McAlbert Oil Co., Inc.

In the Matter of MCALBERT OIL COMPANY , INC., AND D. B. MCDANIEL, DRILLING CONTRACTOR 1 and OIL WORKERS INTERNATIONAL UNION, LOCAL 227 Cases Nos. C-1087 and R-1039.-Decided March 20, 1940 Crude Oil Production Industry-Jurisdiction: sustained • respondents' entire oil production sold to pipe-line company which pumps oil 60 miles within State to storage tanks of refining company, owner of pipe-line company ; refining company purchases respondents' oil, comingles it with oil of other producers, and stores it within State; most of oil thus stored ultimately shipped to re- finery outside State-Interfei ence, Restraint, and Coercion: interrogation of employees by supervisors concerning union activities ; anti-union statements by supervisors; threlits to shut down operations and discharge employees if they joined Union ; attempts to deal with employees directly so as to avoid Union- Di,scrnaination: charges of, sustained; discharge of union leader-Reinstate- inent Ordered: employee found to have been discriminatorily discharged-Back Pay: awarded-Investigation of Representatives: controversy concerning repre- sentation of employees : refusal of employer to recognize Union ; controversy as to appropriate unit-Unit Appropriate for Collective Bargai'n'ing: produc- tion and maintenance employees, excluding drilling, supervisory, and executive employees ; employer's request for inclusion of drillers and employees of an- other employer rejected-Election Ordered: time for and eligibility date to be fixed after effects of unfair labor practices dissipated. Mr. Harry C. Duncan, Jr., and Mr. Charles M. Brooks, for the Board. Fouts, Amerman di Moore, by Mr. Joseph W. Moore, of Houston, Tex., for the respondents. Mandell di Combs, by Mr. Arthur J. Mandell, of Houston, Tex., for the Union. Mr. Wallace Cooper, of counsel to the Board. DECISION ORDER AND DIRECTION OF ELECTION STATEMENT OF THE CASE On March 31, 1938, Oil Workers International Union, Local 227, herein called the Union, filed charges, on July 5, 1938, amended 'This respondent was incorrectly named in the second amended charges and also in the complaint as D B. McDaniel Drilling Corporation. At the hearing, the complaint was amended , on motion of the Board's counsel , so as to correct this error 21 N. L. R. B., No. 89. 863 864 DECISIONS OF NATIONAL LABOR RELATIONS BOARD charges, and on August 12, 1938, second amended charges, with the Regional Director for the Sixteenth Region (Fort Worth, Texas), the second amended charges alleging that Mc Albert Oil Company,, Inc., and D. B. McDaniel, Drilling Contractor,' Barbers Hill," Texas, herein called the respondents, had engaged in and were engaging in unfair labor practices affecting commerce within the meaning of Section 8 (1) and (3) of the National Labor Relations Act, 49 Stat. 449, herein called the Act. On May 21, 1938, tha Union filed with the Regional Director a petition, and on July 5, 1938, an amended petition, alleging that a question affecting commerce had arisen concerning the representation of employees of the respondents and requesting all investigation and certification of representatives pursuant to Section 9 (c) of the Act. On July 30, 1938, the National Labor Relations Board, herein called the Board, acting pursuant to Section 9 (c) of the Act and Article III, Section 3, of National Labor Relations Board Rules and Regulations-Series 1, as amended, ordered the Regional Director to conduct an investigation and to provide for an appropriate hearing upon due notice, and, acting pursuant to Article II, Section 37 (b), and Article III, Section 10 (c) (2), of said Rules and Regulations, further ordered that the representation proceeding and the proceed- ings with respect to the alleged unfair labor practices be consolidated for the purpose of hearing and that one record of the hearing be made. On September 13, 1938, the Board, by the Regional Director, issued its complaint alleging that the respondents had engaged in and were engaging in unfair labor practices affecting commerce, within the meaning of Section 8 (1) and (3) and Section 2 (6) and (7) of the Act. Copies of the complaint and an accompanying notice of hearing were duly served upon the respondents and upon the Union. The complaint alleged in substance with respect to the unfair labor practices that the respondents had (1) since about February 18, 1938, by and through their officers and agents, made various anti-union statements and threatened employees with discrimination and loss of employment if they insisted on dealing with the-respondents through a union; (2) discharged J. H. Spear, about April 1, 1938, and at all times since refused to reinstate him for the reason that he had joined and assisted the Union; and (3) by the foregoing and other acts interfered with, restrained, and coerced their employees in the exercise of the rights 1 This respondent was incorrectly named in the second amended charges and also in the complaint as D. B McDaniel Drilling Corporation At the hearing, the complaint was amended, on motion of the Board's counsel, so as to correct this error 2 The second amended charges alleged that the respondents' operations involved herein were conducted at Mt. Belvieu, Harris County, Texas. The complaint contained no alle- gation in that regard. At the hearing, the proof showed that these operations were con- ducted at Barbers Hill , Chambers County, Texas. On a general motion ` made by' the Board's counsel, the complaint was amended so as to conform to the proof MCALBERT OIL COMPANY, INC. 865 guaranteed in Section 7 of the Act. On September 19, 1938, the respondents filed an answer containing a general denial of the material allegations of the complaint, together with affirmative allegations (1) that J. H. Spear had been discharged for cause and (2) that the Board lacked jurisdiction to proceed in the matter. Pursuant to notice, a hearing was held at Houston, Texas, on Sep- tember 22, 23, 24, 26, and 27, 1938, before William P. Webb, the Trial Examiner duly designated by the Board. The Board, the respondents, and the Union were represented by counsel and participated in the hearing. Full opportunity to be heard, to examine and cross-examine witnesses, and to produce evidence bearing on the issues was afforded all parties. During the course of the hearing, the complaint was amended, on motion of the Board's counsel, so as to conform to the proof and more particularly to allege the sale of crude oil by the respondents to Sun Pipe Line Company instead of to Sun Oil Com- pany, as was previously alleged. During the course of the hearing, the Trial Examiner made several rulings on motions and on objections to, the,admission