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Inland Steel Co. v. National Labor Relations Board. United Steel Workers of America

September 23, 1948


Author: Kerner


MAJOR, Circuit Judge (dissenting in part).

These cases are here upon petition (in No. 9612) of Inland Steel Company (hereinafter called the Company), to review and set aside an order issued by the National Labor Relations Board on April 12, 1948, against the Company, pursuant to Sec. 10(c) of the National Labor Relations Act,*fn1 following the usual proceedings under Sec. 10 of the Act, and upon petition (in No. 9634) of the United Steel Workers of America, C.I.O. (hereinafter called the Union), to review and set aside a condition attached to the Board's order.

In the beginning, it seems appropriate to set forth that portion of the Board's order which gives rise to the questions here in controversy. The order requires the Company to

"Cease and desist from:

"(a) Refusing to bargain collectively with Local Unions Nos. 1010 and 64, United Steelworkers of America (CIO), with respect to its pension and retirement policies if and when said labor organization shall have complied within thirty (30) days from the date of this Order, with Section 9(f), (g), and (h) of the Act, as amended, as the exclusive bargaining representative of all production, maintenance, and transportation workers in the [petitioner's] Indiana Harbor, Indiana, and Chicago Heights, Illinois, plants, excluding foremen, assistant foremen, supervisory, office and salaried employees, bricklayers, timekeepers, technical engineers, technicians, draftsmen, chemists, watchmen, and nurses;

"(b) Making any unilateral changes, affecting any employees in the unit represented by the Union, with respect to its pension and retirement policies without prior consultation with the Union, when and if the Union shall have complied with the filing requirements of the Act, as amended, in the manner set forth above."

The Company, in case No. 9612, attacks that portion of the order which requires it to bargain with respect to its retirement and pension policies. The Union has been permitted to intervene and joins the Board in the defense of this part of the order. The Union, in case No. 9634, attacks the condition attached to the order, which requires as a prerequisite to its enforcement that the Union comply with Sec. 9(h) of the Act. Obviously, if the Company's position is sustained, the Union's petition need not be considered. On the other hand, if the Company's contention is denied, we will be confronted with the question raised by the Union.

We shall, therefore, first consider the question presented on the Company's petition for review. In doing so, we do not overlook the Board's contention that we are without authority to consider such question on the ground that the Company is not aggrieved until there has been compliance by the Union with the condition attached to the order. We think this contention is without merit and need not be discussed.

There is no question as to jurisdiction and no dispute of any consequence as to the facts in either case. The Company's refusal to bargain concerning a retirement and pension plan is based solely on its contention that it is not required to do so under the terms of the Act. The Union has refused to comply with the condition attached to the order insofar as Sec. 9(h) is concerned, on the ground that the paragraph is unconstitutional. Thus, a question of law is presented in each case.

The collective bargaining requirement in in the original Act was embraced mainly in Secs. 8(5) and 9(a).*fn2 No question is raised as to any change in the status of the parties because of the amended Act. It seems, therefore, that the original Act is of importance only as an aid in construing the amended Act wherein Congress employed the identical language, so far as pertinent to the instant question, which it had originally used.

The Company relates in lengthy detail the complicated nature of its retirement and pension plan, for the purpose, as we understand, of showing that it is impossible, or at any rate highly impractical, for it to bargain relative thereto with the multiplicity of bargaining units which the Board has established in its plant. It states in its brief:

"Retirement and pension plans such as the petitioner's cannot be dealt with through the processes of compulsory collective bargaining required by the National Labor Relations Act, which entail bargaining within units of the character established by Section 9(a) and (b) of that Act."

The Company concedes that "Congress could have established a requirement of compulsory collective bargaining upon any subject which a representative of the employees chose to present for that purpose," and we understand from some parts of its argument that it tacitly concedes that some retirement and pension plans may be within the scope of the bargaining requirement. However, we find in the Company's reply brief, in response to the Board's argument, what appears to be the inconsistent statement that "Congress intended to exclude from the compulsory bargaining requirement of the Act all industrial retirement and pension plans. The law is a law for all and it is the same law." We agree, of course, with the last sentence of this quotation. We also are of the view that the bargaining requirements of the Act include all retirement and pension plans or none. Otherwise, as the Board points out, "some employers would have to bargain about pensions and some would not, depending entirely upon the unit structure in the plant and the nature of the pension plan the employer has established or desires to establish." Such a holding as to the Act's requirements would supply the incentive for an employer to devise a plan or system which would be sufficiently comprechensive and difficult to remove it from the ambit of the statute, and success of such an effort would depend upon the ingenuity of the formulator of the plan. We are satisfied no such construction of the Act can reasonably be made.

