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National Labor Relations Board v. Sheridan Creations Inc.

decided: March 16, 1966.


Lumbard, Chief Judge, Smith, Circuit Judge, and Levet, District Judge.*fn* Lumbard, Ch. J. (dissenting).

Author: Smith


Respondent Sheridan Creations is engaged in the wholesale distribution of ladies' sweaters and related products in New York, New York. After decision by the trial examiner in favor of respondent, the NLRB found that respondent violated § 8(a)(1) and (5) of the NLRA, 29 U.S.C. 158(a), by refusing to accept and ratify a collective bargaining agreement reached between a union and the Knitwear Employers Association, the multi-employer association to which respondent had belonged. The Board issued a cease and desist order on October 1, 1964, and petitions pursuant to § 10(e) of the Act, 29 U.S.C. 160(e), for enforcement of the order. We hold the order a valid exercise of the Board's power and order its enforcement.

Pursuant to agreement with the union, respondent had joined the association in 1960, after the union had organized respondent's employees. Respondent adopted the existing joint agreement between the union and association, and was a party to agreements of 1960 and 1961. The 1961 agreement was to terminate April 30, 1963, and the union notified respondent and the association, on February 23, 1963, of a wish to negotiate. It was the usual practice for the association to bargain generally and for each member to bargain on particular matters. Respondent did not reply to the union's request, and the union and association met March 14 and 25. Respondent's Secretary-Treasurer, its bargaining official, was present at these meetings. On March 27 respondent filed a petition with the NLRB Regional Director, requesting an election in a single employer unit, and on April 1 notified the association it was withdrawing bargaining authority effective March 26. Respondent withdrew the petition of March 27, as well as another filed later, and eventually filed a third petition on May 1. After further negotiation the union and association agreed to terms on April 30, and the agreement was ratified and signed by May 8. Respondent refused to ratify and to continue to recognize the union.

Respondent argued before the Board that there was nothing to support the determination of a multi-employer bargaining unit. The Board has been given broad discretion in this area, NLRB v. Truck Drivers Local No. 449, etc. (Buffalo Linen), 353 U.S. 87, 1 L. Ed. 2d 676, 77 S. Ct. 643 (1957), especially where the individual units are small. Here the units were small and worked in the same narrow field and the employers had agreed to bargain and had bargained as such a unit. Respondent stressed the right of individual employers to bargain separately on special matters. Sometimes this has resulted in a finding of no multi-employer unit, see Retail Clerks Union No. 1550 v. NLRB, 117 U.S. App. D.C. 336, 330 F.2d 210 (2 Cir. 1964). But "Multi-employer bargaining does not altogether preclude demand for specialized treatment of special problems." Genesco, Inc. v. Joint Council 13, United Shoe Workers of America, 341 F.2d 482 (2 Cir. 1965). The Board's determination of the appropriate bargaining unit should not lightly be set aside, Packard Motor Car Co. v. NLRB, 330 U.S. 485, 91 L. Ed. 1040, 67 S. Ct. 789 (1947). Respondent here indicated by agreeing to three previous agreements that it intended to be bound by the Association's bargaining. We think there was sufficient support for the determination of a multi-employer unit.

The Board's rule, The Kroger Co., 148 NLRB 569 (1964), Ice Cream Frozen Custard Employees, 145 NLRB 865 (1964), C & M Construction Co., 147 NLRB 843 (1964), Walker Electric Co., 142 NLRB 1214 (1963), that withdrawal from a multi-employer unit is untimely, absent union consent, once negotiations on a new contract have started, seems to us logical, although it has not yet received approval from the courts. To permit withdrawal after negotiations commence might well lead to a breakdown of the unit. Withdrawal should be restricted to the period before negotiations to assure that it is not used as a bargaining lever. Since this is the purpose of the rule, it is used as an alternative to an inquiry into good faith. In fact, the Board, in reversing the Trial Examiner, held that no issue of good faith was involved. In any event, good faith in a refusal to bargain is no defense to the unfair labor practice charge, United Aircraft Corp. v. NLRB, 333 F.2d 819 (2 Cir. 1964); Welch Scientific Co. v. NLRB, 340 F.2d 199 (2 Cir. 1965), at least where the Board finds, as it did here, that the multi-employer unit was in fact the appropriate one.

Multi-employer bargaining is based on the consent of the parties to treat with one another through the agreed units. A shift in membership after negotiations have begun has lively possibilities for disrupting the bargaining process. In a case such as this, good faith withdrawal of a small unit might in practice have minimal or no effect. However, the potential for disruption is sufficient to justify the Board in adopting a uniform rule for all cases that withdrawal is not timely once bargaining has begun. We cannot say that no such potential exists, or that its incidence would be so infrequent that the Board's judgment that the uniform rule is needed is without a reasonable foundation or arbitrary in nature.

Respondent claimed that since it filed a petition for an election in a single employer unit on May 1, and the agreement between the union and the association was not signed until May 8, the petition was timely. In view of the statutory duty to execute contracts where agreement has been reached (here, on April 30), Sec. 8(d), filing an election petition when under that duty cannot alter it.

When withdrawal is not timely the multi-employer unit is still the unit held "appropriate," Sec. 9(a), for the purpose of collective bargaining.

Respondent argues that it would be illegal for it to bargain after it knew that a majority of its employees had withdrawn. "Its," however, refers to the bargaining unit, once one has been established, rather than one employer of a multi-employer unit.

An appropriate order will enter enforcing the order of the Board.

LUMBARD, Ch. J. (dissenting):

The sole issue before us is the appropriateness of the Board's rigid rule that withdrawal from a multi-employer bargaining unit, once negotiations have begun, is untimely and ineffective regardless of bad faith or a showing that there has been an adverse effect upon the bargaining process. In my opinion, withdrawal should be permitted at any time in the absence of evidence that it was in bad faith or that it was unfair to any of the other participants in the negotiations.

By their nature multi-employer bargaining units are voluntary and consensual. NLRB v. Sklar, 316 F.2d 145 (6 Cir. 1963). Only recently the Board declared: "It is because the multiemployer unit is rooted in consent that the Board has always permitted an employer to withdraw from such a unit for any reason at a proper time and by giving proper notice. The Board has considered material to permitting withdrawal only the 'time and manner' of the withdrawal request . . . Important practical considerations demonstrate the wisdom of leaving intact the freedom of ...

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