to Plant Manager Davis (R. 8;
74-76, 83-86). Similarly, Foreman Sleeth ad
dressed anti-union remarks to Dodrill’s wife, also
an employee, and predicted that “ the ones that
did not sign up with the C. I. O. didn’t have any
thing to worry about, that the company would see
that they was taken care o f ” (R. 8; 117-119).
Early in September 1941 the Union asked peti
tioner for recognition as the bargaining repre
sentative of its employees (R. 9; 76). Petitioner,
although challenging the Union’s majority claim,
refused the latter’s offer to have its membership
application cards checked against petitioner’s
payroll unless petitioner’s plant manager were
given an opportunity to question each employee
individually with respect to his designation of the
6
Union (R. 9; 149-150, 154-155, 196-197). When
the Union rejected this proposal, Plant Manager
Davis suggested the holding of a Board election.
The Union agreed, on condition that petitioner
reinstate Dodrill, who had been discharged by
petitioner in August (R. 9-10; 145, 150-151, 155-
156, 198). Plant Manager Davis rejected this
proposal on the ground that Dodrill “ was too
much of a union agitator” (R. 10; 151, 198). On
September 25 the Union called a strike and estab
lished a picket line at the plant, which was shut
down the same day (R. 10; 76, 151, 198).
With the advent of the strike petitioner
launched the Independent. A group of employees
arranged to meet at the home of Foreman Gibson
on the night of October 2 for the purpose of form
ing an organization (R. 10-11; 76-77, 89-93, 135-
137). On the appointed night Foreman Gibson
met the group on the street and adjourned the
meeting to the home of his assistant, Lundy
Groves (id.), explaining that, “ I can’t have it at
my house, there is too many C. I. O. members”
(R. 90). Groves worked under Gibson and acted
as foreman in Gibson’s place when the latter was
absent from the plant (R. 11-12; 78-79, 87-88, 96-
97, 133-134, 208-210, 215). The Independent was
organized at the meeting in the Groves’ home.
Ihe oiganization was assisted by B. E. Thompson,
a local newspaper editor, who was recommended to
the group as an adviser by Irene Weese (R. 11-
12; 89-94, 100-102, 116, 232-233, 237), petitioner’s
7
paymaster and confidential secretary to Plant
Manager Davis (R. 10; 217-218, 227-228).
Thompson became the Independent’s business
manager (R. 100-102), but leadership among the
employee participants in the organization was as
sumed by Groves, together with Reese and Smith,
supervisory employees who held positions of re
sponsibility with petitioner similar to Groves’ (R.
11-12, 20; 95-96, 119-120, 126-131, 140-145, 153-
154, 173-176, 186-187, 206-207, 210-216). All
three men attended the initial organizing meeting
of October 2, at Groves’ home (R. 92-93), and all
three became members of the Independent’s bar
gaining committee which conducted negotiations
with petitioner (R. 10-11; 55, 199-200). Both
Groves and Reese were members of the board of
directors of that organization (R. 20; 103), and
Reese was its president at the time it first re
quested recognition by petitioner (R. 11; 199).
Groves also solicited for the Independent during
the strike (R. 13; 77-78).
On October 10, 1941, the Union filed charges
with the Board, alleging, inter alia, that petitioner
had violated Section 8 (2) of the Act by sponsor
ing the formation of the Independent (R. 12; 312-
313).4 On October 14, the Independent requested
4 The charges also alleged that petitioner had discharged
Harvey Dodrill because of his activities on behalf of the
Union and had otherwise opposed the Union’s organizing
campaign, in violation of Section 8 (1) and (3) of the Act
(E. 312).
8
recognition by petitioner as bargaining represent
ative of the employees (R. 12; 199). On October
31, the Independent filed with the Board a petition
for investigation and certification of representa
tives of petitioner’s employees (R. 12-13; 292-
293).
During the ensuing two and one-half months,
representatives of petitioner, the Board, and the
two unions engaged in negotiations looking toward
settlement of the entire controversy, including dis
position of the Union’s charge and the Independ
ent’s petition (R. 13-14; 151-152, 157-159, 200-
202, 271-275, 286, 293-296). Meanwhile the In
dependent’s membership drive proceeded, coupled
with a company-sponsored back-to-work move
ment. Petitioner mailed post cards to employees
and sent foremen to their homes soliciting their
return to work (R. 13; 97-98, 124-126, 180-183,
202-203, 311). Foreman Gibson, during this
period, told a subordinate employee that he had
“ orders to go around and ask all the girls to go
back to work * * * the plant is going to open
at 2 o ’clock and if you don’t come back you are off:
the pay roll” (R. 13; 97-98). Foreman White,
after soliciting an employee to return to work, told
her that the plant “ will never run under the
O. I. O.” (R. 13; 124—125, 180-181). Assistant
Foreman Lundy Groves, while soliciting one em
ployee to join the Independent, declared, accord
ing to the latter’s testimony, that “ that was the
9
only way we was evei* a-going to get back to work
up there, if we ever got this thing settled we would
have to settle it in that way” (R. 13; 77-78).
Between January 13 and 19, 1942, petitioner,
the Independent, and the Union entered into
agreements providing for termination of the
strike, immediate resumption of operations at
the plant, and an election to be conducted by the
Board to determine whether either of the two
unions represented a majority of petitioner’s em
ployees (R. 14-15; 53-59). The agreement pro
vided further that if either union won the elec
tion, petitioner would enter into a “ union shop”
contract with it (R. 15; 55).5 Finally, the elec
tion agreement provided for settlement and with
drawal of the Union’s pending charges, in con
sideration of petitioner’s promise not to dominate
or interfere with the Independent or otherwise to
interfere with its employees’ rights under the Act
(R. 15; 53-54).6 At the election, held on January
5 For the purposes of this case the parties have made no
distinction between the terms “union shop” and “closed-
shop. ’ The provision in the settlement agreement referred
to reads as follows (R. 55) :
“The Company further agrees that if either Union is
proven to represent a majority of its employees by said
vote, it will recognize a Union Shop, providing that the
Company shall at all times retain the right to suspend,
hire or discharge any employee for proper and just
cause.”
6 In effecting the settlement, three documents were exe
cuted. The first, dated January 13, was signed by represent-
615265— 44-------2
10
30, the Independent received a majority of the
votes cast,7 and on February 4 it was certified
by the Board’s Regional Director as the exclusive
collective bargaining representative of petitioner’s
employees (R. 18; 60).
Following the election petitioner and the Inde
pendent entered into bargaining negotiations. On
February 28, the latter wrote to petitioner de
manding a closed-shop contract as a necessary
means of preserving its small majority against
possible dissipation at the hands of those em
ployees who preferred the Union (R. 18; 287-
289). The letter stated that, since the election,
petitioner had hired several new employees who
“ are favorable to the interests of our opponents” ,
and that “ if other similar-minded employees are
given jobs in your plant, it won’t be long until
our majority of 15 will be either jeopardized or
overcome.” Declaring that the Independent in-
atives of petitioner and of the two unions (E. 54-55). It
provided that the strike would be terminated and operations
resumed pending an election to be conducted by the Board,
that petitioner and both unions would refrain from all forms
of coercion and intimidation of employees, and contained
the “ union shop” provision referred to above (id.). The
other two documents, dated January 19, were signed by rep
resentatives of the parties and approved by the Board’s
Kegional Director (R. 54, 59). They provided for the hold
ing of the election, withdrawal of the Union’s charges, the
reinstatement of Dodrill, and that petitioner would refrain
from interfering with or coercing its employees or dominat
ing the Independent (R. 53-54, 56-59).
7 Of the 186 valid votes cast the Independent received 98,
the Union 83, and 5 votes were cast for neither (R. 60).
11
tended to use the proposed closed-shop agreement,
not to require all employees to become members,
but rather to remove from the plant employees
who, prior to the election, had exercised their
rights under the Act by participating in the
Union’s organizing campaign, the letter stated
(R. 18; 288-289, italics added) :
The “ Closed Shop” will, therefore, give us
some control in preventing the hiring of
additional employees who are unfavorable
to our interests and who would further
jeopardize our majority. It would also
provide us with a legal means of disposing
of any present employees, including Har
vey Dodrill whom our members have de
clared by unanimous ballot that they will
not work with, whose presence in the plant
is unfavorable to our interests because
those who are so unfavorable will not be
permitted to become members of our or
ganisation and without such membership
they would not be permitted to work in the
plant under a closed shop contract which
we respectfully insist we MUST have.
On March 7, petitioner and the Independent
executed a 2-year contract which provided that
all present and future employees eligible for
membership in the Independent “ shall become
members” within 10 days from the date of the
contract or from date of hiring (R. 19; 61-66).
On the same day a copy of the contract was posted
in the plant (R. 19; 218-219). Thereafter, be-
12
tween March 7 and 18, 31 of the petitioner’s
employees who applied for membership in the
Independent were rejected because of their past
adherence to the Union (R . 19, 21-24; 82-83, 99,
152-153, 38). On March 16, petitioner posted a
notice in its planl that, pursuant to the contract,
only members in good standing in the Independent
would he permitted to continue in petitioner’s em
ploy on and after March 18 (R. 19; 218, 291-292),
and on the latter date it excluded from its plant
and dismissed the 31 employees who had been re
jected by the Independent, together with 12 other
employees, former members of the Union, who
had not applied for membership in the Independ
ent (R. 19; 98-100, 152-153, 38).
Upon these facts the Board concluded that pe
titioner had engaged in unfair labor practices
within the meaning of Section 8 (1), (2), and
(3) of the Act (R. 27). The Board considered
the effect of the settlement agreements, the con
sent election, and the certification of the Inde
pendent, and, in the exercise of its administrative
discretion, determined that in view of the circum
stances under which the closed-shop contract was
executed, the purposes of the statute would be
effectuated by considering petitioner’s entire
course of conduct, both before and after the set
tlement agreements and the certification (R. 21-22,
23-24). The Board concluded that the proviso
to Section 8 (3) of the Act did not justify peti
tioner's conduct in entering into the closed-shop
13
agreement when it knew that the Independent
intended to refuse membership to, and thus cause
the discharge of, employees because of their previ
ous adherence to the Union. The Board accord
ingly found that the closed-shop agreement was
invalid and that petitioner’s discharge of 43 em
ployees pursuant thereto was discriminatory and
in violation of Section 8 (3) and (1) of the Act
(R. 21-24). Reviewing petitioner’s conduct in its
entirety, both before and after the settlement
agreements, the Board also concluded that the
Independent had been dominated in violation of
Section 8 (2) and (1) of the Act (R. 19-21, 24,
27). Accordingly, the Board ordered petitioner
to cease and desist from its violations of the Act,
to cease and desist from giving effect to any con-0
tract between it and the Independent, to withdraw
recognition from and disestablish the Independent
as representative of any of its employees for col
lective bargaining purposes, to offer reinstate
ment with back pay to the 43 employees discrim
inated against, and to post appropriate notices
(R. 28-30).
Thereafter petitioner and the Independent filed,
in the court below, petitions to review and set
aside the Board’s order (R. 323-337, 358-368),
and the Board filed its request that the order be
enforced (R. 338—343, 369—370). On February
3, 1944, the court handed down its opinion and
entered its decrees enforcing the Board’s order
(R. 345-352, 371).
14
SU M M A R Y OF ARG U M EN T
I. The Board did not abuse its administrative
discretion in considering petitioner’s entire course
of conduct both before and after the settlement
agreements and the certification of the Independ
ent. Plainly, nothing in the settlement agree
ments or the certification of the Independent pre
cluded the Board from inquiring into whether
unfair labor practices had been committed sub
sequent to the certification of the Independent.
As to unfair labor practices prior to the settlement
agreements, it is within the Board’s administra
tive discretion to go behind a previously approved
settlement agreement, certification, or other means
of adjusting a labor dispute, where the Board
finds that such means of adjustment have ceased
to serve the intended purpose of effectuating the
policies of the Act. In view of the unlawful con
duct of petitioner and the questionable conduct of
the Independent, with respect to the making and
giving effect to the terms of the closed-shop con
tract, the Board reasonably determined that the
purposes of the Act would be effectively served
if the Board considered the entire relationship
between the two, both prior and subsequent to the
settlement agreements and the certification. Fur
thermore, the settlement was in express terms con
ditioned upon petitioner’s future compliance with
the Act. Petitioner’s subsequent violation of the
law, in breach of the settlement, cleared the path
for the Board to consider the entire controversy.
15
II. The Board properly found that the closed-
shop agreement was invalid under Section 8 (3)
of the Act for the reason that petitioner entered
into and gave effect to the terms of the agreement
when it knew that the Independent intended to
refuse membership to employees because they had
previously engaged in activities in behalf of the
Union. The minority employees in the case at
bar were denied membership in the Independent
and were discharged by petitioner because they
had exercised their right under the Act to engage
in activities in support of the Union. The pro
viso to Section 8 (3) of the Act, which prescribes
the narrow limits within which a closed-shop con
tract may be consummated, construed, as it must
be, in the light of the policy and provisions of the
Act as a whole, does not countenance an encroach
ment upon the basic rights the statute guarantees
to employees. The language of the Act, its broad
purpose, its legislative history, the opinions of ex
perts in the labor relations field as to the true
function of the closed-shop, and decisions of the
courts, support the Board’s view that Congress
did not intend the closed-shop proviso to permit an
employer and the bargaining representative se
lected by the majority of his employees in a
proper unit to override the statutory right of
individuals or minority groups of employees to
engage in concerted activities. To allow an em
ployer and the exclusive representative of his
employees to discriminate against the minority
16
employees under the guise of a closed-shop agree
ment would be contrary to the policies of the Act
and to public policy generally. The fact that pe
titioner had contracted, as part of the settlement
agreement prior to the election, to enter into a
closed-shop contract with whichever union won
the election, cannot operate to defeat the purposes
of the statute.
III . The Board’s finding that petitioner domi
nated, interfered with, and supported the Inde
pendent in violation of Section 8 (2) and (1) of
the Act is supported by substantial evidence, as
the court below held. Following a period of open
opposition on the part of petitioner to the Union’s
attempts to organize its employees, and to bargain
with petitioner in their behalf, the Union called
a strike. The Independent was organized and
officered by petitioner’s supervisory employees
during the course of the strike to compete with
the Union as a candidate for the employees’
choice as their bargaining representative.
A RG U M EN T
INTRODUCTION
The Board and the court below found that
petitioner, by its conduct both before and after
the settlement agreements and certification of the
Independent, violated the Act (R. 21, 23-24, 348-
351). Certain provisions of the Board’s order
are based primarily on unfair labor practices
antedating the settlement agreements and can be
17
sustained only if tlie Board acted properly in
going behind the settlement and certification.
These are the provisions of the order, based on the
finding that petitioner dominated the Independ
ent, which require petitioner to cease and desist
from dominating, interfering with, and contribu
ting support to the Independent, to cease and
desist from recognizing it and to take the affirma
tive action of withdrawing recognition (R. 28-29).
The Board expressly rested its power to find that
petitioner dominated the Independent on its
determination that it could properly consider
events occurring prior to the settlement (R. 21-
24, 25-26), and the court below in sustaining this
finding upheld the Board’s power to go behind
such agreements (R. 348-351).
The remaining provisions of the Board’s order
are based on events which occurred subsequent to
the settlement and certification and can be sus
tained irrespective of whether the Board could
go behind such settlement and certification.8
These provisions of the order are based on the
finding that petitioner violated the Act by entering
into, and discharging employees pursuant to, the
8 Of course, nothing in the settlement agreements or the
certification of the Independent licensed petitioner to commit
subsequent unfair labor practices or the Independent to bene
fit from such practices. We discuss a different point—the
claimed bearing of the settlement agreements and the certi
fication upon the question whether such subsequent unfair
labor practices were in fact committed—under Point II,
infra, pp. 69-70.
18
closed-shop contract and require petitioner to
cease and desist from giving effect to the contract
with the Independent, from encouraging member
ship therein, and from in any other manner inter
fering with, restraining and coercing its em
ployees, and to take the affirmative action of of
fering reinstatement with back pay to the 43
employees discharged and of posting appropriate
notices (R. 28-29). It is to be noted, further
more, that if the Board had the right to consider
the presettlement events, those provisions are valid
irrespective of the issues raised as to the events
occurring subsequent to the settlement, because the
contract was made with a company-dominated
union. The Board pointed out that its finding
respecting company-domination supported its set
ting aside of the contract (R. 25-26), and the court
below expressly held as an alternate basis for its
decision that the conduct of the petitioner and
Independent subsequent to the settlement and cer
tification was so “ high-handed” that, irrespective
of whether it constituted an unfair labor practice,
the Board properly considered the earlier events
and these in turn sustained the full order (R. 348-
349, 350-352).
Since the order can be sustained-in toto only if
the Board is not estopped by agreement or other
wise from resting its decision upon all the facts in
the case, we shall discuss under Point I (pp.
19-32, infra), the effect of settlement agreements
and certifications. Under Point I I (pp. 33-72,
19
infra), we shall argue that petitioner’s conduct in
entering into, and discharging the 43 employees
pursuant to, the closed-shop contract violated Sec
tion 8 (3) and (1) of the Act, irrespective of
whether the Independent was an employer-domi
nated organization. Under Point I I I (pp. 72-78,
infra) we shall show that petitioner dominated
the Independent in violation of Section 8 (2) and
(1) of the Act.
I
THE BOARD DID NOT ABUSE ITS ADMINISTRATIVE DIS
CRETION, IN CONSIDERING AND BASING FINDINGS OF
UNFAIR LABOR PRACTICES UPON PETITIONER’S ENTIRE
COURSE OF CONDUCT BOTH BEFORE AND AFTER THE
SETTLEMENT AGREEMENTS AND CERTIFICATION OF
THE INDEPENDENT, AND FINDING THAT PETITIONER
THEREBY COMMITTED UNFAIR LABOR PRACTICES
Nothing in the National Labor Eelations Act
prevents the Board from disregarding a settlement
agreement or a certification when it deems such
action in harmony with the purposes of the
statute.9 The Board found that petitioner had
continued to violate the statute, subsequent to the
settlement agreements and the certification, and
deemed itself justified in basing its determination
9 Section 10 (a) of the Act provides that the Board’s power
“to prevent any person from engaging in any unfair labor
practice” by means of the formal procedure set out in Section
10, “ shall be exclusive, and shall not be affected by any other
means of adjustment or prevention that has been or may be
established by agreement, code, law, or otherwise” (italics
supplied).
20
of unfair labor practices upon petitioner’s entire
course of conduct, including events antedating the
settlement. The Board’s position in this respect
can be supported on two grounds: (a) that under
general principles of administrative law it is
proper for the Board in carrying out the purposes
of the Act to disregard an agreement designed to
settle prior charges when the unfair labor prac
tices continue, and (b) that here the settlement
agreements themselves were conditioned upon
petitioner’s future compliance with the Act, so
that the agreements became inoperative as a settle
ment when further violations of the Act occurred.
A. The Board’s experience has led it to make
extentive use of the amicable adjustment of dis
putes as a substitute for formal action. In many
cases the Board can more effectively enforce the
policies of the Act by settling charges of unfair
labor practices, upon agreement of the parties,
than it can by proceeding formally against the
employer. In such cases the Board concludes
that the time saved in settling the controversy
quickly, the public expense avoided, and the rea
sonable assurance of substantial compliance with
the purposes of the statute, compensate for ac
cepting less than the complete compliance which
might result from a formal proceeding. It is
felt that the practice, in its over-all use, goes far
to obtain the declared objective of the Act to
assure employees of their right to self-organiza
tion and to encourage “ practices fundamental to
21
the friendly adjustment of industrial disputes”
(Section 1 of the Act, infra, pp. 79-80). By ac
complishing the “ rapid removal” of such disputes
“ from the area of possible industrial con
flict * * * the benefits of such settlements
have accrued to the employers and employees di
rectly involved, as well as to the general public”
(National Labor Relations Board, First Annual
Report (1936), p. 31).10
Settlements generally are arranged by the
Board’s agents working in the field and are likely
10 The Board’s extensive use of settlements to terminate
disputes, either in the course of formal proceedings or where
no formal action has been taken, and the importance of the
settlement device in the administration of the Act, are shown
in the Board’s Annual Reports. See First Annual Report
(1936), pp. 30-31 (45 percent of all cases closed were set
tled) ; Second Annual Report (1937), pp. 15-17 (60 percent
of all cases closed were settled) ; Third Annual Report
(1938), pp. 20-22 (52 percent of all cases closed were settled;
of the 4,621 cases settled, 2,972, or 64 percent, involved unfair
labor practices) ; Fourth Annual Report (1939), pp. 19-22
(47 percent of all cases closed were settled; of the 3,069 cases
settled, 2,072, or 67 percent involved unfair labor practices) ;
Fifth Annual Report (1940), pp. 14, 16-18, 20, 26 (39 per
cent of all cases closed were settled; of the 2,888 cases settled,
1,877, or 65 percent, involved unfair labor practices) ; Sixth
Annual Report (1941), pp. 14r-15, 25, 26, 27, 29 (50 percent
of all cases closed were settled; of the 4,283 cases settled,
2,142, or 50 percent, involved unfair labor practices) ; Sev
enth Annual Report (1942), pp. 22-25, 28-30, 80-86 (51 per
cent of all cases closed were settled; of the 5,968 cases
settled, 2,450, or 41 percent, involved unfair labor practices) ;
Eighth Annual Report (1943), pp. 20-23, 91, 92 (47 percent
of all cases closed were settled; of the 4,592 cases settled,
1,358, or 30 percent, involved unfair labor practices).
22
to come directly to the Board’s attention only in
the comparatively few instances where a dis
agreement arises concerning them. Where such
disagreements do arise, however, in order to en
courage the friendly settlement of disputes, and
to foster confidence in its agents on the part of
management and labor, the Board has, by custom,
established a working rule that where a settle
ment agreement approved by a Board agent is
adhered to by the parties the Board will respect
its terms and will not go behind such agreement
to investigate or prosecute unfair labor practices
alleged to have occurred prior thereto.11 At the
same time the Board has consistently held that
where subsequent events show that a settlement
or other adjustment is not accomplishing the pur
poses of the Act, because the employer violates or
continues to violate the Act after entering into
it, the Board will disregard such agreement and
consider the employer’s entire course of conduct
both before and after the agreement was exe
cuted.11 12
11 Matter of Corn Products Refining Co., 22 N. L. R. B. 824,
828-829; Matter of TVickwire Brothers, 16 N. L. E. B. 316,
325-326; Matter of Godchaux Sugars, Inc., 12 N. L. E. B. 568,
576-579; Matter of Shenandoah-Dives Mining Co., 11 N. L.
E. B. 885, 888; cf. Matter of the Locomotive Finished Ma
terial Company, 52 N. L. E. B. 922, 927.
12 Matter of the Locomotive Finished Material Company,
52 N. L. E. B. 922, 926-928; Matter of Chicago Casket Com
pany. 21 Y. L. R. B. 235, 252-256; Matter of Harry A. Halff,
16 Y. L. R, B. 667, 679-682; cf. the Wickwire decision cited
in footnote 11, supra.
23
The Board’s practice in this respect has been
recognized by the courts as properly within the
Board’s administrative discretion.13 It is “ a fun-
13 As to settlements, see: Sperry Gyroscope Co. v. National
Labor Relations Board, 129 F. (2d) 922, 926, 931 (C. C. A.
2 ); National Labor Relations Board v. T. W. Phillips Gas
& Oil Co., I l l F. (2d) 304 (C. C. A. 3 ); National Labor
Relations Board v. Hawk <& Block Co., 120 F. (2d) 903,
904̂ -905 (C. C. A. 5 ); National Labor Relations Board v.
Prettyman, 117 F. (2d) 786,792 (C. C. A. 6) ; National Labor
Relations Board v. General Motors Corp., 116 F. (2d) 306,
312 (C. C. A. 7 ); National Labor Relations Board v. Thomp
son Products, Inc., 130 F. (2d) 363, 366-367 (C. C. A. 6) ;
Canyon Corp, v. National Labor Relations Board, 128 F.
(2d) 953, 955-956 (C. C. A. 8).
For decisions holding that representation proceedings,
whether or not they culminate in the certification of a bar
gaining representative, neither estop the Board from subse
quently investigating and prosecuting charges o f unfair la
bor practices alleged to have occurred prior thereto, nor con
stitute res 'judicata of such charges, see: Warehousemen’s
Union v. National Labor Relations Board, 121 F. (2d) 84,
92-94 (App. D. C.), certiorari denied, 314 U. S. 674; Mag
nolia Petroleum Co. v. National Labor Relations Board, 115
F. (2d) 1007,1012-1013 (C. C. A. 10) ; Utah Copper Co. v. Na
tional Labor Relations Board, 139 F. (2d) 788, 791 (C. C. A.
10), certiorari denied, 64 S. Ct. 946, sub nom. Independent
Ass’n of Mill Workers v. National Labor Relations Board;
National Labor Relations Board v. Swift da Co., 127 F. (2d)
30, 31 (C. C. A. 6) ; National Labor Relations Board v.
Standard Oil Co., 142 F. (2d) 676 (C. C. A. 6), enforcing
with modifications 47 N. L. R. B. 517, petition for certiorari
pending, No. 204, this Term; National Labor Relations
Board v. Stone, 125 F. (2d) 752, 756-757 (C. C. A. 7),
certiorari denied, 317 U. S. 649; cf. National Labor Rela
tions Board v. Sun Shipbuilding and Dry Dock Co., 135 F.
(2d) 15, 18, 23 (C. C. A. 3)
Cf. United States v. City and, County of San Francisco, 310
U. S. 16, 31-32; Utah Power & Light Co. v. United States,
(2d) 15,18,23 (C. C .A .3 ).
24
damental conception of our law * * * [that]
there can be no rule which would restrict the
Board from an appropriate inquiry into a pending
complaint * * * [and that] the extent to
which the Board may refuse to go into matter
raised by a complaint, either because the matter
is stale or because it has been satisfactorily con
cluded theretofore, must rest in the Board’s dis
cretion.” National Labor Relations Board v. T.
W . Phillips Gas (& Oil G o 141 E. (2d) 304, 305-
306 (C. C. A. 3). We submit that to hold other
wise would be contrary both to the provisions of
Section 10 (a) and the purpose of the statute to
prevent interruptions to commerce.
B. Even if the case were merely a matter between
private parties, however, petitioner wonld he in
no position to complain. It will be noted that the
settlement specifically provided that petitioner,
“ on condition that [the Union] agrees to with
draw the charge” , agreed “ in no wise to interfere
with, restrain or coerce its employees in the rights
guaranteed in Section 7 of the National Labor
Relations Act; * * * in no wise to dominate
or interfere with the administration of the Rich-
wood Clothespin and Dish Workers’ Union
* * *” (R. 53) ; and “ not to coerce or intimi
date any of its employees in regard to Union mem
bership” (R. 54). The Union, on its part, agreed
to “ request withdrawal and hereby does request
withdrawal of said charge on condition that [pe
titioner] fully and faithfully complies with this
25
agreement * * *” (R . 53-54). Thus the set
tlement was in terms conditioned upon petitioner’s
future compliance with the Act. After the charge
was withdrawn (R. 15), and while the Board and
the Union were complying with the terms of the
settlement, petitioner entered into and gave effect
to the closed-shop agreement with the knowledge
that the Independent intended to use the agree
ment to deprive employees of their jobs because
they had previously supported the Union. If, as
we contend (Pt. II, infra, pp. 33-72), such con
duct was in violation of Section 8 (1) and (3) of
the Act, is constituted a breach of an essential
condition of the contract.
Upon these facts the Board’s action in up
setting the settlement finds full support in the
general principles of contract law without re
gard to the Board’s peculiar powers as an ad
ministrative agency of the Federal Government.
Whether the settlement be regarded as in the
nature of a compromise, an accord and satisfac
tion, or an ordinary bilateral contract, the ap
plicable principle is clear. Where one party to
a contract fails in the performance of a material
part of his promise, or fails to satisfy a sub
stantial condition, the other party is relieved of
further performance and may treat the contract
as terminated.14 “ By the general principles of
14 See 3 Williston on Contracts (Kev. Ed.) Secs. 813, 831,
841; and 6id. Sec. 1848.
615265— 44-------3
26
contract an open cessation of performance with
the intent to do no more, even if justified, excuses
the other party from further performance on
his side.” The Elisa Lines, 199 U. S. 119, 129;
Boehm v. Horst, 178 U. S. 1, 8; Farmers’ Loan
and Trust Co. v. Galesburg, 133 U. S. 156, 179;
Phillips and Colby Construction Co. v. Seymour
91 U. S. 646, 649. Similarly, the “ breach of
* * * a dependent covenant, one which goes
to the whole consideration of the contract gives to
the injured party the right to treat the entire con
tract as broken * * Kauffman v. Boeder,
108 Fed. 171, 179 (C. C. A. 8), certiorari denied,
191 U. S. 567; Sylvania Industrial Corp. v. Lilien-
feld’s Estate, 132 F. (2d) 887, 891-892 (C. C. A.
4 ) ; Knutson v. Metallic Slab Form Co., 128 F.
(2d) 408, 411 (C. C. A. 5) ; Fore Biver Shipbuild
ing Co. v. Southern Pacific Co., 219 Fed. 387,
393 (C. C. A. 1). And a party “ asserting
that the contract [is] still in force, [is] bound
to show such performance on his part as [would
entitle] him to demand performance on [the
other party’s] part.” Norrington v. Wright,
115 U. S. 188, 205; Lamborn v. National Bank
of Commerce, 276 U. S. 469, 472; New York
Life Insurance Co. v. Viglas, 297 U. S. 672, 679-
680; City of Columbus v. Mercantile Trust and
Deposit Co. of Baltimore, 218 U. S. 645, 660-661.
To the same effect, a party seeking to avail him
self of a compromise must show performance
27
on his part (Brown v. Spofford, 95 U. S. 474,
484) and “ if part of the consideration agreed on
be not performed, the whole aceord fails.” First
National Hank of Arkansas City v. Leech, 94 Fed.
310, 311 (C. C. A. 8) •, City of Memphis v. Brown,
20 Wall. 289, 308-309; Shubert v. Bosenberger,
204 Fed. 934, 938 (C. C. A. 8) ; TJntermyer v.
Bowers, 79 F. (2d) 9, 11 (C. C. A. 2) ; The Joy,
290 Fed. 407, 408 (E. D. N. Y .).
Applying these principles to the case at bar, it
is clear that when petitioner violated the Act
subsequent to the settlement agreement it failed
in the performance of a most material part of
the consideration it had promised in return for
the settlement and thereby breached the settle
ment agreement and relieved the Board and the
other parties thereto from any obligation to give
it effect. The condition placed by the Union on
its withdrawal of the charge of past violation
(i. e., that petitioner comply in the future with
the agreement and the Act) could have no sig
nificance if the Union were not relieved of its
obligation and thereby rendered free to press its
original charge anew if the company again vio
lated the Act. Petitioner thus is in no position
to advance the settlement agreement as a shield
against accountability for its wrongful conduct
prior thereto. Nor is the Independent in any
better position than petitioner to complain of the
Board’s refusal to observe the terms of the settle-
28
ment after the agreement had been breached. As
the court below declared (R. 351), the “ high
handed conduct of the Independent” was “ in
violation of the clear spirit of the compromise
agreement * *
We submit that a consideration of the problem
with which the Board was faced, and of the cir
cumstances under which it arose, demonstrates
the complete reasonableness of the solution which
the Board adopted. The problem was, first,
whether petitioner by entering into the closed-
shop contract with knowledge that the Independ
ent intended to use the contract to expel former
union adherents from the plant, and by discharg
ing 43 employees pursuant to the contract, vio
lated Section 8 (3) of the Act. Having found
against petitioner on this point (R. 21-24), the
Board’s problem remained how fully to rem
edy the wrong done and how to dispose of the
Union’s charge, based principally upon events al
leged to have occurred prior to the settlement and
the certification of the Independent, namely, that
petitioner had dominated and supported the Inde
pendent in contravention of Section 8 (2) of the
Act.
I f the Board had followed the course advo
cated by petitioner, and allowed the settlement
and certification to stand, it would have left the
employees with an officially approved exclusive
bargaining representative which, in the Board’s
29
view, had been dominated and supported by peti
tioner prior to tbe settlement and had, subse
quently thereto, forced the unfair and illegal re
sult of the closed-shop agreement, so as to penal
ize the former union adherents for having exer
cised their rights under the Act (infra, pp. 33-M2,
72-78). In the face of the questionable conduct of
both petitioner and the Independent with respect
to the closed-shop agreement, the Board was asked
to close the door to an exploration of the entire re
lationship between the two. Moreover, it was
asked to sustain the settlement and certification
despite its conclusion that, far from serving their
intended purpose to effectuate the policies o f the
Act, they were in fact being used as the allegedly
lawful excuse for an absolute frustration of that
purpose (infra, pp. 33-42, 69-70).
We submit that the Board acted altogether rea
sonably in deciding that it should not, for the
sake of sustaining its past administrative de
terminations, which had not been complied with,
sacrifice the statutory rights of petitioner’s em
ployees. Certainly the Board’s refusal to do so
cannot be called arbitrary or capricious.
This is not to say that the Board may ignore the
“ fundamentals of fair play.” On the contrary,
they are elemental to the administrative process.
Federal Communications Commission v. Potts-
ville Broadcasting Co., 309 II. S. 134, 143; Jeffer
son Electric Co. v. National Labor Belations
30
Board, 102 F. (2d) 949, 954 (C. C. A. 7). But
“ fair play,” even in disputes between private
parties, entails a weighing of conflicting interests.
The case at bar, however, affects the private inter
ests of petitioner, its employees, the Union, and
the Independent only incidentally. Dominant
over these is the public interest in the enforce
ment of the policies of the Act. Amalgamated
Utility Workers v. Consolidated Edison Co., 309
U. S. 261, 265-269; and authorities cited infra,
p. 65. And it is fundamental that where pri
vate interests clash with the public interest the
former must yield. Hence, petitioner here was
entitled, not to abstract “ fair play” with respect
to its private interests as against other private
interests affected, but to the “ fair play” which
the public interest, as embodied in the Act, would,
in all the circumstances, permit.15 The Board, 16
16 Thus, the fact that petitioner had relied upon the settle
ment agreement and the certification of the Independent in
entering into the closed-shop agreement with the latter was
but one of the many considerations the Board had to weigh
in determining whether the threat to the purposes of the Act,
inherent in the situation, was sufficiently serious to warrant
setting aside the settlement agreement and the certification.
Similarly, whatever hardship may have fallen upon peti
tioner as a result of the Board’s final action was but one of
the factors for the Board to consider. It could not be the
controlling consideration. National Labor Relations Board
v. Hudson Motor Car Co., 128 F. (2d) 528, 533 (C. C. A. 6) ;
McQuay-Norris Mfg. Co. v. National Labor Relations Board,
116 F. (2d) 748, 752 (C. C. A. 7), certiorari denied, 313 U. S.
565; National Labor Relations Board v. Star Publishing Co.,
97 F. (2d) 465, 470 (C. C. A. 9 ); cf. Louisville <& Nash
ville R. R. Co. v. Mottley, 219 U. S. 467,474.
31
in the exercise of its administrative discretion,
was required to resolve the conflict, and we sub
mit that the Board reasonably determined that
the policies of the Act, and the public interest
therein effectuated, would be served effectively in
the case at bar by setting aside the settlement and
certification and considering the entire course of
petitioner’s conduct and its relations with the In
dependent, It follows, of course, that the Board,
upon such consideration having found that peti
tioner violated the Act within the meaning of
Section 8 (1), (2), and (3), was not barred by the
settlement and certification from prescribing the
normal remedy therefor.
Manifestly the foregoing argument supports
the Board’s action in upsetting the settlement
and certification16 only if the Court approves the
Board’s finding that petitioner violated the Act
by executing the closed-shop agreement with the
Independent, since that was the only unfair labor
practice the Board found petitioner had engaged
in subsequent to the settlement agreement. We
are of the opinion, however, as was the court
below, that the narrow ground upon which the
Board based its determination to upset the settle-
18 Of course, if it was proper for the Board to go behind
the settlement and find that the Independent was dominated
and interfered with in violation of Section 8 (2) of the Act,
the certification of the Independent automatically became
invalid.
32
ment and certification (R. 21-24) need not be
the test of the propriety of its action. W e believe
that the Board’s powers of administrative discre
tion furnish a broader test and that the unusual
circumstances of this case, involving, as they did,
questionable conduct by both petitioner and the
Independent, justified the Board’s exploration of
the entire affair regardless of whether or not the
making of the closed-shop agreement subsequent
to the settlement be considered unlawful. The
court below declared that (R. 350-351) :
* * * even if discharges such as those
here involved be not considered of them
selves unfair labor practices within the
meaning of the act, we think that the*
Board was justified -under the circum
stances, notwithstanding the agreement
that had been made and the certification of
the Independent, in going fully into the
question of company domination and hold
ing the Independent to be a company-
dominated union and hence not entitled to
invoke the closed-shop provision. * * *
[The] high-handed conduct of the Inde
pendent union here, is in violation of the
clear spirit of the compromise agreement
as well as of the rights of the minority,
and the acquiescence of the company in
that conduct, furnished ample justification
for the Board to inquire fully into the his
tory of the union * * *.
33
II
THE CLOSED-SHOP AGREEMENT WAS INVALID UNDER
SECTION 8 (3) OF THE ACT BECAUSE PETITIONER
ENTERED INTO AND GAVE EFFECT TO THE TERMS OF
THE AGREEMENT WHEN IT KNEW THAT THE INDE
PENDENT INTENDED TO REFUSE MEMBERSHIP TO
EMPLOYEES BECAUSE THEY HAD PREVIOUSLY EN
GAGED IN ACTIVITIES IN BEHALF OF THE UNION.
There is no question but that the purpose and
effect of the closed-shop agreement was to dis
criminate against employees because they had
exercised their lawful right to engage in activities
in behalf of the Union. The Board found (R. 23)
that the agreement was not intended to achieve
the lawful purpose “ merely to require employees
to seek membership in the Independent as a con
dition of employment,” but that, on the contrary
“ its real purpose” was, as petitioner knew, “ to
bar from future employment with the [peti
tioner] persons who had adhered to the charging
Union in the election campaign.” The Board
found further (R. 19, 24) that 31 employees ap
plied for and were refused membership in the
Independent because of their previous support of
the Union and that they were therefore dis
charged by petitioner. The court below affirmed
this determination (R. 347-348).17 Contrary to
17 The Board found that petitioner unlawfully discharged
a total of 43 employees, all former members of the Union,
pursuant to the terms of the illegal closed-shop agreement
(R. 24). Of these, 31 had applied for and had been refused
membership in the Independent, as noted above, and 12 had
never applied for such membership (R. 19, 24). But since
the Board found the closed-shop agreement invalid ab initio
34
petitioner’s assertions (Br. 39-47), there is sub
stantial evidence that at the time of the dis
charges petitioner had1 ample reason to believe
that the employees had been excluded from mem
bership pursuant to the policy announced by the
Independent in its letter to petitioner of Febru
ary 28, 1942, and that a substantial number of the
43 had actually applied for membership and been
rejected (R. 287-289, 300, 307-308, 224; supra,
pp. 10-12).
It cannot seriously be contended that petitioner,
when it made the closed-shop agreement, was not
aware of the true purpose of the Independent to
exclude supporters of the Union from future em
ployment. As the court below held (R. 347), “ the
Independent * * * clearly indicated to the
Company that one of the purposes of such agree
ment was to get rid of employees who were un
acceptable because of prior union activities.” 18
In view of this knowledge on the part of the com-
the discharge of any employee pursuant thereto was neces
sarily discriminatory and in violation of Section 8 (3) of the
Act (R. 24).
18 Thompson’s letter of February 28 (supra, pp. 10-11) de
manded a closed-shop contract on the ground that it was the
only protection * * * available” to the Independent
against dissipation of its small majority, since it not only
would give us some measure of control in preventing the
hiring of additional employees who are unfavorable to our
interests,” but “ would also provide us with a legal means of
disposing of any present employees, including Harvey Dod-
1 ' * whose presence in the plant is unfavorable to
our interests * * *. The letter then plainly stated that
the Independent would refuse membership to such “unfavor
able ’ employees and thereby foreclose their employment (R.
35
pany of the Independent’s plan it is of no conse
quence whether the company knew previously
which of the 43 employees had made application
to the Independent and been rejected. The num
ber of persons to be discharged itself would have
put the company on notice that the Independent
had been carrying out its previously announced
policy. The question is whether the proviso to
Section 8 (3) of the Act permits the discrimina
tion in which petitioner has engaged. The Board
held that it does not.