It is, therefore, our view that the Company's retirement and pension plan, complicated as it is asserted to be, must be treated and considered the same as any other such plan. It follows that the issue for decision is, as the Board asserts, whether pension and retirement plans are part of the subject matter of compulsory collective bargaining within the meaning of the Act. The contention which we have just discussed has been treated first, and perhaps somewhat out of order, so as to obviate the necessity for a lengthy and detailed statement of the Company's plan.

Briefly, the plan as originally initiated on January 1, 1936, provided for the establishment of a contributory plan for the payment of retirement annuities pursuant to a contract between the Company and the Equitable Life Assurance Society. Only employees with earnings of $250.00 or more per month were eligible to participate. Effective December 31, 1943, the plan was extended to cover all employees regardless of the amount of their earnings, provided they had attained the age of 30 and had five years of service. The plan from the beginning was optional with the employees, who could drop out at any time, with rights upon retirement fixed as of that date. On December 28, 1945, the Company entered into an agreement with the First National Bank of Chicago, wherein the Company established a pension trust, the purpose of which was to augment the Company's pension program by making annuities available to employees whose period of service had occurred largely during years prior to the time when participation in the retirement plan was available to them. These were employees whose retirement date would occur so soon after the establishment of the plan that it would not afford them adequate retirement annuity benefits. The employees eligible to participate in the pension trust were not required to contribute thereto, but such fund was created by the Company's contributions.

An integral and it is asserted an essential part of the plan from the beginning was that employees be compulsorily retired at the age of 65. (There are some exceptions to this requirement which are not material here.)

The Company's plan had been in effect for five and one-half years when, because of the increased demands for production and with a shortage of manpower occasioned by the war, it was compelled to suspend the retirement of its employees as provided by its established program. In consequence there were no retirements for age at either of the plants involved in the instant proceeding from August 26, 1941 to April 1, 1946. This temporary suspension of the compulsory retirement rule was abrogated, and it was determined by the Company that no retirements should be deferred beyond June 30, 1946. By April 1, 1946, all of the Company's employees, some 224 in number, who had reached the age of 65, had been retired. Thereupon, the Union filed with the Company a grievance protesting its action in the automatic retirement of employees at the age of 65. The Company refused to discuss this grievance with the Union, taking the position that it was not required under the Act to do so or to bargain concerning its retirement and pension plan, and particularly concerning the compulsory retirement feature thereof. Whereupon, the instant proceeding was instituted before the Board, with the result already noted.

This brings us to the particular language in controversy. Sec. 8(5) of the Act requires an employer "to bargain collectively with the representative of his employees, subject to the provisions of Sec. 9(a)," and the latter section provides that the duly selected representative of the employees in an appropriate unit shall be their exclusive representative "for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment * * *." The instant controversy has to do with the construction to be given or the meaning to be attached to the italicized words; in fact, the controversy is narrowed to the meaning to be attached to the term "wages" or "other conditions of employment."

The Board found and concluded that the benefits accruing to an employee by reason of a retirement or pension plan are encompassed in both categories. As to the former it stated in its decision:

"With due regard for the aims and purposes of the Act and the evils which it sought to correct, we are convinced and find that the term 'wages' as used in Section 9(a) must be construed to include emoluments of value, like pension and insurance benefits, which may accrue to employees out of their employment relationship. * * * Realistically viewed, this type of wage enhancement or increase, no less than any other, becomes an integral part of the entire wage structure, and the character of the employee representative's interest in it, and the terms of its grant, is no different than in any other case where a change in the wage structure is effected."

