Morand Brothers Beverage Co. et al.

National Labor Relations Board - Board Decisions

Jun 30, 1952

99 N.L.R.B. 1448 (N.L.R.B. 1952)

1448 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
MORAND BROTHERS BEVERAGE CO. ET AL . and DISTILLERY, RECTIFYING
AND WINE WORKERS INTERNATIONAL UNION OF AMERICA, A. F. L.
Case No. 13-CA-450. June 30,1962
Supplemental Decision and Order
On September 25, 1950, the Board issued a Decision and Order in.
this case,' finding that the employers involved' in this remand pro-
ceeding, hereafter called the Petitioners, and Old Rose Distributing
Co., had discriminated in regard to the employment of their sales-
men in violation of Section 8 (a) (3) and (1) of the National Labor
Relations Act, as amended, and ordering, among other things, that
the Petitioners and Old Rose make the salesmen whole for any loss
of pay they had suffered by reason of such discrimination. A peti-
tion for review of this Decision and Order was -filed by the Petitioners
and Old Rose in the United States Court of Appeals for the Seventh
Circuit. A cross-petition for enforcement of the Order was filed by
the Board.
On July 28,1951, the court enforced the Board's Decision and Order
only insofar as it related to Old Rose. As to the Petitioners, the court
remanded the case with directions for the Board to :
Make a clear and explicit finding on the question whether the
severance of the employer-employee relation between the various
petitioners (other than Old Rose) and their respective salesmen
was intended to be temporary or permanent and, if intended to
be temporary in character, in view of the Board's further consid-
eration, whether it was made for the purpose of "interfering or
coercing employees in the rights guaranteed to them by Section
7" or as a legitimate exercise of petitioners' economic remedies,
and, if permanent, whether, in the light of the principles an-
nounced in this opinion, a back pay award would tend to effectuate
the policies of the Act.2
On August 27, 1951, the court granted a motion by Petitioners for
leave to adduce additional evidence, in respect to whether
Petitioners locked out, suspended, laid off, or discharged their
salesmen, as to whether it was made for the purpose of interfer-
ing with or coercing the salesmen in their rights under Section 7
of the National Labor Relations Act, as amended, or was a legiti-
mate exercise of petitioners' economic remedy... .
On September 5, 1951, the Board ordered the record reopened and
a further hearing held "for the purpose of taking such additional
1 91 NLRB 409.
z Morand Brothers Beverage Co V N. L R B., 190 F. 2d 576 (C A. 7)
99 NLRB No. 55.
MORAND BROTHERS BEVERAGE CO. ET AL. 1449
evidence and of making such additional findings." Pursuant thereto,
a, hearing was held before Trial Examiner J. J. Fitzpatrick in Chi-
cago, Illinois, from October 29 to November 2, 1951, inclusive.. The
General Counsel, the Petitioners, and the Union were represented by
counsel; and all were afforded full opportunity to be heard, to examine
and cross-examine witnesses, and to introduce evidence bearing on the
issues. After the conclusion of the hearing, briefs were received from
the General Counsel, the Petitioners, and the Union. The Board has
reviewed the rulings made by the Trial Examiner at the hearing and
finds that no prejudicial error was committed. The rulings are hereby
affirmed.
On January 22, 1952, the Trial Examiner issued a Supplemental
Intermediate Report, copies of which were duly served upon the
parties, and a copy is attached hereto. He found that the Petitioners
did not intend to effect a permanent severance of their relations with
their salesmen, but only a severance for the duration of their dispute
with the Union. He found further that the purpose of such tem-
porary severance (or "lockout") was to interfere with, and coerce the
employees.in, the exercise of rights guaranteed by Section 7 of the
Act and to discriminate as to their hire and tenure of employment
because of membership in the Union, and that such lockout was not a
legitimate exercise of Petitioners' economic remedies.
The Petitioners, the Union, and the General Counsel filed exceptions
to the Supplemental Intermediate Report, together with supporting
briefs. The Board has considered the Supplemental Intermediate
Report, the exceptions and briefs, and the entire record in the case,
and hereby makes the following supplemental findings, conclusions,
and order :
1. WAS THE SEVERANCE OF THE EMPLOYMENT RELATION BETWEEN THE
PETITIONERS AND THEIR RESPECTIVE SALESMEN INTENDED TO BE TEMPO-
RARY OR PERMANENT ?
This was the first issue on which the court instructed the Board to
make an express finding.
It is always difficult to ascertain from evidence of surrounding cir-
cumstances and testimony given after the fact what the subjective
intent of individuals was in doing what they did. In the particular
context in which the problem is presented in this case these difficulties
are magnified. To ascertain whether in severing the employment of
their employees on April 7, 1949, the Petitioners intended at that time
to effect a permanent discharge or a temporary layoff we have had to
consider evidence of what was said and done at that time, as well as
what occurred thereafter, and the testimony on the record before us
of witnesses who at the hearings attempted to describe the intent that,
1450 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
motivated the action that was taken some time before. No one of
these phases of the evidence is necessarily conclusive, nor are all equally
trustworthy as indicia of the Petitioners' intent on April 7.
We have carefully weighed all of the evidence bearing upon this
issue adduced in the original proceeding in this case and in the hearing
after remand, accepting the Trial Examiner's resolutions of the
credibility of witnesses, whenever such resolutions have been made,
and giving due weight to his findings in the Intermediate Report and
Supplemental Intermediate Report. We are persuaded that the evi-
dence preponderates in favor of a finding that in severing their sales-
men on April 7, 1949, the Petitioners intended the severance to be
a permanent discharge and not a temporary layoff.
The Petitioners and Old Rose Distributing Company were members
of a multiemployer groups which had since 1943 bargained jointly
with Local 62 of the Union. On April 6, 1949, after an impasse was
reached in negotiations for a renewal of the collective bargaining
agreement, Local 62 called a strike against Old Rose. On April 7,
all the Petitioners and Old Rose sent a letter to all of their sales-
men, about 800 in number. That letter, which is set forth in full in
Appendix A attached hereto, stated that the employers in question
considered the strike by the salesmen of Old Rose to indicate a deci-
sion by the salesmen (all of whom were members of Local 62) to
strike all the Petitioners, and that this was a course of action the
Petitioners could not permit. The letters then directed the salesmen to
turn in any records, papers, credentials, and moneys belonging to the
Petitioners, and settle any existing financial differences. Many of the
salesmen failed to report for work ; others reported but were not
permitted by their employers to work. Thereupon, the salesmen pick-
eted the Petitioners until May 6, 1949, carrying placards which said
"Locked out and Discharged." On May 6 the dispute was settled by
negotiations between the. Petitioners and the Union, and all the sales-
men were reemployed.
The letter of April 7 itself strongly suggests an intent to discharge
the salesmen. There is no reference in the letter to any future con-
tingencies, and no attempt is made to describe the Petitioner's action
in directing the salesmen to turn in their records and settle their
accounts as temporary in nature. Moreover, the uncontradicted testi-
mony of salesmen testifying in the remand hearing 4 establishes that,
according to custom and practice in the industry, such instructions
were normally synonymous with, a discharge rather than a temporary
layoff.
8 This group comprised members of two associations : The Illinois Wholesale Liquor
Dealers- Association and the Chicago Wholesale Liquor Dealers Association.
