Court Opinion

ID: 9652654
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:29:46.196631+00
Date Added: 2024-06-11T18:12:53.292687
License: Public Domain

RUTLEDGE, Associate Justice
(dissenting in part).
I concur in the conclusions reached by the majority so far as they hold that the orders of the Board should be sustained. In some respects I regard the facts shown by the refcord not only as sufficient to sustain these conclusions, but also as more *948strongly supporting them than the majority’s opinion indicates. I agree that the order must be modified by eliminating the provision for reimbursement of relief agencies.
But I dissent from the view that the orders of the Board should be modified in other respects. The most important point of difference relates to the conclusions with respect to the holding company, Gannett Co., Inc. In my opinion the evidence clearly established that it dominated and controlled the Press Co. in its employment relations and in other respects; that it was guilty of unfair labor practices toward the complaining employees; and that, under the circumstances of domination shown in respect to these practices, relief was required against Gannett Co., Inc., if it was to be fully or perhaps at all effective. These and other issues are intertwined in the evidence, and some further statement of it than has been made is necessary for presentation of my views.
I. Press Co. is an operating unit in a highly integrated and extensive corporate system. Gannett Co., Inc., is the holding corporation. It also publishes two newspapers. There are some fifteen other operating subsidiaries. In at least five, including Press Co., Gannett Co., Inc., holds 100;% of the voting capital stock. It holds pr controls from 50-)-% to 93.22% of the voting stock in the other subsidiaries. Bonds and preferred, nonvoting stock have been largely distributed to the public. Frank E. Gannett holds more than 98% of the voting stock of Gannett Co., Inc. Each corporation has a board of directors, but Gannett, Frank E. Tripp and H. W. Cruickshank or some combination of two of these three constitute a majority in the boards of eleven of the subsidiaries, including Press Co. They also are on the board of the holding company, which has four other members. Gannett is president of the holding company and of thirteen of the subsidiaries. Tripp is an officer of the holding company and of eleven subsidiaries, and Cruickshank of the holding company and of thirteen subsidiaries. The lines of legal control of the system are therefore well concentrated within the hands of these three, and in no place more securely than with respect to Press Co. By virtue of his ownership of substantially the entire voting stock of Gannett Co., Inc., and its ownership of all the voting stock of Press Co., Gannett is of course the dominant figure in the trio, in the chain, and in each of its links, including Press Co.
For some purposes, such an integration of power and identity of interest would be sufficient in itself to justify or require identification of Press Co. with Gannett Co., Inc. But the commonly repeated dogma is that something more than identity of share ownership, voting control and dominant personnel in interlocking directorates must be shown in order to wipe out the segregation of legal relations which incorporation under other circumstances provides. If so, the concentration of legal controls was matched here by one of virtual or actual controls.
In important respects, of course, each corporation went about its own business. Each had its own subscription lists, its own local advertisers, its own staff. For some purposes the particular unit’s relation to the chain was unimportant and to that extent it may be assumed that the formal separate grouping of legal liabilities — and rights — would be effective substantively.
But in other and, for present purposes, more important respects, the units were not independent — they were rather merely links in the chain, parts of the entire system, each connected with the other and operated as parts of the whole. There were periodical “conferences” at Rochester, the headquarters of Gannett Co., Inc., concerning business policy, editorial policy and publishing problems for the entire “Gannett Group.” It had a uniform system of handling advertising, and apparently a common advertising agency. The different member papers exchanged services and adopted services of the central Gannett offices without charge. Editorials were sent out from the central Rochester offices to all chain papers and generally were published by them, in some instances optionally, in others apparently as “must” editorials. At least one airplane was used to gather news for the member papers. A “guidebook” was sent to all newspapers in the “Group” to achieve uniformity in style, make-up, etc. A chain “house organ,” “the Gannetteer,” was distributed throughout the chain and bore the label: “Published by the News and Editorial Office of the Gannett Newspapers.” Control of financial policies also was exerted from Rochester. Instances could be multiplied, but these show sufficiently that in important business respects the chain was operated as a chain, not as disconnected links.
