The Mackay doctrine, as the striker replacement portion of the ruling is known, is one of the most significant Supreme Court rulings in American labor law, and has defined collective bargaining in the United States since its publication. "Mackay Radio was more than a decision that provided an instrumental method for a firm to replace economic strikers and to resist their return to employment after a strike. It was also a decision that established important practices that constituted the conduct of union-management bargaining during the post-New Deal Era.
The ruling is also highly controversial, even 70 years later. It is strongly and uniformly condemned by labor unions, and resolutely defended by employers. In the legal community, however, "the doctrine continues to provoke the notice and the nearly universal condemnation of scholars.
In 1934, at the behest of the American Federation of Labor, Senator Robert F. Wagner began work on a bill which would ban the replacement of striking workers. The bill was strongly opposed by the National Association of Manufacturers and other employer groups, which argued that the bill would permanently deprive replacement workers of the right to join a union, participate in a union, or become a full-time employee. Many of Sen. Wagner's legal and labor advisors also made the same arguments. The National Urban League also opposed the bill. The organization pointed out that many AFL unions discriminated against African American workers, and that black workers often were employed as strikebreakers. The bill, the Urban League said, would be racially discriminatory and hinder the League's efforts to open union membership to all. Wagner's bill never made it out of committee. When Wagner introduced a new version of the bill in 1935, the legislation omitted all reference to striker replacement. Committee staff reports noted that the bill conformed to existing Lochner era law and practice, which gave striking workers protections as employees but permitted striker replacement. The issue of striker replacement received almost no debate in the House or the Senate. The new bill was enacted, and on July 5, 1935, President Roosevelt signed the National Labor Relations Act (NLRA) into law.
Section 2(3) of the National Labor Relations Act (29 U.S.C. §§ 151-169) states:
By the early morning of October 8, 1935, it was apparent the strike had failed. At a meeting between the union and a company representative early that day, the company announced that all but 11 men could return to work. The company representative handed the union a list containing the names of the 11 men, and said the 11 could apply for work. The men would be rehired, however, only if positions opened up. Although the list contained the names of some of the strongest union supporters, the union members voted to return to work on the company's terms. The strike ended at 6:00 a.m. that morning. The 11 men applied for work, and seven were rehired two days later. The four operators not rehired were the most senior and best paid men, as well as the strongest union supporters.
ARTA immediately filed a complaint with the NLRB. The NLRB issued its own complaint on November 9, 1935, and a hearing was conducted from December 2 to December 20. The Board transferred authority to issue a ruling from the Regional Office to the national Board on December 19. On February 20, 1936, the NLRB issued its decision in Mackay Radio & Telegraph Co. 1 NLRB 201 (1936). The Board specifically avoided ruling on whether the replacement workers were strikebreakers and what right they had to their jobs. Instead, the Board focused almost exclusively on the fact that the employer had discriminated against the four men based on their protected union activities.
But then on April 12, 1937, the U.S. Supreme Court upheld the constitutionality of the NLRA in National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U.S. 1 (1937).
The NLRB asked for a rehearing by the Ninth Circuit in light of the Supreme Court's ruling in NLRB v. Jones & Laughlin Steel. The court agreed to do so. But in NLRB v. Mackay Radio & Telegraph Co. 92 F.2d 761 (9 Cir. 1937), the appeals court again refused to enforce the Board's order. Although Judges Mathews and Garrecht held to their original views, Judge Wilbur now conceded the Act's constitutionality. However, he concluded that the strikers were no longer employees as defined by the Act. Only if workers walked off the job to protest an unfair labor practice did they remain employees.
On January 15, 1938, Solicitor General Stanley Forman Reed appealed the case to the U.S. Supreme Court. Certiorari was granted in February, and oral argument heard from April 5 to April 6, 1938. Arguing the case for the NLRB was General Counsel Charles H. Fahy. Reed had been nominated to the Supreme Court the day the appeal occurred, so the new Solicitor General, Robert H. Jackson, argued the case for the United States. California attorney Louis W. Myers argued the case for Mackay Radio.
Half of Justice Roberts' opinion provides, in great detail, the facts of the case in question, covering the contract talks, the strike, the strike's collapse, the offer to return to work, and the various proceedings before the Court of Appeals.
Roberts began the substantive part of the Court's ruling by asserting the Court's jurisdiction without comment and dismissing Mackay Radio's claim that the appeal had violated federal rules of civil procedure.
