27 Introduction to Labor Law II 27 Introduction to Labor Law II
Labor law under the NLRA has been described as intended to create a democracy of the workplace--creating more responsive and representative relationships between workers and unions and between unions and employers. In this section, we will study several core aspects of this labor democracy. First, we will consider the duty of the union to fairly represent the interests of individual workers and its limits. Next, we will consider Section 8(a)(5)'s duty to bargain collectively in good faith. When and how does an employer violate this duty? And how can an employee waive otherwise applicable rights?
27.1 Vaca v. Sipes 27.1 Vaca v. Sipes
VACA et al. v. SIPES, ADMINISTRATOR.
No. 114.
Argued November 17, 1966.
Decided February 27, 1967.
*172■ David E. Feller argued the cause' for petitioners. With him on the brief were Henry A. Panethiere, Russell D. Jacobson, Jerry D. Anker and George G. West.
Allan R. Browne argued the cause and filed a brief for respondent..
Briefs of amici curiae, urging reversal, were filed by Solicitor General Marshall, Robert S. Rijkind, Arnold *173 Ordman, Dominick L. Manoli and Norton J. Come for the United States; by /. Albert Woll, Robert C. Mayer, Laurence Gold and Thomas E. Harris for the American Federation of Labor and Congress of Industrial Organizations; and by Robert L. Hecker and Earl G. Spiker for Swift & Co.
delivered the opinion of the Court.
On February 13, 1962, Benjamin Owens filed this class action against petitioners, as officers and representatives of the National Brotherhood of Packinghouse Workers1 and of its Kansas City Local No. 12 (the Union), in the Circuit Court of Jackson County, Missouri. Owens, a Union member, alleged that he had been discharged from his employment at Swift & Company’s (Swift) Kansas City Meat Packing Plant in violation of the collective bargaining agreement then in force between Swift and the Union, and that the Union had “arbitrarily, capriciously and without just or reasonable reason or cause” refused to take his grievance with Swift to arbitration under the fifth step of the bargaining agreement’s grievance procedures.
Petitioners’ answer included the defense that the Missouri courts lacked jurisdiction because the gravamen of Owens’ suit was “arguably and basically” an unfair labor practice under § 8 (b) of the National Labor Relations Act (N, L. R. A.), as amended, 61 Stat. 141, 29 U. S. C. § 158 (b), within the exclusive jurisdiction of the National Labor Relations Board (NLRB). After a jury trial, a verdict was returned awarding Owens $7,000 compensatory and $3,300 punitive damages. The trial judge set aside the verdict and entered judgment for petitioners on the ground that the NLRB had exclusive jurisdiction *174over this controversy, and the Kansas City Court of Appeals affirmed. The Supreme Court of Missouri reversed and directed reinstatement of the jury’s verdict,2 relying orf this Court’s decisions in International Assn. of Machinists v. Gonzales, 356 U. S. 617, and in Automobile Workers v. Russell, 356 U. S. 634. 397 S. W. 2d 658. During-the appeal, Owens died, and respondent, the administrator of Owens’ estate, was substituted. We granted certiorari to consider whether exclusive jurisdiction lies with the NLRB and, if not, whether the finding of Union liability and the relief afforded Owens are consistent with governing principles of federal labor law. 384 U. S. 969. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Swift, and the United States have filed amicus briefs supporting petitioners. Although we conclude that state courts have jurisdiction in this type of case, we hold that federal law governs, that the governing federal standards were not applied here, and that the judgment of the Supreme Court of Missouri must accordingly' be reversed.
I.
In mid-1959, Owens, a long-time high blood pressure patient, became sick and entered a hospital on sick leave from his employment with Swift. After a long rest during which his weight and blood pressure were reduced, Owens was certified by his family physician as fit to resume his heavy work in the packing plant. However, Swift’s company doctor examined Owens upon his return and concluded that his blood pressure was too high to permit reinstatement. After securing a second authorization from another outside doctor, Owens returned to the plant, and a nurse permitted him to resume work *175on January 6, 1960. However, on January 8, when the doctor discovered Owens’ return, he was permanently discharged on the ground of poor health.
Armed with his medical evidence of fitness, Owens then sought the Union’s help in securing reinstatement, and a grievance was filed with Swift on his behalf. By mid-November 1960, the grievance had been processed through the third and into the fourth step of the grievance procedure established by the collective bargaining agreement;3 Swift adhered to its position that Owens’ poor health justified his discharge, rejecting numerous medical reports of reduced blood pressure proffered by Owens and' by the Union. Swift claimed that these reports were not based upon sufficiently thorough medical tests.
On February 6, 1961, the Union sent Owens to a new doctor at Union expense “to see if we could get some, better medical evidence so that we could go to arbitration with his case.” R., at 107. This examination did not support Owens’ position. When the Union received the report, its executive board voted not to take the Owens grievance to arbitration because of insufficient medical evidence. Union officers suggested to Owens that he accept Swift’s offer of referral to a rehabilitation center, and the grievance was suspended for that purpose. Owens rejected this alternative and demanded that the Union take his grievance to arbitration, but the Union *176refused. With his contractual remedies thus stalled at the fourth step, Owens brought this suit. The grievance was finally dismissed by the Union and Swift shortly before trial began in June 1964.4
In his charge to the jury, the trial judge instructed that petitioners would be liable if Swift had wrongfully discharged Owens and if the Union had “arbitrarily . . . and without just cause or excuse . . . refused” to press Owens’ grievance to arbitration. Punitive damages could also be awarded, the trial judge charged, if the Union’s conduct was “willful, wanton and malicious.” However, the jury must return a verdict for the defendants, the judge instructed, “if you find and believe from the evidence that the union and its representatives acted rea= sonably and in good faith in the handling and processing of the grievance of the plaintiff.” R., at 161-162. The jury then returned the general verdict for Owens which eventually was reinstated by the Missouri Supreme Court.
HH I — I
Petitioners challenge the jurisdiction of the Missouri courts on the ground that the alleged conduct of the Union was arguably an unfair labor practice and within the exclusive jurisdiction of the NLRB. Petitioners rely on Miranda Fuel Co., 140 N. L. R. B. 181 (1962), enforcement denied, 326 F. 2d 172 (C. A. 2d Cir. 1963), where a sharply divided Board held for the first time that a union’s breach of its statutory duty of fair representation violates N. L. R. A. § 8 (b), as amended. With the NLRB’s adoption of Miranda Fuel, petitioners argue, the broad pre-emption doctrine defined in San Diego Building Trades Council v. Garmon, 359 U. S. 236, be*177comes applicable. For the reasons which follow, we reject this argument.
It is now well established that, as the exclusive bargaining representative of the employees in Owens’ bargaining unit, the Union had a statutory duty fairly to represent all of those employees, both in its collective bargaining with Swift, see Ford Motor Co. v. Huffman, 345 U. S. 330; Syres v. Oil Workers International Union, 350 U. S. 892, and in its enforcement of the resulting collective bargaining agreement, see Humphrey v. Moore, 375 U. S. 335. The statutory duty of fair representation was developed over 20 years ago in a series of cases involving alleged racial discrimination by unions certified as •exclusive bargaining representatives under the Railway Labor Act, see Steele v. Louisville & N. R. Co., 323 U. S. 192; Tunstall v. Brotherhood of Locomotive Firemen, 323 U. S. 210, and was soon extended to unions certified under the N. L. R. A., see Ford Motor Co. v. Huffman, supra. Under this doctrine, the exclusive agent’s statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and.to avoid arbitrary conduct. Humphrey v. Moore, 375 U. S., at 342. It is obvious that Owens’ complaint alleged a breach by the Union of a duty grounded in federal statutes, and that federal law therefore governs his cause of action. E. g., Ford Motor Co. v. Huffman, supra.
Although N. L. R. A. § 8 (b) was enacted in 1947, the NLRB did not until Miranda Fuel interpret a breach of a union’s duty of fair representation as an unfair labor practice. In Miranda Fuel, the Board’s majority held that N. L. R. A. § 7 gives employees “the right to be .free from unfair or irrelevant or invidious treatment by their exclusive bargaining- agent in matters affecting their *178employment,” and “that Section 8 (b)(1)(A) of the Act accordingly prohibits labor organizations, when acting in a statutory representative capacity, from taking action against any employee upon considerations or classifications which are irrelevant, invidious, or unfair.” 140 N. L. R. B., at 185. The Board also held that an employer who “participates” in such arbitrary union conduct violates § 8 (a)(1), and that the employer and the union may violate §§ 8 (a) (3) and 8 (b) (2), respectively, “when, for arbitrary or irrelevant reasons or upon the basis of an unfair classification, the union attempts to cause or does cause an employer to derogate the employment status of an employee.” 5 Id., at 186.
The Board’s Miranda Fuel decision was denied enforcement by a divided Second Circuit, 326 F. 2d 172 (1963). However, in Local 12, United Rubber Workers v. N. L. R. B., 368 F. 2d 12, the Fifth Circuit upheld the Board’s Miranda Fuel doctrine in an opinion suggesting that the Board’s approach will pre-empt judicial cognizance of some fair representation duty suits. In light of these developments, petitioners argue that Owens’ state court action was based upon Union conduct that is arguably proscribed by N. L. R. A. § 8 (b), was potentially enforceable by the NLRB, and was therefore pre-empted under the Garmon line of decisions.
A. In Garmon, this Court recognized that the broad powers conferred by Congress upon the National Labor Relations Board to interpret and to enforce the complex Labor Management Relations Act (L. M. R. A.) necessarily imply that potentially conflicting “rules of law, of remedy, and of administration” cannot be permitted to *179operate. 359 U. S., at 242. In enacting the National Labor Relations Act and later the Labor Management Relations Act,
■ “Congress did not merely lay down a substantive rule of law to be enforced by any tribunal competent to apply law generally to the parties. It went on to confide primary interpretation and application of its rules to a specific and specially constituted tribunal-. . . . Congress evidently considered that centralized administration of specially designed procedures was necessary to obtain uniform application of its substantive rules and’ to avoid these diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies. ... A multiplicity of tribunals and a diversity of procedures are quite as apt to produce incompatible or conflicting adjudications as are different rules of substantive law.” Garner v. Teamsters Union, 346 U. S. 485, 490-491:
Consequently, as a general rule, neither state nor federal courts have jurisdiction over suits directly involving “activity [which] is arguably subject to § 7 or § 8 of the Act.” San Diego Building Trades Council v. Garmon, 359 U. S., at 245.
This pre-emption doctrine, however, has never been rigidly applied to cases where it could not fairly be inferred that Congress intended exclusive jurisdiction to lie with the NLRB. Congress itself has carved out exceptions to the Board’s exclusive jurisdiction: Section 303 of the Labor Management Relations Act, 1947, 61 Stat. 158, 29 U. S. C. § 187, expressly permits anyone injured by a violation of N. L. R. A. § 8 (b) (4) to recover damages in a federal court even though such unfair labor practices are also remediable by the Board; § 301 of that Act, 61 Stat. 156, 29 U. S. C. § 185, permits suits for breach of a collec*180tive bargaining agreement regardless of whether the particular breach is also an unfair labor practice within the jurisdiction of the Board (see Smith v. Evening News Assn., 371 U. S. 195); and N. L. R. A. § 14, as amended by Title VII, § 701 (a) of the Labor-Management Reporting and Disclosure Act of 1959, 73 Stat. 541, 29 U. S. C. § 164 (c), permits state agencies and courts to assume jurisdiction “over labor disputes over which the Board declines, pursuant to paragraph (1) of this subsection, to assert jurisdiction” (compare Guss v. Utah Labor Board, 353 U. S. 1).
In addition to these congressional exceptions, this Court has refused to hold state remedies pre-empted “where the activity regulated was a merely peripheral concern of the Labor Management Relations Act .... [or] touche'd interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress has deprived the States of the power to act.” San Diego Building Trades Council v. Garmon, 359 U. S., at 243-244. See, e. g., Linn v. Plant Guard Workers, 383 U. S. 53 (libel); Automobile Workers v. Russell, 356 U. S. 634 (violence); International Assn. of Machinists v. Gonzales, 356 U. S. 617 (wrongful expulsion from union membership) ; Allen-Bradley Local v. Wisconsin Employment Relations Board, 315 U. S. 740 (mass picketing). See also Hanna Mining Co. v. Marine Engineers Beneficial Assn., 382 U. S. 181. While these exceptions in no way undermine the vitality of the pre-emption rule where applicable, they demonstrate that the decision to preempt federal and state court jurisdiction over a given class of cases must depend upon the nature of the particular interests being asserted and the effect upon the administration of national labor policies of concurrent judicial and administrative remedies.
