Service & Maintanance Employees' Union, No. 399

National Labor Relations Board - Board Decisions

Sep 14, 1964

148 N.L.R.B. 1033 (N.L.R.B. 1964)

SERVICE & MAINTENANCE EMPLOYEES' UNION, NO. 399 1033
Board 's order . This contention is correct if there was in fact "a bona fide
discontinuance of a true change of ownership-which would terminate the duty
of reinstatement created by the Board 's order ." Southport Petroleum Co.
v. N.L.R .B., 315 U.S. 100 , 106, 62 S. Ct. 452, 86 L. Ed. 718. If not , then the
Board's order should be enforced.
In sum , I conclude that none of the cases discussed above supports the General
Counsel's position that The Eskin Corporation is liable for backpay to the employees
discriminated against by M. Eskin & Son.
I find and conclude that The Eskin Corporation was a bona fide purchaser for value
of part of the business of M. Eskin & Son and did not thereby become a successor of
the latter , liable to remedy the latter 's unfair labor practices 23
CONCLUSIONS AND RECOMMENDATIONS
Upon the entire record and in accordance with the foregoing findings, I conclude:
11. That the claimants listed below are entitled to payment by the Union of the
sums listed opposite their names:
Victor Balajthy------------------------------------------ $125.26
Gary Kupic------------------------- --------- r---------- 75.00
Donald Smith------------------------------------------- 70.00
2. None of the claimants is entitled to payment from The Eskin Corporation.
3. The amended backpay specification should be dismissed as to The Eskin
Corporation.
°3I do not , therefore , find it necessary to reach the further defenses raised by The
Eskin Corporation : that the stipulation entered into between the General Counsel and the
conservator of Continental Vending, which established the latter 's liability as a successor
to M. Eskin & Son, constitutes an accord and satisfaction which released any alleged
liability of The Eskin Corporation ; that the General Counsel was guilty of laches in
failing to take earlier action against M. Eskin & Son and , in so failing, prejudiced The
Eskin Corporation ; that earnings of Bunting for hours in excess of 40 hours per week
during their backpay periods constitute interim earnings which should be deducted from
gross backpay ; and that allowances for unpaid Christmas bonuses should be excluded in
determining the gross backpay.
Service and Maintenance Employees' Union, Local No. 399, AFL-
CIO and Kai Efron, d/b/a Superior Souvenir Book Company.
Case No. 21-CE-28. September 14, 1964
DECISION AND ORDER
On January 23, 1964, Trial Examiner Henry S. Sahm issued his
Decision in the above-entitled proceeding, finding that the Respond-
ent had not engaged in the unfair labor practices alleged in the com-
plaint, and recommending that the complaint be dismissed in its
entirety, as set forth in the attached Trial Examiner's Decision.
Thereafter, exceptions and a brief were filed by the General Counsel;
the Respondent filed cross-exceptions and a brief.'
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, the National Labor Relations Board has delegated its
powers in connection with this case to a three-member panel [Chair-
man McCulloch and Members Fanning and Brown].
i The Respondent 's request for oral argument is hereby denied , as the record , including
the exceptions , cross-exceptions , and briefs , adequately presents the issues and positions of
the parties
148 NLRB No. 99.
1034 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions, the cross-exceptions, the briefs,
and the entire record in this case, and hereby adopts the findings and
recommendation of the Trial Examiner.
Without adopting all the reasoning and legal conclusions of the
Trial Examiner, we agree that article IV, the contract provision in
-question, is not violative of Section 8(e). In accordance with the
contract interpretation of the arbitrator, to whose determination we
attach substantial weight, we find that article IV, which reserves
to employees of United Artists the sale of souvenir books in connection
with any showing at its theaters, was designed to define and protect
unit work, and is to be construed as a complete ban on the performance
,of such work by nonunit employees. As this contractual restriction
was designed to regulate the relations between United Artists and
its employees in the appropriate bargaining unit represented by
Respondent Union, and as it was aimed at the preservation of work
opportunities for the employees in such unit, it is quite clearly outside
the intended interdiction of Section 8(e). As stated in Ohio Valley
'Carpenters District Council (Cardinal Industries), 136 NLRB 977,
985-986:
. .. Section 8(e) was basically designed to close what its propo-
nents considered a loophole in the secondary boycott provisions
of the Taft-Hartley Act . . . . Section 8(e) was intended to
outlaw what is in effect a "secondary boycott in futuro," that is,
"an agreement by an employer to permit a secondary boycott
to be conducted against him." II Leg. Hist. 1859 (1959). .. .
[T]he delineation and exclusive assignment to employees . . . of
specified work tasks cannot itself be regarded as unlawful; in-
deed . . . it is necessary if the contract is to be meaningful. .. .
[I]t has long been recognized that restrictions on subcontracting
work out to another employer, or on otherwise having done else-
where work usually performed by employees in a bargaining unit,
is a mandatory subject of collective bargaining and a proper
matter for contract inclusion. . . . Contractual restrictions of
this character undoubtedly impinge upon an employer's freedom
to engage in business with others. But where they do no more
than define and reserve [work] for the exclusive performance
of employees in a bargaining unit . . . they have a different func-
tion from the contracts that were the targets of 8(e). Restric-
tions designed to confine work to unit employees are immediately
related to terms and conditions of employment within the unit.
SERVICE & MAINTENANCE EMPLOYEES' UNION, NO. 399 1035
They anticipate no work to be performed by persons other than
employees of the immediate employer. Their sole, direct, and
primary aim is to protect and preserve work and therefore jobs
for employees within the bargaining unit. In these respects
limited restrictions of that character are quite different in pur-
pose and intent from the "hot goods" clauses 8(e) was designed
to ban-that is, the blacklisting of specified employers or classes
of employers because their products or labor policies are objec-
tionable to the union.
'See also Milk Drivers' Union Local 753, etc. (Pure Milk Association),
141 NLRB 1237,1240.
Concluding as we do that Section 8(e) is not applicable to this situ-
ation, we shall dismiss the complaint.
[The Board dismissed the complaint.]
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
Upon a charge filed on January 24, 1963, by Kal Efron , doing business as Superior
Souvenir Book Company, herein called both the Charging Party and Superior, the
General Counsel of the National Labor Relations Board, by the Regional Director
for Region 21, on April 29, 1963, issued a complaint alleging that Service and
Maintenance Employees' Union, Local No. 399, AFL-CIO, herein called both the
Respondent and the Union , had engaged in and was engaging in unfair labor prac-
tices within the meaning of Section 8(e) and Section 2(6) and (7) of the National
Labor Relations Act, as amended . Copies of the charge , complaint , and notice of
hearing were duly served upon the Respondent Union, and copies of the complaint
and notice of hearing were served upon the Charging Party
With respect to the unfair labor practices , the complaint alleges, in substance, that
the Respondent Union entered into, maintained , and gave effect to certain provisions
in its multiemployer Southern California Theatre Amusement agreement with United
Artists Theatre Circuit, Inc., herein called United, pursuant to which United has
expressly or by implication , ceased , or refrained from , and have agreed to cease or
refrain from, handling , using, transporting, or otherwise dealing in the products of
Superior and from doing business with Superior and other persons.
