Opinion
Docket No. 58394.
Argued November 3, 1977 (Calendar No. 4).
Decided November 20, 1978.
Miller, Klimist, Cohen, Martens Sugarman, P.C. (by Sheldon L. Klimist and Thomas L. Gravelle), for plaintiff.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Francis W. Edwards, Assistant Attorney General, for defendant Employment Relations Commission. Honigman, Miller, Schwartz Cohn (by John Sklar and Charles H. Tobias) for defendants Ninety-Six Grand Corporation; and Sol Krim, Leonard Krim, Harry Krim and Mac Krim, doing business as Krim Enterprises.
The temporary employment of both members of a two-person bargaining unit ended when a first contract agreement could not be reached. The question is whether an unfair labor practice under § 16 of the labor relations and mediation act (MCLA 423.16; MSA 17.454[17]) was committed. We affirm the Court of Appeals, which affirmed the Michigan Employment Relations Commission's finding that there was no unfair labor practice on this record.
The defendants own the Farmington IV Theatre. During late November of 1972, while the theatre was still under construction, they sought out the plaintiff union hoping to hire a union projectionist and relief projectionist. The defendants had in the past enjoyed a satisfactory relationship with the union, employing a number of its members at other theatres which they owned.
The defendants and the union met together several times over the course of the next few weeks to discuss a possible contract. However, no agreement was reached. During this initial discussion period, Robert Holmes, a union projectionist, was hired by Ringold Equipment Company to install the projection equipment in the theatre. Holmes installed the equipment and was paid by Ringold for his work. On the day the theatre was scheduled to open, the union agreed to let two of its members, Holmes and a relief projectionist, work as projectionists for two weeks, during which time further discussions were to take place regarding a possible contract. The defendants agreed to pay the two members full union scale while the discussions continued. It was understood that this was only a temporary arrangement.
The union's business representative, Archie Shelley, testified as follows about his dealings with one of the defendants, Sol Krim, on the day the theatre was scheduled to open:
" A. I took the agreement out to the theatre — the two-week agreement we were supposed to have, and he told me he was going to take it, I assume, to you — you are his attorney — and have you check it over. That was the way it was left. Subsequently, I never got the agreement.
" Q. But the idea when you spoke to him was that we are on a temporary basis and will be negotiating during this two-week period?
" A. That is correct.
" Q. On December 22nd, that was not a permanent agreement?
" A. No, that was not a permanent agreement.
" Q. To the best of your knowledge, did the Krims during that two-week period honor all of the terms of the temporary arrangement?
" A. Yes, he did."
The defendants and the union met together several more times during the next two weeks but they still could not reach an agreement on an initial contract. They did agree, however, to extend the temporary work arrangement on a day-to-day basis and to continue the contract discussions. On this basis, the members continued to work and the defendants continued to pay them full union scale.
Mr. Holmes, the projectionist, understood that there was no permanent contract. He testified:
" Q. So when you went to work you knew you were not under contract?
" A. Correct.
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" Q. Did Mr. Shelly tell you that `during this period you are not under contract so be prepared at any time to be pulled off the job', or words to that effect?
" A. Maybe something to that effect."
Nearly one month later, after several more meetings, the defendants and the union still had not been able to agree on an initial contract. Based upon the theatre's first month earnings, the defendants told the union that they could not pay full union scale and also meet their other expenses. They made an offer of one-half union scale. The union rejected this offer and said that nothing less than full union scale would be acceptable. The union then told the defendants that it was pulling its members off the job and the defendants said that the members' services were no longer needed. Contract discussions ended. Thereafter, the defendants themselves acted as projectionists.
The union later asked the defendants to send the two members a formal letter of termination. After receipt of this letter, the union filed unfair labor practice charges against the defendants.
The administrative law judge ruled that the defendants had been guilty of unfair labor practices. The Michigan Employment Relations Commission reversed in a split decision and dismissed the charges. The majority concluded inter alia that the defendants "were sincere in their economic protestations" and were motivated solely by economic considerations. On rehearing the majority affirmed its original decision and stated that "the evidence persuades that the officers of the employer were, if anything, pro-union and not antiunion in their opinions and attitudes". In addition, the majority found that "[t]he evidence establishes that both employees were furnished by the union under a hiring hall situation, and that the employment was for a temporary period while bargaining continued". The majority concluded by emphasizing the unique factual circumstances of this case.
MERC majority opinion, p 8.
MERC majority opinion on rehearing, p 4.
Id., p 2.
The Court of Appeals affirmed the MERC majority in a split decision. 68 Mich. App. 458; 242 N.W.2d 806 (1976).
We also affirm. The MERC decisions are supported by competent, material and substantial evidence on the whole record. See Const 1963, art 6, § 28.