A primary justification for the pre-emption doctrine— the need to avoid conflicting rules of substantive law *181in the labor relations aréa and the desirability of leaving the development of such rules to the administrative agency created by Congress for that purpose — is not applicable to cases involving alleged breaches of the union's duty of fair representation. The doctrine was judicially developed in Steele and its progeny, and suits alleging breach of the duty remained judicially cognizable long after the NLRB was given unfair lábor practice jurisdiction over union activities by the L. M. R. A.6 Moreover,. when the Board declared in Miranda Fuel that a union’s breach of its duty of fair representation would henceforth be treated as an unfair labor practice, the Board adopted and applied the doctrine as it had been developed by the federal courts. See 140 N. L. R. B., at 184-186. Finally, as the dissenting Board members in Miranda Fuel have pointed out, fair representation duty suits often require review of the substantive positions taken and policies pursued by a union in its negotiation of a collective bargaining agreement and in its handling of the grievance machinery; as these matters are not normally within the Board’s unfair labor practice jurisdiction, it can be doubted whether the Board brings substantially greater expertise to bear on these problems than do the courts, which have been engaged in this type of review since the Steele decision.7
In addition to the above coi.iJderations, the unique interests served by the duty of fair representation doc*182trine have a profound effect, in our opinion, on the applicability of the pre-emption rule to this class of cases. The federal labor laws seek to promote industrial peace and the improvement of wages and working conditions by fostering a system of employee organization and collective bargaining. See N. L. R. A. § 1, as amended, 61 Stat. 136, 29 U. S. C. § 151. The collective bargaining system as encouraged by Congress and administered by the NLRB of necessity subordinates the interests of an individual employee to the collective interests of all employees in a bargaining unit. See, e. g., J. I. Case Co. v. Labor Board, 321 U. S. 332. This Court recognized in Steele that thé congressional grant of power to a union to act as exclusive colléctive bargaining representative, with its corresponding reduction in the individual rights of the employees so represented, would raise grave constitutional problems if unions were free to exercise this power to further racial discrimination. 323 U. S., at 198-199. Since that landmark decision, the duty of fair representation has stood as a bulwark to prevent arbitrary union conduct against individuals stripped of traditional forms of redress by. the provisions of federal labor law. Were we to hold, as petitioners and the Government urge, that the courts are foreclosed by the NLRB’s Miranda Fuel decision from this traditional supervisory jurisdiction, the individual employee injured by arbitrary or discriminatory union conduct could no loinger be assured of impartial review of his complaint, since the Board’s General Counsel has unreviewable discretion to refuse to institute an unfair labor practice complaint. See United Electrical Contractors Assn. v. Ordman, 366 F. 2d 776, cert. denied, 385 U. S. 1026.8 The existence of even a small group *183of cases in which the Board would be unwilling or unable to remedy a union’s breach of duty would frustrate the basic purposes underlying the duty of fair representation doctrine. For these reasons, we cannot assume from the NLRB’s tardy assumption of jurisdiction in these cases that Congress, when it enacted N. L. R. A. § 8 (b) in 1947, intended to oust the courts of their traditional jurisdiction to curb arbitrary conduct by the individual employee’s statutory representative.
B. There are also some intensely practical considerations which foreclose pre-emption of judicial cognizance of fair representation duty suits, considerations which emerge from the intricate relationship between the duty of fair representation and the enforcement of collective bargaining contracts. For the fact is that the question of whether a union has breached its duty of fair representation will in many cases be a critical issue in a suit under L. M. R. A. § 301 charging an employer with a breach of contract. To illustrate, let us assume a collective bargaining agreement that limits discharges to those for good.cause and that contains no grievance, arbitration or other provisions purporting 'to restrict access to the courts. If an employee is discharged without cause, either the union or the employee may sue the employer under L. M. R. A. § 301. Under this section, courts have jurisdiction over suits to enforce collective bargaining agreements even though the conduct of the employer which is challenged as a breach of contract is also arguably an unfair labor practice within the jurisdiction of *184the NLRB. Garmon and like cases have no application to § 301 suits. Smith v. Evening News Assn., 371 U. S. 195.
The rule is the same with regard to pre-emption where the bargaining agreement contains grievance and arbitration provisions which are intended to provide the exclusive remedy for breach of contract claims.9 If an employee is discharged without cause in violation of such an agreement, that the employer’s conduct may be an unfair labor practice does not preclude a suit by the union10 against the employer to compel arbitration of the employee’s grievance, the adjudication of the claim by the arbitrator, or a suit to enforce the-resulting arbitration award. See, e. g., Steelworkers v. American Mfg. Co., 363 U. S. 564.
However, if the wrongfully discharged employee himself resorts to the courts before the grievance procedures have been fully exhausted, the employer may well defend on the ground that the exclusive remedies provided by such a contract have not been éxhausted. Since the employee’s claim is based upon breach of the collective bargaining agreement, he is bound by terms of that agreement which govern the manner in which contractual rights may be enforced. For this reason, it is settled that the employee must at least attempt to exhaust exclusive grievance and -arbitration procedures established by. the bargaining agreement. Republic Steel Corp. v. Maddox, 379 U. S. *185650. However, because these contractual remedies, have been devised and are often controlled by the union and the employer, they may well prove unsatisfactory or unworkable for the individual grievant. The problem then is to determine under what circumstances the individual employee may obtain judicial review of his breach-of-contract claim despite his failure to secure relief through the contractual remedial procedures.
An obvious' situation in which the employee should not be limited to the exclusive remedial procedures established by the contract occurs when the conduct of the employer amounts to a repudiation of those contractual procedures. Cf. Drake Bakeries v. Bakery Workers, 370 U. S. 254, 260-263. See generally 6A Corbin, Contracts § 1443 (1962). In such a situation (and there may of course be others), the employer is estopped by his own conduct to rely on the unexhausted grievance and arbitration procedures as a defense to the employee’s cause of action.
We think that another situation when the employee may seek judicial enforcement of his contractual rights arises if, as is true here, the union has sole power under the contract to invoke the higher stages of the grievance procedure, and if, as is alleged here, the employee-plaintiff has been prevented from exhausting his contractual remedies by the union’s wrongful refusal to process the grievance. It is true that the employer in such a situation may have done nothing t& prevent exhaustion of the exclusive contractual remedies to which he agreed in the collective bargaining agreement. But the employer has committed a wrongful discharge in breach of that agreement, a breach which could be remedied through the grievance process to the employee-plaintiff’s benefit were it not for the union’s breach of its statutory duty of fair representation to the employee. To leave the employee remediless in such circumstances would, in our *186opinion, be a great injustice. We cannot believe that Congress, in conferring upon employers and unions the power, to establish exclusive grievance procedures, intended .to confer upon unions, such unlimited discretion to deprive injured employees of all remedies for breach of contract. Nor do we think that Congress intended to shield employers from the natural consequences of their breaches of bargaining agreements by wrongful union conduct in the enforcement of such agreements. Cf. Richardson v. Texas & N. O. R. Co., 242 F. 2d 230, 235-236 (C. A. 5th Cir.).
For these reasons, we think the wrongfully discharged employee may bring an action against his employer in the face of a defense based upon the failure to exhaust contractual remedies, provided the employee can prove that the union as bargaining agent breached its duty of fair representation in its handling of the employee’s grievance.11 We may assume for present purposes that such a breach of duty by the union is an unfair labor practice, as the NLRB and the Fifth Circuit have held. The employee’s suit against the employer, however, remains a § 301 suit, and the jurisdiction of the courts is no more destroyed by the fact that the employee, as part and parcel of his § 301 action, finds it necessary to prove an unfair labor practice by the union, than it is by the fact that the suit may involve an unfair labor practice by the employer himself. The -court is free to determine *187whether the employee is barred by the actions of his union representative, and, if not, to proceed with the case. And if, to facilitate his case, the employee joins the union as a defendant, the situation is not substantially changed. The action is still a § 301 suit, and the jurisdiction of the courts is not pre-empted under the Garmon principle. This, at the very least, is the holding of Humphrey v. Moore, supra, with respect to pre-emption, as petitioners recognize in their brief. And, insofar as adjudication of the union’s breach of duty is concerned, the result should be no different if the employee, as Owens did here, sues the employer and the union in separate actions. There would be very little to commend a rule which would permit the Missouri courts to adjudicate the Union’s conduct in an action against Swift but not in an action against the Union itself. ’ ;
For the above reasons, it is obvious that the.courts will be compelled to pass upon whether there has been a breach of the duty of fair representation in the context of many § 301 breach-of-contract actions. If a breach of duty by the union and. a breach of contract by the' employer are proven, the court must fashion an appropriate remedy. Presumably, in at least some cases, the union’s breach of duty will have enhanced or contributed to the employee’s injury.. What possible sense could there be in a rule which would permit a court, that has litigated the fault of employer and union to fashion a remedy only with respect to the employer? Under such a rule, either the employer would be compelled by the court "to pay for the union’s wrong — slight deterrence, indeed, to future union misconduct — or the injured employee would be forced to go to two tribunals to repair a single injury] Moreover, the Board would be compelled in many cases either to remedy injuries arising out of a breach of contract, a task which Congress has not assigned to it, or to leave the individual employee with*188out remedy for the union’s wrong.12 Given the strong reasons for not pre-empting duty of fair representation suits in general, and.the fact that the courts in many § 301 suits must adjudicate whether the union has breached its duty, we conclude that the courts may also fashion remedies for such a breach of duty,
It follows from the above that the Missouri courts had jurisdiction in this case. Of course, it is quite another problem to determine what remedies may be available against the Union if a breach of duty is proven. See Part IV, infra. But the unique role played by the duty of fair representation doctrine in the scheme of federal labor laws, and its important relationship to the judicial enforcement of collective bargaining agreements in the context presented here, render the Garmon pre-emption doctrine inapplicable.
III.
Petitioners contend, ’ as they did in their motion for judgment notwithstanding the jury’s verdict, that Owens failed to prove that the Union breached its duty of fair representation in its handling of Owens’ grievance. Peti*189tioners also argue that the Supreme Court of Missouri, in rejecting this contention, applied a standard that is inconsistent with governing principles of federal law with ■respect to the Union’s duty to an individual employee in its processing of grievances under the collective bargaining agreement with Swift. We agree with both contentions.
A. In holding that the evidence at trial supported the jury’s verdict in favor of Owens, the Missouri Supreme Court stated:
“The essential issue submitted to the jury was whether the union . . . arbitrarily . . . refused to carry said grievance . . . through the fifth step ....
“We have concluded that there was sufficient substantial evidence from which the jury reasonably could have found the foregoing issue in favor of plaintiff. It is notable that no physician actually testified in the case. Both sides were content to rely upon written statements. Three physicians certified that plaintiff was able to perform his regular work. Three other physicians certified that they had taken plaintiff’s blood pressure and that the readings were approximately 160 over 100. It may be inferred that such a reading does not indicate that his blood pressure was dangerously high. Moreover, plaintiff’s evidence showed that he had actually done hard physical labor periodically during the four years following his discharge. We accordingly rule this point adversely to defendants.” ' 397 S. W. 2d, at 665.
Quite obviously, the question which the Missouri Supreme Court thought dispositive of the issue of liability was whether the evidence supported Owens’ assertion that he had been wrongfully discharged by Swift, regardless of the Union’s good faith in reaching a contrary *190conclusion. This was also the major concern of the plaintiff at trial: the bulk of Owens’ evidence was directed at whether he was medically fit at the time of discharge and whether he had performed heavy work after that discharge.
