J.E. Pearce Contracting and Stevedoring Co., Inc.

In the, Matter of J. E. PEARCE CONTRACTING AND STEVEDORING COM- PANY, INC. and INTERNATIONAL LONGsIIOREMEN AND W AREHOUSE- MEN'S UNION, LOCAL 2-5 Case No. C-1313.Decided February P,9, 1940 Stevedore In.dustri-Interference, Restraint, and Coercion: charges of, dis- missed-Discrimination: employer's reliance upon a preferential-employment contract in awarding preference in employment to members of contracting union held valid despite transfer of allegiance by a substantial number of the members of the contracting union to another labor organization ; disestablishment of contracting union by International and substitution of a new local in the place of the contracting union as a disciplinary measure against employees who trans- ferred their allegiance, held not to dissipate the preferential-employment con- tract-Collective Bargaining: charges of refusal to bargain collectively, dismissed-Complaint: dismissed. Mr. L. N. D. Wells, Jr., and Mr. Alba B. Martin, for the Board. Royston cC Rayzor, by Mr. M. L. Cook , of Galveston, Tex., for the respondent. Mandell and Combs, by Mr. A. J. Mandell and Mr. Herman Wright, of Houston , Tex., for the I. L. W. U. Armstrong, Crawford, Barker and Bedford, by Mr. Owen Barker and Mr. Fine G. Bedford, of Galveston , Tex., for the I . L. A. and Local 1576. Mr. Theodore TV. Kheel,, of counsel to the Board. DECISION AND ORDER STATEMENT OF THE CASE Upon charges and amended charges duly filed by International Longshoremen and Warehousemen's Union, Local 2-5,1 affiliated with the Congress of Industrial Organizations, herein called the I. L. W. U.} the National Labor Relations Board, herein called the Board, by the Regional Director for the Sixteenth Region (Fort Worth, Texas),, on November 9, 1938, issued its complaint against J. E. Pearce Con- 'The charges were filed by Longshoremen 's Association of Galveston, Texas, Inc., the name under which the I. L. W. Ti. operated until it secured its charter from the- International Longshoremen and Warehousemen 's Union . The amended charges were. filed by the I. L. W. U. 20 N. L. It. B., No. 102. 1061 2830-11 -41-vol. 20--08 1062 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tracting and Stevedoring Company, Inc., Galveston, Texas, 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), (3), and (5) and Section 2 (6) and (7) of the National Labor Relations Act, 49 Stat. 449, herein called the Act. The complaint alleged in substance that the respondent fos- tered, dominated, and supported a labor organization of its employees known as the International Longshoremen's Association, Local-No. 1576, herein called Local 1576; refused to bargain collectively witht6 I. L. W. U. as the representative of a majority of the employees in an appropriate unit; locked out and refused to employ 295 named persons because they joined and assisted the I. L. W. U.; and by the foregoing and other acts interfered with, restrained, and coerced its employees in the exercise of rights guaranteed in Section 7 of the Act. Copies of the complaint and notice of hearing were duly served upon the respondent and the I. L. W. U. On November 18, 1938, the respondent filed a written answer to the complaint, admitting certain allegations pertaining to its business but denying that it had engaged in the alleged unfair labor practices. Pursuant to notice a hearing was held at Galveston, Texas, from November 21 to December 13, 1938, before Horace A. Ruckel, the Trial Examiner duly designated by the Board. Prior to the hearing, International Longshoremen's Association, herein called the I. L. A., and Local 1576 thereof, petitioned jointly for leave to intervene. The Trial Examiner granted their petition. The Board, the respond- ent, the I. L. W. U., Local 1576, and the I. L. A. were "represented by counsel and participated in the hearing. Full opportunity to be heard, to examine and cross-examine witnesses, and to introduce evidence bearing on the issues was afforded all parties. During the hearing, counsel for the I. L. W. U. moved to file a supplemental charge adding the names of 88 persons allegedly locked out by the respondent to the 295 persons named in the complaint, and a second supplemental charge alleging that the respondent had executed a contract with Local 1576 in September .1938 although the I. L. W. U. then represented a majority of the respondent's employees in an appropriate unit. Counsel for the Board moved to file a first and second supplemental complaint in accordance with these charges. The Trial Examiner granted all of these motions but ruled, with respect to the inclusion of the 88 additional persons allegedly locked out, that the respondent and Local 1576 should receive five (5) days' notice before evidence pertaining to these employees should be intro- duced.' Upon the conclusion of the Board's case, counsel for the 2 On December 5, 1938, 10 days after the motion to file the first supplemental charge and complaint was made, the I. L. W. U. filed with the Board a supplemental charge containing the names of four additional persons allegedly locked out by the respondent. J. E. 