RICHFIELD OIL CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 12483.
United States Court of Appeals District of Columbia Circuit.
Argued May 5, 1955. Decided Jan. 16, 1956.
Writ of Certiorari Denied April 23, 1956. See 76 S.Ct. 695.
231 F.2d 717
Mr. Duane B. Beeson, Atty., National Labor Relations Board, of the bar of the Supreme Court of California, with whom Mr. Marcel Mallet-Prevost, Asst. Gen. Counsel, National Labor Relations Board, was on the brief, for respondent. Mr. Robert G. Johnson, Atty., National Labor Relations Board, also entered an appearance for respondent.
Messrs. William B. Barton and Anthony P. Alfino, Washington, D. C., filed a brief on behalf of The Chamber of Commerce of the United States, as amicus curiae, urging reversal. Mr. Milton A. Smith, Washington, D. C., also entered an appearance for The Chamber of Commerce of the United States.
Mr. Lambert H. Miller, Washington, D. C., filed a brief on behalf of National Association of Manufacturers of the United States of America, as amicus curiae, urging reversal.
Messrs. Milton C. Denbo, Washington, D. C., and Thomas E. Shroyer, Cleveland, Ohio, filed a brief on behalf of American Retail Federation, as amicus curiae, urging reversal.
Before WILBUR K. MILLER, BAZELON and DANAHER, Circuit Judges.
DANAHER, Circuit Judge.
Petitioner Richfield asks us to review and set aside, and the Board seeks enforcement of, the Board’s order issued
Richfield produces, refines and sells petroleum products in interstate and foreign commerce and employs about 5,000 employees. The company engages in collective bargaining with some 11 labor organizations. Since April 1945, and at all times material to the issue raised here, Oil Workers Union has been the exclusive collective bargaining representative of about 2,000 production, construction and maintenance Richfield employees.
On April 14, 1953, Richfield announced to its employees a voluntary Stock Purchase Plan of the deferred distribution type. The Plan had not previously been discussed with the Oil Workers Union, although there was then in full force and effect a collective bargaining agreement with that Union. The latter thereupon wrote as of April 2, 1953, expressing its desire to meet with the Richfield Oil Corporation for the purpose of negotiations on the proposed Stock Purchase Plan. Richfield declined such negotiations, insisted that the Plan had been finally adopted subject only to clearance with the Commissioner of Internal Revenue, but expressed willingness to meet with the Union for the purpose of explaining the Plan. Meetings were accordingly held on May 7, 1953, and again on May 13, 1953, when the Union proposed certain modifications embodied in a Plan it submitted, purposed to encourage employees to provide additional security for their retirement through systematic savings. The Union sought to establish the plan by contract to be ratified by the Union, to enlarge the group of eligibles, to protect Union members while in authorized leave status, to prescribe certain safeguards in the event of strike or lockout, to relate various types of service time to certain situations otherwise covered in the outstanding collective bargaining agreement, and in other respects to vary the Richfield plan. After Richfield flatly advised that it did not consider the Stock Purchase Plan to be a proper subject of collective bargaining, the Union charged Richfield with unfair labor practices.
The complaint recited that the Union requested the Respondent to bargain collectively with it in respect to the Respondent’s unilaterally promulgated Stock Purchase Plan as exclusive bargaining representative2 of the employees in its unit, and Richfield’s refusal so to bargain. Unfair labor practices accordingly were alleged.
The facts were stipulated for the purposes of the hearing. Attached as exhibits were the exclusive bargaining agreement then in force,3 certain amendments thereto, Richfield’s announcement, the Plan, a retirement plan and a retirement annuity plan concluded by agreement in 1944, and various other documents or correspondence. The retirement plan benefits were provided by a group annuity contract, paid for by Richfield, and were in addition to those provided under an Employees Group Insurance Plan and by the Social Security Act,
Adequate details of the Stock Purchase Plan can be gleaned from the findings, included in the Board’s Decision and Order.4
One member dissenting, the Board majority concluded on the record as a whole that the Plan represents a mandatory subject of collective bargaining. The opinion said, in part:
We think that a common sense, non technical view of the Plan, including its manifest purpose, its unmistakable emphasis upon the long term accumulation of stock for future needs rather than upon stock ownership as such, its requirement that participants be employees, and its provision for benefits which are related to the employees’ length of service and amount of wages while participating, compels the conclusion that benefits accruing to employees thereunder represent a part of the compensation or remuneration received by the employees for their labor, differing from their weekly wages only in form and time of payment.