A breach of the statutory duty of fair representation occurs only when a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith. See Humphrey v. Moore, supra; Ford Motor Co. v. Huffman, supra. There has been considerable debate over the extent of this duty in the context of a union’s enforcement of the grievance and arbitration procedures in a collective bargaining agreement. See generally Blumrosen, The Worker and Three Phases of Unionism: Administrative and Judicial Control of the Worker-Union Relationship, 61 Mich. L. Rev. 1435, 1482-1501 (1963); Comment, Federal Protection of Individual Rights under Labor Contracts, 73 Yale L. J. 1215 (1964). Some have suggested that every individual employee should have the right , to have his grievance taken to arbitration.13 Others have urged that the union be given substantial discretion (if the collective, bargaining agreement so provides) to decide whether a grievance should be taken to arbitration, subject only to the duty to refrain from patently wrongful conduct such as racial discrimination or personal hostility.14
*191Though we accept the proposition that a union may not arbitrarily ignore a meritorious grievance or. process it in perfunctory fashion, we do not agree that the individual employee has an absolute right to have his grievance taken to arbitration regardless of the provisions of the applicable collective bargaining agreement. In L. M. R. A. § 203 (d), 61 Stat. 154, 29 U. S. C. § 173 (d), Congress declared that “Final adjustment by a method agreed upon by the parties is . . . the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.” In providing for a grievance and arbitration procedure which gives the union discretion to supervise the grievance machinery and to invoke arbitration, the employer and the union contemplate that each will endeavor in good faith to settle grievances short of arbitration. Through this settlement process, frivolous grievances are ended prior to the most costly and time-consuming step in the grievance procedures. Moreover, both sides are assured that similar complaints will be treated consistently, and major problem areas in the interpretation of the collective bargaining contract can be isolated and perhaps resolved. And finally, the settlement process furthers the interest of the union as statutory agent and as coauthor of the bargaining agreement in representing the employees in the enforcement of that agreement. See Cox, Rights Under a Labor Agreement, 69 Harv. L. Rev. 601 (1956).
If the individual employee could compel arbitration of his grievance regardless of its merit, the settlement machinery provided by the contract would be substantially undermined, thus destroying the employer’s confidence in the union’s authority and returning the individual grievant to the vagaries of independent and unsystematic negotiation. Moreover, under such a rule, a sig-. nificantly greater number of grievances would proceed to *192arbitration.15 This would greatly increase the cost of the grievance machinery and could so overburden the arbitration process' as to prevent it from functioning successfully. See NLRB v. Acme Industrial Co., 385 U. S. 432, 438; Ross, Distressed Grievance Procedures and Their Rehabilitation, in Labor Arbitration and Industrial Change, Proceedings of the 16th Annual Meeting, National Academy of Arbitrators 104 (1963). It can well be doubted whether the parties to collective bargaining agreements would long continue to provide for detailed grievance and arbitration procedures of the kind encouraged by L. M. R. A. § 203 (d), supra, if their power to settle the majority of grievances short of the costlier and more time-consuming steps was limited by a rule permitting the grievant unilaterally to invoke arbitration. Nor do we see substantial danger to the interests of the individual employee if his statutory agent is given the contractual power honestly and in good faith to settle grievances short of arbitration. For these reasons, we conclude that a union does not breach its duty of fair representation, and thereby open up a suit by the employee for breach of contract, merely because it settled the grievance short of arbitration.
For these same reasons, the standard applied here by the Missouri Supreme Court cannot be sustained. For if a union’s decision that a particular grievance lacks *193sufficient merit to justify arbitration would constitute a breach of the duty of fair representation because a judge or jury later found the grievance' meritorious, the union’s incentive to settle such grievances short of arbitration would be seriously reduced. The dampening effect on the entire grievance procedure of this reduction of the union’s freedom to settle claims in good faith would surely be substantial. Since the union’s statutory duty of fair representation protects the individual employee from arbitrary abuses of the settlement device by providing him with recourse against both employer (in a § 301 suit) and union, this severe limitation on the power to settle grievances is neither necessary nor desirable. Therefore, we conclude that the Supreme Court of Missouri erred in upholding the verdict in this case solely on the ground that the evidence supported Owens’ claim that he had been wrongfully discharged.
B, Applying the proper standard of union liability to the facts of this case, we cannot uphold the jury’s award, for we conclude that as a matter of federal law the evidence does not support a verdict that the Union breached its duty of fair representation.. As we have stated, Owens could not have established a breach of that duty merely by convincing the jury that he was in fact fit for work in I960; he must also have proved arbitrary or bad-faith conduct on the part of the Union in processing his grievance. The evidence revealed that the Union diligently supervised the grievance into the fourth step of the bargaining agreement’s procedure, with the Union’s business representative serving as Owens’ advocate throughout these steps. When Swift refused to reinstate Owens on the basis of his medical reports indicating reduced blood pressure, the Union sent him to another doctor of his own choice, at Union expense, in an attempt to amass persuasive medical evidence of Owens’ fitness for work. When this examination proved unfavorable, the Union *194concluded that it could not establish a wrongful discharge. It then encouraged Swift to find light work for Owens at the plant. When this effort failed, the Union determined that arbitration would be fruitless and suggested to Owens that he accept Swift’s offer to send him to a heart association for rehabilitation. At this point, Owens’ grievance was suspended in the fourth step in the hope that he might be rehabilitated.
In administering the grievance and arbitration machinery as statutory agent of the employees, a union must, in good faith and in a nonarbitrary manner, make decisions as to the merits of particular grievances. See Humphrey v. Moore, 375 U. S. 335, 349-350; Ford Motor Co. v. Huffman, 345 U. S. 330, 337-339. In a case such as this, when Owens supplied the Union with medical evidence supporting his position, the Union might well have breached its duty had it ignored Owens’ complaint or had it processed the grievance in a perfunctory manner. See Cox, Rights under a Labor Agreement, 69 Harv. L. Rev., at 632-634. But here the Union processed the grievance into the fourth step, attempted to gather sufficient évidence to prove Owens’ case, attempted to secure for Owens less vigorous work at the plant, and joined in the employer’s efforts to have Owens rehabilitated. Only when these efforts all proved unsuccessful did the Union conclude both that arbitration would be fruitless and that the ■ grievance should be dismissed. . There was- no evidence that any Union officer was personally hostile to Owens or that the Union acted at any time other than in good faith.16 Having concluded that *195the individual employee has no absolute right to have his grievance arbitrated under the collective bargaining agreement at issue, and that a breach of the duty of fair representation is not established merely by proof that the underlying grievance was meritorious, we must conclude that that duty was not breached here.
IV.
In our opinion, there is another important reason why the judgment of the Missouri Supreme Court cannot stand. Owens’ suit against the Union was grounded on his claim that Swift had discharged him in violation of the applicable collective bargaining agreement. In his complaint, Owens alleged “that, as a direct result of said wrongful breach of said contract, by employer . . . Plaintiff was damaged in the sum of Six Thousand, Five Hundred ($6,500.00) Dollars per year, continuing until the date of trial.” For the Union’s role in “preventing Plaintiff from completely exhausting administrative remedies,” Owens requested, and the jury awarded, compensatory damages for the above-described breach of contract plus punitive damages of $3,000. R., at 4. We hold that such damages are not recoverable from the Union in the circumstances of this case.
The appropriate remedy for a breach of a union’s duty of fair representation must vary with the circumstances of the particular breach. In this case, the employee’s complaint was that the Union wrongfully failed to afford him the arbitration remedy against his employer established by the collective bargaining agreement. But the damages sought by Owens were primarily those suffered *196because of the employer’s alleged breach of contract. Assuming for the moment that Owens had been wrongfully discharged, Swift’s only defense to a direct action for breach of contract would have been the Union’s failure to resort to arbitration, compare Republic Steel Corp. v. Maddox, 379 U. S. 650, with Smith v. Evening News Assn., 371 U. S. 195, and if that failure was itself a violation of the Union’s statutory duty to the employee, there is no reason to exempt the employer from contractual damages which he would otherwise have had to pay. See pp. 185-186, supra. The difficulty lies in fashioning an appropriate scheme of remedies.
Petitioners urge that an employee be restricted in such circumstances to a decree compelling the employer and the union to arbitrate the underlying grievance.17 It is true that the employee’s action is based on the employer’s alleged breach of contract plus the union’s alleged wrongful failure to afford him his contractual remedy of arbitration. For this reason, an order compelling arbitration should be viewed as one of the available remedies when a breach of the union’s duty is proved. But we see no reason inflexibly to require arbitration in all cases. In some cases, for example, at least part of the employee’s damages may be attributable to the union’s breach of duty, and an arbitrator may have no power under the bargaining agreement to award such damages against the union. In other cases, the arbitrable issues may be substantially resolved in the course of trying the fair representation controversy. In such situations, the court should be free to decide the contractual claim and to award the employee appropriate damages or equitable relief.
A more difficult question is, what portion of the employee’s damages may be charged to the union: in partic*197ular, may an award against a union include, as it did here, damages attributable solely to the employer’s breach of contract? We think not. Though the union has violated a statutory duty in failing to press the grievance, it ig the employer’s unrelated breach of contract which triggered the controversy and which caused this portion of the employee’s damages. The employee should have no difficulty recovering these damages from the employer, who cannot, as we have explained, hide behind the union’s wrongful failure to act; in fact, the employer may be (and probably should be) joined as a defendant in the fair representation suit, as in Humphrey v. Moore, supra. It could be a real hardship on the union to pay these damages, even if the union were given a right of indemnification against the employer. With the employee assured of direct recovery from the' employer, we see no merit in requiring the union to pay the employer’s share of the damages.18
The governing principle, then, is to apportion liability between the employer and the union according to the damage caused by the fault of each. Thus, damages attributable solely to the employer’s breach of contract should not be charged to the union, but increases if any *198in those damages caused by the union’s refusal to process the grievance should not be charged to the employer. In this case, even if the Union had breached its duty, all or almost all of Owens’ damages would still be attributable to his allegedly wrongful discharge by Swift. For these reasons, even if the Union here had properly been found liable for a breach of duty, it is clear that the damage award was improper.
Reversed.
with whom The Chief Justice and Mr. Justice Harlan join, concurring in the result.
1. In my view, a complaint by an employee that the union has breached its duty of fair representation is subject to the exclusive jurisdiction of the NLRB. It is a charge of unfair labor practice. See Miranda Fuel Co., 140 N. L. R. B. 181 (1962);1 Local 12, United Rubber Workers, 150 N. L. R. B. 312, enforced, 368 F. 2d 12 (C. A. 5th Cir. 1966).2 As is the case with most other *199unfair labor practices, the Board’s jurisdiction is preemptive. Garner v. Teamsters Union, 346 U. S. 485 (1953); Guss v. Utah Labor Board, 353 U. S. 1 (1957); San Diego Building Trades Council v. Garmon, 359 U. S. 236 (1959); Local 438, Constr. Laborers v. Curry, 371 U. S. 542 (1963); Plumbers’ Union v. Borden, 373 U. S. 690 (1963); Iron Workers v. Perko, 373 U. S. 701 (1963); Liner v. Jafco, Inc., 375 U. S. 301 (1964). Cf. Woody v. Sterling Alum. Prods., Inc., 365 F. 2d 448 (C. A. 8th Cir. 1966), pet. for cert. pending, No. 946, O. T. 1966. There is no basis for failure to apply the preemption principle in the present case, and, as I shall discuss, strong reason for its application. The relationship between the union and the individual employee with respect to the processing of claims to employment rights under the collective bargaining agreement is fundamental to the design and operation of federal labor law. ' It is not “merely peripheral,” as the Court’s opinion states. It “presents difficult problems of definition of status, problems which we have held are precisely ‘of a .kind most wisely entrusted initially to the agency charged with the day-to-day administration of the Act as a whole.’ ” Iron Workers v. Perko, supra, 373 U. S., at 706. Accordingly; the judgment of the Supreme Court of Missouri should be reversed and the ■ complaint dismissed for this reason and on this basis. I agree, however, that if it were assumed that jurisdiction of the subject matter exists, the judgment would still have to be reversed because of the use by the Missouri court of an improper standard for measuring the union’s duty, and the absence of evidence to establish that the union refused further to process Owens’ grievance because of bad faith or arbitrarily.
