Don Juan Co., Inc.

National Labor Relations Board - Board Decisions

May 18, 1950

89 N.L.R.B. 1425 (N.L.R.B. 1950)

In the Matter of DON JUAN Co., INC., AND DON JUAN, INC., and UNITED
PACKINGTIOUSE WORKERS OF AMERICA CIO, DISTRICT 6
Case No. 2-C-6533
SUPPLEMENTAL FINDINGS
CONCLUSIONS AND RECOMMENDATION
May 18,195O
On August 27, 1948, the National Labor Relations Board issued a
Decision and Order in this case,1 in which it found that Don Juan
Co., Inc., and Don Juan, Inc., herein called the Respondents, had
engaged in and were engaging in certain unfair labor practices affect-
ing commerce, and ordered the Respondents to cease and desist there-
from and to take certain affirmative remedial action. The Board
found, among other things, that the Respondents had unlawfully dis-
charged employees Wilkinson and Holmes on the ground that they
had ceased to be members in good standing of Hair Goods, Toiletries
and Accessories Workers Union, No. 21906, AFL, herein called the
Union, which was the contractual bargaining representative of the
Respondents' employees. To remedy this unfair labor practice, the
Board directed the Respondents to offer reinstatement to Wilkinson,
the only one of the two discharged employees who desired reinstate-
ment, and to make whole both Wilkinson and Holmes for any loss of
pay they may have suffered as a result of the discrimination.
The Board thereafter petitioned the United States Court of Appeals
for the Second Circuit for enforcement of its Order against the Re-
spondents. On December 9, 1949, the Court handed down its opinion.
In connection with the Board's back-pay order, the Court, referring
in its opinion to three early cases 2 in which the Board had declined to.
order back pay because the legal rights of the parties were doubtful
1 79 NLRB 154.
z M cB 117 Woodworking Company, 6 NLRB 372; Smith Wood Products, Inc., 7 NLRB 950 ;
McKesson,( Robbins, Inc., 19 NLRB 778. See p. 4, infra.
89 NLRB No. 191.
1425
1426 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and because the employer had acted in good faith, stated tliat in the
instant case-
It does not appear from the record that the Board considered
the question of good faith at all, or whether, if the discharges
were thought to have been in good faith, it intended to depart from
what seems to have been its practice in refusing to order back pay
in such a situation. We think that there should be findings in
respect to the question of good faith and a clear indication of the
policy which the Board determines to exercise in the particular
circumstances.
On March 29, 1950, the Court handed down its decree, directing
that all provisions of the Board's Order be enforced except insofar
as they related to the award of the back pay, and remanding the pro-
ceeding to the Board for further consideration of the back-pay ques-
tion in the light of the Court's opinion.
Pursuant to the remand by the United States Court of Appeals for
the Second Circuit, and upon consideration of the entire record in the
proceeding, the Board 3 makes the following :
Supplemental Findings and Conclusions
The record reveals that the collective bargaining contract between
the Respondents and the Union immediately preceding the one in
force at the time of the discharges had contained a clause which,
although not entirely clear, might be construed as requiring member-
ship in the Union as a condition of employment. This clause was
omitted, however, from the agreement in effect at the time of the dis-
charges, and the pertinent clauses of the later agreement provided only
a prohibition against the Respondents entering into individual con-
tracts with any employee-member of the Union, and a dues checkoff
for such employee-menmbers. The Respondents contended that the
contract with the Union required the discharge of Wilkinson and
Holmes upon their loss of good standing. We stated in our earlier
decision, 79 NLRB 154,156, that "the contract on that score is ambigu-
ous." Accordingly we held, and the Court agreed, that the discharges
were illegal because union-security provisions, to fall within the
proviso of Section 8 (3) of the Act prior to amendment, must be clear
and unambiguous.
In response to the mandate of the Court "that there should be find-
ings in respect to the question of good faith," we are prepared to
3 Pursuant to the provisions of Section 3 (b) of the National Labor Relations Act, the
Board has delegated its powers in connection with this case to a three-nienmber panel
[ Chairman Herzog and Members Houston and Murdock].
DON JUAN CO., INC. 1427
assume that the Respondents acted in good faith in their construction
of the contract. At the direction of the Court, we set forth here "a
clear indication of the policy" which guides us "in the particular
circumstances."
We believe that the inherent equities of such a situation require that,
whether the discharges were made in good faith or bad faith, the finan-
cial loss resulting therefrom should be borne by the Respondents, who
committed the illegal acts, not by the two employees who were dis-
charged through no fault of their own. The risk of mistake in con-
struing ambiguous provisions of a supposed union-security contract
should reside with the party who misinterprets the contract, rather
than with the employees against whose interest the contract has
-erroneously been thought to run.
The requirement, under such circumstances, that the illegally dis-
charged employees be reimbursed for their losses of back pay is
consistent with our usual practice in such a situation, and with the
practice of the courts. Although in the early cases cited by the Court,
