Warren E. Burger: We will hear arguments next in Fleck against Spannaus. Mr. Christensen, I think you may now proceed whenever you are ready.
George B. Christensen: Mr Chief Justice and May it please the Court. I had hoped that someday I would have the pleasure of arguing an appeal and not have to confess an inadvertent typographical error in a brief. In our reply brief, we refer to the New Jersey case, Raybestos-Manhattan vs. Glasser as being in 156 Atlantic Second. It should be 165 instead of 156. We have it correct in our main brief, but it may give your clerks a little annoyance since they work for an hour.
Warren E. Burger: What is the name of the case again?
George B. Christensen: Raybestos Manhattan.
Warren E. Burger: And we should change that to, what is the correction again?
George B. Christensen: It appears in your brief as 156 Atlantic Second. It should be 165.
Warren E. Burger: Well, in mine, it appears as 365. It should be 365.
George B. Christensen: I still have not got it right, now I have I hope.
Warren E. Burger: Well, between us, we will get it straightened out. Very well.
George B. Christensen: The Court may recall that this is sort of a companion case to the White Motor case you decided recently involving the Minnesota Pension Protection Act. You there decided that to the ERISA of the subject of patent regulation was not preempted by the Federal Labor Laws and you did not touch any Constitutional issues.
William H. Rehnquist: You said patent regulation, you mean pension?
George B. Christensen: Pension. I have been listening too much this morning, I am afraid. The same pension statute is before you in this case that you had before you in the White Motor case. In substance, what Minnesota did, anticipating that ERISA was coming which eventually would preempt the field, it passed this 10-year vesting provision that added to the substantive obligations of Allied Structural Steel’s pension plans thereby conferring an unexpected windfall on employees. It did this retroactively, in effect gave a retroactive wage increase because contributions to a pension plan are a form of compensation for the employee and as we try to demonstrate, and think we do in our reply brief in the face of no important or vital public need that would authorize such an intrusion into private contracts. We take the position that if it is what was done here is not impermissible, if it is upheld, then the impairment of contract clause is virtually gone from the Constitution and there would be no limit upon what states could do in important business contracts whether they be leases, insurance policies, deeds, pension plans or whatnot, they could play havoc with them and destroy the stability in private arrangements that the Constitution is designed to procure. You will find as you go through the briefs Your Honors that New Jersey had a somewhat similar notion a little before Minnesota and that is this Raybestos-Manhattan case that we refer to. There, they made a statute somewhat similar to this imposing, in effect vesting requirements long or much earlier than the plan provided for and they limited it to employers of 500 persons or more. New Jersey has a statute that is not, I do not know whether it is common to many states that provides special legislation. The New Jersey Superior Court struck the statute down as unconstitutional, as special legislation under their New Jersey Statute and as denying equal protection of the laws under both the State and the Federal Constitution and that has been affirmed by an opinion that came out in late March or early April, I forget which is, yet unpublished, but is attached as an appendix to our reply brief. The State of Minnesota before Your Honor does not deny as I read their brief that this is a vital impairment of the contract and you cannot imagine a much greater one in our case because we represent a smaller employer. There appears to be about $150,000.00 of additional burden imposed. You cannot tell precisely the amount until actuarial computations are made and in the White Motor case where far more people were involved, there was a difference of some $8 to $10 million beyond the funds that White had committed itself or had reserved to pay its terminated employees.
William H. Rehnquist: Mr. Christensen, I suppose in the strictly technical sense, there is not an impairment of contract in so far as Allied is concerned here in the sense that a contractual expectation that it had was taken away from it. Very likely, the sense of the provision is involved, but do you not ordinary think of impairment of the obligation or contract as thinking you had a right to receive something under a contract and then the state says no, you do not have a right to receive it?
George B. Christensen: Well, I think the term has been expanded over the years by the Courts, but there is a very definite impairment Mr. Justice Rehnquist in the sense I believe you were talking about because Allied had a right to terminate this pension plan with no penalty and Minnesota said in effect, you cannot terminate this plan even though the contract gives you an unlimited right so to do. You cannot terminate it unless you pay this ransom money into this state fund to buy annuities for these people.
Warren E. Burger: Well, it had imposed the new obligations, is that your argument?
George B. Christensen: Well, you can call it a new obligation. You can say depriving us of our right to terminate. It is pretty much Mr. Chief Justice a matter of semantics, but here was a plan which prescribed how it should be funded. It was funded according to actuarial principles and of course it assumed that not all of the employees would be present to receive pensions. They would either die, be discharged, quipped any number of --
Byron R. White: You think the state could if a company had no bargained for plan or no voluntary plan, you think a state statute could require the company to adopt a statutory type plan? Suppose in the statute they had a formula, a pattern and they just required all companies to start putting their money into these funds?
George B. Christensen: Well, that Your Honor, I do not think would involve the obligation of contracts clause. It involves questions of due process.
Warren E. Burger: Is that very far away from what the Social Security Act as Mr. Justice White’s suggestion?
George B. Christensen: Well, it is not too far away from it, but Your Honor, your point now is addressed to the powers of the Federal Government and it is not directed to destroying or altering or changing a private contract.
William H. Rehnquist: What you are suggesting is that the Federal Government is not bound by the retirement clause the way the states are?
George B. Christensen: That is correct and that there is no doubt about that Your Honor.
Warren E. Burger: Are you also suggesting that a state could not have adopted what is essentially the social security statute, independent of federal action?
George B. Christensen: I do not know if I am prepared to answer that question. It would depend now when the Federal Government got to ERISA, its second regulation of pension plans, it moved quite carefully. It brought the plan in under a five-year implementation plan. It gave various options for vesting or it permitted you to abandon the pension plan entirely with no penalty. It is a very complicated statute and I do not mean to speak with great authority upon it. Now, if you go to whether a state could have as you first put it, have adopted a social security plan, I do not think I am prepared to answer that.
Byron R. White: Mr. Christensen, in your argument, it would make a difference whether it was for the future of the payouts, would it not?
George B. Christensen: Yes certainly, but you are now talking about a thing unconnected with service just at a certain age or they put in a tax. If you follow social security, a state would tax individuals and employers in some prescribed amount to build retirement payments at age 65 or with the permission of this Court now 70 whatever it may be. Now, that is quite a different problem, Mr. Justice. That retroactively is saying to employees who have worked and have received ever dime they were entitled to, either in direct wages or in the written promises or fringe benefits such as this pension plan. You would go back and pay more money to those people by a sort of a retroactive vesting.
Byron R. White: Mr. Christensen, are there not really two parts to the retroactive aspect of this case, Mr. Justice Rehnquist’s question brought this to mind. On the one hand you have to put more money into the fund, you come up with more and secondly, you are prevented from getting back that which you would have been able to recover over and above the vested rights of those who are entitled to some money that I take it were in the surplus that under the contract, you would have had the right to return?
George B. Christensen: No. On the second assumption, I beg to differ with you. What went in there was there for all times and purposes. Now of course, contributions made five years ago on behalf of employee 'A' who died in the interim, stay in the fund and help fund or provide money for employee C, D and so forth, but it does not revert back to the employer.
Byron R. White: But if you terminate the plan --
George B. Christensen: No sir --
Byron R. White: That you are asserting that in answer to Mr. Justice Rehnquist, you pointed out that the contractual right to terminate the plan had been impaired.
George B. Christensen: That is correct.
Byron R. White: But how did that hurt you then if all the money was in there to stay anyway?
George B. Christensen: Because Minnesota has imposed this pension funding charge --
Byron R. White: I understand the requirement that you put more money into the pot that hurts you?
