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

May 12, 1944


Author: Jones

Before JONES, and GOODRICH, Circuit Judges, and GANEY, District Judge.

JONES, Circuit Judge.

The National Labor Relations Board seeks an order adjudging Edward G. Budd Manufacturing Company (hereinafter referred to as "the Company") and Edward G. Budd, the Company's president, guilty of contempt because of their alleged violation of this Court's decree enforcing a Board order against the Company. The matter was argued and submitted on the Board's petition (whereon a rule to show cause issued in course) and the joint answer and amended answer of the Company and of Edward G. Budd individually. The contempt charge is made to rest upon the following circumstances.

As a result of a complaint proceeding duly instituted on charges made by the United Automobile, Aircraft and Agricultural Implement Workers of America (a C.I.O. affiliate hereinafter referred to as "the Union"), the Board found the Company guilty of unfair labor practices in that it (1) had dominated and interfered with the administration of Employees' Representation Association (hereinafter referred to as "the Association"), a labor organization admitting to its membership employees of the company, and (2) had discriminatorily discharged two employees because of their membership and activities in the Union. The unfair labor practices, so found, being violative of the National Labor Relations Act, 29 U.S.C.A. ยง 151 et seq., the Board accordingly entered an appropriate remedial order designed to abate the Company's unlawful conduct and to secure to its employees for the future the freedom of choice in their labor affiliations and activities which the law accords them.

Thereafter, upon the Company's petition at the above number and term, seeking to have the Board's order set aside, and upon answer thereto by the Board, praying a decree of enforcement, this Court sustained the Board's order (3 Cir., 138 F.2d 86) and entered a decree directing that the order be enforced. The decree appears in full in the addendum to this opinion.

In general, the decree directed the Company to cease and desist from the unfair labor practices, whereof it had been found guilty, and to take certain affirmative action including the posting of notices of its intention to comply. Immediately upon the decree's becoming operative (following the Supreme Court's denial of certiorari, 64 S. Ct. 619), the Company posted the required notices, disestablished the Association forthwith, fulfilled the requirements of the decree as to the two discharged employees and duly notified the Regional Director for the Labor Board of the steps thus taken to comply with the decree.

The Board concedes that the Company's compliance with the decree, as above stated, was both timely and adequate for the purpose and that there would be no question of a contempt were it not for two letters (rather a letter and an enclosure), on Company stationery, which Edward G. Budd, the Company's president, signed and mailed to each of the Company's employees contemporaneously with the posting of the notices by the Company. The letter and the enclosure in that order are shown in full in the addendum.

The letter indicated that the decree had become effective upon the Supreme Court's denial (February 28, 1944, 64 S. Ct. 619) of the Company's petition for a writ of certiorari and that thereby the Company was compelled to withdraw its recognition of the Association as the bargaining agent of its employees, which, as the letter went on to state, "places upon you and your fellow workers the responsibility of the future". The letter then suggested that the employees "may decide to: a. have no union at all in the plant, b. affiliate with an outside organization, c. form an independent union of your own." The letter further stated that: "In any event, yours is the freedom of choice. You should, however, not act without a complete knowledge of the facts concerned, and I am therefore setting forth in the attached pages a detailed statement for your consideration." The letter concluded by urging the employees to "read these pages carefully, and give them your mature deliberation before arriving at a decision."

The enclosure may justly be characterized as an undisguised and unmistakable effort on the part of Budd to impress the Company's employees with the fact that they were free to form a union of their own as well as to join an outside one and to argue to them the advantages, as he saw them, to be derived by the employees from a union of their own.

In the latter connection the enclosure cited, what Budd denominated, "10 years of industrial peace" in the Company's plants while the Association had served as bargaining agent and set forth figures to show the increases in wages in that period under contracts negotiated annually with the Company by the Association during which time the Company had not paid any dividends on its common stock and none on its preferred except for two quarterly dividends paid since the summer of 1943.The enclosure stated that the Association had been chosen over a local of the A.F. of L. as the employees' bargaining agent by secret ballot at an election in 1934 and that in 1941 the Union had "made an unsuccessful drive to induce the employees to desert" the Association and "to choose and pay dues to the C.I.O. Local as their bargaining representative" and that, at the same time, the Union had made the charge of Company domination of the Association which had resulted in the Board's order of disestablishment. The enclosure then stated that, since the Supreme Court had declined to take the case, "we will of course obey the Labor Board's order in good faith even though we still believe it to be wrong, unfair and contrary to the best interests of the employees."

