Seattle First National Bank v. National Labor Relations Board

444 F.2d 30, 77 L.R.R.M. (BNA) 2634, 1971 U.S. App. LEXIS 9656

• Court: Court of Appeals for the First Circuit
• Decided: June 11, 1971
• Docket: 24613_1
• Status: Published

Opinions

TRASK, Circuit Judge:

This matter is before us on the petition of Seattle First National Bank to review and set aside an order of the National Labor Relations Board finding that the bank had engaged in an unfair labor practice, and upon the cross-petition of the Board to enforce the order.¹ The jurisdiction of this court to review the order is conferred by 29 U.S.C. § 160(f).

The sole question on review is whether there is substantial evidence on the record considered as a whole to support the Board’s conclusion that the bank’s unilateral discontinuance of free investment services to its bargaining unit employees materially affected the terms and conditions of their employment within the meaning of Section 8(d) of the National Labor Relations Act, as amended, 29 U.S.C. § 158(d), such that the bank was under a mandatory duty to bargain collectively with the union under Sections 8(a) (1) and (5) of the Act, 29 U.S.C. § 158(a) (1) and (5).²

For approximately 28 years prior to August 1, 1968, the bank’s employees were not charged by the investment service department of the bank for services provided in effecting the purchase or sale of securities on their behalf. However, as the number of employee transactions increased to approximately 25 percent of all investment transactions handled by the department, the bank felt that it was economically necessary to impose a new rate schedule which' increased services rates to non-employee customers and imposed, for the first time, a service charge on employees (union and non-union) equal to one-half of the regular fee charged to non-employees.³ Transactions in the bank’s own stock were exempted from the new rate schedule.

The decision to impose the investment service charges on employee transactions was unilaterally made by the bank. The union objected and offered to discuss the matter at the next round of contract negotiations. The bank refused to bargain because it was of the opinion that it was not mandatorily required to do so. Because of the bank’s refusal, an unfair labor practices charge was filed with the Board. The charge was denied by the bank, and a hearing was held.

The record before the Trial Examiner showed that during any one calendar year from the period of January 1, 1966, through August 1968, approximately 3 percent of the 3,000 bargaining unit employees effected transactions which would have incurred service charges under the new rate schedules. This small group of employees accounted for less than 11 percent of the total transactions that would have been subject to service charges after August 1, 1968. The transactions entered into by bargaining unit employees were outnumbered to a considerable extent by the transactions effected by the non-bargaining unit employees. And notwithstanding the recent dramatic increase in total employee investment activity as a percentage of all investment department business, the number of bargaining unit employees using the free services had remained almost constant during the period. The aggregate dollar value of the services to the bargaining unit employees was minimal. During the eight-month period from January 1, 1968, through August 1968, the investment service charges, if they had been imposed upon bargaining unit employee transactions, would have totaled $655.21 for the entire group.

The record also showed that the free investment services had never been reflected in a collective bargaining agreement with the union, nor had they ever been the subject of negotiations. There was no evidence that the free services had been held out as a fringe benefit to induce prospective employees to accept a job, or that the services had been the subject of any communication to the union or existing employees. In fact, there was no testimony that any of the employees, let alone the employer, had considered the free services as a term or condition of employment.

The Trial Examiner found that the existence of free investment services for the bank’s employees was a condition of employment for the bargaining unit employees within the meaning of Section 8(d) of the Act. Thus, it was determined that the bank, by unilaterally imposing fees for these investment services, had violated its mandatory duty under Sections 8(a) (1) and (5) of the Act to bargain collectively with the employees’ representative.

The Trial Examiner recommended that the bank cease and desist from refusing to bargain concerning the investment charges and from unilaterally altering the same. Affirmatively, it was recommended that the bank bargain upon request from the union; make whole any employee losses resulting from its unlawful conduct; and post the usual notices.

The Board adopted in full the findings, conclusions and recommendations of the Trial Examiner, without elaboration or critical comment.

Only as to those matters enumerated in Section 8(d) of the Act is there a mandatory obligation to bargain under Section 8(a) (5). Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 210, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964); NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958). And, as to those matters specified in Section 8(d), the phrase “terms and conditions of employment” is to be interpreted in a limited sense which does not include every issue that might be of interest to unions or employers.⁴ Fibre-board Paper Products Corp. v. NLRB, supra, 379 U.S. at 220, 85 S.Ct. 398 (Stewart, J., concurring); Westinghouse Electric Corp. v. NLRB, 387 F.2d 542, 545 (4th Cir. 1967) (en banc). A mere remote, indirect or incidental impact is not sufficient. In order for a matter to be subject to mandatory collective bargaining it must materially or significantly affect the terms or conditions of employment. American Smelting & Refining Co. v. NLRB, 406 F.2d 552, 554 (9th Cir.), cert. denied, 395 U. S. 935, 89 S.Ct. 1998, 23 L.Ed.2d 450 (1969); Westinghouse Electric Corp. v. NLRB, supra, 387 F.2d at 547; NLRB v. Lehigh Portland Cement Co., 205 F.2d 821 (4th Cir. 1953).