4 The testimony of Allen Schultz , which is set forth below , is to the same effect.
MORAND BROTHERS BEVERAGE CO. ET AL. 1451
But even if there is any ambiguity in the language of the letter,
there is no such ambiguity in what was said and done to individual
salesmen immediately after the April 7 letter. As already stated, a
number of the salesmen who reported for work were not permitted to
work and, at the original hearing in this case, salesmen of eight of
the Petitioners testified without contradiction that they were told by
management that the April 7 letter constituted a discharge b
Significantly, at the original 1949 hearing in this case the Petition-
ers did not contend that their action of April 7 amounted to no more
than a temporary layoff of the salesmen. On the contrary, the Peti-
tioners' brief filed with the Trial Examiner after the original Board
hearing characterized the action of the Petitioners as a "discharge [of
their salesmen] in accordance with a prearranged plan"; and argued
on the theory that the discharge was lawful because the salesmen were
engaged in unprotected activity. At the original hearing the president
of Old Rose testified that the purpose of all the employers was to
"dismiss" the salemen for striking Old Rose. The only time the
contention was made in the original hearing that the April 7 action
constituted a layoff was in an amicuus brief filed with the Board by an
association which was not a party to the proceeding. Not until the
remand hearing, when the Petitioners were put on notice by the de-
cision of the court of appeals that the, action of April 7 might be de-
clared lawful if it were found to have constituted a temporary lay-
off, did the Petitioners attempt to demonstrate that the action
amounted only to a layoff.
This sudden shift in the position of the Petitioners on the factual
issue now under consideration renders suspect the testimony of 11
of the Petitioners at the remand hearing that no discharge was in-
tended.' Under all the circumstances, we are compelled to conclude
that these self-serving declarations are heavily outweighed by the
contrary evidence to which we have already referred, as well as that
which follows. •
The strongest evidence which supports the conclusion that the Peti-
tioners on April 7 intended to effect a discharge of their salesmen
appears in the testimony of Allen Schultz at the remand hearing.
During the negotiations between the Union and the Associations which
culminated in the Old Rose strike of April 6, and for some time there-
after, Schultz had been general counsel of one of the two employer
associations involved herein-The Chicago Wholesale Liquor Dealers
E There was contrary testimony by certain of the Petitioners testifying at the remand
hearing For the reasons stated below we do not give controlling weight to this testimony.
The Trial Examiner did not advert to this testimony in his Supplemental Intermediate
Report.
•
1452 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Association.7 The other association-The Illinois Liquor Dealers
Association-had been represented in the prestrike negotiations by
Samuel Golan, who was counsel of record for all the Petitioners in the
instant proceeding. Schultz testified that sometime before the Old
Rose strike he discussed with Golan what action to take if the Union
struck one of the Petitioners, and that he was present at the meeting of
the Petitioners on April 7, at which it was determined to send out the
letter of that date.8 On direct examination, at the remanded hearing,
Schultz testified as follows concerning the April 7 letter.
Q. Now, was this particular subject of the letter discussed at an
association meeting or association meetings?
A. I would say before this letter was sent out there were meet-
ings between the Chicago Wholesale Liquor Dealers, and the
Illinois Wholesale Liquor Dealers in the offices of Mr. Golan.
*
Q. Was there a plan made at these meetings?
A. I would say that from the first meeting on.... there was
a definite plan with regard to this particular controversy.
Q. What was that plan?
A. That plan was definitely not to create a lockout. I use that
word, because that is the word that we used. The plan at that
time was to create a legal discharge. The word "lockout" was
feared by . . . those in control of the controversy 'for the side
of the employer.
I would say . . . that the object was to get as close to a dis-
charge as possible, and as a result I believe, I firmly believe, I
recall that we were insistent that the employers receive from the
• employees all of their paraphernalia, all of their books and rec-
ords, and anything that had to do with establishing a relation-
ship between the employer and the employee. The purpose of
that was to follow the plan of not having a lockout but rather a
discharge. [Emphasis supplied.]
Thus on direct examination Schultz made it clear that the Peti-
tioners definitely were aware of two alternatives-a temporary layoff
'The record indicates that Schultz continued to represent the Chicago Association at
least until about a week before the dispute was settled, and that at the time of the remand
bearing he was still counsel for some of the individual Petitioners He did not , however,
appear for any of the Petitioners in the instant proceeding . He was subpenaed by the
General Counsel to testify at the remand hearing.
8 The letter had already been drafted by Golan and copies had been signed by the Peti-
tioners in anticipation of the subsequent events.
6
MORAND BROTHERS BEVERAGE CO. ET AL. 1453
(which they had labeled a "lockout") and a permanent discharge, and
that they chose the latter course.
On cross-examination of Schultz by Golan, the record shows the
following :
Q. Mr. Schultz, you do remember that we said we did not
desire to create a lockout . . . ?
A. Yes.
Q. You do remember that the reason for it was that we did
not want to commit an unfair labor practice . . . ?
A. Yes.
Q. And we were very careful in drafting the letter, and you
commented on it . . . saying, "Sam, I don't think anybody can
say that we tried to lock anybody out"?
A. Right.
Q. Was it our purpose to take these salesmen back when the
strike was over?
A. I would say that we had discussions at that meeting that
maybe-well, I would say that you had discussions about maybe
not having a union and breaking the union.
Q. Now, that is not the question, . . . I asked if it was not our
intention to take the salesmen back when the strike was over?
A. Well, I think when this particular controversy was at its
height, that the thought of the organization was that maybe you
could do as you pleased after the strike was over, take them back
or not take them back.
Q.... the time we wrote the letter of April 7, was it not our
intention to take the men back when the strike was over?
A. I would not know whether it was. I know that we were
trying to establish a legal discharge and doing it very, very sin-
cerely.
*
Q. You mean that we discussed and said that a legal discharge
at that time . .. was legal , but we thought a lockout was not legal?
A. We thought at that time that a lockout would be illegal, but
that a discharge-we have a right to hire and fire our help-that
that would be legal.
Q. You are sure of that.
A. Yes. [Emphasis supplied.]
Despite the Petitioners ' efforts to shake Schultz' clear testimony on
direct , examination , the cross -examination of Schultz served only to
strengthen the definiteness of his statements as to the nature of the
severance of the salesmen . He made it plain that the plan of the
1454 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Petitioners, translated by their counsel into the letter of April 7, was
to discharge the salesmen and not to lay them off temporarily ; that this
was done to "break" the Union, and thereby to leave the Petitioners
free to decide after the strike was over whether or not to rehire the
salesmen.
We can perceive no reason why this unequivocal testimony of
Schultz should not be credited as an accurate description of what the
Petitioners had in mind .9 It was given by one who, while no longer
counsel for either of the associations, is still counsel for some of the
individual Petitioners. The testimony is against their, and his, inter-
ests. It is the testimony of an attorney who, perhaps more than the
average lay witness, is apt to be particularly conscious of the obliga-
tions of his oath as a witness. Moreover, as an attorney, experienced
in the field of labor relations, his description of the intended nature
of the severance of the salesmen is not weakened by the fact that such
a description is-in part at least-a description of a legal conclusion.
It is reasonable to assume that when Schultz distinguished between a
discharge and a lockout, he was familiar with the factual content of
each of those terms io
We are therefore constrained to rely on Schultz' testimony, particu-
larly as that testimony is supported by the other direct evidence de-
scribed above. Taken together, all of this evidence persuades us that
on April 7, the Petitioners intended to discharge the salesmen.
In reaching this conclusion, we have fully considered all of the
circumstantial evidence disclosed by the record, on the basis of which
the Trial Examiner reached a result different from ours. We are of
the opinion, however, that these factors, considered individually or
together, are outweighed by the direct evidence upon which we have
relied. Because of the fact that many of these items of circumstantial
evidence were regarded as controlling by the Trial Examiner, we shall,
in all fairness, set forth our views with respect to that evidence in
detail :
1. It is contended that the view that the Petitioners intended a
layoff rather than a discharge is strongly supported by the fact that
during the entire period of the dispute no replacements for the sales-
men were hired. However, this contention assumes that in this indus-
e The Trial Examiner credited Schultz with respect to his testimony that the instruc-
tions in the Petitioners' letter of April 7 were intended to establish a discharge. He
made no reference , however , to the remainder of Schultz ' testimony.