of evidence. In addition, the. Trial Examiner reserved decision on other motions made by the respondents to dismiss the com- plaint (1) on jurisdictional grounds and (2) because of a variance between the allegations of the complaint and the proof with respect to the "purchaser of the crude oil produced by the respondents. These motions were denied by the Trial Examiner in his Intermediate Report. The Board has reviewed all rulings made during the course of the hear- ing and in the Intermediate Report on motions and on objections to the admission of evidence and finds that no prejudicial errors were com- mitted. These rulings are hereby affirmed. The Trial Examiner also reserved decision upon a motion made by the respondents at the com- mencement of the hearing for particulars with respect to the general allegations of paragraphs 8, 9, and 10 of the complaint. This motion is hereby denied. On December 8, 1938, the Trial Examiner filed an Intermediate Report in which he found that the respondents had engaged in unfair labor practices within the meaning of Section 8 (1) and (3) of the Act, and recommended that the respondents be ordered to cease and desist therefrom and to reinstate J. H. Spear with back pay. Copies of the Intermediate Report were duly served upon the respondents and the Union. Thereafter the respondents filed exceptions to the Inter- mediate Report. and a brief in support of such exceptions. On November 14, 1939, the Board ordered the record herein reopened for the purpose of taking further evidence with respect to the business of the respondents. Pursuant to notice, a hearing was held at Beau- mont. Texas, on January 15. 1940. before Albert L. Lohm, the Trial Exanminem dui\- designated by the Board. The Board and the respond- 866 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ents were represented by counsel and participated,in the hearing.. Full opportunity to be heard, to examine and cross-examine witnesses, and to produce evidence bearing on the business of the respondents was afforded all parties. At the commencement of the hearing, the respondents filed objections to the Board's order reopening the record and moved to dismiss the proceeding. These objections are hereby overruled and the motion to dismiss is denied. During the course of the hearing, the Trial Examiner made several rulings on other motions and on objections to the admission of evidence. These rulings are hereby affirmed. Pursuant to notice, a hearing for the purpose of oral argument was held before the Board at Washington, D. C., on, February 12, 1940, in which the Union participated. The respondents failed-to appear and participate therein. The Board has considered the exceptions to the Intermediate Report and, except in so far as they are consistent with the findings, con- clusions, and order set forth below, finds them to be without merit. Upon the entire record in the case, the Board makes the following: FINDINGS OF FACT 1. THE BUSINESS OF THE RESPONDENTS McAlbert 3 Oil Company, Inc., herein called McAlbert, is a corpora- tion organized and doing business under the laws of the State of Texas. D. B. McDaniel, Drilling Contractor, herein called McDaniel, is the name under which the respondent D. B. McDaniel conducts an unin- corporated business described below. The respondents are jointly engaged in the production of crude oil from leased lands located near Barbers Hill, Chambers County, Texas. These lands, aggregating approximately 30 acres, are operated by the respondents under the provisions of three leases,4 two of which are held by McAlbert and one by McDaniel. Five wells have been drilled on the McAlbert leases and four on the McDaniel lease, seven of which were producing crude oil at the time of the first hearing herein. The respondents operate these leases jointly with a single crew of employees whose wages and salaries are apportioned between the respondents. S,wn Pipe Line Company All crude oil produced by the respondents from the Barbers Hill leases is pumped into stock tanks situated on the leases and sold 3 "McAlbert" is a combination of portions of the names of D. B . McDaniel and Albert Plummer , the incorporators McDaniel and Plummer own substantially all of the capital stock of the corporation , McDaniel owning approximately 58 percent theteof McDaniel has been president of McAlbert since its incorporation in 1929 1 These leases terminate upon cessation of production McALBERT OIL COMPANY, INC. 867 daily to Sun Pipe Line Company, herein called Sun Pipe Line 6 Since 1930, Sun Pipe Line has purchased substantially all crude oil produced by the respondents from said leases.6 Sun Pipe Line also purchases substantially all of the entire crude oil production of the Barbers Hill area, which it considers to be its "choice bank." 7 The crude oil produced by the respondents and other producers in this area is classified as "grade B" by Sun Oil Company, herein called Sun Oil, and is suitable for the refining of gasoline at Sun Oil's Marcus Hook, Pennsylvania, refinery, referred to below. The respondents' crude oil is turned daily from their stock tanks into the pipe line of Sun Pipe Line and there comingled with the crude oil of other producers in the Barbers Hill area. This mass of crude oil then flows through the main pipe line of Sun Pipe Line, for approximately 60 miles entirely within the State of Texas until it reaches the terminus of the line at Sun Station,8 , Texas. Swn Oil Company At Sun Station all crude oil gathered by Sun Pipe Line through its pipe-line facilities is sold and delivered to Sun Oil at the price paid for it by Sun Pipe Line plus a transportation charge .9 Sun Oil has 52 storage tanks at Sun Station ranging in capacity from 55,000 to 177,000 barrels. During the period from January 1, 1936, to August 31, 1939, inclusive, all crude oil purchased from the respondents was pumped into "one or another" of these 52 tanks along with the grade B crude oil purchased from other producers. These tanks have an aggregate storage capacity in excess of 4 million barrels, and Sun Oil receives and stores in certain of them several grades of crude oil other than grade B crude. Grade B flows more regularly than any other grade of crude oil in and out of Sun Station-" Sun Oil is engaged in purchasing and refining crude oil and in the sale and distribution of refined oil products in various States of the United States. It operates three refineries located in Oklahoma, Ohio, and Pennsylvania. The refinery located at Marcus Hook, 8 Sun Pipe Line is a wholly owned subsidiary of Sun Oil Company 9 From January to August 1938 , Inclusive, these purchases amounted to 126,351 53 bar- rels of crude oil at an