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December 29, 1943


The opinion of the court was delivered by: MORRIS

This action was brought by the plaintiff, The Commercial Telegraphers' Union, an affiliate of the American Federation of Labor, against the defendant, Western Union telegraph Company, hereafter referred to as Western Union, for damages for breach of contract and temporary and permanent injunctive relief against a continuing breach thereof. Upon motion, the American Communications Association, an affiliate of the Congress of Industrial Organizations, was allowed to intervene and file answer to the complaint. By leave of Court, the Federal Communications Commission appeared and filed a brief as amicus curiae. The case is before the Court on a motion by the plaintiff for temporary injunction, to the granting of which the defendant, the intervenor, and the Federal Communications Commission are opposed.

The facts, as they appear by the pleadings and in the hearing, in so far as they relate to the immediate issue, are these: The National Labor Relations Board, in accordance with legislative authority, *fn1" determined the units "appropriate for the purpose of collective bargaining" and designated the plaintiff as "the exclusive representative of all employees in such units" of the defendant, Western Union. Subsequently, on January 15, 1942, the plaintiff entered into a contract with the defendant as such exclusive representative for "the employees of its Washington, D.C., office, all departments, in respect to rates of pay, wages, hours of employment, and other conditions of employment," excepting certain employees to which the contract specifically did not apply. The plaintiff, on or about the same time, entered into like contracts with the defendant respecting numerous other units throughout the United States. All of such contracts were to continue in force from year to year until terminated by either party upon sixty days' notice.

 The National Labor Relations Board likewise designated the intervenor as the exclusive bargaining representative for the employees of the Postal Telegraph-Cable Company, hereafter referred to as Postal, with the exception of supervisory employees of said company and certain employees employed in the States of Washington, Oregon and Idaho, the units appropriate for collective bargaining not being on the local basis determined with respect to the Western Union. Subsequently, the intervenor entered into a contract with the Postal as "the exclusive representative for collective bargaining in all matters pertaining to rates of pay, wages, hours of employment, and other conditions of employment for all employees of the company, including wire chiefs and traffic chiefs, who were eligible to vote in the election held pursuant to the Direction of Election, dated November 22, 1938, as amended, issued by the National Labor Relations Board, except employees who, because of their positions, shall be deemed ineligible for membership by the Union." The record does not disclose the date of the original agreement. The agreement filed in this cause was executed June 14, 1943, effective as of October 1, 1942. It is understood, from statement of counsel at the hearing, that such agreement is not substantially different from those in force since the designation of the intervenor, above referred to, in February 1939.

 By Act of Congress, approved March 6, 1943, the Communications Act of 1934 was amended by adding Section 222. *fn2" This legislation made it lawful, upon application to and approval by the Federal Communications Commission, for any two or more domestic telegraph carriers to effect a consolidation or merger. It is provided that, upon application of interested carriers, the Commission shall order a public hearing to be held, notice of which shall be given to numerous designated public officials, and to "representatives of employees where represented by bargaining representatives known to the Commission." The Commission is authorized, after such hearing, to enter an order approving and authorizing such consolidation and merger, if it is found that it is authorized by the statute, conforms to all other applicable provisions, and is in the public interest. Whereupon, "any law or laws making consolidations and mergers unlawful shall not apply to the proposed consolidation or merger." Much of the legislation authorizing such consolidation and merger has to do with the protection of the rights of employees of any carrier so consolidated or merged. *fn3" It is readily apparent that the Congress intended to carry into effect the policy reflected in the following quotations from the Report of the House Committee on Interstate and Foreign Commerce, dealing with this legislation:

 * * *

 "* * * Moreover, the general economic situation of telegraph-industry employees, aggravated by a feeling of insecurity as to their employment in the industry, is not conducive to efficient war time operations, especially when manpower demands from outside the industry are so intense. The need for a sound and stable unified domestic telegraph company is plain."

 Pursuant to this legislative sanction, on May 25, 1943, Postal and Western Union filed with the Federal Communications Commission an application for approval of a proposed merger. Among many others to whom notice was given, appearances were filed by representatives of the plaintiff and the intervenor. Hearings were begun on July 7, 1943, and concluded on September 23, 1943, on which date an order was entered approving the merger. This merger was accomplished by issue of two classes of stock, both without par value, one class to be issued in exchange for outstanding Western Union stock, and the other in exchange for outstanding Postal stock. The distribution was upon a basis of the worth of the properties as established by the Commission. By the terms of the consolidation, Western Union would acquire all, or substantially all, of the property rights, privileges and franchises, and other assets of every character whatever of the Postal, and the Western Union would assume the obligations and liabilities of the Postal.

 During the course of the hearings, it became evident that a very important consideration, which would affect the Commission's action, was the treatment after the merger of the former Postal employees. The Western Union represented that it would assume, among other obligations of the Postal, the contract of that company with the intervenor, and by a communication to the Chairman of the Federal Communications Commission, dated September 15, 1943, stated: "* * * employees absorbed into the Western Union System from the Postal Telegraph Company will be treated for purposes of position, advancement, discharge, and pension rights as if they had been employees of the Western Union Telegraph Company during the period of their employment by the Postal Telegraph Company, subject, of course, to necessary modification to conform to any seniority rules that may be agreed upon by all interested labor groups."

 To this communication, the Chairman of the Commission replied by letter, dated September 20, 1943, stating in part:

 "You state that full recognition in the merged company will be given to the records of service of employees, irrespective of whether they were formerly Postal Telegraph or Western Union employees. This recognition is to be applied to questions of position, advancement, and all other conditions of employment affected by seniority.

 "The Commission is convinced that fulfillment by Western Union of this commitment is essential to the successful merger of the two labor forces. Any other policy would not only be inequitable but might precipitate a wholesale exodus of employees from an ...

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