IU The same cannot necessarily be said of the self-serving statements of the 11 Peti-
tioners who testified that they did not intend to discharge the salesmen , which testimony
we have discussed above A further demonstration of the inherent unreliability of such
testimony appears in the testimony of Wayne, who was president of one of the Petitioners
during March and April 1949 and was present at several of the meetings of the Associa-
tion before and on April 7. He testified that an agreement was reached to "discharge"
the salesmen , but that it was the intent of the Petitioners to reinstate the salesmen when
the dispute was over.
MORAND BROTHERS BEVERAGE CO. ET AL. 1455
try, and under the circumstances that prevailed at the time, it would
have been practicable to hire replacements in case of a mass discharge,
but that it would not have been feasible to do so in case of a layoff.
But this assumption is untenable. It may be true that replacements
would be more difficult to recruit if they had no assurance of steady
employment, and to that extent there would have been practical
obstacles to replacing the salesmen if the Petitioners intended on April
7 voluntarily to reinstate all their salesmen after the dispute ended
and could therefore offer to replacements- no security of tenure. On
the other hand, under the particular circumstances that prevailed, it
seems clear that even if the Petitioners, as we believe, intended a
discharge on April 7, they were not in a position conscientiously to
offer to replacements any greater security of tenure.
They were aware that the salesmen were picketing their premises
in protest against the April 7 action," and that the Union on April 12
had filed with the Board charges that the April 7 'action constituted
an unfair labor practice. It was by no means certain that the Peti-
tioners would be able to resist these pressures upon them to reinstate
the salesmen en masse. Under these circumstances, they could 'offer
to replacements no bona fide assurance of employment for any definite
period.
Moreover, even if replacements could have been obtained despite this
insecurity of tenure, the Petitioners would have encountered difficulty,
in the case of a discharge, as in that of a layoff, in obtaining trained
replacements outside the ranks of the strikers.12 It is not contended
that any other source of trained replacements was available. It would
not have been prudent to hire untrained replacements, in view of the
lack of certainty that. they would be employed even long enough to
warrant the expense of training themis
For all these reasons, we do not regard the failure to replace the
salesmen as necessarily indicative of an intent on April 7 to lay off
rather than discharge. That fact is equally consistent with a finding
that the April 7 action was intended to operate as a permanent sever-
ance, the Petitioners at the same time, or shortly thereafter, recog-
nizing that they might be compelled by economic pressure, including
the desirability of terminating possible back-pay liability, to reinstate
all the discharged salesmen.
2. It is further contended that the fact that all the salesmen were
ultimately reinstated in May 1949 is conclusive evidence that a layoff
rather than a discharge was intended.
"As already stated, the pickets carried signs bearing the legend : "Locked out and
Discharged."
11 No Petitioner could have recruited salesmen from among the strikers without breach-
ing the Associations ' policy of presenting a united front against the Union.
11 Several of the Petitioners testified , without contradiction , concerning the difficulty
and expense of developing competent salesmen.
1456 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
However, this contention, like the one just discussed, is bottomed
on an erroneous assumption-the assumption that discharged em-
ployees are never rehired. But discharged employees are frequently
reemployed for a variety of reasons. (Cf. N. L. R. B. v. Fansteel
Metallurgical Corp., 306 U. S. 240, 259.) Circumstances change, and
with such changes a course of action previously decided upon may be
abandoned or modified. Here the Petitioners, as already stated, were
subject to various pressures to rescind their action of April 7. The
salesmen were engaged in militant picketing in protest against that
action. Their loyalty to the Union was unwavering. It must have
become apparent to the Petitioners that under these conditions their
only alternative was reemployment of all the salesmen or none. The
latter course meant indefinite prolongation of the dispute with the risk
of incurring burdensome back-pay liability, should it be determined
in the proceeding then pending before the Board that the April 7
action violated Section 8 (a) (3) or (1) of the Act 14 It seems there-
fore as reasonable to suppose that the later mass rehire was prompted
by these pressures, as that Petitioners intended at the earlier date of
the April 7 action to reemploy all the salesmen as soon as the dispute
was settled. That the rehire of all the salesmen is equally consistent
with a finding that the April 7 action was intended as a discharge, is
further supported by the fact that all the Old Rose strikers, as to
whom the court of appeals sustained the Board's finding of a dis-
charge, were also reemployed.
3. Evidence was adduced at the remand hearing that certain of the
Petitioners had friendly relations with individual salesmen during the
dispute. This is urged as further evidence that on April 7 the Peti-
tioners intended to reinstate the salesmen. Thus, during the picketing,
several of the Respondents engaged the salesmen in conversations, in
which both parties expressed a desire for the dispute to end. Three of
the Petitioners made loans to a total of 13 salesmen out of the 800
involved. One of the Petitioners helped a salesman to obtain other
employment.
However, even if viewed in the most favorable light, these isolated
incidents, involving only an insignificant proportion of the disputants
and occurring at various times after April 7, are entitled to little
weight as evidence of the intent of all the Petitioners on April 7. At
the most, they indicate only that some of the Petitioners were favor-
ably disposed to certain of the salesmen and would have rehired them,
14 As already stated , a charge was filed by the Union on April 12 , 1949, and a complaint
was issued by the General Counsel on May 4, 1949 , only a few days before the dispute was
settled and the salesmen reemployed . Schultz , counsel for one of the employer associa-
tions involved herein, testified at the remand hearing that during the dispute he warned
his clients of the danger of their incurring back-pay liability as a result of the April 7
action.
MORAND BROTHERS BEVERAGE CO. ET AL. 1457
in any event, whether they had been laid off or discharged. These
incidents fall far short of demonstrating that any one of the Peti-
tioners intended at the time of the severance to reemploy all its sales-
men after the dispute ended, but is consistent with the view that they
intended, as in the case of any mass discharge, to pick and choose
among the salesmen after the Union capitulated and the Petitioners
were in a position to rehire the salesmen on their own terms.
The evidentiary weight of these friendly contacts is further weak-
ened by other incidents during the dispute indicative of bad feeling
between the parties. Civil and criminal proceedings were instituted
by some Petitioners based on alleged disorderly conduct by pickets.
4. The failure of the salesmen to seek other employment is another
factor which is urged as evidence that they were not discharged.
Apart from any other considerations, this contention fails for want of
any real proof. The record of the remand hearing shows that one
of the salesmen sought other employment during the dispute. The
record of the original hearings shows that 6 of the salesmen who testi-
fied at that hearing either registered for other employment or made
independent efforts to obtain work. What efforts the rest of the sales-
men made to find other jobs does not appear from either record; this
question was not fully litigated. But, even if it be assumed that none
of the other salesmen sought employment during the dispute, it does
not necessarily follow that their inaction was prompted by any assur-
ance of reinstatement given them by the Petitioners, or by any con-
struction by them of the April 7 letter as a layoff rather than a dis-
charge. 5 Most, if not all, of the salesmen may well have been con-
vinced of the futility of seeking another job as a liquor salesman, in
view of the simultaneous shutdown of 35 wholesalers and the fact
that they would have to compete for such jobs as were available with
the 800 other liquor salesmen . Rather than seek employment in a
different line of work, in which they had not training or experience,
the salesmen may well have preferred to cooperate in exerting pres-
sure through picketing to obtain reemployment in their former
employment.
5. At the remand hearing, 6 of the Petitioners testified that dur-
ing the dispute they continued to pay premiums for group hospitali-
is Moreover, any understanding on the part of the salesmen as to whether they were
discharged would not be conclusive evidence of what the Petitioners intended by the
April 7 letter . For that reason we attach little significance to the testimony of several
of the Petitioners at the remand hearing that some of the salesmen expressed concern for
the dispute to end so that they could return to work. These statements do not, in any
event, necessarily reflect an understanding by the salesmen that they had not been dis-
charged. They could equally well reflect a hope that, although they had been discharged,
the Petitioners would be induced by economic pressures to rescind their action. A better
indication of what the salesmen thought their status was-if that be relevant-is the
legend inscribed on the picket signs "Locked out and Discharged."