'PEARCE CONTRACTING AND STEVEDORING 'COMPANY, IN'C.1063 Board moved to conform the pleadings to the proof. This motion was granted. At the close of the hearing the respondent requested leave to take the deposition of Mary Katherine Pearce, president of the respondent, who was unable to attend the hearing. Counsel for the Board requested permission to take depositions in rebuttal. The Trial Examiner granted the parties until January 15, 1939, within which to take such.depositions. On January 18, 1939, upon the request;''o'f -the respondent, this time was extended to March 1, 1939. On March 1 and 2, 1939, the depositions of Mrs. Pearce and Herman Wright were taken. During the course of the hearing, the Trial Examiner made other rulings on motions and on objections to the admission of evidence. The Board has reviewed the rulings of the Trial Examiner and. finds that no prejudicial errors were com- mitted. The rulings are hereby affirmed. On July 3, 1939, the Trial Examiner filed his Intermediate Report, copies of which were duly served upon all the parties, in which he found that the respondent had engaged in unfair labor practices, within the meaning of Section-$ (1) and (3) and Section 2 (6) and (7) of the Act, and that the. respondent had not engaged in unfair labor practices within the meaning of Section 8 (5) of the Act. The Trial Examiner recommended that the respondent cease and desist from interfering with, restraining, or coercing its employees in the exercise of the rights guaranteed in Section 7 of the Act and from discouraging membership in the I. L. W. U., and, affirmatively, offer to 206 named employees immediate and full reinstatement to their former positions and opportunity to obtain employment without prejudice to their seniority and other rights and privileges as em- ployees and withdraw, all recognition from Local 1576 as a repre- sentative of its employees for the purposes of collective bargaining. Inasmuch as the Trial Examiner found that the respondent had relied upon advice of counsel in locking out and refusing to rein- state members of the I. L. W. U., he recommended that the respond- ent should not be required to pay back pay for the period between the aJieged lock-out and a' date, ten (10) days subsequent to. the receipt of. the Intermediate Report. The Trial Examiner also recomineiided that the 'complaint be dismissed with respect to 84 named persons, who he found were not employees of the respondent and in so far as it alleged that the respondent refused to bargain collectively with the I. L. W. U. Exceptions to the Intermediate Report and briefs were subsequently filed by the respondent, the I. L. A., and Local 1576. On November 7, 1939, pursuant to notice duly served upon all the parties, a hearing for the purpose of oral argument was held before the Board in Washington, D. C. The respondent and Local 1576 appeared by counsel and participated. The Board has reviewed the 1064 DECISIONS OF NATIONAL LABOR RELATIONS BOARD exceptions to the Intermediate Report and, in so far as they are inicoli- sistent with the findings, conclusions of law, and order set forth below,, finds no merit in them. Upon the entire record in the case, the Board makes the. following: FINDINGS Or FACT 1. '.]'HE BUSINESS O>`rHE RESPONDENT J. E. Pearce Contracting and Stevedoring Company, Inc., is a Texas corporation engaged in the business of unloading bananas and occasionally other fruits from boats arriving at Galveston, Texas. It has agreements with the United Fruit Company and the Southern Banana Corporation, pursuant to which it unloads all the banana boats of these two companies that dock at Galveston. The United Fruit Company imports to Galveston approximately 40,000 stems of bananas a week. The Southern Banana Corporation averages one to two boats a week, carrying from 5,000 to 30,000 stems. Both com- panies import their bananas from Mexico and Central America: The fruit which the respondent unloads for these two companies is im- mediately reloaded into nearby railroad cars and the greater part of it is then shipped to places outside of Texas. We find that the respondent is engaged in trade, traffic, transporta- tion, and commerce among the several States and between the United States and foreign countries and that the banana handlers employed by the respondent, as appears below; fire directly; engaged in, such trade, traffic, transportation, and commerce. II. THE ORGANIZATIONS INVOLVED International Longshoremen and Warehousemen's Union, Local 2-5, is a labor organization affiliated with the Congress of Industrial Or- ganizations, herein called the C. I. O. It admits to membership banana handlers employed by the respondent. International Longshoremen's Association, Local No. 1576, is a.labor organization affiliated with the American Federation of Labor. .It admits to membership banana handlers employed by the respondent. International Longshoremen's Association is a labor organization affiliated with the American Federation of Labor. III. THE ALLEGED UNFAII{ LABOR PRACTICES The respondent's employees, commonly known as banana handlers, were first represented, beginning in 1929, by International Long- shoremen's Association, Local No. 307. This union also admitted to membership longshoremen employed by other companies on tlle,docb at Galveston, Texas. In 1934 a separate local of the International Longshoremen's Association, Local 1350, restricted to banana handlers, J. E. PEARCE CONTRACTING AND STEVEDORING COMPANY, IN'c.1065 was organized. This union' remained the only representative of the respondent's employees until July 8, 1938, when its members voted, as the minutes of this meeting recount, to "go on record for affiliation with the C. I. 0." At the time this vote was taken Local 1350 was crating under a preferential employment contract with the respondent. This con- tract, which was in force from September 1, 1937, until September 30, 1938, recognized Local 1350 "as the collective bargaining agency for the employees known as banana handlers." It also provided : The company agrees to continue the practice 3 of giving pref- erence in employment to members of the union, though non-union men may be employed. This preferential employment contract, coupled with the "shape-up" system of hiring used by the respondent, enabled the members of Local 1350 to fill all available jobs before non-members could be employed. Under the "shape-up" system the respondent, through its foremen, selects, from among the men who assemble on the pier each boat-day, the number of employees necessary to unload the boat.4 The respondent notifies the men through the union with which it'•is dealing when a -boat :is to arrive. During the existence of Local 1350, the respondent would notify Tom Hencey, the presi- dent