Oil, Chemical & Atomic Workers International Union v. Mobil Oil Corp.

426 U.S. 407, 96 S. Ct. 2140, 48 L. Ed. 2d 736, 1976 U.S. LEXIS 106, 92 L.R.R.M. (BNA) 2737

• Court: Supreme Court of the United States
• Decided: June 14, 1976
• Docket: 74-1254
• Status: Published

Opinions

Me. Justice Marshall

delivered the opinion of the Court.

Section 8 (a) (3) of the National Labor Relations Act, 49 Stat. 452, as amended, 61 Stat. 140, 29 U. S. C. § 158 (a)(3), permits employers as a matter of federal law to enter into agreements with unions to establish union or agency shops.¹ Section 14 (b) of the Act, 61 Stat. 151, 29 U. S. C. § 164 (b), however, allows individual States and Territories to exempt themselves from § 8 (a) (3) and to enact so-called “right-to-work” laws prohibiting union or agency shops.² We must decide whether, under § 14 (b), Texas’ right-to-work laws can void an agency-shop agreement covering unlicensed seamen who, while hired in Texas and having a number of other contacts with the State, spend the vast majority of their working hours on the high seas.

I

Petitioners (hereinafter Union) ³ represent the unlicensed seamen who work on respondent employer’s oil tankers, In November 1969 the Union and respondent entered into a collective-bargaining agreement which provided for an agency shop: “For the duration of the Agreement all employees hired shall, as a condition of employment, become members of the Union and/ or in the alternative pay the regular union dues and initiation fees within 31 days from the employment date.” App. 281. Almost two years after entering into the agreement, respondent filed suit in the United States District Court for the Eastern District of Texas under § 301 of the Labor Management Relations Act, 61 Stat. 156, 29 U. S. C. § 185, claiming that the agency-shop provision was invalid and unenforceable because it violated Texas’ right-to-work laws.⁴

Uncontested evidence was presented at trial concerning the relevant locations of various aspects of the relationship between the Union, the respondent, and the seamen. Because this evidence bears heavily on the contentions of the parties, we shall summarize it in some detail. Respondent is a division of Mobil Oil Corp., a New York corporation, and operates a fleet of eight oceangoing tankers which transport respondent’s petroleum products from Texas to Atlantic coast ports. Respondent is headquartered in Beaumont, Tex., and maintains its personnel records there. Sixty percent of the applications to be unlicensed seamen on respondent’s ships are made in Beaumont and 40% in New York. The final hiring decisions are made in Beaumont. Of the 289 unlicensed seamen who are employed to man the tankers, 123 maintain residence in Texas, and 60 in New York.⁵ One hundred and fifty-two of the seamen list Beaumont as their shipping port — a designation that determines travel allowances to and from a seaman’s residence — and the remainder list either New York or Providence, R. I. Seamen can elect to be paid their wages aboard ship, to have their paychecks sent from the Beaumont office to designated recipients, or to use a combination of these two schemes. The collective-bargaining agreement whose agency-shop provision is at issue here was negotiated and executed in New York. It was re-executed in Texas.

A typical trip by one of respondent’s tankers from Beaumont, the Texas port, to Providence or New York, the Atlantic ports, takes from 4% to 5 days. Loading and unloading in port takes from 18 to 30 hours. No more than 10% to 20% of the seamen’s work time is spent within the territorial bounds of Texas.

Based on the above evidence, fully reflected in its findings of fact, the District Court concluded that “[t]he acts performed in the State of Texas in the administration and performance of the collective bargaining agreement are such that the State of Texas is intimately concerned with the collective bargaining agreement and with the employees working thereunder.” App. 29. Relying on this “intimate concern,” the court held that the Texas right-to-work laws were applicable under § 14 (b) and that the agency-shop provision was therefore void and unenforceable.

A three-member division of the United States Court of Appeals for the Fifth Circuit, one judge dissenting, reversed. 483 F. 2d 603 (1973). The court concluded that the Texas right-to-work laws could not apply since the employees’ principal job situs is not in Texas but rather is on the high seas. On rehearing en banc the full court, over the dissent of six of its members, vacated the division opinion and affirmed the judgment of the District Court. 504 F. 2d 272 (1974). The court identified and analyzed the interests that Texas has in the employment relationship at issue, placing special stress on the fact that all final hiring decisions take place in Texas. It held that “the federal labor legislation, the predominance of Texas contacts over any other jurisdiction, and the significant interest which Texas has in applying its right to work law to this employment relationship warrant application of the Texas law and, consequently, invalidation of the agency shop provision.” Id., at 275. We granted certiorari, 423 U. S. 820 (1975), and we now reverse.