aggregate price of $139,495 45 . Sun Pipe Line purchases this crude oil on a "gravity basis" at a price posted by it each day 7The respondents ' crude oil is of a similar "gravity" to that produced in the entue Barbers Hill area 8 Situated on the Neches River approximately 7 miles south of Beaumont, Texas .Since July 1, 1939 , the respondents ' crude oil has been purchased directly by Sun Oil io Although the flow of grade B crude into these tanks has since January 1, 1936 , ranged from approximately 3,268 ,000 to 5,707 ,000 barrels annually, these « eie in storage only 698,434 barrels on January 1, 1936, 324,741 barrels on January 1, 1937, 520,235 batiels on January 1, 1938, and 431,262 barrels on January 1, 1939 At no time since January 1, 1936, has the amount of grade B crude in storage been in excess of 1.150 ,000 barie]s 868 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Pennsylvania, which refines gasoline and lubricating oil, receives approximately 75 per cent of its crude oil from Sun Station or be- tween 80 and 90 per cent of all crude oil gathered at Sun Station. The practice of Sun Oil is to ship grade B crude via its own tankers from Sun Station to Marcus Hook "dependent on the circumstances and the best convenience and transactions of the Sun Oil Com- pany." 11 The remaining 10 to 20 per cent of crude oil gathered at Sun Station is sold to other oil companies and delivered to them within the State of Texas. The flow of grade B crude oil into and from Sun Station from January 1, 1936, to August 31, 1939. inclusive, was as follows : 1936-Received at Sun Station------------------------- 3,268, 454 barrels Shipped to Marcus Hook ------------------------- 3,640,475 Sold to others ----------------------------------- None 1937-Received at Sun Station--------------- ------- 4,562,787 Shipped to Marcus Hook ------------------------- 3,575,758 Sold to Humble Oil & Refining Company --------- 786,762 1938--Received at Sun Station ------------------------- 5,707,841 Shipped to Marcus Hook------------------------- 5,482,041 Sold to Humble Oil & Refining Company --------- 75, 095 i 13 Sold to The Pure Oil Company 243, 275 1939- ( first 8 months.) Received at Sun Station------------------------- 4,251,175 Shipped- to Marcus Hook ------------------------- 3,880,157 Sold to others ------------- ----------------------------------- None Although the record contains no evidence that the respondents have knowledge of the ultimate destination of the crude oil produced by them, D. B. McDaniel testified that he had been informed by Sun Pipe Line that this oil is sold to Sun Oil,' which stores it on the Texas coast and ultimately pumps it into tankers and barges for shipment. On the basis of the foregoing facts, we find that there is a con- tinuous flow of grade B crude oil from the respondents' oil wells situated near Barbers Hill, Chambers County, Texas, to points out- side the State of Texas.15 "Testimony of Donelson Caffery, assistant to the general manager of the Beaumont Division of Sun Oil 12 This oil was sold f. o. b steamship Donelson Caffery testified that crude oil pur- chased by Rumble Oil & Refining Company from Sun Oil goes "beyond the Neches River" and "out into the Gulf" 11 See footnote 12 above. "This oil was deliver ed by pipe line from Sun Station to The Pure Oil Company' s refin- ery tanks at Smith' s Bluff, Texas, which adjoins Sun Station In Matter of The Pure Oil Company and Oil Workers' International Union, Local 228, 6 N. L R B 818. we found,on the basis of a stipulation entered into between the Board and The Pure Oil Company that "Approximately 95 percent of the products of the Smith' s Bluff refinery are transported for sale to points outside the State of Texas " 15 See National Labor Relations Board v Fainblatt , 306 U. S 601; Consolidated Edison Co v National Labor Relations Board, 305 U S 197 ; Santa Cruz Fruit Packing Co. v. National Labor Relations Board, 303 U S 453 : National Labor Relations Board v . (irowe Coal Co , 104 F (2d) 633. cert den 308 U S. 584; Clover Fork Coal Co. v National McALBERT OIL COMPANY, INC. H. THE LABOR ORGANIZATION INVOLVED 869 Oil Workers International Union, Local 227, affiliated with the Committee for Industrial Organization' 16 is a labor organization admitting to membership "any person employed in the Petroleum Industry." III. THE 1 ' N FAIR LABOR PRACTICES A. Interference, restraint, and coercion Union activities among the respondents' production and mainte- nance employees commenced in February 1938.17 J. H. Spear, an e_ectrician employed by the respondents, became a member of the Union on about February 7, and between that date and February 18 talked with several of his fellow employees concerning the Union. As a result of his efforts, Euclide East, Louis C. McClung, and Emmett Flowers were induced to go with him on the latter date to talk with James B. Thornbury, an officer of the Union, at Huffman, Texas, about 20 miles from Barbers Hill, concerning affiliation with the Union. These employees joined the Union on that occasion and during the latter part of February they, together with Spear, sought to interest several other employees in becoming members. J. A. Samuels and Ernest Laughlin declined to join at that time, but Frank Bergeron joined about March 3, 1938. On about March 1, 1938, the union employees formed a union grievance committee composed of Spear, East, and Flowers, and designated Spear as chairman. Late in February, Samuels had a conversation concerning the aforesaid union activities of his fellow employees with George Hurst, the respondents' production superintendent, in which Samuels told Hurst that he "had a family to take care of" and did not want to lose his job. Hurst replied that he thought that Samuels'' attitude was "right." Subsequently, Samuels and Laughlin had other conversa- tions in this same regard with Hurst. On about March 15, 1938, East had a conversation with Hurst concerning the employees' union ac- tivities. The following is East's uncontradicted testimony in that regard : I walked to the home of Mr. George Hurst, and we sat down there and we talked. So he asked me, and he said : " East, I Labor Relations Board, 97 F . ( 2d) 331; Mooresville Cotton Mills v National Labor Rela- tions Board, 94 F . (2d) 61 ; Matter of Botany Worsted Mills and Textile Workers Organ- izing Committee, 4 N. L. R. B. 292 , remanded to Board on other grounds . 