The theatre was a new business enterprise. The defendants did not have to hire union members to fill the job openings. They could have hired non-union projectionists or performed the work themselves. (They finally performed the work themselves.) Instead, they voluntarily sought out the union to fill the jobs weeks before the theatre was scheduled to open.
When many meetings failed to result in an initial contract satisfactory to both the defendants and the union, the parties went their separate ways. They reverted to the same positions they had occupied prior to the defendants' solicitation of the union. Neither side was in any better or any worse position than it had been in before. The only interest the two union members (the only members of the unit) had was a temporary day-to-day work arrangement contingent upon the successful outcome of the initial contract discussions. When those discussions ended unsuccessfully, their interests expired. No interests were destroyed. The formal letter of termination requested by the union does not transform the temporary consensual work arrangement and its expiration into a permanent hiring and a discharge.
In these unique circumstances, the case of National Labor Relations Board v Great Dane Trailers, Inc, 388 U.S. 26; 87 S Ct 1792; 18 L Ed 2d 1027 (1967), does not apply and the reasons proffered by the employer for expiration of the temporary arrangement supported the MERC decisions.
Affirmed. No costs, a public question.
KAVANAGH, C.J., and LEVIN, FITZGERALD, and RYAN, JJ., concurred with COLEMAN, J.
The majority premises its decision on the assumption that the employees were hired only temporarily, conditioned upon whether a contract could be negotiated between the employer and the union. Accordingly, the majority opines that since the union and the employer reached an impasse in negotiations, the employees could be permanently dismissed. We dissent. We conclude that once an employer recognizes a union as representing the bargaining unit for newly hired employees and the parties attempt to negotiate a permanent relationship, the employer cannot resolve its bargaining problems by eliminating the unit.
I
The employer in the instant case urgently needed the expertise of union projectionists to set up and begin the operations of a projection room for the opening of a new motion picture theater. In view of this need, prior to the opening of the new theater, the employer contacted the union for the purpose of employing two experienced projectionists.
To assure the theater would open on time and operate continually during this crucial commencement period, the employer agreed to pay the projectionists the local union scale temporarily.
Negotiations to effectuate a permanent contract covering pay rate and other conditions were conducted over a two-month period. However, after the critical opening period had passed and the employer had time to train others to carry on the established projection room operations, the employer discharged the union projectionists.
Following the dismissal of the employees, the union filed an unfair labor practice charge with the Michigan Employment Relations Commission (hereinafter MERC) pursuant to the Michigan Labor Mediation Act (hereinafter the Act), MCL 423.16; MSA 17.454(17). Specifically, the union charged that the employer's conduct constituted unfair labor practices under MCL 423.16, subds (1), (3), (6); MSA 17.454(17), subds (1), (3), (6). The employer countered that the discharge resulted solely from the economic reality of the situation. The employer claimed it was not feasible to meet the union pay scale demands.
MCL 423.16; MSA 17.454(17) provides:
"It shall be unlawful for an employer or any officer or agent of an employer (1) to interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section 8; * * * (3) to discriminate in regard to hire, terms or other conditions of employment in order to encourage or discourage membership in any labor organization; * * * (6) to refuse to bargain collectively with the representative of his employees, subject to the provisions of section 26."
Subsection (1), infra, refers to rights guaranteed in § 8 which provides:
"It shall be lawful for employees, to organize together or to form, join or assist in labor organization, to engage in lawful concerted activities for the purpose of collective negotiation or bargaining or other mutual aid and protection, or to negotiate or bargain collectively with their employers through representatives of their own free choice." MCL 423.8; MSA 17.454(8).
The administrative law judge, Bert H. Wicking, agreed with the union's position:
"Normally, where a union representative and an employer bargain to impasse over wage rates, the employer, in order to get on with his business, may pay at the rate of the employer's last offer. The union representative may then acquiesce or strike. In either, impasse or strike situations, the employees retain their status as employees. An employer has no right to terminate an employment relationship because an employee, through his union, makes demands upon the employer. The Act specifically protects employees' rights to collectively bargain, free from threats or discharge because of an employer's dislike of unions or because of dislike of a bargaining demand by a union."
The employer appealed and MERC, in a divided decision, dismissed the union's complaint. Significantly, there was no finding by MERC that the employees would be retained only if amicable salary arrangements were negotiated. However, the majority accepted the employer's explanation that the discharge of the union projectionists occurred for economic reasons and was not an attempt to discourage union activity.
