Before LUMBARD, Chief Judge, WATERMAN and FRIENDLY, Circuit Judges.
LUMBARD, Ch. J.: This case is another in the series of cases involving Local 138, International Union of Operating Engineers, and the employers with whom the union deals.*fn1 The members of Local 138 are "operating engineers," employed in the building and construction trades on Long Island. In proceedings before the National Labor Relations Board, the Board found (1) that the union had violated the National Labor Relations Act, 29 U.S.C. § 141 et seq ., by maintaining a collective bargaining agreement with an employers' association which included provisions discriminating in favor of union members; (2) that the union had violated the act by operating a discriminatory hiring and job referral system and exacting an unlawful fee of nonmembers for use of the referral system; (3) that the union had violated the act by unlawfully discriminating against four individuals in job referrals and by threatening not to refer two of the same individuals and a third individual; (4) that the union, the Nassau and Suffolk Contractors' Association, the Welfare Fund in which both participate, and the trustees of the Welfare Fund violated the act by operating the Fund so as to discriminate against employees who were not union members and by denying benefits to one such employee; and that employer John C. Peterson Construction Co., a member of Nassau-Suffolk, violated the act by transferring an employee to a less desirable job and thereafter refusing to rehire him when the job to which he was transferred ended. Local 138, the Welfare Fund, and its trustees have petitioned this court to review and set aside the order of the Board. The Board has cross-petitioned for enforcement. We grant enforcement of some provisions, set aside others, and remand to the Board for further findings with respect to others.
Local 138 makes a broad attack on all of the proceedings below on the ground that Ralph Winkler, who acted as trial examiner, had been designated chief counsel to board member Gerald A. Brown on April 21, 1961, and he did not file his Intermediate Report until November 16, 1961. This, the union argues, violated § 4(a) of the act, which prescribes that "no trial examiner shall advise or consult with the Board with respect to exceptions taken to his findings, rulings, or recommendations." 29 U.S.C. § 154(a).Although Winkler's appointment as chief counsel to board member Brown was announced in April, he did not take office until the day following the issuance of his report. We see no reason why Winkler's conclusions in his report should have been affected by his impending advancement. And while it may be that during the interim period, Winkler did act in some respects in a dual capacity, member Brown did not sit on this case. There is thus no reason to believe that Winkler played any part whatever in the deliberations of the Board. The union argues that for certain purposes the chief counsel to the board members sit as a committee and reach joint decisions. But it has shown no respect in which such collective deliberations could have affected the result here; so far as we have been informed, the counsel act collectively in phases of a proceeding having nothing to do with review of a trial examiner's report. In these circumstances, § 4(a) was not violated.
I. THE COLLECTIVE BARGAINING AGREEMENT WITH BUILDING TRADES EMPLOYERS ASSOCIATION.
In 1959, Local 138 entered into a collective bargaining agreement with the Building Trades Employers Association of Long Island, Inc., an association of employers in the construction industry. In 1960, another contract, effective until 1963, was executed. Both contracts included clauses which the Board found to be violations of § 8(b)(1)(A) of the act, 29 U.S.C. § 158(b)(1)(A).*fn2 The clauses in question provided (1) that "No member of the Union shall be subject to a physical examination in order to be employed"; (2) that union members shall be entitled to changes in shift at regular intervals; and (3) that union members shall be paid their accrued wages immediately upon termination of employment. In addition, the contracts provided that "In case any employee becomes ineligible under the rules of the Union and the employer is notified, then the said employer shall promptly discharge such employee."
The Board argues that by referring only to union members in the above clauses dealing with physical examinations, shifts, and payment of wages, the contract discriminates against nonmembers. Such discrimination, it is urged, goes beyond permissible limits in inducing employees to join the union. See Radio Officers' Union v. NLRB, 347 U.S. 17, 40-42 (1954). The discharge clause is similarly unlawful, the Board argues, because the union rules provide that a member becomes "ineligible" for reasons other than nonpayment of law-fully exacted fees. For example, the constitution of the International, followed by Local 138, provides that a member may be expelled for subscribing "to the principles of communism or similar doctrines," etc.