of Local 1350, on the day preceding the arrival of a boat. Hencey would in turn communicate this information to the members of Local 1350 by posting a notice in the Screwman's Rest, a saloon which he owned and operated. On the following day, he would re- port on the pier with the men and snake certain that brass checks were first given to "button men," that is, members of Local 1350, and only to non-members after the supply of "button men" was exhausted. Local 1350 did not possess sufficient members to fill all the avail- able jobs. The membership records of Local 1350 show that it had approximately 413 members on July 14, 1938, while for periods rang- ing fr6m-11/2 to 10 1/2 months .between September l,'1937, and Novem- ber 22, 1938, the respondent employed from about 1,000 to 2,000 different banana handlers.,, 8 The practice was initiated in 1934 pursuant to an oral agreement between the re- spondent and Local 1350. In September 1936 these parties negotiated a written agreement incorporating this preferential employment provision. This contract remained in effect until September 1937 when it was replaced by the contract discussed above. . The foremen make the selection by giving each employee a brass check with a number on it. This check serves also as a means of identification when the employees come for their pay. S The following are the number of different banana handlers employed by the respondent for the period stated : July 18-November 22, 1938, 1,114; January 1-July 14, 1938, 1.679; September 1, 1937-July 14, 1938, 1,93T; June 1-September 30, 1938, 1,205; April 1-June 30, 1933, 1,228; January 1-March 31, 1938, 1,058; September 1-December 31, 1937, 1,112. While similar proof of membership in Local 1350 and of banana handlers employed by the respondent' for earlier periods, particularly when the preferential employment contracts were executed, is lacking, there is no reason to believe that the number of members or different persons employed by the respondent varied substantially from the figures given above. 1066 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Approximately three-fourths of the members of Local 1350 at- tended its meeting on July 8, 1938. The decision taken at this meeting is briefly summarized in the minutes: Motion made and seconded and passed that the entire organiza= tion go on record for affiliation with the C. I. 0. Vote was taken. Result as follows : 307 for ; 5 against. The house was counted by order of the Secretary. 312 members was present. After this meeting, several members of Local 1350, notably Edward Meyer and John Musick, who were opposed to the motion adopted by Local 1350, sought the advice of officials of the South Atlantic and Gulf Coast District of the International Longshoremen's Association, herein called the District. In particular, they desired to ascertain the effect of the election to affiliate with the C. I. 0. upon Local 1350's con- tract with the respondent. M. J. Dwyer, president of the District, advised these men, "That the contracts were made with the I. L. A., and that we were going to see that the Longshoremen's organization took care of the contracts and carried them out." As a result of the decision adopted•at. the meeting.:of..Local,--13i50- on July 8, 1938, officials of the District summoned Tom Hencey to appear before its emergency policy board on July 15, 1938, to answer charges of -dual unionism.° Anticipating that Hencey and other mem- bers of Local 1350 would adhere to the course which they had adopted, officials of the District planned with Musick, Meyer, and others, as a further means of censuring Hencey and those members of Local 1350 who had voted to affiliate with the C. I. 0., to revoke the charter of Local 1350 and install a new charter in its place. The members of Local 1350 assembled again on July 14, 19381`with approximately 186 persons in attendance, and reaffirmed their deter- mination to affiliate with the C. I. 0. They also signed cards 7 at this meeting designating the I. L. W. U. as their representative for collec- tive bargaining a and elected a committee to inform the respondent that "the membership is now ready, able, and willing to perform" its. O The constitution of the District , Article XI, contains the following sections : Sac. 6 (a). That no local of the International Longshoremen 's Association in this district covered by our Charter rights will admit to membership any man. who is a member of a dual organization , whose principles and teachings are opposed to those of the I . L. A. and the American Federation of Labor ; nor can any man who is now a member of any I. L. A. local become a member of a dual organization. Sac. 6 ( b). That an Emergency Policy Board consisting of nine members be. Immediately appointed , three members of the Emergency Policy Board to be named by the International President, three members to be named by the District President, including himself, and three members to be named by the American Federation of Labor. The duties of said Emergency Policy Board shall be as follows : 1. To fight dual Unions that are attempting to disrupt and capture our Local Unions or Its individual members. All but three or four of the members present at this meeting signed these authorizations. The International Longshoremen and Warehousemen 's Union did not confer a charter upon this dissident group until July 27, 1938. Until that time they operated under the name Longshoremen's Association of Galveston, Texas., Inc. For convenience, we shall refer to this group at all times as the I. L. W. •U. a. E. PEAUCE CONO RACTI G AND STEVEDORING COMPANY, INC. 1067 contract with the respondent and that "this change in this said organ- ization :does not in any way alter or change the policy of this said organization with respect to its outstanding contracts, and the fulfill- ment of any such contracts." Concerning the summons received by Hencey to appear before the emergency policy board of the District