The Board also found and concluded that in any event a retirement and pension plan is included in "conditions of employment" and is a matter for collective bargaining.After a careful study of the well written briefs with which we have been favored, we find ourselves in agreement with the Board's conclusion. In fact, we are convinced that the language employed by Congress, considered in connection with the purpose of the Act, so clearly includes a retirement and pension plan as to leave little, if any, room for construction. While, as the Company has demonstrated, a reasonable argument can be made that the benefits flowing from such a plan are not "wages," we think the better and more logical argument is on the other side, and certainly there is, in our opinion, no sound basis for an argument that such a plan is not clearly included in the phrase, "other conditions of employment." The language employed, when viewed in connection with the stated purpose of the Act, leads irresistibly to such a conclusion. And we find nothing in the numerous authorities called to our attention or in the legislative history so strongly relied upon which demonstrates a contrary intent and purpose on the part of Congress.

The opening sentence in the Company's argument is as follows: "Sections 8(5) and 9(a) of the Act do not refer to industrial retirement and pension plans, such as that of the petitioner, in haec verba." Of course not, and this is equally true as to the myriad matters arising from the employer-employee relationship which are recognized as included in the bargaining requirements of the Act but which are not specifically referred to. Illustrative are the numerous matters concerning which the Company and the Union have bargained and agreed, as embodied in their contract of April 30, 1945. A few of such matters are: a provision agreeing to bargain concerning nondiscriminatory discharges; a provision concerning seniority rights, with its far reaching effect upon promotions and demotions; a provision for the benefit of employees inducted into the military service; a provision determining vacation periods with pay; a provision concerning the safety and health of employees, including clinic facilities; a provision for in-plant feeding, and a provision binding the Company and the Union to bargain, in conformity with a Directive Order of the National Way Labor Board concerning dismissal or severance pay for employees displaced as the result of the closing of plants or the reduction in the working force following the termination of the way. None of these matters and many others which could be mentioned are referred to in the Act "in haec verba," yet we think they are recognized generally, and they have been specifically recognized by the Company in the instant case as proper matters for bargaining and, as a result, have been included in a contract with the Union. Some of the benefits thus conferred could properly be designated as "wages," and they are all "conditions of employment." We think no common sense view would permit a distinction to be made as to the benefits inuring to the employees by reason of a retirement and pension plan.

The Company in its brief states the reasons for the establishment of a uniform fixed compulsory retirement age for all of its employees in connection with its retirement annuity program, among which are (1) "The fixed retirement age gives the employee advance notice as to the length of his possible service with the Company and enables him to plan accordingly," (2) "The fixed retirement age prevents grievances that otherwise would multiply as the question of each employee's employability arose," (3) "A fixed retirement age gives an incentive to younger men," and (4) "It is unfair and destructive of employee morale to discriminate between types of jobs or types of employees in retiring such employees from service." These reasons thus stated for a compulsory retirement age demonstrate, so we think, contrary to the Company's contention, that the plan is included in "conditions of employment."

The Supreme Court, in National Licorice Co. v. N.L.R.B., 309 U.S. 350, 360, 60 S. Ct. 569, 84 L. Ed. 799, held that collective bargaining extends to matters involving discharge actions and, as already noted, the Company in its contract with the Union has so recognized. We are unable to differentiate between the conceded right of a Union to bargain concerning a discharge, and particularly a nondiscriminatory discharge, of an employee and its right to bargain concerning the age at which he is compelled to retire. In either case, the employee loses his job at the command of the employer; in either case, the effect upon the "conditions" of the person's employment is that the employment is terminated, and we think, in either case, the affected employee is entitled under the Act to bargain collectively through his duly selected representatives concerning such termination. In one instance, the cessation of employment comes perhaps suddenly and without advance notice or warning, while in the other, his employment ceases as a result of a plan announced in advance by the Company. And it must be remembered that the retirement age in the instant situation is determined by the Company and forced upon the employees without consultation and without any voice as to whether the retirement age is to be 65 or some other age. The Company's position that the age of retirement is not a matter for bargaining leads to the incongruous result that a proper bargaining matter is presented if an employee is suddenly discharged on the day before he reaches the age of 65, but that the next day, when he is subject to compulsory retirement, his Union is without right to bargain concerning such retirement.