The enclosure also admonished the employees that "You must now decide whether you want to have a bargaining agency, and if you do, whether it will be more to your advantage to choose one of the outside unions or, on the other hand, to form your own organization. This you have a perfect legal right to do." Then followed a quotation of Section 7 of the National Labor Relations Act in full. The enclosure expressed the Company's complete recognition of the right guaranteed employees by the Act and said that "membership in any organization that you may choose to join or to form will not affect the position or prospects in the Company of any employee." The employees were further told that it was not necessary for them "to join any particular labor organization", that there was no law requiring or compelling them "to pay dues or to join any organization" and that, if they decided to form an independent union, the Company, although entirely agreeable to the idea, "can and will do nothing whatever to assist you" but would recognize such an association when satisfied that it was properly formed and had the support of a majority of the employees.

The enclosure counselled the employees, when deciding their preference between an outside union and an organization of their own, to "make up your mind which form of representation will be better for you as an employee of this Company and which one will be more likely to enable your Company to operate most efficiently and continue to be able to pay you the highest wages" and concluded by posing the following questions. "To what kind of leadership are you going to entrust your future with this Company? Is it unselfish leadership, or is it not? Is it interested in your personal, individual welfare, or is it self-seeking? If an outside organization, on the basis of its past record is it open and above board and dependable, or don't you know? These are questions you should think about and talk over at home."

The Board contends that, in the circumstances obtaining, the implications to be taken from the argument contained in the letter and its enclosure in favor of an independent union, as contrasted with an outside union, constitute violations of paragraph 1 of the decree that the Company cease and desist from "(b) Dominating or interfering with the administration of, and contributing * * * support to, * * * any other labor organization of its employes" and "(e) In any other manner interfering with, restraining, or coercing its employees in the exercising of the right to self organization, * * * [and] to bargain collectively through representatives of their own choosing * * * , as guaranteed in Section 7 of the Act" and also of paragraph 2(d)(3) with respect to the notice that the Company's "employees are free to become or remain members of" the Union and that the Company "will not discriminate against any employee because of membership or activity on behalf of said labor organization."

The respondents reply (1) that the writings are privileged under the First Amendment as expressions of opinion, and that a lawful exercise of the privilege must necessarily lie beyond the intended scope of the decree and (2) that the exercise of the privilege was lawful because it involved no threats or acts of domination, coercion or intimidation nor was it otherwise violative of the rights guaranteed employees by Section 7 of the Labor Act.

Except for the letter and its enclosure there is admittedly no basis for a suggestion that either Budd or the Company have acted in contempt of this Court's decree. The Board's brief concedes that "respondent Company, on February 29, 1944, posted a notice substantially in accordance with the directions in paragraph 2(d) of the Decree * * * ". In fact, the notice contained a verbatim copy of the decree and the Company additionally and affirmatively engaged to carry out each and every of the requirements of the decree, specifically including the requirement not to "discriminate against any employee because of membership in or activity in behalf of" the Union. It is also a fact that, on the same day the notices were posted, the Company formally took open and affirmative action in withdrawal of all recognition from and in avowed disestablishment of the Association. And, coincidentally, the Company fulfilled the requirements of the decree with respect to the two discriminatorily discharged employees and duly notified the Regional Director for the Labor Board of the steps thus taken to comply.

We fail to see how the letter and enclosure standing alone can be thought to violate anything contained in the decree. Certainly, there is no direct prohibition in the decree purporting to restrain the employer or its officers or agents from entertaining opinions on labor matters or on any other subject or from giving such opinions free expression. Nor could the decree validly contain any such prohibition. "In the circumstances of our times the dissemination of information concerning the facts of a labor dispute must be regarded as within that area of free discussion that is guaranteed by the Constitution." See Thornhill v. Alabama, 310 U.S. 88, 102, 60 S. Ct. 736, 744, 84 L. Ed. 1093.

It can hardly be questioned that the constitutional guaranty protects the employer and the employee alike. Thus, to make known the facts of a labor dispute has been recognized as a constitutionally protected right of a member of a union. Senn v. Tile Layers Protective Union, 301 U.S. 468, 478, 57 S. Ct. 857, 81 L. Ed. 1229. And, in Midland Steel Products Co. v. National Labor Relations Board, 6 Cir., 113 F.2d 800, 804 it was appropriately said that "Unless the right of free speech is enjoyed by employers as well as by employees, the guaranty of the First Amendment is futile, for it is fundamental that the basic rights guaranteed by the Constitution belong equally to every person." Again, in National Labor Relations Board v. Lightner Pub. Corporation, 7 Cir., 113 F.2d 621, 626, the court said that "obviously the National Labor Relations Board has no authority to interfere with an employer's untrammelled expression of views on any subject." Cf. National Labor Relations Board v. Sterling Electric Motors, Inc., 9 Cir., 109 F.2d 194, 204. For like reason, a court, in enforcing a Labor Board order, lacks any such authority. The decree, therefore, is not to be construed as requiring something which it is beyond our power to direct.