2. I regret the elaborate discussion in the Court’s opinion of problems which are irrelevant. This is not an action by the employee against the employer, and the *200discussion of the requisites of such an action is, in my judgment, unnecessary. The Court argues that the employee could sue the employer under L. M. R. A. § 301; and that to maintain such an action the employee would have to show that he has exhausted his remedies under the collective bargaining agreement, or alternatively that he was prevented from doing so because the union breached its duty to him by failure' completely to process his claim. That may be; or maybe all he would have to show, to maintain an action against the employer for wrongful discharge is that he demanded that the union process his claim to exhaustion of available remedies, and that it refused to do so.3, I see no need for the Court to pass upon that question, which is not presented here, and which, with all respect, lends no support to the Court’s argument. The Court seems to use its discussion of the employee-employer litigation as somehow analogous to or supportive of its conclusion that the employee may maintain a court action against the union. But I do not believe that this follows. I agree that the NLRB’s unfair labor practice jurisdiction does not preclude an action under § 301 against the employer for wrongful discharge *201from employment. Smith v. Evening News Assn., 371 U. S. 195 (1962). Therefore, Owens might have maintained an action against his employer in the present case. This would be an action to enforce the collective bargaining agreement, and Congress has authorized the courts to entertain actions of this type. But his claim against the union is quite different in character, as the Court itself recognizes. The Court holds — and I think correctly if the issue is to be reached — that the union could not be required to pay damages measured by the breach of the employment contract, because it was not the union but the employer that breached the contract. I agree; but I suggest that this reveals the point for which I contend: that the employee’s claim against the-union is not a claim under the collective bargaining agreement, but a claim that the union has breached its statutory duty of fair representation. This claim, I submit, is a claim of unfair labor practice and it is within the exclusive jurisdiction of the NLRB. The Court agrees that “one of the available remedies [obtainable, the Court says, by court action] when a breach of the union’s duty is proved” is “an order compelling arbitration.” This is precisely and uniquely the kind of order which is within the province of the Board. Beyond this, the Court is exceedingly vague as to remedy: “appropriate damages or equitable relief” are suggested as possible remedies, apparently when arbitration is not available. Damages against the union, the Court admonishes, should be gauged “according to the damage caused by [its] fault” — i. e., the failure to exhaust remedies for the grievance. The Court’s difficulty, it seems to me, reflects the basic awkwardness of its position: It is attempting to force into the posture of a contract violation an alleged default of the union which is not a violation of the collective bargaining agreement but a breach of its separate and basic duty fairly *202to represent all employees in the unjt. This is an unfair labor practice, and should be treated as such.4
3. If We look beyond logic and precedent to the policy of the labor relations design which Congress has provided, court jurisdiction of this type of action seems anomalous and ill-advised. We are not dealing here with the interpretation of a contract or with an alleged breach of an employment agreement. As the Court in effect acknowledges, we are concerned with the subtleties of a union’s statutory duty faithfully to represent employees in the unit, including those who may.not be members of the union. The Court — regrettably; in my opinion — ventures to state judgments as to the metes and bounds of the reciprocal duties involved in the relationship between the union and the employee. In my opinion, this is precisely and especially the kind of judgment that Congress intended to entrust to the Board and which is well within the pre-emption doctrine that this Court has prudently stated.5 See cases cited, supra, es*203pecially the Perko and Borden cases, the facts of which strongly parallel the situation in this case. See also Linn v. Plant Guard Workers, 383 U. S. 53, 72 (1966) (dissenting opinion). The nuances of union-employee and union-employer relationships are infinite and consequential, particularly when the issue is as amorphous as whether the union was proved guilty of “arbitrary or bad-faith conduct” which the Court states as the standard applicable here. In all reason and in all good judgment, this jurisdiction should be left with the Board and not be placed in the courts, especially with the complex and necessarily confusing guidebook that the Court now publishes.
Accordingly, I join the judgment of reversal, but on the basis stated.
dissenting.
The Court today opens slightly the courthouse door to an employee’s incidental claim against his union for breach of its duty of fair representation, only to shut it in his face when he seeks direct judicial relief for his underlying and more valuable breach-of-contract claim against his employer. This result follows from the Court’s announcement in this case, involving an employee’s suit against his union, of a new rule to govern an. employee’s suit against his employer. The rule is that before an employee can sue his employer under § 301 of the L. M. R. A. for a simple breach of his employment contract, the employee must prove not only that he attempted to exhaust his contractual remedies, but that his attempt to exhaust them was frustrated by “arbitrary, discriminatory, or . . . bad faith” conduct on *204the part of his union. With this new rule and its result I cannot agree.
The Court recognizes, as it must, that the jury in this case found at least that Benjamin Owens was fit for work, that his grievance against Swift was meritorious, and that Swift breached the collective bargaining agreement when it wrongfully discharged him. The Court also notes in passing that Owens* has a separate action for breach of contract pending against Swift in the state courts. Arid in Part IV of its opinion, the Court vigorously-insists that “there is no reason to exempt the employer from contractual damages which he would otherwise have had to pay,” that the “employee should have- no difficulty recovering these damages from the employer” for his “unrelated breach of contract,” and that “the employee [is] assured of direct recovery from the employer.” But this reassurance in Part IV gives no comfort to Owens, for Part IV is based on the assumption that the union breached its duty to Owens, an assumption which, in Part III of its opinion, the Court finds unsupported by the facts of this case. What this all means, though the Court does not expressly say it. is that Owens will be no more successful in his pending breach-of-contract action against Swift than he is here in his-suit against the union. For the Court makes it clear “that the question of whether a union has breached its duty of fair representation will... be a critical issue- in a suit under L. M. R. A. § 301,” that “the wrongfully discharged employee may bring an action against his employer” only if he “can prove that the union . . . breached its duty of fair representation in its handling of the employee’s grievance,” and “that the employee, as part and parcel of'his § 301 action, finds *205it necessary to prove an unfair labor practice by the union.” Thus, when Owens attempts to proceed with his pending breach-of-contract action against Swift, Swift will undoubtedly secure its prompt dismissal by pointing to the Court’s conclusion here that the union has not breached its duty of fair representation. Thus, Owens, who now has obtained a judicial determination that he was wrongfully discharged, is left remediless, and Swift, having breached its contract, is allowed to hide behind, and is shielded by, the union’s conduct. I simply fail to see how it should make one iota of difference, as far as the “unrelated breach of contract” by Swift is concerned, whether the union’s conduct is wrongful or rightful. Neither precedent nor logic supports the Court’s new announcement that it does.
Certainly, nothing in Republic Steel Corp. v. Maddox, 379 U. S. 650, supports this new rule. That was a case where the aggrieved employee attempted to “completely sidestep available grievance procedures in favor of a lawsuit.” Id., at 653. Noting that “it cannot be said . . . that contract grievance procedures are inadequate to protect, the interests of an aggrieved employee until the employee has attempted to implement the procedures and found them so,” ibid., the Court there held that the employee “must attempt use of the contract grievance procedure,” id., at 652, and “must afford the union the opportunity to act on his behalf,” id., at 653. I dissented on the firm belief that an employee should be free to litigate his own lawsuit with his own lawyer in a court before a jury, rather than being forced to entrust his claim to a union which, even if it did agree to press it, would be required to submit it to arbitration. And even if, as the Court implied, “the worker would be allowed to sue after he had presented his claim 'to the union and after he had suffered the inevitable discouragement and delay which necessarily accompanies the union’s refusal *206to press his claim,” id., at 669', I could find no threat to peaceful labor relations or to the union’s prestige in allowing an employee to by-pass completely contractual remedies in favor of a traditional breach-of-contract lawsuit for back pay or wage substitutes. Here, of course, Benjamin Owens did not “completely sidestep available grievance procedures in favor of a lawsuit.” With complete respect for the union’s authority and deference to the contract grievance procedures, he not only gave the union a chance to act on his behalf, but in every way possible tried to convince it that his claim was meritorious and should be carried through the fifth step to arbitration. In short, he did everything the Court’s opinion in Maddox said he should do, and yet now the Court says so much is not enough.
In. Maddox, I noted that the “cases really in point are those which involved agreements governed by the Railway Labor Act and which expressly refused to hold that a discharged worker must pursue collective bargaining grievance procedures before suing in a court for wrongful discharge. Transcontinental & Western Air, Inc. v. Koppal, 345 U. S. 653; Moore v. Illinois Central R. Co., 312 U. S. 630.” 379 U. S., at 666. I also observed that the Court’s decision in Maddox “raised the overruling axe so high [over those cases] that its falling is just about as certain as the changing of the seasons.” Id., at 667. In the latter observation I was mistaken. The Court has this Term, in Walker v. Southern R. Co., 385 U. S. 196, refused to overrule in light of Maddox such cases as Moore and Koppal. Noting the long delays attendant upon exhausting administrative remedies under the Railway Labor Act, the Court based this refusal on “[t]he contrast between the administrative remedy” available to Maddox and that available to Walker. If, as the Court suggested, the availability of an administrative remedy determines whether an employee can sue without first *207exhausting it, can there be any doubt that Owens who had no administrative remedy should be as .free to sue as Walker who had a slow one? Unlike Maddox, Owens attempted to implement the contract grievance procedures and found them inadequate. Today’s decision, following in the wake of Walker v. Southern R. Co., merely perpetuates an unfortunate anomaly created by Maddox in the law of labor relations.
The rule announced in Maddox, I thought, was a “brainchild” of the Court’s recent preference for arbitration. But I am unable to ascribe any such genesis to today’s rule, for arbitration is precisely what Owens sought and preferred. Today the Court holds that an employee with a- meritorious claim has no absolute right to have it either litigated or arbitrated. Fearing that arbitrators would be overworked, the Court allows unions unilaterally to determine not to take a grievance to arbitration — the first step in the contract grievance procedure at which the claim would be presented to an impartial third party — as long as the union decisions are neither “arbitrary” nor “in bad faith.” The Court derives this standard of conduct from a long line of cases holding that “[a] breach of the statutory duty of fair representation occurs only when a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith.” What the Court overlooks is that those cases laid down this standard in the context of situations where the employee’s sole or fundamental complaint was against the union. There was not the slightest hint in those cases that the same standard would apply where the employee’s primary complaint was against his employer for breach of contract and where he only incidentally contended that the union’s conduct prevented the adjudication, by either court or arbitrator, of the underlying grievance. If the Court here were satisfied with merely holding that in this situation the employee *208could not recover damages from the union unless the union breached its duty of fair representation, then it would be one thing to say that the union did not do so in making, a good-faith decision not to take the employee’s grievance to arbitration. But if, as the Court goes on to hold, the employee cannot sue his employer for breach of contract unless his failure to exhaust contractual remedies is due to the union’s breach of its duty of fair representation, then I am quite unwilling to say that the union’s refusal to exhaust such remedies — however non-arbitrary — does not amount to a breach of its duty. Either the employee should be able to sue his employer for breach of contract after having attempted to exhaust his contractual remedies, or the union should have an absolute duty to exhaust contractual remedies on his behalf. The merits of an. employee’s grievance would thus be determined by either a jury or an arbitrator. Under today’s decision it will never be determined by either.
And it should be clear that the Court’s opinion goes much further than simply holding that an employee has no absolute right to have the imion take his grievance to arbitration. Here, of course, the union supervised the grievance into the fourth step of the contract machinery- and dropped it just prior to arbitration on its belief that the outcome of arbitration would be unfavorable. But limited only by the standard of arbitrariness, there was clearly no need for the union to go that far. Suppose, for instance, the union had a rule that it would not prosecute a grievance even to the first step unless the grievance were filed by the employee within 24 hours after it arose. Pursuant to this rule, the union might completely refuse to prosecute a grievance filed several days late. Thus, the employee, no matter how meritorious his grievance, would get absolutely nowhere. And unless he could prove that *209the union’s rule was arbitrary (a standard which no one can define), the employee would get absolutely no consideration of the merits of his grievance — either by a jury, an arbitrator, the employer, or by the union. The Court suggests three reasons for giving the union this almost unlimited discretion to. deprive injured employees of all remedies for breach of. contract. The first is that “frivolous grievances” will be ended prior to time-consuming and costly arbitration. But here no one; not even the union, suggests that Benjamin Owens’ grievance was frivolous. The union decided not to take it to arbitration simply because the union doubted the chance of success. Even if this was a good-faith doubt, I think the union had the duty to present this contested, but serious, claim to the arbitrator whose very function is to decide such claims on the basis of what he believes to be right. Second, the Court says that allowing the union to settle grievances prior to arbitration will assure consistent treatment of “major problem areas in the interpretation of the collective bargaining contract.” But can it be argued that whether Owens was “fit to work” presents a major problem in the interpretation of the collective bargaining agreement? The problem here was one of interpreting medical reports, not a collective bargaining agreement, and of evaluating other evidence of Owens’ physical condition. I doubt whether consistency is either possible or desirable in determining whether a particular employee is able to perform a particular job. Finally, the Court suggests that its decision “furthers the interest of the union as statutory agent.” I think this is the real reason for today’s decision which entirely overlooks the interests of the injured employee, the only one who has anything to lose. Of course, anything which gives the union life and death power over those whom it is supposed to represent furthers its “interest.” I simply fail to see how *210the union's legitimate role as statutory agent is undermined by requiring it to prosecute all serious grievances to a conclusion or by allowing the injured employee to sue his employer after he has given the union a chance to act on his behalf.
