National Labor Relations Board, Petitioner, v. Joint Council of Teamsters No. 38, Teamsters Union, Local No. 87, et al., and Arden Farms Co., et al., Respondents, 338 F.2d 23 (9th Cir. 1964)

The National Labor Relations Board petitions for enforcement of its order directed against certain provisions of respondents' collective bargaining agreement, which the Board held¹  to be in violation of section 8(e) of the National Labor Relations Act.² 

* The first of the challenged provisions, article 5, section 1, provides that each respondent employer "agrees to refrain from doing business with any person engaged in the distribution of fluid milk or ice cream products who has not executed this agreement."

Respondents contend that the agreement embodied in section 1 of article 5 is not forbidden by the language of section 8(e), and, moreover, that it is not the kind of agreement which Congress intended to prohibit.

Respondents' argument based upon the statutory language begins with a division of section 8(e) of the Act into two parts — the first prohibiting an agreement by an employer to "cease or refrain from handling, using, selling, transporting or otherwise dealing in any of the products of any other employer"; the second prohibiting an agreement by an employer to "cease doing business with any other person."

1. Respondents contend that the first of these prohibitory clauses is inapplicable to section 1 of article 5 for two reasons. First, they assert that the phrase "any person" in this provision of their contract refers to individual truckers who have no employees, and argue that an agreement to refrain from doing business with such individuals is not an agreement to refrain from dealing in the products "of any other employer." Second, they assert that the milk products involved are those of the respondent employer, and argue that there is thus no agreement to refuse to handle the products "of any other employer."

As to respondents' first contention, the record before the Board contained uncontradicted testimony that at least six to eight independent distributors doing business within the area affected by the collective bargaining agreement were in fact employers. The Board could properly conclude that the unqualified language of section 1 of article 5 applied to these distributors.

As to respondents' second contention, we think the rationale of National Labor Relations Board v. Servette, Inc., 377 U.S. 46, 84 S. Ct. 1098, 12 L. Ed. 2d 121 (1964), requires that the term "products of any other employer" in section 8(e) be read to include services furnished by an employer performing a distribution function.³  This conclusion is implicit in National Labor Relations Board v. Milk Wagon Drivers' Union Local 753, 335 F.2d 326 (7th Cir. 1964). See also Bakery Wagon Drivers and Salesmen Local Union No. 484 v. National Labor Relations Board, 116 U.S.App. D.C. 87, 321 F.2d 353 (D.C. Cir. 1963); Highway Truck Drivers & Helpers Local 107 etc. v. National Labor Relations Board, 112 U.S.App.D.C. 312, 302 F.2d 897 (1962).

As the Supreme Court pointed out in Servette, "a primary target of the 1959 amendments was the secondary boycotts conducted by the Teamsters Union, which ordinarily represents employees not of manufacturers, but of motor carriers." 377 U.S. at 55, 84 S. Ct. at 1104. Section 8(e) would fall short of achieving its purpose if the Teamsters Union and a trucking company could agree with impunity that the latter would not interchange traffic with a non-union trucking company, on the theory that the latter's transportation service was not a "product." Both Congressman Landrum and Congressman Griffin pointed to this type of agreement as illustrative of the wrong which Congress sought to remedy.⁴ 

As noted in Servette, such terms as "produced" and "production" are commonly used in legislation to apply to the distribution of goods. 377 U.S. at 55-56, 84 S. Ct. 1098. The legislative history of section 8(e) is replete with references indicating that Congress meant to include all forms of economically productive effort within the term "product."⁵  Moreover, the language of the second clause of section 8(e) plainly includes services, and there is nothing in the legislative history to indicate that Congress intended the application of the two clauses to differ in this respect.

2. Even if the first clause of section 8(e) were inapplicable, section 1 of article 5 of respondents' contract would fall within the language of the second prohibitory clause. Respondents' contention to the contrary is premised upon the fact that the second clause of section 8(e) applies only to agreements "to cease" doing business, whereas section 1 of article 5 is an agreement "to refrain" from doing business. Respondents offered evidence that the parties intended this contract provision to apply only to future arrangements, and that no respondent-employer had been required to terminate existing arrangements with distributors.

Some commentators have accepted the distinction which respondents draw,⁶  but most have rejected it.⁷  We are satisfied that the latter position is correct. The legislative history offers compelling evidence that Congress intended no difference in meaning in its use of "cease" and "cease and refrain" in the two prohibitory clauses of section 8(e).

Section 8(e) originated in a floor proposal, offered by Senator Gore, prohibiting agreements by unions and common carriers by which the latter agreed to "cease or refrain from handling or transporting any of the products of any other employer." Senator McClellan expressed concern that this language might be circumvented by an agreement to refuse to do business with another employer. Such an agreement would effectively stop the transportation of that employer's products, but would not fall literally within the description of an agreement to stop "handling or transporting" those products. To meet this problem, Senator McClellan suggested the addition of the language, "or to cease doing business." The amendment was accepted.⁸  Thus, the second prohibitory clause of section 8(e) was added for the sole purpose of avoiding a possible subject-matter limitation upon the agreements prohibited. Nothing in the legislative materials suggests that either House intended to limit the reach of this broadened, "catch-all" clause to agreements affecting existing business relationships.