on the following day, the members voted "that the telegram [summons] sent to Brother To Hency by dictator J. C. Ford be relegated to its proper place, to wit, the common waste basket; and that said J. C. Ford and self-appointed policy board be not dignified with the presence of any of the members at any of the caucuses, meetings, or `monkey trials' ..." When Hencey failed to appear before it on the following morning, July 15, 1938, the emergency policy board revoked the charter of Local 1350 and expelled those persons who had affiliated with the C. I.. O. from membership in the I. L. A. Over the signature of J. C. Ford, secretary of the emergency policy board, the following letter was then sent to Hencey : This will serve to notify you of the action of the Emergency Policy Board. It having been brought to our attention that you and your Local have deliberately violated Section 6-A and 6-B, Article II [XI] of the constitution of South Atlantic and Gulf Coast District of the I. L. A. Therefore, the Charter of I. L. A. Local #1350 has been re- voked by the Emergency Policy Board of the South Atlantic and Gulf Coast District of the I. L. A. Later in the day on July 15, 1938, approximately 20 former members of Local 1350 gathered in the office of M. J. Dwyer and participated in the installation of a charter for Local 1576. The next morning Dwyer had the following letter delivered to the respondent: This is to advise that the Emergency Policy Board of the South Atlantic and Gulf Coast District, International Longshore- men's Association has revoked charter no. 1350 and issued a new charter to take the place of former charter no. 1350, the new char- ter to read Banana and Green Fruit Handlers, Local no. 1576 ..,of-the I. L. A. Charter no. 1576 has been set up and will carry on the work of unloading fruit under the terms and conditions of the con- tract as now in force and as agreed to between J. E. Pearce Stevedoring and Contracting Company and the International Longshoremen's Association, Local no. 1350, expiring September 30, 1938. Edward Meyer, J. E. Musich [Musick] were elected temporary President and Secretary respectively., A copy of the above has been sent to United Fruit Co. and Southern Banana Corporation. 1068 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Thereafter on the same day, Hencey and the committee elected by the I. L. W. U. to inform the respondent that the I. L. W. U. was prepared to carry out the contract, met with Mrs. Pearce and Judge Royston, attorney for the respondent. Herman Wright, attorney, was present for the I. L. W. U. The I. L. W. U. contended at this con- ference that it was entitled to the benefits of the contract while Judge Royston, speaking for the respondent, maintained "that the contract that the Pearce Company [respondent] had was with the I. L. A., an organization affiliated with the A. F. of L., and ... that he felt that his client was obligated under the law to live up to her contract and hire preferentially men who belonged to the I. L. A." Wright ad- mitted that the I. L. W. U. did not assert at this time that it repre- sented a majority of the respondent's employees in an appropriate unit. Both the I. L. W. U. and Local 1576 campaigned for members on July 16 and 17, 1938. Toward the evening on July 17, 1938, Musick, who had been elected secretary-treasurer of Local 1576, telephoned S. G. Buckley, the respondent's superintendent, and informed him that Local 1576 "would have . . . sufficient men to work that boat the next day." The boat referred to by Musick was the Comayagna, owned .and operated by the United Fruit Company. It was the first boat that the respondent unloaded between July 14 and 18, 1938. Hencey and the members of Local 1350 had unloaded the boat that had arrived on July 14, 1938. Local 1576, as noted above, was not organized until July 15, 1938. In accordance with its contract, the respondent gave Hencey due notice of the arrival of the boat on July 14, 1938. It did not, however, notify him of the arrival of the Comayagn.a. Relying upon the advice of counsel that it was obligated to deal with Local 1576, the respondent, instead of notifying Hencey as it had done in the past, accepted Musick's statement to Buckley on the telephone that Local 1576 had sufficient men to unload the boat on, July 18, 1938. The respondent took no further steps to inform employees that a -boat was due to arrive on that day. To insure that Local 1576 would obtain preferential employment, officials of that organization printed and distributed among its mem- bers small white cards with the letters I. L. A. inscribed thereon. As the men reported for work on July 18, 1938, representatives of Local 1576 stationed themselves at the gate leading to the pier and refused to permit anyone to pass through the gate unless he possessed or ac- cepted one of these I. L. A. cards. Although representatives of the respondent were present, they made no attempt to prevent Local 1576 from restricting employment in this manner. Members of the I. L. J. E. PEARCE CONTRACTING AND STEVEDORING COMPANY, INC. 1069 W. U., estimated to number from 100 to 300 , remained standing across the street from the pier, refusing to accept I. L. A. cards to get through the gate. Approximately 40 or 50 persons , however, were persuaded to accept I. L. A. cards and gained admission to the pier. The men who passed through the gate to the pier were selected to work. Ap- proximately 287 persons were employed by the respondent on this day. Another boat arrived at Galveston, Texas, on the following day, July 19, 1938, and substantially the same procedure was followed. Those persons who had or who accepted I. L. A. cards were permitted to enter the gates to the pier and from among those persons who assembled on the pier the respondent selected employees to unload the boat. On succeeding boat-days, it was not necessary for Local 1576 to protect the right to obtain preferential employment as it had