106 F. ( 2d) 263; Matter of David Strain Company, Inc and International Lathes' Garment Workers Union, 8 N. L. R B 310 ; Matter of Sunshine Mining Company and Inter national Union of Mine. Mall and Smelter Workers, 7 N. L R B. 1252 10 Now Congress of Industrial Organizations 17 The number of such employees duting February 1938 does not appear in the record, but there were eight such employees , exclusive of supervisors, on March 31, 1938, and nine on September 21, 1938 2 8 3 0 3 2--41-v o f 21--50 870 DECISIONS OF NATIONAL LABOR RELATIONS BOARD understand that all of you joined the union." And I says: '-George; not necessarily." "Well," he says, "Don't you know tJje company can shut down for ninety days and then when they get ready to go back to work they could rehire a new bunch?" On. about March 17, 1938, Spear and Hurst had a conversation in which Hurst inquired as to the number of employees who had joined the Union. When Spear replied that he and the roustabout crew 18 belonged, Hurst said that O. C. Russell, the respondents' general superintendent, was "very sore" because the employees had not in- formed him of their intentions before joining. During the course of this conversation, Hurst stated that he had joined a union in Louisiana in 1917 and that it cost him his job, his money, and his friends. He replied to Spear's remark that "maybe, this is not the same union then that you joined back in Louisiana," saying, "yes, it is the same thing, and I don't believe there is anything to a union," and that Spear had better be careful about agitating the employees as they had worked, for the respondents from 2 to 8 years and had always been satisfied. During the course of this conversation, Spear informed Hurst that he had been appointed chairman of a union committee. A few days later, Hurst told Spear that his services would be terminated at the end of the month. On March 23, 1938, Russell and Hurst found Spear, East, Bergeron, Flowers, and McClung working together and engaged them in a conversation concerning their union activities. East testified 10 that during this conversation Russell told the employees that Hurst had informed him that they had joined the Union, that they could have had "those benefits without joining the union" if they had come to him instead of going to the Union, and that he would not talk with the union representatives concerning hours of employment as. such representatives did not work for the respondents and he did not know whether they were citizens of the United States, "or own property, or help build communities." Russell also expressly stated to the employees, according to East, that the respondents would send them to the "company doctor" and they could not "come back" if they joined the Union, and, concerning the individual employees, that "There is Mr. Spear, he has got a bad eye"; "There is a man that can't come back," referring to East; "Ain't you got bad eyes, Frank (Bergeron) ?"; and "Flowers, ain't you ruptured?" Russell also in- formed Flowers, who lived on the respondents' property, that he, would be forced to cut . . . (Flower's) lights and water and gas"' and charge him "ground rent" on his house.20 11 Production and maintenance employees 1° East's testimony was substantially corroborated by the testimony of McClung, Ber- geron, Flowers, and Spear 20 See Matter of Good Coal Company and United Mine Workers of America, District 19, 12 N L R B 136 McALBERT OIL COMPANY, INC. 871 Russell testified concerning this conversation that he informed the employees that they could have a 6-hour day if that was what they wanted, but that it would be necessary for them to take a wage cut since production was falling. He also testified that he said, "Don't this (sic) whereby we will have to get rid of some of you boys, for two reasons : First, we don't want to get rid of you and, second, the insurance company examination'is much stricter than it has been . . ." and "Mr. Spear, you have one eye, and Lam pretty sure if you lose this job here that you will not be able to stand an examination for any of.the other companies." Hurst did not testify concerning this conversation. The Trial Examiner, although not, expressly resolving the above conflict in testimony,- found the conversation= as testified by East and the other employees. We find that it occurred substantially as testified by East. On March 31, 1938, the respondents discharged Spear, effective that day. Russell also on March 31 had another conversation with the same group of employees referred to above. Flowers' testimony concerning this conversation, substantially corroborated by East, McClung; Bergeron, and Spear, is as follows: Well, lie (Russell) said . . . "Boys, have I ever threatened to fire any of you all for joining the union?" J. H. Spear replied that he hadn't threatened to fire us for joining the union, but that he would"send-us'to a company doctor and we wouldn't come back and Russell said, "Whoever is telling this is telling a lie." He said, "Here is two men that have been working for me for a long time." That is East and Bergeron. He said, "We aren't going to fire them, it don't make any dif- ference what they do." He said, "They can set a tank afire or a well afire. We are going to take care of these two men." Russell admitted having had the aforesaid conversation and did not dispute Flowers' testimony. The day -following Spear's discharge, Russell and Hurst had another conversation with Flowers, East, Bergeron, and McClung. Flowers testified, without contradiction, that Russell informed the employees during this conversation that they could work shorter hours if they so desired, `but that McDaniel and his lawyer were '`awful hat" and wanted him to "force" them on a 36-hour week; that, they were all "fine boys" and he hated to see them misled, but. that someone had made them lie; and that he had been mad at Spear the previous day, but was no longer mad at anyone and they could join "a hundred unions" if they so desired. Russell also informed the employees that he was going to give them what they were "ask- ing for but the C. I. O. didn't have a thing to do with it," and that 872 DECISIONS OF NATIONAL LABOR RELATIONS BOARD they were in the same union that, "cost him a thousand dollars and an automobile and came damn near starving" him. - On the basis of the foregoing facts and the entire record, we find that during February, March, and April, 1938, the respondents, by interrogating their employees regarding their union activities and those of other employees, by remarks made to their employees derog- atory to labor organizations and particularly the Union, by their plain-spoken attempts to discourage their employees from resorting to the processes of collective bargaining through a representative of their own choosing, by attempting to deal with their employees di- rectly so as to avoid dealing with the Union,21 and by express and clearly - implied threats to discharge • their employees provided