1458 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
zation insurance covering their salesmen. However, as these premi-
ums, which were paid for the month of April, were deducted from
commissions earned by the salesmen before April 7, and were not
employer contributions, we can attach no significance to these pay-
ments as evidence that the Petitioners regarded the severance only as
temporary.
6. Equally without merit is the contention that clear evidence of an
intent not to discharge the salesmen appears in the fact that the Peti-
tioners during the dispute continued to make contributions to a health
and welfare fund administered by the Union on behalf of the sales-
men. These payments were made for the month of April pursuant
to a trust agreement, which, by its terms, did not expire until April 30,
1949.16 This agreement required monthly contributions for each em-
ployee to be paid in advance by the employer on the 5th of each month.
While in some, if not all, cases,17 the payments were actually made
after April 7, the date that the salesmen were severed, it would seem
that, under the terms of the contract, liability for the April payments
accrued on April 5 with respect to each salesman then on the payroll,
and without regard to any later separation of such salesman. It may
well be, therefore, that the action of the Petitioners in continuing
these contributions was dictated by the foregoing construction of the
contract, rather than by the view that the salesmen were merely in a
suspended status.
- 7. It is not disputed in the record that, in the vernacular of the in-
dustry, the instruction to the salesmen in the April 7 letter to turn
in their books and records denoted a discharge. However, some of
the Petitioners testified at the remand hearing that several salesmen,
in fact, failed to turn in their records, and that no effort was made
by these Petitioners to induce them to do so. On the other hand, there
was uncontradicted testimony at the hearing that many, salesmen did
in fact turn in their records, and that in a letter of April 18, 1949,
the Petitioners advised the salesmen that commissions due them had
been computed and would be paid as soon as they turned in their
records. With the evidence in this posture, it is impossible to draw
any reliable inferences from the failure of some of the salesmen to
turn in their records.
8. It has been suggested that the good will developed by the sales-
men through their personal contacts with customers over a long period
of time was an important asset to the Petitioners, and that they would
'" This agreement, although referred to therein, was not physically a part of the main
collective contract, which expired March 15, 1949, but was a separate document, sepa-
rately executed by each Petitioner.
P The relatively few Petitioners who testified concerning these payments stated that
they were made at various dates after the April 7 severance. There was no evidence as to
the dates of payment by the other Petitioner!.
MORAND BROTHERS BEVERAGE CO. ET AL. 1459
therefore be reluctant to destroy this asset and lose these customers
by a permanent severance of all their salesmen. However, the Peti-
tioners were confronted with a demand by the Union for increased
commissions, which they asserted in their letter of April 7, and in
bargaining negotiations, they could not grant without courting
"economic disaster." 18 In any event, it is clear that to grant this de-
mand would have meant a substantial increase in their operating
costs. This consideration might well have outweighed in the mind
of the Petitioners the cost to them of losing those customers, if any,
who dealt with them only because of the customers' personal liking
for a particular salesman. Moreover, as we have pointed out above, a
decision to discharge all of the salesmen on April 7 was by no means
inconsistent with a decision to rehire some of them later. By dis-
charging all their salesmen, the Petitioners would not preclude them-
selves from rehiring as new employees, and on their own terms, those
salesmen who had an important personal following in the trade.
Finally, any competitive disadvantage that an individual Peti-
tioner might have incurred had he acted alone in discharging his ex-
perienced salesmen, was offset by the fact that virtually all his com-
petitors, the other Petitioners, had placed themselves in the same
position.
9. At the remand hearing the Petitioners put in evidence a form
letter sent by them to the salesman on April 27 and May 3, 1949,
severely criticizing the strike strategy of the union officers, disparag-
ing their treatment of union members, deploring the plight of the
salesmen, and placing sole responsibility therefor on the Union. How-
ever, these letters do not expressly disclaim any intention to discharge
the salesmen or offer them any concrete assurance of reemployment.
The content and timing of these letters are entirely consistent with
a strategy of driving a wedge between the salesmen and the Union,
in the hope of inducing the salesmen to desert the Union, which was
demanding their reemployment, and to apply for their jobs as new
employees, whom the Petitioners could accept or reject as they saw
fit.
These letters are also explicable on the ground that, although intend-
ing by their April 7 action to effect a permanent severance, the Peti-
tioners between that date and April 27 might have reconsidered "their
decision and determined to rehire all the salesmen,19 and had written
"This letter states further that Petitioners had exhibited to the Union financial state-
ments prepared by certified public accountants demonstrating inability to pay any in-
crease in commission rates, and that the Union admitted that any such increase would
force a large number of Petitioners to go out of business.
19 In this connection, it is significant that on April 18, only 9 days before the April 27
letter, the Petitioners by letter, as already noted, in effect renewed their demand that
the salesmen return their books and records, thereby reiterating the "discharge formula"
of the April 7 letter.
1460 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the letter in the hope that the salesmen would exert pressure on the
Union to make economic concessions to the Petitioners in the settle-
ment negotiations.
At the risk of unduly burdening this opinion, we have set forth our
views with respect to these various facets of evidence on the first
issue posed by the court of appeals in considerable detail. Careful con-
sideration of the entire record in this case persuades us that the Re-
spondent on April 7 intended to effect a permanent, and not a tem-
porary, severance of their salesmen , and we unanimously so find. We
further find that such mass discharge was in reprisal for the Old Rose
strike called by Local 62, of which the salesmen were members, and
in reprisal for the threat of Local 62 to strike the Petitioners, them-
selves; that it was calculated to discourage membership in, and to
destroy, Local 62; and that the Petitioners thereby violated Section
8 (a) (3) and 8 (a) (1) of the Act.
II. IF THE SEVERANCE OF THE SALESMEN WAS INTENDED TO BE TEMPORARY,
WAS IT MADE FOR THE PURPOSE OF INTERFERING WITH OR COERCING THE
EMPLOYEES IN THE EXERCISE OF THEIR RIGHTS GUARANTEED BY SECTION
7 OF THE ACT, OR DID IT REPRESENT A LEGITIMATE EXERCISE OF PETI-
TIONERS' ECONOMIC REMEDIES?
This is the second issue which the court of appeals has directed us
to consider. The Board having found as a fact that the severance was
not intended to be temporary, it is not strictly necessary for purposes
of our decision to consider this issue. Chairman Herzog dissents from
his colleagues' action in passing upon it at all 2°
However, a majority of the Board finds that, even if it be assumed,
arguendo, that the severance of the salesmen on April? was intended
only to be temporary, it was not a legitimate exercise of Petitioners'
economic power, but was effected for the purpose of interfering with
and coercing the salesmen in the exercise of their statutory rights.
The majority reaches this conclusion for two reasons: First, because
we are satisfied from the evidence in this case, as was the Trial Exam-
iner, that, even if the Petitioners' action of April 7, 1949, was intended
to constitute a temporary layoff, its clear purpose was not merely to
break the impasse in bargaining, but to penalize the employees for
striking and threatening to strike and to destroy Local 62, and, as
such, violated Section 8 ( a) (3) and 8 (a) (1). Second, with all
due respect to the contrary view expressed by the court of appeals
in this case, the Board majority believes that even if it were true
that the sole purpose of the layoff was to break an impasse in bargain-
20 Therefore , although he is signing the Board 's decision , Chairman Herzog does not
join in either the language or the conclusions contained in the ensuing portion of this
opinion , relating to the illegality of the Petitioners ' action if regarded only as a "layoff."
Whatever views or doubts he may have on that subject are reserved for a more appro-
priate case.
MORAND BROTHERS BEVERAGE CO. ET AL. 1461
ing, that fact would not privilege the lockout or layoff of the salesmen.
We shall consider these two points separately.