on July 18 and 19, 1938. Local 1576 and the respondent settled into the routine which.the respondent had formerly observed with Local 1350. Instead of notifying Hencey of the arrival of a boat, the respondent communicated with Musick or Meyer after July 19, 1938, and they in turn notified the members of Local 1576. At the pier the respond- ent's foremen gave preference in employment to "button men" of Local 1576 instead of, as it had done prior to July 18, 1938, to mem- bers of Local 1350. In protest, the I. L. W. U. maintained a picket line in front of the entrances to the piers on and after July 18, 1938. The following incident , alleged to constitute interference, restraint, and coercion, occurred on July 10, 1938, 2 days after the members of Local 1350 voted to affiliate with the C . I. O. J. B. Brooks, em- ployed by the Galveston Wharf Company as captain of the wharf police, addressed a group of Mexicans . which included employees of the respondent, at a local Catholic church. Despite Brooks' testi- mony to the contrary , it is clear from the record that he cautioned these employees against following Hencey into the C. I. 0., spoke disparagingly of Hencey , and suggested that it was still not too late for them to remedy their decision to affiliate with the C. I. O. We have mentioned above that Local 1350 unloaded a boat for the respondent on July 14, 1938. Some of the men who worked on that day :came to the respondent's offices on or about July 15, 1938, to receive their pay, Four witnesses , who were first members of Local 1350 and later joined the I. L. W. U., testified that Mrs. Pearce said to them, in substance, as she gave them their pay, "Well , you'd better put this down in your sock because this is the last you are going to get because I have no contract with the C. I. 0." Mrs. Pearce denied that she made this or other similar statements attributed to her. For reasons which appear below, we do not find it necessary to resolve this conflict in testimony. 1070 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On or about July 19, 1938, F. Salinas and John Webb, two foremen of the respondent, borrowed an automobile belonging to C. A. Ricketts, the respondent's head stevedore, and solicited members for Local 1576. Both Salinas and Webb were members of Local 1350 and thereafter of Local 1576. Salinas and Webb purchased 5 gallons of gasoline which was subsequently paid for by Ricketts. Webb and Ricketts testified, and their testimony was not contradicted in this respect, that Webb was a tenant of Ricketts and had, on many other occasions, borrowed his car. As a result of the respondent's failure to recognize it as a party to the contract, the I. L. W. U. instituted a suit for a temporary re- straining order, a temporary injunction, and a permanent injunction in the District Court of Galveston, Texas, on July 25, 1938, to restrain the respondent from "failing and refusing to give preferential employ- ment" to the I. L. W. U. The request for a temporary restraining order was denied and after a hearing on the suit for a temporary injunction, that was also denied. Although the laws of the State of Texas permit an appeal from a refusal to grant a temporary injunc- tion, no appeal has been taken nor has the suit for a permanent injunction been pressed. In September 1938, shortly prior to the expiration of the contract executed in September 1937, the respondent began negotiations with Local 1576, for the purpose of formulating an agreement to replace this contract. On September 12, 1938, the I. L. W. U. wrote to the respondent stating : "that we are ready at any time to negotiate a new agreement with you, for the ensuing year of 1939, as our present agree- ment expires midnight September 30, 1938." The respondent an- swered this letter on September 19, 1938, stating : We have been informed and we believe the fact to be that the International Longshoremen's Association represent a large ma- jority of our employees, -and on September 8, 1938, the Inter- national Longshoremen's Association, through its Local #1576, commenced negotiations with our Company looking to a renewal of the contract with our Company. The "renewal" was consummated in September 1938 to take effect on October 1, 1938, for 1 year from that date. This contract followed substantially the provisions of the two earlier contracts with Local 1350. Conclusions with respect to the alleged unfair labor practices The complaint alleges that the respondent locked out and-,refused,, to employ 295 named persons on or about and at all times after July 18, 1938, because they joined and assisted the I. L. W. U. In its J. E. PEARCE CONTRACTING AND STEVEDORING COMPANY, IIQC.1071 answer the respondent denied these allegations of the complaint and averred that "Such personsas were refused employment by respondent were refused employment for the . . . purpose of complying with respondent's contract." I This contract provides that the respondent will give "preference in employment" to members of Local 1350. As we have observed above, this provision, taken in conjunction with the shape-up system of hiring, obligated the respondent to allow members of Local 1350 to fill all jobs for which it was able to furnish members. We have held that the imposition and enforcement of such a provision con- stitute an unfair labor practice, within the meaning of Section 8 (1) and (3) of the Act, unless justified by the proviso clause of Section 8 (3).1° No contention is made that Local 1350 was established, maintained, or assisted by any acts defined as unfair labor practices or that it did not represent a majority within an appropriate unit when the con- tract was executed in September 1937. The respondent was, in con- sequence, entitled to give preference in employment to members of Local 1350.11 The I. L. W. U. argues nonetheless that the respondent lost this immunity by the events which occurred in July 1938. On July 8, 1938, as we have noted above, Local 