Pursuant to notice , a hearing was held in Los Angeles , California , on August 5
and 6, 1963, before Trial Examiner Henry S. Salim. The parties filed briefs on
September 10, 1963, which have been fully considered
Upon the basis of the entire record in the case, including the stipulations and the
briefs, I make the following:
FINDINGS OF FACT
1. COMMERCE
Superior Souvenir Book Company , whose principal office is located in New York,
New York, is engaged in the business of publishing and distributing souvenir book-
lets and programs at theaters and other places of amusement at various places
throughout the United States and Canada. In the operation of its business , Superior
annually derives a gross income in excess of $500,000 from the publication and dis-
tribution of these booklets and programs , and annually ships souvenir booklets and
programs valued in excess of $50,000 from the States of Indiana and Missouri di-
rectly to points located in other States of the United States. United Artists Theatre
Circuit, Inc. (herein called United ), a Delaware corporation with its principal office
in New York, New York, is engaged in the operation of motion picture theaters in
many States of the United States , including a theater in Los Angeles , California,
operated under the name of Egyptian Theatre, and other theaters in the State of
California . In the operation of its California theaters , United annually does a gross
volume of business in excess of $500,000 , and annually transmits more than $500,000
from its California operations to its office in New York, New York.
1036 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Metro-Goldwyn-Mayer, Inc., herein called MGM, a corporation with its principal
office in New York, New York, is engaged in the distribution of motion picture films
to theaters throughout the United States and in foreign countries. In the course of
its business, MGM annually receives more than $1,000,000 from its operations in the
State of California.
It is found, accordingly, that Superior, United, and MGM are engaged in com-
merce within the meaning of Section 2(6) and (7) of the Act, and that it will effectu-
ate the policies of the Act to assert jurisdiction herein.
It. THE LABOR ORGANIZATION INVOLVED
Respondent Union is a labor organization within the meaning of Section 2(5) of
the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
Background and Issue
Moving pictures known as "roadshows" are exhibited on a two-performances-a-
day basis. At this type of show programs are sold in the theater lobby. The Re-
spondent Union has represented program sellers for some years. Where the services
of a program salesman are required, the Union customarily is requested to refer a
salesman to the theater. The Union then selects on the basis of a seniority system
a salesman from its registration list whom it dispatches to the theater.
The Charging Party, Superior, had the program concession at one of United's
theaters with which the Union had a collective-bargaining contract. This contract
between the Union and United Theatre has a provision which reads as follows:
Article IV
Section 3. Job Security. In the event a souvenir book is sold in connection
with any showing at any of the theatres of the Employer, it is agreed that the
sale, work, and duties of selling such souvenir book shall be performed only by
employees of the Employer. Such employees shall be paid in accordance with a
a schedule hereinafter negotiated and shall be covered by the terms and condi-
tions of this Agreement.
In the event the Employer find that it is uneconomical to employ such em-
ployees for the sale of such souvenir books, the Union and the Employer will
attempt to reach a mutually satisfactory arrangement regarding the performance
of such sale or duties, and the Employer will not contract regarding the sale of
said souvenir books unless mutually agreed upon by the Employer and the
Union.
The theater owner, United, subcontracted the right to sell programs to Superior, the
Charging Party, without consulting with the Union as provided for in article IV,
section 3, supra. When the Union objected, the matter was referred to arbitration
and the arbitrator found in favor of the Union whereupon the program concession of
the Charging Party, Superior, was canceled and the theater used one of its own em-
ployees (referred to it by the Union) to sell programs.
The General Counsel alleges that article IV, section 3, supra, falls within the pro-
scriptive purview of Section 8(e) of the-Act which prohibits agreements that directly
or indirectly require an employer to cease doing business with other persons because
this provision resulted in Superior losing its program concession with. United theaters.
The Union, on the other hand, contends that it is lawful for it to contract to pro-
hibit such subcontracting by the theater, as provided for in article IV, section 3,
supra, where its primary objective is to protect the wages, seniority, working condi-
tions, and jobs of its members who are program salesmen. It is necessary, therefore,
in order to resolve these conflicting contentions to determine what article IV, sec-
tion 3, of the contract, supra, was intended to accomplish.
The Testimony
Exhibited in various theaters in the Los Angeles area are moving pictures which
are shown on a two-performances-a-day basis as distinguished from the usual situa-
tion where movies are shown continuously throughout the day and evening. These
two-performances-a-day moving pictures are referred to as "roadshows." At these
"roadshow" type of moving pictures salesmen sell programs in the theater lobby.
For at least some 15 years, Local 399, the Respondent herein, and the theater
owners, bargaining as a multiemployer group (Southern California Theatre &
Amusement Group), had entered into a succession of agreements fixing the condi-
SERVICE & MAINTENANCE EMPLOYEES' UNION, NO. 399 1037
tions of employment in this industry in southern California. Each theater owner
had a collective-bargaining agreement with the Respondent Union negotiated through
the group, but signed individually. Included in the unit since at least 1958 were pro-
gram salesmen.'
Under this collective-bargaining agreement, when the services of program sellers
are required, the theatre, if it retains the sale of programs for itself, requests the
Respondent Union to refer program salesmen. The Union then selects a program
salesman from its registration list on the basis of a system of seniority and dispatches
him to the requesting theater. Frequently, prior to 1961 (when article IV, section 3,
first appeared in these contracts), the theater would subcontract the right to sell
programs to a third party. In such instances, the subcontractor customarily would
request the Union to refer a program salesman.
However, it appears that as early as 1955, the Union upon hearing that
the Charging Party, Superior Souvenir Book Company, was not obtaining its pro-
gram salesmen from the Union, notified Superior that all program sellers should
be obtained through the Union. On October 19, 1960, at a time when Superior had
the program concession at the Pantages Theater in Los Angeles for the showing of
the moving picture "Spartacus" the Union picketed the theater because Superior
allegedly had neither obtained its program salesman through the Respondent Union
nor was paying the Respondent Union's wage scale for program salesmen. The
picket sign read- "Distribution of Spartacus Book-Non Union Conditions-No
dispute with any other Employer. Local 399." 2 As a result of the picketing, a set-
tlement agreement was entered into in February of 1961 and approved by the
Regional Director in March 1961. Superior, however, did not sign a contract with
the Union nor agree to pay the union scale for program salesmen.
About the same time this settlement agreement was executed, the multiemployer
theatre owners and the Respondent Union, upon the expiration of the then cur-
rent contract, entered ino a new contract on February 15, 1961. For the first
time, there appeared in this contract (whose termination date is February 15, 1964)
the following provision:
Section 3. Job Security. In the event a souvenir book is sold in connection
with any showing at any of the theatres of the Employer, it is agreed that the
sale, work, and duties of selling such souvenir book shall be performed only by
employees of the Employer. Such employees shall be paid in accordance with
a schedule hereinafter negotiated and shall be covered by the terms and con-
ditions of this Agreement.
In the event the Employer find that it is uneconomical to employ such em-
ployees for the sale of such souvenir books, the Union and the Employer will
attempt to reach a mutually satisfactory arrangement regarding the perform-
ance of such sale or duties, and the Employer will not contract regarding the
sale of said souvenir books unless mutually agreed upon by the Employer and
the Union.