*949It is said that this has no significance other than would pertain to similar activities carried on by corporations independently owned and controlled. But the very essence of the philosophy which dictates that the formalistic segregation of legal relations be disregarded is that the foundation for it has been destroyed by the conjunction of two things: (1) identity of legal controls in the hands of the same persons or interests, and (2) identity of actual, operating control exercised to such an extent that in practical effect a single enterprise results. When to identity of stock ownership and legal voting power is added a failure to observe in actual operation the separations formally established by the distinct incorporations, their distinctiveness disappears if otherwise the policy of the law will be defeated in respect to the particular matter in issue. So in this case, as shown by the instances stated and others, the lines of corporate integrity have been blurred in many respects and wiped out in others.
However, general domination of one corporation’s affairs _ by another may not require that the legal and formal segregation be ignored in respect to a particular matter. The-fact that there has been commingling of activities in many respects does not always require that in others the separation be disregarded. When, however, the commingling not only is general, but relates to the very matter in issue, and the effect of maintaining the separate grouping of rights and liabilities would be contrary to some paramount policy in respect to that matter, incorporation affords no escape from the enforcement of the policy. The policy of maintaining corporate formal integrity gives way to the stronger one presented by the particular issues. In the present case this means that the holding company is to be held accountable, if the failure to maintain the corporate segregations relates to and has substantial effect upon the labor relations of Press Co. and its employees in producing the unfair practices complained of, and if a failure to take account of that fact would defeat or impair the policy of the Wagner Act.
It is exactly in respect to the labor relations of Press Co. — and other subsidiaries— that the record discloses the clearest evidence that the lines of legal and business control separating Gannett Co., Inc., and Press Co. were ignored. All the Gannett newspapers negotiated together a uniform wage cut of 10% during the early years of the depression. Such simultaneous uniformity among so many “independently” controlled companies would be a remarkable coincidence. McDonald, general manager, treasurer and director of Press Co., testified that a uniform policy of employment was “universally adopted by all our papers as a result of an order from the general manager.” The general manager referred to as the author of the order was Tripp, who occupied that position with Gannett Co., Inc., not with Press Co. In a general conference of managing editors Gannett expressed the view that “the Wagner Act, passed to avoid labor disputes, has failed.” He discussed labor policies in some detail, stating that he was not opposed to the Guild, but was discouraged by some developments, such as a tendency of tjie Guild to lessen the interest of newspapermen in their work and to make the capable suffer for the deficiencies of the incapable, the possibility of a closed shop and fears that increasing demands on wages and hours would threaten the lives of many papers. That these views had more than merely academic effect is shown by the remarkably similar, but much more emphatic, statements made by Atwood, Lewis and other executives in the long course of negotiations between Press Co. and the Guild. Gannett and Atwood were more conservative in their statements than Lewis, who made the covert hostility open and unreserved. But all of them were concerned that the Guild should devote itself primarily to ethical standards, not to the workers’ economic interests, all expressed the view that unionization was beneath the dignity of editorial employees, and all kept close watch upon the Guild and its members. Atwood and Gannett, chiefly the former, were the persons to whom Lewis made his periodical reports recounting the results of his surveillance of the Guild. It is clear, therefore, that the views expressed by Gannett in these conferences, and reflected by Atwood and Lewis, were intended and had effect as a chainwide policy. They were not reached and executed by each corporation independently and through its own officials acting without influence and control from.the system. In the execution of the system’s uniform policy, Gannett was the real power, but Gannett Co., Inc., was the principal instrument, the key link in the complex chain. Through it, actual and operating, as well as legal and formal, control over Press Co. and its affairs was exercised.
*950Although this is shown by many facts, it appears most clearly, even conclusively, by the part which Atwood played. He is the incontrovertible connecting link between Press Co. and Gannett Co., Inc., and in fact between Press Co. and the chain, as well as its dominant figure, Gannett. Atwood was “associate editor” or “Editorial Director” of the Gannett Newspapers. 'He had no official position with Press Co. His only connection was with Gannett Co., Inc., which paid his salary and prescribed his duties. What he did, therefore, must be ascribed to Gannett Co., Inc., if it is to be given official effect. Unlike some others, he had no ambiguous official situation. He was connected with one, and only one, corporation. He could not alternate at will between his capacity as an officer of Gannett Co., Inc., and a similar capacity as an officer of Press Co. He either acted officially and exclusively on behalf of the holding company or over an extended period was engaged constantly in business activities which were entirely outside his official duties and the corporate affairs of his employer. It cannot be assumed that departure so gross, constant and long-continued would be tolerated, if what he was doing was none of his master’s business. On the contrary, the conclusion is inevitable that his corporate employer knew of, assented to and in fact directed his intervention in the affairs of Press Co. By doing so, it made them its own.