Henceforth, in almost every § 301 breach-of-contract suit by an employee against an employer, the employee will have the additional burden of proving that the union acted arbitrarily or in bad faith. The Court never explains what is meant by this vague phrase or how trial judges are intelligently to translate it to a jury. Must the employee prove that the union in fact acted arbitrarily, or will it be sufficient to show that the employee's grievance was so meritorious that a reasonable union would not have refused to carry it to arbitration? Must the employee join the union in his § 301 suit against the employer, or must he join the employer in his unfair representation suit against the union? However these questions are answered, today’s decision, requiring the individual employee to take on both the employer and the union in every suit against the employer and to prove not only that the employer breached its contract, but that the union acted arbitrarily, converts what would otherwise be a simple breach-of-contract action into a three-ring donnybrook. It puts an intolerable burden on employees with meritorious grievances and means they will frequently be left with no remedy. Today’s decision, while giving the worker an ephemeral right to sue his union for breach of its duty of fair representation, creates insurmountable obstacles to block his far more valuable right to sue his employer for breach of the collective bargaining agreement.
27.2 National Labor Relations Board v. Truitt Manufacturing Co. 27.2 National Labor Relations Board v. Truitt Manufacturing Co.
NATIONAL LABOR RELATIONS BOARD v. TRUITT MANUFACTURING CO.
No. 486.
Argued March 29, 1956.
Decided May 7, 1956.
David P. Findling argued the cause for petitioner. With him on the brief were Solicitor General Sobeloff, Theophil C. Kafnmholz, Dominick L. Manoli and Frederick U. Reel.
R. D. Douglas, Jr. argued the cause for respondent. With him on the brief was Whitejord S. Blakeney.
delivered the opinion of the Court.
The National Labor Relations Act makes it an unfair labor practice for an employer to refuse to bargain in good faith with the representative of his employees.1 *150The question presented by this case is whether the National Labor Relations Board may find that an employer has not bargained in good faith where the employer claims it cannot afford to pay higher wages but refuses requests to produce information substantiating its claim.
The dispute here arose when a union representing certain of respondent’s employees asked for a wage increase of 10 cents per hour. The company answered that it could not afford to pay such an increase, it was undercapitalized, had never paid dividends, and that an increase of more than 2% cents per hour would put it out of business. The union asked the company to produce some evidence substantiating these statements, requesting permission to have a certified public accountant examine the company’s books, financial data, etc. This request being denied, the union asked that the company submit “full and complete information with respect to its financial standing and profits,” insisting that such information was pertinent and essential for the employees to determine whether or not they should continue to press their demand for a wage increase. A union official testified before the trial examiner that “[W]e were wanting anything relating to the Company’s position, any records or what have you, books, accounting sheets, cost expenditures, what not, anything to back the Company’s position that they were unable to give any more money.” The company refused all the requests, relying solely on the statement that “the information ... is not pertinent to *151this discussion and the company declines to give you such information; You have no legal right to such.”
On the basis of these facts the National Labor Relations Board found that the company had “failed to bargain in good faith with respect to wages in violation of Section 8 (a)(5) of the Act.” 110 N. L. R. B. 856. The Board ordered the company to supply the union with such information as would “substantiate the Respondent’s position of its economic inability to pay the requested wage increase.” The Court of Appeals refused to enforce the Board’s order, agreeing with respondent that it could not be held guilty of an unfair labor practice because of its refusal to furnish the information requested by the union. 224 F. 2d 869. In Labor Board v. Jacobs Mfg. Co., 196 F. 2d 680, the Second Circuit upheld a Board finding of bad-faith bargaining based on an employer’s refusal to supply financial information under circumstances similar to those here. Because of the conflict and the importance of the question we granted certiorari. 350 U. S. 922.
The company raised no objection to the Board’s order on the ground that the scope of information required was too broad or that disclosure would put an undue burden on the company. Its major argument throughout has been that the information requested was irrelevant to the bargaining process and related to matters exclusively within the province of management. Thus we lay to one side the suggestion by the company here that the Board’s order might be unduly burdensome or injurious to its business. In any event, the Board has heretofore taken the position in cases such as this that “It is sufficient if the information is made available in a manner not so burdensome or time-consuming as to impede the process of bargaining.” 2 And in this case the Board has held *152substantiation of the company’s position requires no more than “reasonable proof.”
We think that in determining whether the obligation of good-faith bargaining has been met the Board has a right to consider an employer’s refusal to give information about its financial status. While Congress did not compel agreement between employers and bargaining representatives, it did require collective bargaining in the hope that agreements would result. Section 204 (a)(1) of the Act admonishes both employers and employees to “exert every reasonable effort to make and maintain agreements concerning rates of pay, hours, and working conditions . ...” 3 In their effort to reach an agreement here both the union and the company treated the company’s ability to pay increased wages as highly relevant. The ability of an employer to increase wages without injury to his business is a commonly considered factor in wage negotiations.4 Claims for increased wages have sometimes been abandoned because of an employer’s unsatisfactory business condition; employees have even voted to accept wage decreases because of such conditions.5
Good-faith bargaining necessarily requires that claims made by either bargainer should be honest claims. This is true about an asserted inability to pay an increase in wages. If such an argument is important enough to pre*153sent in the give and take of bargaining, it is important enough to require some sort of proof of its accuracy. And it would certainly not be farfetched for a trier of fact to reach the conclusion that bargaining lacks good faith when an employer mechanically repeats a claim of inability to pay without making the slightest effort to substantiate the claim. Such has been the holding of the Labor Board since shortly after the passage of the Wagner Act. In Pioneer Pearl Button Co., decided in 1936, where the employer’s representative relied on the company’s asserted “poor financial condition,” the Board said: “He did no more than take refuge in the assertion that the respondent’s financial condition was poor; he refused either to prove his statement, or to permit independent verification. This is not collective bargaining.” 1 N. L. R. B. 837, 842-843. This was the position of the Board when the Taft-Hartley Act was passed in 1947 and has been its position ever since.6 We agree with the Board that a refusal to attempt to substantiate a claim of inability to pay increased wages may support a finding of a failure to bargain in good faith.
The Board concluded that under the facts and circumstances of this case the respondent was guilty of an unfair labor practice in failing to bargain in good faith. We see no reason to disturb the findings of the Board. We do not hold, however, that in every case in which economic inability is raised as an argument against increased wages it automatically follows that the employees are entitled to substantiating evidence. Each case must turn upon its particular facts.7 The inquiry must always be whether or not under the circumstances of the particular case the *154statutory obligation to bargain in good faith has been met. Since we conclude that there is support in the record for the conclusion of the Board here that respondent did not bargain in good faith, it was error for the Court of Appeals to set aside the Board’s order and deny enforcement.
Reversed.
whom Mr. Justice Clark and Mr. Justice Harlan join,
concurring in part and dissenting in part.
This case involves the nature of the duty to bargain which the National Labor Relations Act imposes upon employers and unions. Section 8 (a) (5) of the Act makes it “an unfair labor practice for an employer ... to refuse to bargain collectively with the representatives of his employees,” and § 8 (b) (3) places a like duty upon the union vis-a-vis the employer. Section 8 (d) provides that “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, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession . . . .” 61 Stat. 142, 29 U. S. C. § 158 (d).
These sections obligate the parties to make an honest effort to come to terms; they are required to try to reach an agreement in good faith. “Good faith” means more than merely going through the motions of negotiating; it is inconsistent with a predetermined resolve not to budge from an initial position. But it is not necessarily *155incompatible with stubbornness or even with what to an outsider may seem unreasonableness. A determination of good faith or of want of good faith normally can rest only on an inference based upon more or less persuasive manifestations of another’s state of mind. The previous relations of the parties, antecedent events explaining behavior at the bargaining table, and the course of negotiations constitute the raw facts for reaching such a determination. The appropriate inferences to be drawn from what is often confused and tangled testimony about all this makes a finding of absence of good faith one for the judgment of the Labor Board, unless the record as a whole leaves such judgment without reasonable foundation. See Universal Camera Corp. v. Labor Board, 340 U. S. 474.
An examination of the Board’s opinion and the position taken by its counsel here disclose that the Board did not so conceive the issue of good-faith bargaining in this case. The totality of the conduct of the negotiation was apparently deemed irrelevant to the question; one fact alone disposed of the case. “[I]t is settled law [the Board concluded] , that when an employer seeks to justify the refusal of a wage increase upon an economic basis, as did the Respondent herein, good-faith bargaining under the Act requires that upon request the employer attempt to substantiate its economic position by reasonable proof.” 110 N. L. R. B. 856.
This is to make a rule of law out of one item — even if a weighty item — of the evidence. There is no warrant for this. The Board found authority in Labor Board v. Jacobs Mfg. Co., 196 F. 2d 680. That case presented a very different situation. The Jacobs Company had engaged in a course of conduct which the Board held to be a violation of § 8 (a)(5). The Court of Appeals agreed that in light of the whole record the Board was entitled to find that the employer had not bargained in good faith. Its refusal to open its “books and sales records” for union *156perusal was only part of the recalcitrant conduct and only one consideration in establishing want of good faith.* The unfair labor practice was not founded on this refusal, and the court’s principal concern about the disclosure of financial information was whether the Board’s order should be enforced in this respect. The court sustained the Board’s requirement for disclosure which “will be met if the respondent produces whatever relevant information it has to indicate whether it can or cannot afford to comply with the Union’s demands.” 196 F. 2d 680, 684. This is a very far cry indeed from a ruling of law that failure to open a company’s books establishes lack of good faith. Once good faith is found wanting, the scope of relief to* be given by the Board is largely a question of ádministra-tive discretion. Neither Jacobs nor any other court of appeals’ decision which has been called to our attention supports the rule of law which the Board has fashioned out of one thread drawn from the whole fabric of the evidence in this case.
The Labor Board itself has not always approached “good faith” and the disclosure question in such a mechanical fashion. In Southern Saddlery Co., 90 N. L. R. B. 1205, the Board also found that § 8 (a) (5) *157had been violated. But how differently the Board there considered its function.
“Bargaining in good faith is a duty on both sides to enter into discussions with an open and fair mind and a sincere purpose to find a basis for agreement touching wages and hours and conditions of labor. In applying this definition of good faith bargaining to any situation, the Board examines the Respondent’s conduct as a whole for a clear indication as to whether the latter has refused to bargain in good faith, and the Board usually does not rely upon any one factor as conclusive evidence that the Respondent did not genuinely try to reach an agreement.” 90 N. L. R. B. 1205, 1206.
The Board found other factors in the Southern Saddlery case. The employer had made no counter-proposals or efforts to “compromise the controversy.” Compare, McLean-Arkansas Lumber Co., Inc., 109 N. L. R. B. 1022. Such specific evidence is not indispensable, for a study of all the evidence in a record may disclose a mood indicative of a determination not to bargain. That is for the Board to decide. It is a process of inference-drawing, however, very different from the ultra vires law-making of the Board in this case.
Since the Board applied the wrong standard here, by ruling that Truitt’s failure to supply financial information to the union constituted per se a refusal to bargain in good faith, the case should be returned to the Board. There is substantial evidence in the record which indicates that Truitt tried to reach an agreement. It offered a 2%-cent wage increase, it expressed willingness to discuss with the union “at any time the problem of how our wages compare with those of our competition,” and it continued throughout to meet and discuss the controversy with the union.
*158Because the record is not conclusive as a matter of law, one way or the other, I cannot join in the Court’s disposition of the case. To reverse the Court of Appeals without remanding the case to the Board for further proceedings, implies that the Board would have reached the same conclusion in applying the right rule of law that it did in applying a wrong one. I cannot make such a forecast. I would return the case to the Board so that it may apply the relevant standard for determining “good faith.”
27.3 Fibreboard Paper Products Corp. v. National Labor Relations Board 27.3 Fibreboard Paper Products Corp. v. National Labor Relations Board
FIBREBOARD PAPER PRODUCTS CORP. v. NATIONAL LABOR RELATIONS BOARD et al.
No. 14.
Argued October 19, 1964.
Decided December 14, 1964.
*204 Marión B. Plant argued the cause for petitioner. With him on the briefs was Gerard D. Reilly.
Solicitor General Cox argued the cause for respondent National Labor Relations Board. With him on the brief were Arnold■ Ordman, Dominick L. Manoli and Norton J. Come.
David E. Feller argued the cause for respondents United Steelworkers of America et al. With him on the brief were Elliot Bredhoff, Jerry D. Anker, Michael H. Gottesman and Jay Darwin.
Briefs of amici curiae, urging reversal, were filed by Eugene Adams Keeney and James W. Hunt for the Chamber of Commerce of the United States; Lambert H. Miller for the National Association of Manufacturers of the United States; and John B. Qlverson for the Electronic Industries Association.
delivered the opinion of the Court.