George B. Christensen: Yes.
Byron R. White: But that is not an impairment of an existing obligation. That is a creation of a new obligation?
George B. Christensen: Well, or it is a condition.
Byron R. White: And your answer to Mr. Justice Rehnquist was that, well, they have impaired our right to cancel the plan, now how did that hurt you, the no longer being able to cancel the plan? I thought that meant that you would have gotten some money back.
George B. Christensen: I do not think a conditional right to cancel it. I think they have destroyed the right to cancel. You say they have created an additional obligation. I phrase it and again, you and I may be engaging in semantics, when I have an unqualified right to terminate a plan without further liability and Minnesota says, you can terminate that plan only if you will pay more money. I think they have destroyed my unlimited right of termination.
Thurgood Marshall: You mean what you want is the right to terminate without paying additional money?
George B. Christensen: Yes, sir.
Byron R. White: Did the state prevent you from terminating the plan with respect to any newly hired employees?
George B. Christensen: No. That would not arise Mr. Justice because this Act goes into effect only when you are closing a plan, so the question of new employees coming in cannot arise in Minnesota.
Byron R. White: What about the employees transferred to another plan? They have to go on paying for them if you do not want to?
George B. Christensen: I will have to go off the record. My colleagues --
Byron R. White: Well, that is alright. You carry on the way you want. Go ahead.
George B. Christensen: They had such a thing here. One of these cases that they thought applied, employees were transferred and Minnesota did not levy its tax.
Byron R. White: You go ahead, I am sorry to interrupt.
Warren E. Burger: But it is clear that this Act requires the employer to pay some money for an earlier period. It is retroactive in that sense, is it not?
George B. Christensen: Yes sir, it is very retroactive.
Warren E. Burger: So that it is not just altering an existing contract with respect to the future, you say? It requires a deposit, a payment covering a period that is already lapsed before the statute was passed.
George B. Christensen: Yes. This plan had an elaborate vesting scheduled that was a combination of years of service plus age and the Minnesota statute says you have got to fund your plan so that all contributions made at 10 years are vested. They put in a 10-year vesting period and it is stringently retroactive. It is the equivalent of giving these employees a retroactive wage increase. Now, Minnesota or the District Court make some point which we have endeavored to answer in our brief that the employees anticipated they would get their pension. Now, that with all due respect to the Court below and my brethren here is fanciful. Everyone goes on thinking he is going to live forever, but every man knows in his heart that he may not and he buys an insurance policy. Employees anticipate and have a right to anticipate pensions only in accordance with the terms of their plans. The doctrine created by the District Court here which it permitted to stand that people you can invade and change contracts to make them work as someone may have anticipated they would work would destroy contracts completely. I expect near lunchtime and with your permission, I will reserve, you go at 12:30.
Warren E. Burger: 12 o' clock.
George B. Christensen: 12 o' clock, I would prefer to reserve the balance of my time if I may?
Warren E. Burger: Very well.
George B. Christensen: I will answer any questions right now if there are any more at the moment.
Warren E. Burger: Mr. Starns.
Byron E. Starns: Mr. Chief Justice and May it please the Court. First of all, the Minnesota Act applies in two situations, a planned termination by an employer and a plant closing. This case involves the closing of a plant, not a plan termination. I think that point should be clarified.
Warren E. Burger: Well, is the plan being terminated because the plant is closing?
Byron E. Starns: No Your Honor, the plan is still in effect as of this date. It has been amended twice by the company to freeze the benefit levels and to freeze the ability of anyone to get into the plan in the future and the amounts have been vested with respect to the people covered by the plan prior to those amendments. Our position, Your Honors is, the heart of appellant’s argument is that the situation addressed by the Pension Act was a subject of a preenactment contract and that as applied Allied, the Act has changed those established contractual rights. To the contrary, our position is that there is no established contract between Allied and its Minnesota workers with respect to their earned interest in the pension benefits based upon the circumstance of a plant shutdown and further that the act is not retroactive in effect since no preenactment established contractual rights are affected. Now, I think this can be illustrated by examining the nature of the contractual relationships we are dealing with here. The creation of a pension plan constitutes an unilateral offer by the employer which is subject to the acceptance by the employee and that acceptance is only complete when he has satisfied both the length of service requirements and the attainment of the minimum age requirement. So that we have no fully completed contract in the context of this case since we are dealing with people who have --
William H. Rehnquist: Mr. Starns, are you saying there has been no impairment?
Byron E. Starns: I think that is the sense of our argument.
William H. Rehnquist: I have read that the District Court’s opinion that say you in effect conceded there was impairment, but that was justifiable?
Byron E. Starns: Your Honor, I think I could clarify that point. I think the District Court has said that the state seems to concede that there has been no impairment. The only statement in the record below was a statement in our pretrial brief on the summery judgment aspects of the case where we stated that if to the extent --
Warren E. Burger: We will resume there at 1:00[Recess] Mr. Starns, you may continue.
Byron E. Starns: Mr. Chief Justice and May it please the Court. At the recess, the state was arguing about the contractual relationship involved in this particular case. I thought that a brief recitation of the procedural history relating to this point might be in order to help clarify the position before the Court. The challenge was brought by Allied Steel in District Court to the application of the state statute here in question. As a result of that action, the state ultimately filed a motion for the Federal District Court to abstain in order that the State Courts could construe the null and void provision of the Act which is the final section of the Act. At the same time, there was a cross motion for summary judgment brought by Allied Steel. In the context of that motion, we filed a brief in June of 1976 which stated that to the extent that the pension plan allowed Allied to cause a forfeiture of the accrued benefits for those not qualified under the plan, there might be impairment. Of course, subsequent to that brief, there was an argument before the District Court. The District Court denied both motions, certified instead of abstaining on the question of interpretation of state law, certified that to the Minnesota State Supreme Court appoint a Special Master to find fact. The Special Master found as a finding of fact that the pension plan as originally adopted does not take into account a plant shutdown as one of the conditions for the actuarial calculations associated with those findings of fact were stipulated to by all the parties and in constitute findings of fact in this case. So in any event, we think that there is before the Court, the issue of whether or not there is impairment to this contract. Now, the relevance of the impairment issue of course goes to the reasonableness test under the United States Trust and extent of impairment. Our point is that it is established that a pension plan constitutes a unilateral offer by the employer to the employee of the form of the differed compensation. The law is and the appellants have admitted that employer contributions constitute a form of compensation. However, the cases have held that an employee is not entitled to receive that form of differed compensation or any part thereof unless he has satisfied the eligibility requirements to the plan and those eligibility requirements are typically the attainment of a minimum age and the service for a minimum period of time whatever it might be under the particular plan. Consequently in such a situation, we submit that if there is no contract for the employees benefit to have enforced in this situation, there can be none to be impaired.
Speaker: Was this a bargained for plan?
Byron E. Starns: No your Honor, it was not.
Byron R. White: You might not be able to make this argument in the bargained for plan?
Byron E. Starns: I think that argument might not be made in that context. The Act does not affect the subject of preenactment bargaining, much less agreement in our opinion also and that takes it out of the scope of retroactivity in our opinion.
Speaker: Mr. Starns, when you say it does not affect the subject of preenactment, it maybe not in this case, but does not the statute apply to bargained contracts?
Byron E. Starns: Yes, I am only taking about this case Your Honor.
Speaker: What is your view as to its constitutionality as to bargained contracts then?
Byron E. Starns: I think it is constitutional.
Speaker: But you just said it is not even an impairment of contract here?
