Magnolia Petroleum Co.

In the Matter Of MAGNOLIA PETROLEUM COMPANY and OIL WORKERS INTERNATIONAL UNION, LOCALS Nos. 280 AND 378 Case No. C-1254.Decided January 8, 1940 Oil Refinery Industry-Interference , Restraint, and Coercion : anti-union statements to employees ; maintenance of employee representation plan-Cons- pang-Dominated Union: domination of and interference with formation and ad- ministration ; suggestion that employee representation plan be continued ; grant of concessions to alleged company union not indicative of independence ; election agreement relating to two of the respondent 's nine districts involved in the pro- ceding, participated in by agents of the Board , given effect as to the two dis- tricts; disestablished in remaining districts as agency for collective bargaining- Discrimination : charges of, dismissed. Mr. Hare C. Duncan, for the Board. Mohun cC Elliott, by Mr. George E. Elliott, of Washington, D. C., and Mr. W. H. Francis, M11r. Walace Hawkins, and Mr. Ross Madole, of Dallas, Tex., and Blakeney, Wallace, Brown cfi Blakeney, by Mr. W. R. Wallace and Mr. Russell Surles, of Oklahoma City, Okla., for the respondent. dir. Maurice Daly and Mr. R. H. Stickel, of Tulsa, Okla., for the Union. Mr. Don Anderson, of Oklahoma City, Okla., for the Intervenor. dlr. Frederr4ck, R. Levinstone, of counsel to the Board. DECISION AND ORDER STATEMENT OF THE CASE Upon charges and amended charges duly filed by the Oil Workers International Union, Locals Nos. 280 and 378, herein called the Union, the National Labor Relations Board, herein called the Board, by Edwin A. Elliott, Regional Director for the Sixteenth Region, (Fort Worth, Texas), issued its complaint dated November 25, 1938, against Magnolia Petroleum Company, herein called the respondent, alleging that the respondent had engaged in and was engaging in unfair labor practices affecting commerce within the meaning of Section 8 (1), (2), and (3) and Section 2 (6) and (7) of the National Labor Re- lations Act, 49 Stat. 449, herein called the Act. 19 N. L. R. B., No. 24. 184 MAGNOLIA PETROLEUM COMPANY 185 With respect to the unfair labor practices, the complaint alleged in substance that during July 1937, the respondent discharged James A. Mullennax and subjected other of its employees in its Stonewall district in Oklahoma to discriminatory transfers because they joined and assisted the Union, thereby discriminating in regard to their hire and tenure of employment and discouraging membership in the Union"; that the respondent through its officers, agents, and persons acting in its behalf, dominated and interfered with the formation and administration of, and contributed support to, a labor organi- zation in the State of Oklahoma known as the Magnolia Production and Shop Department Employees Association, herein called the As- sociation ; that the respondent discouraged its employees from becoming or remaining members of the Union; and that by these and other acts the respondent interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act. On December 2, 1938, the respondent filed its answer admitting certain allegations of the complaint but traversing others and making certain allegations by way of an affirmative defense. Pursuant to notice, a hearing was held at Drumright, Oklahoma, from December 12 through 19, 1938, before Henry J. Kent, the Trial Examiner duly designated by the Board. All the parties were repre- sented by counsel, participated in the hearing, and were afforded full opportunity to be heard, to examine and cross-examine witnesses, and to introduce evidence bearing on the issues. At the opening. of the hearing the Association moved to intervene in the proceedings. Leave to intervene was granted but only in so far as its interests were affected by the proceeding. During the course of the hearing the Trial Examiner ruled on various motions and on objections to the admission of evidence. The Board has reviewed the rulings of the Trial Examiner at the hearing and finds that no prejudicial errors were committed. The rulings are hereby affirmed. The Trial Examiner also reserved rulings on several motions. On April 10, 1939, the Trial Examiner filed an Intermediate Report in which he found that the respondent had not engaged in unfair labor practices within the meaning of Section 8 (3) of the Act and that the respondent had engaged in and was engaging in unfair labor practices within the meaning of Section 8 (1) and (2) and Section 2 (6) and (7) of the Act. He accordingly recommended that the respondent cease and desist therefrom and that it cease giving recognition to, and disestablish the Association as, the collective bargaining representative for any of its employees in the State of Oklahoma. Thereafter, the respondent and the Association filed. exceptions to the Intermediate Report and, following due notice to all parties, presented oral argument before the Board in Washington, 186 DECISIONS OF NATIONAL LABOR RELATIONS BOARD D. C., on October 12, 1939. The Board has considered the exceptions to the Intermediate Report and, except as they are consistent with the finding s, conclusions, and order below, finds them to be without merit. Upon the entire record in the case, the Board makes the following : FINDINGS OF FACT I. THE BUSINESS OF THE RESPONDENT Magnolia Petroleum Company, a Texas corporation, is 'a sub- sidiary of Socony-Vacuum Oil Company, Inc., and is capitalized at $125,000,000. It is engaged in oil refining and other activities peculiar to the oil industry -including the operation of producing v. ells and wholesale distributing stations. It owns a subsidiary known as the Magnolia Pipe Line Company which operates pipe-line carriers in'the States of Texas, Oklahoma; Arkansas, and Louisiana. The' production division' of Magnolia Petroleum Company is com- posed of 8 shop districts and 28 production districts, 9 of the latter being