Shortly after this contract was executed, United Artists Theatre Circuit, Inc.,
entered into a contract for the showing of the movie "King of Kings" which opened
in October 1961 at a United theater. Superior had the concession for selling the
programs for this moving picture under subcontract from United, when United re-
ceived a letter from the Union that article IV, section 3, set out above, forbade the
subcontracting of the program concession to Superior unless it is "mutually satisfac-
tory" and "mutually agreed" upon by United and the Union. The Union's letter
objected to the subcontracting of program sales to Superior and requested that the
theater either designate one of its own employees or that if it did not desire to do
so that it work out an arrangement mutually satisfactory to both the theater and
the Union to sell the programs, as provided for in article IV, section 3, supra. United
replied to the Union's letter stating it had "mistakenly" subcontracted the program
concession for the showing of "King of Kings" not realizing that it was contrary to
the provisions of article IV, section 3. The Union then replied to United, stating
it would not insist on the application of article IV, section 3, in view of the "apparent
good faith misunderstanding" by United and that Superior could continue to retain
the program concession for the remainder of the showing of "King of Kings."
' A contract was executed for the period April 1955' to February 1957 between United's
Cathay Circle Theatre and the Union which included, " program sellers" in the bargaining
unit
2 Certain testimony regarding a deceased participant to this incident was excluded from
evidence . See Schwob Manufacturing Company v. N L R.B., 297 F. 2d 864, 869 (C.A. 5).
1038 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In April 1962, United and Metro-Goldwyn-Mayer entered into a contract in New
York City for the showing in Los Angeles of the movie "Mutiny on the Bounty."
Included in this contract was a provision reserving to MGM the right to sell and dis-
tribute programs. In October 1962, MGM subcontracted the right to sell programs
to Superior On November 6, before the opening of "Mutiny on the Bounty" on
November 16, 1962, the Union and United held a meeting at which the Union ob-
jected to Superior having the program concession, claiming that it was a violation of
article IV, section 3 of the contract to which United was a signatory.3 Another
meeting between the same parties was held on December 2, 1962, at which time the
Union again urged that if United did not assign one of its own employees to selling
programs, article IV, section 3 required that a "mutually satisfactory arrangement"
would have to be worked out between the Union and United for the sale of the pro-
grams. It was then agreed by the parties to submit article IV, section 3 to arbitra-
tion in accordance with the arbitration provision in the contract, in order to resolve
whether this clause violated Section 8(e) of the Act. On January 24, 1963, the
arbitrator handed down a decision in favor of the Union. Thereupon, in compliance
with the arbitrator's decision, a program salesman was referred by the Union to
United who was put on the payroll as an employee of the theater. The net effect
of this arbitration decision was to abrogate the agreement whereby MGM had sub-
contracted the right to Superior to sell programs at "Mutiny on the Bounty." The
same day, Superior filed its charge in this proceeding.
Contentions
The General Counsel argues that the effect of article IV, section 3-which re-
quires the theater owners to use its own employees as program salesmen and, if the
theater owner does not desire to do so, then a mutually satisfactory agreement must
be worked out between the theater and Respondent Union-falls within the "hot
cargo" 4 proscriptions of Section 8(e) of the Act which makes it an unfair labor
practice to require an employer to cease doing business with a person, in this case
Superior, which lost its program concession for the picture "Mutiny on the Bounty"
because of this provision.
Respondent contends, however, that its purpose in enforcing the above referred to,
provision was to protect both union conditions of their members and work previ-
ously performed by the Union's members in the bargaining unit.
Discussion
Prior to the 1959 amendments of the Act, an employer could lawfully agree with
a union not to do business with "any other person" although a union could not un-
lawfully attempt to enforce such an agreement by strike action .5 This was called a
"hot cargo" contract under which the employer agrees ahead of time to quit doing
business with other employers who are nonunion or who have a labor dispute. The
U.S Supreme Court in its 1958 Sand Door decision 6 held that hot cargo contracts
were not invalid in themselves, but that unions could not attempt to enforce the
clauses by conduct otherwise within the secondary-boycott prohibition of the Act.
Thus, at the time Congress considered the 1959 amendments, the situation was that
the execution of a hot cargo contract was lawful and an employer could voluntarily
3 Kunkel, manager of United Theaters, testified Superior intended to employ a program
salesman from San Francisco
h "As used by labor unions, the term 'hot cargo' refers to goods produced or shipped by
an 'unfair' employer In such a context the term 'unfair' may refer to a struck employer,
to an employer whose goods bear no union label, or to an employer whose wages or other-
working conditions are deemed substandard by the Union." The Labor Reform Law,
p 91, Bureau of National Affairs (1059) It has also been defined "as an agieenient be-
tween an employer and a union which reserves to the union's members the right to refuse
to handle the goods of any other employer involved in a labor dispute " . .. or an
agreement which requires that the employer cease or refrain from doing business Frith
another person when that other person's labor policies are objectionable to the contract-
ing union " 48 New York University Law Review, No. 1, p 97 (January 1963)
5 Amalgamated Union, Local 5, UATV, Independent (Dynamic Manufacturing Corpora-
tion ), 131 NLRP. 292 See also Henry V Rabovin, d/b/a Conway's Express, 87 N1,111"
972, enfd. 195 F. 2d 906 (C A. 2) ; Chauffeurs, Teamsters , Warehousemen and Helpers'
Local Union No 135, etc (Pittsburgh Plate Glass Company), 105 NLRB 740; Genuine
Parts Company, 119 NLRB 399; McAllister Transfer, Inc, 110 NLRB 1769.
6 357 U.S. 93, enforcing 113 NLRB 1210, affirmed 241 F. 2d 147 (C A. 9)
SERVICE & MAINTENANCE EMPLOYEES ' UNION, NO. 399 1039)
comply with such a contract but the contract could not operate as a defense to in-
ducement of employees to strike or to refuse to handle goods even though the
union claimed it was only attempting to enforce the contract . New Section 8(e) 7
now makes it an unfair labor practice for an employer and a union merely to enter
into such an agreement and renders such agreements "unenforceable and void."
The legislative history demonstrates that Section 8(e) was enacted to close a loop-
hole that existed under the old Section 8(b) (4) and to prevent labor organizations,
from pressuring employers into signing "hot cargo" agreements and later forcing the
employers to cease doing business with other employers .8 Thus, the Congress sought
to make the existence of such contracts an unfair labor practice , so as to prevent the
"moral suasion" upon employers that would otherwise flow from the existence of
"hot cargo" agreements . This is evidenced by its being made a violation of the new
Section 8(b)(4)(A ) and (B ) for a union to use picketing or other secondary-
boycott pressures to force an employer to enter into such agreements with two ex-
ceptions not pertinent here.