The Board found that the term wages comprehends emoluments of value flowing from the employment relationship. In like manner, the Plan, in its objectives and in its operation, was said to affect conditions of employment. On both predicates the Board overruled Richfield’s contention that the Plan is not the subject of compulsory collective bargaining.
Richfield in its brief argues that no employer can be compelled by law to provide for the acquisition of its own shares by its employees, and the law gives neither to the employer nor to a trade union any right to compel employees without their consent, to buy the corporate shares of their employer, however needy that employer may be. The Company has offered, of its own volition, a plan by which employees will be assisted by Richfield in the purchase of the latter’s shares. No one, so far as we can see, has asserted that Richfield can be compelled by law to provide for the purchase of its shares. No one has sought to compel employees, without their consent, to buy Richfield’s shares. As a matter of fact, employees who enter upon the Plan, under its terms, may even withdraw from the purchase program at any time. The Plan in its every aspect was conceived and formulated by Richfield itself. We are offered by the language quoted a strange interpretation of the issue as we see it, yet the statement finds counterpart in other arguments offered in the Richfield brief.
For example, Richfield’s plan is offered as something separate from the wage agreement, to afford (as the plan states), an opportunity for employees to invest in the Company’s stock, and thereby to promote a close and continuing association with the Company’s business. As analysis discloses, the plan is nothing more than that, (emphasis added) we are told.
Since analysis is invited we look more closely at the terms proposed.
A Richfield employee having been employed for more than one year and being between the ages of 30 and 65, may at stated dates contribute through regular payroll deductions up to 5 per cent of his normal wage, but not less than $5 per month. Richfield then promises to contribute regularly an amount equal to one-half of the employee’s monthly contribution. The Company will make an annual contribution of a sum based upon the ratio of its profits to invested capital which will adjust the total monthly contributions made by the Company to the following schedule. Then, having specified that profits shall mean the Company’s net income after taxes for the preceding calendar year, Richfield in its schedule shows that its annual contribution will run from 50 per cent to 75 per
Enough has been said on this point to demonstrate that the Plan is something more than that argued to us. Certainly continuity of uninterrupted service means that each participating employee will receive from the Company an emolument equal to at least 50 per cent of his own contributions if the Company’s net earnings reach only 11 per cent per annum, while his emolument for each additional per cent of net profits increases 5 per cent up to a maximum of 75 per cent of the employee’s contributions. If that is not tantamount to a wage incentive program for uninterrupted service, it should at a minimum, cause any employee, all eligible participating employees, substantial concern as to what happens should there be a strike. The Plan is silent on the point. If 68 per cent of the Company’s eligible employees are participating in the Plan, and they are, they might readily consider themselves ill-advised to take any steps which would disentitle them to receive Company contributions reaching to a possible 75 per cent of their own contributions over the period of participating years.
Perhaps on the foregoing account, the Union sought an agreement that the Plan was not to be impaired or abrogated as a result of, or solely by reason of, any strike or lockout. In that context the Union proposed a definite understanding that the effect of any strike or lockout shall be limited to the effect of suspension of contributions by both Company and participants during the periods of strikes or lockouts. The Union, too, asked firm agreement that Participation by an employee who is granted a Union leave of absence shall not be terminated during such leave but allotments shall be suspended in accordance with the suspension provisions of the Stock Purchase Plan. The Union suggested further that the Plan run concurrently with its collective bargaining contract, the provisions of the Plan accordingly not be subject to change as to Employees or Participants represented by the Union, and otherwise as proposed. Apart from clarification of the status of its members in such particulars, it is possible the Union also had in mind the impairment of its status in the eyes of its members as well as other Company employees when, despite its having been chosen as the bargaining representative of its unit with a valid contract in full force and effect, Richfield nonetheless unilaterally and without notice to the Union, announced the Plan. The bland assertion that Richfield contemplated merely an opportunity for employees to invest in the Company’s stock would seem to fall short of its conclusion that The Plan is nothing more than that. (supra.)