in Oklahoma. Approximately 25 per cent of the crude oil received at the re- spondent's refineries during the first 11 months of 1938 came' from States 'other than the State in which said ' refineries are located. During the same period the respondent produced in its 9 Oklahoma production districts approxinia.tely 8,115,000 barrels of crude oil, of which it transported approximately 7,028,000 into States of the United States other than the State of Oklahoma. The finished petroluem products of said refineries are shipped via rail, truck, and sea carrier. During the period from January 1 to December 1, 1938, the respondent sold or caused to be transported approximately 81 per cent of the finished products processed at its refineries to States of the United States other than the State in which said refineries are located. The respondent's sales during this period exceeded $47,110,000. It.employs approximately 4,000 employees. II. THE ORGANIZATIONS INVOLVED The Oil Workers International Union, Locals Nos . 280 and 378, affiliated with the Congress of Industrial Organizations, are labor organizations admitting to membership all production and main- tenance employees of the respondent excluding clerical and super- visory employees. The Magnolia Production and Shop Department Employees Asso- ciation is an unaffiliated labor organization admitting to membership employees of the respondent, excluding supervisory employees. MAGNOLIA PETROLEUM COMPANY 187 III. THE UNFAIR LABOR PRACTICES A. Interference, restraint, and coercion Immediately preceding the adoption of the Petroleum Code under the National Industrial Recovery Act, in the summer of 1933, the respondent initiated and fostered the "Employees Industrial Repre- sentation Plan," herein called the Plan. Under the terms of the Plan employee groups elected representatives from each of the 36 geographical districts into which the respondent' s operations are divided and the management appointed a representative for the same district. The Plan was put in operation in substantially all of the districts, including two in Oklahoma where the respondent had recognized the Union., The Plan provided for an "advisory committee" of seven men . elected by the representatives at their annual meeting. The committee members, who were elected on a; geographical basis, elected their own chairman and for the year 1935-1936 they chose E. L. Coleman, who subsequently became a management representative.2 The advisory committee meetings were frequently held in the offices of the respondent's industrical relations department and its minutes were mimeographed and distributed by the respondent to all the representatives. With the exception of meetings for the election of officers, all meetings under the Plan were called by the respondent and were at- tended by management representatives. The Plan made no provision for dues and all expenses, including printing costs and traveling expenses of the representatives, were paid by the respondent. Although the respondent recognized the Union under the Plan, it displayed a hostile attitude toward it. On one occasion, about April 1, 1937, W. F. Sherman, superintendent of the respondent's Yale district, advised James Mullennax, an employee, to investigate carefully before joining the Union and stated that "the Oil Workers Union was represented by five Russian Jews." During a conference held on July 13, 1937, to arbitrate his previous discharge, Mullennax requested the date of the hearing to be held in the matter and stated that he desired to be represented by the union committee. E. N, Wilson, State superintendent of the respondent, replied, "Hell, no, I don't need no damn committee with me." The Trial Examiner found, in his Intermediate Report, that John Terrell, safety director for the Oklahoma Division, during a safety address in the late spring of 1937 asked the men to "try the represent- ' In these districts the Union designated the employee representative and participated in the meetings held under the Plan. s Apparently management representatives under the - Plan were not necessarily super- visory employees. 188 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ative plan a little longer." The respondent did not attempt to refute or deny this testimony but contends that any possible inference of a preference to be drawn thereby was dispelled by a subsequent address of a superior officer, Mr. Proctor, who was superintendent of the Oklahoma Division. Proctor, in reply to an employee's request for his opinion as to the desirability of joining the Union or staying "with the company union," stated "Well, the Union was all right if they would keep politics out of it," * * * "There is no hurry to join it. You can join it at any time you want to, they will take your $2.00 at any times you want to give it to them. That I never have known of anybody being kept out of the Union." We do not believe that the disparaging effect of Terrell's statement was dispelled by Proctor's remark. We find that the respondent by the above-described acts and statements of its supervisory employees and its maintenance of the Plan interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act. B. The f ormatio'n o l the Association Shortly after the constitutionality of the Act was sustained by the Supreme Court of the United States on April 12, 1937, M. J. Norrell, head of the respondent's industrial relations department, called a meeting of the Plan's advisory committee. At this meeting, held in Norrell's office on April 29, dissatisfaction was expressed with the management's participation in the Plan and a resolution was adopted to recommend to the general representatives that management repre- sentation be discontinued.3 The minutes of this meeting were mimeo- graphed and distributed by the respondent to all the representatives. Within 2 weeks of this meeting a letter of the