A. TH E PROVISO TO SECTION S ( 3 ) DOES NOT COUNTENANCE A N
ENCROACH M ENT UPON T H E BASIC RIGHTS TH E STATUTE
GUARANTEES TO EMPLOYEES
Section 8 (3) of the Act makes it an unfair
labor practice for an employer------
By discrimination in regard to hire or
tenure of employment or any term or con-
288-289) . The naming of Dodrill, the Union’s president and
leading organizer and a “union agitator” in the eyes of peti
tioner (supra, p. 6), left the intention and purpose of the
Independent unmistakably clear.
That the Independent in fact carried out its intention is
equally clear, not only from Thompson’s letter, but from the
fact that all of the 31 employees whose applications for mem
bership were rejected were members of the Union (R. 82-83,
99, 152-153, 38). Nor does the fact that some former union
adherents were admitted to membership in the Independent
(R. 122-123,191-192) alter the picture. The purge instituted
by the Independent was so sweeping that it could accomplish
its aim without complete precision in execution. Cf. Na-
tional Labor Relations Board v. American Manufacturing
Co., 106 F. (2d) 61, 67-68 (C. C. A. 2), affirmed, 309 U. S.
629; Stonewall Cotton Mills v. National Labor Relations
Board, 129 F. (2d) 629, 633 (C. C. A. 5).
36
dition of employment to encourage or dis
courage membership in any-labor organiza
tion:
The subsection then contains the following pro
viso :
Provided, That nothing in this 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 em
ployment membership therein, if such labor
organization is the representative of the
employees as provided in section 9 (a ), in
the appropriate collective bargaining unit
covered by such agreement when made.
Under the language preceding the proviso, there
can be no question but that the discharge of the
43 employees constituted a forbidden discrimina
tion. The Board’s findings make it clear that the
scheme of the Independent was to deny member
ship to these individuals, and thus to exclude them
from employment because of their past adherence
to the Union. It is true that this plan did not
originate with petitioner, but it is likewise true
that petitioner did acquiesce in the Independent’s
proposal and did make itself the instrument for
its effectuation. On principle and under the uni
form decisions of the Circuit Courts of Appeals,
the statutory test, of discrimination is thus satis
fied. National Labor Relations Board v. Star Pub
lishing Co., 97 F. (2d) 465, 470 (C. C. A. 9 ) ;
National Labor Relations Board v. Hudson Motor
37
Car Go., 128 F. (2d) 528, 532-533 (C. C. A. 6) ;
National Labor Relations Board v. Gluek Brewing
Co., decided August 7, 1944 (C. C. A. 8) ; South
Atlantic Steamship Co., v. National Labor Rela
tions Board, 116 F. (2d) 480 (C. C. A. 5), certio
rari denied, 313 I T . S. 582.
The proviso equips the employer with a defense
against such a charge of discrimination in narrow
circumstances. The proviso does not, of course,
attempt directly to control the internal affairs of
labor organizations or the conditions under which
they may deny membership to employees or expel
those who have become members. Such controls
the statute leaves where it found them, in the
states. But the proviso, in describing the cir
cumstances under which an employer may defend
against a charge of discrimination, affects union
conduct indirectly in denying to labor organi
zations benefits under the National Labor Rela
tions Act which might otherwise be open to them.
This does not mean that an organization lacks
the power to determine its own membership
qualifications without restriction, subject only to
state law, but it may mean that if an organiza
tion wishes to exercise the right under the
federal statute to act as exclusive representative
of a bargaining unit it must give up such of its
former prerogatives as would permit it to dis
criminate against members of the unit it purports
to represent.19 In applying the proviso the ques-
proposition (Br. 52) “ that a union has exclusive control of
19 Petitioner cites a number of state decisions for the
38
tion is not whether a labor organization is free
under the law of any particular state to permit
or deny membership on its own uncontrolled terms,
but whether the language of the proviso permits
the conduct under scrutiny, when knowingly par
ticipated in by an employer, to serve as a defense
to what would otherwise be a violation of Section
8 (3).
Literally, the proviso protects “ an agreement
with a labor organization * * * to require as
a condition of employment membership therein.”
An agreement under which all persons within the
unit are required to become members of the con
tracting union, and only those who of their own
choice fail to join are then.excluded from further
employment, is clearly within the quoted language.
This is the ordinary closed-shop agreement, and
the Board has not suggested that such a contract
would be invalid. But that was not the object of
the agreement here, nor the manner in which it
was performed. Here the Independent, with pe
titioner’s knowledge, executed the agreement not
admission to its own membership.” Although this may be
true as a general matter (but see Cameron v. International
Alliance, 118 N. J. Eq. 11 (1935)) it does not follow that
Congress intended the closed shop proviso to protect any
thing lawful in the states, no matter how inconsistent with
the policy of the Act. Furthermore the state cases cited by
petitioner on their face do not indicate that a closed shop
entered into for the purpose of exclusion of employees in the
opposing Union would be valid. At the very least, there is
not sufficient authority dealing with any such problem to
warrant a generalization as to the state rule.
39
in order to bring all the employees within the or
ganization but to keep a substantial number of
them out; and this solely on the basis of the past
exercise by these employees of rights granted
under the Act. Such an arrangement goes beyond
the traditional closed-shop which the proviso was
designed to protect—the requirement of member
ship.
Conceivably, the proviso could be read to give
the contracting union and the employer unre
strained license to exclude from employment any
person denied membership for any reason or no
reason. But the provision need not be so con
strued, for its language shows that Congress was
concerned with a contract aimed at bringing all
employees into an organization. Otherwise, as
here, the right to require membership as a condi
tion of employment may be converted into a
blanket right to deny membership so as to exclude
from employment. The other provisions of the
Act, as well as the other pertinent guides to stat
utory construction, support a restrictive reading
of the proviso, and, in turn, furnish guides as to
the validity of the terms of membership here im
posed.20
Accordingly, the Board, exercising its duty to
give effect to the policies of the Act generally,
20 Also, to the extent that the Independent was deliberately
discriminating against employees in the bargaining unit, it
was not acting as their “representative,” within the meaning
of the proviso. The provisions for majority representation
40
looked, not alone at the language of the proviso,
but interpreted that language in its relation to
the statute as a whole (R. 22).21 In so doing the
Board properly said “ the proviso relating to the
closed-shop is not a severable and separate portion
of the Act. It must be construed in the light of
the statutory statements of policy and the general
provisions of the Act * * * the express pur
pose [of which] is to insure employees of their
right to self-organization and a free choice of
representatives” (R. 22).
In the light of the entire statute, the Board
concluded that the proviso to Section 8 (3), which
prescribes the only conditions under which a law
ful closed-shop agreement may be made {supra,
p. 36), sanctions neither the making of a closed-
shop agreement under the circumstances here
present, nor the result achieved (R. 21-22). The
in Section 9 (a) would seem to impose upon the representa
tive a duty to act on behalf of all the members of the bargain
ing unit equally and in good faith. Accordingly, it can be
said that the Independent lost its standing as representative
under Section 9 (a) by reason of the conduct in question; and
only a “representative of the employees as provided in sec
tion 9 (a) -’ is permitted to take advantage of the proviso in
Section 8 (3). The Board did not base its decision on this
theory, but we call it to the Court’s attention as additional
support for the decision reached. See infra, pp. 47-55, 59-69.
-1 Phelps Dodge Corp. v. National Labor Relations Board,
313 U. S. 1(7, 194: National Labor Relations Board v. Penn
sylvania Greyhound Lines, 303 U. S. 261, 266; International
Ass'n ° f Machinists v. National Labor Relations Board, 311
IT S. 72,82.
41
Board held, as it had in two earlier cases,22 that
the proviso does not countenance the use of a
22 In Matter of Rutland Court Owners, Inc., 44 N. L. R. B.
587, 46 N. L. R. B. 1040, the Board held that a valid closed-
shop contract did not protect an employer where the contract
ing union persuaded the employer to discharge certain
employee members of the union because, shortly before the
expiration of the contract, they indicated their intention to
seek representation by another union. The Board there
stated that, “We cannot allow the declared intention of Con
gress to be evaded by permitting an employer and a union
thus to combine to preclude the employees from expressing
their choice. The proviso in Section 8 (3) cannot therefore
be considered as an instrument for depriving employees of
their statutory right to select another representative for a
period succeeding the term embraced by the closed-shop con
tract” (46 N. L. R. B. at 1042).
In Matter of Monsieur Henri Wines, Ltd., 44 N. L. R. B.
1310, a majority of the employees in an appropriate bargain
ing unit applied for membership in a union, thereby desig
nating it as their representative for' collective bargaining
purposes. The union persuaded the employer to enter into
a closed-shop contract, both the employer and the union
knowing that the latter intended to reject the employees’
applications for membership thereby excluding them from
employment, and to have the employer replace them with
new employees who were members of the union. The
Board found that (p. 1318) “ the purport of the agreement
was to close the shop against [the employees] and to distrib
ute their jobs to non-employee members o f” the union. It
concluded, therefore, that the agreement and the subsequent
discharge of the employees who were denied membership in
the contracting union were not in conformity with the proviso
to Section 8 (3), since the union had repudiated its represent
ative status and the agreement was “not the culmination of
bona fide collective bargaining between an employer and a
labor organization acting as the exclusive representative of
his employees, within the meaning of Section 9 (a), but
615265— 44------ 4
42
closed-shop agreement “ as an instrument for
effecting discrimination against * * * em
ployees solely because of their prior union activi
ties,” or “ to penalize employees whose choice
of representatives was not that of the majority,”
or to “ deprive employees of their statutory right
to select bargaining representatives” (R. 21-23).
The broad purpose of the statute, its language,
its legislative history, the opinions of experts in
the labor relations field as to the function of the
closed shop, and decisions of the courts, support
the limited construction which the Board (R.
21-23) and the court below (R. 349-350) placed
upon the closed-shop proviso.23
The purpose of the Act.—The declared objective
of the Act, as the Board observed (R. 22), is to
protect “ the exercise by workers of full free
dom of association, self-organization, and desig
nation of representatives of their own choosing”
for the purpose of collective bargaining, and to
encourage “ practices fundamental to the friendly
adjustment of industrial disputes.” (Section 1
[was] an unlawful device for depriving the employees of
their jobs” (44 N. L. R. B., at 1318-1319).
“3 In view of the limiting terms of the proviso (National
Labor Relations Board v. Electric Vacuum Gleaner Co., 315
l . S. 685, 694—695) a narrow construction is proper. United
States v. Scharton, 285 U. S. 518, 521-522; United States v.
McElvain, 272 U. S. 633, 639; United States v. Dickson 15
Pet. 141,165.
43
of the A ct).24 And freedom from fear on the
part of the employees that they will suffer from
the assertion of their organizational rights is
recognized as an element essential to the achieve
ment of that objective.25 Employees will not be
assured of the freedom to organize and select
representatives of their own choosing, however, if
24National Labor Relations Board v. Jones & Laughlin
Steel Oorp., 301 U. S. 1, 33-34; Phelps Dodge Gorp. v. Na
tional Labor Relations Board, 313 U. S. 177, 182-183; Pitts
burgh Plate Glass Co. v. National Labor Relations Board,
313 U. S. 146, 165-166; National Labor Relations Board v.
Waunibec Mills, Inc., 114 F. (2d) 226, 232-234 (C. C. A. 1);
National Labor Relations Board v. Rath Packing Go., 115
F. (2d) 217,219 (C. C. A. 8).
25 The reinstatement and back-pay provisions of Section 10
(c) of the Act are designed to just this end. Thus the
Circuit Court of Appeals for the Eighth Circuit has
noted, in National- Labor Relations Board v. KUloren,
122 F. (2d) 609, 612, that it is necessary “* * * for
the workmen in industry generally to, feel assured that
they would be protected, as fully as soundly possible,
not merely in the exercise of their right of self-organiza
tion and designation of representatives of their own
choosing, but against the economic consequences of a legiti
mate assertion of those rights. The experience of the
Board, as reflected in its decisions, demonstrates the need
for this assurance.” Similarly this Court said in Virginia
Electric <& Power Co. v. National Labor Relations Board,
319 U. S. 533, 541, that “ I f employees have some assurance
that an employer may not with impunity impose upon them
the cost of maintaining an organization which he has domi
nated, any more than he can make them bear the burden
of a discriminatory discharge, they may be more confident
in the exercise of their statutory rights.”
44
they know that, in a situation where more than one
union has secured a following among them, those
. who choose the wrong candidate may be dis
charged. On the contrary, if the employer and the
majority representative were free to enter into a
closed-shop contract designed to discriminate
against the defeated minority group of employees,
the freedom of the employees to choose a repre
sentative would be impaired. In all cases where
it appeared likely, or even possible, that a closed-
shop agreement might follow the selection of a
majority representative, the employees would be
impelled to speculate as to which organization
would ultimately win the support of the majority
in order to avoid becoming marked as supporters
of the minority group. The employees’ right to
support and select the bargaining representative
he wanted would be reduced to the right to guess
which of two or more competing unions would
ultimately be chosen by the majority. And they
would make their selection at their peril. In hold
ing that this result would be contrary to the fun
damental purpose of the Act the Board has applied
a reasonable and realistic interpretation both to
the proviso to Section 8 (3) and to the Act as a
whole.
The legislative history.—The Congi’essional in
tent in writing the proviso to Section 8 (3) into
the Act was not to legalize or encourage the adop
tion of the closed-shop generally, but to achieve the
45
very different purpose of preserving the status
quo in the matter of the legality of closed-shop
contracts under the laws of the several States, with
the exception that- such contracts thenceforth were
to conform to the requirements of the Act, where
the employer was subject to its jurisdiction. Both
the Senate and House Committee reports state that
Section 7 (a) of the National Industrial Recovery
A ct26 had resulted in confusion and misunder
standing as to the legal status of the closed-shop
contract and that the proviso to Section 8 (3) of
the National Labor Relations Act was designed to
clarify its status.27
26 Section 7 (a) of the National Recovery Act (48 Stat.
195,198-199) read, in part, as follows :
“* * * no employee and no one seeking employment shall
be required as a condition of employment to join any com
pany union or to refrain from joining, organizing, or assist
ing a labor organization of his own choosing. * * *”
27 The Senate Committee stated: “The reason for the inser
tion of the proviso is as follows: According to some interpre
tations, the provision of section 7 (a) of the National Indus
trial Recovery Act, assuring the freedom of employees ‘to
organize and bargain collectively through representatives of
their own choosing” was deemed to illegalize the closed
shop * * * [the proviso to Section 8 (3) was designed]
to prevent similar misconceptions of this bill.” (S. Rep.
No. 573, 74th Cong., 1st Sess. p. 11.)
To the same effect, the House Committee said, “All that
[the proviso to Section 8 (3)] does is to eliminate the doubts
and misconstructions in regard to the effect of section 7
(a) [of the National Industrial Recovery Act] upon closed-
shop agreements, and the possible repetition of such doubts
and misconstructions under this bill * * (H. Rep.
No. 1147, 74th Cong., 1st Sess. p. 19.)
46
The Senate Committee said that “ the hill does
nothing to facilitate closed-shop agreements or to
make them legal in any State where they may be
illegal; it does not interfere with the statux quo
on this debatable subject but leaves the way open
to such agreements as might now legally be con
summated, with two exceptions * * *” (S.
Rep., pp. 11-12). Similarly the House Committee
said “ the bill does nothing to legalize the closed-
shop agreement in the States where it may be
illegal; but the committee is confident that it would
not be the desire of Congress to enact a general
ban upon closed shop agreements in the States
where they are legal” (H. Rep., pp. 19-20).
Finally, the Senate Committee declared that the
“ propaganda * * * that this proviso attaches
special legal sanctions to the closed shop or seeks
to impose it upon all industry * * * is abso
lutely false * * *. The assertion that the bill
favors the closed shop is particularly misleading
in view of the fact that the proviso in two respects
actually narrows the now existent law regarding
closed-shop agreements” (S. Rep., pp. 11-12).
The purpose, therefore, of the proviso to Sec
tion 8 (3), in the eyes of Congress, was to permit
the making of closed-shop agreements where such
agreements are valid under State laws, to the
extent that such agreements are consistent with
the provisions and policies of the Act. Its pur
pose, indeed, was to define the narrow limits
47
within which the exceptional discrimination
against employees because of union affiliation
inherent in a closed-shop arrangement was to be
permitted under the Act.
In the instant case a minority group of em
ployees who exercised their right under the Act
to sponsor the Union in the election campaign
was discriminated against, and the employees lost
their jobs because they had exercised that right.
In view of the plain intent of the legislators to
protect employees’ freedom to organize and to
eliminate such restraints upon their exercise of
that freedom, there is no room for the contention
that the proviso countenances such a result. On
the contrary, we submit that even if the letter
of the proviso appears to be satisfied, a closed-
shop agreement still does not grant the employer
and the contracting union carte blanche to do as
they will without regard to the statutory rights
of individual or minority groups of employees.
In short, a closed-shop agreement under the Act
does not constitute a loophole through which the
broad purposes and spirit of the Act may be cir
cumvented and defeated.
Since a closed-shop agreement is valid only,
among other conditions, if made with a “ labor
organization [which] is the representative of the
employees as provided in section 9 ( a ) ” (Sec
tion 8 (3) of the Act), an examination of the
function of Section 9 (a) is essential to a proper
48
consideration of the validity of a closed-shop
agreement under the Act."8 Congress adopted the
majority rule principle in Section 9 (a), after
grave consideration of the possibilities it afforded
for abuse, as the only workable scheme by means
of which an employer and his employees could en
gage in the collective bargaining the Act seeks
to encourage. The House Committee (H. Rep.,
p. 21) stated that “ majority rule * * * is
the only practical method of achieving the desired
ends.” 29 At the same time testimony taken by
28 It is significant that the bill originally permitted the
employer to make a closed-shop contract with the “represent
ative of the majority of the employees” but was amended to
require the contracting labor organization to be “the repre
sentative of the employees as provided in Section 9 (a ).”
79 Cong. Rec. 7650.
28 The Senate Committee pointed out that “ the principle of
majority rule has been applied successfully by governmental
agencies * * It noted that “It was promulgated by
the National War Labor Board created by President Wilson
in the spring of 1918. It has been followed without devia
tion by the Railway Labor Board, created by the Transporta
tion Act of 1920. Public Resolution No. 44, approved June
1934, contemplated majority rule in that it provided for
secret elections. The 1934 amendments to the Railway Labor
Act * * * [embodied the principle]” (S. Rep., p. 13).
The House Committee made similar reference to these prece
dents (H. Rep., p. 22). And Dean Lloyd K. Garrison of the
Law School of the University of Wisconsin stated before the
Senate Committee that “* * * everybody that has had
to deal with this problem * * * [has], without exception,
applied the majority rule * * * What other rule could
possibly work'? ” Senate Committee on Education and Labor,
74th Cong.. 1st Sess. on S. 1958, Part 2, p. 127.
49
the Committees of both the Senate and House,30
the debates on the floors of both Houses,31 and
the Committee reports, reveal that Congress was
acquainted with, and intended to avoid, the danger
to minority groups of giving legal sanction to a
totally unrestrained majority representative.
The House Committee (H. Rep., p. 20) stated
that, “ the underlying purposes of the majority
rule principle are simple and just.” The Senate
Committee declared that the principle “ is sanc-
30 Numerous witnesses testified as to the danger of the
majority rule principle to individual and minority em
ployees, e. g., before the Senate Committee on Education
and Labor, U. S. Senate, 73rd Cong., 2d Sess., on S. 2926,
Robert L. Hale, Professor of Law at Columbia University,
Part 1, p. 57; William E. Taylor, Chairman Legislative Com
mittee, D. C. Branch, National Association for the Advance
ment of Colored People, Part 3, pp. 997-998; T. Arnold Hill,
The National Urban League for Social Service Among Ne
groes, Part 3, pp. 1020-1022; before the Senate Committee on
Education and Labor, 74th Cong., 1st Sess., on S. 1958, James
Myers, Industrial Secretary, Federal Council of the Churches
of Christ in America, Part 2, p. 224; Walter Gordon Mer
ritt, Part 3, pp. 318-321; James T. Donnelly, Executive Vice-
President, Illinois Manufacturers’ Association, Part 3, p.
511; A. B. Trembley, Part 3, pp. 548-549; James Emery,
general counsel, National Association of Manufacturers,
Part 3, p. 855; before the House Committee on Labor, 74th
Cong., 1st Sess., on H. R. 6288, Hon. Frances Perkins, Sec
retary of Labor, pp. 278-279; Dr. E. R. Lederer, pp. 307-308.
31 The problem of the rights of minorities was raised in
the debates, e. g., in the Senate: Senator Wagner: “ * * *
majority rule recognizes minority rights.” 79 Cong. Rec.
7571; Senators Hastings, Walsh and Wagner, 79 Cong. Rec.
7671-7673; in the House: Messrs. Connery, Taylor and
Wood, 79 Cong. Rec. 9686-9687.
50
tioned by our governmental practices, by busi
ness procedure, and by the whole philosophy of
democratic institutions” (S. Rep., p. 13). The
evidence is plain that what Congress had in mind
was to implant in the field of labor relations the
same concept of majority rule which permeates
the democratic process, including the same obli
gation on the part of the majority to observe the
rights of minorities.32 The House Committee
noted that “ Majority rule is at the basis of our
democratic institutions” (H. Rep., p. 21).
On the basis of the political analogy alone it
seems clear that Congress could not have intended
that the designation of the representative selected
by the majority of the employees in a proper unit
as the “ exclusive” representative of “ all the em
ployees” in the unit should clothe that repre
sentative with a power it might exercise arbi
trarily and accountable to no one. More specific
evidence of Congress’ intention that the Act
32 Discussing the bill on the floor of the Senate, Senator
TV agner, referring to Dean Lloyd K. Garrison said, “He has
made it clear that democracy in industry must be based upon
the same principles as democracy in government. Majority
rule, with all its imperfections, is the best protection of
workers rights, just as it is the surest guaranty of political
liberty that mankind has yet discovered” (79 Cong. Rec.
Toll). Similarly, Representative TVinthrow on the floor of
the House said: “The right of self-government through
fairly chosen representatives is a right which is inherent to
the American people and to our American form of govern
ment. this bill does no more than guarantee that right to
American labor” (79 Cong. Rec. 9691).
51
should protect the rights of minority employees
from being overridden by an irresponsible ma
jority, however, is available in the reports of the
Congressional Committees and the debates on
the floors of both Houses.
The Senate Committee declared that “ *
majority rule, it must be noted, does not imply
that any employee can be required to join a union,
except through the traditional method of a closed-
shop agreement, made with the assent of the em
ployer. And since in the absence of such an
agreement the bill specifically prevents discrimina
tion against anyone either for belonging or for
not belonging to a union, the representatives se
lected by the majority will be quite powerless to
make agreements more favorable to the majority
than to the minority” (S. Rep., p. 13, italics
supplied). Similarly the House Committee stated
that “ Since the agreement will be made to apply
to all, the minority group and individual workers
are given all the advantages of united action
* * * land] agreements more favorable to the
majority than to the minority are impossi
ble * * *” (H. Rep., p. 21, italics supplied).
And the Senate Committee (S. Rep., pp. 13-14),
after pointing out that the bill preserved the right
of an individual employee or group of employees
to present grievances to their employer, said:
Another protection for minorities is that
the right of a majority group through its
52
representatives to bargain for all is con
fined by the bill to cases where the majority
is actually organized “ for the purposes of
collective bargaining in respect to rates of
pay, wages, hours of employment, or other
conditions of employment.” An organiza
tion which is not constructed to practice
genuine collective bargaining cannot he the
representative of all employees under this
hill. (Italics supplied.)33
This statement indicates that the Senate did not
intend that the broad powers of majority rule
should be used by a union to exclude from em
ployment persons it claimed to represent. This
clearly appears from the previous history of the
majority rule principle. The House R eport34
cites with approval the decision of the National
Labor Relations Board established under Public
Resolution No. 44, 73rd Cong., H. J. Res. 375, in
Matter of Iloude Engineering Corp., 1 N. L. R. B.
(old) 35, which was the first decision applying
the majority rule principle to employees within
Federal jurisdiction other than those covered by
the Railway Labor Act. The Senate Report,
33 It follows that an organization, however constructed,
which in fact does not “ practice genuine collective bargain
ing' repudiates its statutory status as “exclusive” representa
tive of employees. Compare the statement of the Board in
Matter of Monsieur Henri Wines, Ltd., 44 N. L. R. B. 1310,
1318-1319 {infra, p. 68, n. 45).
34 H. Rep. No. 1147,74th Cong., 1st Sess., pp. 20-21.
53
while not citing the Houde case, does refer to the
fact that the majority rule principle had been
applied under Public Resolution No. 44. ,36 In the
Houde decision, the old National Labor Relations
Board reviewed the history of majority rule as
developed by the First W ar Labor Board and by.
the Railway Labor Board and its successors. It
then listed certain situations in which it sug
gested that majority rule might be inapplicable.
Thus, in the Houde case (at p. 43-44), the old
National Labor Relations Board stated:
In concluding this opinion the Board
wishes to indicate the limits beyond which
it [majority rule] does not go. * * *
* * * * *
Nor does this opinion lay down any rule
as to what the employer’s duty is where
the majority group imposes rules of par
ticipation in its membership and govern
ment which exclude certain employees
whom it purports to represent in collective
bargaining, * * * or where the major
ity group has taken no steps toward col
lective bargaining or has so abused its
privileges that some minority group might
justly ask this Board for appropriate
relief.
Subject to these qualifications, the Board
confines itself to holding that when a per
son, committee or organization has been
designated by the majority of employees in
*5 S. Rep. No. 595, 74th Cong., 1st Sess., p. 13.
54
a plant or other appropriate unit for col
lective bargaining, it is the right of the
representative so designated to be treated
by the employer as the exclusive collective
bargaining agency of all employees in the
unit, and the employer’s duty to make
every reasonable effort, when requested, to
arrive with this representative at a col
lective agreement covering terms of em
ployment of all such employees.
A contemporaneous study of collective bar
gaining made by the Twentieth Century Fund
likewise places similar limitations upon the ap
plicability of majority rule.36 The two limitations
relevant to this case which are stated by the
Twentieth Century Fund study are:
3. It lays down no rule as to an em
ployer’s duty where the majority group im
poses restrictive rules of participation in
its membership and government, excluding
certain employees whom it purports to
represent for collective bargaining.
* * * * *
5. It lays down no rule in cases where
the majority group has taken no steps
toward collective bargaining or has so
abused its privileges that some minority
group might justly ask the board for ap
propriate relief.
Likewise, in testimony before the Senate and
House Committees it was indicated that unions
36 Twentieth Century Fund, Inc., Labor and Government
(New York, 1935), pp. 245-246.
55
enjoying the benefits of the Act must have an
open membership policy. Thus, Paul Brissenden,
Professor Economics at Columbia University,
stated: 3T
* * * the group which gets its poli
cies and terms written into the protocol
must be the recognized group, membership
in which, of course, should be open and
free from inequitable restrictions, as in
the case of the trade associations.
The inescapable conclusion, in view of these
considerations, is that Congress intended that the
majority rule principle embodied in Section 9 (a)
should include a “ simple and just” ( supra, p. 49)
observance of the rights of minorities in keeping
with the deep sense of justice which is funda
mental to our democratic way of life and that
the same principles, obviously, should be applied
with particular care under the proviso of Sec
tion 8 (3).
Understanding as to the meaning of the closed-
shop.—Presumably Congress meant to protect by
the proviso of Section 8 (3) the closed-shop agree
ment which had been traditionally recognized in
“ the philosophy of bargaining as worked out in
the labor movement in the United States” (Order
of Railroad Telegraphers v. Railway Express
Agency, Inc., 321 U. S. 342, 346). Authorities in
the field of labor relations support the view that 37
37 Hearings before the Committee on Education and Labor,
U. S. Senate, 73rd Cong., 2nd Sess., on S. 2926, Pt. 1, p. 216.
56
the purpose and function of the closed-shop, his
torically, has been to expand union membership,
not to restrict it. The closed-shop prior to the
passage of the Act was not considered a device to
enable the contracting union to control employ
ment on the ‘ ‘winner-take-all’ ’ basis which peti
tioner contends should have prevailed in the case
at bar. Its purpose, rather, was to bring within
the union fold, not merely the employees who had
designated the union as their bargaining agent,
but all of the employees in the particular shop or
unit who were enjoying the fruits of the union’s
efforts to improve the lot of the workers. The
major reasons advanced by responsible union
leaders for seeking a “ closed” or “ union” shop38
may be characterized as (1) “ self-preservation”
or “ security” (2) “ share the cost,” (3) “ respon
sibility,” and (4) “ sentimental” or “ social.”
While they are necessarily inter-related to a de-
38 Although these, two terms are regarded by some authori
ties as essentially indistinguishable (Toner, The Closed
Shop, p. 27), some modern union leaders eschew the term
“closed shop” because they feel that opponents of the closed-
shop principle have succeeded in distorting the term “closed
shop” into an epithet by misrepresenting it as the label for
a closed shop with a closed union irresponsibly exercising
dictatorial powers over membership and job opportunities.
In other words, the term “closed shop” has, in the opinion
of those labor leaders, been widely construed as synonymous
with the misuse, and misapplication of the closed-shop prin
ciple. See Golden and Ruttenberg, The Dynamics of In
dustrial Democracy, pp. 191, 214-210; Appendix B, pp. 86,
100,102-105, infra.
57
gree, the theory underlying these reasons for the
closed-shop may be stated succinctly as follows:
(1) The “ self-preservation” or “ security”
reason stems from the union members’ fears that
the employment of non-union workers will, by
diluting the union’s strength, weaken its bargain
ing power, and inevitably bring about a reduc
tion of the improved working standards the union
members have struggled to gain. The ultimate
fear, of course, is that loss of effectiveness as a
bargaining agent may destroy the union itself
(Appendix B, pp. 91-102, 106-107, 111, 115-116,
infra). (2) The “ share the cost” reason is based
upon the instinctively human feeling on the part
of union member workers that “ those who reap the
benefits should bear the burdens.” The improve
ment in their common status, achieved through
the efforts of the union members, accrues to the
benefit of all the employees in the shop or unit
involved. The union members resent the fact that
their often hard-won gains may be enjoyed by
non-union “ chisellers” who, by refusing to join in
the common cause, not only fail to carry their
share of the substantial burden involved, financially
and in other respects, but stand as a potential
threat to the union’s bargaining position (A p
pendix B, pp. 90, 92, 99-102, 114-115, infra).
(3) The “ responsibility” reason is that a closed
shop, by giving the union greater control over the
working force, enables the union to carry out
with greater effectiveness and responsibility its
6 1 5 2 6 5 — 4 4 ---------5
58
obligations as bargaining representative of the
employees. The requirement that all employees
become members of the union, subject to union
discipline, eliminates possible interference with
the Union’s exercise of its representative func
tion on the part of irresponsible non-member
employees, and thus redounds to the welfare of
both management and labor (Appendix B, pp. 93,
94, 98,101,102,107-108,113-114, infra). (4) The
“ sentimental” or “ social” reason is that union
men prefer, naturally, to work with their own
kind, with men who are sympathetic to their views,
and resent being required to work alongside of
non-union men whose presence they regard as
potentially dangerous to their cause (Appendix B,
pp. 86-87, 98, 109-112, infra).
Implicit in the rationale underlying these basic
reasons for which unions seek the closed shop is
the principle that its purpose is “ to control the
non-unionists by bringing them into the fold ”
(Appendix B, pp. 86-89, 91-93, 98-99, 103-106,
109, 110-111, 116, infra), and not the contrary
notion that a union holding a closed-shop contract
is constituted an irresponsible and absolute dic
tator over employment in the shop.39 It would be 33
33 For instance the Steel Workers Organizing Committee,
" l''ch has now become the United Steel Workers o f America,
C. I. O., invariably seeks to obtain a union-shop agreement
vith employers, but whenever it loses an election it advises
its own members to join the victorious union (Golden and
Ruttenberg, The Dynamics of Industrial Democracy, Ap
pendix B, p. 113, infra). And authorities in the labor rela-
59
anomalous, indeed, if the closed shop, which arose
historically as a means of affording protection
against employer opposition to those employees
who believed in the necessity of organization,
should be used, now that employees’ right to free
dom of organization is protected by Federal law,
for the purpose of thwarting their exercise of that
right.
Court decisions.—Decisions of this Court and
of others support the Board’s construction of the
proviso to Section 8 (3), and of the Act as a whole,
as applied in the case at bar. In National Labor
Relations Board v. Electric Vacuum Cleaner Co.,
315 IT. S. 685, 694—695, the Court noted the “ illu
minating comment” of the Senate Committee
{supra, p. 46) to the effect that the proviso to
Section 8 (3) was designed not “ to facilitate
closed-shop agreements” but, with certain excep
tions, was to maintain “ the status quo on this
debatable subject.” The Court has recognized,
moreover, that the individual employee “ becomes
entitled by virtue of the Labor Relations Act
somewhat as a third party beneficiary to all bene
fits of the collective trade agreement” ; that “ the
very purpose of providing by statute for the coi
tions field commonly regard the maintenance of a closed shop
by a closed union, which arbitrarily refuses membership to
eligible applicants, as a misuse of the closed-shop principle.
‘‘The result is a thoroughly unwholesome situation—legally,
socially, and economically” Toner, The Closed Shop, p. 164;
A. G. Taylor, Labor Problems and Labor Law (New York,
(1938), pp. 90-92.
60
lective agreement” is to enable the employer and
his employee to agree to terms “ which reflect the
strength and bargaining power and serve the wel
fare of the group [and that the] benefits and
advantages [of such an agreement] are open to
every employee of the represented unit * * * ” .
(J. I. Case Co. v. National Labor Relations Board,
321 U. S. 332, 336, 338, italics supplied). “ The
statute guarantees to all employees, ” the Court
has said, “ the right to bargain collectively
through their chosen representatives” (Medo
Photo Supply Corp. v. National Labor Relations
Board, 321 U. S. 678, 684, italics supplied). Simi
larly, the Circuit Court of Appeals for the Eighth
Circuit declared that “ * * * a minority have
a right to protection to the end that they, as well
as other employees of the unit, may have their
full rights under Section 7” (National Labor Re
lations Board v. Brashear Freight Lines, Inc., 119
F. (2d) 379, 381 (C. C. A. 8, italics supplied).
To the same effect the Circuit Court of Appeals
for the Sixth Circuit has held that an employer
may not discriminate against employee members
of a minority union in favor of employees who
are members of the majority representative. Na
tional Labor Relations Board v. Hudson Motor
Car Co., 128 F. (2d) 528, 532 (C. C. A. 6).
When a related problem arose under the R a il-.
way Labor Act (44 Stat. 577, 48 Stat. 1185) in
Brotherhood of Railway and Steamship Clerics,
61
et al. v. United Transport Service Employees of
America, 137 F. (2d) 817 (App. D. C.), reversed
on other grounds, 320 U. S. 715,40 Chief Justice
Groner, in a concurring opinion, eloquently pointed
to the injustice of permitting the majority repre
sentative to use its “ exclusive” status under the
statute so as to discriminate against a minority
group of employees. In part he said (at 821-
822) :
“ * * * the Brotherhood, designated
by the Board as the bargaining agent
of the [Negro] porters, is a white organi
zation which does not permit membership
by the colored employees of the railroads.
As a result, the effect of the action of the
Board is to force this particular group of
employees to accept representation by an
organization in which it has no right to
40 This Court's reversal of the above decision in 320 U. S.
715, and the holdings in Switchmen’s Union of North Amer
ica, et al. v. National Mediation Board, 320 U. S. 297, 305-
307; General Committee of Adjustment of the Brotherhood
of Locomotive Engineers for the Missouri-Kansas-Texas
Railroad v. Missouri-Kansas-T exas Railroad Co., 320 U. S.
323, 336; and General Committee of Adjustment of the
Brotherhood of Locomotive Engineers for the Southern Pa
cific Co. v. Southern Pacific Co., 320 U. S. 338, 342-344, are
not contra to the principle expounded by Chief Justice
Groner. Those decisions turned upon the point that the
Railway Labor Act foreclosed judicial review of the Na
tional Mediation Board’s decisions upon questions of repre
sentation under Section 2, Ninth of the Act, and therefore
did not pass upon the merits. There is, of course, no ques
tion of the Court’s authority to review the action taken by
the Board in the instant case (Section 10 (e) of the Act).
62
membership, nor right to speak or be heard
in its own behalf. This obviously is wrong
and, if assented to, would create an intoler
able situation. * * * that the Brother
hood, in combination with the employer,
should force on these men this proscription
and at the same time insist that Brother
hood alone is entitled to speak for them in
the regulation of their hours of work, rates
of pay and the redress of their grievances
is so inadmissible, so palpably unjust and
so opposed to the primary principles of the
Act as to make the Board’s decision up
holding it wholly untenable and arbitrary.
The purpose of the Act, as is apparent on
its face, and as has been recognized and
confirmed by the Supreme Court and this
Court in many decisions, is to insure free
dom of choice in the selection of repre
sentatives. * * * nothing in the Act
nor in its construction by the courts can
be found to justify such. coercive action as
to force upon any class of employees repre
sentation through an agency with whom it
has no affiliation nor right of association.
* * * To perpetuate it by law would be
to impose a tyranny in many respects anal
ogous to “ taxation without representation.”
And if anything is certain, it is that the
Congress in passing the Act never for a
moment dreamed that it would be construed
to diminish the right of any citizen to follow
a lawful vocation on the same or equal
terms with his neighbor. In this view, to
63
enforce the Board’s decision would be con
trary to both the word and spirit of our laws.
These decisions support the proposition that
the selection of a bargaining representative by the
majority of the employees in an appropriate unit
pursuant to Section 9 (a) of the Act grants no
privilege to the employer and the bargaining rep
resentative to override the basic statutory rights
o f individual or minority groups of employees.
And where, as in the case at bar, a closed-shop
contract is involved, it follows that the rights of
minorities must be given every possible protec
tion.
Conclusion.— The principles and authorities re
viewed above demonstrate the reasonableness of
the Board’s interpretation of the proviso to Sec
tion 8 (3) and of its holding that the proviso did
not sanction the conduct of petitioner and the In
dependent. The stress which Congress {supra,
pp. 51-54) and the courts {supra, pp. 59-63) have
laid upon the fact that the Act was designed to
extend freedom of organization to all employees,
the concern of Congress over the rights of mi
nority groups of employees under application
of the majority rule principle {supra, pp. 47-55),
the political analogy {supra, pp. 49-50), and the
fundamental purposes of the statute {supra, pp.
32-40), compel the conclusion that the granting of
the extraordinary right of “ exclusive” represen
tation under Section 9 (a) was intended to carry
64
reasonable obligations with it. While it is clear
that Congress did not intend to establish the
Board as a regulator of unions, it is equally
clear that it did not mean to bestow upon em
ployees and their representatives rights without
bounds. The natural bounds are the policies of
the Act and public policy generally, and the de
termination of when these bounds are exceeded
was left to the Board.41
This Court has recognized that the Act does
not protect employees in the exercise of “ con
certed activities” per se, but that the protection
is conditioned upon an element of responsibility
on the part of the employees. Their activities
must not be contrary to the policies of the Act
or otherwise contrary to public policy.42 And
41 “A statute expressive of such large public policy as
that on which the National Labor Relations Board is based
must be broadly phrased and necessarily carries with it the
task of administrative application * * * in the nature
of things Congress could not catalogue all the devices
and stratagems for circumventing the policies of the
Act * * *. Congress met these difficulties by leaving the
adaptation of means to end to the empiric process of ad
ministration.” Phelps Dodge Corp. v. National Labor Rela
tions Board, 313 U. S. 177,194.
42 See Matter of American News Company, Inc., 55 N. L.
R. B. 1302,1309-1314, where the Board discusses this problem
in conjunction with the Court’s decisions in Southern Steam
ship Co. v. National Labor Relatione Board, 316 TJ. S. 31,
47; National Labor Relatione Board v. Fansteel Metallurgi
cal Corp., 306 U. S. 240, 252-261; and National Labor Rela
tions Board v. Sands Mfg. Co., 306 U. S. 332. Cf. Cameron
v. International Alliance, etc., 118 N. J. Eq. 11, where thecourt
65
the Court has repeatedly noted the importance
of the public interest in labor relations questions
( Thornhill v. Alabama, 310 IT. S. 88, 103-104;
Carpenters & Joiners Union of America, et al.
v. Ritter’s Cafe, et al., 315 IT. S. 722, 724-725),
and particularly under the Act (Medo Photo Sup
ply Corp. v. National Labor Relations Board, 321
IT. S. 678, 687; J. I. Case Co. v. National Labor
Relations Board, 321 U. S. 332, 337; Phelps
Bodge Corp. v. National Labor Relations Board,
313 IT. S. 177,192-194). It has said that the Board
is “ charged in the public interest” with the duty
of giving effect to the policies of the Act. Na
tional Licorice Co. v. National Labor Relations
Board, 309 IT. S. 350, 364; Pittsburgh Plate Glass
Co. v. National Labor Relations Board, 313 U. S.