A full record of Atwood’s participation in the Press Company’s business cannot be given here. He was active constantly, almost daily, and over a long period of years in its affairs, whether they involved business matters, editorial policy or labor problems.
He consulted with Eddy, managing editor of the Press for twelve years, “almost daily” on salaries, purchase of features, editorial management, use of “Rochester” editorials, etc. Some of this took the form of “instructions” or “directions,” and Eddy understood it as such. He informed Eddy of his promotion to the position of managing director. Hyde, managing editor of the News for four years, had the same frequent consultation with Atwood, received numerous memoranda from him on how to conduct his work, customarily told him his plans, and testified that there were only two instances in which he “overruled Mr. Atwood and was permitted to proceed.” (Italics supplied.) Miss Raymond, secretary successively to Eddy, Hyde and Lewis, testified that they maintained constant communication with Atwood. Supervision so close, sustained and authoritative hardly can be accepted as constituting merely friendly “counsel,” “advice” or “suggestion.”
But it is in relation to Press Company’s labor relations and problems that Atwood’s intervention was most constant and authoritative, during the period covered by its negotiations and controversies with the Guild. His activities may be summarized by saying that he had a hand, in my judgment a controlling one, in nearly everything which‘Lewis did, as well as other matters. It is upon Lewis’ conduct, principally, that the majority rely in finding that Press Co. was guilty of unfair labor practices, requiring that relief be given by the Board. In my judgment the facts show that Lewis and Atwood worked hand in hand constantly and throughout the period of controversy. They show further, in my opinion, that of the two Atwood had the superior power.
Atwood was the person to whom Lewis sent his weekly reports of the results of his surveillance of the Guild, except in the rare instances when he reported to Gannett. Lewis kept Atwood informed concerning the Guild’s meetings, what occurred in them, what it was planning, who joined and who refused to join, what he thought about its more active members, and many other matters. The function of these reports could have been only to enable Atwood to keep close tab on the Guild and Press Company’s relations with it. Neither an independent executive nor a spy reports with such regularity and thoroughness to one who is merely a friendly outsider, in order to secure from him kindly, but unauthoritative “counsel” and “advice.” The conclusion is irresistible that Lewis reported to Atwood because he was required to do so and because Atwood was required not only to receive but to act upon these reports when action became necessary. The true relation between the two men is disclosed, perhaps unconsciously or merely from habit, by the fact that Lewis always addressed Atwood in these reports as “Dear Boss.” Atwood was thus directly a party to Lewis’ surveillance of the Guild, and since the reports were made to him, he was the more authoritative party. If Lewis was guilty of surveillance, Atwood was equally guilty of it.
*951These facts take on greater significance and conviction when it is recalled that it •was Atwood, not McDonald, Press Company’s “policy-making official,” who aided Lewis in making up the list of editorial employees who were to be retained after the merger, and therefore in selecting those who were discharged. Atwood thus also had a hand directly in the final act which •constituted unfair discrimination against the’Guild and its members. He was the one who informed Hyde of his discharge at the time of the merger. That his participation in the surveillance and the discriminatory selection was not mere casual and advisory intervention in Press Company’s business appears both from the nature of these acts and from other facts. During the long negotiations with the Guild, Atwood and Lewis wrote to each other almost daily. Atwood took an active part in these negotiations. He attended nearly all of the meetings with the Guild leading up to its agreement with Press Co. In these he spoke for the management, not merely as an “adviser,” but also as one having authority, -and he was understood by Guild members as speaking in this manner. In dealing with Lewis, McDonald and others, the Guild constantly had trouble in finding some one who would admit having power to act when, after negotiations long drawn out, it demanded decision. The usual reply was that the matter would have to be referred “to Rochester.” This was true both before and after Cruickshank arranged for McDonald to supplant Lewis in further dealings with the Guild. Yet, on one ' occasion when an impasse had been reached and the usual plea of no authority was made, the president of the Guild wired Gannett, demanding a conference “with án authorized representative of the Gannett Newspapers.” Gannett replied: “Your telegram received referred to Mr Atwood authorized representative.” McDonald testified that he had no hand in selecting the employees for postmerger retention, except to accept without question or change the list made by Lewis. If McDonald had been, as petitioners contend, Press Company’s “policy-making official” with real, rather than merely shadowy authority, this action would have been strange in view of .Lewis’ previous disqualification to deal further with the Guild and McDonald’s supplanting of him in this function. The more reasonable explanation is that McDonald knew that Atwood had approved the list made up by Lewis and recognized that neither he nor Lewis could overrule what Atwood had sanctioned.