II

All parties are agreed that the central inquiry in this case is whether § 14 (b) permits the application of Texas’ right-to-work laws to the agency-shop provision in the collective-bargaining agreement between the Union and respondent.⁶ Only if it is to be so read is the agency-shop provision unenforceable.⁷ The parties are similarly agreed that a State can apply its right-to-work laws only with respect to employment relationships with which the State has adequate contact. The crux of the differences between the parties concerns whether the contacts between Texas and the employment relationship in this case are sufficient to come under § 14 (b).

The Union, as well as the United States as amicus curiae, argues that the nature of the concerns at which § 14 (b) is directed mandates that job situs be the controlling factor in determining the applicability of § 14 (b), and that since in this case the employees’ principal job situs is on the high seas — outside the territorial bounds of the State — the agency-shop provision at issue is valid. Respondent contends that “[t]he sufficiency of a state’s interest in applying its law is to be determined by looking to the whole employment relationship.” Brief for Respondent 15. Giving weight to all the contacts between Texas and the employment relationship, see supra, at 410-411, respondent concludes that Texas can validly apply its right-to-work laws under § 14 (b). A third approach, the one adopted by the dissenting opinion in this case, is that the location of the hiring process should be determinative of the applicability of a State’s right-to-work laws. Under this test, also, Texas’ contacts in this case would be sufficient to apply its laws.

In light of what we understand Congress’ concerns in both § 8 (a) (3) and § 14 (b) to have been, we conclude that it is the employees’ predominant job situs rather than a generalized weighing of factors or the place of hiring that triggers the operation of § 14 (b). We hold that under' § 14 (b), right-to-work laws cannot void agreements permitted by § 8 (a) (3) when the situs at which all the employees covered by the agreement perform most of their work is located outside of a State having such laws.

Under § 8 (3) of the Wagner Act, enacted in 1935, closed shops, union shops, and agency shops were all permitted. But in 1947, in § 8 (a) (3), as added by the Taft-Hartley Act, Congress reacted to widespread abuses of closed-shop agreements by banning such arrangements.⁸ Union and agency shops were still permitted, however, by §8 (a)(3). That provision makes employment discrimination in favor of or against labor unions an unfair labor practice but contains the following proviso which we have held to apply to agency shops as well as union shops, NLRB v. General Motors Corp., 373 U. S. 734 (1963):

“Provided, That nothing in this subchapter or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization ... to require as a condition of employment membership therein on or after the thirtieth day following the beginning of such employment or the effective date of such agreement, whichever is the later . . . .”

While permitting agency- and union-shop agreements, however, Congress provided certain safeguards for employees who were subject to such agreements. Thus a second proviso to § 8 (a) (3) warns:

“[N]o employer shall justify any discrimination against an employee for nonmembership in a labor organization (A) if he has reasonable grounds for believing that such membership was not available to the employee on the same terms and conditions generally applicable to other members, or (B) if he has reasonable grounds for believing that membership was denied or terminated for reasons other than the failure of the employee to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership.”

Like its decision to ban closed-shop agreements, Congress’ decision in § 8 (a) (3) to provide these safeguards reflects a concern with compulsory unionism. But, in stark contrast to closed-shop agreements, these safeguards and the agency- or union-shop agreements to which they apply are not focused on the hiring process. Rather, they are directed at conditions that must be fulfilled by an employee only after he is already hired, at least 30 days after he is already working at the job-site.⁹ Moreover, quite apart from the safeguards that it provided, Congress’ decision to allow union-security agreements at all reflects its concern that, at least as a matter of federal law, the parties to a collective-bargaining agreement be allowed to provide that there be no employees who are getting the benefits of union representation without paying for them. Again,, the focus of this concern is not the hiring process, but rather the benefits to be derived from union representation during the period of employment — while the employee is on the job. Thus, the Senate Committee Report on what became the Taft-Hartley Act observed that § 8 (a)(3) gives “employers and unions who feel that [union-security] agreements promoted stability by eliminating 'free riders’ the right to continue such arrangements.” S. Rep. No. 105, 80th Cong., 1st Sess., 7 (1947), 1 Leg. Hist. 413. “Congress recognized that in the absence of a union-security provision 'many employees sharing the benefits of what unions are able to accomplish by collective bargaining will refuse to pay their share of the cost.’ S. Rep. No. 105, 80th Cong., 1st Sess., p. 6, 1 Leg. Hist. L. M. R. A. 412.” NLRB v. General Motors Corp., supra, at 740-741.

In short, insofar as it deals with union-security agreements less onerous than the closed-shop agreement, § 8 (a)(3) focuses in both effect and purpose on post-hiring conditions, conditions which have a major impact on the job situs.