146, 165-166; the J. I. Case decision, supra, 321
IT. S. at p. 337. It goes without saying that effec
tuation of the statute’s policies may require some
restriction upon the absolute freedom of action
of employees and their representatives.43
condemned a union’s practice of unduly favoring senior
members over juniors in the matter of employment privi
leges, as a “perversion, an embezzlement of power” and
“opposed to the public interests.”
43 The National War Labor Board has established a “pol
icy of denying maintenance-of-membership [contracts] when
the union is undemocratic and irresponsible,” and regularly
considers “evidence of union responsibility or irresponsibility
[and] evidence of democratic control and 'procedure within
the union or absence of such control and pi'ocedure * * *”
in determining whether to grant a union a maintenance-of-
membership contract. In re Humble Oil and Refining Co.,
6 6
The necessity of applying the above-discussed
principles to cases arising under the Act is demon
strated by the case at bar. The minority group of
employees herein can be denied employment
under the closed-shop agreement only in contra
vention of the principles of the Act and of public
policy.44 If, under Section 9 (a) a representative
chosen by the majority of the employees in a bar
gaining unit is bound “ to practice genuine col
lective bargaining” in order to be the “ exclusive
representative of all the employees” in the unit
15 W. L. R. 380, 387, 389-390 (italics supplied); In re
S. A. Woods Machine Co., 2 W. L. R. 159, 162; In re Los
Angeles Steel Casting Co., 4 W. L. R. 214,219; In re Pullman
Standard Car Manufacturing Co., 10 W. L. R. 400, 403. See
In re Tennessee Coal, Iron and R. R. Co., 15 W. L „R . 15,
17-18, where the Regional Board (Region IV ) refused to
grant a maintenance-of-membership contract because the
union’s constitution and bylaws contained “no safeguard
against the union’s expelling a member unfairly and thus
bringing about the loss of his job.” See the statement of Mr.
Harry Shulman, as umpire, in In re Arbitration between
Ford Motor Company and UAW {CIO), 14 L. R. R. 219,
220-221, that “the prerogative of social clubs to be exclusive
in the selection of their membership is not transferable to
unions of working men” (Appendix C, p. 117, infra).
44 1° carry out the political analogy {supra, pp. 49-50) :
the C. I. O. adherents, having lost the election, were not only
disenfranchised, but were, in effect, deported. See Lusky,
Minority Rights and the Public Interest, 52 Yale Law Jour.
1-41 (Dec., 1942), for a discussion of minority rights as re
lated to the public interest, with reference to the public in
terest in labor relations matters at p. 19. See also Note,
Effect of a Closed-shop Contract on Employer Practices
Otherwise Unfair under the National Labor Relations Act,
56 Har. Law Rev. 613, 618-619, 623 (Jan., 1943).
67
(S. Rep., pp. 13-14), it follows that a repre
sentative which enjoys the privileges of a closed-
shop agreement must do so. Indeed, because of
the very nature of a closed-shop agreement with
respect to both the power it places at the disposal
of the contracting union and the disastrous effect
upon individual or minority employees against
whom an abuse of such agreements might operate,
it would seem that the test of whether a repre
sentative is satisfying the requirements of Sec
tion 9 (a) should be applied more strictly in the
latter case than in the former. While the Board
has never invalidated a contract between an em
ployer and a majority representative of his em
ployees in the absence of a finding of unfair labor
practices committed by the employer, it neverthe
less has indicated an awareness that labor organ
izations enjoying the privileges of exclusive rep
resentation under Section 9 (a) incur comple
mentary obligations and that a failure of the rep
resentative to discharge those obligations might
result in either the invalidation of its bargaining
agreement or in the loss of its status as exclusive
representative under the Act.40 * * 43 I f a bargaining
40 In Matter of Bethlehem-Alameda Shipyard, Inc. and
Bethlehem Steel Company, Shipbuilding Division, Alameda
Yard, 53 N. L. R. B. 999, 1016, a representation proceeding
not involving unfair labor practices, the Board, without
deciding the question, declared: “We entertain grave doubt
whether a union which discriminatorily denies membership
to employees on the basis of race may nevertheless bargain
as the exclusive representative in an appropriate unit com-
6 8
agreement, otherwise valid, may be abrogated be
cause the contracting union is not deporting itself
in accordance with the requirements of the Act, it
necessarily follows that where, as here, both the
employer and the contracting union fail to ob
serve the statutory requirements in executing a
posed in part of members of the excluded race. Such bar
gaining might have consequences at variance with the pur
poses of the Act. I f such a representative should enter into
a contract requiring membership in the union as a condition
of employment, the contract, if legal, might have the effect
of subjecting those in the excluded group, who are properly
part of the bargaining unit, to loss of employment solely on
the basis of an arbitrary and discriminatory denial to them
of the privilege of union membership. In these circum
stances, the validity under the proviso of Section 8 (3) of the
Act of such a contract would be open to serious question.”
In another representation proceeding, Matter of Lams &
Brother Company, Inc., 5-R-1413, 5-R-1437, the Board, on
April 7, 1944, issued a rule to show cause why it should not
rescind its certification of a union which allegedly refused to
admit to membership and to bargain for Negro employees,
who constituted a minority in the bargaining unit composed
of both Negro and white employees.' The Board has since
directed a further hearing in the matter. And in Matter of
Monsieur Henri Wines, Ltd., {supra, p. 41), the Board de
claring a closed-shop contract invalid, found that the con
tracting union, by using its contract “as a device to legalize
its fraud,” had “repudiated its representative status” and
that the agreement was not “ the culmination of bona fide
collective bargaining between an employer and a labor or
ganization acting as the exclusive representative of his em
ployees, within the meaning of Section 9 (a) * * *”
(44 N. L. R. B. at pp. 1318-1319, italics supplied). In the
latter case, as in the instant case, however, the Board found
that the employer had committed unfair labor practices.
See also Matter of U. S. Bedding Company, 52 N. L. R. B.
382, 388.
69
closed-shop agreement the Board may find the
agreement invalid.
B. PETITIONER VIOLATED SECTION 8 ( 3 ) OF TH E ACT IN EXECU T
ING TH E CLOSED-SHOP AGREEM ENT A N D IN DISCHARGING
EMPLOYEES PU RSU A N T THERETO
For the reasons set forth above the closed-
shop proviso in Section 8 (3) does not protect an
agreement designed to discriminate against mem
bers of the bargaining unit who are willing to
join the majority organization. Accordingly, we
submit that the Board properly held that peti
tioner violated Section 8 (3) of the Act in exe
cuting the closed-shop agreement with the
knowledge that the Independent intended to use
it, contrary to the purposes of the statute, in or
der to deprive employees of their jobs because of
their previous adherence to the Union. It fol
lows, of course, that the discharge of employees
pursuant to the terms of the illegal agreement
was discriminatory and in violation of Section
8 (3). National Labor Relations Board v. Elec
tric Vacuum Cleaner Co., 315 U. S. 685, 694; cf.
International Ass’n of Machinists v. National La
bor Relations Board, 311 U. S. 72, 81.
Petitioner’s contention that it was compelled to
enter into a closed-shop contract with the Inde
pendent by reason of the settlement agreement
which provided that petitioner would execute a
closed-shop contract with whichever union won the
election {supra, p. 9) is without merit. The set-
70
tlement agreement provided for a closed-shop in
the customary sense, and not as a means of se
curing the discharge of members of the minority
union. Furthermore, as was pointed out by the
Board (R. 22, 23) and by the court below (R.
349-350), regardless of the validity of the settle
ment agreement, petitioner cannot say that per
formance of its terms required petitioner to vio
late the Act.46 It is thoroughly settled that pri
vate parties cannot by contract “ make permis
sible a course of conduct forbidden by law”
( United States v. City and County of San Fran
cisco, 310 U. S. 16, 28), and that even where an
agreement is valid when made, an intervening
“ change of fact or of law” may render further
performance illegal.47 48
48 Restatement of the Law of Contracts, Vol. II, Sec. 608.
See also 6 Williston on Contracts (Bev. Ed.) Sec. 1759:
“ * * * where the contract was originally legal, but because
of a change in purpose of the parties, or a change in the law,
performance of the acts contracted for on one side or the
other has become illegal, any subsequent performance of such
acts is against public policy and the party who has undertaken
to perform them is excused from so doing * * *.”
47 In Omnia Co. v. United States, 261 U. S. 502, 512, the
Court quoted with approval the following language from In
re Shipton, Anderson &• Co.., (1915) 3 K. B. 676, 683-684: “ I f
one contracts to do what is then illegal, the contract itself is
altogether bad. If after the contract has been made it cannot
be performed without what is illegal being done, there is no
obligation to perform it. In the one case the making of the
contract, in the other case the performance of it, is against
Public policy.” In Norman v. Baltimore di Ohio R. Co.,
291 U. S. 240. 307-308, the Court observed that “ ‘Contracts,
71
Similarly, petitioner’s protestations of good
faith in executing the closed-shop agreement, even
if credited, do not alter the fact that its conduct
was illegal. It is settled that an employer’s mo
tive and intent are not determinative of the ques
tion whether his conduct is in violation of the
Act. As the Sixth Circuit has held, “ where it is
once made to appear from the primary facts that
the employer has violated the express provisions
of the Act, we may not inquire into his motives,”
even where it is shown that the employer “ has
not willfully violated” the Act. National Labor
Relations Board v. Hudson Motor Car Company,
128 F. (2d) 528, 532-533 (C. C. A. 6). To the
safe effect are: National Labor Relations Board
v. Gluek Brewing Co., decided August 7, 1944
(C. C. A. 8) ; McQuay-N.orris Mfg. Co. v. National
Labor Relations Board, 116 F. (2d) 748, 752
(C. C. A. 7), certiorari denied, 313 U. S. 565;
however express, cannot fetter the constitutional authority
of the Congress * * * Parties cannot remove their
transactions from the reach of dominant constitutional
power by making contracts about them. See Hudson Water
Co. v. McCarter, 209 U. S. 349, 857.” See also other cases cited
at 294 U. S. 306-311. In cases arising under the Act the
Court has also had occasion to observe that since the Board
is “charged in the public interest with the duty of preventing
unfair labor practices” (National Licorice Co. v. National
Labor Relations Board, 309 U. S. 350, 364), “ wherever pri
vate contracts conflict with its functions, they obviously must
yield or the Act would be reduced to a futility.” J. / . Case
Co. v. National Labor Relations Board, 321 U. S. 332, 337.
72
American Smelting Refining Co. v. National
Labor Relations Board, 126 F. (2d) 680, 685
(C. C. A. 8) ; Kansas City Power & Light Co. v.
National Labor Relations Board, 111 F. (2d) 340,
346-347 (C. C. A. 8) ; National Labor Relations
Board v. Star Publishing Co., 97 F. (2d) 465, 470
(C. C. A. 9) ; cf. Warehousemen’s Union v. Na
tional Labor Relations Board, 121 F. (2d) 84, 87
(App., D. C.), certiorari denied, 314 IT. S. 674;
National Labor Relations Board v. Remington
Rand, Inc,, 130 F. (2d) 919, 936 (C. C. A. 2).
I l l
PETITIONEE DOMINATED, INTERFERED W IT H , AND SUP
PORTED THE INDEPENDENT IN VIOLATION OF SECTION
8 (2) AND (1) OF THE ACT
I f we are correct in concluding that petitioner
had engaged in the unfair labor practices dis
cussed in Point II, supra, which occurred sub
sequent to the settlement agreements and certi
fication, then, as we have shown in Point I, supra,
pp. 19-31, the Board was clearly justified in con
sidering the entire course of petitioner’s conduct,
including events prior to the settlement agree
ments and certification. However, even if the
Court should disagree with us as to the substance
of Point II, we submit that the Board’s order
should nevertheless be affirmed in view of its
finding that the Independent was dominated, in
terfered with, and supported in violation of Sec
tion 8 (2) and (1). That is, even if, contrary
73
to our argument under Point II, no independent
unfair labor practices had occurred subsequent
to the certification, petitioner’s and the Independ
ent’s conduct with regard to the execution and
effectuation of the closed-shop contract was of
so questionable a character and struck so basically
at the spirit of the Act as to warrant and, indeed,
compel the Board, in vindication of the public
interest, to examine the true character of the
Independent. This, as we have seen (Point I,
supra, pp. 31-32), was the view of the court below.
Consequently, whatever the Court’s conclusion as
to Point II, we direct attention to the whole course
of the relationship between petitioner and the
Independent.
The Board’s finding that petitioner dominated,
interfered with, and supported the Independent
in violation of Section 8 (2) and (1) of the Act
(R. 24, 27) is, as the court below held (R. 348),
supported by substantial evidence (supra, pp.
4-9). During the second week of the strike,
petitioner launched the Independent to compete
with the Union as a candidate for the employees’
choice as their bargaining representative. The
initial appearance of the Independent was under
the sponsorship and guidance of Foreman Clark
Ctibson who delegated to his assistant, Lundy
droves, and to Groves’ wife, the task of setting
up the organization (supra, p. 6). The as
sistance rendered by Weese, petitioner’s pay-
6 1 5 2 6 0 — 4 4 6
74
master and confidential secretary to Plant Man
ager Davis, in suggesting Thompson as adviser
for the Independent {supra, pp. 6-7), and the
participation in the formation and administration
of the Independent of the “ assistant foreman,”
Smith and Reese {supra, p. 7), together with
the joint sponsorship by petitioner and the In
dependent of the anti-union back-to-work move
ment which was conducted coextensively with the
Independent’s membership drive {supra, pp. 8-9),
unmistakably placed the print of management
approval and support upon the organization.
International Ass’n of Machinists v. National
Labor Relations Board, 311 U. S. 72, 80-81;
II. J. Heinz Co. v. National Labor Relations
Board, 311 U. S. 514, 518-521; National Labor
Relations Board v. American Mfg. Co., 106 F.
(2d) 61, 64, 68 (C. C. A. 2), affirmed 309 IT. S.
629; National Labor Relations Board v. Norfolk
Shipbuilding A Drydock Corp., 109 F. (2d) 128,
129 (C. C. A. 4) ; New Idea, Inc. v. National Labor
Relations Board, 117 F. (2d) 517, 519, 523-525
(C. C. A. 7 ); National Labor Relations Board v.
Germain Seed Ac Plant Co., 134 F. (2d) 94, 96-99
(C. C. A. 9).
The Board’s findings that Groves, Smith, Reese,
and Mrs. Weese 48 were employees identified with
4SThe fact that Mrs. Weese, at times, attended foremen’s
meetings at the plant (R. 188, see also R. 200); that fore
men and others occasionally turned to her for advice in the
absence of Plant Manager Davis (R. 177-178) and that she
75
petitioner’s management (R. 12, 20) are supported
by substantial evidence (supra, pp. 6-7), as the
court below held (R. 348). While petitioner offi
cially designated Groves and Smith as “ machine
set-up men” and Reese as an “ oiler” {supra,
p. 7), they were, in fact, temporary or assistant
foremen. They were so regarded by other em
ployees,49 and Plant Manager Davis admitted at
the hearing that they might properly be considered
temporary foremen (R. 214-216). Their selec
tion by the Company to substitute for their respec
tive foremen during the latter’s absences plainly
set them apart and clothes them with a prestige
which inevitably associated them with the manage
ment in the eyes of the other employees.50 The
was petitioner’s paymaster and the confidential secretary to
Plant Manager Davis {supra, pp. 6-7), supports the Board’s
finding (R. 20) that she was “ identified with management.”
National Labor Relations Board v. Germain Seed di Plant
Co., 134 F. (2d) 94, 96, 98-99 (C. C. A. 9) : National Labor
Relations Board v. Southern Bell Telephone Co., 319 U. S.
50, 54; and cases cited in text, infra, p. 76.
49 Employees who worked under them consistently referred
to Groves, Smith, and Reese, as “ assistant boss” or “ assistant
foreman” who, in the absence of the regular foreman, “would
give us orders what to do” (R. 87-88, 97, 126-130, 133, 153-
154). One employee testified that he had known Groves
“to run the department for more than three weeks at a
time” when Foreman Gibson was absent (R. 78).
50 The fact that these temporary foremen were permitted
to vote in the Board supervised election {supra, pp. 9-10; R.
190-191) did not preclude the Board from finding that their
participation in the formation and administration of the In
dependent was attributable to the Company and therefore
constituted unlawful support of, and interference with, the
76
Board was warranted in so finding (R. 12). In
ternational Ass’n of Machinists v. National Labor
Relations Board, 311 U. S. 72, 80-81; II. J. Heinz
Co. v. National Labor Relations Board, 311 U. S.
514, 518-521; National Labor Relations Board v.
Link-Belt Co., 311 U. S. 584, 598-599; National
Labor Relations Board v. Cities Service Oil Co.,
129 P. (2d) 933, 934-935 (C. C. A. 2 ) ; Gamble-
Robinson Co. v. National Labor Relations Board,
129 P. (2d) 588, 590 (C. C. A. 8) ; and other cases
cited, supra, p. 75, n. 48.
SINCE PETITIONEE DOMINATED, INTERFERED W IT H , AN D SUP
PORTED TH E INDEPENDENT IN VIOLATION OF SECTION 8 ( 2 ) OF
TH E ACT, TH E CLOSED-SHOP AGREEMENT W AS IN VALID
To be valid under the proviso to Section 8 (3)
of the Act, a closed-shop agreement must be made
with a labor organization which (a) is “ not estab
lished, maintained, or assisted, by any” unfair
labor practice, and (b) “ is the representative of
Independent. The right of foremen and other supervisory
employees under the Act to become members of a labor or
ganization does not include the right to coerce subordinate
employees either by soliciting members or by otherwise en
gaging in active leadership in the organization. Interna
tional Ass'n of Machinists v. National Labor Relations
Board, 311 U. S. 72, 80-81; National Labor Relations Board
v. Aintree Corp., 132 F. (2d) 469, 472 (C. C. A. 7), certiorari
denied, 318 U. S. 774; National Labor Relations Board v.
Skinner & Kennedy Stationery Co., 113 F. (2d) 667, 671
(C. C. A. 8) ; National Labor Relations Board v. Christian
Board of Publication, 113 F. (2d) 678, 682 (C. C. A. 8 );
1 ational Labor Relations Board v. Pacific Gas & Electric
Co., 118 F. (2d) 780, 788 (C. C. A. 9).
77
the employees as provided in Section 9 (a ), in
the appropriate collective bargaining unit covered
by such agreement when made.” 51 Where either
of these requirements is not satisfied, a closed-shop
agreement is unlawful. National Labor Relations
Board v. Electric Vacuum Cleaner Co., 315 U. S.
685, 694; International Ass’n of Machinists v.
National Labor Relations Board, 311 XJ. S. 72,
75, 81.
In the instant case the Board found that the
closed-shop agreement between petitioner and the
Independent failed to meet the requirements of
the proviso to Section 8 (3) of the Act in that
(a) petitioner had dominated, interfered with,
and supported the Independent in violation of
Section 8 (2) (R. 24, 27), and (b) petitioner
entered into the agreement with the knowledge
that the Independent intended to refuse member
ship to employees for the reason that they had
previously engaged in activities in behalf of the
Union (R. 21, 23, 24). I f the Court affirms, as
did the court below (R. 348), the Board’s finding
that petitioner violated Section 8 (2) of the Act
in its relations with the Independent, it is clear
on the face of the statute (Section 8 (3)) that the
closed-shop agreement was illegal ab initio and
could not be a valid basis for discharging em
ployees because of their failure to become members
51 No question as to the appropriateness of the bargaining
unit is present in the instant ease.
78
of the Independent, regardless of the reason for
their non-membership. National Labor Relations
Board v. Electric Vacuum Cleaner Co., 315 U. S.
685, 694; International Ass’n of Machinists v.
National Labor Relations Board, 311 U. S. 72, 75.
In these circumstances, the Board could properly
require petitioner to cease giving effect to the
unlawful closed-shop agreement and to restore to
their status quo the employees discriminated
against by reason of the agreement. The Electric
Vacuum Cleaner and International Ass’n of Ma
chinists cases (supra).
CONCLUSION
For the foregoing reasons, it is respectfully sub
mitted that the decision below should be affirmed.
Chables F ah y ,
Solicitor General,
Robert L. Stern,
Special Assistant to the Attorney General.
A lvin J. Rockwell,
General Counsel,
Ruth W eyand,
Marcel Mallet-P revost,
Attorneys,
National Labor Relations Board.
November 1944.
A P P E N D IX A
The pertinent provisions of the National Labor
Relations Act (Act of July 5, 1935, 49 Stat. 449, c.
372, 29 U. S. C., Secs. 151, et seq.) are as follows:
FINDINGS AND POLICY
S e c t i o n 1. The denial by employers of the
right of employees to organize and the re
fusal by employers to accept the procedure of
collective bargaining lead to strikes and
other forms of industrial strife or unrest,
which have the intent or the necessary effect
of burdening or obstructing commerce * * *
The inequality of bargaining power be
tween employees who do not possess full free
dom of association or actual liberty of con
tract, and employers who are organized in
the corporate or other forms of ownership
association substantially burdens and affects
the flow of commerce, and tends to aggravate
recurrent business depressions, by depress
ing wage rates and the purchasing power of
wage earners in industry and by preventing
the stabilization of competitive wage rates
and working conditions within and between
industries.
Experience has proved that protection by
law of the right to employees to organize and
bargain collectively safeguards commerce
from injury, impairment, or interruption,
and promotes the flow of commerce by re
moving certain recognized sources o f indus
trial strife and unrest, by encouraging prac
tices fundamental to the friendly adjustment
( 7 9 )
80
of industrial disputes arising out o f differ
ences as to wages, hours, or other working
conditions, and by restoring equality of bar
gaining power between employers and em
ployees.
It is hereby declared to be the policy
of the United States to eliminate the
causes of certain substantial obstructions
to the free flow of commerce and to miti
gate and eliminate these obstructions when
they have occurred by encouraging the
practice and procedure of collective bar
gaining and by protecting the exercise by
workers of full freedom of association,
self-organization, and designation of rep
resentatives of their own choosing, for the
purpose of negotiating the terms and con
ditions of their employment or other mu
tual aid or protection.
* * * * *
EIGHTS OP EMPLOYEES
Sec. 7. Employees shall have the right
to self-organization, to form, join, or as
sist labor organizations, to bargain col
lectively through representatives of their
own choosing, and to engage in concerted
activities, for the purpose of collective
bargaining or other mutual aid or pro
tection.
Sec. 8. It shall be an unfair labor prac
tice for an employer—
(1) To interfere with, restrain, or co
erce employees in the exercise of the rights
guaranteed in section 7.
(2) To dominate or interfere with the
formation or administration of any labor
organization or contribute financial or
other support to it: * * *
81
(3) By discrimination in regard to hire
or tenure of employment or any term or
condition of employment to encourage or
discourage membership in any labor or
ganization : Provided, That nothing in this
Act, or in the National Industrial Recov
ery Act (U. S. C., Supp. V II, title 15,
sees. 701-712), as amended from time to
time, or in any code or agreement ap
proved or prescribed thereunder, or in any
other statute of the United States, 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, if
such labor organization is the representa
tive of the employees as provided in sec
tion 9 (a), in the appropriate collective
bargaining unit covered by such agree
ment when made.
* * * * *
REPRESENTATIVES AND ELECTIONS
Sec. 9. (a) Representatives designated
or selected for the purposes of collective
bargaining by the majority of the em
ployees in a unit appropriate for such
purposes, shall be the exclusive represent
atives of all the employees in such unit
for the purposes of collective bargaining
in respect to rates of pay, wages, hours
of employment, or other conditions of em
ployment: Provided, That any individual
employee or a group of employees shall
have the right at any time to present griev
ances to their employer.
(b) The Board shall decide in each case
whether, in order to insure to employees
82
the full benefit of their right to self
organization and to collective bargaining,
and otherwise to effectuate the policies of
this Act, the unit appropriate for the pur
poses of collective bargaining shall be the
employer unit, craft unit, plant unit, or
subdivision thereof.
(c) Whenever a question affecting com
merce arises concerning the representation
of employees, the Board may investigate
such controversy and certify to the parties,
in writing, the name or names of the rep
resentatives that have been designated or
selected. In any such investigation, the
Board shall provide for an appropriate
hearing upon due notice, either in con
junction with a proceeding under section 10
or otherwise, and may take a secret ballot
of employees, or utilize any other suitable
method to ascertain such representatives.
* * * * *
PREVENTION OF UNFAIR LAROR PRACTICES
Sec. 10. (a) The Board is empowered, as
hereinafter provided, to prevent any per
son from engaging in any unfair labor prac
tice (listed in section 8) affecting commerce.
This power shall be exclusive, and shall not
be affected by any other means of adjustment
or prevention that has been or may be estab
lished by agreement, code, law, or otherwise.
* * * * *
(c) The testimony taken by such mem
ber, agent or agency or the Board shall be
reduced to writing and filed with the Board.
Thereafter, in its discretion, the Board
upon notice may take further testimony or
hear argument. I f upon all the testimony
83
taken the Board shall be of the opinion
that any person named in the complaint has
engaged in or is engaging in any such un
fair labor practice, then the Board shall
state its findings of fact and shall issue
and cause to be served on such person an
order requiring such person to cease and
desist from such unfair labor practice, and
to take such affirmative action, including
reinstatement of employees with or without
back pay, as will effectuate the policies of
this Act. * * *
.(e) The Board shall have power to peti
tion any circuit court of appeals of the
United States * * * within any cir
cuit or district, respectively, wherein the
unfair labor practice in question occurred
or wherein such person resides or trans
acts business, for the enforcement of such
order and for appropriate temporary re
lief or restraining order, and shall certify
and file in the court a transcript of the
entire record in the proceeding, including
the pleadings and testimony upon which
such order was entered and the findings
and order of the Board. Upon such filing,
the court shall cause notice thereof to be
served upon such person, and thereupon
shall have jurisdiction of the proceeding
and of the question determined therein,
and shall have power to grant such tem
porary relief or restraining order as it
deems just and proper, and to make and
enter upon the pleadings, testimony, and
proceedings set forth in such transcript a
decree enforcing, modifying, and enforc
ing as so modified, or setting aside in whole
or in part the order of the Board. No
objection that has not been urged before
the Board, its member, agent or agency,
84
shall be considered by the court, unless the
failure or neglect to urge such objection
shall be excused because of extraordinary
circumstances. The findings of the Board
as to the facts, if supported by evidence,
shall be conclusive. I f either party shall
apply to the court for leave to adduce
additional evidence and shall show to the
satisfaction of the court that such addi
tional evidence is material and that there
were reasonable grounds for the failure to
adduce such evidence in the hearing before
the Board, its member, agent, or agency,
the court may order such additional evi
dence to be taken before the Board, its
member, agent, or agency, and to be made
a part of the transcript. The Board may
modify its findings as to the facts, or make
new findings, by reason of additional evi
dence so taken and filed, and it shall file
such modified or new findings, which, if
supported by evidence, shall be conclusive,
and shall file its recommendations, if any,
for the modification or setting aside of its
original order. The jurisdiction of the
court shall be exclusive and its judgment
and decree shall be final, except that the
same shall be subject to review by the
appropriate circuit court of appeals if
application was made to the district court
as hereinabove provided, and by the Su
preme Court of the United States upon
writ of certiorari or certification as pro
vided in sections 239 and 240 of the Ju
dicial Code, as amended (U. S. C., title
28, secs. 346 and 347).
( f ) Any person aggrieved by a final
order of the Board granting or denying
in whole or in part the relied sought may
obtain a review of such order in any cii’-
85
cuit court of appeals of the United States
in the circuit wherein the unfair labor
practice in question was alleged to have
been engaged in or wherein such person
resides or transacts business, or in the
Court of Appeals of the District of Co
lumbia, by filing in such court a written
petition praying that the order of the
Board be modified or set aside. * * *
A PPEN D IX B
STATEMENTS OF ECONOMISTS AND EXPERTS IN THE
FIELD OF LABOR RELATIONS W IT H RESPECT TO THE
PURPOSE AND FUNCTION OF THE CLOSED SHOP
[Arranged in Chronological Order]
Moffett, E. H. The “ Open” Shop, The Ameri
can Eederationist,. March 1904, p. 214:
The object of the union shop is not to
create a monopoly of opportunity. It is not
a “ closed shop.” It is wide open to any
working man who is willing to help main
tain the superior conditions that attract
him.
Darrow, Clarence S. The Open Shop, Social
Economic Series, Yol. 1, No. 2, Hammersmark
Publishing Co., Chicago (1904), quoted in Golden,
Clinton S., and Ruttenberg, Harold J., Dynamics
of Industrial Democracy, Harper & Bros. (1942),
pp. 201-202:
The reason why a union workman does
not choose to work with a non-union work
man is plain and evident and founded in
the protection of himself and his fellow
. craftsmen * * *. Instinctively men
love the company of others of their kind
* *. The man who desires the society
of his companions must so conduct himself
that his associates are content to live with
him. I f he sees fit voluntarily to so
arrange his life that his fellows do not de
sire his company he must accept the con
sequences, however, unreasonable society
( 86)
87
may be. Whether the boycott is just or
unjust, equitable or inequitable, has no
bearing on the case. In this world men are
not crucified because they are good or bad,
but because they are unlike their fellows.
Trade unionists for centuries have believed
that they are upholding the right of man,
the welfare of their class; that without
their organization their liberty and inde
pendence would be lost; they have come to
regard the non-union man as one who not
only refuses to stand with them, but who
is unloyal to his class, a traitor to his kind.
They look on him as a man who seeks to
undermine and destroy his fellow workman,
and from the nature of things there is a
great gulf between them and him. This is
not a fact in trade unionism; it is a fact in
human nature, and is as deep as the right
of self-defense. For in the last analysis,
it is self-defense.
The employing class has exactly the same
feeling toward one of its members who
gives his influence and strength on the side
of the union workman, and who refuses to
stand with them in their opposition to the
demands of labor, that the trade unionist
has toward the one he calls a scab. Neither
is loyal to his class. Both pay the penalty
of their disloyalty to their class; they are
cut off from the friendship and association
with others of their kind.
Gompers, Samuel. “ The, Union Shop is Right,”
American Federationist, April 1905. p. 221:
We assert that the union shop does not
deny employment to the nonunionist, but
we insist that, like all others in society, per
sons who are desirous of becoming bene
ficiaries of an agreement should become par
ties to that agreement and that they should
88
bear the equal responsibility wbieh such an
agreement involves * * *
Stockton, Frank T. The Closed Shop in Amer
ican Trade Unions, Baltimore (1911), pp. 130,
162, 176.
* * * Finally, when enough members
have been obtained to promise a successful
issue, the union suddenly reveals to the em
ployer the fact that many of his men are
unionists and demands that he make the
shop a closed one. I f he complies, the non-
unionists are given the alternative of join
ing the union or seeking other jobs (p. 130).
* * * * *
An argument for the closed shop of which
much has been made is that it increases
trade-union membership. Experience has
shown that there are always a large num
ber of workmen “ in and out of the union.”
They are “ in the union” when they obtain a
job in a closed shop; they are “ out of the
union” when they work in a shop where a
union card is not necessary. It has been
said that “ the mere closing of one door to
the non-unionist is the best argument to him
for application. ’ ' 2 Instances of marvelous
growth in membership following the intro
duction of the card system have also been
frequently reported (p. 162).
* * * * *
In reply the unions have answered that it
is not their purpose to establish a labor
monopoly through the closed shop, that on
the contrary it is the purpose of every union
______ every man following or engaged at
Bookbinders, Official Proceedings of the Sixth Annual
Convention, 1898. p. 21.
89
a business to affiliate birnself. ’ 1 To this end
vigorous campaigns for members are con
ducted among non-unionists, and ‘hundreds
of missionaries are at work, in and out of
season, urging and pleading with them to
enter the wide-open doors of the union. ’ 1 2
Furthermore, it is said that even if it is true
that ninety per cent of the wage earners in
America are non-union, the great majority
of non-unionists are ‘ in occupations in
which there are no unions at all, or in which
the unions are too weak to think of chal
lenging a contest over the employment of
workers outside their organizations.’ 3
Here again it seems to the writer that
many of the critics of the closed shop have
identified it with the closed union. I f non
union men have no difficulty in obtaining
union membership, it is hard to see how the
closed shop can be condemned as a “ crim
inally selfish” device. Only when a union
declares that it will not work with non-
membsrs and then refuses to admit the
latter to membership can monopolistic mo
tives properly be charged.4 * Closed unions,
however, are rarely found at present except
1 Operative Plasterers, Proceedings of the Eighteenth
Convention, 1904, p. 45.
2 American Federation of Labor, Report of Proceedings
of the Twenty-third Convention, 1903, p. 20, President’s
Report.
3 Iron Holder’s Journal, June 1904, p. 423.
4 “If a union is working not for the interest of all the men
at the trade but of members who at the time are actually in
the union, if it is unduly restrictive * *, * then its re
fusal to work with nonunion men is monopolistic and such a
union should not be put up on a par with unions that refuse to
work with non-unionists in the general interest of the trade.”
(Mitchell, p. 283.)
615265— 44 7
90
in decaying trades. The closed shop is
ordinarily intended not to restrict mem
bership but to increase it, as has already
been shown6 (p. 176).
Carlton Frank T. The History And Problems
of Organised Labor, Boston (1911), pp. 126-128:
The two arguments in favor of the closed
shop are, “ sentimental” and economic. Ac
cording to the first method of justifying
the closed shop, wages have been raised and
conditions of labor within a given trade
improved as the result of the efforts and
the sacrifices of the members of labor or
ganizations. All workers in a trade are
benefited; and “ he who is benefited should
bear his share of the expenses of the bene
factor.” The man who refuses to join the
union and bear his share of the expenses
necessary to the success of the union’s
policies is a parasite and deserves to be
excluded from employment. Through the
efforts of labor organizations unionists ex
pect not only to help themselves, but in
directly to aid all wage earners. Viewed
through these spectacles, the non-unionist
or “ scab” strikes a blow at the hearthstone
of every worker in the land when he refuses
to conform to the program of the union.
At, best, the “ scab” is an extremely short
sighted man, and one who must not be
allowed to ruthlessly take away such ad
vantages as have been gained by labor
organizations. The following quotation
well illustrates the union point of view.
To the non-unionist, despite that which his
advocates say for him, cannot be attributed
the virtue of helping his fellow workmen
or contributing toward the establishment
6 See above, p. 162, et seq.
91
of more rightful relations between work
ingmen and their employees. No force but
that of persuasion and moral and intelli
gent influences should be exercised to con
vert the non-unionist to membership in our
organization, but it is hurtful from every
viewpoint, and to every enlightened interest,
to advocate the “ open shop.’ ' 1
The economic necessity for the closed
shop depends in a large measure upon the
attitude of the employer. I f the employer
insists upon his right to make individual
bargains with non-union employees, and
discriminates against union men, or hires
non-union men at a lower wage than that
paid union men, the union will sooner or
later be obliged to fight or be disinte
grated. The hostile employer, unless re
strained by the closed shop or by a uni
form system of wage payment for all
workers coupled with a system of appren
ticeship and of promotion, can deunionize
his shop unless the union includes prac
tically all the workers available in that
trade or industry. The Union facing a
hostile employer anxious to reduce wages
and to lengthen the working day, and in
touch with a supply of non-union workers,
is forced, unless it gives up all hope of
efficient trade-union action, to adopt the
closed shop policy. Under such conditions
the closed shop means more bread and but
ter, more leisure, and better treatment for
the wage earner.
Bryan, W. E. (General Pres. United Brother
hood of Leather Workers). “ Open” and
1 American Federationist, November 1903, p. 1196. .
92
“ Closed” Shops, American Federationist, April
1912, p. 321:
The closed or union shop, as advocated by
trade unions, is founded on justice and
equity to all men. The church is a closed
shop inasmuch as it requires its members
to subscribe to its pi’ecepts and practice
its principles. The trade union asks no
more than the church in its requirements,
and its doors are open to all men that are
willing to accept its principles and sub
scribe to its purpose.
Commons, John R. and Andrews, John B.
Principles of Labor Legislation, New York (1936),
p. 391:
d. Closed-shop Strikes.—A closed shop
means that the employer agrees to employ
only union members. Unions justify their
demand for a closed shop on two grounds:
(1) They allege that only workers who
support the union financially and other
wise are entitled to the benefits which it
secures. (2) They insist that if the shop
remains open to non-unionists collective
bargaining will be endangered. For the
union will be seriously weakened, both be
cause workers will not feel the need o.f re
taining membership, and, perhaps more
important, because the employer will he
able imperceptibly to discriminate in
favor of non-unionists, and thus eventually
be able with impunity to break the col
lective agreement or refuse to renew it.
In order, then, to maintain the wages and
hours won through union effort, many
unions seek to achieve the closed shop.
Gompers, Samuel. The Union Shop And Its
Antithesis (pamphlet). July 1920. Quoted
93
in Beman, Lamar, T., The Closed Shop. New
York, 1922, p. 49:
A non-union man who accepts employment
in a union shop has the privilege of join
ing the union which has a voice in de
termining with 'employers the wages,
hours and conditions of work. He is given
time in which to make application, if he
so desires.
Lord, James (Pres. Mining Dept. A. P. of L .).
The “ Open Shop,” American Pederationist, Janu
ary 1921, pp. 49-50:
The union shop is the real “ open shop.”
It is open to all workers, in every trade
and industry, who desire to join and lend
their efforts to an intelligent solution of
their affairs. No matter what their past
attitude has been, * * * the past is
wiped out that minute they exhibit a desire
to carry their share of the burden and costs
of their own movement, as well as share in
its achievements and blessings.
Catlin, Warren B. The Labor Problem, New
York (1926), p. 344:
The unions themselves look to complete
organization and the maintenance of a
union-shop as the best guarantee that
prompt readjustment to new conditions will
be made, standards preserved, and agree
ments kept inviolate. They ask for his
measure o f control in order that they may
enforce discipline. Here the issue is clearly
joined with that large group of employers
* * * who, while professing no desire
to discriminate against union men—might,
in fact, hire one occasionally if they could
not find anyone else—declare for the “ open
shop” and the right of the employer to hire
94
whom he pleases, regardless of whether or
not he belongs to any union or association.
The demand for the union shop—that only
members of the union shall be employed
or that non-union men who are employed
shall be required to join the union within
a reasonable time—is chiefly a result of
the uncertain, partially recognized, pro
bationary status of the union that still
prevails in many industries. * * *
Cummins, E. E. The Labor Problem in the
United States, New York (1932), p. 231:
To trade unionists the closed shop seems
in most instances an obviously necessary
device for the protection of their inter
ests through union control of working con
ditions; that is to say, it is one means
and an important one of enforcing the
general policy of standardization. * * *
The union also insists that the closed shop
holds many advantages for the employer.
In demanding the “ check-off” system, the
anthracite section of the United Mine
Workers’ Union made use of this argu
ment—a fight for the check-off being, of
course, practically equivalent to a fight for
the closed shop. ‘ ‘ Outlaw ’ ’ strikes occurred
in spite of trade agreements, and the union
contended that with the check-off it could
keep its members under control.
Tead, Ordway and Metcalf, Henry C. Labor
Relations Under The Recovery Act, New York
and London (1933), p. 172:
10. Union demands culminate in a stand
for the “ closed shop.” This restricts the
freedom of any worker who does not join
and hence is “ un-American.” It is true
that unionism in order to fulfill its pur
pose—indeed, in order to be sure of its
95
survival—logically implies that the shop
which is operating under a collective agree
ment shall at least give preference in em
ployment to union workers. Otherwise the
union members employed would be gradu
ally superseded and the collective agreement
would no longer have binding effect on the
new workers in their dealings with the
company. I f the union is to be responsible
in any "degree for upholding its end of an
agreement, it must have assurances that the
great majority of employees are and will
continue to he its members.
Perlman, Selig and Taft, Philip. History of
Labor in the United States, 1896-1932, New York
(1935), vol. IV, p. 9:
10. The new leaders of the American Labor
movement were even more conscious of the
immigrant problem than the Knights of
Labor, which had pioneered the first legis
lation to restrict free immigration. They
had learned that to workers employed in a
given industry, a new wave of immigrants,
generally of a new nationality, meant a
competitive menace to be fought off and to
be kept out of the industry. The emphasis
on the closed shop had among other objec
tives that of preventing the employer from
preparing for a future showdown with the
union by attaching to himself immigrant
employees, who, due to the social and cul
tural gulf between themselves and the
unionized American fellow employees, could
be influenced to align themselves with the
employer. With all that, the leaders of the
Federation, many of them former immi
grants, knew that once the natural leaders
in an immigrant group had been reached by
the gospel of unionism, the immigrant, in
stead of continuing a liability, became an
96
asset. Whether the immigrant was treated
as a potential asset or an immediate danger
depended on circumstances and on the ideal
ism of a particular leader.