The original Senate bill in 1959 limited the hot cargo prohibition to common
carriers subject to Title II of the Interstate Commerce Act . Its evident purpose was,
to apply to the trucking industry . But what originally was intended to apply to the
trucking industry has been extended by interpretation to apply to all phases of the,
economy in an attempt to prohibit any restraints on trade .9
Section 8 (e), read literally , would make unlawful any contractual provision con-
taining a restriction on an employer 's power to subcontract work, for any such pro-
vision constitutes , in some measure , an agreement not to do business with other per-
sons. Section 8(e) must be read, therefore , in the light of its purpose and legislative
history 10 and of the particular evils at which the legislation was aimed,il which was
to make unlawful hot cargo contracts , "implied" as well as "express ," whereby an
employer agrees , in advance , to allow secondary pressures to be conducted through
him.12 Accordingly , whether or not a particular contract clause falls within the
interdiction of Section 8(e) is determined by whether the clause in issue embodies
or envisages a secondary boycott.13 That is, the clause is within the proscription,
of Section 8(e) if its provisions "extend beyond the employer and are aimed really
at the union 's difference with another employer ." 14 If, on the other hand, the
subcontracting clause is a total ban aimed at protecting the jobs 15 or the contract
standards of the contracting employer's employees, then its purpose is primary, and'
the clause is not within the proscription of Section 8(e).16 Thus , to the extent that
7 Section '8(e) provides'
It shall be an unfair labor practice for any labor organization and any employer to,
enter into any contract or agreement , express or implied , whereby such employer
ceases or refrains or agrees to cease or refrain from handling, using , selling, trans-
porting or otherwise dealing in any of the products of any other employer , or to cease
doing business with any other person, and any contract or agreement entered into
heretofore or heieafter containing such an agreement shall be to such extent un-
enforceable and void . . . .
8 Virginia L . Rev. 195, 237 ( 1960).
01 Leg Hist ( 1959 ) 115, 778; 2 Leg. Hist. ( 1959 ) 1706, 1708 ; H Rept. No. 741,
pp 20, 80, and 97
10H Rept . No 741 , pp 20, 80 , 97, I Leg . Hist. (1959 ) 778, 838 ; II Leg Hist (1959)
1007, 1162, 1194, 1258 , 1273, 1384, 1428, 1437, 1454 , 1568, 1620, 1703, 1708, 1712, 1749,
1775 , 1794, '1857
11 See Apex Hosiery Co . v Leader, 310 U . S. 469, 489.
12 See 71 Yale Law Journal 158 , 164, particularly footnote 33.
is District No 9, International Association of dtachsnusts v. N.L R B . ( Greater St Louis
Automotive Trimmers & Upholsterers Assn ), 315 F. 2d 33 , 36 (C.A D.C )
14Local 636 , United Association of Journeymen and Apprentices of the Plumbing and
Pipe Fitting Industry of the U.S. and Canada, AFL-CIO v. N .L R B. (Detroit Edison Co.),
278 F 2d 858 , 864 (CAD C ).
is It would appear illegal for a union to attempt to obtain work not traditionally per-
formed by it See 38 N Y.U Law Rev . 97 at p. 114, and Wilson if Co., 143 NLRB 1221
1s In District No 9, International Association of Machinists ( Greater St Louis Auto,
motive Trimme)s ), 134 NLRB 1354 , the Board noted that many labor-management agree-
ments include provisions restricting or prohibiting subcontracting of work which ordi-
narily is performed by employees in the bargaining unit The Board , however , did not
rule "whether such contract clauses were" lawful or unlawful Professor Cox holds that
if the object is to maintain jobs for the employees , it is not illegal 44 Minn. L R. 257,
273. Accord 38 N.Y U. Law Rev. at p 113.
1040 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
a contract imposes a total ban on subcontracting, it is primary in nature and outside
the scope of Section 8(e), in that it regulates solely the relations between an employer
and his employees and its basic objective is the preservation of work for those em-
ployees in the bargaining unit.17 It would appear, therefore, that a clause which
completely limits subcontracting to companies which conform to prevailing working
conditions, fringe benefits, and wage standards would not be within the ban of Sec-
tion 8(e). For, it would seem, such a clause, despite the fact that it relates to the
employment conditions of another employer, is primary in nature in that it has a
direct bearing on the preservation of work for the unit employees, as well as the
economic integrity of the work unit, in that it removes much of the economic in-
centive for contracting out and thus preserves the work for the unit employees.18
Such a provision, it would appear, neither embodies nor envisages a secondary
boycott.
Professor Archibald Cox, now Solicitor General, who as adviser to then Senator
Kennedy, played an important role during congressional consideration of the Labor-
Management Reporting and Disclosure Act of 1959,19 leaves little doubt as to
the intention of Congress in enacting Section 8(e) with respect to its inapplication
to conventional restrictions on subcontracting of work. He states as follows: 20
Although the language leaves doubt, the underlying rationale should also
exclude from section 8(e) conventional restrictions upon subcontracting such
as the promise that all work that is usually performed in the plants of the
Company shall continue to be performed in such plants unless a change is
mutually agreed upon by both parties. [Emphasis supplied.]
In a literal sense this clause is an agreement between an employer and a
union by which the employer undertakes not to do business with any other
person, but it has a different function from the contracts which were the targets
of section 8(e). A restriction upon subcontracting which seeks to protect
the wages and job opportunities of the employees covered by the contract, by
forbidding the employer from having certain kinds of business done outside
his own shop, is quite different in purpose and effect from blacklisting spec-
ified employees or groups of employers because their products or labor policies
are objectionable to the union. The fact that Congress rejected the attacks
upon the secondary boycott provisions of the Landrum-Griffin Bill which
alleged that the bill unwisely threw doubt upon the validity of bona fide re-
strictions upon subcontracting, may be attributed to disbelief in the allegation
just as easily as to congressional opposition to contractual restrictions upon
managerial freedom to subcontract, although there were undoubtedly indi-
viduals who hoped also to resolve the subcontracting issue in favor of manage-
ment. Whatever the merits of the latter issue, it is distinct from the only ex-
plicit subject of legislative concern.
Another authority on labor law, Professor Benjamin Aaron, reaches the same
conclusion. Professor Aaron states as follows: 21
The second major question is whether the "hot cargo" prohibition is ap-
plicable to provisions in collective agreements that either forbid any subcon-
tracting by the employer or substantially curtail his right to subcontract.
Suppose, for example, that an employer who formerly had certain kinds of
work performed by subcontractors, away from his plant, agrees to the follow-
ing new provision in the collective agreement: "All work shall be performed
on the employer's own premises; there will be no work contracted out during
the term of this agreement." Literally construed, the provision is an agree-
ment by the employer to cease dealing with another person; yet it does not
appear to be the type Congress wished to outlaw. As Professor Cox points out,
a restriction upon subcontracting which seeks to protect the wages and
job opportunities of the employees covered by the contract, by forbidding
the employer from having certain kinds of business done outside his shop,
17 Ohio Valley Carpenters District Council, etc (Cardinal Industries), 136 NLRB 977;
Milk Drivers' Union Local 753, etc. (Pure Milk Assocriation), 141 NLRB 1237
18 Cf Retail Clerks Union Local 770 etc (United States Hardware and Paper Co.) v.
N L R B , 296 F 2d 368, 374 (C A.D C )
19 Vol II, "Legislative History of Labor-Management Reporting and Disclosure Act of
1959," p 1203(1).