While § 8 (a) (3) articulates a national policy that certain union-security agreements are valid as a matter of federal law, § 14 (b) reflects Congress’ decision that any State or Territory that wishes to may exempt itself from that policy. Section 14 (b) allows a State or Territory to ban agreements “requiring membership in a labor organization as a condition of employment.” ¹⁰ We have recognized that with respect to those state laws which § 14 (b) permits to be exempted from § 8 (a)(3)’s national policy “[t]here is . . . conflict between state and federal law; but it is a conflict sanctioned by Congress with directions to give the right of way to state laws . . . .” Retail Clerks v. Schermerhorn, 375 U. S. 96, 103 (1963). The question here, of course, is whether Texas’ contacts with this employment relationship are adequate to call into play § 14 (b)’s mandated deference to state law.

Section 14 (b) simply mirrors that part of § 8 (a) (3) which focuses on posi-hiring conditions of employment. As its language reflects, § 14 (b) was designed to make clear that § 8 (a) (3) left the States free to pursue “their own more restrictive policies in the matter of union-security agreements.” Algoma Plywood Co. v. Wisconsin Board, 336 U. S. 301, 314 (1949). Since § 8 (a)(3) already prohibits the closed shop, the more restrictive policies that § 14 (b) allows the States to enact relate not to the hiring process but rather to conditions that would come into effect only after an individual is hired. It is evident, then, that § 14 (b)’s primary concern is with state regulation of the posi-hiring employer-employee-union relationship. And the center of the post-hiring relationship is the job situs, the place where the work that is the very raison d’etre of the relationship is performed.

The centrality of job situs to Congress’ concern in § 14 (b) is also suggested by the House Committee Report on the bill that contained the substance of what was finally enacted as § 14(b). That report reflects the House’s intent that agreements providing for agency or union shops would be valid “only if they are valid under the laws of any State in which they are to be performed.” H. R. Rep. No. 245, 80th Cong., 1st Sess., 34 (1947), 1 Leg. Hist. 325. Where an agreement is “performed” may be open to some debate, but we think the most reasonable reading of the phrase is that union-security agreements are “performed” on the job situs. Thus, the import of the House Report is that the committee viewed what became § 14 (b) as allowing a State to ban agreements calling for work to be performed within the State. While the Taft-Hartley Act as finally enacted does not contain the precise wording of the House bill, there is no indication that any language changes were designed to alter this focus on the place of performance.

Whether taken separately or together, the place of hiring and the other factors on which respondent relies — the employees’ place of residence, the locale of personnel records, the place at which payroll checks are written, etc. — are not nearly as central to the concerns of § 14 (b) as the employees’ job situs. And, because of this close relationship between § 14 (b) and job situs we conclude that § 14 (b) does not allow enforcement of right-to-work laws with regard to an employment relationship whose principal job situs is outside of a State having such laws.

Two practical considerations bolster our conclusion that the employees’ predominant job situs should determine the applicability of a State’s right-to-work laws under § 14 (b). First, the use of a job situs test will minimize the possibility of patently anomalous extraterritorial applications of any given State’s right-to-work laws. Use of a job situs test will insure that the laws of a State with a continuing and current relationship with the employees in question will govern the validity vel non of any union-shop or agency-shop provision. On the other hand, if place of hiring were to be the determinative factor, Texas, for instance, could apply its right-to-work laws to employees who work solely in Connecticut simply because the relevant hiring decisions were made — perhaps many years ago — in Texas. We cannot believe that it was Congress’ purpose in passing § 14 (b) to sanction such a result.

A test such as the one adopted by the Court of Appeals that evaluates all of a jurisdiction’s employment relationship contacts in order to determine the applicability of its right-to-work laws under § 14 (b) might not result in irrational extraterritorial applications. But such a test does suffer the disadvantages of being both less predictable and more difficult of application than a job situs test. Under a job situs test, parties entering a collective-bargaining agreement will easily be able to determine in virtually all situations whether a union- or agency-shop provision is valid. By contrast, bargaining parties would often be left in a state of considerable uncertainty if they were forced to identify and evaluate all the relevant contacts of a jurisdiction in order to determine the potential validity of a proposed union-security provision. The unpredictability that such a test would inject into the bargaining relationship, as well as the burdens of litigation that would result from it, make us unwilling to impute to Congress any intent to adopt such a test.¹¹

Ill

Having concluded that predominant job situs is the controlling factor in determining whether, under § 14 (b), a State can apply its right-to-work laws to a given employment relationship, the disposition of this case is clear. Because most of the employees’ work is done on the high seas, outside the territorial bounds of the State of Texas, Texas’ right-to-work laws cannot govern the validity of the agency-shop provision at issue here. It is immaterial that Texas may have more contacts than any other State with the employment relationship in this case, since there is no reason to conclude under § 14 (b) that in every employment situation some State or Territory’s law with respect to union-security agreements must be applicable.¹² Federal policy favors permitting such agreements unless a State or Territory with a sufficient interest in the relationship expresses a contrary policy via right-to-work laws. It is therefore fully consistent with national labor policy to conclude, if the predominant job situs is outside the boundary of any State, that no State has a sufficient interest in the employment relationship and that no State’s right-to-work laws can apply.