The Company, however, attempts to escape the force of this reasoning by arguing that the retirement provision affects tenure of employment as distinguished from a condition of employment. The argument, as we understand, rests on the premise that the Act makes a distinction between "tenure of employment" and "conditions of employment," and attention is called to the use of those terms in Secs. 8(3) and 2(9) of the Act. Having thus asserted this distinction, the argument proceeds that tenure of employment is not embraced within the term "conditions of employment." Assuming that the Act recognizes such distinction for some purposes, it does not follow that such a distinction may properly be made for the purpose of collective bargaining, as defined in Sec. 9(a). "Tenure" as presently used undoubtedly means duration or length of employment. The tenure of employment is terminated just as effectively by a discharge for cause as by a dismissal occasioned by a retirement provision. And in both instances alike, the time of the termination of such tenure is determined by the Company. As already shown, a termination by discharge is concededly a matter for collective bargaining. To say that termination by retirement is not amenable to the same process could not, in our judgment, be supported by logic, reason or common sense. In our view, the contention is without merit.

The Company also concedes that seniority is a proper matter for collective bargaining and, as already noted, has so recognized by its contract with the Union. It states in its brief that seniority is "the very heart of conditions of employment." Among the purposes which seniority serves is the protection of employees against arbitrary management conduct in connection with hire, promotion, demotion, transfer and discharge, and the creation of job security for older workers. A unilateral retirement and pension plan has as its main objective not job security for older workers but their retirement at an age predetermined by the Company, and we think the latter is as much included in "conditions of employment" as the former. What would be the purpose of protecting senior employees against lay-off when an employer could arbitrarily and unilaterally place the compulsory retirement age at any level which might suit its purpose? If the Company may fix an age at 65, there is nothing to prevent it from deciding that 50 or 45 is the age at which employees are no longer employable, and in this manner wholly frustrate the seniority protections for which the Union has bargained. Again we note that discharges and seniority rights, like a retirement and pension plan, are not specifically mentioned in the bargaining requirements of the Act.

The Company in its brief as to seniority rights states that it "affects the employee's status every day." In contrast, the plain implication to be drawn from its argument is that an employee is a stranger to a retirement and pension plan during all the days of his employment and that it affects him in no manner until he arrives at the retirement age. We think such reasoning is without logic. Suppose that a person seeking employment was offered a job be each of two companies equal in all respects except that one had a retirement and pension plan and that the other did not. We think it reasonable to assume an acceptance of the job with the company which had such plan. Of course, that might be described merely as the inducement which caused the job to be accepted, but on acceptance it would become, so we think, one of the "conditions of employment." Every day that such an employee worked his financial status would be enhanced to the extent that his pension benefits increased, and his labor would be performed under a pledge from the company that certain specified monetary benefits would be his upon reaching the designated age. It surely cannot be seriously disputed but that such a pledge on the part of the company forms a part of the consideration for work performed, and we see no reason why an employee entitled to the benefit of the plan could not upon the refusal of the company to pay, sue and recover such benefits. In this view, the pension thus promised would appear to be as much a part of his "wages" as the money paid him at the time of the rendition of his services. But again we say that in any event such a plan is one of the "conditions of employment."

The Company makes the far fetched argument that the contributions made to a pension plan "differ in no respect from a voluntary payment that might be made to each employee on his marriage, or on the birth of a child, or on attaining the age of 50, or on enlisting in the armed forces in time of war or on participating as a member of a successful company baseball team," but we think there is a vast difference which arises from the fact that such hypothetical payments are not made as the result of a promise contained in a plan or program. They represent nothing more than a gift.Assume, however, that such supposed payments were made to employees as a result of a company obligation contained in a plan or program. Such an obligation would represent a part of the consideration for services performed, and payments made in the discharge of such obligation would, in our view, be "wages" or included in "conditions of employment."

The Board cites a number of authorities wherein the term "wages" in other fields of law has been broadly construed in support of its conclusion in the instant case that the term includes retirement and pension benefits for the purpose of collective bargaining. While we do not attach too much importance to the broad interpretation given the term in unrelated fields, we think they do show that a broad interpretation here is not unreasonable. For instance, the Board has been sustained in a number of cases where it has treated for the purpose of remedying the effects of discriminatory discharges, in violation of Sec. 8(3) of the Act, pension and other "beneficial insurance rights of employees as part of the employees' real wages and, in accordance with its authority under Sec. 10(c), to order reinstatement of employees with * * * back pay," and has required the employer to restore such benefits to employees discriminated against. See Butler Bros., et al. v. N.L.R.B., 7 Cir., 134 F.2d 981, 985; General Motors Corp. v. N.L.R.B., 3 Cir., 150 F.2d 201, and ...

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