Daugherty, Carroll R. Labor Problems in Amer
ican Industry, Houghton Mifflin Company (1936),
pp. 557, 558:
(3) The closed union shop with open union
is the “ milder” form of the closed union
shop. Employers are supposed to hire
union men, but if these are not available,
non-union workers may be employed with
the express provision that they must .join
the union as soon as they enter the shop.
Only union men are on the jobs in the plant,
but union membership is easy to get.
Unions advocating this plan claim that the
organization can best be saved from the un
dercutting competition of non-unionists by
bringing the latter into the fold, since there
is no way to drive them out of the industry.
This argument seems largely borne out by
the experience of the United Mine Work
ers in the bituminous-coal fields and of the
clothing industry in New York City. The
closed shop with open union is thus found
mainly in highly competitive and seasonally
unstable industries * * * (p. 557).
The bases of collective bargaining, it has
been shown, are the curtailment of compe
tition among individual wage-earners and
the observance of uniform employment
standards without change over a period of
time. The realization of this program is
plainly dependent upon the ability of a
union to control at least a majority of the
workers in its craft or industry. I f non-
unionists are permitted to labor without
regulation, they will accept job terms below
the minimum standards demanded by the
97
union. Most employers will hire them in
stead of union men, so that the latter will
fail to get work unless they too accept
poorer conditions. All solidarity will thus
ebb away and the organization will in the
end be broken up. Recognition of the
union, the very existence of the union,
depends in many cases on shop control as
a part of the main aim of job control.
This is particularly true under American
conditions. Employers in this country of
ten deal with unions, not because they
prefer to, but because they are compelled
to by force of circumstances. Many of
them would be glad to return to conditions
of individual bargaining. Certain excep
tions exist, as in the cases of individual
railroads, but. in most industries eternal
vigilance is for unions the price of recog
nition. The competition of different
groups of substandard workers, extremely
menacing where skill has been broken down
by the use of machines, is unusually keen
in the United States. The closed union
shop is a reaction to all these conditions.
In England one seldom hears of it because
organized labor is relatively secure; em
ployers there have for a long time accepted
unions as spokesmen for their workers, and
recognition is not an issue. Immigration
is almost non-existent and the introduction
of machinery is not considered an excuse
for substituting non-unionists for displaced
unionists (p. 558).
Clark, Marjorie R. and Simon, S. Fanny. The
Labor Movement in America, New York (1938),
p. 32:
A closed shop agreement is valuable to the
unions primarily because it prevents an
98
employer from weakening and sometimes
destroying the union by gradual replace
ment of union with non-union workers. To
an employer the closed shop agreement is
often desirable as it places full responsi
bility for supplying qualified workers upon
the union.
National Industrial Conference Board, Inc.,
Studies in Personnel Policy, No. 12, The Closed
Shop, New York (1939), p. 7:
The case for the closed shop from the
management angle is best summed up by
the president of a company employing
nearly 2,000 workers:
There is little doubt in our minds that a
closed shop reduces or eliminates strained
relations among groups of employees, intra-
plant hatred and strife, which are very
detrimental to management and earnings.
* * * * *
Centralized responsible leadership in a na
tional and experienced union has resulted
in improved discipline, higher efficiency, and
spirit of co-operation. The union un
doubtedly appreciated receiving the closed
shop and has encouraged a spirit of interest
in the success of our business. The union
is able to insure uninterrupted operations—
our contract calls for no strikes—and it
can handle men who would otherwise be
chronic trouble-makers. Collective bar
gaining is more orderly since we are dealing
with only one group, with which we can
deal at arm’s length.
Brooks, Robert R. R. Unions of Their Own
Choosing, New Haven (1939), pp. 185-187:
The distinction between a closed shop
and a closed union should be made clear.
99
A closed-shop agreement simply requires
that all workers hired by the employer shall
join the union at the time of hiring or
within a stated period afterward. It leaves
the choice of workers up to the employer.
He can hire whomever he pleases and fire
whomever he pleases, as far as a closed-
shop agreement is concerned. The closed
shop does not create a monopoly of the
labor supply by the union since the em
ployer can expand or contract his labor
force at will. The closed shop is not itself
a hardship on the employer, except to the
extent that it increases the union’s bar
gaining power. The • chief effect of the
closed shop is upon the minority of workers
who are unwilling to join the union.
When the closed shop is combined with
a closed union, however, a tight monopoly
is created which may injure the employer,
nonunion workers, and consumers. That is,
if the union seriously restricts membership,
the effect upon costs of production, prices,
sales, and employment is indistinguishable
from the effect of any other monopoly— a
small minority gains at the expense of the
great majority.
The demand for the closed shop rests
upon two motives: the desire to prevent a
minority of nonunion “ chiselers” from se
curing, free of charge, the advantages for
which the union members have paid; and
a desire to prevent the employer from de
feating the union by gradually transform
ing a nonunion minority into an antiunion
majority.
The first motive is understandable enough
to anyone who has ever taken part in group
activity. The majority, especially if it is
a large majority, almost always feels that
the minority ought to pay “ its share of the
100
freight.” Even individualistic employers
sometimes agree with this point of view,
(p. 185-186)
* * * * *
More often, however, the employer takes
the position that he will close down his
plant before he will permit a minority of
his men to be coerced by a majority. In
these cases, the union frequently persists in
its demand because of a strong suspicion
that the real intention of the employer is to
get rid of the union altogether as soon as
possible. At this point the conflict tends to
arrange itself around two unreal symbols:
the “ closed” shop vs. the “ open” shop.
Neither side means exactly what it says.
The union may be content with less than a
closed shop if it can be assured of a secure
position. In demanding an “ open” shop
the employer frequently wants so large a
proportion of non-union men that the union
is powerless as a bargaining agent. This
is perfectly apparent when the “ open shop”
is accompanied by the other antiunion poli
cies of employers who make the greatest
stir over the closed-shop issue. The real
matter at stake is not the open vs. the closed
shop, but unionism vs. antiunionism, (p.
187).
Cooke, Morris Llewellyn and Murray, Philip.
Organized Labor & Production, New York (1940),
pp. 47-48:
There is therefore a strong motive for
union members and leaders to seek a closed
shop contract. Under such a contract
workers are required to join the union at
the time of employment or within a stated
period afterward. I f employment is slack,
this may mean that only workers on the
101
union’s membership and seniority lists will
be employed. The traditional reasons for
union insistence upon a closed shop con
tract are, first, to prevent an anti-union
employer from whittling away the union’s
strength by gradually replacing union
members with non-union workers and,
second, to compel all workers receiving the
benefit of union activities to pay their
share of the freight. * * * For some
time to come, therefore, the closed shop is
likely to be insisted upon as an important
tool for preserving collective action among
organized workers.
There is a third reason, compelling to
union and employer alike, for the closed
or union ship. Under a “ members only”
or even “ sole bargaining rights” contract
the status of the union is insecure. It owes
its continued existence to the day-to-day
benefits it can confer upon its member
ship. There is a tendency therefore for
the union to take up grievances indiscrim
inately and make vigorous efforts to win
them all, for if it does not do so, it will
lose support and membership. The short
sighted employee who has no justifiable
complaint but is pressing for “ action” will
say, “ All right, if you won’t take up my
case, I ’ll stop paying dues and get my
friends to do the same.” Under a closed
shop contract this is impossible. The union
then is in a position to take up cases on
their merits alone, ignoring threats of this
kind.
Lester, Richard A. Economics of Labor, New
York (1941), p. 622:
Unionists * * * defend the closed shop
on the ground that, if a majority of the
employees select a certain agency to repre-
102
sent them, the rest should accept that
majority decision and assist in paying for
the benefits they receive as a group through
collective bargaining and the activities of
the union. This argument rests on the
notion that no employee should be per
mitted to be a “ tax dodger.’ ’ Union officials
also insist that 100-percent unionization is
necessary if the union is to enforce its
working rules, particularly national union
rules that may not be embodied in local
trade agreements. * * * In addition,
union leaders state that they cannot be
responsible for the discipline of all workers
in a plant unless all of them are in the
union and hence are subject to the union’s
discipline measures.
Labor officials have also insisted that the
closed shop is necessary to prevent dis
crimination in favor of nonunion men, to
prevent competition on the terms of em
ployment, and to win strikes.
Daugherty, Carroll R. Labor Problems in A mer-
ican Industry, New York (1941), p. 464:
* * * Union standards and union exist
ence depend on the maintenance of imion
shops. They are furthermore undoubtedly
justified in claiming that it is not fair for
non-unionists to work with union men.
Why should the former reap where they
have not sowed, getting the benefits of
union wages and standards without making
sacrifices for them?
Toner, Rev. Jerome L., The Closed Shop,
Washington (1942) :
The origin of the term “ closed shop” never
has been satisfactorily ascertained. Ac
cording to Samuel Gompers * * * the
103
phrase was coined and cunningly employed
by opponents of labor as a synonym for
the term “ union shop” because of wide
public antipathy for anything “ closed”
and general sympathy for the freedom of
opportunity popularly, but speciously, as
sociated with the so-called “ open shop.”
(pp. 22-23)
Trade union leaders have with good rea
son tried to supplant the term “ closed
shop” with “ union shop” * * * (p .25).
* * * Strictly interpreted, member
ship as “ a condition of employment”
might mean that the workers must be
members of the union before starting to
work, or more strictly still, that the em
ployer must employ only those who are
and have been members of the union, in
which membership in some cases might
be difficult or impossible to acquire. In
terpreted liberally, the expression “ union
membership as a condition of employ
ment” suggests that, a “ new worker must
either be a member when he is hired or
become a member within a specified time
after commencing work with company.64
This is the interpretation usually intended
in current closed shop agreements, (p.
32-33)
* * * * *
In some of the better-organized indus
tries, “ any applicant must be admitted
who is not an offender against the
union * * * and if any rule shall be
passed that imposes unreasonable hard
ship, or that operates to bar desirable per-
64 National Industrial Conference Board, [ The Closed,
Shop\, p. 4 ; cf. National Association of Manufacturers,
[Open Shop Encyclopedia for Debaters (New Y ork: 1921) ],
104
sons, that matter may be brought before
the tribunal trade board with appeal to
the board of arbitration for such remedy
as it may deem advisable.” 75 (p. 37)
* * * * *
As for the charge that it is in the nature
of the closed shop to create an air-tight
labor monopoly, a recognition between the
use of the principle and the abuse of re
lated circumstances is important. The
situation that produces the closed shop
and the closed union in combination is one
that no friend of labor will seek to justify.
Unless union membership generally is open
to every competent worker on terms that
are non-discriminatory, reasonable, and
uniform, there is little to be said in its
favor. It would be mincing words to argue
that the closed shop with the closed union
does not impede the basic and unchallenge
able privilege of the employer to hire
whom he pleases and of the individual to
' ’ Amalgamated Clothing Workers of America, standard
contract.
83 The United Mine Workers of America have always per
mitted the coal operator to employ anyone he wished but
they have insisted that anyone not a member of the union
should, on employment, join up. (p. 41)
* * * * *
So As long as the union honestly and reasonably keeps its
membership books open to those qualified and willing to join
and retains a moderate initiation fee, that type of closed shop
with open union is defendable, but as soon as the closed shop
and closed union are united, there is little to be said for them
and they are condemned by the courts and union leaders gen
erally. I lie public and the press, either ignorant or mis
informed. are inclined to condemn every type of closed shop
agreement, (p.42-43)
105
have the opportunity to join the union
so that he may work in a closed shop.110 * * * * * * * * *
It cannot be denied that there have been
and still are some flagrant and infamous
offenses against freedom of opportunity
committed by labor czars and racketeers
who have corrupted the principle of the
closed shop for their own purposes. Their
power, however, comes not from the closed
shop as such, but from their methods of
threat and coercion, graft and violence;
their victims are not only employers but
workers as well. * * * (p. 136-137)
* * * * *
A related objection to the closed shop is
that it makes employment contingent upon
continual good standing in the union.
But though that condition springs from
the very nature of the closed shop prin
ciple, abuses against that principle are not
intrinsic to it. Here again it would be a
disservice to labor to attempt to excuse
or minimize the grave injustice involved
in the deprivation of employment caused
to any unionist expelled or suspended
without sufficient reason, (p. 140)
* * * * *
Closely connected with the criticism of
compulsory union membership is the charge
110 It must not be inferred that an open union would not
have the right to induce an employer to give preference to
union men in hiring or that he should not agree to hire only
those who are already or will become members of the union.
In effect, in a period of considerable unemployment, that
would be tantamount to a closed shop union, but with one
significant difference—the union would have been open for
workers who wish to insure their job opportunities and the
employer would have waived his right to employ whom he
pleases.
6 1 5 2 6 5 — 4 4 ---------8
1 0 6
that “ force and coercion are absolutely es
sential to the establishment and mainte
nance of the closed shop and will always be
its most prominent characteristic so long as
it continues to be an industrial institu
tion.” 120 As already pointed out, such an
indictment may be valid when the closed
shop is coupled with a closed union. When
these two practices exist in combination,
there is the danger that an artificial monop
oly may be created. But when the closed
shop operates under an open union, non-
unionists will not be shut out if they are
willing to join the union. The degree of
force and coercion necessary to establish
and maintain that type of closed shop—as a
general rule the only defensible type—is
automatically lessened (pp. 140-141).
* * * * *
* * * pj.)e -faet js cioge(j shop unions
are generally open to any qualified worker—
as stipulated by collective agreements and
by statutes, (p. 146)
* * * * *
* * * Whenever unionists are in the ma
jority, they have the right to bargain as the
exclusive agent for a contract which benefits
unionist and non-unionist alike. It is gen
erally under such conditions that a imion
tries to obtain the closed shop. (p. 149)
* * * * *
To begin with what is probably its best-
known function, the closed shop offers pro
tection to union members. * * * a
______ closed shop assures the union and its mem-
120 V alter Drew, “Closed Shop Unionism,” in L. T. Beman
(editor) Selected Articles on the Closed Shop (New York:
1921) , p. 150.
107
bers of non-discrimination during the life
of the agreement, for once the closed-shop
contract is obtained the employer cannot
hire any non-union worker except for a
specified period of time. Thus the union
membership will remain numerically the
same even if the employer should be vindic
tive enough to discharge those who had been
very active in promoting the cause o f union
ism. When he finds it necessary to main
tain or increase his working force, he will
be obliged to hire men who are or will be
come members of the union * * * the
union * * * finally resorts to the seem
ingly drastic measure of the closed shop be
cause it realizes, as Sidney Hillman says,
that “ a labor organization can be construc
tive and responsible only where it is strong,
independent, and well-disciplined.” 10 Un
der closed shop conditions, a union is af
forded the greatest possible opportunity for
developing those attributes.
Even in cases where the employer is
willing to sign a non-closed shop contract,
the union is forced to harbor a natural
suspicion that the arrangement will not
last; the apprehension that the added pres
sures of contractual obligations may induce
the employer to hire non-union men forces
the union to seek the closed shop as a means
of self-preservation, (p. 149-151)
* * * * *
Closely related to this aspect of the
closed shop is its function in contributing
to an increase in responsibility. Since
under collective bargaining the wages,
10 Hearings before the Committee on Education and Labor
on S. 1000, S. W64, S. 1550, S. 1580, and S. 2123, 76th Cong.,
IstSess. (1939). p.3769.
108
hours, and conditions of work are nego
tiated and agreed upon by the employer
and the union, and since the enforcement
of agreements is generally left to the union,
it is essential that the union have authority
over all the employees to whom the contract
applies. The unions contend that the degree
of responsibility will be in direet propor
tion to its control over all employees.
Therefore, in view of the nature o f the
relationship of the closed shop to all em
ployees covered by the contract, the union
regards it as the best method by which
to carry out its obligations in the fullest
m e a s u r e * * * (p. 157). * * *
Defenders of the closed shop point to the
fact that the strongest and most re
sponsible unions in the United States are
those that have closed shop: contracts or
conditions that endow them with similar
authority, (p. 157)
* * * * ; *
An important aspect of the power of the
closed shop to control job opportunity and
tenure is the dangerous power which it
vests in union leaders who do not repre
sent the interests of the rank-and-file mem
bership. The almost irresistible impulse
to. perpetuate their positions sometimes
leads them to utilize constitutional devices
to centralize authority in executive hands.51
Any attempt to organize an opposition may
be penalized by charges resulting in sus
pension or expulsion from the union, which
automatically means dismissal from a
closed shop job. Such strategy is carried
on by a perversion of parliamentary pro
cedure just as effective as gangster dom-
51 Harris, [American Labor], p. 165; Sullivan, [This Labor
Union Racket], p. 54.
*
109
illation. Unless the worker is protected
from this kind of abuse under the closed
shop, it may prove more harmful than
employer exploitation and discrimination.
Not until the employee who is suspended
or expelled from a union is able to go to a
Labor board, Federal or State, and have
his case heard will this danger, almost in
herent, although infrequent, in the closed
shop, be removed, (p. 166)
# * * * *
* * * the advocates of the closed shop
reject the charge of monopoly.82 They
insist that because the union is open to
ally competent worker no one can complain
of being deprived of the opportunity to
work * * * The objective of the union
is, however, to enforce closed-shop con
tracts, to obtain control of all possible job
opportunities, and to enroll every worker
within the ranks of their respective unions
(p. 175). [Italics supplied.]
Golden, Clinton S., and Buttenberg, Harold J.
The Dynamics of Industrial Democracy, Harper
& Brothers (1942) :
The union-shop idea is simply that union
and nonunion workers in most instances
cannot; work alongside of each other indefi
nitely for practical reasons. The “ yellow-
dog contract,” now illegal, provided that,
because (1 ) management did not recognize
labor unions, or (2) believe in or practice
collective bargaining, and (3) its employees
82 Since the passage, of the National Labor Relations Act
and the outstanding decision of Williams v. Quill, 277 N. Y.
1, 12 NE (2) 547 (1939), the monopoly charge against the
closed shop has lost much legal support.
110
were not union members, it was a condition
of employment that no employee could
belong to a union. Management, then, used
its arbitrary powers of discharge to enforce
these contracts, whether they were written
or just understood, that any employee who
joined the union would be fired when it was
learned he had joined, or it was suspected
he had joined or might join. Management’s
enforcement of the dictum that union and
nonunion workers should not work side by
side was complete. The “ blacklist” was
devised, this simply provided that once a
worker was fired for union membership,
union agitation, or suspected union mem
bership no firm in the district, frequently
in the industry, would give hiin employ
ment. This policy naturally flowed from
the basic opposition of management to
organized labor, but it was also conceived
and practiced for practical operating re
quirements. Associate OPM Director Sid
ney Hillman aptly pointed this out to the
House Judiciary Committee of Congress6
early in 1941. A Congressman asked,
“ Now, my understanding of an open shop
is a place where union and nonunion men
work together. Is that true?”
“ Oh, no, Congressman,” Mr. Hillman
replied, “ they just work in the same place.
They don’t work together.”
Members of labor organizations favor the
union shop for different but nonetheless
potent practical reasons; they cannot afford
to work with nonunion workers for reasons
of self-preservation. Unionists do so only
temporarily as a matter of expediency—
imtil the first opportune time to bring the
6 Pittsburgh Press, February 28,1941, p. 2.
I l l
non-members into the union fold or replace
them with union members, (pp. 200-201)
* * * * *
The self-defense policy of union workers
is, “ I f we don’t hang together, we will each
hang separately.” As management finds
it essential to self-defense to “ coerce” those
who may stray from an antiunion-shop
policy, so, likewise, do union workers find
it essential to self-defense to “ coerce” non
union workers into the union fold. In
arguing the union shop with a management
official who is prominent in high society
circles in Pittsburgh, one of the authors
remarked, “ Whether or not you grant the
union shop, union members will continue to
exert social pressure on nonmembers to get
them into the union. ’ ’ He laughed; the idea
that workers might exert social pressure
against members of their group who failed
to conform to the group’s attitudes seemed
ridiculous to him. In his own group, of
course, social pressures are rigidly ex
erted—a daughter who married the chauf
feur just has to move across the railroad
tracks with him. That a non-union worker
might have to drink his beer at home in
stead of at a bar frequented by union
workers, to this man of high society, was
laughable. Maybe he thought workers exert
social pressure only with their fists as he
was laughing at the idea of calling a street
brawl “ social pressure.” More likely, how
ever, he felt social pressures were subtle
practices that his group in society engaged
in exclusively, when actually, of course,
they are a vital part of the habits of every
social group.
But there is a significant difference in
the way in which management and union
112
members exercise their respective policies
of self-defense. A small minority of in
dustrial leaders—only a very small per
centage of the manufacturing establish
ments in America, for instance, belong to
the National Association of Manufactur
ers—formulate the basic policies affecting
union-management relations, and “ coerce”
the vast majority of industrial firms to
abide by them. Union members, on the
other hand, exercise their self-defense pol
icies within the framework of democratic
principles. They do not seek to “ coerce”
with the penalty of discharge any worker
into union membership in a given bargain
ing unit until a majority of eligible workers
have voluntarily become union members.
Then a majority—in accordance with the
democratic principle of majority rule—seek
the right through the union shop to “ co
erce” a minority of their fellow workers
into union membership at the penalty of
discharge.
The philosophy of the union shop, there
fore, is rooted in the basic democratic prin
ciple that governs our political life ; namely,
the rule of the majority. The only thing
that is revolutionary—to management—
about the underlying principle of the union
shop is that it should be fully accepted in
our industrial and economic life as well
as our political life (pp. 203-205).
* * * * *
It is practical for only one union to
represent any given group of workers.
The minority nonmembers cannot express
their views or exert their influence through
another union, because neither the law nor
management recognizes a minority union.
113
All workers in a given unit have to be
represented by one bargaining agency.
Thus the only way the minority workers
can express their views and exert their
influence is through union membership.
They are bound by the action of the major
ity in any event, and to have a voice in
making the decisions of the majority the
minority or nonunion workers have to join
the union. In cases where SWOC local
unions lose an election conducted by the
National Labor Relations Board, we usually
advise our members to join the victorious
union to protect their interests. This does
not necessarily deny them their particular
views which led them originally to choose
SWOC in preference to the victorious
union. Within its councils they can ex
press their views and, as frequently hap
pens, after an interval of time they per
suade a majority of their fellow unionists
to change their local union affiliation to
SWOC. But to secure a voice in industry
the minority must join the majority union.
Membership in the union as a condition of
employment, therefore, is an essential re
quirement of industrial democracy in order
to assure all workers a voice in the determi
nation of their conditions of employment.
Police powers or disciplinary powers are
vested in the union in direct proportion with
the amount of responsibilities it assumes.
The union assumes the responsibility to see
that no stoppages of work occur, that all
workers adhere to the contract machinery
to settle grievances peacefully, and that
wages and other vital cost factors are
pegged generally for the life of the contract.
To fulfill these responsibilities the union
must have sufficient authority to discipline
114
those workers who, for example, may stop
work in violation of the contract. Because
supreme power is divided between manage
ment and the union, the majority-rule prin
ciple operates differently from the way it
does in a political democracy—where su
preme power is vested in one agency, the
government. Here, if the Republicans are
elected, Democrats do not have to join the
Republican party, because the state or gov
ernment has the supreme power to enforce
the laws passed by the Republicans. But it
is necessary for the minority nonmembers
to join the union or else the majority,
through the union, lacks the power to see
that the minority abides by the rules. For
example, nine hundred of a thousand work
ers vote for SWOC. The one hundred that
vote against it refuse to join. I f they stop
work the entire one thousand workers are
affected. Management holds the union re
sponsible for enforcing the contract; but it
cannot discipline nonmembers, since its au
thority is confined to members. Thus in or
der to discharge its responsibilities for the
maintenance of industrial peace the minor
ity workers must be required to join the
union at the penalty of discharge.
Lastly, it is a basic principle of industrial
democracy that those who share its benefits
must assume the responsibility of securing
them. This principle has its coimterpart
in a political democracy; namely, those who
enjoy its freedom must assume the responsi
bilities of it. The city taxpayer, for in
stance, who votes against the victorious can
didate for mayor, whose program advocates
increased taxes to build a new city hospital,
must pay the additional taxes to erect the
hospital. Failure on his part to pay such
115
taxfeS, if persisted in, results in the recalci
trant taxpayer losing his property. All the
employees in a given bargaining unit, as we
have seen, are bound by the collective bar
gaining contract. The wage increases,
shorter hours, and other benefits secured by
the majority in the contract are enjoyed
likewise by the minority. The union has to
pay hall rent, postage, grievance committee
men for lost time, and other operating ex
penses. To meet these obligations every
member must pay the taxes (union dues)
levied by and for the support of the union.
All the workers in a given unit derive equal
benefits from the union and, therefore, they
should all share equally in paying the cost
of its upkeep. This is possible only through
union membership, because the union cannot
collect dues from workers for whom it bar
gains but who in turn, are not members of
it. Union members also, on occasion, have
to strike to win gains. This often means
that the union has to assess its members to
win the strike. The benefits of the victory
are shared in equally by the minority non
members. Consequently, it is a requirement
of industrial democracy that all of its bene
ficiaries assume their share of the burdens
(pp. 211-213).
* * * * *
We cannot afford to trust implicitly a man
agement that adamantly refuses to concede
the union shop after our local union (or
unions) in its plant (or plants) has enrolled
a majority of eligible workers on a volun
tary basis. Nor can other labor leaders,
except at the peril of their union’s life. A
management that withholds from the union
full and complete recognition puts the latter
116
on the defensive, compels it constantly to be
prepared for an eventual strike for its very
existence (p. 227).
Padway, Joseph A., “ The Closed Shop Is Up
held.” The American Federationist (December
1943), vol. 50, no. 12, pp. 12-13:
It is ridiculous to say that anyone is de
prived of his right to work by the union
shop. When simply by joining with his
fellow workers in assuming the responsi
bilities of collective bargaining instead of
seeking a free ride, he can obtain the de
sired employment.
A PPE N D IX C
Mr. Harry Shulman, as umpire under a con
tract between the Ford Motor Company and the
United Automobile, Aircraft & Agricultural Im
plement Workers of America (C IO ), has recently
observed (In re Arbitration between Ford Motor
Company and U. A. W . (C IO ), case No. 209,
decided March 29,1944,14 L. R. R. 219, 220-221) :
The relationship of a union member to
his union is a matter of extreme impor
tance in our economic organization. A
union is not a social club or college fra
ternity where men seek congenial company
for leisure time. It is an organization
which transcends differences in religious
faith, political affiliation, racial origin,
educational background, or social manners.
More and more, union membership has be
come a condition of earning a livelihood.
Many workers would find it impossible to
obtain employment and to provide food and
shelter for themselves and their families
if they did not belong to a union. The
prerogative of social clubs to be exclusive
in the selection of their membership is
not transferable to unions of working men.
The growth of industrial unions like the
UAW (CIO) illustrates the emphasis on
general inclusion * * *.
The primary and historic purpose of
labor unions is, of course, to increase the
workers’ bargaining power and to protect
them in their relations with their employ
ers. But since unions, too, are managed
(117)
118
by fallible ancl mortal human beings, there
is need, at the same time, to safeguard the
workers’ interests in his relation to the
union. This is increasingly true as unions
grow in power and importance. The dis
charge of a worker by an employer leaves
him free to take a job with some other
employer. But the expulsion of a worker
from membership in a union may disable
him from finding any work in the com
munity or industry.
U. 8 . GOVERNMENT PRINTING OFFICE! 1944
B E FO R E TH E
Suprem e C o u r t of tjje TOttteb S ta te s
O c to b er T e r m , 1943.
No. 435.
B r o th e r h o o d of R a il w a y a n d S t e a m s h ip C l e r k s , e t a l .,
Petitioners, and Appellants Below,
v.
U n ited T r a n s p o r t S e r v ic e E m p l o y e e s oe A m e r ic a , e t a l .,
Respondents, and Appellees Below.
PETITION FOR A RECONSIDERATION OR
REHEARING.
J a m e s A . C obb ,
G eorge E . C . H a y e s ,
C h a r l e s H . H o u s t o n .
C obb, H o w ard & H a y e s ,
Attorneys at Law,
613 - F - Street, N. W.,
Washington, D. C.
Press of Byron S. Adams, W ashington, D. C.
INDEX.
Petition for a Reconsideration or Rehearing.............. 1
Jurisdiction..................................................................... 2
Reasons for Petition for Reconsideration or Rehearing 2
Conclusion....................................................................... 19
13th Amendment (Sections 1, 2 ) ................................... 16
Section 1977, U. S. C ode.............................................. 17
TABLE OP CASES CITED.
Civil Rights Cases, 109 U. S. 3 ...................................... 17
Brotherhood of Railroad Trainmen v. National Media
tion Board, 88 Fed. 2nd 757 ................................... 9
Brotherhood of Railroad Trainmen v. National Media
tion Board, 135 Fed. 2nd 780 ................................. 9
Carter v. Carter Coal Company, 298 U. S. 238, 80 L. Ed.
1160.......................................................................... 14
General Committee of Adjustment v. Missouri Kansas
Texas Railroad Company No. 23, decided Novem
ber 22, 1943 ................ ....................................... 2, 5
General Committee of Adjustment v. Southern Pacific.
Company, No. 27, decided November 22, 1943.... 2, 5
General Grievance Committee v. General Committee of
Adjustment No. 41, decided November 22, 1943... 2
Guinn v. U. S., 238 U. S. 347, 59 Law Ed. 1310............. 19
Heiner v. Donnan, 285 U. S. 312.................................. 13
Hodges v. IT. S., 203 U. S. 1 ......................................... 18
Meyer v. Nebraska, 262 U. S. 390................................. 14
McCabe v. Atchison, et al. Railway, 235 U. S. 151......... 16
Missouri ex rel. Gaines v. Canada, 305 U. S. 337......... 16
Mitchell v. IT. S., 313 U. S. 8 0 ...................................... 16
Myers v. Anderson, 238 U. S. 368, 59 L. Ed. 1349 ...... 19
National Federation of Railway Workers v. National
Mediation Board, 71 App. D. C. 256 ...................... 10
Schechter Poultry Corp. v. IT. S., 295 U. S. 495, 79 Law
Ed. 1570 ................................................................. 14
Slaughter House Cases, 16 Wall. 3 6 ........................... 14
Switchmen’s Union of North America v. National Medi
ation Board, No. 48, decided November 22, 1943. . 2, 8
Texas and New Orleans Railway Co. v. Brotherhood of
̂Railway and Steamship Clerks, 281 U. S. 548, 569. 6
Twining v. New Jersey, 211 U. S. 78........................... 13
Yick Wo v. Hopkins, 118 U. S. 356, 30 L. Ed. 220......... 19
Page
BEFORE THE
Suprem e C o u rt of fte U n tte b S ta te s
O c to b er T e r m , 1943.
No. 435.
B roth erh o od of R a il w a y a n d S t e a m s h ip C l e r k s , e t a l .,
Petitioners, and Appellants Beloiv,
v.
U nited T r a n s p o r t S e r v ic e E m p l o y e e s of A m e r ic a , e t a l .,
Respondents, and Appellees Below.
PETITION FOR A RECONSIDERATION OR
REHEARING.
To the Honorable Chief Justice, and the Associate Justices
of the Supreme Court of the United States:
Come now the petitioners herein, respondents and ap
pellees below, and present this petition for a reconsidera
tion or rehearing, and for the vacating of a judgment re
versing in a per curiam decision the judgment of the lower
court.
2
JURISDICTION.
On the 6th day of December, 1943, the Court entered the
following order in the case of Brotherhood of Railway and
Steamship Clerics, et al. v. United Transport Service Em
ployees of America, et al., No. 435, October Term, 1943:
“ Per Curiam: The petition for writ of certiorari is
granted and the judgment is reversed on the authority
of General Committee of Adjustment v. Missouri-Kan-
sas-Texas Railroad Co.; General Committee of Adjust
ment v. Southern Pacific Company; General Grievance
Committee v. General Committee of Adjustment; and
Switchmen’s Union of North America v. National
Mediation Board, Nos. 23, 27, 41 and 48, respectively,
decided November 22, 1943.”
This petition for a reconsideration or rehearing is filed
within twenty-five days from December 6, 1943, in accor
dance with Rule 33 of this Court.
REASONS FOR PETITION FOR RECONSIDERATION
OR REHEARING.
The original cause of action in the District Court of the
United States for the District of Columbia was brought by
the United Transport Service Employees of America, an
unincorporated labor organization, and a number of in
dividual employees of the Saint Paul Union Depot Com
pany against the National Mediation Board in which cause
the Brotherhood of Railway and Steamship Clerks, Freight-
handlers, Express and Station Employees, et al., were al
lowed to intervene. The pleadings revealed that about
forty-five station porters (redcaps) in the employ of the
Saint Paul Union Depot Company, Saint Paul, Minnesota,
after organizing as a local chapter of the respondent ap
pellee, the United Transport Service Employees of Amer
ica, (hereinafter called the “ United” ) applied to their em
ployer for the execution of a working and wage agreement
and joined with the “ United” in requesting recognition of
3
the “ United” as their bargaining agent. The intervenors,
the Brotherhood of Railway and Steamship Clerks (here
inafter called the “ Brotherhood” ) took the position that
the redcaps were covered by a working agreement between
the employer and the Brotherhood, entered into in 1921.
The Mediation Board’s services were invoked to investi
gate this dispute over the representation. The Board dis
missed the application on the ground that station porters
“ are part of the craft or class of clerks, office, station and
storehouse employees and not a separate craft or class for
the purposes of the Railway Labor Act and that ‘ no dis
pute over representation has been found by the Board to
exist among the craft or class of * * * (such employees
in the services of the company).’ ”
Certain conceded facts are important as a background to
this petition. The working agreement entered into in 1921
between the Saint Paul Depot Company and employees rep
resented by the Brotherhood (1) did not list station porters
or “ redcaps” ; (2) the Saint Paul redcaps at no time desig
nated the Brotherhood as their bargaining agent but in
fact unanimously so designated the United; (3) the Media
tion Board has recognized the United as a craft or class
organization, acting for redcaps either by actual certifica
tion to or through knowledge of executed agreements with
upwards of twenty-one railroads and station companies;
(4) the Saint Paul redcaps are all colored and because of
this are not eligible for membership in the Brotherhood.
In spite of the foregoing, as above indicated the Media
tion Board dismissed the application of these redcaps for
a bargaining agent of their own choosing, and relegated
them to a voiceless minority in a craft or class in which
they were not previously and are not now recognized, and
designated for them as a bargaining agent a brotherhood
to which they cannot belong and in which they have abso
lutely no voice.
This petition for a reconsideration or rehearing consti
tutes a final appeal for relief from a judgment by this
4
Court sustaining an administrative determination that has
been and will be used to restrain the exercise by certain
railway employees of basic constitutional rights, and is
made for the purpose of pointing out additional circum
stances and of stressing distinctions between this case and
those which were cited by this Court as determinative of
the issues involved. In granting certiorari and reversing
the judgment of the Court of Appeals of the District of
Columbia, this Court without hearing from the respondent
appellees gave a per curiam decision on the authority of
the four cases hereinbefore referred to, all of which were
decided on the 22nd day of November, 1943; which said de
cision, with apparent lack of concern as to constitutional
questions raised, took the position that the courts were
without jurisdiction to determine the correctness of the
position of the Mediation Board, and that the decision of
the Mediation Board was final and conclusive.
It is to be noted that the question of jurisdiction in this
case had not been raised by the petitioners seeking cer
tiorari and also it is to be noted that the Mediation Board,
the original party to this suit, did not take an appeal from
the United States District Court for the District of Colum
bia to the Court of Appeals for the District of Columbia,
and the Government was not a party in interest on this
application.
We respectfully submit that the Brotherhood of Railway
and Steamship Clerks v. United Transport Service Employ
ees of America case is not ruled by the four cases referred
to in this Court’s per curiam decision, nor by any of them.
The assumption of jurisdiction by the District Court of
the United States for the District of Columbia, and the
affirming of that position by the Court of Appeals for the
District of Columbia, are as a matter of fact reasonably
sustained by language taken from the four cases referred
to, from which cases the instant case is distinguishable and
the view taken by this Court in those cases does not compel
a conclusion that the findings made by the Mediation Board
5
in the present case are not subject to review by the Fed
eral Courts.
With these distinctions properly drawn a different result
than that occasioned by this Court’s per curiam decision
can be reached without harm to any pronouncements of this
Court in any of the cases cited or in any previous case.
The instant case, unlike the cases cited, involved not only
the question of the validity of the Board’s determination
as to what constituted the “ craft or class” , but the far more
important and constitutional question as to the right of the
petitioners to be protected against an effective and arbi
trary denial of their right to organize and bargain collec
tively through representatives of their own choosing. Sec
tion 2 (4th) Railway Labor Act. The Missouri-Kansas-
Texas Railway Company case did not involve the basic
right granted by Section 2(4th) of the Act. In that case
this Court said:
“ Section 2(4th) states that employees shall have the
right to organize and bargain collectively through rep
resentatives of their own choosing. But that great
right which Congress in 1926 at last supported with
legal sanctions is not challenged here. The Engineers
and Firemen are the collective bargaining agents for
their respective crafts and are acknowledged as such.
Their authority so to act is not challenged. (64 Sup.
Ct. 146, 151.) ” (Italics ours.)
The Southern Pacific Company case did not involve a
denial of the right to bargain collectively through repre
sentatives of their own choosing, as this Court cogently
remarks:
We are concerned only with a problem of representa
tion of employees before the carriers in certain types
of grievances which, though affecting individuals pre
sent a dispute like the one at issue in the Missouri-
Kansas-Texas Railway Co. case. It involves, that is
to say, a jurisdictional controversy between two
unions * * * For the reasons stated in our opinions in
the Missouri-Kansas-Texas Railway Co. case and the
6
Switchmen’s Case, we believe that Congress left so-
called jurisdictional controversies between unions to
agencies or tribunals other than the courts. (64 Sup.
Ct. 142, 145.)
The controversy in the Switchmen’s case centered around
the authority of the Mediation Board in election disputes
to interpret and define the meaning of “ craft or class” as
used in the Bailway Labor Act. It is not denied that the
rights granted employees under Section 2(4th) are possibly
involved in the issues of the Switchmen’s case inasmuch as
the right of a majority of any class or craft of employees
to choose who shall be the representative of the class or
craft is enforced by the powers given the Board under Sec
tion 2 (9th) to resolve controversies and as an incident
thereto to determine what is the appropriate class or craft
in which an election should be held. However, the peti
tioners contend that the said Switchmen’s case does not
involve the basic issue of the case at bar—the denial of the
right to participate in the selection of the bargaining
representative.
Petitioners contend that the findings of the Mediation
Board in the instant ease deprive the petitioners of basic
rights under the Bailway Labor Act, making the cases re
ferred to either distinguishable, as hereinbefore outlined,
or raising the unquestionable issue that the Bailway Labor
Act itself is unconstitutional if, under its terms, there be a
delegation of uncontrolled and uncontrollable authority in
the hands of the Mediation Board of fundamental consti
tutional rights of persons situated as are these petitioners.
Tinder the Bailway Labor Act it is clear that the petitioners
as employees have the right to organize and bargain col
lectively through representatives of their own choosing.
45 IT. S. 0. A., Section 152, 4th. In the case of Texas & New
Orleans Railway Co. v. Brotherhood of Railway <& Steam
ship Clerks, 281 U. S. 548, 569, this Court, through Chief
Justice Hughes, stated:
7
“ Freedom of choice in the selection of representatives
on each side of the dispute is the essential foundation
of the statutory scheme. All proceedings looking to
amicable adjustments and to agreements or arbitration
of disputes, the entire policy of the Act, must depend
for success on the uncoerced action of each party
through its own representatives to the end that agree
ments satisfactory to both may be reached and the
peace essential to the uninterrupted service of the in
strumentalities of interstate commerce may be main
tained.” (Italics ours.)
Although this Court has cited the General Committee of
Adjustment v. Missouri-Kansas-Texas Railway Company
as authority for the reversal of the Court of Appeals for
the District of Columbia in the instant case, in that very
case this Court, in speaking of the freedom of choice in the
selection of representatives, said:
“ * * * "What has long been a ‘ right’ of employees en
forceable only by strikes and other methods of indus
trial warfare emerged as a ‘ right’ enforceable by
judicial decree.” (Italics ours.)