Byron E. Starns: Right, I think that of course whether or not there is an impairment, whether or not the statute is retroactive on the decisions of this Court, a valid police power enactment is constitutional. I think that for all the reasons set forth in our brief, this law would be constitutional whether or not it applied to a collectively bargained or noncollectively bargained plan. I think that the distinction between the plans would relate to what the expectations of the parties are and of course that is one of the factors that this Court has identified to be analyzed in terms of determining the extent of impairment and of course, I think that in examining expectations to parties, the nature of the contractual relationship is an important factor. It may impact upon the breadth with which the Court can go outside the document itself.
William H. Rehnquist: Mr. Starns, do you have any off hand top of the head knowledge as to how many bargained for employees would be covered by this and how many nonbargained for employees?
Byron E. Starns: Well, because of the enactment of the Employee Retirement Income Security Act of 1974, the number of Minnesota people is limited. The vast majority are the subjects of collectively bargained contracts. The White case is 1,200 people I believe.
William H. Rehnquist: So if we were to decide it just on the basis of this, this was a nonbargained for pension plan, we would leave undecided, I take it, if our decision applied only to those facts, the vast majority of the people to whom the plan applied?
Byron E. Starns: Your Honor, I think that the answer to that is that might be the result of your decision and it would depend upon the basis for indecision. If it was solely on the basis of the contractual nature of the relationship, yes. If it was based upon the police power analysis and the complete analysis --
Speaker: (Inaudible) contractual argument so I guess you will get to the other one?
Byron E. Starns: Yes, I will, Your Honor.
Speaker: But also it is limited in the sense that there have not been too many, I do not suppose too many instances for you to apply the plan? Between the time it went into effect into the Act, and between the time it went into effect and the time that I has been preempted by ERISA?
Byron E. Starns: That is correct. Minnesota Supreme Court held that the Act was preempted by ERISA effective January 1975 and the plan years to which the ERISA language applies. However, I think that there may be applications in the future depending upon what the fact situation is. I admit that they are limited and it may be nonexistent, but there conceivably could be some application of the Act in the future.
Speaker: To a bargained for plan?
Byron E. Starns: To a bargained for and a nonbargained for plan. Now, the state’s position is also that the statute is not retroactive in effect. The express language of the pension plan itself indicates that there was no meaning in the minds on the plant shutdown situation. For example, the length of service for vesting under the pension plan is a lengthy period of time, 20 years. Secondly, there is an expressed covenant not to compete in the plan. It seems to use that this implies that the person reading that document could anticipate that the plan would continue in existence and the plan would continue in operation for at least the minimum period of vesting, 20 years plus the lengthy period of time thereafter since retirees would forfeit their benefits if they engaged in competition with the company. That presumes a continuing enterprise. We note the Court below took special notice of the fact that the companies actuaries did not take into account the plant shutdown and Judge Haney noted that the argument on the merits that in light of that fact, there is a question as to whether you really have an impairment of contract. Now, the Act is also not retroactive in our opinion because it applies to transactions which are completed after its day of enactment. Generally a law is retroactive or considered retroactive for constitutional purposes if it reaches back to alter already completed transactions. Here, the triggering event of the statute occurs after its effective date.
William H. Rehnquist: To what point of constitution or your retroactivity argument directed?
Byron E. Starns: That would be essentially a due process argument I think Your Honor.
William H. Rehnquist: There is no specific prohibition in the Constitution against the enactment of retroactive laws, is there?
Byron E. Starns: No, and I think I am trying to address the points raised by appellants in their brief.
Speaker: Well, Mr. Starns may I ask the only question that is presented in jurisdictional statement, even as rephrased in your brief is contract close question. Do we have anything else to decide here?
Byron E. Starns: No Your Honor.
Speaker: Well, this discussion of due process police powers of that rather relevant to the question presented?
Byron E. Starns: I think it is if you construe it in that way Your Honor. The only relevance of the question of whether or not there is impairment would go to the degree of impairment analysis under the contract clause. Now, we do not quarrel that the results of the statute has been to change the overall employment agreements involving these employees. The Court below in a footnote I think at page 890 of the appendix noted that employment agreement includes the wage agreement, the pension plan, and any other fringed benefits. Now, our understanding is that the contract clause issue raised by the appellants relate solely to the pension plan and in the context of that argument I think our point that there is really no contract there is relevant. However, if the Court is going to view the entire employment agreement as a contract then I think these arguments are relevant to the matter before the Court as are the retroactivity arguments. Our position is also that the Act is not retroactive because there is no change in the benefit levels provided by the plan, and therefore, it does not impair the contract itself. As a general matter, the Act is tied to the specific benefit levels that are provided by the plan to which it applies. It should be noted that the allied plan itself would provide more liberal benefits in a plan termination situation than our Act requires. If you look at the termination article of that pension plan, it states that if when the plan is terminated all covered employees have a right to their earned interest in their pension plan.
Speaker: In this case, in the facts of this case it is going to cost the company more money to close down its plant then it would have it if they act and then pass, for that moment?
Byron E. Starns: Yes, it will cost them some more money and our position is that the money that it cost them is in the form of the wages that they have owing to the employees for the work rendered up to this point because they admit that the pension benefits are wages and so from that point of view the statute really becomes a form of waging our protection really. It is not a retroactive wage increase.
Speaker: But Mr. Starns, if that argument is valid you did not need the Statute, they already owe the money?
Byron E. Starns: No Your Honor, I think that is good point in terms of logical consistency, but unfortunately the decisions hold otherwise.
Speaker: So they did not owe the money then?
Byron E. Starns: They hold that the employees cannot enforce any quasi contractual obligation.
Speaker: Well, then do you not have to acknowledge that the statute is the source of the company’s obligation to pay higher wages?
Byron E. Starns: Yes, but our point is it does not --
Speaker: But does it not imposed in a new obligation, a new and different wage obligation than existed before?
Byron E. Starns: Our point Your Honor is that it is not a new obligation. It maybe somewhat different.
Speaker: It is with everyone…
Byron E. Starns: Well, I am not so sure. I think that --
Speaker: Well, the difference between 0 and (Inaudible)?
Byron E. Starns: Yes, there is the difference between what maybe left in the balance of the plan upon termination.
Warren E. Burger: When did the obligation come into being?
Byron E. Starns: The obligation to pay came into being I think with the passage of the law.
Warren E. Burger: Well, then have you not just contradicted yourself. You said it was not new. If it came into being with the passage of the law then it is new, is it not?
Byron E. Starns: I think the point I am trying to make Your Honor is that the obligation is not new in terms of the expectations to the parties. It maybe new in terms of the expressed language of the agreements, but that under the decisions of this Court relating to the contract laws one of the things to be analyzed in terms of studying the reasonableness of the legislation that is being challenged is the extent to which it promotes rather than under cuts the original expectations of the guardians.
Speaker: But you have to decide which party’s expectation you are going to look at? It is the same expectation from the employees, but different from the employer and if you are looking at it that way, supposing there had not been enough money in the company and the legislature decided the only way to satisfy the expectations of the junior employees would be to take some of the vested compensation away from the senior employees on the ground that they have been overpaid over the years and they are going to get social security anyway and so forth and their expectations will be frustrated, but the juniors would be fulfilled, could you do that?
Byron E. Starns: I think there might be a problem with that and of course of our act --
William H. Rehnquist: What is the difference?
Byron E. Starns: Well, our Act does not have any effect upon the vested, the funds and the trust.