20 Vol 44, Minnesota L Rev., p 257.
=1 "The Labor-Management Reporting and Disclosure Act of 1959," 73 Harvard L. Rev,
pp. 1086, 1118 '`
SERVICE & MAINTENANCE EMPLOYEES' UNION* NO. 399 1041
is quite different in purpose and effect from blacklisting specified employers
or groups of employers because their products or labor policies are ob-
jectionable to the union.
Unfortunately, the problem is not always that simple. Suppose, the subcontract-
ing provision obligates the employer to cease dealing with an outside mainte-
nance company which formerly performed janitorial services at the employer's
place of business On its face this agreement seems to be legitimate on the
grounds mentioned by Professor Cox. Suppose, however, that the union in-
volved is an affiliate of the Building Service Employees, and that the mainte-
nance company has been actively resisting the same union's efforts to organize
its employees. In this situation the union may. be motivated both by the desire
to increase work opportunities for its own members and by the wish to punish
the subcontractor. If the agreement were to be held illegal for that reason,
however, it would tip the scales unreasonably and far too heavily in favor of
the subcontractor in its competitive struggle with the union. As long as the
union can show that the subcontracting provision will'directly benefit employees
covered thereby, its other motives, as well as the incidental effects of such an
arrangement on outsiders, should not be made the basis for declaring the agree-
ment illegal. [Emphasis added'.] -
"The law on subcontracting clauses under Section 8(e) is still in a state of flux." 22
It might be well, therefore, to discuss some recent Board decisions interpreting
Section 8(e).
In Minnesota Milk Company, 133 NLRB 1314, enfd. 314 F. 2d 761 (C.A. 8), the
Board held that whether a particular work protection clause is violative of Section
8(e) because it may affect present relationships between the employer and sub-
contractors presently doing such work, must depend upon "the language used, the
intent of the parties and the scope of the subcontracting restriction .
In E. A. Gallagher & Sons (Highway Truck Drivers and Helpers, Local 107),23
the Board found violative of Section 8'(e) a contract provision which, would have
obligated the employer to'see that all trucks arriving in the area, be brought to. the
employer's terminal before making any delivery or pickup. Though not explicitly a
hot cargo agreement, this contract would have had, the effect of causing the employer
to cease doing business with certain nonunion. owner-operators. Finding a violation,
the Board stated: ". . . by proscribing contracts `express or implied,' Congress obvi-
ously intended that the thrust of Section 8(e) extend not only to contracts which
clearly on their face cause a cessation of business, but also to those contracts which
by their intended effect or *operation achieve the same result. No other interpretation
appears open or reasonable; else the efficacy of this section would be nullified." 24
In another case,25 the Board stated similarly: "Congress was intent upon outlaw-
ing `hot cargo' clauses no matter how disguised. Probably no language can be ex-
plicit enough to reach in advance every possible subterfuge of resourceful parties.
Nevertheless, we believe that in using the term `implied' in Section 8(e) Congress
meant to reach every device which, fairly considered, is tantamount to an agreement
that the contracting employer will not handle the products of another employer or
cease doing business with another person."
In Patton Warehouse and' Brown Transport; two cases 26 involving so-called' "pro-
tection of rights" clauses, the Board found that a contract clause which granted em-
ployees immunity from disciplinary action for their refusal to cross a picket line is a
valid clause only if it is limited (1) to protected activities engaged in by employees
against their own employer and (2) to activities against another employer who has
been struck by his own employees, where the strike has been approved or ratified by
their representative, whom the employer is required to recognize under the Act. In
Patton Warehouse, the clause required the employer "to refrain from using the serv-
ices of any person who does not observe the wages . . . established by labor unions
having jurisdiction over the type of services performed." The Board found the
clause unlawful under Section' 8(e) on the ground that the clause limited the em-
22Bakery Wagon Drivers Local 484 v. N.L R B. ( Sunrise Transportation ), 321 F 2d
353, 357 (C A D C ).
21131 NLRB 925, enfd • 302 F. 2d 897 (C.A.D.C.).
'-¢ Id at 930. - +
15 Amalgamnated Lithographers of America and, Local 78 (Employing Lithographers),
130 NLRB 968, 976.
20 Patton Warehouse, Inc., 140 NLRB 1474, and Brown Transport Corp., 140 NLRB 1436.
760-577-65-vol. 148-67
1042 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ployer in the choice of the persons with whom he should be permitted to do business
rather than to require him "to refrain from contracting out work previously per-
formed in the bargaining unit."
In, Swimming Pool Gunite Contractors, 144 NLRB 978, where a contract clause
sought, by the union provided that unions would not be deemed to have violated the
contract if a signatory employer's employees refused work on a project where work
has been stopped because the job has been declared "unfair," the -Board, citing
Patton Warehouse, held that since the disputed clause is not limited to situations
where the strike was ratified or approved by the majority representative, "We find
that such clause in effect forces the employers to cease doing business with other
employers and therefore comes within the terms of Section 8(e)."
In another case 27 involving "subcontracting" clauses, the Board struck down an
agreement that provided the contracting employers would subcontract work only to
employers who were under contract with the respondent unions or with specified
unions. The Board held that these clauses implied an agreement not to do business
with those who did not so qualify under the contract, and therefore were invalid
under Section 8(e).
In Arden Farms,28 the Board held invalid an agreement where the contract clause
in question provided, in effect, that employers must do business only with individual
signatories to an agreement or who agree to be bound by it or who otherwise are
approved by unions that are parties to such contract. The Board held that the em-
ployers and the union may lawfully contract that -all operations of the employers
should be performed by those employees in the bargaining unit but that Section 8(e)
forbids an agreement to subcontract work, even of a character performed by em-
ployees in the unit, only to those employers who employ members of,the union or
who otherwise meet the union's approval. -
In Meat and Highway Drivers, Dockmen, Helpers and Miscellaneous Truck Termi-
nal Employees,. Local Union No. 710, IBTCHWA- (Wilson & Co. Inc., et al.), 143
NLRB 1221, the meatpackers were moving their plants out of Chicago and utilizing
over-the-road drivers to ship products into the Chicago area. The loss of these jobs,,
formerly held by the union's members, disturbed the union so that the contract pro-
visions in question were designed to limit Chicago deliveries to the respondent union's
members. A Board majority held that the union violated Section 8(e) of the Act by
demanding inclusion in a collective-bargaining contract,of clauses which (a) would
result in a partial cessation of business relations with interstate carriers, (b) limit
the trucking companies with whom the employer can do business to those under con-
tract with the union, (c) would require cessation of business with interstate carriers
by withdrawing from them the intracity portion of their deliveries directed to cus-
tomers in -the Chicago area, and (d) the effect of which would expressly prohibit
subcontracting overflow shipments in excess of employer's facilities to any nonunion
employer. The Board held the agreement went beyond protecting work'of em-
ployees in the unit by removing subcontracting to low-wage carriers, and, at least by
implication, declared the Board, is an agreement not to do business with employers.
who do not qualify. Moreover, its object was to force meatpackers to assign to
employees in the bargaining unit deliveries originating out of State which had never
been performed by them. -
Chairman McCulloch (dissenting in part) held that "the union may insist on'bar-
gaining with the packers with respect to contractual provisions which are designed to
retain, reclaim, or obtain work of the type now being performed by unit members,
despite the possibility that a successful insistence in that respect might entail changes
in the present relationships between packers and their independent haulers who are,
making local deliveries as the final step in their interstate hauling." He disagreed
with the majority's "tacit assumption that the effort of the union to bargain with the
packers about protection of unit work necessarily violates § 8(e) .