William M. Ellmann, the dissenting MERC member, viewed the situation differently:
"In the instant case while it is apparent that the respondent participated in the collective bargaining process with the charging party, it is also clear that when respondent no longer desired to do so, it discharged the entire bargaining unit. The discharge of employees because they are represented by a union and demanded the union rates of pay plainly has the effect of discouraging union activity and is clearly a violation of the Act. Section 8 of the LMA [labor mediation act] provides employees with the right `to negotiate or bargain collectively with their employers through representatives of their own free choice.' Section 16 of the LMA makes it unlawful for an employer `to interfere with, restrain or coerce employees in the exercise of their rights guaranteed in Section 8.' No employer conduct can be considered more inherently destructive of such employee rights than the act of firing an entire bargaining unit because negotiations were not proceeding satisfactorily."
The Court of Appeals, in a split decision, affirmed the MERC determination. 68 Mich. App. 458; 242 N.W.2d 806 (1976). Judge R.E. NOBLE dissented from the majority's affirmance:
"The employer's action here, even if motivated by economic reasons and even in the total absence of animus, was `inherently destructive' of important employee rights.
"There is no more important right of an employee than the right `to negotiate or bargain collectively with their employers through representatives of their own free choice'. MCL 423.8; MSA 17.454(8). There is no clearer `destruction' of that right than a permanent dismissal of all members of the bargaining unit. The discharge of employees because they are represented by a union that demands the union rate destroys union activity because it eliminates the union members." 68 Mich. App. 458, 465.
We agree with the conclusion of the hearing referee and the dissenting MERC and Court of Appeals members. The employer engaged in an unfair labor practice and a discriminatory practice prohibited by the Act.
II
The union charged the employer with violating, inter alia, § 16, subds (1) and (3) of the Act. First, the union claimed that the employer interfered with the employees' right "to negotiate or bargain collectively with their employers through representatives of their own free choice". Secondly, the union charged the employer with discriminating as to hiring or other conditions of employment in order to discourage membership in the union.
See MCL 423.16(1); MSA 17.454(17)(1), supra.
See MCL 423.16(3); MSA 17.454(17)(3), supra.
Since pertinent provisions of the Act closely correspond with similar provisions of the National Labor Relations Act (hereinafter the NLRA), this Court has looked to the Federal courts for guidance in construing the Act. See, for example, Rockwell v Crestwood School Dist, 393 Mich. 616; 227 N.W.2d 736 (1975). Therefore, in evaluating the union's claims, we will examine the Federal cases which analyze § 8(a)(1) and § 8(a)(3) of the NLRA, those provisions which parallel § 16(1) and § 16(3) of the Michigan Act.
Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act, 29 U.S.C. § 158, provide:
"(a) It shall be an unfair labor practice for an employer —
"(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 [section 157 of this title];
* * *
"(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization."
Sections 16(1) and 16(3) of the Michigan Act are virtually duplicates of these Federal provisions.
In asserting a violation of § 16(1) of the Act, the union first claimed that the employer interfered with the employee's right to engage in a protected activity. Throughout the instant litigation, the employer has maintained that its firing of the union projectionists was motivated solely by economic considerations and, therefore, was not an unfair labor practice.
Our examination of pertinent Federal decisions clearly illustrates that a finding of animus by the employer is not a necessary element of a § 8(a)(1) NLRA violation, and by analogy not an element of a § 16(1) violation of the Michigan Act. The fact that an employer may act in good faith for economic considerations does not transform a clear interference with protected rights into an acceptable labor practice. Michigan Employment Relations Comm v Reeths-Puffer School Dist, 391 Mich. 253; 215 N.W.2d 672 (1974). Unlike the union's second claim of discriminatory activities under § 16(3), the motive underlying an employer's conduct is not an element of this unfair labor practice charge.
Crown Central Petroleum Corp v National Labor Relations Board, 430 F.2d 724 (CA 5, 1970); National Labor Relations Board v Burnup Sims, Inc, 379 U.S. 21; 85 S Ct 171; 13 L Ed 2d 1 (1964); International Ladies' Garment Workers' Union v National Labor Relations Board, 366 U.S. 731; 81 S Ct 1603; 6 L Ed 2d 762 (1961); National Labor Relations Board v Laney Duke Storage Warehouse Co, 369 F.2d 859 (CA 5, 1966).
In National Labor Relations Board v Burnup Sims, Inc, 379 U.S. 21; 85 S Ct 171; 13 L Ed 2d 1 (1964), the employer discharged two employees who were not guilty of misconduct but were engaged in union organization activities. Mr. Justice Douglas stated:
"We find it unnecessary to reach the questions raised under § 8(a)(3) for we are of the view that in the context of this record § 8(a)(1) was plainly violated, whatever the employer's motive. Section 7 grants employees, inter alia, `the right to self-organization, to form, join or assist labor organizations'. Defeat of those rights by employer action does not necessarily depend on the existence of an anti-union bias.