Speaker: There is a difference as far as the impairment contract clause is concerned whether it is an employer or a group of old employees that is affected by, what is the distinction?
Byron E. Starns: Well, I think Your Honor in the context of this case, if we analyze what the expectation of the parties are, the employer has in effect created an impossibility situation for performance by the employee. In other words, he has reneged on his expectation that he would achieve as a result of this plan, continuity of employment. He has voluntarily reneged on that and the person that suffers is the employee who is denied the continuing opportunity to qualify for a pension.
Warren E. Burger: Say he is voluntary renamed, what specific do you rely on?
Byron E. Starns: He is reneged by removing the workplace as a place to work and he has made that decision consciously for business reasons or whatever, but it seems to be in terms of its original underlying bargain, it was that the employer expected to get out his pension plan, continuity of employment, it would help his situation in terms of the competition for labor. He expected presumably to get some decrease in wage demands because it is a form of compensation.
Warren E. Burger: What is the basis for any expectation that this company was going to stay in Minnesota forever?
Byron E. Starns: I think the basis would be Your Honor the express language to plan which I noted earlier that contains a covenant not to compete for example which would seem to make no sense.
Warren E. Burger: Do you mean you would read that as a contract to continue to do business in Minnesota in perpetuity?
Byron E. Starns: No Your Honor. I would read it as an indication of what are the reasonable expectations of the parties to this original agreement and I think as I understand the decisions of the Court, the expectations of the parties are an important factor in determining the degree of infringement, and therefore, whether a statute has violated a contract clause. Now, that is assuming we have a contract, we are already beyond the initial --
Warren E. Burger: Why would the employer have any expectation other than his contract was to be executed exactly as it was originally drafted until it was changed with his consent?
Byron E. Starns: Well, I think that is true and our point is that the original contract is at best ambiguous on this point. It does not address the point --
Speaker: What if he has been paying into a pension plan for 10 years and there were 100 employees that have come at different terms. At the end of the ten years, let's assume there is vesting in ten years, some have vested and some have not. Can he terminate, if he terminates the plan then under this particular contract, can he get all the money back out of the fund that he has been paying in or any?
Byron E. Starns: Under the Allied Pension Plan every employee could get a share if the plan were fully funded.
Speaker: Alright. I know, but he has been paying for 10 years and he just wants to quit and so he quits, he terminates the plan?
Byron E. Starns: No, he cannot get anything out because I think the original expectations of the party --
Speaker: Under this plan then there is a contract with the employees to the extent that he has paid into a fund?
Byron E. Starns: Only if he meets the two conditions for vesting and that those are --
Speaker: Yes, but he cannot get his money back if he terminates the plan?
Byron E. Starns: This does not involve an employee contribution.
Byron R. White: I understand, the employer cannot get his money back.
Byron E. Starns: That is correct.
Speaker: So what he pays into the fund it is gone as far as he is concerned, whether he terminates the plan or not?
Byron E. Starns: Except that I would point out Your Honor that there is one provision in the plan that if there is an excess after the money has been distributed, it does go back to the employee, it is a minor point, but there is the possibility to receive money back.
Speaker: Do you think the State of Minnesota could say that is to say that the employer may terminate and get his money back?
Byron E. Starns: No.
Speaker: Because that would be an impairment?
Byron E. Starns: Yes sir. I think that in the context of the facts of this case though Your Honor that the way this would work is a windfall to the employer.
William H. Rehnquist: What you are saying in effect is you can impair so far as the employer is concerned, but not so far as the employee is concerned?
Byron E. Starns: Well, that maybe the case Your Honor. I think we are talking about what the public purpose of this statute is the first benchmark of analysis, what is the public purpose?
William H. Rehnquist: What if the Minnesota legislature had decided that most Minnesota manufacturing companies had put much too much money into pension funding for their financial stability, and therefore, it was of great importance to the State to enable them to reduce these commitments, and therefore, it adopted the provision that Justice White proposed to you. Do you think that would be impairment?
Byron E. Starns: I think it may not, if the Court were to accept those situations as constituting a sufficient fact for public purpose.
Byron R. White: You mean you deny the employee with vested rights for a good reason?
Byron E. Starns: Well, I think that is what the doctrine and the teaching of these Courts decisions are is that you can impair contracts, you can enact retroactive laws.
Byron R. White: Would not there be a difference between the situation that I gave you in the law which instead of doing what I suggested, it said to the employer you must now double your contributions to the pension fund despite what your bargain for contract was or your voluntary contract with your own employees, you must now fully fund your plans and you must double, Allied you must double your payments to the plan?
Byron E. Starns: Well, of course full funding of plans is what ERISA is all about.
Byron R. White: Yes, but what if that certainly would not be inconsistent with his contract with his employees. He has promised them only to put in X and now it is 2x?
Byron E. Starns: Correct. Well, I think that if you judge --
Byron R. White: That is not an impairment, is it?
Byron E. Starns: No, I do not believe it is. It is an added benefit and I think that if you treat this retirement --
Byron R. White: For that do you need even to go through any impairment analysis?
Byron E. Starns: I do not believe so Your Honor because it is in the nature of a minimum wage type protection if you accept the fact that the pension benefits are form of compensation.
William H. Rehnquist: What if a State passed a minimum wage statute and said it is to be effective as of two years ago, any problem?
Byron E. Starns: I think that would be a problem and it would be unconstitutional. I think that the distinction is that we have recognized by our decisions that deferred pension rights are a form of compensation so to that extent the employee has an accrued or in coed right to the amount that he has earned in those pension benefits. That is not the same as changing a $5.00 an hour contract or a $6.00 an hour contract and relating it back.
Byron R. White: But in your answer to brother Rehnquist, do you mean it would be an impairment or would it be a due process violation?
Byron E. Starns: I assume if there was a specific contract --
Byron R. White: Well, the employer has just promised to pay him and he had paid him when had promised to pay him, $10.00 an hour and now the legislature comes along and says we think you should have been paying him $15.00 an hour and further more you should have been paying him that for the last two years so pay it to him, is that an impairment?
Byron E. Starns: Well, it would probably be as well a due process point Your Honor like the Assary case which involved the black loan benefits and the retroactive requirement of payment of those benefits for employees who were terminated prior the effective date of the Act. I think that it is very similar example you pose is very similar to that one. As we stated even if it is found that there is contract impairment here the Act is not unconstitutional. Public purpose to protect the employees' accrued interest and the pension rights to establish full funding of pension plans is clear. ERISA is a monument to that fact. It is reasonable, judged by the extent of impairment and is necessary judged under this Court’s decisions in the US Trust Case. That completes my argument, I have nothing further Your Honor.
Warren E. Burger: Do you have anything further Mr. Christensen?
George B. Christensen: Briefly if I may your Honor? I am not sure that I understand this case anymore. I have just heard counsel I think say that a minimum wage made two years retroactive would be unconstitutional. Well, I think I heard him say earlier that they did not think this statute was retroactive. I do not see how the two were together. He certainly, the one thing we appear to be in agreement on is that contributions to a pension plan are a form of compensation, a form of wage, and there can be no doubt whatsoever that retroactive wages are required by the statute. Now, I could go on and argue, but I do not think I could make the matter any clearer than I have with that blunt assertion. I would like if I might to talk about the line of distinction that counsel would draw between bargain plans and unbargained plans. These contracts, it seems to us are as binding upon the employer as a one bargained out with a labor union and so long as that plan was in effect and about this there can be no doubt, if the company failed to make the required contributions to it each year, the employer could be sued by all or any of these employees, they were a condition of this contract of labor or employment.