We think that our decision in National Labor Relations Board v. Revere Metal Art Co ., 280 F.2d 96 (2 Cir.), cert. denied, 364 U.S. 894 (1960), requires that enforcement of this provision of the Board's order be denied. We there indicated that the failure to include in a union security agreement an express negation of "a right of the union to seek the discharge of an employee after union membership had been terminated for reasons other than non-payment of dues or initiation fees" was not by itself a violation of the act even though the union rules provided for expulsion from the union for such other reasons. Id . at 103. We pointed out that "the safeguard to the employee is postponed until discriminatory action is taken." Id . at 105. The Board has not pointed to any case of an employee who was discharged by his employer for failure to comply with union rules. As to that aspect of the case, Revere Metal Art, supra, is controlling. As to the other disputed clauses of the agreement, the Board has not shown or even attempted to show that any of them has been discriminatorily applied.For aught that appears, references to union members in the agreement are simply references, naturally phrased by a union entering into an agreement with an employer, to all employees. And, while we might be tempted, as we were in Revere Metal Art, supra, at 103, to construe the act to prohibit "the creation of a setting in which employees would think discrimination by the employer" was likely to result from nonmembership, the Board's proof has not gone even so far as to suggest that such a setting exists apart from pointing to the bare words of the agreement. We will not approve a finding of a violation which is based solely on words in an agreement which lend themselves as easily to a construction consistent with the act as to a construction which, if carried into effect, would result in conduct illegal under the act. Enforcement of this provision of the Board's order is denied.
II. THE OPERATION OF THE HIRING HALL AND EXACTION OF PERMIT FEES FROM NONMEMBERS.
The union's agreement with B.T.E.A. provides that the union "shall be the sole and exclusive source of referrals of applicants for employment." The inclusion in an agreement of a provision for an exclusive hiring hall is not by itself unlawful. Local 357, International Bhd. of Teamsters, 365 U.S. 667 (1961). But a hiring hall may not be operated so as to discriminate against workers who are not members of the union. Id . The Trial Examiner and the Board found that the hiring hall operated by Local 138 did discriminate against nonmembers, and therefore violated §§ 8(b)(1)(A) and (2) of the act, 29 U.S.C. § 158(b)(1)(A) and (2). Union Secretary Verner Sofield, who ran the hiring hall together with another union official who was not called as a witness, testified that the order of referral was determined by seniority. So far as we can understand his testimony, "Seniority" for this purpose meant the length of time during which a worker had been a union member in good standing or, if he was not a union member, the length of time after he had actually started work on a job to which he was referred by the hiring hall and during which he had paid the permit fees discussed below. If union dues or permit fees became more than ninety days in arrears, the worker lost all seniority theretofore acquired, and did not reacquire it when he again became paid up. The trial examiner, concluding that Sofield was "not entitled to belief on disputed matters," construed his testimony in the worst possible light and concluded that nonmembers were not dispatched "until the roster of all unemployed and otherwise available union members is exhausted." The Board apparently agreed with this conclusion.
We think that the record does not contain substantial evidence to support a finding of such blanket discrimination. There is nothing in Sofield's testimony which can be so construed; disbelief of a witness does not furnish automatic license to assume that the worst is true. In addition, we are impressed by the absence of any suggestion of discrimination against nonmembers other than those referred to below, who were notorious as members of a "Reform Group," and thus rightly or wrongly placed in a separate category by the union. On the other hand, it is plain that even in its best light, Sofield's testimony evidences some discrimination against nonmembers. A non-member who for the first time filed an out-of-work card and paid his permit fees apparently was not referred for employment until all union members had been referred. Once referred, the nonmember did acquire seniority, but he could get started doing so faster if he joined the union. In addition, the 90-day delinquency provision imposed the financial burden of maintaining permit fees on nonmembers who might not wish to work for a time but who expected to be seeking jobs in the future, lest they lose their seniority already acquired. Although union members also had to keep up their payments, they presumably received benefits in addition to the right to use the hiring hall, while a nonmember who temporarily chose to remain idle would receive nothing in return for his payments.
We do not say that any system of referral based on seniority is bad, but rather that the system used by Local 138, which resulted in impermissible pressures to join the union, was for that reason bad. The discrimination against nonmembers which is evidenced by the record sufficiently justifies the Board's order, which required the union to cease and desist from
"Maintaining any practice or enforcing any agreement, understanding, or practice with the Building Trades Employers Association and its members or with any other employer over whom the Board would assert jurisdiction, which unlawfully gives members of the local Union preference in job referrals or conditions referral or referral seniority upon good standing in the Union as either a member of the local Union or as a permit man."
Accordingly, this portion of the order will be enforced.
In addition to the above provision, the Board ordered Local 138 to "reimburse all individual nonmembers for permit or service fees unlawfully exacted from them as a condition of referral or employment with interest thereon at six percent per annum as set forth in the 'Remedy' section of this Decision and Order." The basis for this order was the Board's conclusion that "because the exclusive hiring and referral system was discriminatorily operated, the Respondent could not lawfully exact a fee for its use." Two of the four Board members who sat on the case would have found the assessment of permit fees discriminatory, and therefore unlawful, for the additional reason that they were in an amount equal to the monthly dues paid by ...