Because of its expertise in the field, the Board’s findings are, of course, entitled to considerable respect. However, when called upon to review an order of the Board, this court cannot accept the Board’s determination as a matter of law, but instead must evaluate “the relevant facts of the particular case.” American Smelting & Refining Co. v. NLRB, supra, 406 F.2d at 554. Moreover, “Congress has * * * made it clear that a reviewing court is not barred from setting aside a Board decision when it cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board’s view.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 465, 95 L.Ed. 456 (1951). We have evaluated the entire record and find that the evidence supporting the Board’s decision is insufficient to establish that the bank’s action in discontinuing the free investment services had a material impact on the terms or conditions of employment.

We find it difficult to understand how the use of the bank’s investment service department by the employees at half-price or free of charge can be within the phrase “terms and conditions of employment.” The purchase and sale of securities by employees has little or nothing to do with their employment. The source of funds may or may not originate from employment. In the words of Fibreboard Paper Products Corp., supra, the pricing of such services is one of the management decisions “which impinge only indirectly upon employment security and should be excluded” from Section 8(d) matters.

The Trial Examiner concluded that the free services were an “emolument of value” accruing out of the employment relationship, and that the effect of their elimination on the terms and conditions of employment was not de minimis. The evidentiary support for this conclusion was stated as follows:

“I am not persuaded that what is here involved can properly be regarded as de minimis. Even if the above-mentioned percentages were to remain constant in the future, as Respondent appears to assume, the value of the investment service to unit employees using it would, over a period of years, be substantial. Moreover, I cannot accept Respondent’s assumption. In view of the substantial increase in utilization of the investment service by Respondent’s employees, including unit employees, it is at least possible that there may be further increases in utilization by unit employees. In addition, contrary to Respondent’s implication, the decisions which it cites do not establish the minimum limits of substantiality, and are not dispositive of the issue here presented. * * * For in addition to the question of Respondent’s power to continue in effect the increases in investment service charges already imposed on unit employees, this ease also involves Respondent’s power to increase the service charges for such employees even further without negotiating with their bargaining representatives. And if Respondent can ignore the bargaining representative with respect to its investment service, it might take the position that it can act unilaterally with respect to a number of other services which it has been giving to its employees, such as effectuating sales and purchases of stock issued by Respondent without charge, free checking accounts, rental of safety deposit boxes at half price, and purchase of bank money orders without charge. [Footnote omitted]. Over a period of years, the total value of all the serv-. ices now and heretofore received by unit employees at a reduced rate or free of charge may be quite substantial indeed.” C.T. 20-21 (emphasis supplied).

The basis in the record upon which the Trial Examiner relied is illusory. Accumulating the aggregate value of the free services “over a period of years” merely camouflages the fact that the percentage of bargaining unit employees taking advantage of the services was extremely small. By itself, an aggregate figure for an undetermined period of years is meaningless. Broken down in terms of the value per unit employee per year, the record here clearly indicates that values would be insignificant. Furthermore, although “it is at least possible” that there might be increases in the future use of the free services by unit employees, it is equally as “possible” that the opposite could be true. There is no evidence in the record that either the percentage or number of unit employees utilizing these services had significantly increased in recent years. Finally, it was inappropriate to attempt to bolster the evidentiary basis for his conclusion by speculating as to the possibility that the bank might act unilaterally with respect to other free services which were not even the subject of the unfair practices charge. There was no evidence that the bank was planning on further unilateral action or that it had even considered it.