Certain corporations in the oil industry have in the past several years bargained with unions representing their employees with regard to plans under which the employees may engage in stock purchase programs whereby they acquire stock in their corporate employer at terms more favorable than those available to the public generally because of employer contributions proportionate to the employees’ contributions to such stock purchase program. Neither Counsel for the General Counsel nor the Charging Party will offer or rely upon the foregoing fact as showing a practice, either in industry generally or in the oil industry of bargaining with respect to such plans; General Counsel and the Charging Party will offer the said fact and rely thereon, for the sole purpose of showing that there is precedent for such bargaining. (J. A. 14-15)
Richfield does not limit its argument to what the law will permit, to be sure. As to what the law will compel and to illustrate its point concerning non-bargainable proposals, Richfield cites situations involving closed shop provisions not in conformity with requirements of the Act, welfare and retirement fund proposals which unlawfully discriminate, demands for excessive union membership fees and certain featherbedding provisions. The quick answer is that what the Union sought to discuss was none of these things, and nothing like any of them. Of course employers will be protected in their legitimate rights, indeed the Board makes clear that the statutory representative cannot act, and the employer need not bargain with it, except as the representative of the employees as such. Moreover, if the Board should enter and thereafter seek enforcement of an improvident order, except as to a permitted bargainable issue, the courts are still here.5
There is involved no threat to Richfield’s maintaining the integrity of its own business ownership, the control of its own management and its own representatives free from union interference. Nor is there substance to the claim that the situation necessarily and inevitably involves bargaining about the conditions and prerogatives of ownership. Richfield in support of such contentions tells us, and cites cases6 to prove its point, that when Congress classified supervisors as a part of management, management itself and all management representatives were already beyond a bargaining duty imposed by the Act. On that premise the Board is assailed for its failure to assure management immunity from union interference. Somehow, the claim falls as short of reality as the cases cited fail to deal with the issue here.
In any event, the Union has asked nothing concerning managerial functions. The Plan is limited to open market share purchase. The maximum rate of employee contributions is 5 per cent of salary, yet there are some 4,000,000 shares outstanding, we are told. The bargaining the Union sought involves, not control of the Company, but status of the offer and of the employees who rely upon it. Richfield invites its employees to become stockholders whether they belong to this Union or not, and seeks to keep them as stockholders by withholding their deferred benefit of Company contributions until as to each employee, all conditions of the Plan shall have been met. To the extent that the Board may rely upon such provisions as stating a condition of employment and hence may establish one of the bases upon which its order rests, we think it is correct. Equally Richfield’s fears are ill-founded, we suggest, if the Company is correct in its representations to us that Richfield may terminate the entire plan at will. Section X, if it be controlling, and on this point we do not rule, in part expressly provides: The Board of Directors of the Company reserves the right to amend or terminate this Plan at any time.
Richfield seeks to pitch its argument on yet additional grounds which may be briefly noted. We are told that the duty to bargain collectively could not have been intended by Congress to cover a field as significant as that of stock acquisition and ownership. Aside from the fact that Congress never forbade such bargaining, the Company’s point is not of the essence of the issue before us. Our question is far more narrowly limited since Congress expressly has provided for collective bargaining with respect to wages and conditions of employment. To the Board has been left the determination as to what facts and circumstances spell out wages or what situations involve other conditions of employment. We will presently reach consideration of the case in those very terms.