1350 voted by 307 to 5 "to go on record for affiliation with the C. I. 0." While a de- cision "to go on record" in favor of affiliation might not be construed as an actual change in affiliation, we shall assume for the purposes of 'Elsewhere in its brief and exceptions and during the hearing , the respondent insisted that it had not, in fact, "refused employment " to any employee. It maintained that it was not a party to the arrangement whereby employees were denied admission it) the piers on July 18 and 19, 1938, unless they possessed or accepted I. L. A. cards and that any employee, irrespective of his union affiliation , could have secured a card from officials of Local 1576 and gained entrance to the pier . The respondent admits, however, that it had decided, upon advice of counsel, to give preference in employment to members of Local 1576 , and obviously Local 1576 could not have assumed authority to limit employment as. It did without the respondent's - consent and approval . Whether or not the respondent assisted in the precise method used to restrict employment to persons acceptable , to Local 1576, is, of course, immaterial . While it is true that Local 1576 freely * dlitrlbuted I. L. A. cards , acceptance of one of these cards was equivalent to a rejection of the I. L. W. U, and an indorsement of Local 1576. Furthermore, after July 19, 1938, Local 1576 attained a membership equal in number to that possessed by Local 1350 prior to July 14, 1938, and the respondent then gave preference in employment to members of Local 1576 and not merely to persons who accepted one of its cards. Cf. Matter of Mason Manufacturing Company and United Furniture Workers of America, Local 576, 15 N. I.. R, B. 295. 10 See Matter of M. c6 J. Tracy , Inc. and Inland Boatmen's Union, 12 N. L. R. B. 916. The proviso to Section 8 (3) of the Act is as follows : Provided, That nothing in this Act . . . shall preclude an employer from making an agreement with a labor organization ( not established , maintained , or assisted by any action defined in this Act as an unfair labor practice ) to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in Section 9 (a), in the appropriate collective bargaining unit covered- by such agreement when made. U All the parties assumed that the respondent in executing the contract of September 5; 1937 , was protected by the proviso of Section 8 (3) of the Act , and the issues herein were litigated upon that assumption. 1072 DECISIONS OF NATIONAL LABOR RELATIONS BOARD this discussion that 307 members of Local 1350 did, in fact, transfer their affiliation to the C. I. 0.1' We have then to consider the effect of this transfer in allegiance upon the preferential employment contract. Although a majority of the members of Local 1350 elected to affiliate with the C. I. 0., they made no effort to disestablish Local 1350 or to close its affiliation with the I. L. A. Local 1350 continued in existence despite this change in membership.13 Under the circum- stances, we are of the opinion that neither the motion carried at the meeting on July 8, 1938, nor any step subsequently taken by the mem- bers of this organization, was sufficient to deprive Local 1350 of its right to obtain preferential employment for its members under the axisting contract with the respondent.14 Consequently, during the life of its agreement with the respondent and so long as it remained in existence, Local 1350 was privileged to secure preferential employ- ment of its members. As we have mentioned above, the District disestablished Local 1350 on July 15, 1938, and substituted Local 1576 in its place and stead. We must now determine the consequence of this action of the Dis- trict upon the rights of the parties to this proceeding. It is clear from the record that the District disestablished Local 1350 in order to punish Hencey and those members of Local 1350 who had elected to transfer their affiliation to the C. I. 0. The District pointed out 12 International Longshoremen and Warehousemen 's Union, affiliated with the Congress of Industrial Organizations , did not confer a charter upon this dissident group until July 27, 1938. Cf. Matter of M. and M. Wood Working Company and Plywood and Veneer Workers Union, Local No. 102, Affiliated With International Woodworkers of America, 6 N. L. It. B. 372, reversed in M. and M. Wood Working Co. et al. v. N. L. R. B. (C. C. A. 9) 101 F. ( 2d) 938. Matter of Smith Wood Products, Inc. and Plywood and Veneer Workers Local No. 2691, International Woodworkers of America , 7 N. L. It. B. 950. 14 In Matter of Ansley Radio Corporation and Local 1221 United Electrical & Radio Workers of America , C. I. 0., 18 N. L. R. B. 1028 , wherein the respondent relied upon a closed- shop contract , validly executed , to justify its refusal to reinstate a majority of the employees in the appropriate unit who had transferred their affiliation to another labor organization , we said : Although the employees who withdrew from the Brotherhood were a majority of the employees in the unit and had designated another labor organization as their collective bargaining representative it cannot be said that by virtue thereof the immunity accorded the respondent by the proviso clause ceased under the Act and in consequence the respondent's refusal to reinstate was violative of the statute. If the Congress had intended to limit in this manner a relationship which it sanctioned under the Act and to impose a responsibility upon the employer for failure to recognize the limitation , certainly such limitation would have been express. There is no express limitation in the Act that the proviso is applicable only so long as the contracting Union maintains its majority. The proviso clause declares that "nothing in this Act" shall preclude an employer from "making" a closed-shop agreement with a labor organization "if such labor organization is the representative of the employees as provided in Section 9 (a), in the