In reaching his decision the Trial Examiner relied heavily on NLRB v. Central Illinois Public Service, 324 F.2d 916 (7th Cir. 1963); Westinghouse Electric Corp., 156 NLRB 1080; and McCall Corp., 172 NLRB No. 55. These authorities are not helpful to the Board’s position. In Central Illinois Public Service, it was held that a unilateral discontinuance of a 33V3% employee discount on gas, which was used for home heating purposes by somewhat less than half of the unit employees and which was worth on the average $48 per year per employee, was a violation of the Act. The materiality of the impact, of course, was significantly greater than that involved here. Moreover, the court noted that the employer in that case had stated on occasion that the gas discount benefits should not be ignored when comparing wages with other employees who were not offered the discount. 324 F.2d at 917. In other words, there was a basis in the record, not present here, to show that the employer had in fact held out the discount as a substantial employee benefit.⁵

In Westinghouse, supra, the Board held that the employer violated the Act by refusing to bargain with the union with respect to minor changes in food prices charged at a plant cafeteria by an independent caterer. The Board’s decision was enforced by a panel of the court of appeals. Westinghouse Electric Corp. v. NLRB, 369 F.2d 891 (4th Cir. 1966) (Boreman, J., dissenting). However, on rehearing en banc, the panel’s decision was reversed, the court holding that the price changes did not have a material or significant relationship to wages, hours or other conditions of employment. 387 F.2d 542 (4th Cir. 1967) (Sobeloff, J., and Craven, J., dissenting).⁶

In McCall Corp., supra, the Board was confronted with a situation similar to that in Westinghouse in which there had been minor price changes by the employer in three vending machine food items. The Board refused to accord any weight to the fact that matter in issue was only of “trifling” importance and found that, since the employer had the power to change the prices of any and all food items, the price changes in question were a condition of employment. On review, the court of appeals recently denied enforcement of the Board’s order in McCall, relying solely on Westinghouse, supra. McCall Corp. v. NLRB, 432 F.2d 187 (4th Cir. 1970) (Sobeloff, J., dissenting).⁷

In addition to the insufficiency of the evidentiary basis in the record to support the Board’s order, we are inclined to point out, as did the court in Westinghouse, that “[t]he case before us does not even remotely involve any question of job security or any other issue which employees could traditionally consider ‘vital’.”⁸ 387 F.2d at 548.

The petition is granted and the order of the National Labor Relations Board herein is set aside; and the Cross-Petition of the Board for enforcement of its order is denied.

1 . The Board’s decision and order are reported at 176 NLRB No. 97.

2 . Sections 8(a) (1) and (5) of the act 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 157 of this title [i. e., Organization and Collective Bargaining];

* * *. ifc *

“(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title [i. e., Representatives and Elections].”

Section 8(d) provides:

“(d) For the purposes of this section, to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment. * * * ”

3 . For example, the new rate for transactions in listed stocks for non-employee customers was set at 10 cents per share ($5.00 minimum), whereas the rate for employees was 5 cents per share ($2.50 minimum).

4 . “If, as I think clear, the purpose of § 8 (d) is to describe a limited area subject to the duty of collective bargaining, those management decisions which are fundamental to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from that area.” Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 223, 85 S.Ct. 398, 410, 13 L.Ed.2d 233 (1964) (Stewart, J., concurring).

5 . Wo also recognize a significant difference in the basic nature of the benefits involved. In Central Illinois Public Service, the gas discount was directly related to a common household expense (i. e., heating costs) which a great many bargaining unit employees might well incur. Depending upon the type of home heating unit an employee possessed, the discount was of obvious immediate and continuous value. On the other hand, the very nature of free investment services dictates that they are of value only to the small number of employees actively trading in securities. Investment service costs are not an immediate and continuous living expense, and consequently, are unlikely to have any influence on employment decisions for an overwhelming majority of the labor force.

6 . The Trial Examiner noted the en banc decision in Westinghouse but did not consider himself bound by it. C.T. 22.

7 . The court of appeals in McCall made it clear that its en banc decision in Westinghouse did not hinge upon the fact that the employer there had only indirect control of cafeteria food prices.

8 . For example, discriminatory discharges, seniority rights, compulsory retirement age and grievance procedures, see Westinghouse Electric Corp. v. NLRB, 387 F.2d 542, 548 n. 4; group insurance plans, W. W. Cross Co. v. NLRB, 174 F.2d 875 (1st Cir. 1949); merit increases, NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); profit-sharing plans, Kroger Co. v. NLRB, 401 F.2d 682, 687-688 (6th Cir. 1968), cert. denied, Amalgamated Meat Cutters, etc. v. Kroger Co., 395 U.S. 904, 89 S.Ct. 1742, 23 L.Ed.2d 217 (1969); regular bonuses, Beacon Journal Publishing Co. v. NLRB, 401 F.2d 366 (6th Cir. 1968); and rents on company housing, American Smelting & Refining Co. v. NLRB, 406 F.2d 552 (9th Cir.), cert. denied. 395 U.S. 935, 89 S.Ct. 1998, 23 L.Ed.2d 450 (1969).