In the Switchmen’s case before referred to the Court ob
served that the right of a craft or class of employees to
select a bargaining representative is not protected by the
Courts, but is protected by the powers granted to the
Mediation Board under Section 2(9th) under the Railway
Labor Act.
In the Switchmen’s case there was no question that all
of the employees concerned, those members of the Switch
men’s Union as well as those members of the Brotherhood
of Railway Trainmen, were doing absolutely the same type
of work. In the principal case the Redcaps were doing an
entirely different type work from that covered tradition
ally under the jurisdiction of the Brotherhood of Railway
and Steamship Clerks. Nevertheless, without a hearing
or any opportunity for the Redcaps to establish the differ
entiation and without any regard to the consequences that
it was linking' together a minority with an antagonistic
8
majority, the Mediation Board issued its fiat, placing the
Redcaps under the jurisdiction of the Brotherhood as com
ing within the same craft or class over which the Brother
hood had jurisdiction. The Board never held an election;
never interviewed, or in any wise communicated with a
single Redcap whose vested property rights in his job by
its decision have been placed at the uncontrolled discretion
of the Brotherhood which will not recognize him as a
member.
It is respectfully urged that an arbitrary designation by
the Mediation Board cannot be substituted for the basic
right of free selection entrusted to the care of the Board
under Section 2 (9th), and we further urge that the effect
of the Court’s decision in the case at Bar is to thwart the
very purpose of the Railway Labor Act, and to rob it of
its vitality by sustaining the Mediation Board in a failure
and refusal to allow to persons invoking its aid the very
rights which the Act was created to insure.
Again as seeming to lay the premise for the distinction
between the Switchmen’s case and the instant case, this
Court in the Switchmen’s case has said:
“ If the absence of jurisdiction of the federal courts
meant a sacrifice or obliteration of a right which Con
gress had created, the inference would be strong that
Congress intended the statutory provisions governing
the general jurisdiction of those courts to control.
That was the purport of the decisions of this Court in
Texas & N. 0. R. Co. v. Brotherhood of R'y. and S. S.
Clerks, 281 IT. S. 548, and Virginian Ry. Co. v. System
Federation No. 40, 300 U. S. 515. In those cases it was
apparent that but for the general jurisdiction of the
federal courts there would be no remedy to enforce the
statutory commands which Congress had written into
the Railway Labor Act. The result would have been
that the ‘ right’ of collective bargaining was unsup
ported by any legal sanction. That would have robbed
the Act of its vitality and thwarted its purpose. Such
considerations are not applicable here. The Act in
Section 2, Fourth writes into law the ‘ right’ of the
‘majority of any craft or class of employees’ to ‘ de-
9
termine who shall be the representative of the craft or
class for the purposes of this Act.’ That ‘ right’ is
protected by Section 2, Ninth which gives the Media
tion Board the power to resolve controversies concern
ing it and as an incident thereto to determine what is
the appropriate craft or class in which the election
should be held. See Brotherhood of Railroad Train
men v. National Mediation Board, 88 F. 2d 757;
Brotherhood of Railroad Trainmen v. National
Mediation Board, 135 F. 2d 780. A review by the fed
eral district courts of the board’s determination is not
necessary to preserve or protect that ‘ right’. Con
gress for reasons of its own decided upon the method
for the protection of the ‘ right’ which it created. It
selected the precise machinery and fashioned the tool
which it deemed suited to that end. Whether the im
position of judicial review on top of the Media
tion Board’s administrative determination would
strengthen that protection is a considerable question.
All constitutional questions aside, it is for Congress to
determine how the rights which it creates shall be
enforced. (Italics ours.)
Can it be denied that in the instant case that if jurisdic
tion be not allowed to the Federal Courts that there is an
attendant sacrifice or obliteration of a right which Con
gress has created! If the premise be that Congress has
the right to determine how the rights which it creates shall
be enforced only when all constitutional questions are
aside, to use this Switchmen’s case as a parallel or a prece
dent to deny to the Courts the right to review the decision
of the Mediation Board in the instant case would be to shut
our eyes to the very gist of the present action and to avoid
the fundamental issues raised. It is to be noted that the
question of the constitutionality of the action of the Board
was made a part of the pleadings as well as the proof in
the instant case. Quotations from the pleadings will evi
dence this foundation:
“ * * # The plaintiffs also urge that the act and actions
of said National Mediation Board herein complained
of are not only aribitrary, capricious and unlawful
10
under the terms of said Act of Congress, but they do
not meet the requirements of due process of law and
violate the rights of plaintiffs guaranteed to them by
the Constitution of the United States. * * * Plaintiffs
aver that the constitutional rights of the plaintiffs in
question are violated by the action of the National
Mediation Board as herein outlined and specifically,
but without limiting the foregoing, the rights as
assured them under the Fifth and Fourteenth Amend
ments to the Constitution of the United States.”
Where a constitutional right is invaded it is not neces
sary for the Congress to bestow a procedural right on any in
dividual or individuals to protect its or their constitutional
rights, and if such rights are taken away under the guise
of legislation, that legislation is unconstitutional and the
only way that those rights may be vindicated is through the
courts. We so maintain in this case. It seems thus that
the decision in this case decided on August 2, 1943, by the
Court of Appeals, makes this so manifest that nothing
further on our part should be said, but in view of the Su
preme Court’s decision we deem it necessary to differen
tiate this case from those cases relied on by the Supreme
Court.
In this connection we invite your attention to Chief Jus
tice Eicher’s reasoning in concluding his opinion in affirma
tion of the lower court:
‘ ‘ The opinion of this Court in National Federation of
Kailway Workers v. National Mediation Board, 71
App. D. C. 256, is without bearing on the issue pre
sented to us in the instant case. The coach cleaners
there concerned were deprived of no statutory rights,
by either the government or their employers. The
designated representative, it is true, was a labor or
ganization to which some of the coach cleaners could
not belong, but it became the designated representative
because a majority of the coach cleaners voted for it
and it could continue only so long as they desired it.”
It will be noted there that the persons in interest had an
opportunity and did take part, and by their majority ex-
11
pressed their preference for the labor organization other
than the National Federation of Railway Workers.
In the instant case the parties in interest unanimously
voted for the United Transport Service Employees of Amer
ica to act as their bargaining agent, but the decision as now
reversed by the Supreme Court of the United States would
mean that the Brotherhood of Railway & Steamship Clerks
should become their bargaining agent, not only without, but
in the teeth of this exercise of franchise, and denying due
process of law to them as indicated by the decision handed
down by Chief Justice Eicher—
“ As we have pointed out, however, the record raises
questions of law and fact that deserve better than cava
lier disposition by both the administrative and the
courts, and the parties are entitled to have them deter
mined in accordance with the due processes of law.
“ The judgment of the District Court is correct and is
therefore affirmed.”
Should there be any doubt as to these forty-five employees
not having their day in court and due process of law also
denied to them, reference is had to the concurring opinion
of Chief Justice Groner.
Chief Justice Groner, after stating the factual angle of
the case, makes this important and further statement:
“ * * # But I think that neither that question nor the
question of the precise or exact meaning of the words
‘ craft or class’ and of whom they shall be composed,
needs to be decided in this case. And this for the reason
that here there is admitted to exist a totally different
situation from any contemplated by the Act, and which,
so far as I know, is unique. And this grows out of the
fact, as we have seen, that the Brotherhood, design-
nated by the Board as the bargaining agent of the por
ters, is a white organization which does not permit
membership by the colored employees of the railroads.
As a result, the effect of the action of the Board is to
force this particular group of employees to accept
representation by an organization in which it has no
right to membership, nor right to speak or be heard in
12
its own behalf. This obviously is wrong and, if as
sented to, would create an intolerable situation. That
the rules of the Brotherhood make Negroes ineligible
to membership is not a matter which concerns us, but
that the Brotherhood, in combination with the employer,
should force on these men this proscription and at the
same time insist that Brotherhood alone is entitled to
speak for them in the regulation of their hours of work,
rates of pay and the redress of their grievances is so
inadmissible, so palpably unjust and so opposed to the
primary principles of the Act as to make the Board’s
decision upholding it wholly untenable and arbitrary.
The purpose of the Act, as is apparent on its face, and
as has been recognized and confirmed by the Supreme
Court and this Court in many decisions, is to insure
freedom of choice in the selection of representatives.
While it is true that this purpose has been held to
yield, when necessary, in the interest of uniformity of
classification in accordance with established custom,
nothing in the Act nor in its construction by the courts
can be found to justify such coercive action as to force
upon any class of employees representation through an
agency with whom it has no affiliation nor right of asso
ciation. It is, therefore, of no consequence that the
porters were at one time dependent upon Brotherhood
as their Spokesman with the railroad, for that never
was a trusteeship of their own making. To perpetuate
it by law would be to impose a tyranny in many re
spects analagous to ‘ taxation without representation.’
And if anything is certain, it is that the Congress in
passing the Act never for a moment dreamed that it
would be construed to diminish the right of any citizen
to follow a lawful vocation on the same or equal terms
with his neighbor. In this view, to enforce the Board’s
decision would be contrary to both the word and spirit
of our laws.”
This language in the concurring opinion of Chief Justice
Groner so clearly differentiates this case from the cases re
lied on by the Supreme Court for the overruling of this
ease that the very statement of it is all that need be said.
Couple this with the Supreme Court's decision to the effect
that the Statute never intended to take away the rights of
13
individuals to make their own contracts, and the further
statement of Mr. Chief Justice Groner—
“ * * # Individually and as members of that organiza
tion they duly requested the Depot Company to enter
into a working agreement with United in their behalf,
and when this was denied invoked the mediation of the
Board. * * * ”
This shows, if the ruling of the Supreme Court stands in
this case, it not only denies to these forty-five members the
right to collectively make their own contract, but it denies
to them the individual right to make their own contract, and
if Congress passed such a law, clearly the law would be un
constitutional and certain it is that the Mediation Board
has no right to do what the Congress is powerless to do,
and it is no answer to say that the Court is not passing on
the right or wrong of the proposition, but simply the powers
of the Board under a Congressional Act. Congress cannot
deprive the courts of jurisdiction to review a challenge of
the constitutionality of its own act if same deprives an indi
vidual of its property without due process of law.
The general scope of the prohibitions of the Fifth Amend
ment as against the Federal Government is frequently meas
ured by the settled scope of the Fourteenth Amendment.
This Court has proceeded on the assumption “ that the legal
import of the phrase ‘ clue process of law’ is the same in both
amendments.” In Twining v. New Jersey, 211 U. S. 78, the
Court said (p. 101) :
“ If any different meaning of the same words as they
are used in the Fourteenth Amendment (and in the
Fifth Amendment) can be conceived, none has as yet
appeared in a judicial decision.”
In Heiner v. Donnan, 285 U. 8. 312, the Court said, at
page 326:
“ The restraint imposed upon legislation by the due
process clauses of the two amendments is the same. ’ ’
14
The Switchmen’s case does not hold that Congress has
the power to deny individuals their constitutional rights.
On the contrary, this Court has held that Congress cannot
abdicate its duty to protect individual rights. Garter v.
Carter Coal Co., 298 U. S. 238, 80 L. Ed. 1160; Schechter
Poultry Corp. v. U. S., 295 TJ. S. 495, 79 L, Ed. 1570.
To the extent that there is conceived a “ liberty of con
tract” under the due process clause of the Fourteenth
Amendment, a similar “ liberty” exists under the Fifth
Amendment. While there is no such thing as absolute free
dom of contract and it is subject to a variety of restraints,
they must not be arbitrary or unreasonable. Freedom is
the general rule, and restraint the exception. In Meyer v.
Nebraska, 262 U. S. 390, 399 (1923), citing Slaughter House
Cases, 16 Wall. 36 (1873), the Court said:
“ While this Court has not attempted to define the lib
erty thus guaranteed, the term has received much con
sideration and some of the included things have been
definitely stated. Without doubt, it denotes not merely
freedom from bodily restraint but also the right of the
individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to
marry, establish a home and bring up children, to wor
ship God according to the dictates of his own con
science, and generally to enjoy those privileges long
recognized at common law as essential to the orderly
pursuit of happiness by free men.” (Italics ours.)
If the Switchmen’s Union case could be used as a prece
dent or as controlling the instant case, the last act within
the framework of the Railway Labor Act by which a minor
ity could have any voice in its rights of pay, rules, or work
ing conditions of employment would be when it casts its
vote for the representative to act as its bargaining agent,
and it in spite of that vote the Mediation Board can select
a representative in
eludes the minority
in the determination
o.t tho conooi
the form of a labor union which ex-
from membership or any participation
of policy, it would mean the relegating
'’ted to a voiceless minority in absolute
15
conflict with the apparent purpose of the Railway Labor
Act.
If again the Mediation Board is to have the last word
and subject to no judicial review, attention should be drawn
to the fact that there are no standards set up for the repre
sentatives’ conduct and this absolute lack of procedural
safeguards of standards of conduct imposed upon the action
of the representative once designated should be contrasted
with the procedural safeguards established by Congress
for the protection of the majority in the determination of
the collective bargaining representative; i. e., certification
of dispute, election, secret ballot, and certification to the
carrier which the carrier is obligated to exclusively recog
nize.
Certain it is that Congress cannot and should not have the
right of delegation to the Mediation Board of the designat
ing to an unchosen majority of control over the jobs and
livelihoods of the minority for same would amount to a con
stitutional interference with personal liberty and private
property, and would be an arbitrary delegation in violation
of due process. (It should here be noted that the redcaps
would always be a voiceless minority as compared with the
total membership of the clerical workers which would mean
that the only available relief to them would be to give up
their jobs.)
It is inconceivable that Congress, without setting up any
standards, has thus put in the Mediation Board an unre
strained and arbitrary power to determine or destroy the
working conditions of the minority. Conceding that the
Mediation Board has the power to designate (1) craft or
class, (2) who shall be the representative of the craft or
class, and (3) that the carrier is bound to deal with the
representative so designated exclusively, the fact that no
standards are established for the conduct of the representa
tive simply means the representative is free to destroy the
minority’s jobs at will. (Southeastern Carrier Conference
agreement with firemen, February 18, 1941, and the Find-
16
ings of the President’s Committee on Fair Employment
Practices, November 18, 1943.)
Constitutional rights are individual rights and are not
determined by the number of persons involved. McCabe v.
Atchison, et al., Railway, 235 IT. S. 151; Missouri ex rel.
Gaines v. Canada, 305 U. S. 337; Mitchell v. U. S., 313
U. S. 80.
It is admitted that the Brotherhood of Railway & Steam
ship Clerks do not permit colored persons to become mem
bers thereof, and the only reason is that of color. It is fur
ther admitted that in this case they sought, and were certi
fied as the bargaining agent for forty-five colored people
who individually and collectively objected to their repre
sentation of them as bargaining agent and who had ex
pressly designated the United Transport Service Employees
of America as their choice as a bargaining agent. This is
involuntary economic servitude, and we respectfully submit
that such is obnoxious to the Thirteenth Amendment to the
Constitution as constituting limitations on individual rights
which pertain to the status of slaves rather than to free men
and the Thirteenth Amendment in its prohibition of slavery
is directed to individuals as well as states.
The Thirteenth Amendment:
Section 1. “ Neither slavery nor involuntary servitude,
except as a punishment for crime, whereof the party
shall have been duly convicted, shall exist within the
United States, or any place subject to their jurisdic
tion.”
Section 2. “ Congress shall have power to enforce this
article by appropriate legislation. ’ ’
In giving legislative aid to these constitutional provisions
Congress enacted in 1866, under the authority of the Thir
teenth Amendment, the following sections which were prac
tically re-enacted after the adoption of the Fourteenth
Amendment:
17
“ Section 1977: All persons within the jurisdiction of
the United States shall have the same right in every
state and territory to make and enforce contracts, to
sue, be parties, give evidence, and to the full and equal
benefit of all laws and proceedings for the security of
persons and property as is enjoyed by white citizens,
and shall be subject to like punishment, pains, penal
ties, taxes, licenses and exactions of every kind, and to
no other.” (Italics ours.)
Mr. Justice Bradley, speaking in the Civil Rights Cases,
109 U. S., page 3, said:
“ Congress, as we have seen, by the Civil Rights Bill
of 1866, passed in view of the Thirteenth Amendment,
before the Fourteenth Amendment was adopted, under
took to wipe out these burdens and disabilities, the
necessary incidents of slavery, constituting_ its sub
stance and visible form; and to secure to all citizens of
every race and color, and without regard to previous
servitude, those fundamental rights which are the es
sence of civil freedom, namely, the same right to make
and enforce contracts, to sue, be parties, give evidence,
and to inherit, purchase, lease, sell, and convey prop
erty, and to the full and equal benefit of ail laws and
proceedings for the security of persons and property
as is enjoyed by white citizens, and shall be subject to
like punishment, pains, penalties, taxes, licenses and
exactions of every kind and no other. ’ ’
From the foregoing it may be assumed that the power of
the National Government by appropriate legislation to pro
tect a right created by, derived from, or dependent in any
degree upon, the Constitution of the United States, cannot
be disputed. To deprive any person of a privilege inher
ing in the freedom ordained and established by the Thir
teenth Amendment is to dprive him of the privilege inhering
in the liberty recognized by the Constitution of the United
States. Is the right to contract without restraint save by
the general law7 of the land, operating on all alike, a right
guaranteed to every citizen under the Thirteenth Amend
ment of the Constitution!
18
That answer has been practically had in all the cases in
which the Supreme Court has spoken on this question. The
decision of the Supreme Court in the above entitled case
denies to the people of color the right to make their own
contract at the instance of a labor organization certified by
the Mediation Board.
It is no sufficient answer for the court to say we are not
passing on the right or wrong of this matter. We are sim
ply passing on the powers of the Mediation Board as created
by Congress.
As above stated, we maintain that the constitutional right
being involved, the Congress did not intend to take away
such right, and if so, it was powerless so to do. Mr. Justice
Harlan, in his dissenting opinion in Hodges v. U. 8 203 U.
S. p. 1, 51 L. Ed. p. 66, stated:
“ * * * I have already said that the liberty protected by
the 14-th Amendment against state action inconsistent
with due process of law is neither more nor less than
the freedom established by the 13th Amendment. . . .
In Allgeyer v. Louisiana, 165 U. S. 578, 41 L. Ed. 832,
we said that such liberty ‘means not only the right of
the citizen to be free from the mere physical restraint
of his person, as by incarceration, but the term is
deemed to embrace the right of the citizen to be free
in the enjoyment of all of Ids facuities; to be free to use
them in all lawful ways; to live and work ivhen he will;
to earn his livelihood by any laivful calling; to pursue
any livelihood or avocation, and for that purpose to
enter into all contracts which may be proper, necessary,
and essential to his carrying out to a successful conclu
sion the purposes above m en tion ed All these rights,
as this court adjudged in the Allgeyer case, are em
braced in the liberty which the 14th Amendment pro
tects against hostile state action, when such state ac
tion is wanting in due process of law. They are rights
essential in the freedom conferred by the 13th Amend
ment. If, for instance, a person is prevented, because
of his race, from living and working where and for
whom he will, or from earning his livelihood by any
lawful calling that he may elect to pursue, then he is
hindered in the exercise of rights and privileges secured
to freemen by the Constitution of the United States. # * * >>
19
If this unchallengable statement of Mr. Justice Harlan be
correct, then unless the Negro worker be given opportunity
under the terms of the Railway Labor Act to function in
equal manner as all other individuals, the Act itself is un
constitutional and violative of due process of law as vouch
safed in the Fifth Amendment to the Constitution of the
United States.
In this connection it is to be noted that the Railway Labor
Act not only did not attempt to take away the common law
right of individuals to individually contract for themselves,
but it sought to add another right—giving them the right to
collectively contract with their employers.
If the interpretation of this court stands, both rights are
denied to Negroes. It is of no moment whether the consti
tutional right of Negroes to bargain or make contracts for
themselves is taken away directly through the Statute or
through the administration of same. Certain it is that the
administration of this Statute is not equal when it comes to
colored and white employees as applied in this ease, and
when inequality is designedly produced by Federal Officials
in the exercise of their administrative power, the discrimi
nation must meet the same constitutional test as a Statute
by which the particular inequality is set forth, and such
would be in derogation of the Fifth Amendment as taking-
property without due process of law.
Whatever the Statute may be upon its face, if the effect
of it is to bring about inequality or to take property without
due process of law, the courts will travel behind the Statute
to see what is its true effect.
Tick Wo v. Hopkins, 118 IT. S. 356; L. Ed. 30, 220.
Guinn v. U. S., 238 U. S. 347; 59 L. Ed. 1310.
Myers v. Anderson, 238 U. S. 368, 59 L. Ed. 1349.
CONCLUSION.
In conclusion we are of the opinion that if this interpre
tation of the Railway Labor Act prevails the plight of the
Negro in the interstate railway labor field is hopeless. Con
gress has no greater power than the organic instrument
under which it derives its existence, and whether we regard
20
this as a casus omissus or a deliberate attempt to deprive
courts of jurisdiction, we submit that in the face of a con
stitutional issue Congress could not take away jurisdiction
of the court, nor can the court abrogate its own jurisdiction
and responsibility under the Constitution to protect the in
dividual workers and their constitutional rights against
arbitrary administrative action.
For the foregoing reasons the petitioners respectfully
urge that a rehearing be granted and that upon further con
sideration that the order of December 6,1943, reversing the
judgment of the lower court in the above entitled cause be
revoked.
Respectfully submitted,
J a m b s A. C obb ,
G eorge E. C. H a y e s ,
C h a r l e s H . H o u s t o n .
Attorneys for Petitioners.
C obb , H ow ard & H a y e s ,
Attorneys at Law,
613 - F - Street, N. W.,
Washington, D. C. I,
I, James A. Cobb, of counsel, for the petitioners, United
Transport Service Employees of America, et al., do hereby
certify that the foregoing petition for rehearing of this
cause and for vacating the order reversing the judgment of
the lower court is presented in good faith and not for the
purpose of delay.
J a m e s A. C o bb ,
Attorney for the Petitioners.
BEFORE THE
Interstate Commerce Commission
ID A M. STOPHER,
VS.
THE C IN C IN N A T I U N IO N T E R M IN A L
COM PAN Y, INC., > No. 28495.
UNITED TR A N SPO R T SERVICE E M
PLO YEES OF A M E R IC A ,
Intervenor.
BRIEF OF UNITED TRANSPORT SERVICE EMPLOYEES
OF AMERICA, INTERVENOR,
A N D
IDA M. STOPHER, COMPLAINANT.
U n it e d T r a n s p o r t S erv ic e E m p l o y e e s
of A m e r ic a ,
B y : W il l a r d S a x b y T o w n s e n d ,
President.
J o h n L. Y a n c e y ,
Se ere tary-Treasure r.
I da M . S t o p h e r ,
B y : M . J. M y e r ,
Attorney.
L eon M . D e sp r e s ,
M . J. M y e r ,
T heodore M . B e r r y ,
Attorneys.
November 1, 1940.
THE OUNTHORP-WARREN PRINTIN8 COMPANY, 210 WEST JACKSON, CHICAGO
IN D E X .
PAGE
Statement of the Case.................................................. 1
Abstract of the Evidence............................................. 3
The Occurrence of March 31, 1940....................... 3
The “ Cincinnati Plan” ......................................... 4
Defendant’s Terminal ......................................... 5
The Duties Performed by Red Caps.................... 6
Discrimination by Defendant .............................. 10
Public Dissatisfaction ......................................... 12
Impairment of Efficient Service ........................... 12
Impairment of Relationship Between Red Caps
and Public........................................................... 13
Argument ...................................................................... 14
Point I. Red Cap Service in the Handling of Hand
Baggage and Other Personal Effects in the Ter
minal Is a Transportation Service Within the
Meaning of the Interstate Commerce Act......... 14
Point II. The Ten Cent Charge Is Illegal Because
the Price Paid for the Ticket Covers Red Cap
Service in Transporting the Passenger’s Hand
Baggage.............................................................. 23
Point III. The Failure to Publish and File With
the Commission a Tariff Covering the Charge
for Red Cap Transportation Service Is Suffi
cient to Make the Charge Illegal Under the
Interstate Commerce A c t .................................. 30
Point IV. The Ten Cent Charge for Transporting
Hand Baggage Has Been Collected in a Dis
criminatory Manner and the Defendant has Wil
fully Collected and Received from Various Per
sons Greater and Less Compensation for the
Same Service Rendered..................................... 30
XI
Point V. Since the Charge is Illegal, Complainant
Is Entitled to Restitution and to an Order Pro
hibiting Further Exaction of the Charge........... 32
Point VI. The Defendant’s Suggestion That the
Ten Cent Charge Was Required by the Terms of
Pair Labor Standards Act Is False. That Act
Requires the Payment of a Wage to All Em
ployees and Has Nothing to Do With the
Charges Made by Employers. Railroad Charges
Are Governed Exclusively by the Interstate
Commerce Act ................................................... 33
Point VII. The Charge Is Undesirable from the
Standpoint of the Railroads, the Employees and
the Public ........................................................... 36
'Conclusion .................................... 39
I l l
C a se s C it e d .
Bacon v. Pullman Co., 159 Fed. 1, 3 (C. C. A. 5th, 1908)
Booker v. Pennsylvania Railroad Company, 82 Pa.
Super. 588 (1924) ......................................................
Cole v. Atlantic Coastline Railroad Company, 211 N. C.
591, 191 S. E. 353 (1937).........................................
Delaware, L. & W. R. Co. v. Morristown, 276 U. S. 182,
77 L. ed. 523, 48 Sup. Ct. 276 (1928).........................
Ellison-White v. Director General, 68 I. C. C. 492....
Franklin v. Southern Pacific Company, 203 Cal. 680,
265 P. 936, 59 A. L. R. 118 (1928), cert. den. 278
U. S. 621 ............................................................. 19,26,
Great Western Railway Company v. Bunch, 13 App.
Cas. 31, 5 Eng. Rul. Cas. 471 (1888)....................... 18,
Herbert v. Shanley Co., 242 U. S. 591, 61 L. ed. 511, 37
Sup. Ct. 232 (1917) ..................................................
Lovell v. London, C. & D. R. Co., 45 L. J. Q. B. 476
(1876) ........................................................................
National Baggage Committee v. Atchison, Topeka and
Santa Fe Railway Co., 32 I. C. C. 152.......................
Soanes v. London & South-Western Railway Company,
120 Law Times N. S. 598 (1919)..............................
Stafford v. Wallace, 258 U. S. 495, 66 L. ed. 735, 42
Sup. Ct. 397 (1922) ..................................................
Wilkinson v. Pullman Company, 22 F. (2d) 177, (D. C.
S. D. Cal. 1927) .........................................................
Ex Parte No. 72 (Sub-No. 1), 229 I. C. C. 410, 417.. .17,
24
17
18
22
24
27
26
25
20
24
19
21
24
23
.
BEFORE THE
Interstate Commerce Commission
ID A M. STOPHER,
VS.
THE C IN C IN N A T I U N IO N T E R M IN A L
COM PAN Y, INC., » No. 28495.
UNITED T R A N SPO R T SE R V IC E E M
PLO YEES OE A M E R IC A ,
Intervenor.
BRIEF OF UNITED TRANSPORT SERVICE EMPLOY
EES OF AMERICA, INTERVENOR, AND IDA M.
STOPHER, COMPLAINANT.
STATEMENT OF THE CASE.
The issues raised by the pleadings * are as follows:
1. whether the ten cent charge instituted by de
fendant on February 1, 1940, for transporting pas
sengers’ hand baggage by red cap employees is un
just and unreasonable in violation of Section 1(5) of
the Interstate Commerce Act;
* The pleadings consist of the complaint filed by Ida M. Stopher; the
answer of the defendant, The Cincinnati Union Terminal Company, Inc.,
an Ohio corporation; and the intervening petition of United Transport
Service Employees of America, a labor organization. A substantially
identical intervening petition was filed by an organization known as the
Brotherhood of Railroad Station Porters.-
2
2. whether it is unjustly discriminatory in appli
cation, in violation of section 2 of the act;
3. whether it is illegal for defendant’s failure to
file a tariff, in violation of section 6 of the act;
4. whether it is illegal as a surcharge or extor
tion for a transportation service to which the com
plainant was already entitled by the purchase of her
ticket.
The defendant has admitted that it has filed no tariff
with the Commission.
3
ABSTRACT OF THE EVIDENCE.
The defendant, an Ohio corporation, is engaged in the
operation and maintenance of railroad terminal facilities,
known as the Cincinnati Union Terminal, in Cincinnati,
Ohio. The defendant is therefore a railroad as defined in
section 1 (3) and is subject to the provisions of the In
terstate Commerce Act.
The Occurrence of March 31, 1940.
On March 31, 1940, Ida M. Stopher, a resident of Cin
cinnati, Ohio, arrived by private automobile at the defend
ant’s terminal. A red cap employed by defendant took
her two suitcases out of the automobile and placed a tag
on each one (Exhibits 1 and 2), giving her two stubs. After
she had purchased a ticket to Indianapolis, the red cap
informed her that she would have to pay a charge of ten
cents for each suitcase carried. She protested that the
charge was improper. The red cap conducted her to the
person then in charge of the station master’s office, who
told her that the red cap was charged with the tags and
that if she did not pay the charge, the red cap would
have to pay it himself. Under protest to the station mas
ter’s representative that the charge was illegal and un
fair, she paid the twenty cents to the red cap. Before
March 31, 1940, Mrs. Stopher had used the terminal on
many occasions and had never been required to pay a
charge for transportation of hand baggage by red caps.
(8-21.) She testified: “ I always understood that the price
of my ticket included all services within the terminal.
(17.)
4
The “ Cincinnati Plan.”
Before February 1, 1940, passengers using the terminal
were entitled to use the services of defendant’s red cap
employees for carrying their hand baggage between the
trains and the terminal entrances and exits. No charge
was made for such service beyond the price which the
passenger paid for his ticket. Although many of the pas
sengers using such red cap service often gave the red cap
a gratuity, there was naturally no compulsion as to the giv
ing of the gratuity or its amount. Commencing on Feb
ruary 1, 1940, however, defendant put into effect a plan
which has now become generally known as the “ Cincinnati
Plan” , under which it proceeded to exact a charge of
ten cents for each article of hand baggage carried by a
red cap. (See defendant’s Exhibit 16.) It is the illegality
and impropriety of this charge, now spread throughout
the country (208), which forms the basis of the complaint
here.
The United Transport Service Employees of America
(hereinafter referred to as United) is a labor organiza
tion having about fifteen hundred red cap members through
out the country. It includes, in particular, substantially all
of defendant’s red cap employees and has been certified by
the National Mediation Board as their bargaining repre
sentative under the Railway Labor Act. (206.) In nego
tiating collective agreements, United has been confronted
almost everywhere with the carriers’ unilateral adoption
of the Cincinnati Plan and has been compelled to nego
tiate on the basis of the Plan in operation. (210-211.) It
has found that the Plan has affected its members very
unfavorably in the performance of their duties, their rela
tionship with their employers, and their relationship with
the traveling public. (212-215, 225-229.) United alleges
therefore that it has an interest in these proceedings, di
5
rect in so far as they affect Cincinnati and indirect in so
far as they may affect the legality and propriety of the
charge elsewhere throughout the United States.
Defendant’s Terminal.
The terminal facilities owned and operated by the de
fendant are really owned and operated by seven lessee
railroads. (653, Exhibit 23.) The common stock of the
defendant, which carries with it the control of the defend
ant’s operations, is entirely owned by these railroads, each
of which elects one of the ten directors constituting the
Board of Directors. (557.) The money from ticket sales
at the terminal is deposited directly into the separate bank
accounts of the seven owning railroads. (558.) Except
for comparatively small rentals from restaurant, retail
ing, shoe-shining and barber shop concessions, defendant’s
entire income comes from the seven owning railroads.
(707.) Each month, after the net expenses of the termi
nal’s operation are computed, each railroad pays its pro
portionate share. Thus, the owning or leasing railroads
pay the operating expense of the terminal. (556-558, 653,
706-710.)
The terminal building itself is a very large and beauti
ful structure (see pages 559-563 for a complete descrip
tion) erected in 1933 at a total cost of $41,000,000. (654.)
In the words of W. K. Kellogg, defendant’s manager, it
was “ designed to afford a convenient flow of traffic through
the terminal” and it provides “ a great deal more in the
way of comfort, convenience and assistance to the passen
gers than the facilities that existed before.” (656.) It has
been designed and laid out so as to provide an efficient, un
broken and rapid movement of passengers and their bag
gage from the entrances to the ticket windows, the bag
gage room, the concourse, and finally the trains. Its
plan reveals an intention to assure a smooth and rapid
6
flow of patrons from the terminal entrances to the trains
and from the trains to the exits. Doubtless, Manager Kel
logg expressed the feelings of each one of the seven own
ing railroads when he said, “ As terminal manager, it is my
personal feeling that the traveling public should be af
forded every convenience that it is possible to give them,”
and that “ affording those conveniences does assist in the
free flow of passenger traffic through, into and oui of the
terminal.” (657.)
Access to the terminal may be had by foot, bus or au
tomobile. From the terminal entrances to the train plat
forms, the distance varies from 400 feet for the nearest
track to 1,000 feet for the farthest. In addition, stairways
lead from the concourse level to the train platforms and
ramps have been constructed for passengers who need or
prefer them. (18, 50, 66, 118.)
Most of the trains entering and leaving the terminal
move in interstate commerce. (73, 647-648, Exhibit 23.)
The Duties Performed by Red Caps.
To assist the passengers in transporting their hand
baggage between the terminal entrances and exits and the
departing and arriving coaches or Pullman cars, and to
assist the free flow of passenger traffic, the defendant em
ploys a staff of about ninety red cap employees (639),
who are included in defendant’s Transportation Depart
ment. (782, Exhibit 30.) Since the red caps are among
the few railroad employees in constant direct contact with
the general public, the defendant in behalf of the owning
railroads considers them as “ salesmen” or “ contact men”
and on occasion has so informed them. (636.) Their du
ties are extensive and make them important employees of
the defendant, not only because they are salesmen and con
tact men, in Manager Kellogg’s phrase, but because their
services are an integral part of the work of the terminal,
7
without which the free flow of passengers and traffic would
be seriously hampered.
The red caps work in regular shifts and are subject to
regular assignments (83, 185), “ all according to the way
the captain thinks the men are needed for particular
trains.” (167.) Their captain supervises the assignment
of the men to various posts so that the poor trains with
few bag-carrying passengers are covered as well as the
good trains. (568, 637.) Their hours of work, shifts, and
days off are all adjusted so that an ample force will always
be on hand to assist passengers.and expedite traffic. (637.)
In connection with passengers coming to the terminal
to board trains, red caps are instructed and required to
do the following, all of which seem well designed, as Man
ager Kellogg suggested, “ to afford a convenient flow of
traffic through the terminal” (656) : They open the doors
of arriving taxicabs and private automobiles and assist
the passenger in taking out his baggage, thereby permit
ting the unloaded automobiles to move on promptly with
out causing congestion. (186.) If the passenger desires
red cap services, they learn his destination, tag each ar
ticle of hand baggage, give half the tag to the passenger,
and write on the tag the passenger’s car and berth num
bers. They carry the baggage to the passenger’s train, guid
ing the passenger to the ticket window if necessary, an
swering his requests for information about train arrivals,
departures, equipment, etc. If he desires, they take his
baggage to the baggage room. They verify his Pullman or
chair car space, if he has any, by inquiry or by examina
tion of his ticket, carry the hand baggage to the train,
place it in the passenger’s proper Pullman or chair car
space or, if the passenger is traveling in a day coach, in
the lu ggage rack. They are then required to collect ten
cents for each article of hand baggage carried.
In connection with passengers arriving at the terminal
8
on incoming trains, they are required to do the following:
In the case of Pullman cars, where the Pullman porter al
ways loads the baggage in the vestibule of the car, the
red caps lift it from the vestibule or take it from the
Pullman porter and place it on the station platform. Until
this is done, the passengers are unable to leave the car.
In many cases, red caps go into the car to obtain baggage
and carry it out at the request of passengers. They often
go into coaches and carry out baggage from the racks or
aisles.
Then as the passenger alights, the red caps ask him
if he desires their service. If so, they take the baggage
and ask the passenger where he is going. They then carry
the baggage to the passenger’s immediate destination, that
is, to an outgoing train, to one of the exits of the ter
minal, or to a car parked on the terminal property. Some
times they carry the hand baggage to some part of the ter
minal property, as for example the parcel check room or
the waiting room. At all times, they furnish the passenger
with requested information, designed to assist him to use
the terminal facilities efficiently and readily. When re
quested, they page passengers. They also operate wheel
chairs for disabled passengers. (47-72, 105-110, 123-136,
137, 146-147, 173-174, 318, Exhibit 5.)
Upon receiving a baggage check from an alighting pas
senger who is pressed to make a connection with an out
going train, they go immediately to the baggage car and
take out the baggage for immediate transportation to the
outgoing train. (135-136.)
Before February 1, 1940, red caps were forbidden under
penalty of dismissal to solicit tips. (Buie 35 in Exhibit 5.)
The rules required that “ each gratuity, regardless of its
value, must be accepted with a courteous ‘ Thank You’ ” .
With regard to giving information to passengers, as
one captain told the red caps, “ To be an efficient red cap,
9
you must know the track that the trains leave from; the
equipment of the trains; and in some cases the approxi
mate time the trains will be ready for the passengers to
get on.” (134.) The station master himself has ordered
the red caps to give information. (57.) Although the
defendant maintains an information desk and attendant
and even provides an additional man during rush periods
(645), the passengers rely on the red caps for information
(146), and probably ten requests for information are
addressed to red caps for each one addressed to the in
formation clerk. (147.) During busy periods, the gateman
and information man could not possibly give information
to all passengers requiring it. (185, 319.) Whenever there
is a change in the train schedules, red caps receive a copy
so that they may familiarize themselves with it. (318.)
Although the passenger has some discretion in the
variety of services he may request of the red cap, the
final authority to decide what personal duties a red cap may
perform other than carrying baggage for a passenger rests
entirely with the defendant. (109-110, 666.) The red cap is
not permitted to leave the terminal property while on
duty. (108.)
The defendant estimates that one passenger out of three
carrying bags, uses the services of Ted caps. (569.) It
seems probable that the average number of bags carried
in each load is three (780), although defendant’s manager
thought that the average was somewhat over two, but
admitted that it might well be greater. (680-682.) He
likewise admitted that the size of the bags is a factor in
determining whether the passenger uses red cap service.
(683.)
10
Discrimination by Defendant.
There is a general rule of practice in the defendant’s
terminal that when passengers vigorously protest the
charge, their hand baggage tags will be approved by the
defendant’s officers so that the red cap can either turn
them hack without money or use them again. (49.) While
the defendant has been careful not to enact an explicit
rule that persons vigorously protesting the charge will not
be required to pay it, the defendant has required red caps
to conduct or report them to the station agent or other
responsible person in authority. (81, 139, 141, 156-160,
326-327, 613.) The defendant’s version is that the red cap
is instructed to report the matter to the station master
who will determine whether he should be relieved of the
charge (613); and he is relieved only if he can satisfy
the station master that the failure to collect was due to
causes beyond his control. Since in every case but one
(539) the red caps have been authorized to re-sell or turn
back the checks, the conclusion is inescapable that the rule
is to waive the charge as to any persistent protester. Evi
dence was introduced showing specific instances of dis
crimination involving Mrs. Franklin D. Eoosevelt, Judge
Florence Allen, and other passengers. (79, 194-200, 200-
202, 204-205, 306-308, 347-349, 355-357, 358-361.) In other
words, the defendant has discriminated by making the
charge for transportation services less for certain per
sons than for others. Defendant’s Exhibit 24 shows that
the discriminations have constantly continued since the
plan went into effect.
Red caps testified to conditions at the following termi
nals throughout the country where the Cincinnati Plan
has been put into effect since February 1, 1940:
Illinois Central Union Station, New Orleans, Louisi
ana (407-422);
Chicago and North Western Terminal, Chicago, Illi
nois (422-431);
11
Houston Belt and Terminal Company, Union Sta
tion, Houston, Texas (435-443);
Cleveland Union Terminal Company, Cleveland,
Ohio (471-480);
Boston Terminal Company, Boston, Massachusetts
(481-491);
Grand Central Terminal, New York City (491-504);
Indianapolis Union Railway Company, Indianapolis,
Indiana (505-510) ;
Michigan Central Terminal, Detroit, Michigan (512-
520);
Illinois Central Terminal, Chicago, Illinois (520-
525);
Chicago and Western Indiana Railroad, Chicago,
Illinois (525-531);
and the record shows that red caps from the following ter
minals were present and prepared to testify to the same
conditions at their terminals (532-533) :
Grand Central Station (Illinois Central), Memphis,
Tennessee;
New York Central Terminal, Buffalo, New York;
Memphis Union Station, Memphis, Tennessee;
Pennsylvania Railroad Station, Pittsburgh, Penn
sylvania ;
Pennsylvania Railroad Station, Baltimore, Mary
land;
Florida East Coast Railway, Miami, Florida;
Nickel Plate Railroad Company Station, Rochester,
New York;
New York Central Railroad Company Station, To
ledo, Ohio;
Union Station, Springfield, Massachusetts;
New York, New Haven and Hartford Railroad Sta
tion, New Haven, Connecticut.