respondent's president, D. A. Little, outlining the respondent's labor policies was enclosed in each employee's pay envelope and published in the respondent's magazine, "Magnolia News." After reviewing the respondent's record of collective bargaining, the letter stated : The law prohibits the employer from interfering with, re- straining or coercing employees in the free exercise of their right to join such organizations or from discriminating against them by reason of such membership. The company has not in the past, nor will it in the future knowingly violate any of these provisions. It has been the purpose of the Company, and the same policy still prevails, to leave such matters to the will of the employee as to what type of representation he wishes. The 3 The resolution of April 29 also changed the name of the "advisory committee" to "executive committee." MAGNOLIA PETROLEUM COMPANY 189 C. I. 0., the A. F. of L., your present Employees' Representation Plan, or any, similar organization is -a "labor organization" within the meaning and protection of the law.4 One month after the publication of Little's letter the respondent called a meeting of the employee and management representatives under the Plan. At this meeting, held on July 13 in the "clubroom" of the Magnolia Building in Oklahoma City, Norrell expressed his appreciation for the friendly relations that had prevailed under the Plan. According to Jeff Bowker, an employee, Norrell then explained that: * * * they would have to abandon the company union, (the Plan) and that the company had got up a little pamphlet, I think he called it The Red Horse Book as their agreement to go by for the employees, and he discussed this book paragraph by paragraph and told them owing to the Wagner Act that they couldn't any longer pay the expenses of representatives and transportation to the meetings; that they hated that as they didn't mind paying the expenses, but it was outlawed, or was against the law, or the Wagner Relations Act, and therefore they would have to make some other arrangements; they would have to form some kind of an organization of their own.5 The respondent admits this version of the meeting to be correct. The employees' attention having been directed toward the elimina- tion of management representatives and the possibility of forming a new association to comply with the Act, several movements were instituted toward that end, none of which crystallized with the ex- ception of the one leading to formation of the Association. After the circulation of Little's letter and Norrell's statement of July 13, John B. Matlock, a representative under the Plan, telephoned J. D. Hensley, Norrell's assistant, to determine what the respondent in- tended "to do then with our Plan of joint representation" (the Plan). Hensley avoided making a definite commitment as to the respondent's policy in relation to the Plan and replied, "Well, it is your baby and you have to name it or raise it or something. We don't want to have anything more to do with it." Subsequent to this call Matlock took a leave of absence for a month to organize an independent or- ganization 6 and with the assistance of H. M. Van Buskirk, chairman ' All italics herein added. a The Trial Examiner in his Intermediate Report found that Norrell also stated that the employees "could continue along with the organization as set up under the Plan." The respondent excepts to this finding . We will resolve the doubt in favor of the respondent and accept the above version of the meeting which the respondent admits to be correct. "Matlock testified that be was prompted to organize the Association by Little' s letter, Hensley's statement on the telephone, and because he "didn't like the tactics of the C. I. 0., that I took it upon myself to go out and organize a union of our own." 190 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of the pipe-line executive committee and Vernon V. Bruce, chairman of the Plan's executive committee, prepared a "covenant" or con- stitution for the new organization to supplant the Plan. The "Covenant" closely resembled the terms of the Plan. It limited membership in the Association to employees of the respondent and, like the Plan, provided that the representatives of the new as- sociation, known as Magnolia Production' and Shop Department Employees' Association should be elected from the various districts into which the respondent's business was divided. It further pro- vided that the Association's affairs should be directed by an executive committee of seven members to be elected by the general representa- tives. Article V, relating to the executive committee and other officers, provided : The representatives and members of the Executive Committee now serving under a Plan of Joint Representation (the Plan) adopted August 18, 1933, shall succeed to their respective offices in this association for their unexpired terms or until their successors are elected and qualified. Article I provided that the employees "fully endorse the provisions of the Statement of Industrial Relations Policies published by Mag- nolia Petroleum Company July 1, 1937." This statement, popularly known as the "Red Horse Book," provided for arbitration of in- dividual grievances but made the respondent's directors the final arbiters in all matters. When the "Covenant" was completed on September 10 it was mailed by Bruce and Matlock to all representatives on the Plan's mailing list together with explanatory letters suggesting that elections for representatives under the Association "Covenant" be held. Most of the letters were written by Bruce. Bruce's letter stated : It is conceded that our Plan of Joint Representation (the Plan) is a legal agency of collective bargaining and no doubt would be so determined by the National Labor Relations Board. However, it makes no provision for the raising of money or for the