This case involves the obligation of an employer and the representative of his employees under §.§8(a)(5), 8 (d) and 9 (a) of the National Labor Relations Act to “confer in good faith with respect to wages, hours, and other terms and conditions of employment.” 1 The primary issue is whether the “contracting out” of work being *205performed by employees in the bargaining unit is a statutory subject of collective bargaining under those sections.
Petitioner, Fibreboard Paper Products Corporation (the Company), has a manufacturing plant in Emery-ville, California. Since 1937 the East Bay Union Machinists, Local 1304, United Steelworkers of America, AFL-CIO (the Union) has been the exclusive bargaining representative for a unit of the Company’s maintenance employees. In September 1958, the Union and the Company entered the latest of a series of collective bargaining agreements which was to expire on July 31, 1959. The agreement provided for automatic renewal for another year unless one of the contracting parties gave 60 days’ notice of a desire to modify or terminate the contract. On May 26, 1959, the Union gave timely notice, of its desire to modify the contract and sought to arrange a bargaining session with Company representatives. On June 2, the Company acknowledged receipt of the Union’s notice and stated: “We will contact you at a later date regarding a meeting for this purpose.” As required by the contract, the Union sent a list of proposed modifications on June 15. Efforts by the Union to schedule a bargaining session met with no success until July 27, *206four days before the expiration of the contract, when the Company notified the Union of its desire to meet.
The Company, concerned with the high cost of its maintenance operation, had undertaken a study of the possibility of effecting cost savings by engaging an independent contractor to do the maintenance work. At the July 27 meeting, the Company informed the Union that it had determined that substantial savings could be effected by contracting out the work upon expiration of its collective bargaining agreements with the various labor organizations representing its maintenance employees. The Company' delivered to the Union representatives a letter which stated in pertinent part:
“For some time we have been seriously considering the question of letting out our Emeryville maintenance work to an independent contractor, and have now reached a definite decision to do so effective August 1, 1959.
“In these circumstances, we are sure you will realize that negotiation of a new contract would be pointless. However, if you have any questions, we will be glad to discuss them with you.”
After some discussion of the Company’s right to enter a contract with a third party to do the work then being performed by employees in the bargaining unit, the meeting concluded with the understanding that the parties would meet again on July 30.
By July 30, the Company had selected Fluor Maintenance, Inc., to do the maintenance work. Fluor had assured the Company that maintenance costs could be curtailed by reducing the work force, decreasing fringe benefits and overtime payments, and by preplanning and scheduling the services to be performed. The contract provided that Fluor would:
“furnish all labor, supervision and office help required for the performance of maintenance work ... at *207the Emeryville plant of Owner as Owner shall from time to time assign to Contractor during the period, of this contract; and shall also furnish such tools, supplies and equipment in connection therewith as Owner shall order from Contractor, it being understood however that Owner shall ordinarily do its own purchasing of topis, supplies and equipment.”
The contract further provided that the Company would pay Fluor the costs of the operation plus a fixed fee of $2,250 per month.
At the July 30 meeting, the Company’s representative, in explaining the decision to contract out the maintenance work, remarked that during bargaining negotiations in previous years the Company had endeavored to. point out through the use of charts and statistical information “just how expensive and costly our maintenance work was and how it was creating quite a terrific burden upon the Emeryville plant.” He further stated that unions representing other Company employees “had joined hands with management in an effort to bring about an economical and efficient operation,” but “we had not been able to attain that in our discussions with this particular Local.” The Company also distributed a letter stating that “sincé we will have no employees in the bargaining unit covered by our present Agreement, negotiation of a new or renewed Agreement would appear to us to be pointless.” On July 31, the employment of the maintenance employees represented by the Union was terminated and Fluor employees took over. That evening the Union established a picket line at the Company’s plant.
The Union filed unfair labor practice charges against the Company, alleging violations of §§ 8 (a)(1), 8 (a) (3) and 8 (a)(5). After hearings were held upon a complaint issued by the National Labor Relations Board’s Regional Director, the Trial Examiner filed an Inter*208mediate Report recommending dismissal of the complaint. The Board accepted the recommendation and dismissed the complaint. 130 N. L. R. B. 1558.
Petitions for reconsideration, filed by .the General Counsel and the Union, were granted. Upon reconsideration, the Board adhered to the Trial Examiner’s finding that the Company’s motive in contracting out its maintenance work was economic rather than antiunion but found nonetheless that the Company’s- “failure to negotiate with . . . [the Union] concerning its decision to subcontract its maintenance work constituted a violation of Section 8 (a) (5) of the Act.” 2 This ruling was based upon the doctrine established in Town & Country Mfg. Co., 136 N. L. R. B. 1022, 1027, enforcement granted, 316 F. 2d 846 (C.- A. 5th Cir. 1963), that contracting out work, “albeit for economic reasons, is a matter within the statutory phrase 'other terms and conditions of employment’ and is a mandatory subject of collective bargaining within the meaning of Section 8 (a) (5) of the Act.”
The Board ordered the Company to reinstitute the maintenance operation previously performed by the employees represented by the Union, to reinstate the employees to their former or substantially equivalent positions with back pay computed from the date of the Board’s supplemental decision, and to fulfill its statutory obligation to bargain.
On appeal, the Court of Appeals for the District of Columbia Circuit granted the Board’s petition for enforcement. 116 U. S. App. D. C. 198, 322 F. 2d 411. Because of the importance of the issues and because of an alleged *209conflict among the courts of appeals,3 we granted certio-rari limited to a consideration of the following questions:
“1. Was Petitioner required by the National Labor Relations Act to bargain with a union representing some of its employees, about whether to let to an independent contractor for legitimate business reasons the performance of certain operations in which those employees had been engaged?
“3. Was the Board, in a case involving only a refusal to bargain, empowered to order the resumption of operations which had been discontinued for legitimate business reasons and reinstatement with back pay of the individuals formerly employed therein?”
We agree with the Court of Appeals that, on the facts of this case, the “contracting out” of the work previously performed by members of an existing bargaining unit is a subject about which the National Labor Relations Act requires employers and the representatives of their employees to bargain collectively. We also agree with the Court of Appeals that the Board did not exceed its remedial powers in directing the Company to resume its maintenance operations, reinstate the employees with back pay, and bargain with the Union.
I.
Section 8 (a)(5) of the National Labor Relations Act provides that it shall be an unfair labor practice for an employer “to refuse to bargain collectively with the representatives of his employees.” Collective bargaining is defined in § 8 (d) as
“the performance of the mutual ■ obligation of the employer and the representative of the employees *210to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.”
“Read together, these provisions establish the obligation of the employer and the representative of its employees to bargain with each other in good faith with respect to ‘wages, hours, and other terms and conditions of employment . . . The duty is limited to those subjects, and within that area neither party is legally obligated to yield. Labor Board v. American Ins. Co., 343 U. S. 395. As to other matters, however, each party is free to bargain or not to bargain . . . .” Labor Board v. Wooster Div. of Borg-Warner Corp., 356 U. S. 342, 349. Because of the limited grant of certiorari, we are concerned here only with whether the subject upon which the employer allegedly refused to bargain — contracting out of plant maintenance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform — is covered by the phrase “terms and conditions of employment” within the meaning of § 8 (d).
The subject matter of the present dispute is well within the literal meaning of the phrase “terms and conditions of employment.” See Order of Railroad Telegraphers v. Chicago & N. W. R. Co., 362 U. S. 330. A stipulation with respect to the contracting out of work performed by members of the bargaining unit might appropriately be called a “condition of employment.” The words even more plainly cover termination of employment which, as the facts of this case indicate, necessarily results from the contracting out of work performed by members of the established bargaining unit.
The inclusion of “contracting out” within the statutory scope of collective bargaining also seems well designed to effectuate the purposes of the National Labor Relations *211Act. One of the primary purposes of the Act is to promote the peaceful settlement of industrial disputes by subjecting labor-management controversies to the media- ■ tory influence of pegoti^tion.4 The Act was framed with an awareness that refusals to confer and negotiate had been one of the most prolific causes of industrial strife. Labor Board v. Jones & Laughlin Steel Corp., 301 U. S. 1, 42-43. To hold, as the Board has done, that contracting out is a mandatory subject of collective bargaining would promote the fundamental purpose of the Act by bringing a problem of vital concern to labor and management within the framework established by Congress as most conducive to industrial peace. .
The conclusion that “contracting out” is a statutory subject of collective bargaining is further reinforced by industrial practices in this country. While not determinative, it is appropriate to look to industrial bargaining practices in.appraising the propriety of including a particular subject within the scope of mandatory bargaining.5 Labor Board v. American Nat. Ins. Co., 343 U. S. 395, 408. Industrial experience is not only reflective of the interests of labor and management in the subject matter but is also indicative of the amenability of such subjects to the collective bargaining process. Experience illustrates that contracting out in one form or another has been brought, widely and successfully, within the collective bargaining framework.6 Provisions relating to contracting out exist in numerous collective bargaining *212agreements,7 and “[contracting out work is the basis of many grievances; and that type of claim is grist in the mills of the arbitrators.” United Steelworkers v. Warrior & Gulf Nav. Co., 363 U. S. 574, 584.
The situation here is not unlike that presented in Local 24, Teamsters Union v. Oliver, 358 U. S. 283, where we held that conditions imposed upon contracting out work to prevent possible curtailment of jobs and the undermining of conditions of employment for members of the bargaining unit constituted a statutory subject of collective bargaining. The issue in that case was whether state antitrust laws could be applied to a provision of a collective bargaining agreement which fixed the minimum rental to be paid by the employer motor carrier who leased vehicles to be driven by their owners rather than the carrier’s employees. We held that the agreement was upon a subject matter as to which federal law directed the parties to bargain and hence that state antitrust laws could not be applied to prevent the effectuation of the agreement. We pointed out that the agreement was a
“direct frontal attack upon a problem thought to threaten the maintenance of the basic wage structure established by the collective bargaining contract. The inadequacy of a rental which means that the owner makes up his excess costs from his driver’s wages not only clearly bears a close relation to labor’s efforts to improve working conditions but is in fact of vital concern to the carrier’s employed drivers; an inadequate rental might mean the progressive cur*213tailment of jobs through withdrawal of more and more carrier-owned vehicles from service.” Id., at 294.
Thus, we concluded that such a matter is a subject of mandatory bargaining under § 8 (d). Id., at 294-295. Thé only difference between that case\and the one at hand is that the work of the employeés in the bargaining unit was let out piecemeal in Oliver, whereas here the work of the entire unit has been contracted out. In reaching the conclusion that the subject matter in Oliver was a mandatory subjéct of collective bargaining, we cited with approval Timken Roller Bearing Co., 70 N. L. R. B. 500, 518, enforcement denied on other grounds, 161 F. 2d 949, (C. A. 6th Cir. 1947), where the Board in a situation factually similar to the present ease held that §§ 8 (a) (5) and 9 (a) required the employer to bargain about contracting out work then being performed by members of the bargaining unit.
The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company’s decision to contract out the maintenance work did not alter the Company’s basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment. Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business.
The Company was concerned with the high cost of its maintenance operation. It was induced to contract out the work by 'assurances from independent contractors that economies could be derived by reducing the work force, decreasing fringe benefits, and eliminating overtime payments. These have long been regarded as matters. *214peculiarly suitable for resolution within the collective bargaining framework, and industrial experience demonstrates that collective negotiation has been highly successful in achieving peaceful accommodation of the conflicting interests. Yet, it is contended that when an employer can effect cost savings in these respects by contracting the work out, there is no need to attempt to achieve similar economies through negotiation with existing employees of to provide them with an opportunity to negotiate a mutually acceptable alterñative. The short answer is that, although it is not possible to say whether a satisfactory solution could be reached, national labor policy is founded upon the congressional determination that the chances are good enough to warrant subjecting such issues to the process of collective negotiation.
The appropriateness of the collective bargaining process for resolving such issues was apparently recognized by the Company. In explaining its decision to contract out the maintenance work, the Company pointed out that in the same plant other unions “had joined hands with management in an effort to bring about an economical and efficient operation,” but “we had not been able to attain that in our discussions with this particular Local.” Accordingly, based bn past bargaining experience with . this union, the Company unilaterally contracted out the work. While “the Act does not encourage a party to engage in fruitless marathon discussions at the expense of frank statement and support of his position,” Labor Board v. American Nat. Ins. Co., 343 U. S. 395, 404, it at least demands that the issue be submitted to the media-tory influence of collective negotiations. As the Court of Appeals pointed out, “[i]t is not necessary that it be likely or probable that the unión will yield or supply a feasible solution but rather that the union be afforded an opportunity to meet management’s legitimate complaints that its maintenance was unduly costly.”