they continued their union activities, have interfered with, restrained, and coerced their employees in, the exercise of the rights guaranteed in Section 7 of the Act. B. The discharge, of J. H. Spear J. H. Spear was initially employed by the respondents on Sep- tember 16, 1937, and worked continuously on production, mainte- nance, and electrical work until he was discharged on March 31, 1938. On the latter date, the respondents had eight production and maintenance employees, exclusive of supervisors, all of whom had more seniority than Spear. During the period of his employment, Spear was engaged approximately one-half of his time as an elec- trician, maintaining electric pumping units and repairing power lines, electric motors, switches, controls, and the like, for which he was solely responsible. The remainder of his time was spent as a roustabout, cutting grass, trucking materials to the wells, painting, cleaning ditches, and building and repairing roads. He was paid $5.50 per 8-hour day, 6 days per week. As noted above, Spear was notified of his discharge by Hurst 2 days after his conversation with Hurst about March 17, 1938, con- cerning the union activities of the respondents' employees. When Spear inquired concerning the reason for the discharge, Hurst re- plied, "I don't know. You will have to talk with Mr. Russell about that." On March 31, Hurst confirmed to Spear the fact that he was to be discharged that day and when Spear asked if it was because of his union activities, Hurst replied, "I don't know, I guess it is." During this same conversation, Hurst made an offer to Spear, pur- suant to Russell's direction, of a few days' employment on the drill- ing rig which was then operating on the respondents' leases.22 Spear 21 See Matter of Williams Coal Company and United Mine lVo,kems of America, Dtistrwt No. 23, 11 N L. R B. 579. 22 These drilling operations ceased on April 16, 1938, and had not been resumed at the time of the first hearing herein McALBERT OIL- COMPANY, INC. 873 refused this offer on -the grounds (1) that he was improperly being laid off the job for which he had been hired, and (2) that he did not care to risk working on the drilling rig since prior to his em- ployment by the respondents one of his eyes had been injured while working as a driller's helper.23 Spear subsequently was recalled as an extra employee on May 2 and 6, and June 7 and 24, 1938.24 The respondents urge that the discharge of Spear was not dis- criminatory but was merely a lay-off as a consequence (1) of a drop in production and earnings, and (2) of, an insufficient amount of electrical work to justify his retention. Hurst and Russell also testified that about February 25, 1938,25 before Russell departed on an 18-day trip to Hot Springs, Arkansas, Russell informed Hurst that it would be necessary in the interest of economy to lay Spear off. In corroboration, Paul H. Bowdoin, an employee, testified that he was present and heard this conversation and that Hurst re- quested that Spear be retained during the operation of the drilling rig for use in hauling supplies to the rig, but that Russell' replied, "Well, we will see about it." On the basis of this testimony, the respondents contend that the decision to discharge Spear was made before the respondents had knowledge of the union activity of which Spear was the leader. The testimony, however, conflicts with Hurst's statements to Spear about March 17 and 31, that he did not know why Spear was being discharged but guessed that it was be- cause of his union activity. In any event, if the decision to lay off or discharge Spear in fact was made about February 25, we find that it was made with knowledge of Spear's union activities. As already noted, Hurst previously had had several conversations with Samuels concerning the union activities of the respondents' em- ployees. We are convinced that the decision to discharge Spear was reached only after the respondents became aware of his leadership in the union activity then in progress. Russell further testified (1) that since production had fallen, Spear's salary had become an excessive charge to the operation of the electric pumps, (2) that the respondents already had more employees on the leases than they needed, but kept them on the pay roll pur- suant to their policy of "taking care" of their older employees, and (3) that in view of these facts and also the fact that Spear had less seniority than the other employees he considered it advisable to lay The respondents are not relieved of the consequences of their discrimination against Spear, as found below , by his refusal to accept a discriminatory change in his status of employment . See Matter of Continental Oil Company and Oral Workers International Union, 12 N. L R. B. 789. 24 The only other work done by Spear up until the date of the first hearing was the wiring of four houses for electricity , for which work he derived a profit of from $10 to $12 on each job. He desires reinstatement to his former position with the respondents 25 This was one week after Spear had induced three fellow employees to join the Union 874 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Spear off. At the outset, we note that on neither occasion when Spear 'inquired as to the reason for his 'discharge did Hurst. mention any shortage of work. It appears, moreover, that during the latter part of February 1938, it actually became necessary to increase the num- ber of production and maintenance employees by calling in several drilling employees to assist for a few days.26 In addition, the num- ber of the respndents' production and maintenance employees was in- ,creased between March 31 and September 21, 1938, by the addition of Aaron Avant and P. H. Rippenhagen. Both these men, old and trusted employees with more seniority than Spear, were transferred to production upon the cessation of drilling operations on April 16, 1938. Although they probably would have been added to the pro- duction-employee force under normal circumstances, it is significant that, despite the alleged lack of ^ work, the respondents did not see fit to discharge anyone to make a place for them.27 It further appears that the respondents employed W. W. Davis as a roustabout from April 1f; to May 15, 1938, to do the same type of work previously done by Spear, except electrical work. Davis' only previous employment by the respondents had been on the drilling rig from March 16 to April 16, 1938. Garrett Logan, who had previously been employed by the respondents during 1935 and 1938 on the drilling rig and very occasionally as a production employee, was employed regularly in production from June 16 to September 15, 1938.28 