12
Discrimination in application has not been confined to de
fendant’s terminal but seems to be indigenous to the work
ing of the Plan. (415, 416, 418, 420, 428, 437, 477, 482, 516,
524, 532-533.)
Public Dissatisfaction.
There is much evidence of complaints by passengers dis
satisfied with the Cincinnati Plan, in Cincinnati (142, 203,
238, 305, 350, 363) and the other cities where it has been
introduced. (407-531 passim.) The defendant attempted
to suggest that there were relatively few complaints and
that these were not important. We question seriously the
defendant’s position. At the hearing, red caps testified
that there were many complaints daily and weekly. Most
of these complaints have not reached the railroad because
the red caps seek to pacify passengers at the time and
avoid the occasion to report them. (142, 203, 309-310, 350,
363.) The laudatory statements which the manager of
the terminal claims to have received were no doubt made
by friends already amicably disposed toward him. (634,
703-706.)
Impairment of Efficient Service.
In innumerable ways, the Cincinnati Plan prevents the
rendering of the same courteous and efficient service which
was rendered before it went into effect, not only in Cin
cinnati, but elsewhere. (143-145, 148, 228, 416, 425, 431,
437, 473, 485, 496-498, 509.) Passengers give packages to
red caps and take them back. (350.) By their delay in
paying the charge they detain red caps on trains even in
motion. (145.) The red cap is driven, not to serve pas
sengers well, but to carry as many bags as possible and
collect as much money as possible with emphasis more on
collections (251, 316-318, 338, 363-366, 635-636) and less
on the quality of the service. (148, 374-379.) A red cap
13
who refused to handle a fourth load when he already had
three loads was called into the station master’s office and
told that he “ wasn’t worth a damn as a red cap.’ ’ (374.)
Impairment of Relationship Between Red Caps and Public.
The relationship between the public and the red cap,
which was formerly one of unusual friendliness, has been
badly marred by the new charge. (476, 486, 490, 497, 509,
517, 525, 531.) Because of the railroads’ publicity seeking
to place the blame for the new charge on the Fair Labor
Standards Act and on the organized red caps, suspicion
and distrust have been created. Into the red caps’ work,
the new charge has brought contemptuous and violent
treatment by passengers (350), uncalled for claims in the
matter of accounting for the collected funds, the job of
pacifying patrons disgruntled by the illegal charge, and
the presence of sabotage and espionage. (227.)
14
ARGUMENT.
POINT I.
Red Cap Service in the Handling of Hand Baggage and
Other Personal Effects in the Terminal Is a Transpor
tation Service Within the Meaning of the Interstate
Commerce Act.
From the description of the duties performed by red
caps, it can be seen that their main duty is to transport the
hand baggage of passengers, and primarily of those pas
sengers who travel with so much baggage that they can
not conveniently carry it themselves. While Manager Kel
logg said that one bag-carrying passenger out of three
uses red cap service, the fact otherwise stated would prob
ably be that virtually every passenger carrying three or
more bags uses it. The function of the red cap in the ter
minal is to assure the free and uninterrupted movement not
only of the passenger whose baggage the red cap may be
handling at the moment but of all the passengers in the
terminal. The smooth functioning, of which Manager Kel
logg boasted, could not be achieved without the work of the
red cups; and their absence would cause such confusion
that the terminal company would promptly replace them.
Picture the situation if all red caps at the defendant’s
terminal suddenly disappeared. Many passengers having
three or more bags would be unable to carry them and
would be stranded. Perhaps some would carry one bag at
a time. Others, including women and aged persons, would
15
be compelled to struggle through the 400 to 1,000 foot dis
tance to or from the train platforms plus perhaps several
hundred feet down the platforms to or from the cars, car
rying their bags whether they be light or heavy. Pas
sengers wishing to alight from trains would find the ves
tibules of their cars blocked and would have to wait until
the Pullman porter unloaded the hand baggage. Those
wanting to make quick connections with an outgoing train
would often find it impossible to do so. Schedules of both
passengers and trains would be upset. Automobiles ar
riving at the terminal would congest the entrance. Pas
sengers accustomed to obtaining information from red
caps would either swamp the remaining sources of in
formation or act on false information or none at all. In
stead of the smooth functioning depot planned, designed,
and operated to provide a rapid and direct flow of traffic
with a minimum of wasted effort and delay, there would
be inconvenience, delay, retracing of steps and confusion.
We dare say that the management would quickly arrange
for trained replacements to restore the “ free flow of pas
senger traffic through, into and out of the terminal.” (Man
ager W. E. Kellogg’s testimony, 657.) It seems clear from
the evidence that red cap service is an integral part of
transportation; and the evidence is supported by the au
thorities.
An examination of the history of red caps discloses that
their function was incorporated into terminal operation by
the independent action of the railroads themselves. In the
Railroad Gazette, now known as Railway Age, for May
16
15, 1896, Volume 40, page 342, appears the following para
graph, the only authentic public evidence as to the origin
of red caps, indicating that the red cap function was added
to terminal facilities by the railroads in order to improve
terminal services and aid in the free flow of passenger
traffic:
“ Mr. Daniels’* red-capped porters seem to be popu
lar ; the plan is copied by both friends and enemies, or,
in other words, by a connecting Vanderbilt road, the
Chicago & Northwestern, and by a competing line, the
Pennsylvania. The latter now has porters at the Cort-
landt street terminals in New York City, where a force
will be on duty from 6 a. m. until midnight. Porters
will, if desired, accompany passengers, carrying their
hand baggage, to the American Steamship Line pier, to
the elevated railroad station, or to the station of the
Central Railroad of New Jersey. There will also be
porters at the Desbrosses street station in New York,
who will go with passengers to the Ninth Avenue
elevated station. We are glad that at last one West
ern railroad has adopted this military notion from the
effete monarchies of Europe. As long as the red-caps
were to be found only in New York, the Western feel
ing that the Eastern citie's are growing undemocratic
and unjustifiably stuck up, was being constantly ag
gravated, and any further widening of the breach, in
this particular presidential year, would have been a
misfortune. The Chicago & Northwestern, which em
ploys the porters at its Chicago station, announces
that ‘no fee will be necessary*. Whether the giving
of tips is absolutely prohibited, is a question which
the reader must decide for himself, by reading between
the lines.”
* Mr. Daniels was receral passenger a.r--nt for the New York Central
Railroad.
17
See also 45 Monthly Labor Review 1303 (December 1937).
We believe that this Commission effectively pronounced
red cap service to be a transportation service in its opinion
in Ex Parte No. 72 (Sub-No. 1), 229 I.C.C. 410, 417:
“ When consideration is given to the fact that red
caps are used at most of the large passenger stations
and that at many stations they are paid regular wages,
the conclusion is inescapable that at large stations
where the distances from trains to waiting rooms and
streets are substantial, red caps are considered neces
sary in the interests of a well-managed station.”
The courts which have had occasion to pass on the na
ture of red cap work have universally recognized and ju
dicially determined that red cap work is part of the rail
roads’ transportation service.
In Booker v. Pennsylvania Railroad Company, 82 Pa.
Super. 588 (1924), the carrier defended a suit for the
value of a suitcase on the ground that the negligent red
cap was not the railroad’s employee. The defendant con
tended that it had not filed tariffs covering red cap service,
that the red caps were not employees, and that the work
was not part of the transportation service. The court
answered clearly:
“ Nor is it material that the railroad company has
not filed tariffs covering the services of these porters.
It does not file tariffs for their services when they act
as elevator men, or for their ushers, or the employees
in their bureau of information, or for the many other
attendants who furnish aid and assistance to travelers
using their line, or are employed in connection with
the facilities of transportation which a well managed
18
railroad in large centers of population furnishes to the
traveling public to expedite its own business as well
as for the convenience and accommodation of its
patrons.” (p. 594.)
In Cole v. Atlantic Coastline Railroad Company, 211
N. C. 591, 191 S. E. 353 (1937), the defendant, a terminal
company, insisted that the acts of a red cap in misdirect
ing a passenger were not its own, because the red cap
was not an employee and the work done was not part of
the transportation service. The court, going so far as
to concede for the purpose of the case that the man was
not an employee, said:
“ * * * nevertheless, his acts were those of the
defendant in the discharge of the contractual duties
which it owed to the railroads using its station, and
to their passengers. Annotations. 59 A. L. E. 126.
He was carrying out his customary duties." (p. 355.)
The question has been discussed 'ey the English Courts,
whose views, while not binding on the Commission, are
well considered and highly persuasive. In the louring rase.
>Fastern fui-u >ct£U Crticinn-’r v. r u*- '. 13 Ape. nas.
31. 5 m Buh Cas. 4 1 1>SS Lori M i-rrurn. in acid-
LH.it A € S m ik ? r L -IL ia? 'DJF t S f i ItTt 1 HicITHhT -v ie
had failed to niace a has in a railway ar. said, jf "he
work ot station porters
■' Everybody who ~ ~ b y railway mows mau
i u* ’'_e e—5. m e, re -rors rm ’m i .c i -tamm m
hagcig*? sre tie? it' 'he mrrsaee "1 me susehse y n a -
perwrs r*aagt *o -anur* umr 'tsgpts*, raise ±
*tr -iss tn&sroeat* « k ■* gat 5 .a® hat u sjs , * 5-
19
Answering the carrier’s contention that the porters must
he taken to he acting on behalf of the passenger, he said:
“ I cannot think this view is correct. The services
rendered by railway porters in receiving passengers’
luggage, in taking it to the platform, and putting it
into the train, rre part of the ordinary facilities for
passenger traffic which the public nowadays expects
from railway companies, and which railway companies
for the most part hold themselves out as ready and
willing to afford. These services are covered by the
fare which the passenger pays for his journey.”
(p. 56.)
In a similar case, Soanes v. London & South-Western
Railway Company, 120 Law Times N. S. 598 (1919), the
Court of Appeals made a similar ruling, saying:
“ In the first place we know that the ordinary
practice of railway companies—that which every pas
senger expects to find when he arrives at the station
—is that there shall be porters in uniform at the
usual place of arrival, whose business it is to take
charge of the passenger’s luggage.” (p. 601.)
Most persuasive of all on this point is the decision in
Franklin v. Southern Pacific Company, 203 Cal. 680, 265
P. 936, 59 A. L. R. 118 (1928), certiorari denied, 278 U. S.
621, in which the court, concluding that the hand baggage
of a passenger commences its transportation in interstate
commerce from the moment it is given to the red cap, said:
“ The train upon whieb respondent was to be trans
ported, along with her baggage, was about to depart
and the purpose of the presence of the porter was to
facilitate her entry thereon for the mutual advantage
of both the railway company and herself. It cannot
20
be seriously disputed that these facts put the baggage
of respondent in interstate commerce and the liability
of the carrier began then, it being admitted that re
spondent was at the time of such delivery to the
porter in possession of a railway ticket and then and
there to go aboard the train * * *
“ The passenger has the right to deliver his baggage
to the carrier such time before the starting of the
train upon which he intends to take passage as may
be reasonably necessary for obtaining a ticket and
checking the baggage.” (p. 684.)
The court also quoted from Lovell v. London, C. <& D. R.
Co., 45 L. J. Q. B. 476 (1876), as follows:
“ I do not see how any railway company could carry
on its business as a carrier of passengers if this
(carrying of hand baggage by station porters) is not
to be considered as the beginning of journey.” (p. 685.)
During this hearing, defendant has contended that red
cap service in transporting baggage is the same as the
parcel check room service in the depot which receives bag
gage and parcels and charges for their storage. However,
in Franklin v. Southern Pacific Co., supra, in which it
should be recalled that certiorari was denied by the Su
preme Court of the United States, the court clearly distin
guished the two. Quoting the language of Lovell v. London,
C. £ D. R. Co., 45 L. J. Q. B. 476, the court said:
“ ‘ She, therefore, did not go for the purpose of
leaving her luggage at the station, but intended to go
by train, and the luggage was delivered in the ordinary
way to the servants of the company, not to be kept,
but for the very purpose for which people go with
luggage to railway stations, that is to say, to have it
labeled and put in the train.’ * * * (p.685.)
21
“ We, therefore, can accord no weight or strength
to the position of appellant denying liability for full
value, because, as expressed by it, ‘ the hand baggage
was not received for transportation and was not being
handled by defendant as a common carrier’ and the
act of the porter was ‘ the tender of a non-common
carrier service which was furnished without charge. ’ ’ ’
(p. 686.)
The distinction between the parcel check room service
and red cap service seems clear. The former may be used
by many persons who are not railway passengers and for
purposes wholly unrelated to railway travel. Moreover,
even passengers’ hand baggage may remain in the check
room for extended periods. The red caps, however, except
in relatively few cases, transport hand baggage to or from
trains in connection with journeys in which passengers
are then engaged. Their service is directly and integrally
a part of the transportation of the passengers and their
property. Furthermore, other services which they render
and which we have already discussed, such as giving neces
sary information, ushering passengers to Pullman cars,
and removing hand baggage from cars, are not rendered
by the parcel check room.
In answer to the defendant’s contention that the red
caps’ carrying of hand baggage should be metaphysically
lifted out of the stream of interstate commerce and con
sidered as a separate service unrelated to the business
of transporting passengers and their hand baggage, we
suggest the appropriateness of the following quotation
from Stafford v. Wallace, 258 U. S. 495, 66 L. ed. 735, 42
Sup. Ct. 397 (1922), where the Court said, in discussing
22
the interstate nature of facilities for handling livestock
between the arriving trains and the packing plants:
“ This court declined to defeat this purpose (federal
regulation of interstate commerce) in respect of such
a stream and take it out of complete national regula
tion by a nice and technical inquiry into the non-in
terstate character of some of its necessary incidents
and facilities when considered alone and without ref
erence to their association with the movement of
which they were an essential hut subordinate part.”
(Italics ours.) (p. 519.)
Defendant has also contended that red cap work is
identical in legal contemplation with other concessionaire
services in the station. These concessionaire services, such
as the restaurants, newsstands and barber shops, are not
at all a part of the transportation service. In the language
of the United States Supreme Court in Delaware, L. & W.
R. Co. v. Morristown, 276 U. S. 182, 77 L. ed. 523, 48 Sup.
Ct. 276 (1928), they do not at all provide the passengers “ a
suitable way for them to reach and leave its station” and
we submit that the defendant’s contention in this regard
should be rejected, particularly since defendant admitted
that while it retained complete control of its red cap em
ployees. it had no direct control of the concessionaires’
employees. (759.)
Defendant relies on Exhibit 29. the statement of the
Director General of Railroads made on March 14. 1919. that
red cap service was not si part of the ea rn erd oty . In
that statement, the Director Genera! acted simply
as an operator o f carriers. for tool parpese in
the same position as defendant. Moreover, as statsc ry
23
this Commission in Ex Parte 72 (Sub. No. 1), 229 I. C. C.
410, 415, a decision of the United States Railway Labor
Board rendered at about the same time held by implica
tion that red caps were carriers’ employees. (June 15,
1921, Vol. II, p. 175.)
POINT II.
The Ten Cent Charge Is Illegal Because the Price Paid
for the Ticket Covers Red Cap Service in Transporting
the Passenger’s Hand Baggage.
It seems too clear to require repetition here that for
forty-five years, passengers traveling on American rail
roads have expected that, in purchasing their tickets and
paying their fares, they are entitled without additional
charge to red cap service in the carrying of their hand
baggage. In fact, the defendant, along with all railroads
in the United States, forbade any red cap under penalty
of dismissal from soliciting the slightest gratuity from a
passenger (Rule 35 in Exhibit 5); and although it was the
custom of many passengers to give some gratuity to the
red cap, many gave none at all. (468.) Since it has always
been the duty of railroads to transport a reasonable amount
of hand baggage with the passenger, it follows that the
entire transportation of hand baggage from the moment it
passes into the hands of the red cap and begins its journey
must be held to be covered by the payment of the fare.
This Commission and the courts have been unanimous
in stating that the transportation of hand baggage is
covered and paid for by the price paid for the ticket.
24
We quote the following statements of this Commission:
Ellison-White v. Director General, 68 I. C. C. 492:
“ 'The free transportation of a limited amount of
baggage is an incident of and is included within the
passenger-fare contract.” (p. 495.)
National Baggage Committee v. Atchison, Topeka and
Santa Fe Railway Co., 32 I. C. C. 152:
“ As a general rule throughout this country the
purchaser of a full first class passenger ticket or of
a mileage ticket is entitled to receive, in addition to
his transportation between the points named on the
ticket or included in the territory in which his mileage
book is honored, the transportation of not more than
150 lbs. of baggage of a value not exceeding $100.00
under rules and regulations prescribed by the carriers.”
The courts have been even more explicit.
In Wilkinson v. Pullman Company, 22 F. (2d) 177, (D.
C. 8. D. Cal. 1927), holding the Pullman Company liable
for the loss of jewelry worn by a passenger and placed by
her in a bag in her berth, the court said:
“ The jewelry that Miss Wilkinson was wearing
and carrying in the car is regarded as baggage with
in the definition of that term as it is used in cases
of this kind. She had the right to carry with her and
to retain under her personal possession and in her im
mediate presence and control as baggage a reasonable
quantity of personal effects for her use, comfort and
adornment during her journey, having in view her
station in life.” tp. 179.)
To the same effect is Bacon v. Pullman Co.. 159 Fed. 1. 3
(C. C. A. 5th. 190S).
25
The general rule is stated in 3 Am. & Eng. Encyc. of
Law 543:
“ It is always implicitly a part of the contract be
tween the carrier and the passenger, that the former
shall carry for the latter his personal baggage; the
price paid for the ticket or for transportation embraces
compensation for the carriage of the baggage, and no
special consideration can be demanded by the carrier
or need be paid.”
Since the transportation of hand baggage (concededly
covered by the payment of the fare) clearly begins at the
moment when the red cap employee carries the baggage,
the red cap service of transportation must be held to be
covered by the fare.
Defendant has attempted to argue that the red cap
service is a thing separate and disjointed from the rest
of the transportation service, for which it receives no
pay; that it is maintained by the defendant for the
passengers’ greater joy and not for the conduct of de
fendant’s business. A similar argument was ably refuted
by Mr. Justice Holmes in the case of Herbert v. Shcmley
Co., 242 U. S. 591, 61 L. ed. 511, 37 Sup. Ct. 232 (1917),
where the plaintiff had brought suit for copyright in
fringement. He complained that the defendant hotel had
caused an orchestra to play a copyrighted song for profit in
its dining room for the entertainment of its dining guests.
Defendant contended that since it made no charge for the
music, the music was but an extra service given to the
guest without being a part of the services for which he
26
paid. Justice Holmes aptly said, and his words might he
transposed almost without change to fit the present case:
“ The defendant’s performances are not eleemosynary.
They are part of a total for which the public pays,
and the fact that the price of the whole is attributed
to a particular item which those present are expected
to order, is not important. * * * If music did not pay,
it would be given up. If it pays, it pays out of the
public’s pocket. Whether it pays or not the purpose
of employing it is profit and that is enough.” (p. 594.)
The present question was specifically and definitively
passed on in the case of Franklin v. Southern Pacific
Co., 203 Cal. 680, 265 P. 936, 59 A. L. R. 118 (1928), certi
orari denied 278 U. S. 621, in which the court stated:
“ Plaintiff paid the full price for her transportation
with the knowledge, presumptive or actual, that this
(red cap) service was part of the consideration enter
ing into the purchase. The fact that it might or could
be dispensed with did not make it gratuitous. Porter
service of all kinds might be withheld, but the answer
to this proposition is that good business principles
doubtless require it in order to get and retain patron
age. This service must be held to have been covered
by the fare paid for the transportation.” (p. 683.)
That court also quoted Great Western Railway Co. v.
Bunch, 13 App. Cas. 31, 5 Eng. Rul. Cas. 471 (1888), to
the following effect:
“ These services (of the railway porters) are cov
ered by the fare which the passenger pays for his
journey. They are offered in view of the contract
which a person who presents himself with luggage at
a railway station presumably either has made or is
about to make. The contract, as the case may be,
27
runs from, or relates back to, the commencement of
the journey; and the journey must, I think, be taken
to commence, as regards passengers’ luggage, at the
time when the luggage is received by the company’s
servants for the purpose of the journey. Thence
forward the work done in taking the luggage to the
platform, in putting it into the train, in conveying it
to its destination, and there delivering it, must, I think
be regarded under ordinary circumstances as one con
tinuous operation to be performed under the contract.
The contract is the ordinary contract of common car
riers—a contract to carry securely.” (p. 691.)
It is well known that railroads carry in the baggage car
free of charge personal baggage up to 150 pounds on each
ticket. (314-316.) At defendant’s terminal, checked bag
gage after it is received in the baggage check room, must
be carried at least 600 to 800 feet to the train. (314-316.)
Since this service of carrying the baggage to the baggage
car is covered by payment of the passenger fare and is
admitted by defendant to be a transportation service, it
would seem that the parallel service of carrying the hand
baggage to the passenger car is equally a transportation
service covered by the fare.
The California court, in Franklin v. Southern Pacific
Company, 203 Cal. 680, 265 P. 936, 59 A. L. R. 118 (1928),
certiorari denied 278 IT. S. 621, discussed this very ques
tion:
“ Our problem then becomes reduced to this ques
tion : Is there any difference between the case at bar
and the case of liability of the carrier for checked
baggage in a case where no graduated scale of valua
tion is allowed by the tariff? * * * We can think of no
28
reason why there should he any difference between
baggage in the custody of a porter as a servant of the
carrier, and lost through his negligence, and baggage
in the custody of a baggageman, likewise a servant of
the carrier, and lost through his negligence.” (p. 689.)
The defendant has argued that in computing passenger
fares between stations, this Commission has never specifi
cally included the cost of red cap service. The decisions
of the Commission show that many factors are taken into
account in computing passenger fares. When finally fixed,
the fare is in substance a uniform over-all mileage rate
(763) arrived at after a consideration of operating costs,
investments, market conditions, competitive conditions,
and many other factors which are taken into consideration
in fixing the price of any product. Once fixed, however,
passenger fares are uniformly computed on a mileage
basis throughout the entire area covered by the Commis
sion’s order. That is why we charge as specious defend
ant’s argument that since the fares are the same from
Metuchen, New Jersey, to London, Ohio, (where red cap
service is not available), as from New York City to
Columbus, Ohio (where red cap service is available),
therefore passenger fares do not include compensation for
red cap services. (766-767. See Exhibit 27.) There are
many services available at New York City and Columbus
but not at Metuchen and London which are indirectly taken
into account in fixing the general over-all mileage rate.
This Commission can surely take administrative notice
that the large terminals in New York City and Columbus
provide a myriad of necessary facilities which are either
29
not available at all in Metuchen and London or available
only in miniature. Once fixed, however, the mileage rate,
which is partially based on operating expenses in New
York City, Metuchen, and elsewhere, ignores differences
among individual stations in the area.
Defendant has made a point of the fact that there is a
“ net deficit” , as shown by^Exhibit 22, from red cap serv
ice in the terminal. By including all money paid to red
cap employees, to captains and to the station master’s
clerk, and contrasting the total with the cash received from
its ten cent charge, the defendant seeks to impress this
Commission with the fact that the red cap service is not
self-sustaining. But defendant fails to point out that all
the transportation services of the Cincinnati terminal are
conducted on the basis of “ net deficits.” The defendant
expects to incur regular net deficits, not because of im
proper management or lack of patronage, but because it
v is in business solely to give passengers the facilities to
which they become entitled when they purchase passenger
tickets from the seven owning railroads. Since the re
ceipts from passenger tickets are allocated directly to the
owning railroads and do not pass through the terminal’s
bank account, there are no legitimate receipts from opera
tions excepting the comparatively small rentals from the
concessions. Thus each department, from the station
master to maintenance department, shows a regular “ net
deficit.” The payment of lawful wages to red cap em
ployees is as much a terminal expense as the payment of
wages to any of the other many employees; and the so-
30
called deficit of operations, which is paid monthly by the
seven owning railroads, should and does include the wages
of all the employees. (710.) The question of “ net deficit”
in any department is not a relevant criterion.
POINT III.
The Failure to Publish and File With the Commission a
Tariff Covering the Charge for Red Cap Transportation
Service Is Sufficient to Make the Charge Illegal Under
the Interstate Commerce Act.
Section 6 of the Interstate Commerce Act requires rail
roads to publish and file a tariff for all charges for trans
portation services. We submit that we have shown that
red cap service is a transportation service. Therefore a
tariff should have been published and filed. In its answer,
the defendant admitted that it had filed no tariff with the
Commission.
POINT IV.
The Ten Cent Charge for Transporting Hand Baggage
Has Been Collected in a Discriminatory Manner and the
Defendant Has Wilfully Collected and Received from
Various Persons Greater and Less Compensation for the
Same Service Rendered.
The evidence set forth in the abstract shows clearly that
neither the defendant nor railroads elsewhere have in
sisted upon collecting the ten cent charge from any person
who complained vigorously about it, persisted in refusing
to pay, or ignored the charge and failed to correct his
error.
31
The defendant’s contention appears to be that so many
hags are carried and so little discrimination is practiced
that the discrimination is not important. Here is indeed
an interesting rebirth of the arguments prevalent about
fifty years ago before this Commission in discrimination
cases. It is now settled that no discrimination of any kind
is permitted. What standing would any railroad have if
it came before this Commission and argued that the Com
mission ought not to subject it to charges of discrimination
because after all it reduced the price of only a few tickets
and then only to people whose protests were vociferous ?
The fact (as shown by defendant’s Exhibit 24) that the
discriminations have neither ceased nor declined in the
months since the plan was put into effect, indicates that
discrimination may rise, especially if the public becomes
aware that the defendant will waive the charge in favor
of any insistent person. As the defendant’s manager
stated, the defendant has no way of collecting the charge
if the passenger refuses to pay and the defendant’s policy
is not to antagonize anyone. (625.)
We submit that this charge, which is illegal in its in
ception, bears internal proof of discriminatory illegality
in that it can not possibly be applied uniformly. Wherever
the Cincinnati Plan has seen put into effect, it has resulted
in continuous discrimination.
32
Since the Charge Is Illegal, Complainant Is Entitled to
Restitution and to an Order Prohibiting Further Exac
tion of the Charge.
Mrs. Ida M. Stopher, the complainant, purchased her
ticket to Indianapolis and in accordance with her custom
and practice of many years’ standing, relied on receiving
red cap service without charge. Mrs. Stopher is a civic
minded person, active in consumers organizations and in
terested in the consuming public. (40.) Although at the
hearing the defendant tried to make much of the fact that
Mrs. Stopher discussed the unfairness and the illegality of
the ten cent charge with a member of United, that accusa
tion cannot save this illegal charge. Sections 9 and 13 of
the Interstate Commerce Act provide that any person may
file a complaint against any illegal practice of a carrier.
Mrs. Stopher indicated an affirmative desire to protest
the illegality of the charge and it is proper that Mrs.
Stopher, as a representative of the traveling public, which
is the principal injured party, should file a complaint with
this Commission. We are of the opinion that defendant’s
attempt to impugn complainant’s motives will not succeed
in diverting the Commission’s attention from the real
issue here, namely, the illegality of the charge.
POINT V.
33
The Defendant’s Suggestion That the Ten Cent Charge
Was Required by the Terms of the Fair Labor Stand
ards Act Is False. That Act Requires the Payment of
a Wage to All Employees and Has Nothing to Do With
the Charges Made by Employers. Railroad Charges Are
Governed Exclusively by the Interstate Commerce Act.
Throughout the entire hearing the defendant sought to
convince the Commission that the ten cent charge for hand
baggage was made necessary by the Fair Labor Standards
Act of 1938, United States Code, Title 29, Sections 201 to
218. In its effort to cast there the blame for its illegal
charge, the defendant introduced a lengthy self-serving
letter which it had written to the secretary of this Com
mission (Exhibit 16), and filled the record with argument,
innuendo, and irrelevant testimony. Over our objection
that the testimony was irrelevant and incompetent, the
Examiner ruled that he desired to obtain the entire pic
ture. We believe that the entire picture disclosed by the
record is sufficient to make the issues clear.
The Fair Labor Standards Act required the defendant
to pay a minimum wage of twenty-five cents an hour to
each employee from October 24, 1938 to October 23, 1939
and thirty cents an hour thereafter. This Act was not
limited in application to red caps alone, but applied to all
employees. Under it, defendant had the duty to pay its
red cap employees the required wage commencing on Octo
ber 24, 1938. Nevertheless, acting in concert with other
railroads throughout the United States, the defendant re
POINT VI.
34
frained from paying the required wage and instituted an
elaborate so-called “ accounting and guarantee plan”
which, the defendant contended, discharged its liability
under the act. Its red cap employees and the United
States Government through the Wages and Hours Ad
ministrator believed that the defendant was evading the
law. United, as the representative of defendants’ red cap
employees, protested defendant’s flagrant failure to pay
the required wage. Shortly before February 1, 1940, the
Administrator filed an injunction proceeding to compel
the defendant to obey the law. Following that proceeding,
on February 1, 1940, the defendant decided to obey the
law and placed its red caps on its payroll as regular em
ployees at the rate of thirty cents per hour. This should
have been done on October 24, 1938. There was no reason
for the long discrimination against red caps nor for the
delay in according them the wage status given to other
employees. Placing the red caps on the pay roll at thirty
cents an hour was required and dictated by the Fair Labor
Standards Act. Thereafter, the United States District
Court dismissed the Administrator’s injunction suit as
moot, and the Administrator appealed to the Circuit Court
of Appeals on the ground that defendant’s previous mis
conduct gave the Administrator the right to an injunc
tion. The appeal is still pending.
On February 1, 1940, at the same time that it began
complying with the Fair Labor Standards Act by paying
its red cap employees a wage, the defendant put into effect
another innovation at its Cincinnati terminal. It decided
35
to charge passengers ten cents for each article of hand
baggage transported by red caps. There was no legal
causative connection between the two changes in procedure.
One, the payment of a wage, was required by law. The
other, the imposition of a charge, was certainly not re
quired by the Fair Labor Standards A ct (which has
nothing to do with charges by employers) and was pro
hibited, we contend, by the Interstate Commerce Act. In
its dealings with this Commission and, in fact, in its deal
ings with the public, the defendant has cleverly tried to shift
the onus of this unpopular ten cent charge from itself to
the Administrator, to the authors and supporters of the
Fair Labor Standards Act, and to the red cap employees
as organized into their union. The defendant no doubt
saw a golden opportunity to shift unpleasant responsibility
and availed itself of that opportunity. For example, on
March 31, 1940, the station master’s representative an
swered Mrs. Stopher’s objection to the charge by saying:
“ Oh well, that is the law—that is our ruling,
now, and you must pay it.” (15.)
Everyone conceded that the defendant’s payment of a
wage on and after February 1, 1940 was forced by the
Fair Labor Standards Act; hut the imposition of the illegal
ten cent charge must he tested not by the Fair Labor
Standards Act, but by the Interstate Commerce Act; and
by that test the charge must fall.
36
The Charge Is Undesirable from the Standpoint of the
Railroads, the Employees and the Public.
Probably few things which railroads could do would
cause as much public dissatisfaction and resentment as the
ten cent charge. The record is full of complaints of dis
satisfaction of passengers. (142, 203, 238, 305, 350, 363.)
Although the defendant tried in a feeble way to show that
the public favored the plan (634), we believe that the testi
mony shows that in Cincinnati, an overwhelming portion of
the general reaction is one of complaint. This situation is
not confined to Cincinnati alone. Just as in every other
terminal throughout the United States the Cincinnati Plan
has of necessity given rise to discrimination and favoritism
in application, so throughout the country our witnesses
from other terminals showed that the reaction of the travel
ing public has been almost uniformly hostile and com
plaining.
We believe that the members of this Commission cannot
have failed to notice that the public press has contained
an unusually large amount of public comment in the form
of news items, columnists’ pronouncements and printed
letters to editors disapproving the charge and complaining
of its imposition. For forty-five years, the traveling
public has received and has been led to expect that the
purchase of a ticket entitled one to legitimate red cap
service in the transportation of hand baggage. To have
the added charge imposed upon it without warrant of law
POINT VII.
37
is irksome and grossly unfair. The imposition of the
charge necessarily gives rise to complaints. As Willard
Saxby Townsend, President of the United, stated at the
hearing:
“ I will say frankly that the manager of the Cin
cinnati Terminal Company could not devise any plan
whereby he could keep down complaints under thig
present arrangement. ” _ (238.)
This testimony is particularly impressive because it comes
from a man with experience as a captain of red caps who
did devise a satisfactory plan which eliminated all com
plaints before the present illegal charge went into effect.
(238-239.)
Furthermore, as shown by the evidence set out in the
abstract, the advent of the charge has marred the relation
ship between the red caps and the traveling public. The
general situation was well described at the hearing by
Mr. Townsend:
“ I might say that the reaction to the invocation of
the ten cents per bag system, startled us to a very
large degree, because, in the first place, there has
always been a very pleasant relationship existing be
tween the traveling public and the red caps throughout
the United States. Women, and in particular women
with children, have always looked to the red caps as
somebody to whom they might go when in confusion.
Invalids have looked to the red cap for help. The
various terminals throughout the United States are
very large and it is ouite a common thing for persons
who are not familiar, to look to the red cap, always,
for help in finding their way about. But with the
invocation of the ten cents per bag, we find a new
38
situation developing. This new situation is one of
belligerence on the part of passengers. I have talked
with them at length; I have walked up close to red
caps at times who were serving passengers; and in
any number of cases, they have been quite hostile
against it.
“ They claimed they would very much rather give
the red cap a tip, than be forced to pay for something
that should be, and that heretofore has been, a free
service. The red caps themselves are also the victims,
because the passenger does not have an opportunity,
as a rule, despite the testimony here, to talk with the
station master. In that connection I would cite in
particular the Grand Central Station, which is the
largest railroad terminal in the United States, where
the station masters and the police, and all of the other
station officials, stay out of the way of the people who
are complaining about this ten cents per bag charge.
In smoking rooms on trains, in club cars, and in many
other places, when I am traveling, very few people
know who I am, and invariably there is a discussion
about the ten cents per bag charge, and they say that
the railroads are attempting to shift their responsi
bility, as usual, over onto the public. * * * But,
there is one thing that I don’t think has been brought
out, and that is the fact that the red cap has attempted
to appease these people by explaining to them what
this is, and has kept down complaints that ordinarily
would have been brought to the attention of the offi
cials.” (212.)
So undesirable is the Cincinnati Plan for all parties that
since the hearing (and this is a matter of general knowledge
reported in the press) the Atchison, Topeka and Santa Fe
Railroad has abandoned the Cincinnati Plan after a trial.
39
CONCLUSION.
We believe that we have demonstrated the complete ille
gality of the charge. We have also demonstrated its im
practicability and its undesirability from the standpoint
not only of the traveling public and the red caps but also of
the railroads themselves, who in the long run should not
sponsor a charge which creates so much ill will. Before
this Commission we have the additional duty of making a
constructive suggestion for the future.
Of course, we favor the payment of a wage to red caps,
as required by the Fair Labor Standards Act of 1938. The
payment of a wage is governed by special law and has no
place in the present decision by this Commission, although
erroneously the defendant has sought to imply that the
charge and the wage are interdependent. Far from ob
jecting to payment of a wage, we ask for the payment of a
living wage. But we believe that when the passengers
pay for a ticket which includes the handling of personal
baggage, the railroads have no moral or legal right to
impose an additional ten cent charge. We ask that the
charge be abolished and that the railroads be compelled to
recognize explicitly as they always have implicitly that the
transportation of hand baggage by red caps is a part of
their regular transportation service, for which they nat
urally have the obligation of paying their red cap employ
ees a living wage consonant with the wages paid other
employees for similar work.
The defendant’s contention that the red cap is perform
ing a personal service to the passenger and that his work
40
is no part of the carrier’s duty to provide terminal
facilities for the transportation of passengers and their
baggage seems to he, in the light of the facts, this Com
mission’s decisions, and the judicial decisions on the point,
mere evasion and subterfuge. It would he difficult to
conceive of work inside the terminal building itself that
could be more closely connected with the free flow of
passengers and property.
The Commission’s decision in this case will determine
for years to come the mutual relationships among the rail
roads, the traveling public, and the red caps. We ask the
Commission to enter an order in accordance with the com
plaint and the intervening petition, finding that the charge
exacted by the defendant under the circumstances proved
is illegal; that the transportation of hand baggage by red
caps in terminals is a part of the transportation service of
the railroads; and that in accordance with the practice of
the last forty-five years, red cap transportation service is
paid for when the passenger pays his fare.
Respectfully submitted,
U n ited T ransport S ervice E m ployees
of A m erica ,
By: W illard S a x b y T o w n se n d ,
President.
J o h n L . Y a n c e y ,
Secretary-Treasurer.
I da M. S topher ,
By: M . J. M yer ,
Attorney.
L eon M. D espres,
M . J. M y e r ,
T heodore M. B erry,
Attorneys.
IN THE
j & i s t r i r t ( J o u r t o f t b f © n i t r t i § t a t p s
F oe t h e N o r t h e r n D is t r ic t of I l l in o is ,
E a s t e r n D iv is io n .
■WILLARD SAXBY TOWNSEND, et al., Civil Action, No. 1097.
Plaintiffs,
VS.
THE NEW YORK CENTRAL RAILROAD
COMPANY, et al.,
Before Honorable
Philip L. Sullivan,
Judge.
Defendants.
BRIEF OF PLAINTIFFS.
LEON M. DESPRES,
M. J. MYER,
Attorneys for Plaintiffs.
THE QUNTNORP-WARREN PRINTING COMPANY, 810 WEST JACKSON, CHICAGO
INDEX.
PAGE
Statement of the Case......... ....................................... 1
I. The Fair Labor Standards Act Requires Defend
ants to Pay Wages to Red Caps. Tips Are Not
Wages .................................................................. 7
II. The Fair Labor Standards Act Requires Defend
ants to Keep Accurate Records in Order to Prove
Payment of the Minimum Wages....................... 11
III. In Its Wording, Operation, and Effect, Defend
ants’ Notice of October 24, 1938, Violated the
Act. Under It the Defendants Failed to Pay
Wages and Failed to Keep Accurate Records.. 12
The Wording of the Notice.............................. 12
The Operation of the Plan................................ 13
IV. The Tip Belongs to the Red Cap....................... 23
V. The Delivery and Operation of the Defendants’
Notice of October 24, 1938, Did Not Change the
Ownership of the Tip. It Continued to Belong to
the Red Cap......................................................... 25
VI. Tips Under Other Statutes................................ 29
Workmen’s Compensation Acts....................... 30
Unemployment Compensation Acts................ 30
State Minimum Wage Acts............................ 32
Collective Bargaining Acts.............................. 33
Old Age Pension Acts..................................... 34
VII. Consideration of Other,Decisions in Suits by Red
Caps Under the Act............................................ 37
Conclusion .................................................................... 42
Appendix 1.................................................................... 45
Appendix I I .................................................................. 47
11
C ases C ited .
Booker v. Pennsylvania Railroad Co., 82 Pa. Super.
Ct. 588 (1924) ............................................................ S
Brown v. Bristol Last Block Corp., 94 Vt. 123, 128, 108
Atl. 922, 924 ............................................................... 30
City of Glendale v. Coquat, 52 P. (2d) 1178, 1180
(Ariz. 1935) ............................................................... 10
Cole v. Atlantic Coast Line R. Co., 211 N. C. 591, 191
S. E. 353 (1937)....................................................... 3
Franklin v. Southern Pacific Co., 203 Cal. 680, 265 Pac.