The Wagner Act does not purport to authorize a restraint upon freedom of speech in any circumstances. "Nowhere in the National Labor Relations Act is there sanction for an invasion of the liberties guaranteed to all citizens [persons] by the First Amendment." See National Labor Relations Board v. Ford Motor Co., 6 Cir., 114 F.2d 905, 914, certiorari denied 312 U.S. 689, 61 S. Ct. 621, 85 L. Ed. 1126. Had there been any such provision in the statute, it would have been invalid as in contravention of the First Amendment. Midland Steel Products Co. v. National Labor Relations Board, supra, 113 F.2d at page 804; National Labor Relations Board v. Union Pacific Stages, Inc., 9 Cir., 99 F.2d 153, 178. Accordingly, it is our opinion that it was not the intention of Congress in the Labor Act to forbid an employer from expressing opinions as to labor unions or as to anything else so long as his expressions do not constitute, or contribute to, acts or threats of discrimination, coercion or intimidation in denial of his employees' free and untrammelled exercise of their rights as guaranteed by the Act. Cf. Jefferson Electric Co. v. National Labor Relations Board, 7 Cir., 102 F.2d 949, 956, quoting from National Labor Relations Board v. Union Pacific Stages, loc. cit. supra.

Because of the qualification just mentioned, an employer's right to speak freely concerning labor matters does not automatically carry with it freedom from responsibility for the reasonably foreseeable consequences of his utterances. Thus an expression may be actionable because of its direct, intended and unmistakable wrongful import or it may take on evidentiary value as revealing of the improper intent, motive or purpose of other conduct which, alone, might be ambiguous or equivocal. See National Labor Relations Board v. New Era Die Co., Inc., 3 Cir., 118 F.2d 500, 505 where, in answering the employer's contention that certain statements made by its management were privileged under the First Amendment, we said that "The fact that expression is free does not mean that the utterer may not be called upon to answer for it by way of being held accountable for the effect of his expressions." But that, in turn, does not mean that one's right to entertain opinions and to give them free expression may be peremptorily foreclosed for the future by either Board order or court decree.

Whether the constitutionally protected right of free speech has been abused by an expression of fact or opinion, so as to render the matter actionable as a violation of the Wagner Act, comes down to the question whether the assailed utterances constitute, or are in furtherance of, employer domination, coercion or interference in his employees' exercise of their legal rights. The inquiry, therefore, in any relevant connection is whether the challenged statements or opinions contain, or, in the circumstances, can reasonably be construed as containing, threats by the employer of discrimination or other coercive or intimidating action against some employees or an allurement of favoritism to others according to their respective labor affiliations or activities. If the utterances do so offend, then they are actionable, for the Wagner Act is aimed directly at such conduct and furnishes the effective means for its eradication.

We have then to examine the statements contained in the letter and enclosure in order to determine "whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent." Per Justice Holmes in Schenck v. United States, 249 U.S. 47, 52, 39 S. Ct. 247, 249, 63 L. Ed. 470.

Admittedly, neither the letter nor the enclosure contains any direct threat of loss of employment, discrimination or other act of intimidation or coercion. And, so far as concerns the implications, upon which the Board bases its case and which it would, perforce, have us arbitrarily and conclusively draw from the letter and the enclosure, it is also to be noted that the letter assured the employees that "yours is the freedom of choice" and the enclosure affirmed that "membership in any organization that you may choose to join or to form will not affect the position or prospects in the Company of any employee." But, the Board reminds us that "Slight suggestions as to the employer's choice between unions may have telling effect among men who know the consequences of incurring that employer's strong displeasure" (citing International Association of Machinists, etc., v. National Labor Relations Board, 311 U.S. 72, 78, 61 S. Ct. 83, 85 L. Ed. 50, and other cases) and asserts that the statements in the letter and enclosure that the employees are free to form a union as well as join one and the argument as to the benefits from a union of their own, inferred from the experience of the Association, amount to such suggestions.

We are unaware of any case where slight suggestions, standing alone, have been held sufficient to sustain even a finding of unfair labor practices (as distinguished from a finding of contempt).Cf. National Labor Relations Board v. Virginia Electric & Power Co., 314 U.S. 469, 478, 62 S. Ct. 344, 86 L. Ed. 348, and National Labor Relations Board v. American Tube Bending Co., 2 Cir., 134 F.2d 993, 995, 146 A.L.R. 1017, certiorari denied 320 U.S. 768, 64 S. Ct. 84. It will be observed that, when the Virginia Electric case went back to the Supreme Court (319 U.S. 533, 539, 63 S. Ct. 1214, 1218, 87 L. Ed. 1568), "the bulletin * * * and the speeches" had by then been "considered [by the Board] not in isolation but as part of a pattern of events adding up to the conclusion of domination and interference." Yet, in the case of unfair labor practices, merely civil ...

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