In view of this evidence, the conclusion is inevitable that Atwood, more than any other person save perhaps Gannett, exercised a dominant and controlling authority-in the affairs of Press Co. and particularly in its relations and dealings with the Guild and its members. He and, through him, Gannett Co., Inc., were responsible for the unfair practices to which the Guild and the complaining employees were subjected. If Lewis was guilty, Atwood was equally so. If Press Co. was guilty, so was Gannett Co., Inc., by virtue of Atwood’s domination of the former’s affairs.
As against this view and the facts which support it, petitioners say that Press Co. is an autonomous corporation, with McDonald, its treasurer and general manager, as the policy-making official; that Atwood had no official connection or real authority in Press Company’s affairs, but acted solely in an “advisory” or “consulting” capacity; that “Rochester,” to which were referred all matters of importance for final decision, meant not Atwood or Gannett Co., Inc., or any of its officials, but merely Gannett, Cruickshank and Tripp, acting exclusively in their capacities as officers and directors of Press Co., and wholly without reference to their like capacities as officers and directors of the holding company and of other subsidiary corporations in the Gannett chain.
Apart from their inconsistencies, these arguments are not sustained by the evi-. dence. McDonald, as a “policy-making official,” had no real or final authority. When any important point of labor policy came up, he disclaimed authority and referred the matter “to Rochester.” This occurred repeatedly. When the Guild protested concerning action taken, he denied responsibility and said that the acts were done or ordered “by Rochester.” His impotence in labor matters was matched in others.1 It was characteristic also of Press Company’s other officers, including Lewis, who reported almost daily to Atwood, and *952Cruickshank, who said he expected to “get hell” from “Rochester” for making concessions to the Guild.
As to Atwood, enough has been stated to show that he was no mere “adviser” or “consultant.” “Advice” so persistent and authoritative, coming from such a source, takes on the character of command.
Nor can the view be accepted that “Rochester,” to which so much was referred, meant only those persons who were directors and officers of Press Co. and resided or maintained their headquarters in Rochester, acting exclusively in these capacities. However much force such an argument might have, in a case in which the separate links in a corporate chain had maintained a rigid formal and operating distinctiveness in their affairs, Atwood’s intervention in Press Company’s business destroys all basis for its acceptance heire. Other facts also bear out this conclusion. There is no showing that when matters involving decision of important labor policies of Press Co. were referred to “Rochester,” meetings of that corporation’s board of directors were called to consider and determine them. When McDonald, also a board member, referred such matters to “Rochester” and “Rochester” decided them, McDonald remained in Albany, although that board did meet on occasion as to other matters, and when it did so McDonald attended. It is, of course, not always essential to valid corporate action that directors meet and formally adopt resolutions. But when it is insisted that the formal separateness of corporations integrated as these were be observed by the courts, it is appropriate to reply when the facts require it that neither the corporations concerned nor those who manage them have observed that separateness themselves in operating their affairs or the formalities by which their observance of it may be evidenced. In so complicated a structure of legal authority and operating power as was presented here, one attempting to deal with a particular unit, such as Press Co., may be confronted with a perpetual game of hide-and-seek in the maze of interlocking officials and capacities to find the actual persons'who have power to act. That was in fact the situation of the Guild in its efforts to reach an agreement with Press Co. and the Gannett chain. In this game “Rochester” was a convenient hiding place, a very useful ambiguity. It was reference to “Rochester” by Press Co. officials which made a merry-go-round of the Guild’s efforts to secure an agreement.