936, 59 A. L. R, 118, cert, den., 278 U. S. 621 (1928). . 3
Great Western R. Co. v. Bunch, 13 App. Cas. 31 (1888) 3
Harrison v. Kansas City Terminal Railway Company
(not yet reported in Federal Supplement), 1941 CCH
Labor Law Service If 60,230, at page 60,718. .9, 27, 37, 39
Holden v. Hardy, 169 IT. S. 366, 397 (1897)................ 10, 42
In the Matter of Regulations Concerning Employees
under Railway Labor Act, 229 I. C. C. 410 (1938).. 3, 4
International Stevedoring Co. v. Haverty, 272 U. S. 50,
52 ............................................................................... 29
Jirout v. Gebelein, 142 Md. 692, 697, 121 Atl. 831, 833.. 30
Jones v. Davis, 246 Kv. 293, 299, 54 S. W. (2d) 681,
683 ............................................................................. 30
Larsen v. Rice, 100 Wash. 642, 649, 171 Pac. 1037, 1039
(1918) ........................................................................ 10
National Labor Relations Board v. Falk Corporation,
102 F. 2 383 (C. C. A. 7th, 1939)............................... 19
New York Central Railroad Co. v. White, 243 U. S. 188,
193 ............................................................................. 30
Penn v. Spiers and Pond (1908), 1 K. B. 766............ 30
I l l
Pickett v. Union Terminal Co., 33 P. Snpp. 244, 249. .
......................................................................8, 29, 35, 37
Polites v. Barlin, 149 Ky. 376, 149 S. W. 828................ 24
Smith v. Light Co., 198 N. C. 614, 620, 152 S. E. 805,
808 ............................................................................. 30
Soanes v. London & S. W. R. Co., 120 Law T. Eep. N. S.
598 (1919).................................................................. 3
West Coast Hotel Co. v. Parrish, 300 U. S. 379, 392-394
(1937) ........................................................................ 10
Williams v. Jacksonville Terminal Co., 35 P. Supp. 267
(1940) ......................................................................37, 38
Zappas v. Roumeliote, 156 Iowa 709, 137 N. W. 935. .. . 24
IN’ THE
D i s t r i c t ( g o u r t o f t i p d l n i t c b g s f a t o s
F oe t h e N orth ern D istrict of I l lin o is ,
E astern D ivisio n .
W IL L A R D S A X B Y TOW NSEND, et al., Civil Action, No. 1097.
Plaintiffs,
VS.
>
THE N E W Y O R K C EN TRAL R A IL R O A D Before Honorable
CO M PAN Y, et al., P h ilip L. Sullivan,
Defendants. Judge.
BRIEF OF PLAINTIFFS.
■Statement of the Case.
This is a suit under Section 16 (b) of the Fair Labor
Standards Act of 1938 (29 U. S. C. §§ 201-219, hereinafter
referred to as the “ Act” ), to recover wages for red
caps from October 24, 1938, the effective date of the
Act, up to the time in 19401 when the defendants
1. The dates when the defendants first put all red caps on the payroll
are as follow s:
Chicago and Western Indiana......................... July 1, 1940
Illinois Central:
Chicago ........................................................ April 1, 1940
Other Stations ............................................. May 1, 1940
Milwaukee Road ........................................September 1, 1940
New York Central:
New York .....................................................June 1, 1940
Other Stations ............................................. May 1, 1940
North Western .....................................................May 5, 1940
Pennsylvania:
Pittsburgh and Bast Liberty.....................April 1, 1940
Baltimore ...................................................April 15, 1940
Harrisburg .................................................April 21, 1940
Philadelphia and Lancaster.........................May 1, 1940
New York ...................................................June 1. 1940
Rock Island ........................................................ May 1, 1940
Santa Fe .............................................................July 1. I940
2
here1 placed red caps on their payrolls. Events leading up
to October 24,1938 require some consideration. Commencing
in 1895 with the New York Central, American railroads be
gan to employ uniformed attendants known as “ red caps”
to perform a myriad of duties in their larger terminals. For
many years, all the defendants have employed red caps
principally to carry passengers’ hand baggage and other
articles from the entrances of their larger stations to out
going trains and from incoming trains to the station exits.
Red caps generally unload Pullman cars on the incoming
trains, and taxicabs at the station entrances. There is some
intermediate carrying of bags within the station to check
rooms, waiting rooms, and other facilities. In addition,
red caps are required to do a great deal of other work for
the railroads. They must furnish information to passen
gers, cheek on space reservations, and transport all sick
and disabled passengers by wheel chair to and from trains.
Various railroads require red caps to put up signs for
trains (R. 264), carry cancellation messages to trains (R.
286), act as safety officers (R. 286, 420), do train porter
work (R. 309, 348), do janitor and cleaning work (R. 311),
do police duty consisting of directing passengers (R. 393),
call trains (R. 393, 407), do messenger work for the rail
roads (R. 394, 409-410), act as payroll carriers (R. 394),
and call trainmen from their quarters (R. 671).
Although for certain purposes defendants used to con
tend that red caps were mere licensees or concessionaires,
1. The defendants to this action are The New York Central Railroad
Company, hereinafter referred to as the New York Central; The Penn
sylvania Railroad Company, hereinafter referred to as the Pennsylvania;
Illinois Central Railroad Company, hereinafter referred to as the Illinois
Central; Chicago and Western Indiana Railroad Company, hereinafter
referred to as the Chicago and Western Indiana: Charles M. Thomson,
trustee of the property of Chicago and North Western Railway Company,
hereinafter referred to as the North Western; Prank O, Lowden, James
E. Gorman and Joseph B. Fleming, trustees of the estate of the Chicago,
Rock Island and Pacific Railway Company, hereinafter referred to as
the Rock Island; Henry A. Scandrett, Walter ,T. Cummings and George I.
Haight, trustees of the property of Chicago. Milwaukee, St. Paul and
Pacific Railroad Company, hereinafter referred to as the Milwaukee Road;
and The Atchison. Topeka and Santa Pe Railway Company, hereinafter re
ferred to as the Santa Fe.
3
they nevertheless exercised complete authority over the
manner and conduct of the red caps’ work and their hire
and discharge. In all cases where courts were asked to
pass on the question, they have regarded them as the rail
roads ’ employees, Booker v. Pennsylvania Railroad Co.,
82 Pa. Super. Ct. 588 (1924); Franklin v. Southern Pacific
Co., 203 Cal. 680, 265 Pac. 936, 59 A. L. R. 118, cert, den.,
278 U. S. 621 (1928); Cole v. Atlantic Coast Line R. Co.,
211 N. C. 591, 191 S. E. 353 (1937); Great Western R. Co.
y . Bunch, 13 App. Cas. 31 (1888); Soanes v. London &
S. W. R. Co., 120 Law T. Rep. N. S. 598 (1919). The Inter
state Commerce Commission held them to be employees
entitled to collective bargaining rights under the Railway
Labor Act, In the Matter of Regulations Concerning Em,-
ployees under Railway Labor Act, 229 I. C. C. 410 (1938).
All the defendants have admitted them to be employees
under this Act-
Wages paid to red caps have had a varied history. At
first, the railroads paid wages. Then they began to employ
some men without paying wages. During the economic
depression beginning in 1929, many railroads ceased pay
ing wages, while others continued throughout the entire
period of this action (R. 204). Before October 24, 1938,
the defendants paid wages to some red caps and not to
others. Although not all passengers tipped, all red caps
did receive tips from passengers. The railroads forbade
them to discriminate among passengers or to solicit tips
and required them to bear a courteous manner in accepting
whatever was offered.
When the Act was approved on June 25, 1938, the rail
roads of the United States found themselves faced with
an obligation to pay wages to all employees, including red
caps. As to red caps who were already on the payroll,
the employers’ finances were not affected. But as to the
other red caps not on the payroll (of whom the Interstate
4
Commerce Commission found there were approximately
3,150, In the Matter of Regulations Concerning Employees
Under Railway Labor Act, 229 I. C. C. 410, 411 (1938)),
the railroads, including all the defendants, formed a com
mittee of the Association of American Railroads to meet the
situation. The aim sought was the avoidance of their obli
gation to pay wages.
Although putting the red caps on the payroll would have
been an easy compliance, the defendants and all other non
wage-paying railroads, through this committee, did con
ceive another arrangement designed to avoid the Act. They
drafted a notice which they called an “ accounting and
guaranty plan” and chose to rely on it as a substitute for
compliance. In so doing, the railroads individually and
in their committee knew that they were risking a liability.
If they should later he successful in establishing their notice
as a device for avoiding the Act, they would reduce their
red cap payroll checks to a trifle. If they failed, they
knew they would be obliged to pay the unpaid wages as
required by the Act. Since they were apparently not too
sure of their position, they proceeded to reduce the risk by
discharging a number of red caps immediately before and
after October 24, 1938.
The amount of money required to pay red caps the mini
mum wage was small compared with the total payroll of
the railroads. Assuming a full work week of 48 hours for
all 3,150 red caps not then on the payroll and disregarding
the reductions in force of October 24, 1938, the total red
cap payroll due for the first year was $1,965,600, and for the
second year, $2,358,720. Those were the amounts which the
railroads were seeking to withhold. Considering that the
total payroll of the Class I railroads alone was $1,746,-
140,636 for 1938 and later $1,863,502,823 for 1939,1 the com-
1. Interstate Commerce Commission, Fifty-second Annual Report of the
Statistics of Railways (for 1938) p. S-53; and Wage Statistics of Class I
Steam Railways in the United States for January, 1949.
5
bining railroads in effect sought, by avoiding the Act, to
save each year payments of about 1/9 of 1% of their total
payrolls.
The plan has resulted in a substantial and unjust enrich
ment to the defendants. During the period covered by this
action, the 1,091 plaintiff red caps admittedly became en
titled under the Act to approximately $908,000. To red
caps already on the payroll, defendants paid approximately
$42,000 in accordance with various contract provisions,
leaving unpaid wages of $866,000. On this amount, the
defendants paid in “ accounting and guaranty” deficiency
checks about $39,000 or about 4|% of the total amount
due. They avoided paying the balance of approximately
$827,000. That was the object which the original commit
tee wished to accomplish. It was certainly an unjustified
windfall for the defendants’ treasuries.
The average wages paid in deficiency checks by each
defendant to plaintiffs was as follows:
AVERAGE MONTHLY
AMOUNT PAID TO
RAILROAD EACH RED CAP
Chicago & Western Indiana.................... $0.18
Illinois Central ...................................... 0.94
Milwaukee Road .................................... 0.65
New York Central.................................. 2.73
North Western ...................................... 2.28
Pennsylvania ......................................... 1-05
Rock Island ........................................... 0.017
Santa Fe ................................................ 0.01
The non-payment plan announced by the defendants
came to the red caps as a surprising violation of the plain
terms of the statute. Revealing their intentions for the
first time, defendants delivered copies of the uniform notice
to the red caps a day or, two before October 24, 1938 and
in many cases obtained receipts for delivery. Acting for
the red caps, the United Transport Service Employees of
America (formerly named International Brotherhood of
6
Red Caps) sent an immediate protest of illegality to all
the defendants except the Milwaukee Road, promptly called
the matter to the attention of the Wages and Hours Ad
ministrator, and filed a petition and brief of protest with
him. Through the committee, all the defendants then filed
their briefs in reply. In addition to oral protests, another
letter was sent to defendants in April, 1939 (Plaintiffs’ Ex
hibit 10) and a hearing was held by the Administrator in
June, 1939 (4 Fed. Reg. 2306, 1941 CCH Labor Law Service
1133,208). Still the defendants persisted in their practice.
Finally, in November, 1939, the Administrator filed a test
suit to restrain the Cincinnati Union Terminal Company
(owned in part by the defendants Pennsylvania and New
York Central) from continuing with the “ accounting and
guarantee ’ ’ plan; thereafter, this action, the first of several,
was filed to recover the unpaid minimum wages which de
fendants withheld to their own enrichment. The defendants
then put the red caps on the payroll.
Defendants rely for their defense on the non-payment
notice of October 24, 1938 and on reports written by plain
tiffs containing amounts which add up to slightly more
than the amount here claimed. Plaintiffs deny receipt of
the amounts written on the reports. Although the defend
ants offered proof that plaintiffs received tips, they offered
no proof of the amount of such tips.
The effects, operations and legality of the defendants’
notice and non-payment plan are the matters before this
Court.
7
I.
The Fair Labor Standards Act Requires Defendants to Pay
Wages to Red Caps. Tips Are Not Wages.
The basic requirement applicable to railroads as well
as to all other employers is contained in Section 6 of the
Act. That section provides that “ every employer shall
pay to each of his employees * * # wages” at the rate of
twenty-five cents (later thirty cents) an hour. The Act
does not say that “ the income of each employee shall
amount to” twenty-five cents per hour; nor that “ each
employee shall receive in the aggregate” twenty-five cents
an hour. It clearly says that every employer shall pay
wages.
In order to remove all doubt from the requirement, the
statute contains an explicit definition of “ wage” . Section
3(m) provides that the “ wage paid to any employee in
cludes the reasonable cost as determined by the Administra
tor to the employer, of furnishing such employee with
board, lodging, or other facilities,” etc. It does not say
that the wage shall include their reasonable cash value to
the employee, although that cash value to the employee
may be greater than the reasonable cost to the employer.
Thus, wages which the employer must pay must be wages,
not “ benefits” or “ advantages” or “ accruals” or
“ tips” , and the only inclusion permitted by the Act is
the reasonable cost to the employer of the facilities men
tioned, and no others. It is hard to see how Congress
and the President could have made their intent any plainer.
With a clear appreciation of the infirmity of preceding
legislation and in the endeavor to establish a practicable
plan, they sought to fix precise standards requiring each
employer to pay a wage. They wanted to avoid the toler
ances and exemptions by which the purposes of the earlier
8
National Industrial Recovery Act had been avoided. (See
testimony of Leon Henderson at the hearings on the bill,
Fair Labor Standards Act of 1937, Joint Hearings, 75th
Congress, S. 2475 and H. R, 7200, p. 169.)
The clear meaning of this Act was well discussed by
Judge Atwell in Pickett v. Union Terminal Co., 33 F. Supp.
244:
“ If a law is plain, unambiguous and constitutional,
the court has nothing to do but speak its enforcement
if and when called upon to act under it. This Act
has been found to be constitutional. (Citations.) It
was written in the interest of the employee. Its phil
osophy is not to limit a recovery to the minimum wage,
but to guarantee such minimum wage. If betterments
to the minimum wage are secured, there is nothing in
the law that would strip them from the employee.
"The payment of tips by the public, to the employee
oi another, is a gift to that employee and in the "ab
sence of any contract between the employee and em
ployer that such tips shall be the property of the
employer, they remain the property of the employee.
A gratuity by the pabllc to the employee of an em
ployer cannot te a compliance with a plainV worded
statute winch requires the employer to ~a.~ the em
ployee a certain stem
1 -’7 ju outsider to a servant hies not «Ss-
nmge the cent or the master to the ser~rmr * --Jw— "
• ~ " he reward, paid, fir a ier x ‘•'im.peirsa-
tran grrsr n a hire*: person fir its ir her eeruess..
-~v-r-trrc. I Uir. LuL 3 -rf. 'v'x®? -j= hat
wmeu s rani n r w rs. / r secwce. esnecmilv in* wars
it x naiTO. meehitnicaL ir. menial h&L ' If w 7-k-*
51 5’'*“ " 'hsuc ns, ji Section J r f f c hat
si. • tJirivTsasss mat w s s raui tn
rsssKssJa? asst .as Sbsbbt-sew sstnaay©* mcitafes
IWfSfc Tbs I • -ycrrjss. roar-
u «t dust: ssent-
Sssr ' a f h g ire
•.‘.over t® r s na-
ftrsysei da*: har
-yss£»i te .assnse-d •*-
31 tut nissst:
'aae? t rae- ’*3631 ■’Strum i
tprrxssi!MS: w- -gmst a
9
It would be remarkable to conclude that a congress
man in 1938, was not familiar with the tipping prac
tice. The Congress did not put into the Act anything
else under the head of wages which might be construed
into an inclusion of tips, which might be received by
an employee, as a deduction from the legal wage pro
vided for.” (p. 219.)
In his oral opinion the Court said:
“ I can hardly believe that a_ Congress, thoroughly
familiar with the system of tipping in America, should
include in the act the use of houses, and so forth,
and leave out the word ‘ tip’, if they intended to per
mit the employer to get around the payment of this
minimum wage by saying that the employee was re
ceiving tips. * * * One would be drifting without an
excuse to seek to read into this statute something
that is not in it. There is no ground for construction.
It is plain, and says what shall be done and what shall
not be done.”
Judge Otis in Harrison v. Kansas City Terminal Rail-
tvay Company (rot yet reported in Federal Supplement),
1941 CCH Labor Law Service If 60,230, at page 60,718,
commented:
“ If Congress had intended that tips should be in
cluded in the meaning of the word ‘wages’ it would
have said so.”
The defendants never before expressed the beEef that
tips were was'es. In their statements to the Interstate Com
merce Commission, seven of them announced substantially
as follows: “ As to those services for passengers or others
* * * fids '-rjwpz r. y is not obligated to m r dot* it pay ew '<-
red emgtJ’ See Agreec f l f l f iw f* of Fact. R. 4Bt)
En&toec for Cat benefit of the employees who are w nsx.';
in a teoA mt iMMy i niiy yawfafaw ihe
caTr-.-,- be v< ■ et je*t toe ■ e *. pv -’pose of '"•> oe
defsead. The ■ - -■> y ?ynhameuta. ejsstimp-
tioeanr ihe e;: yri>; e< ve-ny a *• earj?» oi'ga r ny po*-
tjors wt! neeea*-.-"o* of -t *> o' *•
harsher er;:> • ne VPY;-' to acoept for n# W 'i
10
and for the good of the social community. The mi-mmnTri
wage is fixed like the legal rate of interest in a usury stat
ute. If the lender exacts an excessive rate of interest, he
commits usury even though the necessitous borrower agrees
to it. If the employer pays a lower wage, he is violat
ing the statute even though the employee agrees to
it, City of Glendale v. Coqnat, 52 P. (2d) 1178, 1180 (Ariz.
1935); Larsen v. Rice, 100 Wash. 642, 649, 171 Pac. 1037,
1039 (1918); Holden v. Hardy, 169 U. S. 366, 397 (1897);
West Coast Hotel Co. v. Parrish, 300 IT. S. 379, 392-394
(1937). Contracts or reports cannot take the parties out
of such statutes.
11
II.
The Fair Labor Standards Act Requires Defendants to
Keep Accurate Records in Order to Prove Payment of the
Minimum Wages.
In Section 11(c), the Act requires the employer to
“ keep * * * such records of the persons employed by him
and of the wages, hours and other conditions and practices
of employment ’ ’ as the Administrator shall prescribe; and
in Section 15 (a) (5), it forbids him under severe criminal
penalty “ to make any statement, report, or record filed or
kept pursuant to the provisions of such section or of any
regulation or order thereunder, knowing such statement,
report, or record to be false in a material respect.”
This legal duty is placed unequivocally on the employer.
On October 21, 1938 the Administrator issued general reg
ulations under that section, 1941 CCH Labor Law Service
If 31,121. On October 14, 1939, the Administrator had be
fore him the record of a hearing held by the Wage and Hour
Division containing the following finding of the Presiding
Officer, 1941 CCH Labor Law Service |f 33,208:
‘ ‘ In the light of all the evidence there can be no con
clusion other than that the payroll records of the car
riers for Red Caps generally do not accurately record
the data as to wages paid. It also appears that there
is grave legal doubt as to the validity under the Fair
Labor Standards Act of the accounting and guarantee
arrangement which the carriers have used.”
He issued special regulations for employers of red caps,
“ pending an authoritative court decision determining the
validity of the accounting and guarantee arrangement.”
(1941 CCH Labor Law Service |f 33,208, 4 Fed. Reg. 4252.)
Although this is not a criminal proceeding, the provisions
of the Act are important to show that they place on the
employer the burden of keeping accurate records. It
would therefore be inconsistent with the design of the Act
to permit the employer to exonerate himself from paying
the minimum hourly rate by relying on records and tip
reports which he himself asserts to be inaccurate.
12
III.
In Its Wording, Operation, and Effect, Defendants’ Notice
of October 24, 1938, Violated the Act. Under It the De
fendants Failed to Pay Wages and Failed to Keep Accu
rate Records.
The Wording of the Notice.
For the difference between the deficiency checks and the
statutory wages earned by red caps, the defendants rely
solely on their notice of October 24, 1938.1 Although at first
glance the notice appears to be a guarantee of the minimum
wage, closer scrutiny discloses certain failures to comply
with the Act:
1. The employer expressly announces that it will not
pay wages as required by the statute, saying only that it
“ guarantees compensation which, together with (tips re
ceived) * * * will be not less than the minimum wage.”
Under the very wording, no wages are to be paid except
the deficiency check.
2. The wording of the notice itself implies a constraint.
The employer unmistakably informs the red cap that it
1. For the convenience of the Court, the notice is here set forth in fu ll:
“ In view of the requirements of the Fair Labor Standards Act,
effective October 24, 1938, and in consideration of your hereafter
engaging in the handling of hand baggage and traveling effects of
passengers or otherwise assisting them at or about stations or des
tinations, it will be necessary that you report daily to the under
signed the amounts received by you as tips or remuneration for such
services.
“The carrier hereby guarantees to each person continuing such
service after October 24, 1938, compensation which, together with
and including the sums of money received as above provided, will
not be less than the minimum wage provided by law.
“You are privileged to retain subject to their being credited on
such guarantee all such tips or remuneration received by you except
such portion thereof as may be required of you by the undersigned
for taxes of any character imposed upon you by law and collectible
by the undersigned.
“All the matters above referred to are subject to the right of the
carrier to determine from time to time the number and identity of
persons to be permitted to engage in said work and the hours to
be devoted thereto, to establish rules and regulations relating to the
manner, method and place of rendition of such service, and the
accounting required."
13
will retain the right “ to determine from time to time the
number and identity” of the red caps who will remain at
work and “ the hours to be devoted thereto” . Since the
language appears unnecessary for any other purpose, the
effect of the notice is to tell the red cap not too subtly
that if his reports are not satisfactory, his identification
with the carrier will cease and he will find himself replaced
by a red cap of different identity.
Lest the message be lost, the employer tells him that it
reserves the right to establish “ rules and regulations re
lating to * * * the accounting required.” What “ ac
counting” was “ required” ! The daily reports. As to
these, the employer reserved the right to direct the manner
of the “ accounting required.” Mr. C. R. Young, personnel
director of the Illinois Central who claimed fatherhood of
the notice, knew what message that bore to the red cap.
It was, “ You are supposed to put the minimum on this
card regardless of what you make.” (R. 493.) Any plan
based on such a notice necessarily violates the law.
The Operation of the Plan.
The railroads rely on the records of tips received to
show that plaintiffs received the minimum amount. The
operation and effect of the notice show that no “ guar
antee” was or could be intended under the notice; that the
railroads kept false records; and that the red caps did not
receive the amounts reported. In fact, the reports under
the notice soon became for the most part time reports,
with the entries of amounts balanced over a number of days
so as to equal the hours worked multiplied by the amount
of the minimum wage.
Almost as soon as the Act went into effect, officials of
various defendants quickly made clear to the red caps ex
actly what was expected of them. In a general way, what
occurred was that, commencing October 24, 1938, red caps
14
wrote on their time slips the actual amount of tips re
ceived. Since these amounts were in many cases less than
the minimum amount provided by the Act, the railroads
through their officials soon let it be known what they were
to do, that is, to fill in on the time slips reports averaging
twenty-five cents an hour. For the most part, the com
munication to the red cap consisted of a direct statement
made by a supervisory official and then repeated to other
red caps, or layoffs or threats of layoffs, coupled with
unmistakable notice that they were made as a result of
reports averaging less than twenty-five cents an hour.
Thus the constraint on the face of the notice was imme
diately followed by constraint in practice. It was made
clear that discharge or other disciplinary action would
follow the filling in of inadequate or inaccurate reports.
By “ inaccurate” and “ inadequate” the railroads meant
reports totaling less than 25 cents an hour. A few instances
follow:
A supervisor in charge of red caps for the Illinois Cen
tral told Horace Hale, captain of the red caps: “ Show $2
and tell the other men to show it also.” (R. 291.) Horace
Hale notified the other men. (R. 291.) One station mas
ter for the Illinois Central told Felix Braxton that the
superintendent said, “ he ain’t going to pay you and he
would cut out all the red caps first.” (R, 314.) The sta
tion master added: “ If I have to pay any of you a check,
that is the man that is off.” (R. 315.) As Braxton sum
marized the situation: “ If you don’t have that amount
there and they pay you the check, the cap is theirs and the
check is yours. So that is the reason we signed up for
$1.50 and we know we don’t make it.” (R. 322.)
A supervisor of red caps for the Illinois Central told
Arthur Moon: “ You are supposed to sign $2 on the slip
right away or you will not have a job.” (R. 335, 336.)
Moon reported $2.00 and later $2.40 for eight hours of
work, although he did not receive that much in tips. In
15
New Orleans the ticket agent told Emanuel Keiffer that if
he didn’t “ do better” , he would cut his job off, and in
structed him to “ tell the other hoys.” (R. 340.) Another
supervisory official called in the red caps and told them to
“ come up on” their slips. (R. 341.)
In Chicago, when the plan went into operation, the Illi
nois Central posted a sample report slip on the bulletin
hoard with the sum of $2 as the amount of tips filled in
in red crayon. Most of the red caps there worked eight
hours. (R. 350, 351, 397.) The Chicago and Western In
diana station master instructed James F. Nichols to put
down twenty-five cents for every hour he worked. Nichols
asked, “ What if we don’t make that much?” The station
master answered, “ You are supposed to put down the 25
cents per hour.” (R. 459.) That was in October, 1938. A
month later the station master called him in to ask him to
raise a report he had made. Nichols had truthfully re
ported 90 cents received after seven hours of work. The
station master instructed him to write down $1.75 and
erased the earlier notation. (R. 460.)
In the Grand Central Terminal in New York City, the
New York Central brought up on charges sixteen men
who had failed to report twenty-five cents an hour and
had received deficiency checks. The railroad reprimanded
them. (R. 524-533.) The station master announced that if
the men could not “ make that amount of money why, it
showed there were too many men on the job and he would
have to furlough the men until such time as the men could
bring up the amount and could make it.” (R. 566.) Ap
proximately forty-five red caps were discharged at about
the same time. (R. 567.) All these matters were naturally
reported to the other red caps. At the same terminal, if a
red cap reported less than twenty-five cents an hour, the
railroad called him for a reprimand (R. 594); but not if
his report exceeded twenty-five cents an hour. In fact,
the railroad devised a system of slips. If a red cap re
16
ported less than twenty-five cents an hour, either he would
be instructed to see the station master or he would re
ceive a rubber stamped paper entitled “ Short Slip For
* * * (date)” . One such slip introduced in evidence bore
the timekeeper’s notation “ Show $2.00.” (Plaintiff’s Ex
hibit 13, R, 580-583.)
In Detroit, red caps reported tips received, and, as a
result, over a year’s time the New York Central paid them
some thousands of dollars in checks. The actual payroll
at the station was apparently not in harmony with the rail
road’s original plan to avoid paying wages. As a pre
cautionary move, seven men were discharged, allegedly for
“ falsifying tip reports.” (R. 620, 895.) On October 31,
1939, the situation at the Detroit station was discussed at a
meeting between the red caps and the vice-president of the
railroad. The vice-president announced that the payroll
at the Detroit station was proving embarrassing to him
and that if only the red caps would write out reports of
$2.40 for eight hours worked, he would reinstate the seven
red caps and refrain from further lay-offs. That was done.
(R. 613-615.) The words of the vice-president were re
ported to all the red caps and the reports were made, even
though equivalent tips were not received. (R. 613-615,1087-
1088.)
In Pittsburgh, the Pennsylvania announced that it would
furlough red caps if sufficiently high reports were not re
ceived and, fearing dismissals, the red caps filed reports
adjusted to twenty-five and thirty cents an hour even
though these amounts were not received. (R. 657.) Before
October 24,1938, the railroad had not discussed furloughing
red caps. The station master in Pittsburgh asked Ira
Valentine and Elmer Traynham to use their influence to
persuade the other red caps to bring up the amounts on
their slips. (R. 669.)
In Baltimore, the Pennsylvania station master called in
Stephen Wright and John Anthony a few days after
17
October 24, 1938 and told them that tbeir reports were less
than 25 cents an hour. After Wright answered that he
was reporting the exact amounts of tips received, the station
master said: “ You two birds will have to bring your re
ports up. If you don’t you will not report for work
Monday morning. You won’t work around here any more.’ ’
(R, 674.)
When October 24,1939 came, the minimum wage increased
from twenty-five to thirty cents an hour. Shortly before,
the defendants all issued a notice reminding red caps to
“ report accurately” . Since the railroads contend that they
had always told red caps to report accurately, what could
have been the purpose of issuing a notice just at the time
when the increase occurred? It seems clear that the mean
ing of “ accurate reporting” to the railroads, and conse
quently to the red caps, was a reporting that would accu
rately equal twenty-five cents an hour, or thirty cents
after the increase. That seems to be the intent of the rail
roads ’ notice, which was issued after a conference of the
general committee of the Association of American Rail
roads. At the same time, a superintendent of red caps
for the Illinois Central told Ernest Robinson: “ Robinson,
put down $2.40 down there. The rest of the boys are doing
it.” (R. 254.) Robinson told the other red caps of his
conversation. (R. 255.) As Robinson testified on cross-
examination : “ I got a written notice. That was in Octo
ber, ’39 to make out an accurate account. The oral no
tice was to make out the minimum amounts.” (R. 283.)
At about the same time, on October 27, 1939, the super
intendent told Horace Hale “ to show at least $2.40” for
eight hours worked and to tell the other men to do the same.
(R. 293.) Shortly before, an Illinois Central station master
told Felix Braxton: “ Now I am going to give you all two
days to go up on (your slips) there and they that don’t,
why, I will cut them off.” (R. 317.) Shortly thereafter
four men were laid off. (R. 318.) At about the same time,
18
the station master for the Chicago and Western Indiana
called in E. E. Stephens and said: “ What do you mean
by putting 75̂ on your time card?” Stephens answered:
“ 75(5 is all I made last night.” The rejoinder was, “ Well,
you are supposed to put $2.40 on this card regardless of
what you make.” (R. 493.) So Stephens followed instruc
tions and marked his card to $2.40. Another station master
for the same railroad told Stephens: “ Yesterday you
worked eleven hours and you marked your card $2.40. It
should be $3.30.” (R. 494.) Stephens followed instructions
and changed his card. In Baltimore, the Pennsylvania
station master called in Stephen Wright about a month
before October 24, 1939, and said to him: “ Wright, I have
my orders, you have yours, and I want you to go out and
tell the men to bring their slips up gradually so that when
they get to 30 cents an hour they won’t make a sudden
jump,” and added: “ Don’t tell the men I said so.” (R.
677.) Wright informed the other red caps. The attitude
of the railroads seems to be best summarized by the state
ment of the same Baltimore station master: “ The Penn
sylvania don’t intend to pay you a damn cent.” (R. 673.)
What was the result of the railroads’ action? The red
caps knew then that they were compelled to write down at
least twenty-five cents an hour, later thirty cents, in order
to keep their jobs. As Horace Hale said, “ I was interested
in conforming and complying with the officials of the rail
road, otherwise I would not have left that other system of
turning in what I had made.” (R. 303.) Felix Braxton
said, “ We put it down anyway because we didn’t want to
lose our jobs. ’ ’ (R. 315.) Ernest Robinson testified that he
did it because “ I wanted to work, I knew of boys that had
been let out and I had been told to put it on there and
so I put it on there. * * * I heard men were laid off for not
filing the required amount.” (R. 259, 260, 275.) Morris
Socks said that he reported more than he received because
he didn’t want to get into any difficulty, “ perhaps be called
19
up to the office about it or maybe suspended or something. ’ ’
(R. 398.) Eugene Shepard said that he put down the
amounts even though not received because “ it would save
a lot of time and trouble” . When asked to explain what
he meant by trouble he answered, “ When you are on a job
and the boss don’t exactly come out and tell you, but by in
ference and suggestion he tells you, why, it is just a way
we have of going ahead and doing the right thing, what
we figure the company wants us to do.” (R. 420.)
We quote the following appropriate language from Na
tional Labor Relations Board v. Falk Corporation, 102
F. 2 383 (C. C. A. 7th, 1939):
“ And yet, the voice of authority may, by tone inflec
tion, as well as by the substance of the words uttered,
provoke fear and awe quite as readily as it may be
speak fatherly advice. The position of the employer
where, as here, there is present, general and sincere
respect and regard, carries such weight and influence
that his words may be coercive when they would not
be so if the relation of master and servant did not
exist.” (p. 389.)
At the Grand Central Terminal in New York City, forty-
five men were furloughed. They were men with families.
Some had insufficient clothes. Others had insufficient food.
Two hundred of the working red caps combined and as
sessed themselves ten cents a day to keep the discharged
men from being put in the street and to keep their families
from starving. They decided that if the New York Central
was going to dismiss men because the red caps were report
ing only the actual amount of tips received, they would call
a halt to discharges by reporting the twenty-five cents an
hour. (R. 544-545.)
Even if the plan had not been accompanied by these
coercive and intimidatory practices on the part of the
railroads, it bears an inherently fatal defect. Because of
the constant fear implanted in the minds of the red caps
2 0
that the railroads, if required to pay them deficiency checks,
will conclude that too many men are employed, there is
always a powerful impulsion to report the legal mini
mum even though it is not received. The railroads knew,
relied upon, and took advantage of this fear in devising
and operating this plan. Regardless of external, explicit
coercion, such a plan cannot be construed as a compliance
with the purpose, the policy, or the wording of the Act.
The personnel director of the Illinois Central Railroad
admitted that he believed as early as November 1938 that
the reports were inaccurate. (R. 802.) A Pennsylvania
station master said that he never believed the tip reports
were accurate. (R. 823.) An Illinois Central superin
tendent said he had felt since the end of October 1938 that
the tip reports were inaccurate (R. 860); and the New
Orleans station master said he too believed the tip reports
were inaccurate. (R. 889-890.) The Chicago and Western
Indiana superintendent said he always felt that the tip re
ports were inaccurate. (R. 933.)
At the Illinois Central Station in Chicago reports for
the day were usually received at the beginning or the
middle of the day. (R. 351-352.) In Pittsburgh, reports
for the entire day were received at the beginning of the
day or at any time when it was convenient for the red cap.
(R. 647.) This was done also at the Chicago and West
ern Indiana Station. (R. 496.) There, too, five men worked
six months without the defendant’s ever asking them to
make out tip reports or telling them in any way about the
accounting and guarantee notice. (R. 480-483, 491-492,
497-498.) Attorneys for two of the defendants admitted to
the Court that the reports upon which they relied were in
accurate. (R. 447, 451.) Thus, it is clear that the railroads
knew from the very beginning that they were not keeping
accurate reports. Although admittedly believing the re
ports to be inaccurate, they were content to continue to
2 1
tender them as proof of compliance with the Act. Obviously
the railroads were not concerned about paying the mini
mum wage hut were interested only in having in their tiles
reports which they themselves believed to be false but
which they could pull out if the need should arise and ad
vance as proof that their red caps had been receiving
twenty-five or thirty cents per hour in tips.
The tip reports which the defendants introduced are
not accurate records in any sense. In fact, except for the
actual pay checks issued, the defendants have failed to
introduce any evidence really showing the amounts received
by plaintiffs. Now, where defendants admit as an initial
proposition that they themselves have not actually paid
out the twenty-five (later thirty) cents per hour to their
employees but rely on another form of alleged payment,
that is tips reported, the burden is theirs to establish clearly
that the difference between the amount paid by them and
the minimum amount required by the Act was actually
paid to their employees.
Certainly such a non-payment plan, originated by a
tenuous notice, susceptible in its inherent nature of such
distorted development, and based on false reports pro
cured from the employees, can not constitute compliance
with the Act. During the period of this action, the defend
ants apparently wished to leave undisturbed the feeling of
luxurious satisfaction which many railroad passengers de
rived from bestowal of the discretionary tip; and simultane
ously to retain their own gratuitous freedom from paying
wages to valuable employees. This plan permits of easy
evasions. Although oral testimony was not offered directly
involving all the officials of all the defendants, the testi
mony did show the inevitable development of the plan and
indicates its spread to other railroads. The plan resembles
the many other schemes, such as the use of credit cards, the
22
waiver of overtime payments, or the execution of spurious
purchase and sale agreements, 1941 CCH Labor Law Serv
ice 32,103, ft 33,119, and If 33,359, devised by the cupidity
of some employers for the purpose of evading the Act. The
helpless employee, as well as the fair-dealing employer, is
entitled to protection from it and all similar arrangements.
The defendants’ “ accounting and guaranty” plan takes its
place with all such devices conceived so as “ to result in a
minimum increase in operating expenses.” (R. 41.)
23
IV.
The Tip Belongs to the Bed Cap.
Although we believe that by demonstrating the actual
working of the plan we have shown its non-compliance with
the Act, we desire to meet certain legal arguments which
have been made in cases where there was no proof of the
compulsive nature of the plan and where stipulations con
tained formal admissions that the red caps received tips
equal in average amount to the minimum wage.
Since the beginning of red-capping in 1895, no question
has been raised as to the proposition that the tip belongs
to the red cap. The donating passenger bestows the
gratuity on the red cap as an unconditional gift follow
ing rendition of services. It is unquestioned that not
every passenger tipped; that there was no compulsion
about the giving or the amount of the tip; and that the red
caps were required to serve all passengers without dis
crimination.
As to the intent of the donor of a tip, we quote the fol
lowing language from the article by Mary An
derson, Director of the United States Women’s Bureau,
on “ Tips in Relation to Legal Minimum Wages,” issued
by the American Association for Labor Legislation and
prepared for publication in the March, 1941 number of
The American Labor Legislation Review, Volume XXXI:
“ The average consumer does not think of a tip as
a payment of wages but rather as a gift, a present,
a gratuity, just so much extra change for the attrac
tive little waitress, or for the agreeable porter who
has lugged a heavy bag the length of the railroad sta
tion. That being the case, the recipient is expected
to show becoming humility and gratitude for the gift
that has been so generously bestowed. As tips are
not wages, the ‘ gift’ may well be cut in half, irrespec
tive of the service rendered, if the color of the
24
waitress’s hair or the tone of the porter’s voice does
not correspond with the consumer’s idea of how a
waitress’s hair should look or a porter’s voice should
sound. ’ ’
Before and after October 24, 1938, during the entire
period covered by this action, the passenger’s intent re
mained the same.
In occupations where tipping is customary, gratuities
received by the employee from patrons of his employer
are held to he the property of the employee, Polites v.
Barlin, 149 Ky. 376, 149 S. W. 828; Zappas v. Roumeliote,
156 Iowa 709, 137 N. W. 935; see also Restatement, Agency,
pp. 871-872.
In no sense were the tips payment to the railroads. It
is common knowledge that the public gives tips to red
caps as gratuities to them, not as compensation to the
railroads.
25
Y .
The Delivery and Operation of the Defendants’ Notice of
October 24, 1938, Did Not Change the Ownership of the
Tip. It Continued to Belong to the Red Cap.
Inasmuch as the ownership of the tip before October 24,
1938 resided unconditionally in the red cap, and thereafter
no overt change was made in the triple relationship of
the passenger, the red cap, and the railroad (R. 41), the
only intervening event which might have effected any
change was the railroad’s notice to red caps of October 24,
1938. The defendants rely entirely upon that notice to
establish a change in the status and ownership of the tip.
They rest on the narrow legalistic contention that the
notice so radically changed the whole question of owner
ship that from then on the defendants paid wages to the
red cap to the extent of any tips they can prove him to
have received.
The defendants did not trouble, however, to notify the
most important party to the entire transaction, namely,
the donor of the tip. In fact, one of the reasons why they
conceived this plan was that “ it caused no change in the
existing practice as between passengers and red caps.”
(See Agreed Statements of Fact, R. 41.) As the creator
of the donation, the passenger continued to bestow the tip
with the same intent of investing the red cap with com
plete unconditional ownership. To transform the tip into
wages would require a transformation at the source and
no such transformation took place.
The defendants argue, nevertheless, that they did pay
wages to the red caps. How? The tip, they say, became
the legal property of the railroad and the railroad then
paid it to the red cap as wages. This highly legalistic
argument disregards the plain wording of the Act (which
requires the employer to “ pay wages” ), the coercive
26
character of the notice of October 24, 1938, and the man
ner in which the plan actually operated. In addition, it
is unsound as a legal proposition.
At what moment, under the defendant’s contention,
would the tip become the railroad’s property? Let us
assume first that it becomes the railroad’s property the
moment the passenger gives it to the red cap. In that case,
the passenger would then be giving the money to the rail
road. Now it is common knowledge that the passenger who
creates the gift gives it to the red cap and not to the rail
road. Besides, since tips vary greatly in amount, from
nothing to one dollar, certainly, the railroad would then be
receiving from some persons a greater or less compensa
tion for service rendered than it received from other per
sons for like service, in criminal violation of the Inter
state Commerce Act, 49 U. S. C. §§ 2, 6 (7), and 10. That
result the railroads must he deemed to have avoided.