A. The Petitioners' purpose in severing the salesmen
Like the Trial Examiner, we find no evidence whatsoever in the
record which would indicate that the purpose of the severance of
the salesmen on April 7 was to obviate difficulties in the operation of
the Petitioners' businesses likely to result from the anticipated strike
against Petitioners.21 Nor can it be said in this case that the Peti-
tioners were seeking to bring a kind of temporary economic pressure
on the Union and its ipembers-akin to a strike by a union against an
employer-in order to break the bargaining impasse and resolve the
disputed issues in a manner favorable to the Petitioners. For even
if it be assumed that the severance of the salesmen was temporary,
there is no basis for assuming that the intended effect on the Union was
such. The testimony of Schultz set forth above makes that clear. He
testified that the Petitioners embarked upon their course of action
after discussions which contemplated "not having a union and break-
ing the union." On the record as a whole, we find that the purpose of
the severance of the salesmen-even if it be viewed as a temporary
layoff-was to punish the employees for the Old Rose strike and the
apprehended extension of the strike to the Petitioners, in order to
persuade the employees of the folly of the action taken by their
Union; to cause disaffection from the Union, and thereby to destroy
that Union.
Even if we were to assume, as Petitioners contend, that a lockout
solely for the purpose of breaking an impasse could be lawful, when
such a purpose is coupled, as it is here, with the unlawful aim of "not
having a union and breaking the union," the employer's conduct would
necessarily be illegal in toto.
B. A lockout contrasted ,with a strike
However, as stated above, our decision in this case goes beyond the
particular facts which show that the purpose of the Petitioners in
severing the salesmen was to undermine Local 62. In our view a
temporary layoff (i. e., lockout) of the salesmen would have been
unlawful, even if it were true that its purpose was to bring temporary
economic pressure on the Union and its members solely in order to
break the bargaining impasse.
At the outset, it must be admitted that the argument that the right of
employers to lockout is a necessary corollary of the right of employees
to strike, has a kind of superficial appeal, an aura of fairness. We
believe, however, that more careful examination of the implications
of this argument discloses its inherent defects.
Cf. Betts Cadillac Olds, Inc, 96 NLRB 268.
215233-53-93
1462 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
If we were to equate lockouts with strikes generally , as the court of
appeals suggests at one point in its opinion,22 we would be forced into
an untenable position.
As a union, absent a no-strike agreement, may call a strike at any
time for conduct of the employer detrimental to the interests of the
employees, it would necessarily follow, under this view, that an em-
ployer may lock out his employees at any time as a retaliatory measure
against any conduct of his employees, concerted or otherwise, which
is detrimental to his interests. This would mean that an employer
would be privileged to lock out his employees in order to defeat their
organizational activities, to assist a company-dolziinated union, to pun-
ish them for past strike activity, to discourage them from joining a
union, to force the withdrawal- of bargaining demands even before
an impasse is reached, or for any other reason. Thus, it is clear that
we could not unqualifiedly equate lockouts with strikes without giving
the employer a license to engage in conduct which the Board and the
courts have heretofore uniformly considered to violate the various
provisions of Section 8 (a) of the Act.
It may be urged, however, that, while an employer does not ordi-
narily have a right to lock out, such a right does come into existence
once he has bargained with a union to an impasse . We believe that this
position is equally untenable under Section 8 (a) (3) and 8 (a) (1)
of the Act and finds no real support in Section 8 (d) (4).
In enforcing the Board's order with respect to the Old Rose em-
ployees, who were found to have been discharged, the court of appeals,
in effect, held that a permanent severance of the employment relation
was not justified in the instant case. The court questioned only
whether, assuming a temporary severance or lockout of the other em-
ployees, such severance would be privileged under the circumstances
of this case.
Neither Section 8 (a) (1) nor Section 8 (a) (3) of the Act draws
any distinction between a discharge and a temporary layoff. The
broad language utilized proscribes both permanent and temporary
terminations of the employment relationship when directed against
protected concerted activity. We are not free to cut down on the broad
proscriptions of Section 8 (a) (1) and 8 (a) (3), so as to sanction
lockouts which are designed to break a bargaining impasse by bringing
economic pressure on employees who have engaged in collective bar-
22 After discussing the nature of the strike against Old Rose, the court stated : "It
follows that they [i. e , the Petitioners ] had the right to counteract the strike 's effective-
ness by laying off, suspending or locking out the salesmen , who were members of the
striking Union . . . We so hold , not merely on the basis of the implied recogfiition,
in the 1947 Amendment to the Act , Section 8 (d) (4), of the existence of such a right,
but because the lockout should be recognized for what it actually is, i. e., the employer's
means of exerting economic pressure on the union , a corollary of the union 's right to
strike." [ Emphasis added ]
MORAND BROTHERS BEVERAGE CO. ET AL. 1463
gaining, unless other sections of the statute clearly require it. We find
no sure requirement.
Two sections of the Act, as amended in 1947, are called to our
attention as requiring that we sanction lockouts aimed at breaking a
bargaining impasse. The first is Section 8 (d) (4). That section de-
fines the duty to bargain collectively to include a requirement that the
parties to a collective bargaining agreement give 60 days' notice of
intent to terminate or modify the contract and to continue the contract
in force during the 60 days "without resorting to strike or lockout."
[Emphasis added.] The court of appeals alluded to this provision
as impliedly recognizing the right to lock out, at least after a bargain-
ing impasse had been reached, as in the instant case. However, there
would seem to be no more reason for holding that this phrase immu-
nizes all lockouts, or particular types of lockouts, than there is for
holding that it immunizes all strikes, or particular types of strikes.
Moreover, the mere fact that there is an express proscription of one
type of antiunion conduct-i. e., lockouts-in one section of the Act-
is not a persuasive reason for finding that such conduct is exempt from
the blanket proscriptions of Section 8 (a) (1) and (3) of the Act.
There are many instances of conduct which violate more than one
provision of the Act. For example, illegal union-security contracts
have been held by the Board and the courts to contravene both Section
8 (a) (1) and (3). It could hardly be argued that since such contracts
are specifically barred by Section 8 (a) (3), it must be assumed that
Congress intended to exempt them from the application of Section 8
(a) (1). Multiple sanctions are not unknown to the law. So, the
fact that lockouts during the 60-day cooling-off period fixed in Section
8 (d) (4) constitute violations of Section 8 (a) (5), does not in our
opinion preclude us from finding that such lockouts also violate Section
8 (a) (1) and (3) of the Act.
But it is urged that, in expressly prohibiting lockouts during the
60-day period, Section 8 (d) (4) by indirection sanctions lockouts
occurring after or before that period. If we accepted this view, we
would indeed be letting "the tail wag the dog." We would be relying
on a reference to "lockouts," in a context of restriction on their use, as
a basis for exempting lockouts generally, or lockouts after a bargaining
impasse, from the broad proscriptions of Section 8 (a) (1) and (3),
thus limiting-if not virtually nullifying-the safeguards of em-
ployees'rights in that section.