appropriate collective bargaining unit covered by such agreement when made." Although the proviso ' relates specifically only to the mnaking of the agreement. the necessary implication is that the employer is protected against a charge of discrimination under Section 8 (3) in carrying out the closed-shop agreement as made, at least where, as here, the agreement is for a reasonable period of time. T. E. PEAROE CONTRACTING AND STEVEDORING COMPANY , IIc''c.1073 in its letter to Hencey that "you and your Local have deliberately violated Section 6 A and 6 B, Article II [XI ] of the constitution 15 of the District" and added "Therefore, the Charter of the I. L. A., Local # 1350, had been revoked . . ." Officials of the District considered the effect that revocation of the charter might have upon the contract before they determined upon this course. They con= eluded that the contract . ran to the I. L. A. and not to Local 1350 . and 'tllat the substitution of -Local 1576 in place of Local 1350 would invest Local 1576 with all the rights and privileges under the con- tract formerly exercised -by Local 1350. Thus, Dwyer, president of the District, advised members of Local 1350 who opposed affiliation with the C. I. O. "that the contracts were made with the I. L. A." In his letter to the respondent on July 16 , 1938, Dwyer stated that the emergency policy board of the District "has revoked char- ter no. 1350 and issued a new charter to take the place of former charter no. 1350 . . '." Had they deemed it expedient , the offi- cials of the District could have retained the charter of Local 1350 and insisted, as would have been their right, that the respondent give mel lbers.; of that organization . preference in employment. We do not believe that this right has been lost by the substitution of one local for another as a disciplinary measure against persons who con- travened express prohibitions of the District's constitution. We find, in consequence , that the respondent was justified in relying upon its contract with Local 1350 in giving preference in employment to members of Local 1576 on and after July 18, 1938 , and that it has not unfairly discriminated against or locked out members of the I. L. W. U.1e The complaint also avers that the respondent fostered , dominated, and supported Local 1576 'tnd ref used to bargain with the I. L. W. U., although it represented a majority of its employees in an appropriate unit." The refusal to bargain allegedly took place on July 16,1938, at 16 See footnote 6, supra. 16See Matter of Ansley Radio Corporation and Local 1221 United Electrical & Radio Workerstof America, C. !. 0:1-718 '' N:_L.. R.. B: 1028. As . a defense to the charge in the com- plaint that it locked out and discriminated against , members of the I . L. W. U., the re- spondent contended ' that the District.Coutt's denial of a temporary injunction to compel the respondent to observe the contract in favor of the I. L. W. U. is res 9udicata of the issues involved herein and constitutes an election of remedies by the I. L. W. U. While our decision mskes it unnecessary for us to dispose of this argument, we might mention, nevertheless , that we do not consider the injunction proceeding in the District 'Court of Texas, to which the Board was not a party, a final determination that the respondent has not violated the Act. Nor was the Institution of that proceeding by the I. L. V. U. a bar to a subsequent investigation by the Board to ascertain whether the respondent has committed unfair labor practices . Cf. Matter of Mason. Manufacturing Company and United Furniture Workers of America, Local 576, 15 N. L. R. B. 295. IT The complaint alleges that the appropriate unit consists of "All those employees of the respondent employed in the handling of freight at the Galveston dock of re- spondent . . We have pointed out, see footnote 5, supra, that for periods ranging from 1% to - 104,months , the respondent employed from 1,000 to 2 ,000 different employees. See also footnote 11, supra. 1074 DECISIONS OF NATIONAL LABOR RELATIONS BOARD. the conference described above between representatives of the respond- ent and the I. L. W. U. The I. L. W. U. asserted at this conference that it should receive preferential employment under the contract with the respondent. The respondent maintained, relying upon ad- vice of counsel, that Local 1576 was the lawful successor to Local 1350 and entitled to its rights and privileges under the contract- Since we have found that the respondent was, in fact, required to observe the contract in favor of Local 1576, it follows therefrom that. the respondent has not unlawfully given aid and support to this local and that it did not on July 16, 1938, refuse to bargain with the' I. L. W. U. within the meaning of Section 8 (5) of the Act. The respondent is charged with having supported Local 1576 in two other respects. Mrs. Pearce is alleged to have told employees as. they came for their wages on or about July 15, 1938, that "you'd. better put this down in your sock because this is the last you are going to get because I have no contract with the C. I. 0." Since this. statement merely recites the consequences which flow from the re-- spondent's legal obligations as determined above, it cannot be. said to constitute support of Local 1576. Nor can the solicitation of mem- bers for Local 1576 by Webb and Salinas, foremen, on or about- July 19, 1938, be held to violate the Act under the facts of the case. Webb and Salinas were both members of Local 1350 during its exist- ence and subsequently joined Local 1576. That they used an auto- mobile belonging to the respondent's head stevedore, Ricketts, who eventually paid for the gasoline consumed, cannot be regarded as. material inasmuch as Webb was Ricketts' tenant and ' frequently borrowed his car. We have also mentioned above a speech delivered by Captain Brooks on July 10, 1938, to a group of Mexicans including employees of the respondent. Brooks