payment of expenses necessary to its operation, and for that reason, as well as others, it can no longer serve us to the best advantage. Many groups of employees have given study and thought to the creation of a new plan or new structure of the old plan that would cure its defects. There is no doubt but that we all have become conscious of the benefits of collective bargaining through our own efforts independent of any outside influence or agency, MAGNOLIA PETROLEUM COMPANY 191 and we must perpetuate to ourselves those benefits through our own action. Let me again urge on you the importance of immediate action in this matter as it is my opinion that we cannot afford to leave ourselves without an agency of bargaining that will secure to us the benefits we now have with our Company and those we can hope to secure for the future. * * * * * * * Remember, the organization will have to be perfected before the first Friday in October in order that your group may elect a representative, and as soon as a sufficient number of groups adopt this Covenant, your Executive Committee will order the annual meeting of representatives. In accordance with the suggestion of Bruce and Matlock, the Plan representatives in a number of the districts called meetings at which representatives were elected to act under the Association "Covenant." 7 Many of the representatives so elected had served as representatives under the Plan. Although the Association's officers were not to be elected until the meeting of general representatives scheduled for October 22, Bruce mailed a copy of the "Covenant" to Norrell in a letter dated October 19, advising Norrell that the executive committees would meet on October 20 and 21 in Room 2, Baker Hotel, Dallas. Norrell and Hensley were present at this meeting of the Plan's executive commit- tee and, according to the minutes, undertook to "explain to the group the legal interpretations as handed down by the National Labor Re- lations Board with regard to the carrying on of collective bargain- ing." The minutes further indicate that a list of the representatives elected under the Association. "Covenant" was sent to Norrell in compliance with the request previously made by him. Significantly, a resolution was adopted by the Plan executive committee authorizing the expenditure of $350.34 of the "new" Association's funds so as to reimburse Matlock for salary lost and expenses incurred while organizing the Association. In addition to the foregoing, two principal items of business of the Plan's executive committee meeting of October 20 and 21 were (1) the preparation of the agenda for the October 22 meeting of general representatives elected under the Association "Covenant"; and (2) 7 The record is not clear how the representatives were elected in all districts , nor is it clear that elections actually were held in all districts. 9 Bruce's letter purports to indicate that the executive committee was that of the Association . As noted above, however, no officers were elected under the Association "Covenant" until October 22 and the Association 's organization was not perfected until that date. 192 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the formulation of "Rules of Procedure" to govern the conduct of the Association. Rule 2 of the "Rules of Procedure" thus adopted provided : Since this Covenant fully endorses "The provisions of the statement of Industrial Relations Policies published by the Magnolia Petroleum Company July 1, 1937," it is adopted as a rule of procedure by the Executive Committee that all local complaints, appeals, and arbitrations, shall be conducted as therein set forth. On October 22 the meeting of the general representatives elected under .the Association "Covenant" was held as scheduled. Bruce, chairman of the Plan's executive committee, officiated at this meeting and "extended to all new and old representatives a cordial welcome." He then explained the "Rules of Procedure" adopted for the Associa- tion by the Plan's executive committee in the meeting of October 20 and 21. A resolution was then adopted that members of the executive committee be elected according to geographic districts fol- lowing the. practice established under the Plan. At the afternoon session of the October 22 general meeting Norrell and Hensley, on invitation, discussed the "legal aspects of collective bargaining." After Nowell reviewed the Act at length and advised the members of the respondent's continuous aim to comply with all existing laws, the representatives elected executive committee mem- bers for the ensuing year. As previously noted, this committee, like its counterpart under the Plan, had seven members. G. S. Young, Guy A. Parrish, and J. S. Taylor, three of the seven, had served on the Plan's executive committee and John W. Jackson, formerly a management representative under the Plan, was elected chairman of the Association's executive committee. The participation of Norrell and Hensley in the Association's affairs did not cease with the organizational meetings on October 20, 21, and 22, 1937. The minutes of numerous executive committee, group, and district meetings thereafter show that either Hensley or Norrell was invited to discuss "the company's concept of collective bargaining"' and that the executive committee meeting of December 3, 1937, was held in either Hensley's or Norrell's office. In addition to discussing collective bargaining problems, Hensley, on one occa- sion, advised the members in response to a question that the law did not require the Association to have a charter. The relation between the Association and the respondent is well illustrated by an incident ° The minutes of the following meetings record Hensley 's participation : Group meet- ings held in Oklahoma City , Oklahoma, February 17, 1938 ; Shreveport, Louisiana, March 14, 1938; San Antonio, Texas , April 12, 1938 ; Abilene; Texas, April 22, 1938; joint meeting held in Dallas, Texas, September 15, 1938. MAGNOLIA PETROLEUM COMPANY 193 recorded in the executive committee minutes of May 12, 1938, as follows : On arrival of Mr. Hensley, Mr. Jackson requested him to say anything he desired on matters that had been discussed in the various joint meetings. Mr. Hensley stated that the management was satisfied with the way Association was being conducted, and that the Association, or any Employee Representative had never been criticized for his actions in behalf of the men he represents. C. Conclusions with respect to the Association After the Supreme Court of the United States sustained the valid- ity of the Act, the respondent attempted to purge the Plan of the outward manifestations of its domination while continuing the exist ence of some "independent" labor organization as representative of its employees. Thus, it ostensibly withdrew from the Plan and ceased its contribution of financial support. At the same time, how- ever, it indicated its desire that the employees be represented in the future by an organization similar to the one then in existence. This preference was cumulatively conveyed through the respondent's mimeographing and circulation of the executive committee resolution to eliminate management representation from the Plan, the insertion in the employees' pay envelopes of Little's letter stating that the "present Employees' Representation Plan or any similar organiza- tion" was legal,10 and Norrell's suggestion on July 13 that they would have to form an organization of their own. Any doubt then still remaining in Matlock's mind from these events was dispelled when Hensley told him that the Plan was "your baby and you have to name it or raise it or something." While advising all its employees, through Little's letter; that the Plan was legal, the respondent frankly admitted to the Plan's leaders, that the Plan was illegal. The employee representatives having thus, been warned by Norrell in his speech of July 13, that the respondent's participation in, and support of, the Plan was unlawful, were given the signal at that time to form an organization of their own. We do not believe that Norrell's speech can be accepted as, or was con- sidered by his audience to be, no more than an expression by the respondent of indifference to the form of labor organization to be chosen by its employees upon the abandonment of the Plan. In 10 The statement appears to give a definition of labor organization which would un- doubtedly include the Plan . In asserting that the Plan would be valid under the Act, the statement is clearly erroneous and misleading . In this respect it is interesting to note that in 1934, the Petroleum Labor Policy Board in Case No. 2 of its reports from February 6, 1934, to March 13, 1935, declared the Plan to be company fostered and ordered an election to be held among the employees to determine proper collective bar- gaining representatives. 194 DECISIONS OF NATIONAL LABOR RELATIONS BOARD view of the respondent's disregard of the Act for almost 2 years, Norrell must have known that his statement would not be considered as a mere suggestion but rather as a mandate and when several employees acting under this compulsive suggestion took steps to organize the Association, the respondent made no effort to dispel that belief ."L The moving spirits in the formation of the Association were im- portant officers under the Plan. A former management representative was elected chairman and three members of the executive committee under the Plan were reelected to the executive committee of the Asso- ciation. The organizers admittedly used the Plan mailing list to cir- cularize the Plan representatives urging them to have their respective groups under the Plan elect representatives under the "Covenant." The "Covenant" specifically provided for the continuation in office of the Plan representatives until the new representatives should be elected :and qualified: Acting under this provision, the Plan's "executive com- mittee" authorized the expenditure of funds of the "new" Association, prepared the agenda for the meeting of the general representatives and purported to deal with the respondent as the officers of a "new" Asso- ciation by submitting a list of Association "approved representatives" to Norrell, prior to the first meeting of the representatives. Since the Plan was controlled by representatives, acting in conformity with the respondent's wishes, rather than by the rank and file of the employees, the leadership offered to the Association by the Plan's officers acquires especial significance in the development of the Association. There can be no doubt that by its acts the Plan committee was pursuing the original intention of the Association's organizers that the Association should be a continuation of the Plan without the respondent's direct participation and financial support. Such intention was fully ex- pressed in Bruce's letter recounting the "thought and study" that had been given "to the creation of a new plan or new structure of the old Plan that would cure its defects." It is unlikely that the Association would have been formed with so little effort had not the identity of its proponents and the endorsement of the "Red Horse Book"12 in the "Covenant" conveyed the impression UIn Matter of Wheeling Steel Corporation and The Amalgamated Association of Iron, Steel and Tin Workers of North America, etc., 1 N. L. R. B. 699, 709, we said: The power of an employer over the economic life of an employee is felt intensely and directly . . . The employee is sensitive to each subtle expression of hostility upon the part of one whose good will is so vital to him, whose power is so un- limited, whose action is so beyond appeal. 