Meanwhile we note the Company’s further claim that the Board’s order violates constitutional rights:
- by depriving the employer of freedom and liberty to contract concerning the disposition of its property in contravention of the
Fifth Amendment 7; - by superseding the individual employee’s freedom of contract by binding employees to purchase stock
(3) by transcending the authority delegated to the Board because as so exercised, the Board‘s power may be “so broad as to include the ownership of corporate employers,” all without “understandable limitations on its scope“; and besides, the Act as so interpreted, may “invade the field of legislation reserved to the States.”9
It requires no citation of authority to support the obvious, that in designating a bargaining representative, employees make their choice “for the purpose of negotiating the terms and conditions of their employment“.10 The Union here sought to speak only for its own bargaining unit, as the Act authorizes with respect to “rates of pay, wages, hours of employment, or other conditions of employment.” Under the Plan, only a limited, defined class of employees will be eligible to participate, but they must be employees. Their chance to receive from their employment an emolument to be contributed by the Company depends, not only upon their continued service in an employee status over a prescribed number of years, but upon their own contributions up to 5 per cent of their wages or salary. So what is “service” within the meaning of the Plan, or how “wages” shall be determined upon which to base the percentage of possible contributions, or how continuity of status is to be ascertained and preserved, or what effect there may be upon the employees’ rights to participate in future benefits in the event of strikes or lockouts, or whether a Union man on Union business may be on leave of absence, or whether “Company policy,” undefined, shall solely govern the effect of lay-offs upon the employees’ right to future benefits, or what relationship the “Company policy” in such matters shall bear to similar bargainable issues previously resolved in the outstanding collective bargaining agreement with the Union, and comparable problems, may become of great importance in cementing harmonious industrial relations between the Company and its employees. To achieve the purposes of the Act, resolution of issues on any such subject may well further the objectives Congress sought, although we do not decide, in the absence of a record on a particular point, that any special problem inevitably gives rise to a necessity for bargaining. The result in any such situation will depend upon the outcome of bargaining with reference to it, and complete agreement may follow negotiations.
The very fact that Congress has not defined “wages” or “terms” or “other
At least, without attempting to mark the outer boundaries of the meaning of the word ‘wages’ as used in the Act, or attempting to enunciate a generalizing principle for the decision of future cases, (generalization must await the accumulation of a body of decided cases pricking out the line between subject matters within the Act and subject matters outside its scope) we think it can safely be said that the word ‘wages’ in
§ 9(a) of the Act [29 U.S.C.A. § 159 ] embraces within its meaning direct and immediate economic benefits flowing from the employment relationship. And this is as far as we need to go, for so construed the word covers a group insurance program for the reason that such a program provides a financial cushion in the event of illness or injury arising outside the scope of employment at less cost than such a cushion could be obtained through contracts of insurance negotiated individually.11
So, too, we can here see that the deferred distribution program as outlined in the Plan offers emoluments of value comprehended within the term “wages,” and accrued from the employment relationship.12
Likewise, we agree with the Board opinion that the Plan comes within the “conditions of employment” category. It would add nothing to go beyond the views expressed by the Seventh Circuit:
Suppose that a person seeking employment was offered a job by each of two companies equal in all respects except that one had a retirement and pension plan and that the other did not. We think it reasonable to assume an acceptance of the job with the company which had such plan. Of course, that might be described merely as the inducement which caused the job to be accepted, but on acceptance it would become, so we think, one of the ‘conditions of employment.’ Every day that such an employee worked his financial status would be enhanced to the extent that his pension benefits increased, and his labor would be performed under a pledge from the company that certain specified monetary benefits would be his upon reaching the designated age. It surely cannot be seriously disputed but that such a pledge on the part of the company forms a part of the consideration for work performed, and we see no reason why an employee entitled to the benefit of the plan could not upon the refusal of the company to pay, sue and recover such benefits. In this view, the pension thus promised would appear to be as much a part of his ‘wages’ as the money paid him at the time of the rendition of his services. But again we say that in any event such a plan is one of the ‘conditions of employment.’13
Let an order enter accordingly.
WILBUR K. MILLER, Circuit Judge (dissenting).
I dissent because, in my opinion, the stock purchase plan is not a subject concerning which the Act requires collective bargaining. Cf. Board Member Beeson‘s dissenting opinion in this case, 110 N.L.R.B. at 366 (1954).