Speaker: So there would a suit in a subset under a contract?
George B. Christensen: Yes sir.
Speaker: Illinois subset.
George B. Christensen: Yes, it would be a contract suit, a suit on the contract. It is a long time since I dealt with a subset and I am not sure that I am speaking …
Speaker: Oh! Good, it has been a while since I have too.
George B. Christensen: There was a question at noon what was impaired here, specifically there was the right to terminate the plan without penalty and upon termination of the plan whatever rights any employee had were fully vested. Now, under the plan they would not all get money, if there was not money there, but if this had been an enormously successful plan, if we assume that the funds had been invested by trustees in some wildly successful speculated venture, it very well might be that everyone would have been paid in full and if in the unlikely circumstance, there would be a surplus then the company would get it, but there would have been no forfeiture of any kind. The plan further provided that benefits are payable only out of the trust. Now, Minnesota converted that, although we declared this trust, a corporate employer declared the trust, the party did the trust of course, they made that a direct corporate obligation. I cannot imagine anymore direct increasing of the burdens and that has been held in over noon hour I have been informed Mr. Justice Rehnquist that in the Detroit Railway Case which was sometime in the teens or 20s, this Court has held that adding to the burdens of a contract impairs the contract. I have seen other cases in my research in this thing, but I cannot recite them to the Court right now I am sorry to say. The presentation that has been made orally is so different from the presentation made in the brief.
Byron R. White: What if an employer and a union have effective bargaining contract that will last the next three years that the legislature cannot require the payment of a higher wage than specified in the contract?
George B. Christensen: Well, I think yes they can, assuming that meets due process as you do with minimum wages. They cut right through the fair labor standards.
Byron R. White: That is adding to the burden of a contract making the employer pay more than he ever promised to pay?
George B. Christensen: Yes.
Byron R. White: Well, is that an impairment?
George B. Christensen: You said form the State view. I beg your pardon, I thought you were talking about the Federal government. No sir, a State could not do it. No sir.
William H. Rehnquist: Could a State do it perspectively?
Byron R. White: For the balance that contract term, you said that the contract has got three years to run and the State Legislature says for the next two years you must double the pay into the contract?
George B. Christensen: I do not think so.
William H. Rehnquist: What about if a state were to say for every employee you hire from now on, you will have to pay him $4.00 per hour?
George B. Christensen: And what becomes the $4.00 Your Honor?
William H. Rehnquist: Whatever the employee wants I suppose?
George B. Christensen: So you increase the wage? I think the answer is the same. I would answer that question No, the statement --
Speaker: Would it make a difference if there were or were not a collective bargaining agreement between the employer and the representative of his employees?
George B. Christensen: In my judgment, no. I think the individually made contract is just as sacred and immune to State impairment as a collective bargained type.
Speaker: Well, in my brother Rehnquist's case you would not have individual contracts with future employees, you would hire them only after the state had enacted the statute requiring a minimum per hour pay of $4.00?
George B. Christensen: Well, if you had no contract then --
Speaker: Well, you would not because by definition he is a new employee.
Speaker: Suppose you have the contract of the Union that says we will pay $3 and the Union says fine and it is a Union shop so --
Speaker: That is my question.
Speaker: And you would say there is that a promise to pay only $3.00 and the State says sorry, but you must pay $4.
George B. Christensen: I think that would violate the obligation of contract.
Speaker: How about if there were no collective bargain agreement and the statute applied only to future employees, employess subsequently hired after the enactment of the statute?
George B. Christensen: Then I think you have a different question.
Speaker: You certainly do, do you not?
George B. Christensen: Then you have a different question. That is all I have, thank you for your attention.
Warren E. Burger: Thank you gentlemen. The case is submitted.


John K. Skaggs, Jr.: As to the right of the respondent in this case to litigate in the unfair labor practice proceeding, the question of whether or not Mr. Taylor, Regional Director, was as a matter of law, a -- an officer of this union. The first time that this Court looked at a situation similar to that was in the Highland Park case, where the question of judicial review of the compliance of a union under Section 9 (h) of the Taft-Hartley Act was a judge to be proper subject of judicial review. It was only natural at following that the various Courts of Appeal would look at that question and that a great many other matters might be presented to the courts for their consideration. In the case of the N. L. R. B. versus Sharples Chemical Company from the Sixth Circuit Court of Appeals, it was there held that the veracity of a non-Communist affidavit filed by an officer, shall we say a constitutional officer, as defined by the N.L.R.B might not be questioned. We have no quarrel with that position. We believe that the N. L. R. B. should be able to judge and determine the veracity of such affidavits as are filed. Again, in the N. L. R. B. versus the Vulcan Manufacturing case, the issue of the truthfulness of the affidavits rights or whether the ostensible officers filing them are, in fact, searched by the union. We made no question but that a party to an unfair labor practice proceeding or representative proceeding does not have the right to question the truthfulness of the affidavits. Then, in American Rubber Products Corporation against N. L. R. B. from the Seventh Circuit, again, we find that the Court notes the distinction between the fact of compliance which it holds is not subject to litigation, and again, distinguishes a necessity of compliance as a matter alone. Then, we come to the two most recent decisions, the case that we have here which is on review from the Sixth Circuit Court of Appeals and a more subsequent case of the Goodman Manufacturing Company case against N. L. R. B. which is decided most recently in the -- in November of this past year and I'm unable to furnish a good citation on that case, where the Seventh Circuit Court of Appeals pinpointed and distinguished all these cases, again reiterating that whether or not a person is an officer and incidentally the Goodman case went off directly on that point is subject to judicial review because again, the definition of the term officer becomes the whole keystone of Section 9 (h) of the Act upon which depends all of the ability of our country to control Communist infiltrations into unions. At least, that may be given under the Taft-Hartley Act. And with that before us, it seems clear that the respondent in this case must turn its consideration to the question of is the constitutional test set up by the N. L. R. B. not a reasonable test because we do not think that but we do not think it is a reasonable test, we do not think that a reasonable test is adequate to supply the demand of the statute. For among other reasons, that the Board, in its brief here, clearly points out, and I refer you to page 50 of the -- 50 to 55 -- wait a minute, that is not correct. I'll have that in just a moment. The Board says that the definition --
Hugo L. Black: Are you looking for that --
John K. Skaggs, Jr.: Yes, sir.
Hugo L. Black: -- might to ask you about fully understood just what you said. I thought that the answer may be no. Did I understand that what you're saying is that if the Court should take the position of this -- this definition is good and that should be the reestablished through, it'd be little of importance to litigate on this other subject, or, when -- when they -- if I raise the question of --
John K. Skaggs, Jr.: Oh --
Hugo L. Black: -- all you'd have left in your judgment would be whether this man was an officer under the Constitution that had failed to agree.
John K. Skaggs, Jr.: Well, it seems to me sir that if this Court should hold, after holding that this is a question subject to review, that if the constitutional test, as defined by the N. L. R. B. is a proper and a right test, it would seem to me that I would have nothing left to litigate.
Hugo L. Black: But why would -- why would it be necessary -- necessary then for the Court to pass on the first question if it decided the second adverse of your position.
John K. Skaggs, Jr.: Well, I believe, sir, that the Court would have to decide the first question favorably to me before it would ever come to the second question. If -- if the question of questioning compliance, if the Court held that it did not have the right to review as a matter of law of the actuality of compliance, the necessity of compliance and that that was the sole province of the N.L.R.B., which of course would be in the very teeth, I submit, sir, of the -- of the N. L. R. B. Highland Park case. Then --
Hugo L. Black: I understand --
John K. Skaggs, Jr.: -- it doesn't seem that we would come to the second question.