It seems clear to us from a reading of Section 8 (d) (4) that the
sole concern of Congress in enacting that provision, and the entire
thrust thereof, was to discourage resort to self-help by both employees
and unions during the 60-day period and to induce them to bargain
collectively during that period. It is understandable that, in seeking
1464 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to underscore this purpose, Congress would specifically proscribe the
most relevant forms of self-help-namely, strikes and lockouts. It
follows from this view that Congress was not concerned at this point
with the legal status of strikes and lockouts under other provisions
of the Act but was solely desirous of insuring that, whatever that status
might be, no strikes or lockouts would occur during the 60-day period 23
Before the Board and the court the Petitioners also urged that
Section 1 of the Act declares it to be a policy of the Act to restore
equality of bargaining power between employers and employees, and
that this policy would be defeated if the Petitioners could not retain
the common law right to lock out as an offset of the union's right to
strike. If that argument has any basis at all, it derives from the
fact that in Section 1 of the Act, as amended in 1947, Congress, while
retaining the original declaration of its purpose to eliminate the
inequality of bargaining power arising from the superior economic
strength of employers as against unorganized employees, further
stated as its purpose to eliminate "certain practices by some labor
organizations." However, in furtherance of this new additional policy
Congress, in Section 8 (b) of the amended Act, proscribed certain
practices by labor organizations, and added certain obligations on the
part of unions. It did not seek to accomplish its purpose by narrow-
ing the previously existing proscriptions on employer conduct which
had been contained, and continued to be contained, in Section 8 (a)
(1) and 8 (a) (3), other than to add a statutory guarantee of free
speech. If Congress had intended to accord employers the right to
lock out employees temporarily in order to obtain bargaining conces-
sions, notwithstanding the necessary impingement of such lock outs
upon the concerted activities of employees, we believe it would have
so provided expressly. This it did not do.
Moreover, it seems to us significant that, while Section 13 of the
Wagner Act (reenacted without change in the amended Act) expressly
preserves the right to strike, there is neither in the original nor in
the amended Act any similar express saving of the right to lock out
employees. If Congress felt that Section 13 was needed to dispel
any implication that the Wagner Act, although in terms regulating
employer conduct only, curtailed the right of employees to strike, it
would seem that there would have been even more reason for an express
reservation of the alleged paralleled right of employers to lockout,
" In the amici briefs filed with the court of appeals In this case , implied recognition
of the right to lock out was asserted to be found also in Sections 203 (c ), 206, and 208 (a)
of the amended Act, which prescribe action to be taken by the Federal Mediation and
Conciliation Service and the President to prevent strikes or "lockouts" under circum-
stances not here relevant . For reasons stated in the text, In connection with the discus-
sion of Section 8 (d) (4), none of the foregoing express proscriptions of lockouts is neces-
sarily inconsistent with the view that lockouts may violate Section 8 (a) (3) and (1) as
well.
MORAND BROTHERS BEVERAGE CO. ET AL. 1465
had Congress intended to preserve that right. The absence of such a
provision, therefore, argues strongly against such an intent.
It may be urged that, in locking out to gain bargaining concessions,
the employer is not motivated by a desire to interfere with union ac-
tivity or membership. However, clearly, the resistance by a union,
in the interest of the group, to the employer's demands, in the course
of good faith bargaining, is a form of concerted activity for the mutual
aid and protection of the group as well as the exercise of the right to
bargain collectively, and a mass layoff of union members, depriving
them of their means of livelihood, in order to overcome such resistance
necessarily is designed to interfere with such concerted activity and
collective bargaining, and to discourage membership in the union
which by its opposition to the employer's demands has provoked the
layoffs. It is not disputed that individual discharges, for example, of
members of the union's bargaining committee, in order to break an
impasse in negotiations, would violate Section 8 (a) (3) and (1) of
the Act. It does not seem logical then to say that a mass layoff of all
members of the union, which could not fail to have a more coercive
effect than such individual discharges, is not similarly violative of the
Act.
Nor can it be said that to deprive employers of their right to use
the lockout as a means of enforcing their bargaining demands is to
strip them of all power to cope with the power of unions to strike. It
is most elementary, but it must be remembered, that while unions and
employers may be compelled to bargain with respect to terms and con-
ditions of employment, in the last analysis it is the employer, not the
union, who controls the terms and conditions of employment. Faced
with an impasse which has arisen out of good faith bargaining, an
employer is free to continue the existing terms of employment without
any contract, or, indeed, unilaterally to institute any previously pro-
posed changes in those terms. These courses of action are obviously
not available to the union. And if the union resorts to an economic
strike, the employer can lawfully meet the challenge by replacing the
strikers. The fact that during its 17 years of existence the Board has
had so few cases involving the legality of a lockout after a bargaining
impasse, itself attests to the fact that few employers have seen the
need to resort to a lockout in order to preserve a fair balance of eco-
nomic power at the bargaining table. In short, we believe that even
apart from the fact that the argument for preserving the right to
lockout after an impasse cannot be squared with the statute, it has no
sound basis in justice and equity when it is viewed in the light of the
realities of industrial relations.
We, of course, do not say that an employer is proscribed from tem-
porarily terminating his operations under all circumstances whenever
1466 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
such action happens to be taken after a bargaining impasse. We have
already held in the Betts Cadillac case (supra) that such action,
where necessitated by particular operational difficulties created by an
impending strike, is not proscribed by the statute. We continue to
adhere to the general view that an employer is free to terminate the
employment relationship of his employees for any reason, or for no
reason, so long as the purpose or necessary effect of his conduct is not
to interfere with the rights of employees protected by the Act. We
say only that the right of employees to adhere to a position taken by
their union in good faith in collective bargaining is one of the most
important rights protected by the Act, that a temporary lockout which
has as its purpose causing employees to recede from the bargaining
position of their union is presumptively an interference with that
right and violative of the Act. This presumption is rebuttable, in
our opinion, only by a showing that the employer cannot operate with-
out a contract, or, as the Betts Cadillac case, without assurance that
he will not be struck. There is no such showing here.
For all the foregoing reasons, we find with respect to the second is-
sue posed by the court that the severance of the salesmen, even if in-
tended to be temporary, was effected for the purpose of discouraging
membership in the Union and of restraining and coercing the sales-
men in the exercise of their rights guaranteed by Section 7 of the Act,
and was not a legitimate exercise of Petitioners' economic remedies.
M. IF A PERMANENT SEVERANCE WAS INTENDED, WOULD A BACK-PAY
AWARD EFFECTUATE THE POLICIES OF THE ACT?
This is the third question which the court of appeals remand decree
directs us to consider.
As we have found that the Petitioners intended a permanent sever-
ance of all their salesmen, not only in reprisal for the concerted activi-
ties, actual and threatened, of its salesmen, but also for the purpose
of discouraging membership in, and destroying, Local 62, we perceive
no reason for withholding the usual back-pay remedy. To hold oth-
erwise would be to leave inadequately redressed conduct flagrantly
violative not only of the policy of the Act to protect concerted activi-
ties and the right of employees to organize and bargain collectively,
but also of the overriding policy of the Act to minimize interruptions
to commerce. Certainly, when employees are deprived of earnings in
order to defeat their exercise of protected activity, it is essential to
reimburse them for the loss they have unjustly sustained.
We find, therefore, that the granting of the back-pay remedy in the
instant case is necessary to, and will, effectuate those policies.
MORAND BROTHERS BEVERAGE CO. ET AL. 1467
Accordingly, except for the Old Rose Distributing Co., as to whom
an order has already been enforced, we reaffirm our original order.
MEMBER PETERSON took no part in the consideration of the above
Supplemental Decision and Order.
Appendix A
Since the existence of the salesmen's union all contracts have been
negotiated and signed on an industry-wide basis. During the nego-
tiations last year and this year, we exhibited financial statements pre-
pared by certified public accountants to the Union officials which
demonstrated our inability to give any increase in the commission
rate. The Union officials agreed that we were unable to give an in-
crease last year and, accordingly, the contract was signed without
changing the commission rate.
Business conditions certainly cannot be any better in 1949 than in
1948, and it would be sheer folly and economic disaster on our part
to grant the salesmen any increase in their present high commission
rate. During our negotiations this year, the Union officials admitted
that if the commission rate was increased a large number of whole-
salers would have to go out of business; nevertheless, the salesmen's
union has called their men off the job and are now picketing.
A strike against one house or small group of houses is not just a
strike against one individual wholesaler, but it is a strike against our
house and all the other wholesalers in Chicago. If we permitted the
Union to do this, it would merely be a question of time until each
house would be compelled to sign this unfair contract or to close its
business doors; we consider this action by the union to be in the same
category as a strike called against all of the wholesalers. The Union
officials have been advised and are fully aware of our position and
since the salesmen of your Union walked out on one of these houses
it is our position that you have decided to strike every wholesaler who
has been a party to the industry-wide negotiations.