Since this first assumption leads directly to unreality and
contradictions, it seems clear that at the moment the pas
senger gives the tip to the red cap it still belongs to the
red cap.
Let us make the only remaining assumption under the
defendant’s argument: that the tip becomes the railroad’s
property" immediately after the red cap receives it. In
other words, the red cap immediately transfers the title
to the railroad by assignment or declaration of trust, and
the railroad immediately receives the tip, constructively
of course. In that case, the railroad is still indirectly re
ceiving from some persons a greater or less compensation
for service rendered than it receives from other persons
for like service. Moreover, although the constructive re
ceipt of the tip would then clearly be income to the rail
road, these defendants never included such receipts in
their income tax returns. (R. 720 ff.) By their own
course of dealing, defendants never considered the tip as
27
their property except for the single purpose of claiming
compliance with the Act.
Furthermore, there is no act creating an assignment or
trust. The red cap, who would have to he the assignor
or trustor, not only failed to perform an affirmative act
of trust or assignment but expressly notified the de
fendants in writing on not less than two occasions that he
would not make such an assignment or trust and that his
continuing to work was not to he construed as such.
The defendants can not and do not base their contention
for an assignment or declaration of trust on express words.
They must therefore base it on an act, namely the continu
ation to work after receipt of the notice of October 24,
1938. But the word or act from which an assignment or
trust is to be implied must at least be unambiguous. Here
the continuation to work was more than ambiguous; it
was accompanied by a clear and positive statement in
writing that the red caps were refusing to turn over (i. e.
assign) or hold for the defendants (i. e. create a trust of)
the tips which they would receive. We refer to the letters
of October 31, 1938 (attached to the Agreed Statements
of Fact, B. 36) and of April 19, 1939 (Plaintiffs’ Ex
hibit 10).
The second assumption, therefore, also conflicts with
reality and must be abandoned. The defendants’ entire
legalistic argument fails.
We have been loath to resort to minute juridical
analysis in considering this statute which is based upon a
broad and progressive view of the social aims of the
country. We have felt compelled to do so by the tenuous
application of the legal concept of a trust or assignment
made by Judge Otis in Harrison v. Kansas City Terminal
Co., 1941 CCH Labor Law Service 60,230, and appar
ently by the defendants here also. We believe that the
validity of the so-called accounting and guaranty plan and
28
the methods resorted to thereunder by the defendants
should be tested on broad grounds that are more sensitive
to the social policy declared in the Act.
The Interstate Commerce Commission, which is deeply
concerned with obtaining full reports of all receipts and
all payments, requires railroads to file regular reports of
wages paid. On its report form at the line indicated for
wages to red caps, the Commission directs the railroads
to report only wages actually paid by them in cash. (Chi
cago and Western Indiana Exhibit 63.)
The fact is that the tips, such as they were, went to and
belonged unconditionally to the red cap after October 24,
1938. As the auditor for the Chicago and Western Indi
ana testified:
“ There was no income to the railroad. There
wasn’t any physical transfer of funds. The railroad
did not have that money. It was not income to them,
so it was not necessary to include it in that income
tax return. (R. 990.) * * * The red caps received these
tips from the public and retained them. Therefore
the Western Indiana did not get money in their treas
ury and there was no income to them.’ ’ (R. 1000.)
“ Q. But, you claimed credit for payment of wages
(by tips reported), didn’t you, to those red caps * * *
during the period of the so-called accounting and
guaranty plan. * * * f
“ A. I made no such claim.” (R. 1001.)
29
VI.
Tips Under Other Statutes.
Decisions of the courts or rulings of administrative offi
cers and agencies that tips may or may not be included as
wages for purposes of the workmen’s compensation, un
employment compensation, or old-age pension laws are
not in point under the Fair Labor Standards Act, Pick
ett v. Union Terminal Co., 33 F. Supp. 244, 249. Those
decisions and rulings are under statutes levying
taxes and imposing liabilities for the purpose of
building up reserves of money benefits for em
ployees who become injured, unemployed, or superannu
ated. To effectuate the purpose of such statutes, courts
properly construe “ earnings” to include tips, so that em
ployees and their families may be assured benefits based
on their income. (See International Stevedoring Co. v.
Eaverty, 272 U. S. 50, 52.) But the policy and language
of this Act would not be served by any such construction.
The declared policy of this Act is not only to maintain
at least a minimum standard of living for employees but
also to eliminate detrimental labor conditions, unfair
methods of competition among employers, and labor dis
putes between employers and employees (49 U. S. C. § 202).
To achieve that policy, more is required than a provision
that “ the employee’s income shall aggregate” the mini
mum wage. The dealings between employer and employee
must be safeguarded. Therein lies an important distinc
tion between this Act and the others.
Because defendants have indicated that they will rely
heavily on decisions under other statutes, we undertake a
brief discussion of them.
30
Workmen’s Compensation Acts.
The whole theory of compensation under these acts rests
on our experience that industrial accidents are inevitable.
Therefore, the injured workman and his family should
continue to receive a just portion of his income. Referring
to workmen’s compensation acts, the courts have said:
“ compensation under the Act (N. Y.) is based solely on
loss of earning power,” New York Central Railroad Co. v.
White, 243 U. S. 188, 193; “ the purpose of the statute was
to protect the injured employee and his family in case of
loss of power to earn money,” Jones v. Davis, 246 Ky. 293,
299, 54 S. W. (2d) 681, 683; “ where there is resultant
incapacity by reason of pain and suffering, compensation
will be allowed and awarded, for impairment of the em
ployee’s earning capacity or of his ability to secure work
in the labor markets of the world,” Jirout v. Gebelein,
142 Md. 692, 697, 121 Atl. 831, 833. See also Smith v.
Light Co., 198 N. C. 614, 620, 152 S. E. 805, 808; Brown v.
Bristol Last Block Corp., 94 Vt. 123, 128, 108 Atl. 922, 924.
Quite properly in such cases, courts for the most part
construe “ earnings” to include tips. Undoubtedly, the
recipient of tips has income from them; but from this it
does not follow that the donor of the tip, and even less
a third party such as the railroad, has paid a wage. One
court, which held that tips were “ earnings” but not
“ wages” , phrased the point well, in Penn v. Spiers and
Pond (1908), 1 K. B. 766:
“ It has often been pointed out in this court that the
measure of compensation under the Act is not wages,
but earnings * * * Earnings in the employment do
not always come from the employer.” (p. 769.)
Under the Fair Labor Standards Act, however, the required
wage must come from the employer.
Unemployment Compensation Acts.
The policy of the unemployment compensation acts is to
provide a partial continuation of income during unemploy-
31
ment. Under that policy, tips ought to be included in the
definition of earnings.
Thirty states 1 and the District of Columbia, which de
sired to extend benefits and taxes to tips as well as wages,
deemed it necessary to make a specific inclusion of tips in
the statutory definition.
Four states 1 2 3 whose statutory definitions of ivages do
not specifically include tips, have ruled that, not being in
cluded, tips are not wages.
Only five states, whose broad statutory definitions of
wages do not expressly include tips, have ruled thereunder
that tips are wages, namely, Idaho, Avhich has adopted
the ruling hereinafter referred to under the heading of
Old Age Pension Acts, Iowa, Mississippi, Montana and
New Jersey.
Only one state, Kentucky, Acts of 1938, c. 50 sec. 3 (g),
felt it necessary to enact an express exclusion of tips from
the definition of wages.
In the remaining seven states 4 the statutes contain no
reference to tips and no rulings have been made.
The Railroad Unemployment Insurance Act defines
“ compensation” to exclude tips and “ remuneration” to in
clude tips, 45 U. S. C. § 351 (i) and (j).
Since Michigan is a state where both the statutory defi
nition of wages and the rulings thereunder are silent on
tips, we should be particularly interested in the unemploy
ment compensation returns made there by the New York
1. Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Flor
ida, Georgia. Illinois, Louisiana, Maryland. Minnesota, New Hampshire.
New York, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island,
South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,
Washington. West Virginia, Wisconsin, and Wyoming. For citations, see
appendix.
2. Indiana, Massachusetts, Oregon and Pennsylvania. For citations see
appendix.
3. For citations, see appendix.
4. Alabama, Kansas, Maine, Michigan, Nebraska, Nevada and New
Mexico. For citations, see appendix.
32
Central, the only defendant employing plaintiffs in Mich
igan. Did it construe the word “ wages” to include tips
received by red caps after October 24, 1938 and pay taxes
accordingly? Or did it construe “ wages” to cover only
the cash paid to the red caps in the form of checks from
the railroad? The New York Central answered (Plaintiff’s
Exhibit 20) that in Michigan its reports included only wages
and guarantee payments to red caps and did not include
tips received or reported. “ This,” said the defendant,
“ for the reason that the Michigan Act did not include tips
or gratuities in the definition of ‘wages.’ ” Thus, constru
ing the only wages to he the money actually paid by check,
the defendant showed plainly that it did not consider the
tips reported or received to he wages. Its position in the
case at hand becomes even weaker when we note that the
statutory definition of wages here is even narrower.
State Minimum Wage Acts.
The state statutes generally delegate wage fixing au
thority to an administrative agency. With only one ex
ception, no wage orders or rulings in occupations where tip
ping is customary have provided that the receipt of tips
constitutes payment of the minimum wage.1 The one ex
ception is Kentucky which permits employers to make de
ductions for tips received, hut in no event for more than
fifty percent of the minimum wage. The reason for the
general rule, which is equally applicable to this case under
the Fair Labor Standards Act, is well stated by Mary An
derson, Director of the United States Women’s Bureau, in
an article on “ Tips in Relation to Legal Minimum Wages,”
issued by the American Association for Labor Legislation
and prepared for publication in the March, 1941, number
of The American Labor Legislation Review, Volume X X X I:
“ Our second principle is that tips should not be
counted as part of the legal minimum wage. For ex-
1. For citations, see Appendix.
33
ample, if $16 is established as the legal wage, the em
ployer should not be permitted to pay the worker only
the difference between the tips she receives and the
minimum-wage of $16. If the contrary policy were
followed, the employee would be required to report
to her employer the amount of tips received each
week, in order that he in turn could know the amount
of wages he must pay to make up the $16.
“ If this practice were followed the purpose of the
minimum-wage law would soon be defeated. It would
not be long before employers discovered which of
their employees are costing them the most money.
Obviously, the girls who received the least in tips
would have to be paid the highest wages to make
up the $16. Gradually the girls receiving low tips
would be dismissed, whether efficient or not, and
those with ability to wile larger tips from an irre
sponsible public would be employed in their places.
The workers would be no slower than the employers
in discovering the effects of the reporting system on
their welfare. The dismissal of one or two workers
would be sufficient to warn the others that if they
were to retain their jobs their tips must equal those
of their more fortunate co-workers. There is al
ways one effective way out of a situation like this
for a worker who is desperately in need of a job,
and that is to report to her employer a greater
amount of tips than she actually receives. The
whole purpose of the minimum-wage law, that of
guaranteeing the worker a living wage, would be de
feated if this practice were permitted and the State
authorities would be almost helpless to correct the
situation. ’ ’
Collective Bargaining Acts.
The purpose of statutes guaranteeing collective bar
gaining is to prevent labor disputes and to assure the
right of collective bargaining to employees. Since the
benefits must be extended to all employees covered, the
test of employment as to each collective group is :
“ whether the alleged master or employer has the
right to hire or discharge the servant or employee or
exercise authority with respect to the manner and
conduct of the work to be performed,”
34
In the Matter of Regulations Concerning Employees under
Railway Labor Act, 229 I. C. C. 410, 417 (1938). If the test
is met, the law will give effect to their contract of employ
ment and hold them entitled to bargain collectively, even
though part or all of their income is in the socially regret
table form of tips. As the Interstate Commerce Commission
said in holding red caps to he employees entitled to col
lective bargaining under the Railway Labor Act (same
case and page):
“ The receipt of a stated wage is not essential to
create the relation of master and servant or of em
ployer and employee, and it may exist, although the
servant or employee neither expects nor is entitled
to any compensation. ’ ’
Old Age Pension Acts.
The Carriers’ Taxing Act (Railroad Retirement) spe
cifically provides that the term “ compensation” as used
therein “ does not include tips,” 45 U. S. C. § 261 (e). Con
sequently it excludes from its benefits persons receiving in
come from tips.
The Federal Social Security Act is designed to secure
a nationwide plan for the continuation of income in old
age. To that end it contains a particularly broad defi
nition of the income upon which taxes will be levied:
“ ‘Wages’ means all remuneration for employment includ
ing the cash value of all remuneration paid in any medium
other than cash.” 42 U. S. C. §1001. Despite the basic
differences between that Act and this one. the defendants
appear to rely entirely on an administrative ruling of
the Bureau of Internal Revenue under the Social Se
curity Act definition. Internal Revenue Bulletin. 193S,
I. C. B. 455. June 20. 1938. The difference in the pur
poses of the two acts is manifest. The Social Security
Act :> designed to continue the income et the supetsuinu-
ated unplnjrr the Fair Labor Standards A«t» to ear-
35
rect detrimental labor conditions, end unfair methods of
competition, and eliminate socially undesirable agreements
between employer and employee.
As Judge Atwell said in Pickett v. Union Terminal Co.,
33 F. Supp. 244:
“ That tips are figured under the Social Security
Act, or the Compensation Act, in some states, in
addition to the paid wage, as the aggregate basis for
the determination of benefits that the employee is
to receive under those Acts, is no argument for in
cluding in a clear law the thought that if an employee
received a tip, while working under the Fair Labor
Standards Act, his employer could deduct that
amount from the minimum wage which he was hound
to pay under the law. Such a construction would
be abortive and destructive. The Act uses the phrase,
‘ shall pay,’ in describing the dutv of the employer.”
(p. 249.)'
Comparison of the two stautory definitions shows the
fallacy of defendants’ position:
F air. L abor S tandards A ct .
“ Every employer shall
pay to each of his employees
* * * wages at the follow
ing rates,” etc. 29 TT. S. C.
§ 206.
Definitions.
“ ‘ Wage’ paid to any em
ployee includes the reason
able cost, as determined by
the Administrator, to the
employer of furnishing such
employee with board, lodg
ing. or other facilities, if
such board, lodging, or
other facilities are custom
arily furnished by such em
ployer to big emplovees.”
29 U S. a % 2tt? (m).
S ocial S e c u r it y A ct .
“ There shall be * * *
levied, collected and paid
upon the income of every in
dividual a tax equal to the
following percentages of the
wages * * * received hy
him,” etc. 42 U. S. C. § 100L
Definitions.
“ ‘Wages’ means all re
muneration for employment,
including the cash value of
all remuneration paid in any
medium other than cash.”
42 U. S. C. § 1011 (a).
36
Under the Fair Labor Standards Act, all emphasis is
placed on payment by the employer. "Why? To elimi
nate unfair competition among employers, to prevent eva
sive devices and oppressive agreements, to eliminate det
rimental labor conditions, and to assure payment of at
least the minimum to each employee. Under the Social
Security Act, all emphasis is placed on receipt by the
employee. Why? To assure that the pension will be
based on his entire income. Thus, fuel furnished to an
employee would under the Fair Labor Standards Act be
included at its reasonable cost to the employer, so as to
prevent evasions and under the other, at its cash value
to the employee, so as to continue proper benefits in old
age. In the face of these facts, the defendants rely on
a ruling of the Bureau of Internal Bevenue under the
Social Security Act to justify their attempted self-enrich
ment here of nearly a million dollars!
37
Consideration of Other Decisions in Suits by Red Caps
Under the Act.
There have been three decisions by United States Dis
trict Courts in similar suits filed after this one, namely,
Pickett v. Union Terminal Co., 33 F. Supp. 244 (1940),
in the Northern District of Texas, by Judge Atwell;
Williams v. Jacksonville Terminal Co., 35 F. Supp. 267
(1940), in the Southern District of Florida, by Judge
Waller; and Harrison v. Kansas City Terminal Railway
Co. (1941), not yet reported, 1941 CCH Labor Law Serv
ice If 60,230, by Judge Otis. In all those cases, the defend
ants served the same notice as here. Each of those cases
presents certain substantial differences from this one:
1. No testimony whatever was offered to show
those Courts the effect and the actually coercive opera
tion of the plan, applied by the railroads to compel
fictitious reports.
2. Counsel in each case, apparently desiring to
narrow the issues solely to a question of law, stipulated
that red caps had received amounts equal to the mini
mum wage.
3. Only in Pickett v. Union Terminal Co., did the
red caps deliver proper written protests against the
plan, as was done here by the letters of October 31,
1938 (Agreed Statements of Fact, R.. 36), and April
19, 1939 (Plaintiffs’ Exhibit 10).
4. No testimony was offered showing that the de
fendants by their own books and records at all times
considered the tips to belong to the red caps.
Thus, the two cases pending in the Court of Appeals for
the Fifth Judicial Circuit do not present the same record
that is before this Court.
In Pickett v. Union Terminal Co., 33 F. Supp. 244, the
Court entered judgment for plaintiffs and held that red
caps were employees engaged in commerce, that the Act
V II.
38
was plain and unambiguous, and that the defendant bad
failed to pay wages. The Court rejected the defendant’s
contention that the red caps had made a new arrangement
under the notice of October 24, 1938, pointing out that their
protest was clear and that they waived no rights by con
tinuing to work.
In Williams v. Jacksonville Terminal Co., 35 F. Supp.
267, the Court rejected the theory that red caps were
employees. Once it decided that red caps were not em
ployees, no question remained because they were then not
covered by the Act. We believe the decision is inapplicable
here where employment is admitted. Nevertheless, the
Court went on to say that if red caps were employees, the
defendant had furnished them facilities as provided by the
Act. Those facilities, according to the Court, consisted of
the passengers, the station, and the tips. It seems to us
that passengers are not “ facilities” under the Act. Since
section 3 (m) of the Act refers to “ board, lodging, and
other facilities,” the ejusdem generis rule of statutory
construction would limit facilities to those of the same
general character as board and lodging and exclude pas
sengers, and probably the station and tips also.
It also seems to us that the station is maintained
for proper corporate purposes regardless of red caps and,
being “ primarily for the benefit or convenience of the
employer,” can not be recognized as a facility under the
Act, Administrator’s Official Regulations, Part 531.1 (d).
The tips, costing the employer nothing, have no “ reason
able cost to the employer” as required by the Act. The
Court virtually disregarded the Act’s requirement that the
employer pay wages, holding that the red caps were paid
“ through facilities afforded the plaintiffs by defendant.”
We believe that the conclusion is not in accord with the
Act
39
In Harrison v. Kansas City Terminal Co., 1941 CCH
Labor Law Service If 60,230, the Court, not Laving before
it tbe facts here in evidence, reasoned as follows:
1. Tips are not Wages. Tire receipt of tips is not
the payment of wages required by the Act.
2. But defendant could have required red caps to
turn over all tips received. Then it might have paid
every red cap in cash.
3. Under the notice, defendant asserted an interest
in the tip and the red cap, “ when he had received a
tip, held it in his custody for the benefit of his em
ployer until he had given his employer credit on his
wage, after which it became his separate property.”
Although proposition 2 is academic and not necessary to
Judge Otis’ decision, nevertheless we can not admit its
validity, particularly under the Pair Labor Standards Act.
In any event, however, the defendants neither there nor
here required red caps to turn over all tips received and
we have therefore to deal only with proposition 3. Judge
Otis did not have before him evidence of the many ways
in which the defendants here treated tips as receipts of the
red caps and not as receipts of the railroads. Nor did
the record there contain any protest against the plan or
evidence of the actual operation of the plan by means of
compulsively obtained tip reports.
We have already discussed these questions under points
IV and V above. Judge Otis’ conclusion is inconsistent
with the intent of the passenger who donates the tip
and invests the red cap with ownership. Furthermore, it
w'ould mean that, since tips vary greatly in amount, the
railroad would, as pointed out above, he receiving directly
or indirectly from some persons a greater or less com*
pensation for service rendered than it received from
other persons for like service, in criminal violation of
the Interstate Commerce Act, 49 U. S. C. §§ 2, 6 (7), and
10. The railroads and their attorneys, keenly aware of
40
all the provisions of the Interstate Commerce Act, could
hardly have intended such a result; and we have demon
strated here that they went to great lengths in all other
respects to show that they intended the tips to be receipts
only of the red caps. Judge Otis declined to accept this
argument, because in reading that statute he apparently
emphasized to himself only the “ charge” there referred
to. In his opinion he said:
“ But the tips are voluntarily given by the patrons.
The red caps themselves do not make a charge. How
can that which was not a charge be converted into a
charge by the act of turning over the tip !”
Judge Otis is in error, because the statute which forbids
the charge also forbids any receipt by the carrier, direct
or indirect. We can not believe that the attorneys for the
railroads there or here could fail to appreciate the word
ing of the statute.
Both Judge Waller and Judge Otis cast reflections on
the plaintiffs’ desire to obtain recovery after counsel, in
their apparent desire to present the matter solely as a
question of law, had narrowed the issues by stipulating to
total receipts equal to the minimum amount. Judge Wal
ler spoke of “ judicial brigandage” and “ the minimum
wage thrice multiplied” . Judge Otis referred to the plain
tiffs’ “ bonanza” . Of course, neither one of these judges
had before him any evidence of the true origin and work
ings of the plan. Neither one knew the manner in which the
non-wage-paying railroads deliberately devised a plan to
avoid paying wages to the neediest of their employees;
nor that the railroads consciously assumed the risk
of violating the law and sought thereby to enrich their
treasuries by some two million dollars a year. Nor did
either judge have before him evidence showing compulsion
and the falsity of the railroads' records; and showing that
the railroads never considered receipt of the tip to he
theirs in any way except for the single purpose of claim
41
ing compliance with the Act. Here, however, such
terms as those judges used would not be justified. The
plaintiffs have not received the amounts reported. They
are seeking the minimum wage which the lawr requires.
Congress provided that if an employer withheld the stat
utory wage, he should pay an equal amount in liquidated
damages. It can not he said that this provision is unjust.
Is this provision less justified than the triple damages
under the Sherman Act! Society has a stake, fortunately
enacted by the Congress, in compelling the payment of
sufficient money damages to help correct the evil effects of
the sub-standard wage on the health and morale of the
Avorking man and his family. We are confident that if the
entire situation had been adequately presented to those
judges they would have refused to condone the railroads’
plan of attempted self-enrichment.
42
Conclusion,
The situation of the plaintiffs in this case has been well
described by the Supreme Court in Holden v. Hardy, 169
U. S. 366, when it said:
“ The legislature has also recognized the fact, which
the experience of legislators in many States has cor
roborated, that the proprietors of these establishments
and their operatives do not stand upon an equality,
and that their interests are, to a certain extent, con
flicting. The former naturally desire to obtain as much
labor as possible from their employees, while the latter
are often induced by the fear of discharge to conform
to regulations which their judgment, fairly exercised,
would pronounce to be detrimental to their health or
strength. In other words, the proprietors lay down
the rules, and the laborers are practically constrained
to obey them. In such cases self-interest is often an
unsafe guide, and the legislature may promptly inter
pose its authority.” (p. 397.)
The Congress found it necessary to assure at least a
minimum standard of living for workers, to eliminate detri
mental working conditions, to remove unfair competition
among employers, and to correct oppressive contracts be
tween employers and their employees. To this end it di
rected these defendants to pay their employees wages of
at least twenty-five cents, and later thirty cents, an hour.
The Act of Congress included the cost of certain facilities
as wages but it did not include tips. Although the defend
ants admittedly did not pay the required minimum wage,
they say they instituted as its equivalent the “ accounting
and guaranty” plan. We have shown that under the no
tice and the operation of the plan, the tip reports were not
and could not he accurate. Regardless of whether this
inaccuracy was due to the compulsion exercised by the
defendants or to the precarious economic and social posi
tion in which the red caps find themselves, we have proved
beyond doubt that the tip reports were nothing more than
inflated statements and that the defendants were fully
43
aware of this fact from the time of the plan’s beginning,
and probably from its very creation. Tip reports made un
der such circumstances are in no sense payment of mini
mum wages. Viewed ih the light of the purposes which the
Act was intended to accomplish, the plan falls far short of
the payment required.
Were the defendants to succeed here, the way would be
open for unscrupulous employers to base systems of com
pensation on similar plans; and the Act would soon be
virtually nullified. To approve the defendants ’ plan would
be to condone the unjust enrichment of the defendants and
to exclude red caps from the coverage of the Act. We
respectfully submit that judgment should be entered for
the plaintiffs.
Respectfully submitted,
L e o n M. D e sp b e s ,
M. J. Myeb,
Attorneys for Plaintiffs.
February ..., 1941.
45
APPENDIX I.
Red Caps Are Engaged in Commerce Under the Act.
This proposition, which stands admitted by all the de
fendants except the New York Central, seems too clear for
doubt. It has been held in many cases that transportation
includes loading and unloading.1 Activities such as the
maintenance and repair of tracks, which are much more
remote from interstate commerce than the actual transpor
tation of interstate passengers’ luggage have repeatedly
been held to be “ in commerce.” 1 2 Red caps are held to be
engaged in interstate commerce at the moment the passen
ger entrusts the bag to them, Franklin v. Southern Pacific
Co., 203 Cal. 680, 265 P. 936, 59 A. L. R, 118, cert. den.
278 U. S. 621 (1928), at page 684 of original report, Pickett
& Union Terminal Co., 33 P. Supp. 244, 247 (1940). See also
Lovell v. London C. <& D. B. Co., 45 L. J. Q. B. 476, 485.
1. Union Stock Yard, Go. v. United States, 308 U. S. 213, 219; Atchison,
T. & S. F. Ry. Co. v. United States, 295 TJ. S. 193, 198; Erie R. Co. v.
Shuart, 250 U. S. 465, 468; Baltimore & Ohio S. W. R. Co. v. Burtch,
263 TJ. S. 540; Puget Sound Stevedoring Company v. State Tax Commis
sion, 302 TJ. S. 90; Illinois Central R. Co. v. Porter, 207 Fed. 311 (C. C. A.
6th).
2. Pederson v. Delaware L. <& W. R. Co., 229 TJ. S. 146; Philadelphia,
Baltimore & W. R. Co. v. Smith, 250 TJ. S. 101; Kinzell v. Chicago, M. d
8t. P. Ry. Co., 250 TJ. S. 130; Kansas City Southern Ry. Co. v. Martin,
262 Fed. 241 (C. C. A. 5th) ; Pipal v. Grand Trunk W estern R. Co., 341
111. 320, 173 N. E. 372, cert, denied, 283 TJ. S. 838'. See also Virginian
Railway Co. v. System Federation No. 40, 300 TJ. S. 515, 556 (1937) ;
U. S. v. Lowdenm, 308 TJ. S. 225, 234.
47
APPENDIX II.
Citations to State Unemployment Compensation and Mini
mum Wage Acts.
The following citations cover the relevant statutory
provisions and official rules or orders under the state un
employment compensation and minimum wage acts. To
permit ready access to all the material at one source, we
cite the Commerce Clearing House service instead of the
various state publications.
Unemployment Compensation
1941 Commerce Clearing
House Employment
State Insurance Service
Alabama ........................................................ 114014
Arizona ........................................................11114077, 5007
Arkansas ......................................................111(4017, 5002
California ................................................... 1(1(4024, 5008.13
Colorado ....................................................... 1(1(4067, 8011.05
Connecticut ................................................114003, 5011
Delaware ......................................................114017, 5102
Florida ..........................................................KK4016, 5302
Georgia ......................................................... 1(1(4072, 8004.02
Idaho ............................................................KK4057, 1200.04
Illinois ..........................................................K1J4009, 5302
Indiana ........................................................ 114017C. 6170
Iowa ..............................................................114079, 5002
Kansas ......................................................... 111(4018, 4019
Kentucky ..................................................... K4010
Louisiana .................................................... 1114072. 6003
Maine ........................................................... 1(4075
Maryland ..................................................... 11(4077, 5101
Massachusetts..............................................114015, 1230
Michigan ......................................................114060, 1201.02
Minnesota ................................................... 114018, 5002
Mississippi ................................................... 114077, 1201.07, 5003
M issouri....................................................... 114017, 5002
Montana ....................................................... 114072, 5002, 810.01
Nebraska ...................................................... 14015
Nevada .......................................................... 14017
New Hampshire ....................................... 114016, 5302
New Jersey ...............................................114082, 4083, 1201.02, 8061.09
New Mexico ................................................ 14070
New York ................................................... 114009, 5007
North Carolina .......................................... 114071, 4072, 5302
North Dakota ............................................ 114017, 8004.02
Ohio ............................................................. 114007, 5002
Oklahoma ................................................... 114071, 4072, 5002
Oregon .......................................................... 14005 (and also Ruling 22,
Oregon Unemployment Compensation Commission.)
48
Pennsylvania ..........
Khode Island ..........
South C arolina.......
South Dakota ........
Tennessee ................
Texas ........................
Utah ..........................
V erm ont....................
Virginia ....................
Washington ..............
West Virginia ........
Wisconsin ................
Wyoming ..................
and
District o f Columbia
, 114025, 7801.218
. 114019, 5005, 5101
. 114074, 5002
114016, 8006.02
1114075, 8010.06
114082, 5501
114083, 5002
114016, 5002
114020, 5002
14068
14020
14009
114016, 8010.02
114004, 5014
State Minimum Wage Acts
1941 Commerce Clearing House
State Labor Law Service
California ........
Colorado ...........
Connecticut . . . .
Illinois ..............
Kentucky ..........
Massachusetts .
Minnesota ........
New Hampshire
New York .......
Ohio ...................
Oklahoma.........
Oregon ..............
Utah ..................
Washington . . . .
1145,023, 45,501
1145,026, 45,501
1145.021, 45,501
1145.022, 45,501
1145.023, 45,501
1145,028, 45,501
1145.022. 45,501
1145.023, 45,501
1145.022, 45,501
1145.023, 45,501
1145.022, 45,501
1145.022, 45,501
1145.023, 45.501
1145,022, 45,501
IN' THE
QJnitrti gtatfs (Jirruit <gourt of B ppkiIs
FOR THE FIFTH CIRCUIT.
No. 9 6 1 2
U n io n T e r m in a l C o m p a n y , a p pellan t
v.
A. J. P ic k e t t , appellee
APPEAL FROM T E E DISTRICT COURT OF T E E UNITED STATES
FOR T E E NORTHERN DISTRICT OF TEXAS
BEIEF FOE WILLAED SAXBY TOWNSEND, AS AMICTJS CUE LAE.
LEON Iff. DESPBES,
Attorney.
THEODOBE Jt. B E B B Y ,
GEOBGE E. C. H AYES,
EBED EL H A N D EL,
M. 3. M YEB,
GEOBGE E. BOEW EB,
O f Cowntel.
<se
IN ’ T H E
©ititfft gtato (Sirruit (gourt of t e a l s
FOR THE FIFTH CIRCUIT.
NO. 9 6 1 2
U n io n T e r m in a l C o m p a n y , a ppellan t
v.
A. J . P ic k e t t , appellee
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF TEXAS
BRIEF FOR WILLARD SAXBY TOWNSEND, AMICUS CURIAE.
Willard Saxby Townsend is one of the plaintiffs in the
proceedings in the United States District Court for the
Northern District of Illinois, Eastern Division, instituted
for the recovery of unpaid wages under the Fair Labor
Standards Act of 1938 due to more than one thousand sev
enty red caps employed by eight of the largest railroad
companies of the United States. The case before this
Court presents questions which are of interest not only to
all red cap employees throughout the nation, but also to
the public interested in enforcement of the Fair Labor
Standards Act. The undersigned submits this brief as
amicus curiae, confining his discussion to questions of the
interpretation and application of the statute involved in
this appeal. The same “ guarantee” plan was promulgated
(and later abandoned) by nearly all the major railroads in
the United States.
2
STATEM ENT.
This present action was instituted under Section 16(b)
of the Act by a duly designated representative in behalf
of red caps employed by appellant in its railroad terminal
at Dallas, Texas, to recover the amount of unpaid minimum
wages due the red caps under the provisions of Section 6
of the Act, together with liquidated damages and a rea
sonable attorney’s fee. The case was tried on an agreed
statement of facts and some slight oral testimony. Al
though the only record before this Court is the agreed
statement and the oral testimony and although we can
not present in this brief evidence introduced in another
case showing the operation of the appellant’s so-called
‘ ‘ guarantee ’ ’ plan and the use of coercion by the employer
to compel reports higher than actual tips received, we de
sire to urge upon this Court the consideration of some
basic questions which are inherent in the application of
that plan. Since the decision of this Court will be a per
suasive precedent in other cases, we urge the Court to
consider carefully the manner in which the appellant’s
“ guarantee” plan lends itself in application to a distor
tion of the purposes of the Act.
QUESTION.
The question presented for determination is whether the
procedure adopted by the defendant and denominated
“ guarantee” plan, coupled with the continued receipt of
tips by the red caps, constituted wages paid by appellant
to the red caps within the meaning of the Fair Labor Stand
ards Act.
3
ARGUM ENT.
I.
The tips received by red caps are unconditional gifts by the
donating passengers and can not be construed to be
wages.
The tip which the passenger gives the red cap after the
red cap has performed some work or duty is bestowed un
conditionally and gratuitously on the red cap. Although
the custom of tipping is general, it is by no means uni
versal. Tipping, which is a vestigial practice limited to
certain defined fields and perhaps inconsistent with our
modern conception of the dignity of labor, nevertheless
persists as a practice in which the giver bestows a gift
which he thinks proper under the circumstances. As was
stated in “ Tips in Relation to Legal Minimum Wages” by
Mary Anderson, Director of the United States Women’s
Bureau, United States Department of Labor, a paper is
sued by the American Association for Labor Legislation
and being published in the March 1941 issue of The Ameri
can Labor Legislation Review, Volume X X X I:
“ The average consumer does not think of a tip as
a payment of wages but rather as a gift, a present, a
gratuity, just so much extra change for the attractive
little waitress, or for the agreeable porter who has
lugged a heavy bag the length of the railroad station.
That being the case, the recipient is expected to show
becoming humility and gratitude for the gift that has
been so generously bestowed. As tips are not wages,
the ‘ gift’ may well be cut in half, irrespective of the
service rendered, if the color of the waitress’s hair
or the tone of the porter’s voice does not correspond
with the consumer’s idea of how a waitress’s hair
should look or a porter’s voice should sound.”
The appellant has attempted to convert such unilateral
donations into “ wages paid” . Such a conversion can not
4
take place without the complete participation of the donor;
and here there is no participation whatsoever of the donor
who made the gift with all of its incidents.
There is a way of changing the situation so that money
handed to a porter may become a receipt of the railroad.
That way would be by the imposition of a fixed definite
charge for each hand bag or parcel carried. The charge
would then be paid to the railroad and received by it; and
in turn the railroad could pay wages to the red caps out
of its general treasury. However, the appellant here can
not simultaneously leave the gift to the red cap unaffected
and turn it into a receipt by appellant. Appellant has
sought to leave the passenger with the feelings of luxuri
ousness following excellent services rendered and of satis
faction at playing the Lord Bountiful; and at the same
time it has sought to use the unconditional gifts to the red
cap as wages paid by appellant. Participation of the most
important party in this tripartite transaction is completely
lacking.
n.
By its inevitable application, the plan adopted by appellant
defeats the payment of a minimum wage.
It appears quite clearly that the plan adopted by appel
lant is simply a plan for reporting hours spent at work.
The time slips upon which appellant relies are accurate
reports of hours worked and they are subject to complete
check. Once the hours of work have been established, the
appellant’s duty to pay the wage required by statute is
clear. However, the appellant seeks to relieve itself of its
duty to pay the wage by asking the employee to file a re
port that he has received the amount stipulated by law.
In other words, the defendant’s plan would permit the em
ployer and the employee by a simple paper writing to re
move themselves entirely from the provisions of the Act.
5
The very purpose of the Act is to prevent oppressive deal
ings between employer and employee. Should this Court
uphold the defendant’s plan, railroads throughout the
country would be free to put the plan into effect and to
relieve themselves of all obligations to red caps under
the Act by the simple expedient of inducing red caps by
one means or another to write down on their time slips
at least an equivalent report in tips received, whether or
not the report be true.
Of course, in our society we desire all persons to be as
free as possible to make agreements. Nevertheless, there
underlies a dictate of justice more imperious than any bar
gain between man and man, namely that, when bargaining
powers are unequal and the state by democratic process
has prescribed certain mandatory minimum standards, con
tracts in derogation may not be enforced. If, through ne
cessity or fear of a worse evil, the working man accepts
harder conditions because an employer will afford him no
better, he is made the victim of force and injustice; and
the law will insist upon the statutory minimum standard
and will strike down any contract which seeks to under
mine it.
Quoting again from the paper by Miss Anderson on
“ Tips in Relation to Minimum Wages” , we call the Court’s
attention to the following statement:
“ Our second principle is that tips should not be
counted as part of the legal minimum-wage. For ex
ample, if $16 is established as the legal wage, the em
ployer should not be permitted to pay the worker only
the difference between the tips she receives and the
minimum-wage of $16. If the contrary policy were fol
lowed, the employee would be required to report to
her employer the amount of tips received each week,
in order that he in turn could know the amount of
wages he must pay to make up the $16.
“ If this practice were followed the purpose of the
minimum-wage law would soon be defeated. It would
not be long before employers discovered which of their
employees are costing them the most money. Obvi-
6
ously, the girls who received the least in tips would
have to be paid the highest wages to make up the $16.
Gradually the girls receiving low tips would he dis
missed, whether efficient or not, and those with ability
to wile larger tips from an irresponsible public would
be employed in their places. The workers would be
no slower than the employers in discovering the ef
fects of the reporting system on their welfare. The
dismissal of one or two workers would be sufficient
to warn the others that if they were to retain their
jobs their tips must equal those of their more fortu
nate co-workers. There is always one effective way
out of a situation like this for a worker who is des
perately in need of a job, and that is to report to her
employer a greater amount of tips than she actually
receives. The whole purpose of the minimum-wage
law, that of guaranteeing the worker a living wage,
would be defeated if this practice were permitted and
the State authorities would be almost helpless to cor
rect the situation.”
In enacting the Fair Labor Standards Act, the Congress
necessarily sought to close the many escape holes which
harsh employers would seek. Through such escapes the
benefits to the national economy might seep away. The Act
clearly requires the appellant to pay a wage and forbids
any evasive scheme or device. There may be no deductions
from the wage excepting only the reasonable cost to the
employer of certain specified facilities. No such deduction
is applicable here because there is no reasonable cost to
the employer of the tips (which cost the appellant nothing)
or of the station premises (which the appellant is required
in any event to maintain for its benefit and for the benefit
of its passengers).
The law has dealt with similar situations in the past.
The willing victim of the Blue Sky Law violator may not
waive the law’s provisions by signing a report that the
seller of the securities has complied. The victim of usury
is not estopped to recover illegal payments because he has
signed a report that the interest rate was not usurious.
7
Of course, appellant may argue that in this case the
agreed statement of facts admits that each red cap did in
fact receive tips equivalent to the amount of the minimum
legal wages established by law. Because of the importance
of this decision,, we ask the Court to consider with deepest
attention the effect of the defendant’s guarantee plan else
where throughout the United States. That the plan in
certain cases may at certain times and places result in the
employees’ receiving certain gifts of a certain amount does
not eliminate the inherent vice of the plan in application
or its illegality under the plain wording of the statute.
The problem before the Court is a broader one than the
problem of red cap employees alone. If approved, the plan
may be extended to many many other types of employ
ment. We ask the court to affirm the judgment of the
United States District Court, bearing in mind that under
the plan, the employer can easily obtain reports which will
result in destroying the effect of the law. On the omni
present potential influence of the employer in such situa
tions to compel reports from the employee, we quote the
following language from National Labor Relations Board
v. Falk Corporation, 102 Fed. 2d. 383 (C. C. A. 7th, 1939):
“ And yet, the voice of authority may, by tone inflec
tion, as well as by the substance of the words uttered,
provoke fear and awe quite as readily as it may be
speak fatherly advice. The position of the employer
where, as here, there is present, general and sincere
respect and regard, carries such weight and influence
that his words may be coercive when they would not
he so if the relation of master and servant did not
exist.” (p. 389.)
8
CONCLUSION-.
It is respectfully submitted that tlie judgment of the
Court below is founded upon a correct interpretation of
the Fair Labor Standards Act and should be affirmed.
Respectfully submitted.
L e o n M. D espres,
Attorney at Law.
T heodore M. B erry ,
G eorge E. C. H ayes ,
F red H . M an d el ,
M. J. Myer,
G eorge E. R oew er ,
Of Counsel.