*215We are thus not expanding the scope of mandatory bargaining to hold, as we do now, that the type of “contracting out” involved in this case — the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment — is a statutory subject of collective bargaining under § 8 (d). Our decision need not and does not encompass other forms of “contracting out” or “subcontracting” which arise daily in our complex economy.8
IL
The only question remaining is whether, upon a finding that the Company had refused to bargain about a matter which is a statutory subject of collective bargaining, the Board was empowered to order the resumption of .maintenance operations and reinstatement with back pay. We believe that it was so empowered.
Section 10 (c) provides that the Board, upon a finding that an unfair labor practice has been committed, *216That section “charges the Board with the task of devising remedies to effectuate the policies of the Act.” Labor Board v. Seven-Up Bottling Co., 344 U. S. 344, 346. The Board’s power is a broad discretionary one, subject to limited judicial review! Ibid. “[T]he relation of remedy to policy is peculiarly a matter for administrative competence . . . .” Phelps Dodge Corp. v. Labor Board, 313 U. S. 177, 194. “In fashioning remedies to undo the effects of violations of the Act, the Board must draw on enlightenment gained from experience.” Labor Board v. Seven-Up Bottling Co., 344 U. S. 344, 346. The Board’s order will not be disturbed “unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.” Virginia Elec. & Power Co. v. Labor Board, 319 U. S. 533, 540. Such a showing has not been made in this case.
*215“shall issue ... an order requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this Act . ...” 9
*216There has been no showing that the Board’s order restoring the status quo ante to insure meaningful bargaining is not well designed to promote the policies of the Act. Nor is there evidence which would justify disturbing the Board’s conclusion that the order would not impose an undue or unfair burden on thé Company.10
*217It is argued, nonetheless, that the award exceeds the Board's powers under §10 (c) in that it infringes the provision that “ [n] o order of the Board shall require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any baek pay, if such individual was suspended or discharged for cause. . . .” The legislative history of that provision indicates that it was designed to preclude the Board from reinstating an individual who had been discharged because of misconduct.11 There is no indication, however, that it was designed to curtail the Board’s power in fashioning remedies when the loss of employment stems directly from an unfair labor practice as in the case at hand.
The judgment of the Court of Appeals is
Affirmed.
Mr. Justice Goldberg took no part in the consideration or.decision of this case.
with whom Mr. Justice Douglas and Mr. Justice Harlan join,
concurring.
Viewed broadly, the question before us stirs large issues. The Court purports to limit its decision to “the *218facts of this case.” But the Court’s opinion radiates implications of such disturbing breadth that I am persuaded to file this separate statement of my own views.
Section. 8 (a)(5) of the National Labor Relations Act, as amended, makes it an unfair labor practice for an employer to “refuse to bargain collectively with the representatives of his employees.” Collective bargaining is defined in § 8 (d) as:
“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.”
The question posed is whether the particular decision sought to be made unilaterally by. the employer in this case is a subject of mandatory collective bargaining within the statutory phrase “terms and conditions of employment.” That is all the Court decides.1 The Court most assuredly does not decide that every managerial decision which necessarily terminates an individual’s employment is subject to the duty to bargain. Nor does the Court decide that subcontracting decisions are as a general matter subject to that duty. The Court holds no more than that this employer’s decision to subcontract this work, involving “the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment,” is subject to the duty to bargain collectively. Within the narrow limitations implicit in the specific facts of this case, I agree with the Court’s decision.
Fibreboard had performed its maintenance work at its Emeryville manufacturing plant through its own em*219ployees, who were represented by a local of the United Steelworkers. Estimating that some $225,000 could be saved annually by dispensing with internal maintenance, the company contracted out this work, informing the union that there would be no point in negotiating a new contract since the employees in the bargaining unit had been replaced by employees of the independent contractor, Fluor. Maintenance work continued to be performed within the plant, with the work ultimately supervised by the company’s officials and “functioning as an integral part” of the company. Fluor was paid the cost of operations plus $2,250 monthly. The savings in costs anticipated from the arrangement derived largely from the elimination of fringe benefits, adjustments in work scheduling, enforcement of stricter work quotas, and close supervision of the new personnel. Under the cost-plus arrangement, Fibreboard remained responsible for whatever maintenance costs were actually incurred. On these facts, I would agree that the employer had a duty to bargain collectively concerning the replacement of his internal maintenance staff by employees of the independent contractor.
The basic question is whether the employer failed to “confer in good faith with respect to . . . terms and conditions of employment” in unilaterally deciding to subcontract this work. This question goes to the scope of, the employer’s dúty in the absence of a collective bargaining agreement.2 It is true, as the Court’s opinion *220points out, that industrial experience may be useful in determining the proper scope of the duty to bargain. See Labor Board v. American Nat. Ins. Co., 343 U. S. 395, 408. But data showing that many labor, contracts refer to subcontracting or that subcontracting grievances are frequently referred to arbitrators under collective bargaining agreeménts, while not wholly irrelevant, do not have much real bearing, for such data may indicate no more than that the parties have often considered it mutually advantageous to bargain over these issues on a permissive basis. In any event, the ultimate question is the scope of the duty to bargain defined by the statutory language.
It is important to note that the words of the statute are words of limitation. The National Labor Relations Act does not say that the employer and employees are bound to confer upon any subject which interests either of them; the specification of wages, hours, and other terms and conditions of employment defines a limited category of issues subject to compulsory bargaining. The limiting purpose of the statute’s language is made clear by the legislative history of the present Act. As originally passed, the Wagner'Act contained no definition of the duty to bargain collectively.3 In the 1947 revision of the Act, the House bill contained a detailed but limited list of subjects of the duty to bargain, excluding all others.4 In conference the present language was substi-. tuted for the House’s detailed specification. While the language thus incorporated in the "1947 legislation as *221enacted is not so stringent as that contained in the House bill, it nonetheless adopts the same basic approach in seeking to define a limited class of bargainable issues.5
The phrase “conditions of employment” is no doubt susceptible of diverse interpretations. At the extreme, the phrase could be construed to apply to any subject which is insisted upon as a prerequisite for continued employment. Such an interpretation, which would in effect place the compulsion of the Board behind any and all bargaining demands, would be contrary to the intent of Congress, as reflected in this legislative history. Yet there are passages in the Court’s opinion today which suggest just such an expansive interpretation, for the Court’s opinion seems to imply that any issue which may reasonably divide an employer and his employees must be the subject of compulsory collective bargaining.6
Only a narrower concept of “conditions of employment” will serve the statutory purpose of delineating a limited category of issues which are subject to the duty to bargain collectively. Seeking to effect this purpose, at least seven circuits have interpreted.the statutory language to exclude various kinds of management decisions from the *222scope of the duty to bargain.7 In common parlance, the conditions of a person’s employment are most obviously the various physical dimensions of his working environment. What one’s hours are to be, what amount of work is expected during those hours, what periods of relief are available, what safety practices are observed, would all seem conditions of one’s employment. There are other less tangible but no less important characteristics of a person’s employment which might also be deemed “conditions” — most prominently the characteristic involved in this case, the security of one’s employment. On one view of the matter, it can be argued that the question whether there is to be a job is not a condition of employment; the question is not orie of imposing conditions on employment, but the more fundamental question whether there is to be employment at all. However, it is clear that the Board and the courts have on numerous occasions recognized that union demands for provisions limiting an employer’s power to discharge employees are man-datorily bargainable. Thus, freedom from discriminatory discharge,8 seniority rights,9 the imposition of a compulsory retirement age,10 have been recognized as subjects upon which an employer must bargain, although all of these concern the very existence of the employment itself.
*223While employment security has thus properly been recognized in various circumstances as a condition of employment, it surely does not follow that every decision which may affect job security is a subject of compulsory collective bargaining. Many decisions made by management affect the job security of employees. Decisions concerning the volume and kind of advertising expenditures, product design, the manner of financing, and sales, all may bear upon the security of the workers’ jobs. Yet it is hardly conceivable that such decisions so involve “conditions of employment” that they must be negotiated with the employees’ bargaining representative.
In many of these areas the impact of a particular management decision upon job security may be extremely indirect and uncertain, and this alone may be sufficient reason to conclude that such decisions are not “with respect to . . . conditions of employment.” Yet there are other areas where decisions by management may quite clearly imperil job security, or indeed terminate employment entirely. An enterprise may decide to invest in labor-saving machinery. Another may resolve to liquidate its assets and go out of business. Nothing the Court holds today should be understood as imposing a duty to bargain collectively regarding siich managerial decisions, which lie at the core of entrepreneurial control. Decisions concerning the commitment of investment capital and the basic scope of the enterprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate employment. 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.
*224Applying these concepts to the case at hand, I do not believe that an employer’s subcontracting practices are, as a general matter, in themselves conditions of employment. Upon any definition of the statutory terms short of the most expansive, such practices are not conditions— tangible or intangible — of any person’s employment.11 The question remains whether this particular kind of subcontracting decision comes within the employer’s duty to- bargain. On the facts of this case, I join the Court’s judgment, because all that is involved is the substitution of one group of workers for another to perform the same task in the same plant under the ultimate control of the same employer. The question whether the employer may discharge one group of workers and substitute another for them is closely analogous to many other situations within the traditional framework of collective bargaining. Compulsory retirement, layoffs according to seniority, assignment of work among potentially eligible groups within the plant — all involve similar questions of discharge and work assignment, and all have been recognized as subjects of compulsory collective bargaining.12
Analytically, this case is not far from that which would be presented if the employer had merely discharged all its employees and replaced them with other workers willing to work on the same job in the same plant without the various fringe benefits so costly to the company. While such a situation might well be considered a §8 (a)(3) violation upon a finding that the employer discriminated against the discharged employees because of *225their union affiliation, it would be equally possible to regard the employer’s action as a unilateral act frustrating negotiation on the underlying questions of work scheduling and remuneration, and so an evasion of its duty to bargain on these questions, which are concededly subject to compulsory collective bargaining.13 Similarly, had the employer in this.case chosen to bargain with the union about the proposed subcontract, negotiations would have inevitably turned to the underlying questions of cost, which prompted the subcontracting. Insofar as the employer frustrated collective bargaining with respect to these concededly bargaining issues by its unilateral act of subcontracting this work, it can properly be found to have violated its statutory duty under § 8 (a) (5).
This kind of subcontracting falls short of such larger entrepreneurial questions as what shall be produced, how capital shall be invested in fixed assets, or what the basic scope of the enterprise shall be. In my view, the Court’s decision in this case has nothing to do with whether any aspects of those larger issues could under any circumstances be considered subjects of compulsory collective bargaining under the, present law.
I am fully aware that in this era of automation and onrushing technological change, no problems in the domestic economy are of greater concern than those involving job security and employment stability. Because of the potentially cruel impact upon the lives and fortunes of the working men and women of the Nation, these problems have understandably engaged the solicitous attention of government, of responsible private business, and particularly of organized labor. It is possible that in meeting these problems Congress may eventually decide to give organized labor or government a far heavier hand *226in controlling what until now have been considered the prerogatives of private business management. That path would mark a sharp departure from the traditional principles of a free enterprise economy. Whether we should follow it is, within constitutional limitations, for Congress to choose. But it is a path which Congress certainly did not choose when it enacted the Taft-Hartley Act.
27.4 National Labor Relations Board v. Katz 27.4 National Labor Relations Board v. Katz
NATIONAL LABOR RELATIONS BOARD v. KATZ et al.
No. 222.
Argued March 22, 1962.
Decided May 21, 1962.
*737 Solicitor General Cox argued the cause for petitioner. With him on the briefs were Stuart Rothman, Dominick L. Manoli, Norton J. Come, Frederick U. Reel and Stephen J. Poliak.
Sidney O. Raphael argued the cause for respondents. With him on the briefs was Leo M. Drachsler.
delivered the opinion of the Court.