Roberts next drew two conclusions. First, he found that a current labor dispute had existed as required under Section 2(3). Mackay Radio had argued that it was not at fault for the failed contract talks, but Justice Roberts concluded that was irrelevant. "The wisdom or unwisdom" of the union's decision to strike did not matter; all that mattered was that a current labor dispute existed. Second, Justice Roberts implicitly refused to involve the court in assessing whether Section 2(3) constitutionally made striking workers employees. Roberts quoted the relevant section of the NLRA, and concluded the workers were still employees under the plain meaning of the Act.
Next, Justice Roberts addressed the employer's claim that it was not guilty of an unfair labor practice (ULP). Mackay Radio had asserted that the Board had jurisdiction only over ULP cases, and this was not a ULP case. Justice Roberts agreed that no ULP had been committed in connection with the negotiations. But, in the ruling's most-quoted section, Justice Roberts addressed the question of whether Mackay Radio had committed a ULP for hiring the strikebreakers:
While the employer had claimed that the Board's action violated the due process requirements of the Fifth Amendment. Justice Roberts, citing NLRB v. Jones & Laughlin Steel, concluded that Congress could infringe on property rights for reasonable purposes, including the suppression of labor strife. Hence, the Board's order was not a violation of the Fifth Amendment.
The Court's ruling concluded with a lengthy discussion of the nature of the Board's order. The employer had claimed that the Board's order was arbitrary and capricious. Justice Roberts reviewed at length the Board's evidentiary hearings, the language of the order, and the nature of the charges against Mackay Radio. Mackay Radio's claim, Roberts said, largely turned on whether the Board had failed to define a current labor dispute. But having already dismissed that argument earlier, Roberts concluded that the Board's order was appropriate.
The ruling of the Ninth Circuit Court of Appeals was reversed and remanded.
After very lengthy negotiations, ARTA members negotiated a contract with Mackay Radio in late 1939. The employer complained strenuously and publicly about the impositions the contract created, but did not commit any additional unfair labor practices. Implementation of the contract was rocky. Workers engaged in several job actions (such as work slow-downs) before receiving their raises in March 1940.
ARTA workers struck again at Mackay Radio in 1948. The Supreme Court's ruling in NLRB v. Mackay Radio was used during that strike to deny reinstatement to over 60 striking workers.
Although the Supreme Court permitted strikebreakers to be hired under the Mackay doctrine, replacement workers remained largely unused by employers from the mid-1930s to the early 1970s. Scholars attribute this to a gentlemen's agreement or social contract under which American employers and unions both agreed to seek labor peace. The increased use of strikebreakers began in the late 1960s, and trended significantly upward in the early 1970s. President Ronald Reagan's replacement of striking air traffic controllers in 1981 reinforced the trend, perhaps sundering the social contract permanently.
Some management-side scholars assert that the Mackay doctrine contains too many exceptions to be used effectively and frequently, and that strikebreakers are rarely used. They point out that the use of, or threat to use, strikebreakers has led to a significant decrease in the number of strikes. The threat to use strikebreakers may also act as a check on unreasonable union collective bargaining demands.
However, many scholars and studies draw the opposite conclusion. A 1991 study by the Government Accountability Office based on data from the Federal Mediation and Conciliation Service found that, of all strikes from 1985 to 1989, about 10 percent of major and 16 percent of smaller strikes involved the use of strikebreakers. The occurrence of replacement workers was three times higher in strikes which lasted at least a month in duration. Academic studies support this conclusion. One 1988 survey found that 35 percent of employers said they would definitely hire replacement workers if struck, while another 45 percent said they would consider doing so.
Not all strikebreakers permanently replace workers, however. But when replacement workers are permanent, the duration of the strike lengthens appreciably (and the average duration of the strike where replacement workers are used has lengthened as much as 10-fold in recent years). Permanent replacements also dramatically affect the collective bargaining outcome, with unions settling on much less favorable terms.
Threats to utilize strikebreakers are also becoming prominent before a strike occurs. Several studies of collective bargaining tactics have found that management threatens to use strikebreakers more often than unions threaten to strike, and that the frequency of such threats is increasing over time. Some legal scholars have concluded that the Mackay doctrine has become a tool for allowing employers to engage in bad-faith bargaining. This creates a bargaining impasse, and the threat of strikebreakers coerces unions into accepting an employer's (unlawful) last offer.
Presumably, one implication of the Mackay ruling was that employers would seek to avoid unfair labor practice (ULP) strikes, since the Court had clearly given the protection of the law to such strikes. But this has not been born out in practice. The social contract encouraging employers to refrain from unfair labor practices has also broken down. Employers now routinely challenge ULP charges in court (leading to lengthy litigation), and the relief offered under the NLRA has proven ineffective in discouraging employer ULPs. Consequently, "the most remarkable phenomenon in the representation process in the past quarter-century has been an astronomical increase in unfair labor practices by employers." The legal system "must bear a major share of the blame for providing employers with the opportunity and the incentives" to commit ULPs.