Member Brown (dissenting) found that the clause requiring all deliveries in Chi-
cago city limits be made from a Chicago city dock or Chicago distribution facility by
employees covered by the agreement with the union is valid, as well as the clause
requiring that any subcontracting be made to employers who have agreements with-
the union or have employment standards equal to union standards. He considered it.
"lawful for parties to accommodate employer need for operational flexibility with the
`legitimate attempts by the union to protect and preserve the work and standards it
has bargained for,' " citing Retail Clerks Union Local 770 v. N.L.R.B. (Food Em-
ployers' Council), 296 F. 2d 368 (C.A.D.C.).
n The Frito Company, 138 NLRB 244.
,98 141 NLRB 341.
SERVICE & MAINTENANCE EMPLOYEES' UNION, NO. 399 1043
In Raymond 0. Lewis, et al., as agents for the International Union, United Mine
Workers of America, etc.; et al. (Arthur J. Galligan), 144 NLRB 228, the Board
held that the protective wage clause of the National Bituminous Coal Wage Agree-
ment of 1950 is violative of Section 8(e). The heart of the clause and pertinent
provision thereto provide that "the operators agree that all bituminous coal mined,
produced or acquired by them or any of them under a subcontract arrangement,
shall be or shall have been mined or produced under terms and conditions which
are as favorable to the employees as those provided for in this contract," and that
"any operator signatory to the contract who is a party to any agreement inconsistent
with the obligations assumed hereunder shall not maintain such inconsistent agree-
ment in effect beyond the first date at which such agreement may be terminated by
him in accordance with its terms." Such provisions, which require operators to
obtain coal they themselves cannot mine from other operators who observe con,
ditions as favorable to mine workers as those of the Bituminous Coal wage
agreement, the Board found, establish a class of employers with which the signa-
tory operators are precluded from dealing in the purchase of coal, and that the
operators are required to cease doing business with such employers at the first
opportunity presented under whatever arrangements existed at the time of the sign-
ing of the agreement. In addition, whether or not the signatory operators were
dealing at that time with a particular employer they are required to refrain from
dealing with him, if its employees do not work under standards as favorable as
those set forth in the contract between'the operators and the union. While of the
belief that economic and historical problems relating to subcontracting of work in
the bituminous industry are properly considered in reaching an understanding of the
clauses, the Board did not consider such factors as in any way justifying an admin-
istrative exemption from the provisions of Section 8(e) -which the legislative history
of that section makes*plain'Congress rejected. Although the respondents contended
that the object of the clauses was to preserve work for employees covered by the
contract, and maintain contract standards • under which work is performed, the
limitation, stated the Board, regulates the employment terms and conditions of em-
ployees of other employers with whom the signatory operators may do business
which is violative of Section 8(e).
In Chauffeurs, Teamsters and Helpers "General" Local Union No. 200 (Mil-
waukee Cheese Company), 144 NLRB 826, it was held that clauses restricting the
employer's use of owner-operators and pickup or delivery of perishable commodities
are "too vague to be susceptible of construction or interpretation to determine their
legality under Section 8(e) of the Act." However, these "vague" clauses would
be unlawful, stated the -majority,, if intended to control employment conditions of
-employees of other employers or to limit local deliveries to union members.
In Cardinal Industries, Inc.,29 the Board -laid down the principle that a contract
provision designed only to confine work to unit employees and which is immediately
related to terms and conditions- within the unit is legal, as "hot goods" clauses
within the proscriptive purview of. Section 8(e) are concerned with working con-
ditions outside the contract's bargaining unit.
,In Pure Milk.Association,30 the Board held that a job protection clause of the
unit employees did not violate Section 8(e) as it was valid on its face. The Board
stated that a contract clause which prohibits or restricts absolute subcontracting
of work performed by employees in the bargaining unit is lawful but a clause which
allows subcontracting only to certain qualified employers violates Section 8(e).
To recapitulate, the present law would appear to be that whether a particular
contract clause falls within the proscription of Section 8(e) is determined by whether
its objective is primary or secondary in nature, i.e., whether the clause in question
extends beyond the employer and is aimed really at the union's differences with
another employer,31 or whether its substantive objective is promoting better working
conditions, preserving higher wages and work opportunities for unit employees
generally.32 In making this determination, a distinction should be made between
a subcontracting provision intended to preserve the jobs of the employees in the
unit and a subcontracting restriction which limits the persons with whom the em-
ployer can do business 33
20 136 NLRB 977
30 141 NLRB 1237
31 Local 636 of the United Association of Journeymen etc. (Detroit Edison Co ), 278
F. 2d 858 at 864 (C A.D.C )
32 See Raymond 0. Lewis, et al., International Union, UMW, 144 NLRB 228 supra.
33 See Falstaff Brewing Corporation, 144 NLRB 100.
1044 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUDING FINDINGS
In arriving at a decision in this case , it is necessary to apply the above legal
principles to the salient issue in this proceeding ; namely, what was the Respondent's
overriding purpose in having article IV, section 3, supra, included in the contract
executed on February 15, 1961, between United Theatres and the Union? The
General Counsel argues that Respondent's contention that one of its basic objec-
tives in insisting on the inclusion of article IV, section 3, was to preserve work for
the program sellers is not valid because program salesmen had never been employed
by United Theaters as the program concessions in the past had always been sub-
contracted by United to third parties. The record, however, does not substantiate
this contention of the General Counsel as the evidence reveals that United Theatres
had used their own employees as program salesmen on two previous occasions when
the moving pictures "Oklahoma " and "South Pacific" were shown at its theaters.
Moreover, whether United Theatres had ever used its own employees as program
salesmen prior to the showing of "Mutiny on the Bounty" is not dispositive'as one
of the primary issues in this proceeding revolves around the Union 's right ,to-protect
the work of the employees in the contractual bargaining unit as program salesmen
have been represented by the Union for some years past and were included since
at least 1958 in the bargaining unit described in the current and previous contracts
negotiated between United and the Union.
Highly illuminating with respect to the Union's asserted reasons for desiring
article IV, section 3, and the Charging Party, Superior 's, contention that the Pan-
tages Theater picketing incident in 1960 was intended to circumvent the settlement
agreement and was the reason for the inclusion of this clause in the current con-
tract is the affidavit of one Raskin , who represented the theater owners in the nego-
tations with the Union which eventuated in the execution of the current contract.
His affidavit reads as follows:
Affiant is presently the President of Western Building Maintenance Com-
pany. From 1954 to approximately November, 1961, Affiant was General
Manager and Vice-President of American ' Building Maintenance Company.