We find that Spear was not discharged because of any lack of work to be performed or because business conditions made his continued employment inexpedient. After April 1, 1938, the respondents contracted out the electrical work previously done by Spear at a cost of $50 a month, or consider- ably less than Spear's monthly wages.29 Since Spear was in effect supplanted as a production employee first by Davis and then by Logan, however, it seems clear that as a result of Spear's discharge the respondents must have increased, rather than decreased, their total op- "It is true that the respondents' crude oil production declined from 18,990 barrels in January 1938 to 15,807 barrels in February 1938 . There was a temporary increase in production in March 1938 to 16 ,769 barrels , but the decline was resumed in April 1938 and continued until production stood at 14 ,782 barrels in August 1938 Over this period, the net value of the ail produced by the respondents declined from $20 ,246 in January to $16,31699 in August This decline in pioduction was caused , in part at least, by the cessation of production from two of the nine wells on the respondents ' leases. As appears from the record in this case , a decline in the output of the respondents ' wells does not necessarily decrease the amount of production work which must he performed 2' McClung and Samuels had very little mole seniority than Spear They could seaieely be classed as old employees who ni ould be kept in the absence of the respondents' need for their services. 28 Employment records in evidence do not go beyond September 15, 1938, and it does not appear that Logan's services had terminated on that date 29 O. C . Russell testified that the electrical contractor is paid $50 , per month "to take care of our interests, Gulf Coast , Wilburn and the McAlbert properties ,'.and furnishes all supplies except automatic switches. McALBERT OII. COMPANY , INC. 875 eratmg costs. We find that no saving was effected by the displacement of Spear. It is. clear on the record , moreover, that the electrical work would not have been contracted out but for Spear's discharge and that Spear would not have been discharged had he not enlisted the re- spondents' employees in the Union. The respondents' hostility to- ward the Union and threats of reprisal against the employees, and particularly Spear, leave no doubt that Spear was discharged be- cause he was the leader of the Union , which the respondents desired to destroy. The various reasons assigned by the respondents for Spear's discharge are not persuasive. We are not impressed with the respondents ' further contention that Spear was not discharged on March 31, but merely laid off . The contention is lent color by virtue of the offer of temporary employment to Spear on the drilling rig. As shown in his speech to the employees on March 31 , however, Russell recognized that his statements made to the employees on March 23 had caused them to believe that the respondents would dis- criminate against them because of their union activities. The re- spondents made no serious effort to dispel those fears until on April 1, after Spear's discharge , when Russell stated to the employees that he had been "mad" at Spear on the previous day but was no longer mad at anyone . Doubtless Russell, by that time, felt that since he had accomplished his major objective of eliminating the leader of the Union, he could safely proceed to smooth over , his difficulties with the remaining employees. Knowing from the attitude of the em- ployees that the dismissal of Spear might lead to a charge of dis- crimination , Russell no doubt was eager to prevent the discriminatory character of the change in Spear's employment from being immedi- ately apparent should the question of discrimination against Spear subsequently be raised before the Board. In any event, even were it conceded that the respondents intended merely to demote Spear to temporary employment , such action was motivated by a desire to punish Spear and was, therefore , discriminatory. On the basis of the above facts and the entire record, we find that the respondents , by discharging and thereafter refusing to rein- state Spear to his former or substantially equivalent position, have discriminated in regard to his hire and tenure of employment , thereby discouraging membership in a labor organization , and interfering with, restraining , and coercing their employees in the exercise of the rights guaranteed in Section 7 of the Act. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE We find that the activities of the respondents set forth in Section III above, occurring in connection with the operations of the re- spondents described in Section I above, have a close, intimate, and 876 DECISIONS OF NATIONAL LABOR RELATIONS BOARD substantial relation to trade, traffic, and commerce among the sev- eral States and tend to lead to labor disputes burdening and obstruct- ing commerce and the free flow of commerce. V. THE REMEDY Having found that the respondents have interfered with, restrained, and coerced their employees in the exercise of the rights guaranteed in Section 7 of the Act, we shall order them to cease and desist therefrom and to take certain affirmative action designed to effectuate the policies of the Act and to restore as nearly as possible the con- ditions which existed prior to the commencement of the unfair labor practices. Since J. H. Spear was discharged as the result of the respond- ents' unfair labor practices and desires reinstatement, we shall order his reinstatement to his former or substantially, equivalent-,position in the respondents' production and maintenance department, with back pay in the amount he has suffered by reason of his discrimina- tory discharge by payment to him of a sum equal to the amount which he normally would have earned as wages during the period from the date of his discharge to the date of the offer of reinstate- ment, less his net earnings 30 during said period. VI. THE QUESTION CONCERNING REPRESENTATION On about April 4, 1938, Roy B. Sessions, president of the Union, notified the respondents that the Union represented a majority of the production and maintenance employees and requested a confer- ence for the purpose of discussing collective bargaining. Subse- quently, during April and May 1938, two conferences were held be- tween representatives of the Union and the respondents. During the latter of the conferences, the respondents refused to recognize the Union as the bargaining representative of their production and maintenance employees. We find that a question has arisen concerning the representation of employees of the respondents. "By "net earnings " is meant earnings less expenses , such as for transportation, room, and board, incurred by an employee in connection with obtaining work and working else- where than for the respondents, which would not have been incurred but for his unlawful discharge and the consequent necessity of his seeking employment elsewhere . See Matter of Crossett Lumber Company and United Brotherhood of Carpenters and Joiners of Amer- ica, Lumber and Sawmill Workers Union, Local 2590, 8 N L R B 440 Monies received for work performed upon Federal , State, county , municipal , or other work-relief projects are not considered as earnings , but, as provided below in the Order, shall be deducted from the sum due the employee, and the amount thereof shall be paid over to the appro- priate fiscal agency of the Federal , State, county , municipal, or other government or governments which supplied the funds for said work -relief projects MCALBERT OIL COMPANY, INC. 877 VII. THE EFFECT OF THE QUESTION CONCERNING REPRESENTATION UPON COMMERCE We find that the question concerning representation which has arisen, occurring in connection with the operations of the respond- ents described in Section I above, has a close, intimate, and substan- tial relation to trade, traffic, and commerce among the several States, and tends to lead to labor disputes burdening and obstructing com- merce and the free flow of commerce. VIII. THE APPROPRIATE UNIT The Union urges that the appropriate unit should consist of the respondents' production and maintenance employees, exclusive of drilling, supervisory, and executive employees. All workers in the oil industry, including drillers, are eligible for membership in the Union. The respondents contend that, provided the Board has juris- diction over their activities, the appropriate unit should include all their employees and also the employees of Gulf Coast Drilling Cor- poration, herein called Gulf Coast. Gulf Coast is a corporation owned and controlled by D. B. McDaniel and Albert Plummer. It is engaged in the production of crude oil at Conroe, Texas, 80 miles from Barbers Hill, operating with a production and mainte- nance crew of about eight or nine men. The respondents' production and maintenance employees are en- gaged in pumping and gauging crude oil from the respondents' wells, pulling rods and tubes from the wells, and in such mainte- nance work as cutting grass, painting, repairing roads, digging and cleaning ditches, etc. The crew of production and maintenance employees working on the respondents' leases is entirely separate from the crew of such employees engaged on Gulf Coast's leases, although there have been very occasional transfers of employees between these leases and their operations are to some extent coordi- nated. The respondents use the same drilling crew on their leases as is occasionally used on Gulf Coast's leases, but a regular drilling crew is not maintained since no new wells have been drilled on any of the leases since about 1936.31 However, when the drilling rig is operat- ing it has a crew of about 15 men, consisting of extra employees, formed around a nucleus of from one to three drillers. These drillers are highly skilled employees and are paid substantially more than the production and maintenance employees.32 At the time of the 81 Insofar as the record shows , the last drilling was in March and April 1938, in connec- tion with "working over" an old well belonging to one of the respondents. 32 The production and maintenance employees were paid $5.50 per day. At the time of the hearing, the only driller on the respondents' pay roll, then temporarily engaged in production and maintenance work, was paid $300 per month 878 DECISIONS OF NATIONAL LABOR RELATIONS BOARD hearing, P. H. Rippenhagen was the only driller employed by the respondents, and, although there were no drilling operations then in progress, was retained as the nucleus of a drilling crew. He was at that time temporarily engaged in the production and mainte- nance department, but was paid driller's wages and retained his status as such. On the basis of the foregoing facts, we conclude that the respond- ents' production and maintenance employees constitute an appro- priate unit, and on the request of the Union, the only labor organ- ization here involved, we shall exclude the drillers and also the employees of Gulf Coast from the bargaining unit.33 The Union requests that Aaron Avant be excluded from the unit on the grounds that (1) he was transferred to the production and maintenance department to assist in defeating the Union, and (2) he is a driller. The record contains no evidence in support of the first contention and, on the second contention, it appears that-Avai3t,,pur= suant to his own request, was transferred on April 16, 1938, to a permanent position in the respondents' production and maintenance department. We accordingly find that he is a permanent employee in that department and should be included in the appropriate unit. The Union also requests that O. C. Russell, superintendent of all the operations of the respondents, and George Hurst, superintendent of the respondents' production and maintenance department, be ex- cluded from the appropriate unit. The respondents take no position in that regard. It is clear that both are supervisory employees and we shall exclude them from the appropriate unit. We find that all production and maintenance employees of the respondents on their leases situated at or near Barbers Hill, Cham- bers County, Texas, excluding drilling, supervisory, and executive employees, constitute a unit appropriate for the purposes of collective bargaining and that said unit will insure to employees of the respond- ents the full benefit of their right to self-organization and to collec- tive bargaining and otherwise effectuate the purposes of the Act. IX. THE DETERMINATION OF REPRESENTATIVES There were introduced in evidence a pay roll of the respondents dated March 31, 1938, containing the names of eight employees within the appropriate unit, and also a pay roll dated September 21, 1938, containing the names of eight employees, in addition to J. H. Spear, within the appropriate unit. On the latter date, five of the nine employees, including Spear, were members of the Union. We s3 See Matter of Armour and Company and United Packing House TFoikers Industrial Union, Local 198, affiliated with C 1 0.. et al., 14 N. L R B 682; Matter of The Middle West Corp and Int Brotherhood of Electrical Workers, 10 N L R. B 618 McALBERT OIL COMPANY, INC. 879 find that the question which has arisen concerning the representation of the employees of the respondents can best be resolved by the holding of an