The growing use of strikebreakers under the Mackay ruling may also have contributed to the development by unions of extra-legal organizing and collective bargaining tools. Allowing employers to permanently replace striking workers leads to union capitulation, not bargaining or industrial peace, many legal scholars note. Unions subsequently seek ways out of this dilemma. The development of card check and neutrality agreements and the comprehensive campaign are logical outcomes of the breakdown of the organizing and collective bargaining protections of the National Labor Relations Act.
In 1945, the Supreme Court issued its first decision on strikebreakers since Mackay Radio. In Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945), the Court held that an employer committed a ULP when it hired strikebreakers because the employer had treated employees differently than it would have treated them had they not been engaged in union solicitation.
Two years later, Congress passed the Taft-Hartley Act, which significantly affected the use of strikebreakers. One of the innovations of the Taft-Hartley Act provided a mechanism for workers to vote out ("decertify") a union. Section 9(e)(2) of the Taft-Hartley Act created decertification elections which would permit workers to take a vote on whether they wished to retain existing union representation. Section 9(e)(2) had the intended side-effect of disenfranchising striking workers. Employers quickly exploited this loophole by hiring permanent replacement workers and then petitioning for a decertification election. The practice became so common the President Dwight Eisenhower denounced it several times.
As the use of strikebreakers increased, the Supreme Court was forced to address several issues arising from the practice. One key issue was motive: Did it matter if the use of strikebreakers was motivated by anti-union animus? In Radio Officers' Union v. NLRB, 347 U.S. 17 (1954), the Supreme Court held that proof of motive was indeed required. However, no proof of motive was needed where employer conduct "inherently" encouraged or discouraged union membership. A second issue involved use of the whipsaw strike. As unionization in an industry spread, unions encouraged employers to bargain as a group. To discourage employers from breaking away from the group, unions developed the whipsaw strike—in which the union would strike one employer at a time, one after another. Employer groups would counter the whipsaw strike by locking out all workers at all employers belonging to the group, and using strikebreakers to provide temporary or permanent replacements. The question before the Court was whether the lockout was an unfair labor practice. In NLRB v. Truck Drivers Local 449 ("Buffalo Linen Supply Co."), 353 U.S. 87 (1957), the Court held that such a lockout was not a ULP.
In 1959, Congress addressed the inequities created by Section 9(e)(2) of the Taft-Hartley Act. The Labor Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act) amended the Taft-Hartley Act to permit striking workers to vote in a union decertification election held within one calendar year after the commencement of a strike.
The Supreme Court revisited the Mackay Radio ruling repeatedly from the early 1960s into the late 1980s. Many of the Court's decisions addressed the conditions under which an employer exhibited anti-union animus. In NLRB v. Erie Resistor Corp., 373 U.S. 221 (1963), the Court held that a grant of superseniority to strikebreakers constituted anti-union animus and was a ULP. Building on its ruling in Buffalo Linen Supply Co., the Supreme Court held in American Ship Building v. NLRB, 380 U.S. 300 (1965) that an employer may lock out its employees without violating the NLRA if a bargaining impasse has been reached and the lockout is for the purpose of applying economic pressure to support the employer’s bargaining position. However, the employer cannot hire permanent replacements, only temporary ones. The high court further extended the "Mackay doctrine" in NLRB v. Brown Food Stores, 380 U.S. 278 (1965), holding that an employer could lock out its employees in advance of a whipsaw strike so long as the employer only utilized temporary replacements and locked out all workers (not just those who supported the union). These cases did not address the partial lockout, however. The Court addressed that issue in 1967. In NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967), the Supreme Court held that an employer could avoid being charged with a ULP if it could provide a legitimate and substantial business justification for treating union workers differently than its other employees. However, even if the employer could offer such a justification, the NLRB could still attempt to show anti-union animus at trial.
Many of the Supreme Court's post-Mackay decisions involved balancing the rights of strikebreakers and those who crossed the picket line against the rights of striking workers. This was a logical outcome of the Mackay Radio decision, for the Mackay Court had asserted that strikers remained employees. But the Mackay Court never addressed the legal status of strikebreakers, which it now began to do. In Belknap, Inc. v. Hale, 463 U.S. 491 (1983), the Court held that strikebreakers who were offered permanent employment and then replaced to make room for returning strikers could seek relief in state court for breach of contract and misrepresentation. The Court also began to address the status of union members who crossed picket lines. The Court upheld a union's ability to fine members who crossed picket lines and held that replaced strikers are entitled to reinstatement if the employer expands its workforce after a strike. However, the Supreme Court held that a union may not compel an employer to fire union members who cross a picket line. And in NLRB v. Granite State Joint Board, 409 U.S. 213 (1972), the Supreme Court held that a union member who crosses a picket line can avoid union sanctions by simply resigning from the union. Upholding the right to freedom of association, the Court also held that unions may not constitutionally prohibit members from resigning in order to avoid sanctions for crossing picket lines. The right to work, the Court said, even protected an employer's right to entice striking workers back to work with promises of promotions or better pay.