1z It is asserted that the only possible element of control retained by the respondent over the Association in the "Covenant" was the provision endorsing the "Red Horse Book." At the oral argument, the respondent's counsel offered to post a notice informing the respondent's employees that it did not seek to retain any advantage in collective bargaining by virtue of Section 3 of the "Red Horse Book" governing individual griev- ances. . As previously noted, however, this provision was not the sole, or even the most important, means by which the Association's subservience ro the respondent was assured, but was merely an indicium of that subservience. MAGNOLIA PETROLEUM - COMPANY 195 to the employees that they were complying with the wishes of their employer in joining the Association . The susceptibility of the em- ployees in this respect was further illuminated by their submission of the "Covenant" to Norrell and Hensley prior to its adoption at the gen- eral meeting, and the numerous invitations to the respondent's officials to attend their meetings . It is apparent from this conduct that those forming the Association took for granted the respondent 's interest in it and that the wishes of the respondent played an important part in the preparation of the "Covenant" for the Association. . Since the Association , in the course of its formation , evolved directly from the Plan and bore the impress of the respondent's sponsorship and approval, it is unimportant that the formal provisions of the "Covenant" no longer insure the direct employer control that was pres- ent under the Plan. As previously noted, the respondent, after the validity of . the Act had been sustained , felt compelled to eliminate the outward indicia of its financial support and control in favor of more subtle means of interference with the rights of its employees. The compulsion placed upon the employees by a company-fostered plan that is apparently free of direct employer control has been recognized by the Supreme Court of the United States in National Labor Rela- tions Board v. Pacific Greyhound Lines, Inc.,13 where the court stated by Justice Stone : * * * continued recognition of the Drivers' Association would provide respondent "with a device by which its power may now be made effective unobtrusively, almost without fur- ther action on its part. Even though he would not have freely chosen" the Association "as an initial proposition , the employee, once having chosen, may by force of a timorous habit, be held firm to his choice. The employee must be released from these compulsions." The. respondent and intervenor assert that the Board, in view of its decision in Matter of Wisconsin Telephone Company and Tele- phone Operators Union, Local 175-A, International Brotherhood of Electrical Workers '14 should dismiss the complaint in the present case. In the Wisconsin Telephone case the Independent , the organization in question, had a constitution and bylaws in many respects similar to a predecessor employee representation plan which had been clearly dominated by the respondent. The moving spirits and the officers of the Independent had been officers under the Plan and had used the Plan mailing list to distribute proxies and application cards. However, during a period of intense organizational activity and 11303 U. S. 272. 14 12 N. L. R. B. 375. 196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD prior to an Independent mass meeting held free of the respondent's participation, the respondent affirmatively proclaimed. its neutrality in union matters by posting notices in all of its exchange offices to the effect that it was not "sponsoring the activities of any person attempt- ing to secure membership in any labor organization." Further, at the oral argument before the Board, counsel for the charging union stated that he made no contention that the respondent had engaged in unfair labor practices in connection with the formation of the Inde- pendent. Under all of the circumstances, we held that the Independ- ent had not been formed or administered in violation of the Act. In the present case the respondent admittedly never completely abandoned the Plan but merely allowed it to become "dormant." Moreover, on withdrawing from the Plan the respondent, in violation of the neutrality required of it under the Act, encouraged the Plan representatives to transform the Plan into another "inside" organi- zation and clearly indicated its desire that the employees continue to be represented by such an organization. Having set in motion a series of events culminating in the formation of the Association, the respondent, unlike the respondent in Wisconsin Telephone, partici- pated in the meetings of both the executive committee and the general representatives of the Association. Thus the employees could have been in no doubt as to the respondent's interest in that organization and of its desire that they choose the Association as their collective bargaining agency. In this connection it may be noted that the Su- preme Court of the United States has taken cognizance of the restrictive effect of a formerly company-dominated union upon the free exercise by employees of their rights under the Act in National Labor Relations Board v. Newport News Shipbuilding ci Dry Dock Company 15 where the court stated by Justice Roberts : While the men are free to adopt any form of organization and representation whether purely local or connected with a national body, their purpose so to do may be obstructed by the existence and recognition by the management of an old plan or organization the original structure or operation of which was not in,accordance with the provisions of the law. * * * As pointed out in National Labor' Relations Board v. Pennsyl- vania Greyhound Lines, 303 U. S. 261, disestablishment of a bargaining unit previously dominated by the employer may be the only effective way of wiping the slate clean and affording the employes an opportunity to start afresh in