Hugo L. Black: I understand that but the point I had was that if it were assumed that you did have power to challenge it as you have --
John K. Skaggs, Jr.: Yes.
Hugo L. Black: -- but the Court held that the test provided by the Board was correct. Thereafter, would there be much left to litigate or would there be any reason why the courts should pass on the first question at all that you concede. I understood you to take the position at the practice, there just nothing left on this -- in connection with 9 (h) unless the -- the Court decided your way on point of a constitutional test laid down by the Board.
John K. Skaggs, Jr.: Well, the Board as I -- as I -- what I wish to make my position, Mr. Justice Black, is this. But while the courts have held in -- or this Court has held in N. L. R. B. or as the Highland Park case which we refer to, that the necessity of actual compliance is ligitable. We believe that now that we are here on that question, that by way of defining the future of the N. L. R. B.'s purpose is that it becomes necessary for the Court to look upon their contention that their constitutional test, namely, the person to define in the Constitution of the union is the correct test. I do not admit, sir, that it is a reasonable test --
Hugo L. Black: I understand.
John K. Skaggs, Jr.: -- nor do I admit that if it were a reasonable test, that it would fulfill the requirements laid down to Section 9 (h). (Voice Overlap)
Hugo L. Black: I -- I think I didn't make my question clear. I understand your position is that that test is no good. It violates the Act. And it does a grave injury because it does violate the Act. And you won't have a right to present evidence to determine whether or not the functions they had amounted to enough to come within some definition. But assuming that you lose on that, what you win, why -- why should there be anything left in connection with the big dispute over whether the Board, whether the company can raise the challenge. Would there still be something left to fight about except whether the --
John K. Skaggs, Jr.: There may well not be, sir. I have not --
Hugo L. Black: That part of it.
John K. Skaggs, Jr.: -- not considered that phrase of it. We have turned in our consideration here to the fact that the Board places a question and it urges that its constitutional test, that is who are named by the unions by laws or rather its Constitution, is consistent with the ordinary and usual meaning of the term "officers." Now, that I do not believe if the definition that may well be given to that and was on page 50 of the Board's brief that I referred to that it admits that there is no special connotation to be given to the term "officer" as it used in the labor statute. And that accordingly, since it places the question on that level, I believe, Mr. Justice Frankfurter, in -- in answer to your question, there -- it becomes no occasion for any judicial deference to be given to the Board's definition of the constitutional test since it does place it strictly on that level and does not purport to attach to it any special significance as being used in a labor statute or in any special significance because the N. L. R. B., as a Board constituted under the Act, has so defined it. Our basis for that is when the words are used in their ordinary meaning, their construction presents solely a question of law and an issue fully appropriate for the exercise of -- I -- we believe the widest scope of -- of judicial review. And our authority for that decision is, of course, the Great Northern Railway against the Merchants' Elevator Company case which was found in 259 U.S. And when this Court has then found that Congress used language in Section 9 (h) in its ordinary and accepted sense which is, of course, the holding in the Highland Park case, then it seems to us, as the respondent, that the ruling in the Highland Park -- Park case is inescapable here. And that the Court judicially must need to review the question of officer and the proper definition of the term “officer”. And it is our contention that the term “officer” should be held to include all persons who are occupying pulls of leadership in unions whose duties, responsibilities, and influence in the union measure up to those as an officer as that term is usually and ordinarily understood. Now, I realize that that is a broad definition. I further confess to a lack of knowledge of the union hierarchy that permits me to be more definite in such a position. But, as I said at the outset here, it is not the purpose of the respondent to in anywise seek to hamper the operations of the N. L .R. B as an administrative board, rather, we seek to have them take a real functional view of the term “officer” as it is used to conduct real ex parte hearings into the persons who constitute those unions, who make their policies, are responsible for their decisions, their actions, before it's pointed out in Judge Parker in the lower court the same decision in the Highland Park Case is far more important that those officers, that the officers of national and international union be required to file these affidavits than it is for the ones at the lower level.
Felix Frankfurter: Mr. Skaggs, you --
John K. Skaggs, Jr.: Sir.
Felix Frankfurter: -- several times, used the word ex parte, you want the Board to make ex parte termination, is that right?
John K. Skaggs, Jr.: I -- I've said that the respondent would not object to the Board conducting its own hearings.
Felix Frankfurter: I wouldn't say -- when you said that to my ears, with my understanding, that within conflict with these claims that there must be a hearing allowed in the main course, well judicial determination, whether or not, in the requirement of the statute has then fulfilled. With ex parte, how can there be judicial reviews?
John K. Skaggs, Jr.: We believe, sir, that if the Board would actually conduct hearings for the purpose of determining who are the officers of the union rather than saying to the union, “You tell us, who are your officers?”
Felix Frankfurter: Well, I don't --
John K. Skaggs, Jr.: -- that that would eliminate the necessity of the judicial review.
Felix Frankfurter: I didn't understand Mr. Findling in behalf of the Board to suggest that they asked the union and that to say so the union govern. I can't imagine that's the position of the Board.
John K. Skaggs, Jr.: Oh --
Felix Frankfurter: And once you say ex parte, then I do not think you can limit them your particular mode of ascertaining the necessary facts to conclusions.
John K. Skaggs, Jr.: I do not --
Felix Frankfurter: It may say -- it may determine it by document. They had Board judicial notice as it were, et cetera, et cetera. When you say ex parte, it takes care for me of the judicial review processes.
John K. Skaggs, Jr.: Mr. Justice Frankfurter, my reason for using the term ex parte was that it seems to me that ex parte is, as far as a respondent could go in saying to a -- an agency of the Government, if you conduct a real inquiry into the functions of these particular persons who are leaders of the union and that is fairly conducted by you. Oh, yes, they might call on any or a board or a group of industry to participate with them, but it seems to me, if they were to undertake the administrative obligation of actually inquiring who are the officers of a union, what are their duties, that they would, in the main, fulfill the requirements that we asked here because we definitely assert that the N. L. R. B. here has sub-delegated the power delegated to it by Congress to determine who were the officers by saying to the unions the persons who are denominated in your Constitution as being your officers are the officers who must file these affidavits.
Felix Frankfurter: Well I -- if I may say so, I should like to give justice we ask the defending -- to tell us to bargain on behalf of the Board, you ought to be in position whether they disavow responsibility as ascertaining on their responsibilities who are the officers within an appropriate test to what is enormous. If the Board says no, we first take the say so of the union as such. They're not thinking quite right in saying they have advocated their responsibility on the statute. What if the reply should be that the Board has defined the officers in a certain way and in the way which they have, subject to the qualifications that the union can place -- should not against Board like keeping an office but (Inaudible) of the office of having somebody to discharge his function, as I understand is the qualification of the Board. And they think that is a fulfillment of their responsibility on their own to ascertaining who is an officer. And I think they'd come within your request for making an ex parte determination.
John K. Skaggs, Jr.: (Inaudible)
Earl Warren: Well, you may proceed and we'll finish after the rise.
John K. Skaggs, Jr.: It is true --
Felix Frankfurter: No, no, no. When you say --
Earl Warren: Proceed.