"Cease" and "refrain" are commonly treated as synonymous,⁹  and were so used throughout the legislative proceedings. When Senator McClellan suggested the addition of the second clause, Senator Gore twice restated the section as it would read after amendment, and each time used "cease" and "refrain" in both clauses.¹⁰  The word "refrain" was omitted from the second clause in the final printing of the Senate bill. This version was copied in later bills without comment on the omission, and, it may be fairly assumed, with no intention that the omission be accorded greater significance in the application of section 8(e) by the courts than it was accorded during the consideration of the section by Congress.¹¹ 

We conclude that section 1 of article 5 falls within the language of section 8(e) of the Act.

Respondents' legislative-purpose argument runs as follows: Section 8(e) was intended to reach only agreements of the "hot cargo" variety, which bind a neutral employer to boycott another employer with whom the union has its real dispute. Such agreements are banned because they bring unfair pressure upon the employer having a dispute with the union, involve neutral employers and employees in labor disputes not their own, and spread labor disputes from their primary situs. Section 1 of article 5 is not such an agreement, but rather prohibits subcontracting of bargaining unit work to outside employers to protect the job opportunities of the employees of the signatory employers. Since its purpose is to provide job protection, and not to bring pressure to bear upon other employers to affect their labor policies, the contract provision is primary in nature and does not fall within section 8(e)'s ban on secondary boycotts.

We agree that section 8(e) is not to be applied literally to prohibit all union-employer agreements limiting subcontracting. More particularly, an agreement which restricts subcontracting to protect the job opportunities of the employees of a signatory employer, and not to apply secondary pressure upon third-party employers, may be beyond the purpose of section 8(e) and excepted from its proscription.¹² 

But section 1 of article 5 of respondents' contract does not fall within this exception. Subcontracting is permitted if the third party has signed a union contract, prohibited if he has not. Whether the pressure of a boycott by a signatory employer will be applied to a third party depends entirely upon the latter's relationship with the union. The thrust of this boycott agreement is secondary, and the provision is therefore contrary to the purpose as well as the letter of section 8(e). Meat and Highway Drivers Local Union No. 710 v. National Labor Relations Board, 335 F.2d 709, 717 (D.C. Cir. 1964); Truck Drivers Union Local No. 413 etc. v. National Labor Relations Board, 334 F.2d 539, 548 (D.C. Cir. 1964); Dist. No. 9, Int'l Ass'n of Machinists etc. v. National Labor Relations Board, 114 U.S.App.D.C. 287, 315 F.2d 33, 36-37 (1962); Comment, 62 Mich. L. Rev. 1176, 1193 (1964).

Respondents seem to argue that section 1 of article 5 falls within the exception to section 8(e) because it preserves the job opportunities of employees within the multi-employer bargaining unit by prohibiting subcontracting to any employer outside that unit.¹³  But if this argument were accepted, the exception to section 8(e) would permit precisely what the section itself was intended to prohibit: an agreement by an employer to boycott another unless the latter entered into a union contract.

Since section 8(e) forbids the agreement itself "whether activated or in suspense" (Employing Lithographers of Greater Miami, Fla. v. National Labor Relations Board, 301 F.2d 20, 30 (5th Cir. 1962); see also Truck Drivers Union Local No. 413 etc. v. National Labor Relations Board, 334 F.2d 539, 542 (D.C. Cir. 1964)), it would make no difference if there were no existing non-signatory concerns which might be affected by the boycott agreement. Here, however, the record disclosed that there were,¹⁴  and that it was the union's intention to require them to sign the contract.¹⁵  Since respondent employer-producers control most of the dairy products distributed in the area affected by the contract,¹⁶  their agreement not to do business with independent contractors who did not adhere to the collective bargaining agreement would make resistance to union demands by the latter a practical impossibility. Section 1 of article 5 thus involves signatory employer-producers directly and decisively in the union's dispute with existing non-signatory distributors.

II

Section 2 of article 5 of the collective bargaining agreement is a particularization of the general prohibition of section 1 with respect to the transfer of existing distribution routes. The employer agrees that he will not subcontract existing distribution "without the prior consent of the Union unless after such transfer, the work or services transferred will be performed by an employer who is, or prior to such transfer agrees to become, a signatory to this agreement."¹⁷ 

The difference between this provision and section 1 is that subcontracting to non-signatories is conditioned upon union consent rather than being barred absolutely. Limitation of the consent requirement to transfers to non-signatories gives the agreement a secondary character.

