"In considering the propriety of the equitable relief granted here, we cannot ignore the judgment of Congress, deliberately expressed in legislation, that where the obstruction of the company union is removed, the meeting of employers and employees at a conference table is a powerful aid to industrial peace. (p. 551)."

The Court again adverted to this experience with company unions in N. L. R. B. v. Jones & Laughlin Steel Corp., 301 U. S. 1, 42.

The gist of a complaint under Section 8 (2) of the National Labor Relations Act is the charge that, in the words of the Act, the employer has "dominate[d] or interfere[d] with the formation or administration of [a] labor organization or contribute[d] financial or other support to it." The evidence which is considered by the Board revolves about the subsidiary questions of whether the employer or supervisory employees suggested the formation of the organization; whether supervisory employees occupy offices in the organization; whether the employer or supervisory employees urged employees to join the organization; whether solicitation was carried on during company time and meetings held on company property; etc. These are illustrative examples of the types of interference and support which the Board considers in determining whether Section 8 (2) has been violated. As the Senate Committee Report states, "It is impossible to catalog all the practices that might constitute economic interference, which may rest upon subtle but conscious economic pressure exerted by virtue of the employment relationship. The question is one of fact in each case. And where several of these interferences exist in combination, the employer may be said to dominate the labor organization by overriding the will of the employees." Having determined that an employer had dominated or interfered with the formation or administration of a labor organization, or granted support to it in violation of Section 8 (2), the Board undertakes to remedy the effect of the unfair labor practice. Section 10 (c) of the Act authorizes it not only to issue a "cease and desist" order against the employer, but also to take such "affirmative action" as will effectuate the policies of the Act. The normal remedy ordered by the Board in the case of company-dominated unions is to direct the employer to "disestablish" the illegal organization,' on the theory that it will be impossible for the employees to make a free and uninfluenced choice in the exercise of their right of self-organization, as long as an organization which the employer controls in whole or in part remains in the field. A "disestablished" organization may not be recognized by an employer under any circumstances as a labor organization or collective bargaining agent.

It is apparent that where an employer-dominated or subsidized organization has no contract that no question arises under the limitation in the appropriation act of the power of the Board to direct the employer to disestablish it. It would seem to follow that the same remedy can be ordered even though an employer has signed an instrument with such an organization which appears on its face to be a contract. The real question is whether as an incident to this remedy the Board may, as it does under its normal procedure, order the contract itself set aside. It is the practice in these cases where a contract is shown to have been in existence between an employer and an illegal organization so disestablished, to hold that the contract itself necessarily falls, not only as an incident to the basic unlawful relationship, but because if the employer is prohibited from recognizing the illegal organization, the collective agreement would be meaningless.

It is our considered opinion that the limitation in the current appropriation act was not intended to alter this practice. A contrary view would produce a paradoxical result, since it would mean that even though the illegal organization has no right to further recognition, its contract which has thereby become a hollow shell would still remain in existence.

From the foregoing, it is apparent that in a very real sense a complaint case under Section 8 (2) of the National Labor Relations Act is not one "arising over an agreement between management and labor." It is in fact a case arising over the domination, interference with, or support of a labor organization.

The legislative history of the "rider" confirms the conclusion above and the Board's opinion that it is not barred from proceeding in cases under Section 8 (2) of the Act.

Report of the Senate Committee on Education and Labor, 74th Cong., 1st Sess., on S. 1958, p. 10.

The remedy of disestablishment has been repeatedly sustained by the Supreme Court, beginning with the case of N. L. R. B. v. Pennsylvania Greyhound Lines, Inc., 303 U. S. 261,

When the conference report was before the Senate, Senator Wagner, who was not a member of the Conference Committee, in an excess of caution, expressed a fear that the rider might be construed to protect company unions. Senator Shipstead, in a colloquy with Senator Wagner, flatly stated that the rider had nothing to do with company unions.

*

"Mr. WAGNER. * * I think the way to handle the situation is by legislation. I believe the whole matter should be brought out and discussed. Let us decide the question whether we want to go back to the old days of company unions or not. [Italics supplied.]

"Mr. SHIPSTEAD. I do not think that question has anything to do with the matter under discussion. (Cong. Rec., 78th Cong., 1st Sess., p. 7106)." A similar colloquy took place at the hearing of the Senate Appropriations Committee, between Senator Truman and John P. Frey, president of the Metal Trades Division of the A. F. of L., the sponsor of the rider. When Senator Truman suggested that a contract with a company union which had been in existence for 3 months would be protected by the rider, Mr. Frey properly disposed of the suggestion with the statement that "company unions are illegal" At the same point in the hearing Mr. Frey stated that the rider "would in no way interfere with the efforts of men, members of company unions to have the right to select a union of their own, to have the backing of the Board" [italics supplied). When Senator Maloney asked Mr. Frey, "Do you regard this [rider] as a suspension of the Wagner Act for the period of the war?" Mr. Frey was prompt to reply "Not at all. Oh, my no * *

When the rider was being debated on the floor of the House, Congressman Hare, Chairman of the Subcommittee on Appropriations, told the House, "There is no attempt to amend the National Labor Relations Act." (Cong. Rec., 78th Cong., 1st Sess., p. 7024).