Accordingly, we ask you to turn over to us immediately any records,
papers, credentials, or monies that you may have belonging to us,
and come and see us immediately so that we may settle any financial
differences that exist to date between us.
Supplemental Intermediate Report
On July 28, 1951, the United States Circuit Court of Appeals for the Seventh
Circuit enforced the National Labor Relations Board's Decision and Order in
the above-entitled matter that the salesmen of Old Rose Distributing Co. had
been discriminatorily discharged, but remanded the case with directions for the
Board to :
Make a clear and explicit finding on the question whether the severance of
the employer-employee relation between the various petitioners (other than
1468 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Old Rose ) and their respective salesmen was intended to be temporary or
permanent and, if intended to be temporary in character, in view, of the
Board's further consideration, whether it was made for the purpose of
"interfering or coercing employees in the rights guaranteed to them by Section
7" or as a legitimate exercise of petitioners' economic remedies, and, if perma-
nent, whether, in the light of the principle announced in this opinion, a back
pay award would tend to effectuate the policies of the Act.
On August 27, 1951, the above court granted a motion for leave to adduce addi-
tional evidence, in respect to whether
Petitioners locked out, suspended, laid off, or discharged their salesmen, as to
whether it was made for the purpose of interfering with or coercing the
salesmen in their rights under Section 7 of'the National Labor Relations
Act, as amended, or was a legitimate exercise of petitioners' economic
remedy. .. .
On September 5, 1951, the Board ordered the record reopened and a further
hearing "for the purpose of taking such additional evidence and of making such
additional findings." Pursuant thereto, a hearing was held before the undersigned
in Chicago, Illinois, from October 29 to November 2, 1951, inclusive. The General
Counsel, the Petitioners,' and the Union were represented by counsel ; and all
were afforded full opportunity to be heard, to examine and cross-examine wit-
nesses, and to introduce evidence bearing on the issues. After the conclusion of
the hearing, briefs were received from the General Counsel, the Petitioners,
and the Union.
Supplementary Findings of Fact and Conclusions
Before analyzing the evidence received on the questions posed by the circuit
court of appeals, it is well to recall the setting of the dispute between the parties.
The wholesale liquor dealers involved sell their products through salesmen to
retailers. Each salesman, working on a commission basis, develops his own
customers, no doubt assisted as much as possible by the employer in this highly
competitive field. The salesman is therefore a valuable, if not indispensable,
asset to his employer? As time goes on and the salesman improves his personal
relations with old customers and adds new ones, his value to the wholesaler
normally increases. Many of the salesmen in this proceeding had been with
their particular house for years. ,
While it is clear from the record that every Petitioner was a competitor of the
others, all worked together as a unit, through the Association, in labor relations
and no doubt on other matters of common concern. It is also important to keep
in mind that every salesman involved herein was a member of the Union.
When the Union struck Old Rose on April 6 it was using its economic strength
to force that wholesaler to agree to its commission demands for the salesmen.
However the April V letter enlarged the area and type of conflict, and the Union
found itself in the position of having to fight not only for the desired commissions,
but also for the jobs of the Old Rose salesmen and salesmen employed by any
1 The Petitioners herein are the same liquor wholesalers who were designated as
Respondents in the Board's Decision and Order , with the exception of Old Rose Distrib-
uting Co.
2 Although the record shows that each of the Petitioners did a substantial amount of
business with its retail customers during the strike-through telephone calls and with-
out benefit of salesmen-it was apparently a makeshift arrangement because of the
exigencies of the situation , as is evidenced by the form letter sent to the customers
during the strike, obviously for the purpose of retaining their good will. '
MORAND BROTHERS BEVERAGE CO. ET AL. 1469
wholesale member of either Association. As the weeks went by in the enlarged
conflict, tempers flared, there was some disorder, and criminal prosecutions and
civil actions for damages were started or threatened. When the controversy
was finally settled in May, not only was the original dispute as to the amount of
commissions adjusted, but it was also agreed that all salesmen be reinstated
to their jobs and all suits or threats of suits be dropped.
The above setting is important in considering the purpose of Petitioners in
mailing the early April severance notices, as are other incidents that took place
before and after the mailing of these letters.
The carefully written form letter, prepared by the Associations in March to
be used in the event that the Union struck one or less than all of the whole-
salers, avoided using either "lockout" or "discharge," but it instructed the re-
cipients to turn in all their records and to adjust their financial accounts with
the employer. Such action in the industry was required only in case of a perma-
nent discharge. This instruction was used deliberately, according to Association
Attorney Schultz, in order to establish a discharge without saying so? Consist-
ent with this prearranged plan of dismissal some of the Petitioners told sales-
men prior to April 7 that in the event the Union struck one Petitioner all the
salesmen of the wholesalers would be discharged. Some employers restated this
to salesmen after April 7.
The record contains other evidence indicating that the Petitioners intended
to permanently sever their relations with the salesmen. At the first hearing,
and up until the time when the exact nature of the severance became important
to their interests, the wholesalers substantially admitted that their relations
with the salesmen had been completely severed. Thus, the president of Old
Rose testified that "all of the men were dismissed." In their brief to the Trial
Examiner they stated that the form letter "was mailed by the wholesalers to
their salesmen discharging them, in accordance with the prearranged plan."
In their exceptions to the Intermediate Report it was asserted that the Trial
Examiner "erred in failing to find that the [Petitioners] had a right to discharge
the employees." Except in the one instance of Universal Wine,4 none of 'the
Petitioners paid commissions on sales during the strike, although it was the
practice to do so when a salesman was temporarily absent from his duties
Notwithstanding these admissions, and the strong language contained in the
severance letter and in oral statements to salesmen, there is other evidence,
equally persuasive, that wholesalers. did not intend to entirely sever all future
relations with the men who sold their merchandise. Several of the Petitioners
loaned money to some of their salesmen to finance them during the dispute so
that they would not take other jobs. In spite of the intensity of the contest and
the animosity engendered, certain Petitioners had not unfriendly contacts and
conversations with their salesmen wherein concern was expressed (by both
sides) for the dispute to end. Letters from wholesalers to the salesmen, al-
though highly critical of the Union and its officials and containing statements
justifying the attitude of Petitioners, at least imply resumption of relations when
and if the dispute terminated. Six wholesalers paid the April premiums for
certain salesmen on group hospitalization insurance, as they had done in the
3 That there was some question as to the legality of such request is evidenced by the
Associations' unsuccessful effort to secure the prior approval of the Board's Regional
Chief Law Officer thereto.
* In paying these commissions Universal may have been influenced by the fact that the
charge had already been filed and by the advice of Attorney Schultz that he could settle
the dispute for the smaller wholesalers.
1470 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
past.5 All of them continued to make monthly contributions to a health and
welfare fund administered by the National Union, on behalf of each of its sales-
men.6 No attempt was made to replace any of the salesmen.?
There is no contention that Petitioners had to close down their businesses for
economic reasons because of the action of the Union. In fact it was stipulated
that they all did a substantial business during the dispute, by taking and solicit-
ing orders from their customers over the telephone. I do not regard this action
on the part of the wholesalers as a serious attempt to permanently eliminate
the use of salesmen. Rather, it was their way, during a self-created emergency,
of continuing in business and serving their customers without the conventional
contact of salesmen. Even the salesmen were not deceived by this maneuver.
None of them made any effort to get another job-as it seems probable some of
them, at least, would have tried to do it if they had construed the form letter
as a complete severance-except in one instance. In that case William Jelinek,
employed by Pioneer Atlas, was ill when he received the April 7 letter. There-
after Pioneer Atlas refused his request to certify to the insurance carrier that
Jelinek could return to work on April 13, and he secured another position.