In 1991, the Supreme Court issued the most recent (as of early 2008) of its post-Mackay decisions. That year, the Court held that permanent replacements could not automatically be presumed to oppose an incumbent union. Therefore, use of strikebreakers was not automatically a presumption of anti-union animus.
In 1994, an effort was made in Congress to repeal Mackay Radio. Members of the United Paperworkers' International Union conducted a nationwide strike against International Paper, one of the largest paper manufacturers in the world, in 1987. International Paper utilized permanent replacements as strikebreakers. The labor dispute was particularly bitter at the International Paper plant in the small town of Androscoggin, Maine. The union was unsuccessful in winning a new contract, and an election held a year later decertified the union. The Maine AFL-CIO asked one of Maine's representatives in the House of Representatives to introduce a bill banning permanent replacements. The bill, known as the "Workplace Fairness Act," easily passed the House. On July 13, 1994, the bill was on the verge of passage in the Senate when it was blocked by a Republican-led filibuster.
Another effort to mitigate the effects of Mackay Radio occurred a year later. On March 8, 1995, President Bill Clinton issued Executive Order 12954 which barred the federal government from contracting with employers who permanently replaced striking workers. The United States Chamber of Commerce filed suit in federal court to have the executive order overturned. In Chamber of Commerce v. Reich, 74 F.3d 1322 (D.C. Cir. 1996), the U.S. Court of Appeals for the D.C. Circuit held that the NLRA preempted the executive order, and ordered that Executive Order 12954 no longer be enforced.
Continuing legal uncertainty over the implications of Mackay Radio continue. This has affected decisions of the NLRB in particular. For example, in 1997, the National Labor Relations Board held in Target Rock, 324 NLRB 373 (1997), enf'd. 172 F.3d 921 (D.C. Cir. 1998), that advising replacement employees of their at-will employment status implied that the strikebreakers were not permanent replacements. But the Board later overruled Target Rock in 2007 in Jones Plastic & Engineering, 351 NLRB No. 11.
Nearly every criticism of Mackay Radio is aimed at the Court's "duplicitous distinction" between firing and permanently replacing striking workers. While some legal analyses concede the ruling might be technically correct under some concepts of the law, the distinction is "a hollow, technical difference" in the real world which has "rendered the strike useless and virtually suicidal...".
The ruling is so poorly decided, some scholars conclude, that only the doctrine of stare decisis can account for its continuing use by the Court.
Primary among these is that Mackay Radio directly contradicts the express language of the National Labor Relations Act (NLRA). Section 7 of the NLRA explicitly protects the right to strike. Section 8(a)(1) makes it an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7". But an employer's ability to fire and permanently replace an employee for exercising her statutorily guaranteed right to strike greatly "interferes with" the right to strike. Furthermore, Section 8(a)(3) makes it an unfair labor practice to discriminate "in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization..." Yet, an employer who declines to terminate workers who refuse to strike, agrees to retain workers who return to work, declines to fire replacement workers, and refuses to reinstate strikers clearly discriminates, in a most basic and fundamental way, against those who exercise the right to strike. The Taft-Hartley Act amendments do not alter this conclusion.
Mackay Radio also directly contradicts the NLRA's explicit statutory purpose of encouraging collective bargaining. According to Section 1 of the Act:
Another of the major criticisms of the ruling is its failure to cite sources or provide any reasoning to support the existence of an employer right permanently to replace strikers. The Court presented its conclusion as a series of assertions. It did not discuss the words of the Act, did not provide logical arguments or rationales for its conclusions, and did not discuss alternative policy or economic or political choices. No policy justification was given for the ruling, and the Court never discussed the Act's legislative history to support the conclusion it reached.
