On appeal from Superior Court, Appellate Division, whose opinion is reported at 29 N.J. Super. 68.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Burling, Jacobs and Brennan. For reversal -- Justice Wachenfeld. The opinion of the court was delivered by Brennan, J. Wachenfeld, J. (dissenting).
Plaintiffs sue on behalf of themselves and upwards of 900 other hourly paid employees of defendant's Jersey City plant to recover holiday pay for Labor Day 1951 provided for by the terms of a collective bargaining agreement entered into by the defendant with United Electrical, Radio and Machine Workers of America (U.E.) covering employees of 21 of defendant's plants. Plaintiffs recovered judgment in the Superior Court, Law Division, after a trial without a jury, 25 N.J. Super. 601 (1953). The Appellate Division reversed, 29 N.J. Super. 68 (1953). We allowed certification on plaintiffs' petition, 15 N.J. 79 (1954).
Defendant refused to pay the holiday pay because of the concerted action of the hourly paid employees on each work day but two from July 12, 1951 to September 11, 1951 (Labor Day fell on September 3) in stopping work after only 3 1/2 to 6 hours during their scheduled 8-hour shifts. The trial judge found, and plaintiffs do not challenge the finding, that the concerted action was promoted by the officers
of the local union and was taken "to put unwarranted pressure on the employer in the then pending negotiations" concerning a company proposal to revise the seniority clause of the collective bargaining agreement. The officers of the local union were told on Friday morning before the Labor Day holiday that payment for the holiday would not be made unless the employees worked complete shifts on Friday. Nonetheless, the employees stopped work in a body after 5 1/2 hours of work.
The suit, brought by and on behalf of the employees against the employer, is based upon provisions of the collective bargaining agreement between the company and the union. However, the standing of the employees in their own right to maintain the action upon the agreement is not questioned. Christiansen v. Local 680 of Milk Drivers, etc., 126 N.J. Eq. 508 (Ch. 1940).
Widespread recognition, while slow in coming, is now common that collective bargaining agreements give use to legal rights. See, for example National Labor Relations Act as amended by Taft-Hartley Act, 29 U.S.C.A., sec. 185; Annotation, 95 A.L.R. 10. The day is past when courts denied recognition to such agreements upon grounds that they merely established usages with very little, if any, legal consequences, or lacked consideration, or were unenforceable for want of mutuality of remedy, or reflected duress. 1 Teller, Labor Disputes and Collective Bargaining, secs. 158-162 (1940). The end of such concepts was forecast with the adoption and promotion of the public policy expressed in much federal and state legislation fostering and encouraging collective bargaining between labor unions and employers as the prime tool to achieve and maintain industrial peace and uninterrupted production to further essential social and economic objectives. See National Labor Relations Act, 49 Stat. 449 (1935), as amended by the Taft-Hartley Act, 61 Stat. 136 (1947), 29 U.S.C.A., secs. 151 et seq., New Jersey Constitution of 1947, Art. I, par. 19. The signing of a written contract embodying the terms agreed upon is regarded as the final and an essential step in the
bargaining process; and the agreement is viewed as itself an effective instrument of stabilizing labor relations and minimizing industrial strife during its term. H.J. Heinz Co. v. National Labor Relations Board, 311 U.S. 514, 61 S. Ct. 320, 85 L. Ed. 309 (1941).
But the collective bargaining agreement is in many respects a novelty in the courts raising problems not presented by ordinary contracts nor readily dealt with under traditional principles of contract law. Less than 30 years ago one commentator observed that "it is somewhat surprising to discover that their legal nature has never been carefully considered or precisely defined in an American court decision," Fuchs, Collective Labor Agreements in American Law, 10 St. Louis L. Rev. 1 (1925). Several courts which have since attempted an analysis have found it hard precisely to define the jural relation of the covered employees to the contracting parties and their rights and duties under the contract. The fact that the collective bargaining agreement establishes a structure of employment relations not just for particular known employees but for persons from time to time employed during the contract term and not always members of or desiring to be members of the contracting union, has led courts to say that the agreement resembles "a trade agreement * * * likened to the tariffs established by a carrier, to standard provisions prescribed by supervising authorities for insurance policies, or to utility schedules of rates and rules for service," J.I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S. Ct. 576, 88 L. Ed. 762 (1944); that it is "in many ways a treaty," Yazoo & M.V.R. Co. v. Webb, 64 F.2d 902 (5 Cir., 1933); in our own books that "The relation between the collective bargain and the individual contract of employment somewhat resembles that between a group insurance policy and the individual insurance certificates issued under it," Christiansen v. Local 680 of Milk Drivers, etc., supra, 126 N.J. Eq. 512.
We have noted earlier that the employer here accepts the law to be that the plaintiffs have the right to sue their
employer directly upon the agreement. Do plaintiffs sue as the principals under a contract made for them by the union as their agent? Or are we to consider the union the principal and the employees third-party beneficiaries of the agreement? Both theories encounter difficulties. The agency theory poses the question how an employee may become party to the agreement if he is neither a member of the union nor wants to be or, if employed after the agreement is made, is not shown to have adopted it or to have contracted his hire with reference to it. And what is left to the union by way of direct rights of enforcement of provisions important to it as an organization, the union shop, for example? In the Christiansen case our former Court of Chancery adopted the agency theory and held that a union had no cause of action to sue for violation of a union security clause in the alleged wrongful discharge of four union members, but that only the employees could maintain an action to redress the alleged wrong. The third-party beneficiary theory would not have presented that obstacle to the union suit, and would also make immaterial in suits by employees the questions of the employee's choice of the union as his agent or adoption of the agreement. However, if the employees are to be considered third-party beneficiaries, can it always be said that the union and the company made the agreement primarily for the employees' benefit or are they not often merely incidental beneficiaries, particularly if it is not made to appear that they contracted their hire with reference to the agreement? Teller, supra, pp. 497 to 505. These and like questions emphasizing the difficulties experienced in applying ordinary contract concepts in solving problems arising under collective bargaining agreements have led some students to suggest that "we need a new legal category" to explain and govern such agreements. Rice, Collective Labor Agreements in American Law, 44 Harv. L. Rev. 572 (1931). Teller encourages that view. At pages 519-520 of his text, supra, he observes,
"That the market place should demand of the law a different and more effective way of dealing with newly arising problems is nothing novel to our law. The law ...