Affiant represented American Building Maintenance on negotiations with Local
399. In November of 1960 , Affiant was selected by a group of employers that
were parties to the Southern California Theatre and Amusement Agreement
with Local 399 to represent the employers in negotiating a new Collective Bar-
gaining Agreement with the Union . The group of employers included most of
the major theatre chains in Los Angeles County, including representatives of
United Artists . The reason Affiant was selected as the negotiator for the em-
ployers was that the major cost item of the Contract involved maintenance
work, and Affiant had considerable experience in this area.
The formal negotiations commenced after Christmas , 1960 . At the early
meetings the Union presented a list of demands , which included a provision
which stated , as I recall , as follows: "Program Seller , language clarification."
I asked the Union representatives , Mr. Herchell Chubb and Mr . Edward Phelan,
what they had in mind . They explained to me that the Union wanted to pro-
tect the seniority rights of the program sellers in this area and to protect the
Hiring Hall Procedures and to maintain the uniformity of work conditions for
all program sellers in this area.
The previous Collective Bargaining Agreements between the theatres and
Union had contained the classifications of "program sellers" and "souvenir book
sellers." Many of the theatres hired program sellers directly as employees
under the classifications in the Contract , which the employers always considered
as a part of the Bargaining Unit.
I took the outline of the Union 's demands to the Employers ' Committee and
discussed them with the group . The Committee consisted of representatives of
various theatre chains, including representatives of United Artists and certain
independent theatre owners. I explained the clarifications desired as to the pro-
gram seller and the reasons stated by the Union representatives . The Em-
ployers' Committee advised me that they had no objections to the proposals and
principle and instructed me to ask the Union to draft specific language. -- I asked
the Union for the language and was furnished with the language, which is pres-
ently incorporated in the Agreement as Article IV, Section 3. All of the em-
ployers who are parties to the multi-employer Southern California Theatre
Agreement are bound by the Agreement, which includes Article IV, Section 3.
I recall that the entire Agreement was approved by February 1, 1961• because
we were anxious to get the Agreement signed by February 15, 1961; so that we
would have no problems regarding retroactive pay.
SERVICE & MAINTENANCE EMPLOYEES ' UNION, NO. 399 1045
In none of the negotiations , or discussions with the Union representatives or
the Employers ' Committee was there , any mention of any subcontractors or any
litigation or charges before the National Labor Relations Board 34
This affidavit of a disinterested third party not only fails to corroborate but repudi-
ates the General Counsel 's and Charging Party's contention that article IV, section 3
had as its objective the termination of Superior 's program concession at United
Theatres in order to prohibit United from doing business with Superior . Then too,
there is the absence of probative evidence in the record casting doubt upon the bona
fides of the Union 's contention that its overriding purpose in proposing article IV,
section 3 was to protect its program salesmen 's jobs, seniority , wage scale , and work-
ing conditions and that at no time did it intend to bring pressure on United 's theaters
to cancel Superior 's program concessions.
Corroborative of the Union' s contention that it was interested solely in seeing that
all program sellers were covered by the contract between the theaters and the Union,
in order to prevent the erosion of the bargaining unit , is the cogent fact that on two
occasions when United and Warner - Brothers did not comply with article IV, sec-
tion 3, the Union did not insist that these two theaters rescind Superior 's program
concessions at the showing of "King of Kings" and "Brothers Grimm" but showed its
bona fide intentions by waiving the "violations " and allowing Superior to continue to
sell programs for the remainder of the run of these two moving pictures.
With respect to bona fides , perhaps Superior 's motives and actions might be skepti-
cally characterized , For instance , Superior alleges it has had a contract since 1957
with Home Office Employees Union Local H-63, IATSE, AFL-CIO, which covers
Superior 's program salesmen throughout the United States. This union 's only office
is located in New York City. - However, the Board 's certification (Case No. 2-RC-
8910, November 27, 1957) states that the said New York City union is the repre-
sentative of "all book men employed by [Superior ] in the New York City area, in-
cluding Long Island ." Superior alleges that it employed one Grant , a resident of
Los Angeles , and a member of both the New York City union and the Respondent
Union as a program salesman in the Los Angeles area, upon being informed by the
New York- City union that Grant was "available." '
It is not too unreasonable to assume that Superior 's contract with the New York
City union was used to circumvent what may have been the better working cond-
tions for program salesmen provided for in the Los Angeles area in the Respondent
Union 's contract than in Superior 's contract with the New York City union. It
would appear, therefore , that the Respondent Union had a right to take such de-
fensive action as the circumstances warranted , in order to prevent the working condi-
tions obtained by it for its members from being undermined by the advent of a pro-
gram . concessionaire , Superior, 'operating under an outside union 's contract.
Furthermore , it would appear.under the Boards Town & Country Manufacturing
Company decision 35 that where 'a statutory bargaining representative is in the pic-
ture, as the Respondent Unon here, it_ is required that the subject of subcontracting
be subject to a collective -bargaining process as envisaged in article IV, section 3 the
provision in issue in the instant case. Under Town & Country, the duty to bargain
about subcontracting comes within the area of mandatory bargaining and the matter
of motivation is a question of evidence : At applied 'to the facts in this case , the em-
ployer cannot, under - the provisions of article IV, section 3, unilaterally decide to
subcontract the sale of programs̀ without notifying, negotiating, and bargaining with
the Union, the bargaining representative of the program salesmen . To hold other-'
wise would be tantamount to disparaging and ' undermining the Union as majority'
bargaining agent . Article IV, section ' 3 provides for nothing more than what Town
& Country requires : a form of industrial self-government whereby the employer is
required to' bargain with the' Union about a decision to subcontract bargaining unit
work . The object is to create ' an environment conducive to industrial harmony-one
that would eliminate costly industrial ' s'trife. Article IV, section 3 serves that objec-
tive and , at the same time, affords ' the Union an *opportunity to supply, a mutually
feasible ' solution .* Nbr'does this clause dictate to the Employer 'those persons with
whom he shall be permitted to do ,busiriess, as one of the purposes , is merely to oblige
him'to refrain from contracting out work previously performed by employees in the
This affidavit was an exhibit in a SeGtion ' 10,(1 )' proceeding in the U S. District Court
for the Southern , District of,-California , in Case Civil Nos' 63-651-JWC and 63-490-JWC.
35 136 ,NLR 1022, enfd . '316 F. 2d 846 (,C A. 5 ), which held , 'inter aha, that the duty to
bargain with ,respect to ;subc9ntracting comes , within the ' area of mandatory bargaining.
See NL.R.$."v. j1enne'Hatx, etc.,id% b%a ii ia, a86,4 .Steet Prod+ cta Co., 369, U.S. 736, 747:.
1046 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
contractual bargaining unit. And since the evidence does not show that the Respond-
ent Union acted in bad faith in urging inclusion of this provision , it is found that
there was no violation of the Act.36
The facts in this proceeding do not support a finding of a proscribed motivation
within the meaning of Section 8(e). Nor can there be any premise countenanced
that this is an attempt to usurp legitimate managerial prerogatives as this neither re-
strains an employer from formulating or effectuating an economic managerial deci-
sion nor obligates him to yield to any decision "unless mutually agreed upon by the
Employer and the Union ." 37 What it does require is the very essence of the Act
itself: that the parties , management and labor, engage in prior discussion before in
an attempt to establish answers and find solutions to the problems at hand. What
article IV, section 3 does, in effect , is foster the principle of joint discussion , the key-
stone of the Act itself.
