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National Labor Relations Board v. Unelko Corp.

May 2, 1973


Before SWYGERT, Chief Judge, STEVENS and SPRECHER, Circuit Judges.


The question is whether Respondent effectively withdrew from multi-employer labor negotiations before it became bound to accept the terms of the agreement negotiated by the employers' representative.

The Board found that Respondent had not withdrawn before negotiations for a new contract commenced on March 2, 1971, and that no exceptional circumstance justified a later withdrawal. Although we do not accept the premise that no withdrawal was permissible after March 2, 1971, we are persuaded that Respondent's communications with the Union prior to April 16, 1971, were sufficiently ambiguous to justify the Board's conclusion that it was then too late to withdraw. We therefore enforce the Board's order requiring Respondent to abide by the terms of the agreement which became effective on May 1, 1971.

Respondent is one of about 65 members of the Waste Trade Industry of Chicago. Since 1959 that Association has negotiated five three-year collective bargaining agreements on behalf of its members with the Waste Materials Handlers Unions*fn1 During each of the first four negotiations, Howard Ohlhausen, president of Respondent company, was a member of the Association's negotiating committee; he was not a member of the committee during the 1971 negotiations.

The 1968 agreement contained the following provisions:


"The Association represents that it is legally authorized to enter into this Agreement for and on behalf of the Employers listed in Exhibit I attached hereto. It is agreed that although the Employers shall execute this Agreement individually, the said Employers shall be bound by this Agreement immediately upon its execution by the Association and the Union, and the failure of any Employer to individually execute this Agreement shall not have any legal effect.

"In the event any Employer shall cease to be a member of the Association during the term of this Agreement, such Employer shall still be bound by this Agreement for the term hereof."

The 1968 agreement set the wage rates for nine different categories of employees, including "Rag Sorters and Trimmers." A supplemental agreement between the Union and four members of the Association provided that their Rag Sorters and Trimmers would be paid 10 cents an hour less than the contract rate; the contract which Respondent signed contained no reference to the supplemental agreement.

The justification for the wage differential rested on the fact that the four favored companies were engaged exclusively in the wiper rag industry and could not otherwise survive competition from nonmember companies in the South. Although Respondent was not engaged exclusively in the wiping rag industry, in 1968 it employed 17 Rag Sorters and Trimmers and was a substantial competitor of the four favored concerns. After the differential went into effect, Respondent lost a significant volume of business to its four favored competitors. In 1971, Respondent employed only two Rag Sorters and Trimmers.

Exactly when Howard Ohlhausen learned of the existence of the supplemental agreement favoring Respondent's competitors is not entirely clear. He had been present at the negotiating session on May 7, 1968, when the Union was requested to give special consideration to the members engaged exclusively in the wiping rag business, and the minutes of that meeting state that the terms of the supplemental agreement were agreed upon at that time. Ohlhausen, however, testified that he did not know that the agreement had been made. It was not until late February or early March of 1971 that he "knew specifically which firms, which four firms, were paying a certain amount less." A. 107-108.

Almost a year earlier, in April of 1970, Respondent had sent a letter of resignation to the Association. Under the Association's by-laws a member could resign only during the 30-day period preceding the expiration of the Union contract; for that reason, Respondent's attempted resignation was ineffective.

The Union learned of Respondent's attempt to resign, and therefore was aware of the possibility that Respondent might not participate in the multi-employer bargaining in 1971. However, Respondent did not communicate directly with the Union on this subject in 1970.

It is clear, of course, that even though Respondent had not effectively resigned from the Association, it could have advised the Union that in the future it would negotiate its own labor contracts.And, conversely, even if the resignation had been effective, it would have been possible for Respondent again to participate in the same multi-employer bargaining as in the past.In short, even though as a practical matter the Association membership probably would be co-extensive with the bargaining unit, that consequence was by no means necessary. Thus, the fact that Respondent attempted to resign from the Association in April of 1970, ...

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