National Labor Relations Board v. Truitt Manufacturing Co.

Mr. Justice Black

delivered the opinion of the Court.

The National Labor Relations Act makes it an unfair labor practice for an employer to refuse to bargain in good faith with the representative of his employees.1 *150 The question presented by this case is whether the National Labor Relations Board may find that an employer has not bargained in good faith where the employer claims it cannot afford to pay higher wages but refuses requests to produce information substantiating its claim.

The dispute here arose when a union representing certain of respondent’s employees asked for a wage increase of 10 cents per hour. The company answered that it could not afford to pay such an increase, it was undercapitalized, had never paid dividends, and that an increase of more than 2% cents per hour would put it out of business. The union asked the company to produce some evidence substantiating these statements, requesting permission to have a certified public accountant examine the company’s books, financial data, etc. This request being denied, the union asked that the company submit “full and complete information with respect to its financial standing and profits,” insisting that such information was pertinent and essential for the employees to determine whether or not they should continue to press their demand for a wage increase. A union official testified before the trial examiner that “[W]e were wanting anything relating to the Company’s position, any records or what have you, books, accounting sheets, cost expenditures, what not, anything to back the Company’s position that they were unable to give any more money.” The company refused all the requests, relying solely on the statement that “the information ... is not pertinent to *151 this discussion and the company declines to give you such information; You have no legal right to such.”

On the basis of these facts the National Labor Relations Board found that the company had “failed to bargain in good faith with respect to wages in violation of Section 8 (a)(5) of the Act.” 110 N. L. R. B. 856. The Board ordered the company to supply the union with such information as would “substantiate the Respondent’s position of its economic inability to pay the requested wage increase.” The Court of Appeals refused to enforce the Board’s order, agreeing with respondent that it could not be held guilty of an unfair labor practice because of its refusal to furnish the information requested by the union. 224 F. 2d 869. In Labor Board v. Jacobs Mfg. Co., 196 F. 2d 680, the Second Circuit upheld a Board finding of bad-faith bargaining based on an employer’s refusal to supply financial information under circumstances similar to those here. Because of the conflict and the importance of the question we granted certiorari. 350 U. S. 922.

The company raised no objection to the Board’s order on the ground that the scope of information required was too broad or that disclosure would put an undue burden on the company. Its major argument throughout has been that the information requested was irrelevant to the bargaining process and related to matters exclusively within the province of management. Thus we lay to one side the suggestion by the company here that the Board’s order might be unduly burdensome or injurious to its business. In any event, the Board has heretofore taken the position in cases such as this that “It is sufficient if the information is made available in a manner not so burdensome or time-consuming as to impede the process of bargaining.” 2 And in this case the Board has held *152 substantiation of the company’s position requires no more than “reasonable proof.”

We think that in determining whether the obligation of good-faith bargaining has been met the Board has a right to consider an employer’s refusal to give information about its financial status. While Congress did not compel agreement between employers and bargaining representatives, it did require collective bargaining in the hope that agreements would result. Section 204 (a)(1) of the Act admonishes both employers and employees to “exert every reasonable effort to make and maintain agreements concerning rates of pay, hours, and working conditions . ...” 3 In their effort to reach an agreement here both the union and the company treated the company’s ability to pay increased wages as highly relevant. The ability of an employer to increase wages without injury to his business is a commonly considered factor in wage negotiations.4 Claims for increased wages have sometimes been abandoned because of an employer’s unsatisfactory business condition; employees have even voted to accept wage decreases because of such conditions.5

Good-faith bargaining necessarily requires that claims made by either bargainer should be honest claims. This is true about an asserted inability to pay an increase in wages. If such an argument is important enough to pre *153 sent in the give and take of bargaining, it is important enough to require some sort of proof of its accuracy. And it would certainly not be farfetched for a trier of fact to reach the conclusion that bargaining lacks good faith when an employer mechanically repeats a claim of inability to pay without making the slightest effort to substantiate the claim. Such has been the holding of the Labor Board since shortly after the passage of the Wagner Act. In Pioneer Pearl Button Co., decided in 1936, where the employer’s representative relied on the company’s asserted “poor financial condition,” the Board said: “He did no more than take refuge in the assertion that the respondent’s financial condition was poor; he refused either to prove his statement, or to permit independent verification. This is not collective bargaining.” 1 N. L. R. B. 837, 842-843. This was the position of the Board when the Taft-Hartley Act was passed in 1947 and has been its position ever since.6 We agree with the Board that a refusal to attempt to substantiate a claim of inability to pay increased wages may support a finding of a failure to bargain in good faith.

The Board concluded that under the facts and circumstances of this case the respondent was guilty of an unfair labor practice in failing to bargain in good faith. We see no reason to disturb the findings of the Board. We do not hold, however, that in every case in which economic inability is raised as an argument against increased wages it automatically follows that the employees are entitled to substantiating evidence. Each case must turn upon its particular facts.7 The inquiry must always be whether or not under the circumstances of the particular case the *154 statutory obligation to bargain in good faith has been met. Since we conclude that there is support in the record for the conclusion of the Board here that respondent did not bargain in good faith, it was error for the Court of Appeals to set aside the Board’s order and deny enforcement.

Reversed.

“Sec. 8. (a) It shall be an unfair labor practice for an employer—

“(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 9 (a).

“(d) For the purposes of this section, to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms *150 and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession . . . .” 49 Stat. 452-453, as amended, 61 Stat. 140-142, 29 TJ. S. C. §§ 158 (a)(5), 158 (d).

Old Line Life Ins. Co., 96 N. L. R. B. 499, 503; Cincinnati Steel Castings Co., 86 N. L. R. B. 592, 593.

61 Stat. 154, 29 U. S. C. § 174 (a)(1).

See Sherman, Employer’s Obligation to Produce Data for Collective Bargaining, 35 Minn. L. Rev. 24; Dunlop, The Economics of Wage-Dispute Settlement, 12 Law & Contemp. Prob. 281, 290; What Kind of Information Do Labor Unions Want in Financial Statements?, 87 J. Accountancy 368; How Collective Bargaining Works (Twentieth Century Fund, 1942) 453.

Daily Labor Report, No. 156: A4-A5 (Bureau of National Affairs, Aug. 12, 1954); 35 Lab. Rel. Rep. 106; Union Votes Wage Freeze to Aid Rice-Stix, St. Louis Globe-Democrat, Nov. 25, 1954, p. 1, col. 4; Studebaker Men Vote for Pay Cuts, N. Y. Times, Aug. 13, 1954, p. 1, col. 5.

See, e. g., Southern Saddlery Co., 90 N. L. R. B. 1205, 1206-1207; McLean-Arkansas Lumber Co., 109 N. L. R. B. 1022, 1035-1038; Jacobs Manufacturing Co., 94 N. L. R. B. 1214, 1221-1222, enforced, 196 F. 2d 680; and cases therein cited.

See Labor Board v. American Ins. Co., 343 U. S. 395, 409-410.