The majority accept the view that “Rochester” consisted exclusively of Gannett, Tripp and Cruickshank, acting only in their capacities as officers and directors of Press Co., and without regard to their similar positions with Gannett Co., Inc., and its other subsidiaries. In my judgment that view is untenable. The exact identity of “Rochester” cannot and need not be determined. There was no such consistent, identifiable personality. At times “Rochester” was Gannett; at others, it was Atwood ; at others, it was some other .official or officials of the chain, who may have been officers of Gannett Co., Inc., or of that corporation and of Press Co. In any event 'the important fact in this background was that the lines of separate corporate interest, management and control were not maintained. They were disregarded, as business convenience dictated in such an integrated structure of power. The focal point of action, and of control, was the holding corporation, Gannett Co., Inc. Through it the entire system of subsidiary operating companies was managed and directed. Responsibility should be commensurate with power. In this case, Gannett Co., Inc., should be held responsible for its constant, close and inescapable dominaof Press Co.
II. The question remains concerning the nature of the appropriate relief. The authorities clearly establish that when a parent corporation has interfered with and dominated its subsidiary in its relations with employees and in perpetrating unfair labor practices upon them, relief may be given against the parent company. Orders of the Board based upon facts and findings similar to those involved here have been enforced by the courts on numerous occasions. 2 Such relief seems required by Section 2(2) of the Wagner Act, which provides that the term “employer” as used in the Act “ * * * includes any person *953acting in the interest of an employer, directly or indirectly * *
It is said that even if domination of Press Co. by Gannett Co., Inc., is found to exist, relief against the latter should be limited to that contained in the “cease and desist” provisions of the Board’s order, and that one must be an employer as the term is “generally used” in order to be required to take affirmative action. I find no basis for such a distinction in the statute. Section 10(c) provides that if any person is found to have engaged in unfair labor práctices, the Board “shall issue * * * an order requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action, including reinstatement of employees with or without back pay, as will effectuate the policies” of the Act. Nothing in this justifies the view that affirmative relief may be had only against persons who are employers in some more limited sense than as the term is defined in Section 2(2). The relief provisions are remedial [Republic Steel Corp. v. N. L. R. B., 1940, 311 U.S. 7, 61 S.Ct. 77, 85 L.Ed. -], but they also leave to the Board a discretion to determine whether affirmative relief is required and to choose the particular relief to be ordered. N. L. R. B. v. Pennsylvania Greyhound Lines, Inc., 1938, 303 U.S. 261, 265, 58 S.Ct. 571, 82 L.Ed. 831, 115 A.L.R. 307. When a subsidiary corporation is shown to be dominated by a holding company as Press Co. was by Gannett Co., Inc., in all of its important policies and decisions, the holding company has the power ultimately to determine the question of compliance with every respect to the Board’s order, affirmative as well as negative. In my judgment it is not an abuse of the Board’s discretion to require the dominating company to make the order against the subsidiary fully effective. Cf. Consolidated Edison Co. v. N. L. R. B., 1938, 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126, affirming in pertinent respects, 2 Cir., 1938, 95 F.2d 390, 393; N. L. R. B. v. Pennsylvania Greyhound Lines, Inc., 1938, 303 U.S. 261, 58 S.Ct. 571, 82 L.Ed. 831, 115 A.L.R. 307, enforcing, 1935, 1 N. L. R. B. 1, 43; N. L. R. B. v. Timken Silent Automatic Co., 2 Cir., 1940, 114 F.2d 449. If, because of the unified control, the “cease and desist” provisions can be made effective only by directing the order to the dominating company [cf. N. L. R. B. v. Hearst, 9 Cir., 1939, 102 F.2d 658], that would seem to be true, and for the same reason, concerning its affirmative requirements, notwithstanding the contrary view expressed in the case last cited.
