J. I. Case Co. v. Labor Board, 321 U.S. 332 (1944)
J. I. Case Co. v. Labor Board, 321 U.S. 332 (1944)
J. I. Case Co. v. Labor Board, 321 U.S. 332 (1944)
Supreme Court
J. I. Case Co. v. Labor Board, 321 U.S. 332 (1944)
J. I. Case Co. v. National Labor Relations Board
No. 67
Argued January 3, 1944
Decided February 28, 1944
321 U.S. 332
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Syllabus
1. In view of the continuing character of the obligation imposed on the
employer by the order of the National Labor Relations Board, the
subsequent expiration of the contracts in question and the employer's
entry into a collective bargaining agreement did not render the case
moot. P. 321 U. S. 334.
2. That an employer has individual contracts of employment, covering
wages, hours and working conditions, with a majority of his employees,
which contracts were valid when made and are unexpired, does not
preclude exercise by the employees of their right under the National
Labor Relations Act to choose a representative for collective bargaining,
nor warrant refusal by the employer to bargain with such representative
in respect of terms covered by the individual contracts. P. 321 U. S. 339.
The relation in general of individual contracts to collective bargaining is
discussed.
3. The Board has no power to adjudicate the validity or effect of the
contracts here in question, except as to their effect on matters within its
jurisdiction. P. 321 U. S. 340.
4. Since the desist order literally goes beyond what the Board intended,
its language is modified accordingly. P. 321 U. S. 341.
134 F.2d 70 modified and affirmed.
Certiorari, 320 U.S. 210, to review a decree which granted enforcement
of an order of the National Labor Relations Board, 42 N.L.R.B. 85.
Page 321 U. S. 333
MR. JUSTICE JACKSON delivered the opinion of the Court.
This cause was heard by the National Labor Relations Board on
stipulated facts which, so far as concern present issues, are as follows:
The petitioner, J. I. Case Company, at its Rock Island, Illinois, plant,
from 1937, offered each employee an individual contract of
employment. The contracts were uniform, and for a term of one year.
The Company agreed to furnish employment as steadily as conditions
permitted, to pay a specified rate, which the Company might
redetermine if the job changed, and to maintain certain hospital
facilities. The employee agreed to accept the provisions, to serve
faithfully and honestly for the term, to comply with factory rules, and that
defective work should not be paid for. About 75% of the employees
accepted and worked under these agreements.
According to the Board's stipulation and finding, the execution of the
contracts was not a condition of employment, nor was the status of
individual employees affected by reason of signing or failing to sign the
contracts. It is not found or contended that the agreements were
coerced, obtained by any unfair labor practice, or that they were not
valid under the circumstances in which they were made.
While the individual contracts executed August 1, 1941, were in effect, a
CIO union petitioned the Board for certification as the exclusive
bargaining representative of the production and maintenance
employees. On December 17, 1941, a hearing was held at which the
Company urged the individual contracts as a bar to representation
proceedings. The Board, however, directed an election, which was won
by the union. The union was thereupon certified as the exclusive
accord as to terms which will govern hiring and work and pay in that
unit. The result is not, however, a contract of employment except in rare
cases; no one has a job by reason of it, and no obligation to any
individual ordinarily comes into existence from it alone. The negotiations
between union and management result in what often has been called a
trade agreement, rather than in a contract of employment. Without
pushing the analogy too far, the agreement may be likened to the tariffs
established by a carrier, to standard provisions prescribed by
supervising authorities for insurance policies, or to utility schedules of
rates and rules for service, which do not of themselves establish any
relationships, but which do govern the terms of the shipper or insurer or
customer relationship whenever and with whomever it may be
established. Indeed, in some European countries, contrary to American
practice, the terms of a collectively negotiated trade agreement are
submitted to a government department, and, if approved, become a
governmental regulation ruling employment in the unit. [Footnote 1]
After the collective trade agreement is made, the individuals who shall
benefit by it are identified by individual hirings. The employer, except as
restricted by the collective agreement itself and except that he must
engage in no unfair labor practice or discrimination, is free to select
those he will employ or discharge. But the terms of the employment
already have been traded out. There is little left to individual agreement
except the act of hiring. This hiring may be by writing or by word of
mouth or may be implied from conduct. In the sense of contracts of
hiring, individual contracts between the employer and employee
Page 321 U. S. 336
are not forbidden, but indeed are necessitated by the collective
bargaining procedure.
But, however engaged, an employee becomes entitled by virtue of the
Labor Relations Act somewhat as a third party beneficiary to all benefits
of the collective trade agreement, even if on his own he would yield to
less favorable terms. The individual hiring contract is subsidiary to the
terms of the trade agreement, and may not waive any of its benefits,
any more than a shipper can contract away the benefit of filed tariffs, the
Hence, we find that the contentions of the Company that the individual
contracts precluded a choice of representatives and warranted refusal
to bargain during their duration were properly overruled. It follows that
representation to the employees by circular letter that they had such
legal effect was improper, and could properly be prohibited by the
Board.
Page 321 U. S. 340
One minor matter remains for consideration. The literal terms of the
Board's order require the Company to
"cease and desist from (a) giving effect to the individual contracts of
employment or any modification, continuation, extension or renewal
thereof, or entering into any similar form of contract with its employees
for any period subsequent to the date of this decision,"
and to give written notice to each to that effect and that "such contract
will not in any manner be enforced or attempted to be enforced," and
that "such discontinuance of the contract is without prejudice to the
assertion of any legal rights the employee may have acquired under
such contract."
These provisions, it has been argued, go beyond the Board's power,
leave employees free to bring, but the Company powerless to defend,
actions on the contract, and prohibit making future contracts even when
not obnoxious to the law or to any collective agreement.
The Board, of course, has no power to adjudicate the validity or effect of
such contracts except as to their effect on matters within its
jurisdiction.National Licorice Co. v. Labor Board, supra. The Board,
however, would construe the order more narrowly than its terms
suggest. It says,
"The provision in question, as we have seen, is based upon the finding
that the contracts were utilized as a means of interfering with rights
guaranteed by the Act, and constituted an obstacle to collective
bargaining. Read in the context of this finding, the requirement of the
cease and desist provisions enjoins petitioner only from continuing to
derive benefits from the contracts heretofore utilized to forestall
"2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act:"
"(a) Give separate written notice to each of its employees who signed
an individual contract of employment or any modification, continuation,
extension, or renewal
Page 321 U. S. 342
thereof, or any similar form of contract for any period subsequent to the
date of this Decree, that such contract will not in any manner be
enforced or attempted to be enforced to forestall collective bargaining or
deter self-organization, that the employee is not required or expected by
virtue of such contract to deal with respondent individually in respect to
rates of pay, wages, hours of employment, or other conditions of
employment, and that such discontinuance of the contract is without
prejudice to the assertion of any legal rights the employee may have
acquired under such contract or to any defenses thereto by the
employer."
As so modified the decree is
Affirmed.
MR. JUSTICE ROBERTS is of opinion that the judgment should be
reversed.
[Footnote 1]
See Hamburger, "The Extension of Collective Agreements to Cover
Entire Trade and Industries" (1939) 40 International Labor Review 153;
Methods of Collaboration between Public Authorities, Workers'
Organizations, and Employers' Organizations (International Labour
Conference, 1940) p. 112.
[Footnote 2]
Cf. Labor Board v. Sands Mfg. Co., 306 U. S. 332; Labor Board v.
Columbian Enameling & Stamping Co., 306 U. S. 292, 306 U. S. 297298; Labor Board v. Brashear Freight Lines, Inc., 119 F.2d 379;