We have heretofore pointed out in our prior submission of a request for an opinion with respect to two other questions arising from the rider (letter of July, 1943, pp. 3-6) that the primary purpose of Congress in passing the rider was to prevent the Board from proceeding to a decision and order in the socalled Kaiser cases. To avoid repeating excerpts from the legislative history, we refer you to that letter. It is highly significant that the Kaiser cases did not involve any issues whatever under Section 8 (2) of the National Labor Relations Act, here involved.

That case arose under Section 8 (3) of the Act on charges that certain employees had been discharged in violation of that section. The company defended its action on the ground that the discharges were made pursuant to a contract requiring union membership as a condition of employment-such contracts having legal validity under a proviso to Section 8 (3) reading as follows:

Provided, That nothing in this Act, or in the National Industrial Recovery Act (U. S. C., Supp. VII, title 15, secs. 701-712), as amended from time to time, or in any code or agreement approved or prescribed thereunder, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this Act as an unfair labor practice) to require, as a condition of employment, membership therein, if such labor organization is the representative of the employees as provided in section 9 (a), in the appropriate collective bargaining unit covered by such agreement when made." [Italics supplied]. The position taken by the Board in the complaint was that the particular closed-shop agreements involved did not meet the standards of the proviso, since, inter alia, the union signatory thereto was not a representative of the majority in the appropriate bargaining unit. Most of the trial was devoted to this issue and it may therefore be inferred that issues of this sort are what Congress had in mind when they spoke of complaint cases "arising over an agreement between management and labor."

For the foregoing reasons it is the view of the Board that the rider was not intended to prohibit and should not be construed to prohibit the Board from proceeding in complaint cases arising out of the alleged domination, interference with, or support of a company union in violation of Section 8 (2) of the Act, even though as incident thereto a contract falls which was made with the illegal organization.

Hearings before the subcommittee of the Committee on Appropriations of the United States Senate, 78th Cong., 1st Sess., on H. R. 2935, at p. 336.

4 Ibid, p. 343.

Transmitted to you herewith are copies of the National Labor Relations Act and the Hearings and Debates relating to the rider.

The premise for your statement that the statutory provisions contained in the Labor-Federal Security Appropriation Act, 1944, approved July 12, 1943, 57 Stat. 515, Public Law 135, quoted in the submission, does not apply to complaint cases predicated upon violations of section 8 (2) of the National Labor Relations Act (49 Stat. 449452), would appear to be, first, that since such proceedings primarily involve the question of employer domination of, interference with, or support of a labor organization, the effect thereof upon an existing agreement between management and labor is only incidental and casual; and second, that the legislative history of the provision in question demonstrates that the Congress did not intend its application to such proceedings.

The remedy of disestablishment which the Board is authorized to invoke, and to which you refer, has been defined as "requiring the Company not to recognize, support or encourage the further existence of this particular independent union for any purpose or in any manner." Cudahy Packing Co., v. National Labor Relations Board, 102 F.2d 745. It was been held to be "a remedial measure under § 10 (c) to be employed by the Board in its discretion to remove the obstacle to the employees' right of self-organization, resulting from the continued or renewed recognition of a union whose organization has been influenced by unfair labor practices.' H. J. Heinz v. National Labor Relations Board, 311 U. S. 514, 522. And, in another case, National Labor Relations Board v. Newport News Shipbulding & Dry Dock Co., 308 U. S. 241, 250, the Supreme Court stated that "disestablishment of a bargaining unit previously dominated by the employer may be the only effective way of wiping the slate clean and affording the employes an opportunity to start afresh in organizing for the adjustment of their relations with the employer." But, whether the Board orders the disestablishment of the bargaining unit or otherwise requires the employer to withdraw recognition of the organization as representative of its employees, it is evident from the foregoing that the direct result of the Board's action is the abrogation of any existing agreement. And, in that connection, it is noted that in many instances (inter alia, Virginia Electric & Power Company v. National Labor Relations Board, 87 L. ed. (Adv. Op.) 1135; National Licorice Co. v. National Labor Relations Board, 309 U. S. 350), the Board, by specific direction, has ordered the employer not to enforce contracts found to have been procured by acts prohibited by section 8 (2) of the National Labor Relations Act. Such being the case, and having regard for the clear purpose of the "rider" to leave undisturbed those agreements which have been in effect for a period of three months without charges

being filed, it cannot be said that Congress intended to restrict its application to those cases where the agreement is directly attacked; nor, as a matter of fact, does it appear that the Congress even considered the extent to which the validity of the agreement must be in issue in a complaint case.