we declined, where scisms in the bargaining agent or jurisdictional
we declined, where schisms in the bargaining agent or jurisdictional
disputes had occurred, to order back pay, in more recent cases
analogous to the instant one, we have repeatedly ordered this remedy.
In the Portland Lumber Mills case,4 for example, the Board stated :
.. , in the instant case, the respondent discharged Wilmarth
because it believed in good faith, though mistakenly, that the
terms of its closed-shop contract with the intervenor required
that the respondent accede to the intervenor's demand for Wil-
marth's dismissal. Under such circumstances . . . like the Trial
Examiner, we shall order the respondent to take certain affirm-
ative action, including reinstatement of Wilmarth with back pay,
designed to effectuate the policies of the Act. (Emphasis
supplied.)
In Geraldine Novelty Company, Inc.,' the Trial Examiner found
that, ". . . respondent discharged the employees in question because
it believed, although mistakenly, that it was required to do so by
the terms of its union shop, agreement, and not to satisfy any illegal
.purpose of its own." The rial Examiner specifically considered the
question of the appropriate remedy, and recommended "under such
circumstances" that the Respondent make whole the discharged eih-
ployees by paying them back pay. We adopted the findings; con-
clusions, and recommendations of the Trial Examiner in that case,
464 NLRB 159, 160. See also Eureka Vacuum Cleaner Company, 69 NLRB 878; and
Stanislaus Wood Products, 79 NLRB 260.
574 NLRB 1503.
889227-51-vol. 89-91
1428 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ordered back pay for the discharged employees, and this Order was
enforced in full by the United States Court of Appeals for the
Second Circuit.6
The three cases cited in the Court's opinion 7 were decided within
the first 5 years of the operation of the statute, and, as the later cases
cited above amply demonstrate, have not been construed as imposing
a rigid rule that a good-faith misinterpretation of a contract will
relieve from liability for back pay. In two of those cases, the Board
was no doubt influenced in part by a desire to respect, insofar as
possible under our decisions, a contrary interpretation of the contract
rendered by a United States District Court (M & M Woodworking
Company, supra, at pp. 381-382, 383, Smith Wood Products Co., supra,
at p. 957). In the third case, the Board was probably influenced in
part by a desire not to discourage the making of truce agreements,
such as that which underlay that controversy (McKesson cC Robbins,
supra, at pp. 801, 802). Those cases should be viewed, therefore,
as exceptions to our general rule that it "will effectuate the policies of
this Act" to order reinstatement with back pay to employees who are
illegally discharged for nonmembership in a union, regardless of the
employer's good faith in erroneously believing that this contract with
the union required their discharge. Respondents in this case show
no special circumstance to warrant not applying this general rule.
Accordingly, we are convinced, and find, that whether the Respond-
ents discharged Wilkinson and Holmes in good or bad faith, it will
effectuate the policies of the Act to require the Respondents to make
6 173 F. 2d 14. We have, with judicial approval, applied the same principle where the
employer, although not motivated by antiunion annimus, either under pressure or under
a mistaken view of the legal effect of his conduct, acted in such a way as to interfere
with rights protected under the Act. Thus, in Hudson Motor Car Co., 34 NLRB 815,
'enforced 128 F. 2d 528 (C. A. 6) we ordered reinstatement with back pay of employees
who with the employer's condonation were excluded from the plant by adherents of a
majority union because of their preference for a rival union. The Court of Appeals,
which enforced the order, overruled the objection that the back-pay order was improper
because the respondent had not discharged the employees in question for any illegal
purpose of its own, stating (p. 533) : "We think it right and just to say that so far as
the record shows, respondent has not wilfully violated the provisions of the Act, but
the intent of the Employer is not within the ambit of our power to review. When it
is once made to appear from the primary facts that the Employer has violated the
express provision of the Act, we may not inquire into his motives." Also, employers
have been required to reinstate and reimburse employees who were penalized for violating
a nondiscriminatory rule against either solicitation or distribution of literature on
employer premises during nonworking hours, where the rule, although honestly promul-
gated and applied, nevertheless invaded rights protected under the Act insofar as It
extended to union activity. Republic Aviation Co., 51 NLRB 1181, 1187, 1189, enforced
142 F. 2d 193 (C. A. 2), affirmed 324 U. S. 793; LeTourneau Co. of Georgia, 54 NLRB
1253, 1259, 1264-1265, enforced 324 U. S. 793 (reversing the Court of Appeals judgment
-setting the order aside, 143 F. 2d 67 (C. A. 5).
7 See footnote 2,. above.
DON JUAN CO., INC. 1429
whole these employees for any losses of back pay they may have suf-
fered by reason of their illegal discharges.
RECOMMENDATION
Upon the basis of the above supplemental findings and conclusions,
and of the entire record in the case, the National Labor Relations
Board hereby respectfully recommends to the United States Court of
Appeals for the Second Circuit that the Board's Order of August 27,
1948, be enforced in its entirety.