III. I think the evidence was sufficient to sustain the findings and order in respect to Mowers. It was in conflict as to whether the duties assigned him after the merger were of a kind customarily given to a “cub” reporter and inappropriate for a highly skilled and paid man of long experience. Much of petitioners’ evidence on this issue was to the effect that all work on a newspaper is equally important. This was opposed by evidence showing that work of the kind assigned to Mowers was of routine character and generally given to young and inexperienced reporters. The evidence upon this question presented merely a question of fact, which the Board has determined against the petitioners. See, 1939, 13 N. L. R. B. 630, 647. There was room for conflicting inferences also on the question whether Mowers’ new duties were given to him for sound business reasons in the reorganization following the merger or on account of his affiliation and activities with the Guild. Certainly they differed materially from those he had done previously and there is no claim that he was less skilled or valuable after the merger than before. Mowers complained to the city editor concerning the change, but without results. When he concluded eventually that Press Co. offered him no future, he accepted a temporary position elsewhere at a slightly smaller salary. The effect upon him, subjectively, was to give his exit the character of a subtly forced departure. Whether this was intended by the employer and, if so, because of his union connections and activities, presented questions as to which, upon the evidence, conflicting inferences were possible. The Board having made them in favor of Mowers, its determination should be final and we should not interfere with it.
I also think that the evidence showing the existence of unfair labor practices supports the order of the Board much more strongly than the majority opinion indicates. This is especially true in regard to surveillance 3 *954of the Guild’s activities. The Board found that this constituted coercion on the part of petitioners’ executives toward the Guild and its members. This and other evidence of hostility toward the Guild, particularly on Lewis’ part, gave character to the culminating acts of unfair practice. 4
I should like to add also to what the majority have said concerning the charge that the Board prejudged the case, that the Board in self-respect could not do otherwise than it did, namely, repudiate the calumny with vigor. As originally made, it was ambiguous, but by clear innuendo and by repeated refusal to clarify his meaning, both at the hearing before the Board and here, counsel sought to create the impression that the Board members themselves, as distinguished from their prosecuting subordinates, had prejudged the case in a manner which, if true, would have amounted to misconduct in office. When the Board repudiated the implication and asked that counsel clarify his meaning, he disclosed his true intent by asking that the Chairman’s remarks be preserved in the record as "further evidence of the Board’s bias.” (Italics supplied.) Such a charge would not have been made in court with impunity. It is at least a mild disposition of the matter to say that counsel “brought upon himself” the Board’s retort. Certainly, under the circumstances which called it forth, it was not error or “evidence of bias.”
I think the order of the Board should be affirmed without modification, except in respect to paragraph 2(b), from which the provision for reimbursement of relief agencies should be stricken in view of Republic Steel Corporation v. N. L. R. B., Nov. 12, 1940, 311 U.S. -, 61 S.Ct. 77, 85 L.Ed.

 For instance, negotiations with Hearst which led to the merger of the two Press Co. papers were begun in May, 1937, but it appears that McDonald knew nothing about them until June 23 following, .six days before the agreement was consummated.

 N. L. R. B. v. Pennsylvania Greyhound Lines, Inc., 1938, 303 U.S. 201, 58 S.Ct. 571, 82 L.Ed. 831, 1115 A.L.R. 307; Consolidated Edison Co. v. N. L. R. B., 1938, 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126; Union Drawn Steel Co. v. N. L. R. B., 3 Cir.. 1940, 109 F.2d 587; N. L. R. B. v. Lund, 8 Cir., 1939, 103 F.2d 815, 818; N.L.R.B. v. Hearst, 9 Cir., 1939, 102 F.2d 658, 660-663. See also N. L. R. B. v. Hopwood Returning Co., 2 Cir., 1938, 98 F.2d 97, on contempt application, 2 Cir., 1939, 104 F.2d 302.

 Although much of the evidence showing that surveillance existed was derived from the testimony of the private secretary of Lewis, we have been cited to no authority and we know of none which gives to such a witness or her employer a privilege in relation to their communications, however appropriate the creation *954of such a privilege by legislation may or may not be.

 Cf. International Ass’n of Machinists v. N. L. R. B., 1940, 311 U.S. 72, 61 S.Ct. 83, 85 L.Ed. 406.