election by secret ballot. The Union urges that the representatives should be determined upon the basis of the pay roll dated March 31, 1938. The respond- ents object to this pay roll as the basis for that determination, and insist that the September 21, 1938, pay roll should be used. Since the respondents have, by engaging in various unfair labor practices, interfered with the exercise by their employees of the rights guar- anteed them by the Act, we shall not now set the date for the elec- tion. We shall hold the election , however, upon receipt of information from the Regional Director that the circumstances permit a free choice of representatives unaffected by the respondents ' unlawful acts. We shall, at the time we specify the date on which the election is to be held, also specify the date on the basis of which eligibility to vote in the election shall be determined. Upon the basis of the foregoing findings of fact and upon the entire record in the proceeding, the Board makes the following : CONCLUSIONS OF LAW 1. Oil Workers International Union, Local 227, affiliated with the Congress of Industrial Organizations, is a labor organization within the meaning of Section 2 (5) of the Act. 2. By discriminating in regard to the tenure of employment of J. H. Spear and thereby discouraging membership in a labor organ- ization, the respondents have engaged in and are engaging in unfair labor practices within the meaning of Section 8 (3) of the Act. 3. By interfering with, restraining, and coercing their employees in the exercise of the rights guaranteed in Section 7 of the Act, the respondents- have engaged in and are-engaging in unfair labor.-prac- tices within the meaning of Section 8 (1) of the Act. 4. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2 (6) and (7) of the Act. 5. A question affecting commerce has arisen concerning the repre- sentation of employees of McAlbert Oil Company, Inc., and D. B. McDaniel, Drilling Contractor, Barbers Hill, Chambers County, Texas, within the meaning of Section 9 (c) and Section 2 (6) and (7) of the Act. 6. All production and maintenance employees of the respondents, excluding drilling, supervisory, and executive employees, constitute a unit appropriate for the purposes of collective bargaining, within the meaning of Section 9 (b) of the Act. 880 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 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 respondents, McAlbert Oil Company, Inc., and D. B. McDaniel, Drilling Contractor, and their officers, agents, successors, and assigns shall : 1. Cease and desist from : (a) Discouraging membership in Oil Workers International Union, Local 227, affiliated with the Committee for Industrial Organization, or any other labor organization of their employees , by discriminatorily discharging or refusing to reinstate any of their employees or in any other manner discriminating in regard to their hire or tenure of em- ployment because of their membership in or activity in behalf of any such labor organization ; (b) In any other manner interfering with, restraining , or coercing their 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 concerted activities for the purpose of collective bargaining or other mutual aid or protection. 2. Take the following affirmative action, which the Board finds - will effectuate the policies of the Act : (a) Offer to J. H. Spear immediate and full reinstatement to his former or substantially equivalent position in the respondents' production and maintenance department, without prejudice to his seniority or other rights and privileges previously enjoyed; (b) Make whole J. H. Spear for any loss of pay he has suffered by reason of his discharge by payment to him of a sum equal to the amount which he normally would have earned as wages during the period from the date of his discharge to the date of the offer of rein- statement, less his net earnings during such period; provided that the respondents shall deduct from the back pay due him a sum equal to that received by him for work performed upon Federal , State, county, municipal, or other work-relief projects during the period for which back pay is due him under this Order, and they shall pay any such amount deducted to the appropriate fiscal agency of the Federal, State, county, municipal, or other government or governments which supplied the funds for said work -relief projects; (c) Immediately post notices in conspicuous places throughout the respondents' leases stating (1) that the respondents will cease and desist as provided in paragraphs 1 (a) and (b) of this Order, and that the respondents will take the affirmative action set forth in para- graphs 2 (a) and (b) of this Order ; and (2) that the respondents' JIcALBERT OIL COMPANY, INC. 881 employees are free to become or remain members of Oil Workers International Union, Local 227, and that the respondents will not discriminate against any employee because of membership or activity in that organization; (d) Maintain such notices for a period of at least sixty (60) consecutive days from the date of posting; (e) Notify the Regional Director for the Sixteenth Region in writing within ten (10) days from the date of this Order what steps the respondents have taken to comply herewith. DIRECTION OF ELECTION By virtue of and pursuant to the power vested in the National Labor Relations Board by Section 9 (c) of the National Labor Rela- tions Act, 49 Stat. 449, and pursuant to Article III, Section 8, of National Labor Relations Board Rules and Regulations-Series 2, as amended, it is hereby DIRECTED that, as part of the investigation directed by the Board to ascertain representatives for the purposes of collective bargaining with McAlbert Oil Company, Inc., and D. B. McDaniel, Drilling Contractor, an election by secret ballot shall be conducted at such time as the Board shall hereafter direct, under the direction and supervision of the Regional Director for the Sixteenth Region (Fort Worth, Texas), acting in the matter as agent for the National Labor Relations Board and subject to Article III, Section 9, of said Rules and Regulations, among all production and maintenance employees of McAlbert Oil Company, Inc., and D. B. McDaniel, Drilling Con- tractor, who were employed within a period to be determined by the Board in the future, excluding drilling, supervisory, and executive employees, to determine whether or not they desire to be represented for the purposes of collective bargaining by Oil Workers Interna- tional Union, Local 227, affiliated with the Congress of Industrial Organizations. Ma. WILLIAM M. LEISEESON took no part in the consideration of the above Decision, Order, and Direction of Election.