## Facts

- Edward G. Budd Manufacturing Co. operated a large Philadelphia plant where no employee labor organization had existed.
- After the National Industrial Recovery Act took effect in 1933, employees sought a means of representation; management suggested and participated in creating an internal employee association with elected representatives to discuss workplace concerns.
- The NLRB found the company helped initiate and shape the association and supported it through cooperation such as use of company facilities and paid time during working hours for representatives to handle association matters.
- Management treated association representatives with unusual leniency. Walter Weigand, a representative, repeatedly engaged in serious misconduct (including intoxication while on duty and disruptive behavior at the plant) yet received continued employment and multiple raises.
- In 1941, an outside union began organizing the plant. Weigand joined the union and attempted to enlist support from other association representatives.
- After Weigand and others were seen speaking with a union organizer off-premises, management questioned one representative and soon after discharged Weigand.
- The NLRB also found Budd refused to reinstate Milton Davis because of his union activity.
- The NLRB ordered Budd to disestablish the association and to reinstate Weigand and Davis with back pay. Budd petitioned the Third Circuit for review; the association intervened.

## Issues

1. Whether substantial evidence supported the NLRB’s finding that Budd unlawfully dominated and supported the employee association in violation of NLRA §§ 8(1) and 8(2).
2. Whether substantial evidence supported the NLRB’s finding that Budd violated NLRA §§ 8(1) and 8(3) by discharging Walter Weigand because of union activity, despite Budd’s claim it acted for misconduct.
3. Whether substantial evidence supported the NLRB’s finding that Budd violated NLRA §§ 8(1) and 8(3) by refusing to reinstate Milton Davis because of union activity, and whether the Board’s remedies were within its authority.

## Decision

- The Third Circuit held the Board’s findings are conclusive if supported by substantial evidence on the record as a whole and reviewed the evidence under that standard.
- The court upheld the NLRB’s determination that Budd dominated and supported the association, violating §§ 8(1) and 8(2), and approved disestablishment as an appropriate remedy.
- The court upheld the NLRB’s finding that Budd’s refusal to reinstate Davis was discriminatory under § 8(3).
- As to Weigand, the court accepted the Board’s inference that the discharge was motivated by anti-union considerations, noting the sharp contrast between years of tolerance of serious misconduct and the discharge following visible union activity.
- The court enforced the Board’s order, with minor modification consistent with the court’s opinion regarding the relief afforded.

## Legal Principles

- An employer violates NLRA § 8(2) when it initiates, structures, or finances an employee organization and, through its involvement and support, makes the organization dependent on management rather than employee choice.
- Evidence relevant to unlawful domination/support can include management’s role in forming the organization, providing facilities or paid time for representatives, and giving representatives special workplace privileges tied to their representative role.
- An employer violates NLRA § 8(3) when it discharges or refuses to reinstate an employee because of union membership or organizing activity; asserted misconduct does not defeat liability if substantial evidence supports that union activity was a motivating cause.
- A long history of condoning an employee’s misconduct, followed by discipline soon after the employee engages in protected union activity, can support a finding that the stated reason is a pretext.
- Courts reviewing NLRB orders do not reweigh evidence or reassess credibility when the Board’s findings are supported by substantial evidence, and the Board may order disestablishment and reinstatement/back pay to remedy unfair labor practices.

## Conclusion

Edward G. Budd Mfg. Co. v. NLRB held that substantial evidence supported the Board’s findings that Budd unlawfully dominated and supported an internal employee association and discriminated against employees for union activity, and the Third Circuit therefore enforced the NLRB’s disestablishment and reinstatement/back-pay remedies (with only minor modification to the relief).


Edward G. Budd Mfg. Co. v. National Labor Relations Board, 138 F.2d 86 (1943)