John K. Skaggs, Jr.: It is true that of course the union, Mr. Justice Frankfurter, if it voluntarily leaves a position in its union constitution open, it is true that if it omits one, that the Board may then order inquiry to determine into the (Inaudible) of leaving the position open or of the failure to fill it or of the change in officer. The point that I wish to make is that, in effect, when the Board says that our constitutional test is in saying to the union furnish us with a list of your elected officers such as are described in your Constitution that they say is compliance with their promise under Section 9 (h). Now, I do not mean to say that the union -- that the N. L. R. B. calls in the union and say, “You tell us who are you officers.” I mean to say that, in effect, when they adopt such a test and such a standard, that that is the effect of it, sir.
Earl Warren: Mr. Skagg, what -- what authority do you have for the fact that while the -- the Board may have the authority to do this in this ex parte manner -- manner that you have mentioned that if it does not do it, you have the right to clutter up a -- a -- an unfair labor practice case with the determination with that matter, with that issue.
John K. Skaggs, Jr.: Well, sir, I believe that -- I believe that I have the Highland Park decision as authority for that as well as the Goodman decision from the Seventh Circuit. Because, if I understand the meaning of those decisions they hold that, or else the other decisions hold that the fact of compliance is something that may not be litigated, i.e. the veracity of an affidavit or the fact that it is actually been filed.
Earl Warren: Well, I take it that -- that your suggestion was that in the ex parte proceeding, if the -- if the Board did hold some kind of a hearing and made some kind of a -- of a ruling that you would be bound by that.
John K. Skaggs, Jr.: I believe that I'd have a lot of difficulty getting away from it, if they had tried to make an actual investigation. For instance, sir, if the -- if the N. L. R. B. had held an investigation of Mr. Taylor or if they had a finding that we have investigated the activities of Mr. W. B. Taylor and we find that his duties are such that under no -- these discharges are nothing of any importance to this union, I believe that I would have been in a great deal of trouble. The fact is that they have done nothing looking in that direction. They have done nothing to ascertain, is Mr. Taylor in the office? Is the Regional Director an officer? Who are the officers? They have merely said we take those people that it furnished us by the unions as being their elected officers and I suggest to you, sir, that the term "elected" is substituted or rather it is said and in front of the word "officers." And we're dealing with deflected officers that the Board treats.
Earl Warren: Well, that leads me to -- to this question. Suppose you were permitted to raise this in your unfair labor practice case and the Board decided against you, would that be res judicata or could any other employer coming along in any other unfair labor practice case relitigate the same issue?
John K. Skaggs, Jr.: I do not believe he could if the duties of the employee had not perhaps had change in the meantime.
Earl Warren: Let's suppose he said it's a functionary, he acted a little differently in my case than he did in -- in Coca Cola's case. Then, would he be denied the right of judicial review if you had it in the first instance?
John K. Skaggs, Jr.: That poses a -- that poses a question and I believe would had to turn upon the individual facts as they may be presented in the particular case. But in the absence of a showing, I believe, by -- and I mean a real showing by the party, I do believe that it would be res judicata upon it.
Earl Warren: Regardless of the effectiveness of which you -- you presented the matter or regardless of whether you -- you put the same factors before the -- the Board that -- that the next employer claimed were in his case maybe instead of sitting in the room when the collective bargaining was going on. In the second case, he actually took some part of it in it and then he would -- they would claim that that was -- it was a different functionary. Do you think that you would be precluded or the second man would be precluded from litigating that because you had done under one set of facts?
John K. Skaggs, Jr.: Well that -- that is something that would be very difficult to determine, but I believe that I may answer that by saying that the N. L. R. B. may well discharge that function by conducting a real hearing into the functions and the duties of the various labor officers or persons who are labor leaders, shall we say. It follow -- I make that statement on the authority of the record in this case where it is set forth that the officers named by the CIO have not changed in a period from 1946 through 1954.
Earl Warren: I wonder, we're entitled to assume but because there was no formal hearing on this 0subject, I, the Board that it did not give consideration as to who were actually officers of the CIO.
John K. Skaggs, Jr.: I think that we are definitely entitled to assume that, sir, from the portion of the record that I read you this morning, that appearing in 530 and 531 (a) -- 530 (a) and 531 (a). Because, therein, they state that even though the facts that we offer to prove were admittedly true that under their constitutional test, Mr. Taylor would not have been an officer.
Earl Warren: Well, but, but that still doesn't mean that they didn't make any investigation because under their constitutional test, any one who is the constitutional officer or who has been left out through fraud or deception is also an officer in the eyes of the Board. Now, is there anything in the record to show that -- that the Board did not look into that situation to determine whether there are any -- any persons acting as officers who were fraudulently concealed as such?
John K. Skaggs, Jr.: There is nothing in the record, so far as I know, other than the admissions contained in the Board's brief that its constitutional test consists of accepting the officers that are furnished to get by the union as being its officers duly elected and named in its Constitution. So --
Earl Warren: What I understood Mr. Findling to say that -- that that's only in the first instance, but they invite suggestions from employers or from interested parties or even from within the union that -- that the facts do not conform.
John K. Skaggs, Jr.: I think that that is a correct statement only if it appears that the name of an officer, or we'll say the position of an officer defining the Constitution has been changed or has been left vacant. The N. L. R. B. then may inquire as to why that officer was not elected or why that office was left vacant. Now, I believe that those are the only two instances on which the Board undertakes such an inquiry or where they will listen to a party litigant. Now, the Board may, upon its own volition do that, I believe that anytime, in connection with any representation or any unfair labor practice proceeding, but it would not be open to an employer to question their point.
Hugo L. Black: Was there any question about this man Taylor?
John K. Skaggs, Jr.: I can make no question about Mr. Taylor. Personally, he only performed a very important function as set forth in the brief of the -- of the Board. He has -- he had 89 local unions in the State of Kentucky under his jurisdiction. We offer to prove that he swayed and made policy for those unions. We offered to prove that he sat in their conferences, that he said in the conferences in connection with this -- with the representation case which the Board refers to in this record and that he actually was a person of prominence in the union and a person exercising powers and controls in the union which we believe come under our definition of officers with the Board.
Hugo L. Black: If you had experience, I just want to -- you'd realize that your definition would make a lot of top sergeant as officers.
John K. Skaggs, Jr.: Well, sir, I believe that a lot of top sergeants are officers [Laughter] and perhaps is better than some others [Laughs].
Hugo L. Black: Well, I -- I don't deny that. I had one.
Stanley Reed: In your reference to page 531 (a), I -- I notice that the Board says accordingly, we -- we affirmed the Board's determination made earlier representing the case, represents the case involving similar issues, what -- what's the meaning of that?I -- I looked at the other case and it doesn't seem to have any bearing on this.
John K. Skaggs, Jr.: Mr. Justice Reed, at the -- prior to the -- prior to the beginning of the unfair labor practices case which is the one that we are hereon, this same union filed a petition --
Stanley Reed: But for the other --
John K. Skaggs, Jr.: -- that -- that an election be held for the purpose --
Stanley Reed: Well, the hearing hold in remain to who should take part on the election.
John K. Skaggs, Jr.: Only to who should take part in the election.
Stanley Reed: The election.
John K. Skaggs, Jr.: And they sought to be designated the bargaining representative.
Stanley Reed: What -- what's that got to do with this situation?
John K. Skaggs, Jr.: Only that the -- that we raised the same issue concerning Mr. Taylor and the representation hearing --
Stanley Reed: Oh, that's the --
John K. Skaggs, Jr.: -- and the Board ruled the same way that they ruled here. Thank you very much.
Earl Warren: Mr. Findling, would you mind answering Mr. Justice Frankfurter's question and then I believe you have want to correct some figures you gave, you may do that briefly.