It is true that management 's interest in efficient and economic operation and the
employee-union's interest in unit employment conditions , as well as preventing the
erosion of the bargaining unit, are in the balance. In the abstract a union has the
right to protect the interests of its members and the employer the correlative right to
protect the economic integrity of his enterprise . Giving effect to these dual objectives
is, indeed , most difficult of accomplishment in that a balancing of the equities to deter-
mine which is paramount requires a reconciliation and preservation of the union to
represent its members ' best interests by preserving work standards, their jobs, and
right to work, while at the same time to vouchsafe to employers the right to preserve
or maintain the economic integrity of their business enterprise by subcontracting a
portion of their operations where economic circumstances so require38 It is appar-
ent that these situations involving conflicting legitimate interests of both the union
and the employer cannot be resolved in a frame of reference which takes into account
the rights of only the one to the exclusion of the other. In such a case, conflicting
legitimate interests must be accommodated.39 The instant proceeding presents one of
these ambivalent situations as the ultimate problem is the balancing of conflicting
legitimate interests 40
It may happen , however, that in realizing the dual objectives of work preservation
and maintenance of work standards commensurate with those required by the union,
the employer is precluded from doing business with persons not parties to a contract
with the ' union . However, this is a classic example of damnum absque injuria,41
as the Respondent Union had a legitimate primary dispute with United regarding
article IV, section 3, and the arbitration award which resulted in United Theatre's
cessation of business with Superior is purely an incidental result rather than an "ob-
ject" of its activities as it was only demanding compliance by United of its written
commitment to abide by the provisions of article IV, section 3 of the contract.
Furthermore , Section 8(e) of the Act has reference to the usual situation where
the employer or union "agrees" to "cease or refrain" from doing business with an-
30 See Peerless Distributing Company 44 NLRB 1510.
r37 See article IV, section 3, supra.
88 In this connection, it is interesting to note that the first portion of Section 8(e) makes
it an unfair labor practice for a contract to provide that an employer agrees to "cease"
or "refrain" from doing business with another, whereas the second part of Section 8(e)
omits the word "refrain" and does not prohibit an agreement to "refrain" from doing
business "with any other person." "Cease" is defined as "to bring to an end" while
"refrain" is "to keep oneself from doing something implied or understood." .. Webster's
New Collegiate Dictionary" (1961), pp. 133 and 711. It would seem, therefore, that in
the case of "cease," the relationship has already been established and is in effect, whereas
to "refrain" has reference to a relationship looking to the future and not yet established.
Substantively, this omission of "refrain" in the second part of Section 8(e) might be held
to apply to a situation where it would not be encompassed within the proscriptive pur-
view of Section 8(e) for an employer prospectively to agree not to do business with an-
other person with whom no business relationship had yet been established as of the time
the clause was executed by the employer and union.
' See N.LR.B. v. Truck Drivers Local Union No. 449, IBT (Buffalo Linen Supply-Co.),
353 U.S. 87, 96; N.L.R.B. v. Babcock & Wilcox' Company, 351 U. S. 105 , 112; Republic
Aviation Corporation v. N.L.R B., 324 U.S. 793, 798.
4u N.L R.B. v. Erie Resistor Corp., 373 U.S. 221.
41 "Injury without wrong ; or wrong done to a person for which the law provides no
remedy. Injuria is here to be taken in the 'sense of legal injury ; and where no malice exists,
there are many cases of wrong . . . inflicted upon a person to which the law gives no
remedy." .. Bouvier' s Law Dictionary," vol. I ( 3d ed.), p. 754.
SAUNDERS SYSTEM CORP. 1047
other party. In this proceeding, however, the program concession of Superior was
canceled by United in accordance with the decision of the arbitrator. It would ap-
pear doubtful, therefore, that inasmuch as this was not a voluntary act of United
Theatres in that its abiding by the arbitration award which resulted in Superior's
losing its program concession was not the type of situation envisaged within the pro-
scriptive purview of Section 8(e), because the cessation of business between United
and Superior was not the result of an "agreement" but simply the result of the parties
abiding by the arbitration award. See Bakery Wagon Drivers, Local No. 484, 137
NLRB 987, 995.
Then, too, Respondent Union's insistence on adherence to the provisions of article
IV, section 3, was not illegal as this contract clause was a total and complete prohibi-
tion on all subcontracting. A contract which prohibits all subcontracting, the Board
has stated, is not a violation of Section 8(e) but a legitimate device to protect the
economic integrity of the bargaining unit42
Moreover, the Respondent Union was not objecting to subcontracting as such but
only where a subcontractor who was awarded a program concession by a signatory
to the multiemployer bargaining agreement was not obtaining his program sales-
men through the Union, as expressly provided for in the collective-bargaining agree-
ment between the theatre and the Union. The basis for the Union's objection to
program subcontractors not obtaining salesmen through the Union was not only the
latent possibility that the working standards embodied in the Union's contract with
the theatre owners might be undermined, but also to protect the work which tradi-
tionally has belonged to program salesmen in the bargaining unit. A contract whose
overriding purpose in limiting subcontracting to employers is to maintain working
conditions equivalent to those in the contractual bargaining unit, as well as to protect
the work of the unit employees, is primary in character and not proscribed by Sec-
tion 8(e) absent a requirement for a union contract to enforce illegitimate demands
against subcontractors.43 The Respondent Union's objective, therefore, was to pro-
tect the legitimate economic interests of its member program salesmen and not just
enforcing article IV, section 3, to force United Theatres to cease doing business with
Superior. The language employed in this provision, as reasonably construed, im-
poses no unlawful restraints, as the facts herein reveal that article IV, section 3 is
"strictly germane to the economic integrity of the principal work unit." 44
It is found, therefore, based upon the entire record, that there is not substantial
evidence to support the General Counsel's contention that Respondent Union's motive
in entering into article IV, section 3 was for a reason proscribed by Section 8(e) of
the Act. Accordingly, it is recommended that the complaint herein be dismissed in
its entirety.45
42 Cardinal Industries , Inc., 1136 NLRB 977 ; Pure Milk Association, 141 NLRB 1237.
43 Cf. Drive-Thru Dairy, Inc., 145 NLRB 445.
44 District No. 9, International Association of Machinists v. N.L.R .R. (Greater St. Louis
Automotive Trimmers & Upholsterers Assn.), 315 F. 2d 33 (C.A.D.C.), 51 LRRM 2496,
2498. See also Retail Clerks Union Local 770 v. N.L.R.B . ( United States Hardware etc.),
296 F. 2d 368, 373 ('C.A.D.C.).
46 The conventional "conclusions of law" which are customarily repeated at this point
are omitted as they will be found in the body of this Decision.
Saunders System Corp.' and Lodge 804, District Lodge No. 34,
International Association of Machinists , AFL-CIO, Petitioner.
Case No. 9-RC-2651. September 14, 1964
DECISION AND ORDER AMENDING BARGAINING UNIT
On December 29, 1955, the Regional Director for Region 9
issued a certification of representatives herein, certifying the Peti-
1 The Employer' s name appears as amended at the hearing.
148 NLRB No. 106.