Is it a violation of the duty “to bargain collectively” imposed by § 8 (a) (5) of the National Labor Relations Act1 for an employer, without first consulting a union with which it is carrying on bona fide contract negotiations, to institute changes regarding matters which are subjects of mandatory bargaining under § 8 (d) and which are in fact under discussion? 2 The National Labor Relations Board answered the question affirmatively in this case, in a decision which expressly disclaimed any finding that the totality of the respondents’ conduct manifested bad faith in the pending negotiations.3 126 N. L. R. B. *738288. A divided panel of the Court of Appeals for the Second Circuit denied enforcement of the Board's cease- and-desist order, finding in our decision in Labor Board v. Insurance Agents’ Union, 361 U. S. 477, a broad rule that the statutory duty to bargain cannot be held to be violated, when bargaining is in fact being carried on, without a finding of the respondent’s subjective bad faith in negotiating. 289 F. 2d 700.4 The Court of Appeals said:
“We are of the opinion that the unilateral acts here complained of, occurring as they did during the negotiating of a collective bargaining agreement, do not per se constitute a refusal to bargain collectively and per se are not violative of § 8 (a) (5). While the subject is not generally free from doubt, it is our conclusion that in the posture of this case a necessary requisite of a Section 8 (a)(5) violation is a finding that the employer failed to bargain in good faith.” 289 F. 2d, at 702-703.
We granted certiorari, 368 U. S. 811, in order to consider whether the Board’s decision and order were contrary to Insurance Agents. We find nothing in the Board’s decision inconsistent with Insurance Agents and hold that *739the Court of Appeals erred in refusing to enforce the Board’s order.
The respondents are partners engaged in steel fabricating under the firm name of Williamsburg Steel Products Company. Following a consent election in a unit consisting of all technical employees at the company’s plant, the Board, on July 5, 1956, certified as their collective bargaining representative Local 66 of the Architectural and Engineering Guild, American Federation of Technical Engineers, AFL-CIO. The Board simultaneously certified the union as representative of similar units at five other companies which, with the respondent company, were members of the Hollow Metal Door' & Buck Association. The certifications related to separate units at the several plants and did not purport to establish a multi-employer bargaining unit.'
On July 11,1956, the union sent identical letters to each of the six companies, requesting collective bargaining. Negotiations were invited on either an individual or “association wide” 5 basis, with the reservation that wage rates and increases would have to be discussed with each employer separately. A follow-up letter of July 19, 1956, repeated the request for contract negotiations and enumerated proposed subjects for discussion. Included were merit increases, general wage levels and increases, and a sick-leave proposal.
The first meeting between the company and the union took place on August 30, 1956. On this occasion, as at the ten other conferences held between October 2, 1956, and May 13, 1957, all six companies were in attendance *740and represented by the same counsel.6 It is undisputed that the subject of merit increases was raised at the August 30, 1956, meeting although there is an unresolved conflict as to whether an agreement was reached on joint participation by the company and the union in merit reviews, or whether the subject was simply mentioned and put off for discussion at a later date. It is also clear that proposals concerning sick leave were made. Several meetings were held during October and one in November, at which merit raises and sick leave were each discussed on at least two occasions. It appears, however, that little progress was made.
On December 5, a meeting was held at the New York State Mediation Board attended by a mediator of that agency, who was at that time mediating a contract negotiation between the union and Aetna Steel Products Corporation, a member of the Association bargaining separately from the others; and a decision was reached to recess the negotiations involved here pending the results of the Aetna negotiation. When the mediator called the next meeting on March 29, 1957, the completed Aetna contract was introduced . into the discussion. At a resumption of bargaining on April 4, the company, along with the other employers, offered a three-year agreement with certain initial and prospective automatic wage increases. The offer was rejected. Further meetings with the mediator on April 11, May 1, and May 13, 1957, produced no agreement, and no further meetings were held.
Meanwhile, on April 16, 1957, the union had filed the charge upon which the General Counsel’s complaint later issued. As amended and amplified, at the hearing and construed by the Board, the complaint’s charge of unfair *741labor practices particularly referred to three acts by the company: unilaterally granting numerous merit increasés in October 1956 and January 1957; unilaterally announcing a change in sick-leave policy in March 1957; and unilaterally instituting a new system of automatic wage increases during April 1957. As the ensuing litigation has developed, the company has defended against the charges along two fronts: First, it asserts that the unilateral changes occurred after a bargaining impasse had developed through the union’s fault in adopting obstructive tactics.7 According to the Board,, however, “the evidence is clear that the Respondent undertook its unilat*742eral actions before negotiations were discontinued in May-1957, or before, as we find on the record, the existence of any possible impasse.” 126 N. L. R. B., at 289-290. There is ample support in the record considered as a whole for this finding of fact, which is consistent with the Examiner’s Intermediate Report, 126 N. L. R. B., at 295-296, and which the Court of Appeals did not question.8
The second line of defense was that the Board could not hinge a conclusion that §8 (a)(5) had been violated on unilateral actions alone, without making a finding of the employer’s subjective bad faith at the bargaining table; and that the unilateral actions were merely evidence relevant to the issue of subjective good faith. This argument prevailed in the Court of Appeals which remanded the cases to the Board saying:
“Although we might ... be justified in denying enforcement without remand, . . . since the Board’s finding of an unfair labor practice impliedly proceeds from an erroneous view that specific unilateral acts, regardless of bad faith, may constitute violations of § 8 (a) (5), the case should be remanded to the Board in order that it may have an opportunity to take additional evidence, and make such findings as may be warranted by the record.” 289 F. 2d, at 709.9
The duty “to bargain collectively” enjoined by § 8 (a) (5) is defined by § 8 (d) as the duty to “meet . . . and confer in good faith with respect to wages, hours, and other terms *743and conditions of employment.” Clearly, the duty thus defined may be violated without a general failure of subjective good faith; for there is no occasion to consider the issue of good faith if a party has refused even to negotiate in fact — “to meet . . . and confer” — about any of the mandatory subjects.10 A refusal to negotiate in fact as to any subject which is within § 8 (d), and about which the union seeks to negotiate, violates § 8 (a) (5) though the employer has every desire to reach agreement with the union upon an over-all collective agreement and earnestly and in all good faith bargains to that end. We hold that an employer’s unilateral change in conditions of employment under negotiation is similarly a violation of §8 (a)(5), for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8 (a) (5) much as does a flat refusal.11
*744The unilateral actions of the respondent illustrate the policy and practical considerations which support our conclusion.
We consider first the matter of sick leave. A sick-leave plan had been in effect since May 1956, under which employees were allowed ten paid sick-leave days annually and could accumulate half the unused days, or up to five days each year. Changes in the plan were sought and proposals and counterproposals had come up at three bargaining conferences. In March 1957, the company, without first notifying or consulting the union, announced changes in the plan, which reduced from ten to five the number of paid sick-leave days per year, but allowed accumulation of twice the unused days, thus increasing to ten the number of days which might be carried over. This action plainly frustrated the statutory objective of establishing working conditions through bargaining. Some employees might view the change to be a diminution' of benefits. Others, more interested in accumulating sick-leave days, might regard the change as an improvement. If one view or the other clearly prevailed among the employees, the unilateral action might well mean that the employer had either uselessly dissipated trading material or aggravated the sick-leave issue: On the. other hand, if the employees were more evenly divided on the merits of the company’s changes, the union negotiators, beset by conflicting factions, might be led to adopt a protective vagueness- on the issue of sick leave, which also would inhibit the useful discussion contemplated by Congress in imposing the specific obligation to bargain collectively.
Other considerations appear from consideration of the respondents’ unilateral action in increasing wages. At the April 4, 1957, meeting the employers offered, and the union rejected, a three-year contract with an imme*745diate across-the-board increase of $7.50 per week, to be followed at the end of the first year and again at the end of the second by further increases of $5 for employees earning less than $90 at those times. Shortly thereafter, without having advised or consulted with the union, the company announced a new system of automatic wage increases whereby there would be an increase of $5 every three months up to $74.99 per week; an increase of $5 every six months between $75 and $90 per week; and a merit review every six months for employees earning over $90 per week. It is clear at a glance that the automatic wage increase system which was instituted unilaterally was considerably more generous than that which had shortly theretofore been offered to and rejected by the union. Such action conclusively manifested bad faith in the negotiations, Labor Board v. Crompton-Highland Mills, 337 U. S. 217, and so would have violated § 8 (a) (5) even on the Court of Appeals’ interpretation, though no additional evidence of bad faith appeared. An employer is not required to' lead with his best offer; he is free to bargain. But even after an impasse is reached he has no license to grant wage increases greater than any he has ever offered the union at the bargaining table, for such action is necessarily inconsistent with a sincere desire to conclude an agreement with the union.12
The respondents’ third unilateral action related to merit increases, which are also a subject of mandatory bargaining. Labor Board v. Allison & Co., 165 F. 2d 766. The matter of merit increases had been raised at three of the *746conferences during 1956 but no final understanding had been reached. In January 1957, the company, without notice to the union, granted merit increases to 20 employees out of the approximately 50 in the unit, the increases ranging between $2 and $10.13 This action too must be viewed as tantamount to an outright refusal to negotiate on that subject, and therefore as a violation of § 8 (a)(5), unless the fact that the January raises were in line with the company’s long-standing practice of granting quarterly or semiannual merit reviews — in effect, were a mere continuation of the status quo — differentiates them from the wage increases and the changes in the sick-leave plan. We do not think it does. Whatever might be the case as to so-called “merit raises” which are in fact simply automatic increases to which the employer has already committed himself, the raises here in question were in no sense automatic, but were informed by a large measure of discretion. There simply is no way in such case for a union to know whether or not there has been a substantial departure from past practice, and therefore the union may properly insist that the company *747negotiate as to the procedures and criteria for determining such increases.14
It is apparent from what we have said why we see nothing in Insurance Agents contrary to the Board’s decision. The union in that case had not in any way whatever foreclosed discussion of any issue, by unilateral actions or otherwise.15 The conduct complained of consisted of partial-strike tactics designed to put pressure on the employer to come to terms with the union negotiators. We held that Congress had not, in § 8 (b) (3), the counterpart of § 8 (a)(5), empowered the Board to pass judgment on the legitimacy of any particular economic weapon used in support of genuine negotiations. But the Board is authorized to order the cessation of behavior which is in effect a refusal to negotiate, or which directly obstructs or inhibits the actual process of discussion, or which reflects a cast of mind against reaching agreement. Unilateral action by an employer without prior discussion with the union does amount to a refusal to negotiate about the affected conditions of employment under negotiation, and must of necessity obstruct bargaining, contrary to the congressional policy. It will often disclose an unwillingness to agree with the union. It will rarely be justified by any reason of substance. It follows that the Board may hold such unilateral action to be an unfair labor practice in violation of §8 (a)(5), without also finding the employer guilty of over-all subjective bad faith. While *748we do not foreclose the possibility that there might be circumstances which the Board could or should accept as excusing or justifying unilateral action, no such case is presented here.16
The judgment of the Court of Appeals is reversed and the case is remanded with direction to the court to enforce the Board’s order.
It is so ordered.
Mr. Justice Frankfurter took no part in the decision of this case.
Mr. Justice White took no part in the consideration or decision of this case.
27.5 MV Transportation, Inc., 368 NLRB No. 66 (NLRB 2019) 27.5 MV Transportation, Inc., 368 NLRB No. 66 (NLRB 2019)
The waiver standard . . . effectively requires the parties to focus on particular subjects over which the employer seeks the right to act unilaterally. Such a narrow focus has two clear benefits. First, it encourages the parties to bargain only over subjects of importance at the time and to leave other subjects to future bargaining. Second, if a waiver is won--in clear and unmistakable language--the employer's right to take future unilateral action should be apparent to all concerned.
*8 [C]onstruing collective bargaining agreements as covering only those outcomes the parties concretely foresaw would make extensive future bargaining inevitable, removing the parties' incentive to try to comprehensively bargain in the first place. Promotion of contractual repose is needed to avoid discouraging parties from engaging in the effort, as part of negotiation of their basic collective bargaining agreement, to foresee potential labor-management relations issues, and resolve those issues in as comprehensive a manner as practicable. . . . We have therefore consistently held that whether the parties intended a particular outcome does not resolve the “covered-by” analysis. Instead, what matters is whether the policy falls within the scope of the collective bargaining agreement in light of the . . . policy of encouraging such agreements by fostering their stability and repose.
We would risk the development of conflicting principles were we to defer to the Board in its interpretation of the contract, as distinct from its devising a remedy for the unfair labor practice that follows from a breach of contract. We cannot accord deference in contract interpretation here only to revert to our independent interpretation of collective-bargaining agreements in a case arising under § 301.
“A waiver occurs when a union knowingly and voluntarily relinquishes its right to bargain about a matter; but where the matter is covered by the collective bargaining agreement, the union has exercised its bargaining right and the question of waiver is irrelevant.”