David P. Findling: Yes, Your Honor, thank you. Of course, we don't permit the unions to tell us what our officer test is going to be nor to determine who are the officers. We've established the -- the definition of the word "officer" on our own responsibility. And in addition to looking at the Constitution which has to be filed with us, we require the unions to submit, to what we call a form 1080 which is a -- a testament under oath and subject to the usual penalties and perjuries in which they require to state who the officers are according to their Constitution and by laws. And if there's any suggestion from any responsible source, if it's been evasion or fraud that we investigate that and it hasn't, it isn't limited to the situation where a man's name comes out of the Constitution. Of course, that's the most obvious suspicious circumstance and that has been the one that has come up most often. But there have been situations, for example, where a -- a union president resigned after charges of Communist affiliation, and the assertion has been made that despite his resignation, the -- the -- he's continued to discharge the office of president, we'd looked at that administratively. And --
Earl Warren: Have you had some formal hearings of that character?
David P. Findling: We have had -- in which testimony it was taken, Your Honor?
Earl Warren: Yes.
David P. Findling: Only one but not under Section 9 (h). It was in connection with the failure to -- to serve copies of financial statements on all union members. In the 9 (h) situations, we view -- we've issued a rule to show cause. It's to show why the union shouldn't be declared out of compliance, for example, because of the failure of a given union agent to file an affidavit, there's been a response and the Board has, up to now, and I think there have been about 18 or so such cases the Board has up to now been able to determine the question on the basis of the return and the briefs and argument and so on. In some cases, the Board has said that new affidavits are required for people not designated as officers.
Felix Frankfurter: May I go back to the specific case you gave? As I understand you that the case was that none of (Inaudible) refer to this. He in fact would submit -- would have acted as --
David P. Findling: Now, in --
Felix Frankfurter: You made inquiry as to whether in fact it's made (Inaudible)
David P. Findling: We -- we looked in -- yes, Your Honor. We looked into --
Felix Frankfurter: That is the situation.
David P. Findling: Yes, sir. We looked into the situation to see whether or not the assertion is made, that the particular man who had resigned as president continued to function as president --
Felix Frankfurter: Well, (Voice Overlap) --
David P. Findling: -- but we conducted administratively and no hearing, no formal hearing.
Stanley Reed: But you wouldn't -- you wouldn't listen to the complainant's evidence on that. You merely sent your own investigators to find out what they could.
David P. Findling: Well, Your Honor, we listened -- we invited -- we invited the --
Stanley Reed: I thought you said (Voice Overlap) --
David P. Findling: No -- no formal hearing, Your Honor. We didn't permit him --
Stanley Reed: That -- that he sworn and nobody testified?
David P. Findling: No. It has -- he wasn't. The Board found after conducting the investigation that on the basis of admitted facts, it wasn't necessary to go further. As I say, if the facts were disputed, undoubtedly, the Board would conduct a formal hearing.We have in one case, not under 9 (h). But in the other cases, we haven't found it necessary to do so, but I -- I want to correct that any impression that the Board will close its ears to evidence from any source, whether it happens to be the particular employer in a particular case or not with respect to an abuse of its processes. Now, we backed it on presentments by a grand jury. We backed it on indictments. We backed it on the basis of the published statements and newspapers, even, made simultaneously with an execution of an affidavit which seemed inconsistent with the assertions made in the affidavit that we'll take, we'll listen to any source. But we, under the administrative procedures we follow, will determine administratively whether or not, what further evidence needs to be taken, whether a formal hearing at which formal evidence has taken us on. And we've taken the position that that question is not subject to litigation in the particular unfair labor practice case which may be pending at the time and in which some citizen in this case, it happens to be an employer who has an interest that comes forward with the evidence. In this case, it wouldn't matter to us that the Coca-Cola Company was a party to the unfair labor practice case. We would welcome any evidence they hand without regard to the fact that they're involved in this particular case. If it affected an -- an abuse of process in connection with the submission of the 9 (h) affidavits and that's the way we've acted in the past.
Stanley Reed: But how -- how can they get evidence unless they have the authority of the Board, the subpoena, and swear, and examine into the organization?
David P. Findling: Well Your Honor, under our rules and -- and Mr. -- the Coca-Cola Company had this privilege here, they came into our office. And under -- under supervision, we won't let them go through our files without some supervision, but they were permitted to go through our files and look through the affidavits. And that was in 19 -- late June -- July 1951. And then in 1952, they came back and asked to look at the affidavits again and at that time, we sent them a letter in which we said what our record showed. In other words, the Board doesn't refuse to disclose to any interested party whatever information it has on the file, but it -- and that's would happened in this case.
Stanley Reed: I understand that --
David P. Findling: So we give it to them.
Stanley Reed: I understand that you don't give the complaining -- or shall I say the complainant an opportunity to cross-examine the people that are in the labor organization and determine -- have you determine whether or not they're telling the truth whether -- whether the facts are stated and so on.
David P. Findling: That is true, Your Honor. We take the position that the question whether or not a union is in compliance with the 9 (h) is a matter between the union and the Board not subject to litigation in a particular unfair labor practice. But as I say and I don't want to --
Stanley Reed: Or -- or in any other.
David P. Findling: Or in the representation case. It's only subject to examination in an independent administrative inquiry conducted by the Board. And I don't want to repeat myself unduly, but I do want to emphasize that we -- we invite -- we invite evidence of abuse of the compliance, the date and so on. And we've conducted, as I say, in numerous inquiries.
Stanley Reed: Unconfirmed reports.
David P. Findling: I beg your pardon?
Stanley Reed: You invite unconfirmed reports?
David P. Findling: Well, if anybody has any evidence, we'll look at it but we -- we say, we don't have to make that the subject of a formal hearing everytime somebody comes in with something on it. And he can't clutter up the record in the unfair labor practice proceedings with that. It goes to the whole -- it goes to every case that the CIO or the AFL was filed, not to the particular case. Now, I -- I made a grossly inaccurate response to Mr. Justice Frankfurter's question about the -- the figures with respect to how many cases there were and so on and our executive secretaries office has given the -- the correct figures and I would like to give them to the Court. Last year, we had 6100 odd charges of unfair labor practice cases filed with us, 6171 and we had 7165 petitions for elections of one kind or another file, representation cases of those. Now, of course, potentially, every one of those cases may be the subject of an administrative inquiry into compliance. But of those cases, actually, about 400 of the unfair labor practice cases went to formal hearings so that potentially there was opportunity for litigating in that particular case, the question of officer status. And that's 400 unfair labor practice cases, 400 of the -- of the 6100. Of the 7000 odd representation cases, 2000 roughly went to formal hearing so that we -- we might have had formal contest at a regular Board hearing involving unrelated questions as to the officer status of a -- of the union agent. Thank you very much, Your Honor.
John K. Skaggs, Jr.: Mr. Chief Justice. May I --
Earl Warren: Yes, Mr. Skaggs.
John K. Skaggs, Jr.: May I call the attention to one typographical error in our brief, appeared at page 44.
Earl Warren: Certainly.
John K. Skaggs, Jr.: Somehow or another, we failed to get in the word following the definition should we apply in the correct definition to the term "officer" appearing in Section 9 (h) as against --
Earl Warren: Where --
John K. Skaggs, Jr.: -- to the claim.
Earl Warren: Is that on page 44?
John K. Skaggs, Jr.: -- 44, yes, under subheading (a).
William O. Douglas: Of officer in Section 9 (h).
Earl Warren: Oh, definitely.
John K. Skaggs, Jr.: Definition of the term "officer" in Section 9 (h).
Earl Warren: Thank you Mr. --