Jelinek's experience merely underscores what is not disputed-that none of the
salesmen was working on April 13. It neither proves nor disproves the long-
range purpose of Pioneer or the other Petitioners in dismissing the employees.
That the salesmen understood that the wholesalers would have difficulty con-
tinuing in business indefinitely without benefit of their personal contacts with
the retailers appears also from the failure of some of the salesmen to turn in
their books and records as instructed to do, and the testimony of several of
them that they were anxious for the dispute to be over so that they could return
to work.
Weighing all these factors, including the importance to each Petitioner of the
personal customer contacts and the explanatory inclusions in the form letter, I
am satisfied and find that the severance notice was intended to cover the period
of disagreement ; and that when the dispute was over each Petitioner expected,
or at least hoped, to reinstate all its old salesmen.
This is not to say that the Petitioners intended, and the employees understood,
that a temporary layoff, or suspension from work, be inaugurated on April 8.
There was no time indicated for the employees to return to their interrupted
duties ; nor could there have been under the circumstances. The plan, as above
found, was to sever the salesmen from employment because of and for the
duration of the strike at Old Rose. But a strike is of indefinite duration. No
one knows when it starts how long it will last. Some have continued for
months-even years. The tenure of such a conflict depends to some extent upon
the economic resources of the conflicting parties, and their amenability to rea-
sonable compromise. Other factors may also contribute to shorten or prolong
the struggle. While the releases were not for a fixed temporary period neither
5 The payments were deducted from commissions earned by the salesmen from April 1
through April 7, and later computed.
6 These monthly contributions were pursuant to the terms of a trust agreement with
the Union which did not expire until April 30, 1949. While separate from the collective
bargaining agreement, reference was made therein to the trust agreement. Nevertheless
none of the wholesalers sought to evade the April contribution, or part of it, on the theory
that their salesmen were only employed the first week of that month.
4 As heretofore noted, all the salesmen were members of the Union. The Union con-
tends that, therefore, there were no experienced salesmen available. While this may have
been a factor, it is a fair inference that because of the strategic position of salesmen in
the industry, the wholesalers preferred the old men, rather than to hire new salesmen and
run a chance of losing valued customers.
MORAND BROTHERS BEVERAGE CO. ET AL. 1471
were they unconditional in character. It was a cessation from work, brought
about by the employers, for an indeterminate period of time, but it was not a
permanent severance.
This action of the Petitioners was a lockout, as I understand the conventional
use of the term. There is no statutory definition thereof but at common law
it is described as the "cessation (by the employer) of the furnishing of work
to employees in an effort to get for the employer more desirable terms." The
Board has frequently employed the term where the employer has prevented the
employees from working, but not always with an illegal connotations In the
Intermediate Report I used the term in connection with Petitioners' employees
because the employers had prevented them from working, and to distinguish the
action from Old Rose where the employees were on strike and not working at
the time they were severed. "Lockout" is employed here in the same sense.
There is no dispute that all these salesmen were treated in exactly the same
way-their employment was terminated-Old Rose employees because they had
struck that house and the others because they were members of the Union that
induced the strike. The circuit court agrees that this action on the part of
Old Rose constituted interference with the rights of its employees as guaranteed
in Section 7 of the Act, and also amounted to discrimination as to their hire
and tenure of employment.
The question is posed whether the similar action toward their employees on
the part of Petitioners also amounted to interference with the concerted ac-
tivity of their employees and discrimination as to their hire and tenure of
employment because of membership in the Union, or was a legitimate exercise
of Petitioners' economic remedies in countering the activities of that Union.
It is settled law that, assuming the legality of the concerted activity of the
employees, an employer may not interfere therein, or discriminate against em-
ployees because of membership or nonmembership in a union by discharge or
other change in their terms or conditions of employment ° The guarantee in
Section 7 protects the right of employees "to join, form, or assist labor organiza-
tions" and also to "engage in other concerted activities for the purpose of collec-
tive bargaining or other mutual aid or protection" (or to refrain from doing
so). Thus employees are protected when they join a union, engage in lawful
activity to assist a union, or participate in a strike or other legal concerted
conduct for the purpose of persuading the employer to change conditions of
employment.
It has been established that the union activity and the concerted activity of
the salesmen was lawful. It follows, therefore, that the activity was protected
unless the lockout was economically justified because of disruption in opera-
tion," to prevent spoilage of merchandise u or other operative hardships," and
not in reprisal because of the exercise by the employees of their guaranteed
rights. There is no evidence, or even contention, that Petitioners dismissed
their salesmen because of operative difficulties and hardships, or to prevent
spoilage. The evidence discloses-in fact it is in effect admitted-that the
men were released because their union had struck Old Rose, and in anticipation
8 Allis Chalmers Co., 166 F. 2d 45, 52 (C. A. 7). See also cases cited in Trial Examiner
Schneider's discussion of use of the term in Betts Cadillac Olds, Inc., 96 NLRB 268.
9 Phelps-Dodge Corporation, 313 U. S. 177; Republic Aviation, 324 U. S. 793; National
Broadcasting Co., 150 F 2d 895 (Cl A. 2) ; Allis Chalmers Co., 162 F. 2d 435 (C. A. 7).
Link Belt Co, 26 NLRB 227; International Shoe Company, 93 NLRB 907.
u Duluth Bottling Association, 48 NLRB 1335.
72 Brown-McClaren Co, 34 NLRB 984; Worthington Creamery, 52 NLRB 121; Betts
Cadillac Olds, Inc., 96 NLRB 268.
1472 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
that one or more of the other houses might also be struck . The lockout there-
fore clearly was intended to interfere with the concerted activity of the salesmen.
Summarizing , I find that :
1. Petitioners locked out their employees, and the severance from employment
was temporary in character.
2. The purpose of the lockout was to interfere with and coerce the employees
in the exercise of rights guaranteed under Section 7 of the Act and discriminate
as to their hire and tenure of employment because of membership in the Union,
and was not a legitimate exercise of Petitioners' economic remedies.
KANMAK MILLS, INC., KULPMONT MANUFACTURING COMPANY, INC. and
TEXTILE WORKERS UNION OF AMERICA , CIO. Case No. J-CA-13J.
June 30, 1952
Supplemental Decision and Recommendation
On February 28, 1951, the National Labor Relations Board issued
a Decision and Order in this case,l in which it found that the Respond-
ents had engaged in and were engaging in certain unfair labor prac-
tices affecting commerce, and ordered the Respondents to cease and
desist therefrom and to take certain affirmative remedial action.
On September 1, 1951, the Board petitioned the United States Court
of Appeals for the Third Circuit for enforcement of its Order against
the Respondents, and on September 20, 1951, the Respondents filed
their answer thereto, and also a motion to remand and affidavit in
support thereof. In their motion, the Respondents alleged that, as
Arthur Christopher served as co-counsel for the General Counsel dur-
ing the trial of the case, and was at all times during the trial of the
case and its decision by the Trial Examiner and the Board a legal
assistant to the Chairman of the Board, Section 5 (c) of the Admin-
istrative Procedure Act,2 herein called the APA, was violated. On
October 26, 1951, the court remanded the case to the Board for the
purpose of taking testimony and determining whether Arthur Chris-
topher participated or advised both in functions of investigation or
prosecution and in functions of decision in this case, contrary to the
prohibition of Section 5 (c) of the APA.
Thereafter, on December 21,1951, the Board ordered that the record
in this case be reopened and a further hearing be held before a Trial
Examiner for the purpose of taking testimony and making the de-
termination directed by the court. Pursuant to this order of the
Board, a hearing was held at Washington, D. C., on February 18, 1952,
before George Bokat, a duly designated Trial Examiner.
193 NLRB 490.
15 U. S. C. 1004 (c).
99 NLRB No. 169.