National Labor Relations Board v. Truitt Manufacturing Co.
1956 U.S. LEXIS 1717, 100 L. Ed. 2d 1027, 351 U.S. 149 (1956)
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Rule of Law:
An employer's refusal to provide financial information to substantiate a claim of inability to pay a wage increase may support a finding by the National Labor Relations Board that the employer has failed to bargain in good faith, as required by the National Labor Relations Act.
Facts:
- A union representing employees at Truitt Manufacturing Co. requested a wage increase of 10 cents per hour during collective bargaining.
- Truitt Manufacturing Co. responded that it could not afford such an increase, claiming it was undercapitalized, had never paid dividends, and that any increase over 2.5 cents per hour would put it out of business.
- The union requested that Truitt provide some form of evidence to substantiate its financial claims, asking for access to the company's books and financial data for examination by a certified public accountant.
- Truitt refused all requests for financial information, stating that the information was not pertinent to the discussion and that the union had no legal right to it.
Procedural Posture:
- The union filed an unfair labor practice charge against Truitt Manufacturing Co. with the National Labor Relations Board (NLRB), the federal agency that adjudicates such disputes.
- The NLRB, as the court of first instance for this type of claim, found that Truitt failed to bargain in good faith in violation of the National Labor Relations Act.
- The NLRB ordered Truitt to supply the union with information to substantiate its financial position.
- Truitt Manufacturing Co. appealed the NLRB's order to the U.S. Court of Appeals for the Fourth Circuit, an intermediate federal appellate court.
- The Court of Appeals refused to enforce the NLRB's order, siding with the employer.
- The NLRB sought, and the U.S. Supreme Court granted, a writ of certiorari to resolve a conflict among the federal circuit courts on this issue.
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Issue:
Does an employer's refusal to provide financial information to substantiate its claim of inability to pay a wage increase constitute a failure to bargain in good faith in violation of Section 8(a)(5) of the National Labor Relations Act?
Opinions:
Majority - Mr. Justice Black
Yes. An employer's refusal to attempt to substantiate a claim of inability to pay increased wages may support a finding of a failure to bargain in good faith. Good-faith bargaining requires that claims made by either party be honest. If an employer makes its economic inability to pay a central issue in negotiations, it is obligated to provide some proof of its accuracy. The Court reasoned that without such proof, it is difficult to engage in meaningful bargaining, as the union has no way to evaluate the employer's claim. While not a per se rule, the determination of good faith must be made on a case-by-case basis, and in this instance, the company's flat refusal to provide any substantiation supported the Board's conclusion that it did not bargain in good faith.
Concurring-in-part-and-dissenting-in-part - Mr. Justice Frankfurter
No, the refusal to supply financial information does not by itself constitute a per se failure to bargain in good faith. The determination of good faith should be based on the totality of the circumstances and the party's entire course of conduct during negotiations. The Board erred by fashioning a rule of law out of one single item of evidence rather than examining all the facts, which included Truitt's willingness to continue meeting and its offer of a smaller wage increase. The case should be remanded to the Board to apply the correct, holistic standard for determining good faith, rather than treating one factor as dispositive. Making a lack of disclosure an automatic violation is an improper, mechanical approach to what should be a nuanced factual inquiry.
Analysis:
This decision establishes that the duty to bargain in good faith under the NLRA includes an obligation to provide relevant information necessary for meaningful negotiation. By requiring employers to substantiate claims of financial hardship, the Court prevents them from using unsubstantiated 'poverty pleas' as a bad-faith tactic to stonewall negotiations. The holding significantly strengthens the position of unions in wage negotiations by giving them a tool to verify employer claims. However, the Court's refusal to create a per se rule preserves the NLRB's role as the primary fact-finder, ensuring that the 'good faith' inquiry remains flexible and dependent on the specific circumstances of each case.