Respondents point to the fact that the General Counsel did not challenge the first sentence of section 2. They assert that this provision is indistinguishable in principle from the second sentence (as well as from other challenged provisions), and argue that for this reason the attack upon the second sentence must fail. We need not stop to consider the differences between the two provisions, the soundness of the General Counsel's justification for challenging one but not the other, or whether the Board might have considered the lawfulness of the provision not attacked by the General Counsel. Cf. Frito Co., Western Division v. National Labor Relations Board, 330 F.2d 458 (9th Cir. 1964). It is the function of the Board and the court to determine the legality of the provisions that are in issue, and the General Counsel's decision not to challenge other provisions is irrelevant to that problem.

Respondents suggest that the second clause of section 8(e) of the Act is inapplicable to section 2 of article 5 because the latter applies only to transfers between employers, and the "any other persons" language in the second clause of section 8(e) excludes employers. We think the context clearly indicates that the referent of "other" in the second clause of section 8(e) is not the primary employer of clause 1, but rather the contracting employer. This is necessarily so in the first clause. Moreover, in its amendments of section 8(b) (4) (B), Congress indicated its understanding that "person" is to be read broadly to include employers.¹⁸ 

III

Section 3 of article 5 of the agreement particularizes section 1 with respect to the subcontracting of new or additional distribution by respondent employers.¹⁹ 

Subsection (a) permits the subcontracting of new distribution when it will be performed by an employee of a signatory employer, and is invalid on its face for reasons we have discussed. Subsection (c), in itself, may also impose unlawful secondary pressures upon non-signatory distributors. But, in any event, section 3 as a whole is to be read in the light of section 1 of article 5 and the intention of the parties.²⁰  As we have said, section 3 is a particularization of the unlawful general agreement in section 1, rendering it more specific and creating limited exceptions to it. Whether or not exceptions (b) and (c) would violate section 8(e) as independent agreements, we need not decide. They are integral, dependent parts of the unlawful agreement and must fall with it.²¹ 

IV

Section 4 of article 5 provides that hauling from a processing plant to a depot, federal government installation, or another processing plant, when not performed by employees subject to respondents' collective bargaining agreement, must be performed by persons operating under a collective bargaining agreement with a local of the Teamsters Union.

Since section 4 conditions subcontracting upon the union's relationship with the subcontractor rather than upon economic conditions in the bargaining unit, it is primarily in aid of the union's organizing efforts outside the bargaining unit, and is prohibited by section 8(e). Truck Drivers Union Local No. 413 v. National Labor Relations Board, 334 F.2d 539, 548 (D.C. Cir. 1964); National Labor Relations Board v. Milk Wagon Drivers' Union Local 753, 335 F.2d 326 (7th Cir. 1964); Bakery Wagon Drivers and Salesmen Local Union No. 484 v. National Labor Relations Board, 116 U.S.App.D.C. 87, 321 F.2d 353, 357 (D.C. Cir. 1963); Dist. No. 9, Int'l Ass'n of Machinists etc. v. National Labor Relations Board, 114 U.S.App.D.C. 287, 315 F.2d 33 (1962); Comment, 38 N.Y.U. L. Rev. 97, 114 (1963); Comment, 71 Yale L.J. 158, 168 n. 52 (1961).²² 

V

Article 34 provides that respondent employers shall not order an employee to handle the products of, or serve, an employer who is engaged in a strike or lockout recognized by respondent unions, nor discipline or discharge an employee who refuses to do so.²³ 

Article 34 is tantamount to an agreement that the employers will not deal with the struck plant.²⁴  Indeed, the "hot cargo" clause at which section 8(e) was primarily aimed usually took this form.²⁵  The Board properly held article 34 invalid. Truck Drivers' Union Local No. 413 v. National Labor Relations Board, 334 F.2d 539, 546, 547 (D.C. Cir. 1964); Los Angeles Mailers Union etc. v. National Labor Relations Board, 114 U.S. App.D.C. 72, 311 F.2d 121, 124-125 (1962); National Labor Relations Board v. Amalgamated Lithographers, 309 F.2d 31, 36, 40-41 (9th Cir. 1963); Employing Lithographers of Greater Miami, Fla. v. National Labor Relations Board, 301 F.2d 20, 28, 30 (5th Cir. 1962).

Respondents argue that article 34 should be read as if limited to a permissible agreement that employees will not be required to cross a picket line at the situs of a primary dispute.²⁶  This contention was not made before the Board, and comes too late.²⁷  In any event, the Board's order enjoins respondents from giving effect to the contract provisions only "to the extent found unlawful herein," and the Board did not find article 34 unlawful to the extent that it may constitute a permissible "picket line" clause. If it were established that the parties so construed the clause, it would not be rendered unenforceable by the Board's order.²⁸ 

VI

Respondents' constitutional attack upon section 8(e) has been rejected by this and other Courts of Appeals. Truck Drivers' Union Local No. 413 v. National Labor Relations Board, 334 F.2d 539, 549 (D.C. Cir. 1964); National Labor Relations Board v. Amalgamated Lithographers, 309 F.2d 31, 45 (9th Cir. 1962); Employing Lithographers of Greater Miami, Fla. v. National Labor Relations Board, 301 F.2d 20, 24 (5th Cir. 1962).

The Board's order will be enforced.