organizing for the adjustment of their relations with the employer. " 808 U. S. 241. MAGNOLIA PETROLEUM COMPANY 197 The respondent and intervenor contend that the Trial Examiner did not give proper consideration to the Association's collective bar- gaining achievements in his Intermediate Report. Although the absence of collective bargaining may in some cases be a factor in determining that an organization is subject to employer domination, the fact that the employer grants concessions to the organization does not necessarily indicate the organization's freedom from such domination. Without the grant of such concessions as ostensibly would place the Association on an equal plane of bargaining effective- ness with an outside union, the respondent's employees might be considerably more reluctant to continue to accept the Association as. a ready-made bargaining agent.'6 In fact, even better conditions than unions strive for are sometimes given to dominated organiza- tions in order to maintain the domination. In view of all the evidence we do not regard the Association's alleged record of suc- cessful collective bargaining as materially affecting the subservient relation of the Association to the respondent. In view of the respondent's advice that the employees form a new organization and the subsequent participation of its industrial rela- tions officials in the meetings of this new organization, it was inev- itable that the employees should consider the Association as the Plan: newly wrapped in the "Covenant." From the foregoing facts and circumstances it is apparent that the Association's growth was directly attributable to the respondent's illegal acts, that its influence continued in the Association and that the employees at no time were fully free to consider and determine for themselves the type of agency that would best secure to them the benefits of collective bar- gaining guaranteed by the Act. We find that the respondent has dominated and interfered with the formation and administration of the Association and has con- tributed support to it and has thereby interfered with, restrained, and coerced its employees in the exercise of the'rights guaranteed in. Section 7 of the Act. D. The alleged discriminatory discharge and trunk f crs The complaint alleged that during July 1937, the respondent dis- charged James A. Mullennax and subjected other of its employees. in its Stonewall district to discriminatory transfers because they- joined or assisted the Union, thereby discriminating in regard to. their hire and tenure of employment. The Trial Examiner concluded 16 The device of according contractual benefits to a company-dominated labor organiza- tion in order to bead off a competing organization was noted by the court in National' Lubor Relation.n Board. v. Potash and Chemical Corporation , 98 V. (2d ) 488. 494- (C. C. A. 9). 28;0:20-4.1-col. 19--14 198 DECISIONS OF NATIONAL LABOR RELATIONS BOARD in his Intermediate Report that the respondent had not discriminated against these employees and recommended that the allegations of the complaint relating to them be dismissed. The Union filed no excep- tions to these recommendations of the Trial Examiner. We have reviewed the evidence in the record and agree with the Trial Exam- iner's conclusion. We will accordingly dismiss the complaint in so far as it alleges that the respondent discriminated against. James A. Mullennax and against employees in the Stonewall district. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE We find that the activities of the respondent set forth in Section III above, occurring in connection with the operations of the respond- ent described in Section I above, have it close, intimate, and sub- stantial relation to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that the respondent has engaged in certain unfair labor practices, we shall order it to cease and desist from further engaging therein. We shall al go order the respondent to take certain affirmative action which we deem necessary to effectuate the policies of the Act. We have found that the respondent has dominated and interfered with the formation and administration of the Association in the State of Oklahoma and has contributed support thereto. Under these circumstances the Association cannot and does not offer to the em- ployees the free representation for collective bargaining guaranteed by the Act. Ordinarily we would order the respondent to withdraw recognition from the Association and to disestablish the Association as the collective bargaining representative for any of its employees. It appears, however, that in March 1938 the Board participated in an agreement between the respondent, the Association, and the Union under the terms of which the Board conducted consent elec- tions in the respondent's Cushing and Graham districts in Oklahoma. The agreement provided that the party receiving a majority of the ballots cast in each of the respective districts would be recognized by the respondent as the exclusive bargaining representative in that district. The Association won the election in the Cushing district and the Union won in the Graham district. The respondent urges that the Board, by virtue of its participation in the consent elections is estopped from proceeding on any charge that the Association has been formed or administered in violation of the Act. In support of its contention, the respondent relies upon MAGNOLIA PETROLEUM COMPANY 199 the cases of Matter of Godchaux Sugars, Inc. and Sugar Mill Work- ers Unions' and Matter of Hope Webbing Company and Textile Workers Organizing Committee of the C. I. 0.18 In those cases there were consent elections, covering the respective plants of the respond- ents. In both cases the elections covered substantially all of the employees in the respective plants involved in the proceedings. We held that, while no estoppel was