Accordingly, the judgment of the Court of Appeals is reversed.

So ordered.

Mr. Chief Justice Burger concurs in the judgment.

1 A “union shop” agreement provides that no one will be employed who does not join the union within a short time after being hired. An “agency shop” agreement generally provides that while employees do not have to join the union, they are required— usually after 30 days — to pay the union a sum equal to the union initiation fee and are obligated as well to make periodic payments to the union equal to the union dues. See NLRB v. General Motors Corp., 373 U. S. 734 (1963). The “union shop” and “agency shop” varieties of “union security” agreements are to be distinguished from the “closed shop” agreement, barred by §8 (a) (3), which provides that the employer will hire no one who is not a member of the union at the time of hiring.

2 Section 14 (b) provides in full:

“Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.”

It is settled that § 14 (b) encompasses the agency-shop as well as the union-shop agreement. Retail Clerks v. Schermerhorn, 373 U. S. 746 (1963).

3 There are two petitioners in this case, Oil, Chemical and Atomic Workers International Union, AFL-CIO, and its Local 8-801. Both are parties to the collective-bargaining agreement with respondent.

4 Texas’ right-to-work laws prohibit, inter. alia, the denial of employment to anyone because of a failure to pay “any fee, assessment, or sum of money whatsoever” to a union. Tex. Rev. Civ. Stat. Ann., Art. 5154a, § 8a (1971). The parties are agreed that the law encompasses agency-shop provisions. See Op. Atty. Gen. Tex. No. WW-1018 (1961).

5 The residences of the remainder are spread over 20 other States.

6 The Union does not claim that Texas’ contacts are so minimal as to make the application of the Texas laws in any way unconstitutional. Nor does respondent argue that Congress lacked the power, if it wished, to prohibit state right-to-work laws altogether.

7 There is nothing in either' § 14 (b)’s language or legislative history to suggest that there may be applications of right-to-work laws which are not encompassed under § 14 (b) but which are nonetheless permissible. As we recognized in Retail Clerks v. Schermerhorn, 375 U. S., at 103, it is “§ 14 (b) [which] gives the States power to outlaw even a union-security agreement that passes muster by federal standards.” Cf. Kentucky State AFL-CIO v. Puckett, 391 S. W. 2d 360 (Ky. 1965); Grimes & Hauer, Inc. v. Pollock, 163 Ohio St. 372, 127 N. E. 2d 203 (1955).

8 See NLRB v. General Motors Corp., 373 U. S. 734 (1963); S. Rep. No. 105, 80th Cong., 1st Sess., 6, 1 Legislative History of the Labor Management Relations Act, 1947 (hereinafter Leg. Hist.), p. 412 (1948).

9 In explaining the distinction that § 8 (a) (3) draws between closed shops on the one hand and lesser union-security agreements on the other, Senator Taft noted:

“The great difference is that in the first instance a man can get a job without joining the union or asking favors of the union, and once he has the job he can continue in it for 30 days, and during that time the employer will have an opportunity to ascertain whether he is a capable employee. The fact that the employee will have to pay dues to the union seems to me to be much less important. The important thing is that the man will have the job.” 93 Cong. Rec. 4886 (1947), 2 Leg. Hist. 1422.

10 See n. 2, supra.

11 Our use of a job situs test is consistent with the National Labor Relation Board's application of § 14 (b) under the statutory provision, 29 U. S. C. §159 (e)(1) (1946 ed., Supp. I), requiring the Board in certain circumstances to conduct employee elections to authorize the negotiation of union-security agreements. In determining the employees who were eligible to vote for and be covered by a union-security agreement, the Board in both Giant Food Shopping Center, Inc., 77 N. L. R. B. 791 (1948), and Western Electric Co., 84 N. L. R. B. 1019 (1949), indicated that the laws of one State prohibiting such agreements could not apply to employees whose job situs was in another State or Territory.

12 The Court of Appeals argued that to refuse to “allow Texas to apply its law here would create the bizarre consequence of exempting the maritime industry from the operation of section 14 (b).” 504 F. 2d 272, 280-281 (1974). It further observed, pointing to the 1951 amendment to the Railway Labor Act, 45 U. S. C. § 152 Eleventh, that “when Congress has decided to supersede section 14 (b) and state right to work laws, it has done so expressly.” 504 F. 2d, at 281. In applying a job situs test to this case, we create no “exemption” from § 14 (b) for the maritime industry. Under this test, a State can still apply its right-to-work laws to maritime workers, such as longshoremen, whose job situs is within the State. Moreover, the Rahway Labor Act amendments are simply irrelevant to this case. The issue that we decide here is not whether § 14 (b) has been superseded, but rather whether it applies in the first instance.