was not employed by the respondent nor, so far as the record reveals, was his speech authorized directly or impliedly by the respondent or inspired by any person acting -for- the respondent. Under the circumstances, the respondent cannot-be held responsible for his statements. The complaint was amended during the hearing to allege that the respondent executed a contract with Local 1576 in September 1938, although the I. L. W. U. then represented a majority of its employees in an appropriate unit. The record 'fails to establish that the I. L. W. U. then represented a majority of the respondent's employees in an appropriate unit or that Local 1576 did not represent a majority, of the employees. We shall, therefore, dismiss this allegation of the complaint. ' Upon the basis of the foregoing findings of fact and upon the entire record in the case,'the Board makes the following: J. E. PEARGE CONTRACTING AND STEVEDORING 001NIPANY, IN'C.1075 CONCLusIONs OF LAW 1. The operations of the respondent, J. E. Pearce Contracting and Stevedoring Company, Inc., Galveston, Texas, occur in commerce, within the meaning of Section 2 (6) of the Act. 2. International Longshoremen and Warehousemen's Union, Local No. 2-5, International Longshoremen's Association, Local No. 1576, and International Longshoremen's Association are labor organizations, within the meaning of Section 2 (5) of the Act. 3. The respondent has not discriminated in regard to the hire or tenure of employment or any condition of employment of members of the I. L. W. U., and has not thereby discouraged membership in a labor organization, within the meaning of Section 8 (3) of the Act. 4. The respondent has not refused to bargain collectively with the I. L. W. U. as the representative of its employees in an appropriate unit with respect to rates of pay, hours of employment, or other con- ditions of employment, Within the meaning of Section 8 (5) of the Act. 5. The respondent has not interfered with, restrained, or coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act, within the meaning of Section 8 (1) of the Act. ORDER Upon the basis of the foregoing findings of fact and conclusions of law and pursuant to Section 10 (c) of the National Labor Relations Act, the National Labor Relations Board hereby orders that the com- plaint against the respondent, J. E. Pearce Contracting and Stevedor- ing Company, Inc., Galveston, Texas, be, and the same hereby is, dismissed. MR. EDWIN S. SMITH, concurring in part, and dissenting in part : I cannot agree that the respondent justifiably relied upon its con- tract with Local 1350 in granting preference in employment to members of Local 1576. The respondent was aware that a substantial number of its employees had withdrawn their membership from, Local 1350 in favor of the I. L. W. U. It also knew that the District had completely disestablished Local 1350 and had chartered Local 1576 as a separate and distinct affiliate. The majority finds that thisi new local was substituted for Local 1350 as a disciplinary measure against Hencey and other members who abandoned the I. L. A. and- concludes therefrom that Local 1576 -was - the successor to, and-in- herited the contractual' rights previously vested in, Local ' 1350.. Upon the facts, this finding is no more warranted than the cbnclusion that the benefits of the contract inured to the dissident members of 1076 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Local 1350 who joined the I. L. W. U.111 Local 1576 assumed, in its drive for members, that it was a new and separate entity. Member- ship therein was not automatically granted to loyal members of Local 1350. They were required to join as they would any organization. The respondent, unlike the majority, has not argued that Local 1576, as such, fell heir to the contractual rights of Local 1350. Its defense is predicated on the theory that the contract ran to the I. L. A. and not to the local and that any designated affiliate of the I. L. A. was privileged to assert the rights awarded by the contract. This interpretation contradicts the express wording of the contract. It recites : It is agreed by we, the J. E. Pearce Contracting and Stevedoring Company; Inc., hereinafter designated as company, that Local Union 1360 of the International Longshoremen's Association, hereinafter designated as Union .. , (italics mine.) In its answer the respondent asserted that "all labor employed on the waterfront in the city of Galveston, Texas, is affiliated with- the A. F. of L.," and that "the A. F. of L. members employed on said dock and wharves would not permit members of the C. I. 0. to per- form work or labor on said docks and wharves, and unless respondent uses I. L. A. and/or A. F. of L. labor to conduct its business, it cannot conduct the same." This defense explains the respondent's reluctance to deal with the I. L. W. U., for the record discloses beyond dispute that the respondent was determined to treat only with an affiliate of the I. L. A. Without questioning which of the two competing unions repre- sented a majority of its employees, the respondent accepted Musick's statement on July 17, 1938, 2 days after Local 1576 began to organize, that it had sufficient members to unload the boat due the following day. With Local 1350 disrupted by the desertion of many of its members and disestablished by its.parent body, the respondent should have, in my opinion, refused-to,treat with either the I. L. W. U..or Local 1576 as.exclusive bargaining. agent until one.-or the other,estab- lished that it represented a majority of the employees in an appropri- ate unit. Certainly, under the circumstances herein presented, the respondent cannot find license in the proviso clause of Section 8 (3) to extend the preference in employment provision to either of the two unions. '$ Cf. my dissent in Matter of Ansley Radio Corporation and Local 1221, United Electrical & Radio Workers of America, 0. 1. 0., et al., 18 N. L. R. B. 1028.