involved, in the interests of effective administration of the Act, and in order to retain the respect and confidence of the participants, we should give effect to such election agreements participated in by agents of the Board. Accordingly we refrained from considering events prior to the date of the respec- tive election agreements, in determining whether the respective re- spondent's relations with the alleged company-dominated unions hjtd been improper. In the present case, the election agreement related to only 2 of the respondent's 36 business districts; namely, the Cushing and Graham districts. It is apparent that the parties could not have contemplated that an election agreement relating to only 2 districts would in any way indicate the lack of interference with, or domination of the Asso- ciation in the remaining 34 districts. In any event, we believe that the discretionary limitation that we have placed upon the exercise of our authority, should not go beyond the terms of the agreement but should be coextensive therewith. In so far as it relates to the two districts in Oklahoma, we will give effect to the election agree- ment. We will, therefore, order the respondent to withdraw recog- nition from the Association in all of.the Oklahoma districts with the exception of the Graham and Cushing districts and we shall further order the respondent to disestablish the Association as the collective bargaining representative for any of its employees in all of its Oklahoma districts with the exception of the two afore-mentioned districts. Upon the basis of the above findings of fact and upon the entire record in the case, the Board makes the following : CONCLUSIONS OF LAW 1. Oil Workers International Union, Locals Nos. 280 and 378, and Magnolia Production and Shop Department Employees' Association are labor organizations, within the meaning of Section 2 (5) of the Act. 2. By dominating and interfering with the formation and ad- ministration of Magnolia Production and Shop Department Em- ployees' Association and by contributing support to said organiza- 17 12 N . L. R. B. 565. 1814 N. L. R. B. 55. 200 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tion, the respondent has engaged in and is engaging in unfair labor practices, within the meaning of Section 8 (2) of the Act. 3. By interfering with, restraining, and coercing its employees in the exercise of the rights guaranteed in Section 7 of the Act, the respondent has engaged in and is engaging in unfair labor practices, within the meaning of Section 8 (1) of the Act. 4. The aforesaid labor practices are unfair labor practices affecting commerce within the meaning of Section 2 (6) and (7) of the Act. 5. By discharging James A. Mullennax and transferring employees in its Stonewall district the respondent has not engaged in unfair labor practices within the meaning of Section 8 (3) of the Act. a ORDER Upon the basis of the foregoing findings of fact and conclusions of law, and pursuant to Section 10 (c) of the National Labor Rela- tions Act, the National Labor Relations Board hereby orders that the respondent, Magnolia Petroleum Company , its officers, agents, successors, and assigns shall: 1. Cease and desist from : (a,) In any manner dominating or interfering with the administra- tion of Magnolia Production and Shop Department Employees' Association or with the formation or administration of any other labor organization of its employees and contributing support to Magnolia Production and Shop Department Employees' Association or to any other labor organization of its employees; (h) In any other manner interfering with, restraining, or coercing its employees in the exercise of the right to self-organization to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing and to engage in con- certed activities for the purposes of collective bargaining or other mutual aid or protection , as guaranteed in Section 7 of the Act. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Withdraw all recognition from Magnolia Production and Shop Department Employees' Association as representative of any of its employees in the State of Oklahoma, except in the Graham and Cushing districts , for the purpose of dealing with the respond ent concerning grievances, labor disputes, rates of pay, hours of employment, or other conditions of employment , and completely disestablish Magnolia Production and Shop Department Employees' Association as such representative in the State of Oklahoma, except in the Graham and Cushing districts; MAGNOLIA PETROLEUM COMPANY 201 (b) Post notices immediately in conspicuous places in its plants in the State of Oklahoma, except in the Graham and Cushing districts, and maintain such notices for a period of at least sixty (60) consecu- tive days, stating that the respondent will cease and desist in the man- ner aforesaid and that the respondent withdraws all recognition from Magnolia Production and Shop Department Employees' Association, as the representative of any of its employees in the State of Oklahoma, except in the Graham and Cushing districts, for the purpose of dealing with the respondent concerning grievances, labor disputes, wages, rates of pay, hours of employment, and other conditions of employment and that Magnolia Production and Shop Department Employees' Association is disestablished as such representative in the State of Oklahoma, except in the Graham and Cushing districts; (c) Notify the Regional Director for the Sixteenth Region, in writing, within ten (10) days from the date of this Order what steps the respondent has taken to comply therewith. IT Is FURTHER ORDERED that the complaint be dismissed in so far as it alleges that the respondent has discriminated in regard to the hire and tenure of employment of James A. Mullennax, and in so far as it alleges that the respondent discriminated in transferring its employees in the Stonewall district.