Many scholars see Mackay Radio as one of the last of the Lochner era decisions. From about 1890 to 1937, the Supreme Court tended to apply a strongly libertarian judicial philosophy. By 1937, shifting judicial philosophies within the Court as well as continuing economic and social upheaval led the Court to abandon its Lochner era philosophy. But the language of Mackay Radio harkens back to Lochner era employment rights philosophies which many thought the Supreme Court had abandoned a year earlier. Mackay Radio implies that the rights the Court intended to protect preexisted the National Labor Relations Act and remained unaffected by the Act. For many legal analysits, it is clear that the Supreme Court relied heavily on and restated Lochner era doctrines developed by the courts and adopted by the NLRB's predecessor agencies. Indeed, the NLRB itself had adopted a Lochner era philosophy. The Board had conceded in its Reply Brief that an employer had the right to utilize strikebreakers. "The Act clearly does not forbid him, in the absence of such unfair labor practices, to replace the striking employees with new employees or authorize an order directing that all strikers be reinstated and new employees discharged. The Supreme Court's decision not only squared completely with the Board's brief and previous Board decisions, but also reflected the deeply conservative construction of the Act that the NLRB had taken (worried that an assertive reading and application of the NLRA would lead the Court to find the Act unconstitutional). But the Court went much further in its decision than merely deferring to the expertise of the Board. The high court deliberately utilized nineteenth-century judicial rulings to protect employer prerogatives at the expense of employee rights. Although the intent of the NLRA was to protect strike actions to provide workers with a source of bargaining power, Mackay Radio inverted that dynamic so that the strike became an advantage to employers.
Commentators also point out that, even if the ruling's Lochner era legal analysis is appropriate and correctly applied, Mackay Radio is flawed due to the economic assumptions the Court made. Justice Roberts' opinion assumed perfect competition in labor markets, a lack of monopsony, no statistical discrimination, no information asymmetry, market rationality, and a legal regime which provided a level playing field and equal protection under the law. Some—and possibly all—of these assumptions are incorrect. Worse, however, the Mackay Radio decision fashioned strong incentives which made it rational for one bargainer (management) to refuse to cooperate and opt out of bargaining.
The Court also made assumptions about the business necessity of hiring permanent replacement workers which proved incorrect. Legal scholars, economists and others have pointed out that because most strikes are of an extremely short duration, employers do not need to hire replacements of any kind. Additionally, a large majority of businesses may operate for long periods of time without hiring permanent replacement workers by relying on managerial or supervisory personnel, temporary replacements, or workers loaned from other subsidiaries; contracting out work; or stockpiling inventory. The Court not only assumed that an employer needed to hire replacements in order continue operations but also that the employer must grant replacement workers permanent status to induce them to work. Not only is this assumption unwarranted, but the Court itself recognized this in later rulings. In Erie Resistor, Great Dane Trailers, and Fleetwood Trailer, the Court held that employer tactics which are "inherently destructive" of employee rights are enough to run afoul of the NLRA, and no legitimate business reasons is a defense. Yet, in Mackay Radio, hiring permanent replacements—perhaps the act most likely to be inherently destructive of those rights—is held not to be an infringement of the law. A few scholars bluntly conclude that there is no way to reconcile Mackay Radio with these three cases.
The Court's assumptions, some say, have made the Mackay Radio ruling theoretically unsupportable as a matter of equity. Because the Court assumed that employers must hire permanent replacements as a matter of business necessity, the Court did not find it necessary to require the employer to show the need for permanent replacements. This places the burden on either the Board or unions to prove that the employer had an anti-union animus. But the Supreme Court subsequently held that replacement workers cannot be presumed to be anti-union, so their use is not enough to show animus. Indeed, courts have been reluctant to find support for anti-union animus in any except the most extreme cases. As legal scholars point out, under Mackay Radio, employers can now cloak anti-union animus under the guise of using permanent replacements. They note that it is becoming increasingly common for employers to deunionize using permanent replacements, and nearly impossible for unions to obtain legal redress. This has held to a radical shift in American labor policy which Congress did not intend.
Finally, the changing nature of American federal labor law has made the Mackay Radio doctrine pernicious. When Mackay Radio was announced in 1938, unions were allowed to engage in many kinds of secondary activities. Secondary activities are actions directed at businesses and individuals not directly connected to the labor dispute. These include secondary picketing, sympathy strikes, "hot cargo" strikes (continuing to work but refusing to handle products which come from the struck business), secondary boycotts, and picketing of a struck employer's suppliers or customers. The closed shop was also legal at the time, helping unions ensure that only workers who were bound by union rules were hired. But the Taft-Hartley Act (enacted in 1947) and the Labor Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act, enacted in 1959) outlawed these tactics. Under the federal labor law legal regime which existed in 1937, the hiring of permanent replacement workers was not necessarily destructive of the collective bargaining relationship. But under the post-1959 labor law regime, Mackay Radio has turned (as some scholars conclude) collective bargaining into collective begging.
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