* * *
"That rule seems to us to be in conformity with the policy behind § 8(a)(1). Otherwise the protected activity would lose some of its immunity, since the example of employees who are discharged on false charges would or might have a deterrent effect on other employees. Union activity often engenders strong emotions and gives rise to active rumors. A protected activity acquires a precarious status if innocent employees can be discharged while engaging in it, even though the employer acts in good faith. It is the tendency of those discharges to weaken or destroy the § 8(a)(1) right that is controlling. We are not in the realm of managerial prerogatives." Burnup Sims, supra, 22-24. (Citations omitted; emphasis added.)
An employer may be immune from a primary violation challenge under § 8(a)(1) (Federal) and § 16(1) (Michigan) only if the employer's activity can be categorized as an inherent management prerogative. Discharging the very employees who were actively negotiating a contemplated labor agreement through their representative is not an inherent management prerogative providing immunity from challenge.
See Crown Central Petroleum Corp, supra.
No more striking example of interference with the employees' protected right to bargain through representatives of their own choice could be conceived than the elimination of the bargaining unit for no reason other than the admitted purpose of avoiding wage demands. The precipitous action taken by the employer in firing the employees was a clear violation of § 16(1) of the Act.
For a similar analysis, see Knuth Bros, Inc, 229 NLRB 1204; 95 LRRM 1229 (1977), where an employer refused vacation pay to replaced strikers under an established policy. A § 8(a)(3) violation was not found because there was no showing of unlawful motivation and because other non-striking, terminated employees were treated in the same manner. However, the denial of benefits to the strikers was a consequence of their protected activity and, therefore, was found to be a violation of § 8(a)(1) as a "clear threat of economic loss to employees for engaging in protected concerted activities".
The Court of Appeals and MERC opinions focused on the union's second charge of alleged discriminatory action under § 16(3). MERC, as well as both parties, referred this Court to National Labor Relations Board v Great Dane Trailers, Inc, 388 U.S. 26; 87 S Ct 1792; 18 L Ed 2d 1027 (1967). The MERC majority concluded that, under the Great Dane case, the fact-finder has discretion in deciding whether a discriminatory discharge occurred. MERC concluded that the two projectionists were discharged for sound economic reasons; that only incidental harm to the employees' rights was involved; and that no anti-union motivation on behalf of the company precipitated the discharge action.
Nevertheless, even in considering § 16(3) allegations pursuant to the guidepost of Great Dane, when an employer's practice is inherently destructive of employees' rights and not otherwise justified, no specific evidence of intent to discourage union membership is necessary to establish a violation. Radio Officers' Union v National Labor Relations Board, 347 U.S. 17; 74 S Ct 323; 98 L Ed 455 (1954); American Ship Building Co v National Labor Relations Board, 380 U.S. 300; 85 S Ct 955; 13 L Ed 2d 855 (1965).
For a similar conclusion, see Rushton Mercier Woodworking Co, 203 NLRB 123; 83 LRRM 1070 (1973), enf 86 LRRM 2151 (CA 1, 1974), where the NLRB held that it would be "inherently destructive of employee interests" for an employer upon the resumption of operations following an economic layoff to hire a whole new work force represented by one union to the exclusion of its laid-off employees who were represented by another union.
We cannot accept the MERC conclusion that the employees' rights in this case were only incidentally affected. We find that the employer's action in destroying the bargaining unit by firing all the employees was discriminatory conduct that carried with it its own indicia of improper intent. The only reasonable inference that could be drawn by MERC from the destruction of the bargaining unit was that the employer fired the projectionists because of their union membership and because of their insistence upon union representation at the bargaining table. This conduct was so inherently destructive of the employees' interests that the employer should not be permitted to assert as an excuse an underlying business purpose pursued in good faith.
The discharge action of the employer amounted to unacceptable discriminatory action and a per se violation of § 16(3) of the Act. The employer had no justifiable reason for taking this drastic step. Alternative measures were available. Judge NOBLE, in his dissent, reflected several options available to an employer responding to allegedly excessive wage demands:
"[A]n employer may temporarily lock out the workers or temporarily lay them off when a strike is threatened or imminent.
"An employer may, at a minimum, temporarily replace striking workers, or may, in some situations, impose certain unilateral terms and conditions of employment. However, as we have concluded, an employer, facing an impasse in bargaining and fearing a union strike, may not permanently discharge employees represented by a union." 68 Mich. App. 458, 466-467. (Citations omitted.)
Additionally, the employer could have followed the standard employment practice of paying the employees at the last rate offered by management.
We would reverse and remand to the Michigan Employment Relations Commission for determination of an appropriate remedy as suggested by the dissenting opinion of Judge NOBLE.
WILLIAMS, J., concurred with BLAIR MOODY, JR., J.