Of course, where there is no agreement between the employer and the labor organization the provision in the act of July 12, 1943, cannot operate to preclude the Board from proceeding under section 8 (2) of the National Labor Relations Act; but a similar conclusion would not be warranted in a case where an agreement has been entered into. In such a situation it would appear that the alleged unlawful relationship obtains by reason of the contract and, hence, that the complaint case must be regarded as one "arising over an agreement between management and labor."

Therefore, since it would appear that complaint cases under section 8 (2) of the National Labor Relations Act are within the letter of the "rider", reference to its legislative history would seem appropriate in order to determine whether, in fact, such cases were intended to fall within the purview of the terms of the provision involved. That the Congress was not unaware of the effect of the measure upon company unions is clearly demonstrated by said legislative history. Just prior to his statement with respect thereto cited in your submission, Senator Wagner asserted:

* We passed the Labor Relations Act because we wanted to do away with company unions. No one objects to that, but what is proposed here will in effect authorize a company union. (Cong. Rec. July 2, 1943, page 7104).

During the hearings before the Subcommittee of the Committee on Appropriations, United States Senate, Senator Reed, in speaking of the rider, stated (page 341):

* It would make it possible for an employer to make an agreement with a company union or some other kind of a union, keep it quiet for 3 months, and then be protected by that amendment.

Moreover, while testifying at said hearings, Mr. Gerard D. Reilly, a member of the National Labor Relations Board, stated (page 304): The purpose of the language of this amendment, however, goes much further than merely placing cases like the Kaiser case beyond our jurisdiction. The language is so broad that it would prevent the Board from even setting aside yellow-dog contracts. It would legalize contracts with company-dominated unions * * *. [Italics supplied.]

And Mr. Hoyt S. Haddock, legislative representative, Congress of Industrial Organizations, Maritime Committee, testified (page 346),

It is well known, of course, that the National Labor Relations Act forbids company domination of labor organizations, invalidates agreements made by companies with organizations which they have dominated

**

I know of no person who has dared to come forward to challenge these basic concepts of the National Labor Relations Act. No one has dared to defend the

right of employers to dominate labor organizations nor to take contracts with organizations which they dominate.

Yet consider the operation of this amendment. It prevents the Board from taking any action with respect to a labor contract which has been in effect for 3 months or longer. An employer may thus make an agreement with a companydominated organization and keep it secret and once 3 months have passed the Board is precluded from invalidating the agreement.

*

While the foregoing statements, in and of themselves, are not conclusive of the matter in question, yet, when considered in conjunction with the fact that the intention to except section 8 (2) cases from the application of the rider nowhere is shown, those statements become highly significant. That is to say, the Congress thus having been fully apprised or warned that the provision would operate to inhibit the Board from exercising its authority to determine the validity of agreements with company unions, and having then enacted the rider without making any specific provision to preclude such a result, it is not unreasonable to assume that the Congress intended that it have that effect.

While it is true that the enactment of the rider stemmed from the desire to prevent the Board from deciding the so-called Kaiser cases, I cannot concur in the view, apparently entertained by you, that the rider must be restricted in its application to those cases or such other cases as may involve identical or similar issues. The legislative history of the measure is believed to establish a Congressional purpose to the contrary. In that connection, attention is invited to the following excerpts from the debates in both the House and Senate on

the measure:

Mr. BRIDGES. Mr. President, this amendment is aimed to stabilize labor differences during this critical wartime period. * (Cong. Record, June 26, 1943, page 6648).

Mr. LODGE. If the language is aimed at a special situation in the Kaiser shipyards, why is it so broad as to cover all kinds of situations, really not desired to be covered?

Mr. BREWSTER. I think the Senator from New Hampshire made it entirely clear in his initial statement that the amendment is designed to stabilize labor relations. As a matter of fact, complaints have been filed or are pending in several other similar instances of considerable antiquity. This merely means that unless some stabilization policy shall be adopted, we shall throw the entire field of labor relations into chaos, because a complaint may be filed in every case, and immediately there follows what we found occurring in the Kaiser yards. The men spend an unfortunate amount of their time discussing whether they would join one organization or the other. * * (Cong. Record, June 26, 1943, page 6649).

Mr. BREWSTER. Do I understand the Senator from Nevada correctly, then, that he is in complete sympathy with the objective of stabilizing labor relations at this critical period?

Mr. MCCARRAN. Absolutely. The entire committee is.

Mr. BREWSTER. And that any appropriate language designed to prevent the reopening of, let us say, somewhat aged contracts, would be in accord with the Senator's views?

Mr. MCCARRAN. Yes, that is my view, because I think labor relations should be stabilized all over the country. * (Cong. Record, June 26, 1943,

page 6650).

Mr. TARVER. *

we should enact this proviso and stop this squabbling out there on the Pacific coast or anywhere else in the country until this emergency