Petition for Review of an Order of the National Labor Relations Board.

David S. Barr, Washington, D. C., with whom Bernard N. Katz, Philadelphia, Pa., and George Kaufmann, Washington, D. C., were on brief for petitioner in No. 78-1055 and intervenor in No. 78-1204.

John D. Burgoyne, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., with whom John S. Irving, Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel and David F. Zorensky, Atty., N. L. R. B., Washington, D. C., were on brief, for respondent in No. 78-1055 and petitioner in No. 78-1204.

Robert H. Jones, III, Albany, N. Y., for respondent in No. 78-1204 and intervenor in No. 78-1055.

Before McGOWAN and MacKINNON, Circuit Judges, and HAROLD H. GREENE,* U.S. District Judge for the District of Columbia.

Opinion for the court filed by District Court Judge HAROLD H. GREENE.

Opinion concurring filed by Circuit Judge MacKINNON.

These cases1 involve the question whether the publisher of a newspaper may, consistently with the National Labor Relations Act, refuse to bargain collectively regarding a code of ethics and related work rules he has unilaterally adopted for his employees.

The Pottstown Mercury, a newspaper in suburban Philadelphia owned by Peerless Publications Inc. (both the newspaper and the publisher will generally be referred to herein as the Mercury),2 operates under a collective bargaining agreement with the Newspaper Guild of Greater Philadelphia, Local 10, AFL-CIO, (hereinafter referred to as the Guild).3 On July 1, 1968, the Mercury posted on its bulletin boards a list of twenty-five "General Office Rules," prepared by its publisher. At no time prior to the posting had he or any of his representatives given notice of the impending action to the Guild or its members, nor had there been any prior collective bargaining over the formulation, effectuation, or impact of the Rules with the Guild.

The preamble to the Office Rules states that their "violation . . . may be deemed cause for discharge except in case of those rules where discharge is automatic." On May 10, 1972, the Mercury updated and amended the Rules and again posted them in the offices and distributed them to the employees. On April 3, 1974, all employees were given notice, through attachments to their paychecks, that the " . . . published and posted rules are, and always have been, in force . . . and will be enforced."

The Office Rules concern a variety of employee conduct, including abuse of liquor, disorderly conduct, use of company equipment for private purposes, garnishment of wages for personal debts, posting of circulars, treatment of company property, solicitation of funds on company premises, and various reporting and recordkeeping procedures.4 Furnishing of false or misleading information, intoxication or drinking liquor on the Mercury's premises or engaging in work-stoppages or slow-downs are deemed to be dischargeable offenses. In addition, Rule 11 provides that

All copy and proof, both news and advertising matter, must be treated as confidential. No information obtained by any employee by reason of his employment shall be made use of for himself or given out, or in any way made known prior to publication .... Employees must so conduct themselves outside of office hours as not to reflect adversely on the newspaper or cause loss of business or patronage. . . .5

The Guild did not protest at the time the Office Rules were first posted, but it did object during the August 1968 bargaining session, and again at a session in October 1968, both times without success. After the Guild threatened a strike in October 1968, the Mercury nullified warning letters and the conditional discharges which had previously been issued.6 In 1970 and 1973, the publisher sought to include in the contract a clause which would have authorized the Mercury to "make or change rules, policies, or practices, except for those specifically provided for in the agreement," but the Guild consistently took the position that it would ignore this "purely . . . unilateral declaration" of management prerogatives.7

Notwithstanding this inconclusive bargaining history, the Mercury has enforced the Office Rules from the very beginning, and between 1968 and 1974 it issued approximately fifteen reprimands for alleged employee violations.8 Disciplinary proceedings, including suspensions, discharges, and forced resignations, were begun against several employees, and the Guild has filed grievances against the Mercury pursuant to the collective bargaining agreement concerning these matters.9 While some of these grievances were either withdrawn or settled, at least one-involving a discharge-was still pending before an arbitrator at the time of the National Labor Relations Board proceedings in this case.

On April 15, 1974, the Mercury posted in its offices and published in its pages a "Code of Ethics," a copy of which was also distributed to each employee along with his paycheck for that date.10 The Code is loosely based on an ethics code adopted by the Sigma Delta Chi national society of professional journalists.11

The stated purposes of the Code are to spell out the Mercury's standards of integrity, objectivity, and fairness, and to protect and enhance its quality and credibility. According to the publisher, it was promulgated because " . . . in today's atmosphere of deteriorating integrity in various sections of the country, including Watergate and other things, and other newspapers, we felt that it was time that we set up some goals for ourselves." He noted the likelihood of a Guild objection, but stated his determination to proceed because of his belief that it is "management's prerogative to set its own ethical standards . . . (which are) part of the quality of the newspaper. . . ." He further declared that the Code applied to all employees, that it was a mandatory standard of conduct, and that the employees were bound to adhere to it under penalty of discipline.

The Code contains a preliminary statement of general principles and four substantive sections designated Ethics, Accuracy and Objectivity, Fair Play, and Pledge. Primarily at issue here is the Ethics section,12 which is said to be based on the principle that "newspaper people must be free of obligation to any interest other than the public's right to know the truth." That section prohibits,13 first, acceptance of anything of value which could "compromise the integrity of newspaper people and their employers," including gifts, favors, free travel, special treatment or privileges; and second, conflicts of interest, real or apparent, including secondary employment, political involvement, holding of public office, and service in community organizations.

Prior to the posting of the Code in April 1974, there had been no formal policy concerning gifts of value,14 popularly known as "freebies," and employees had been allowed15 a wide range of gifts, including many which provided access to various types of events and functions.16 Freebies were provided both by advertisers and non-advertisers, and their use by the staff was also varied. Some of the gifts were used in connection with news coverage;17 others were not.18 Events which are covered by the Mercury, e. g., local sports, social and political events, were partially opened to admission by tickets mailed in to the editor,19 by press passes, or simply by the showing of press cards at the door.

Beginning in May 1974, the publisher began to enforce the Code through verbal warnings, warning letters, and cease and desist orders20 concerning outside activities which allegedly constituted conflicts of interest with employment.

On June 4, 1974, the Guild advised the Mercury that the Code of Ethics involved unilateral changes in terms and conditions of employment and was an unfair labor practice, and it requested that management engage in collective bargaining concerning the matter.21 The Mercury refused, stating that it regarded its Code and the Office Rules as a management prerogative. The Guild thereupon filed charges with the Labor Board.

The Guild's charges were heard by an Administrative Law Judge who ruled on September 23, 1975, that the Code of Ethics and the General Office Rules, in toto, were mandatory bargaining subjects, and that the Mercury had failed to comply with its obligation in that regard. He also held that the Guild had not waived its right to bargain over these subjects, and he ordered the company to rescind the Office Rules and the Code and to bargain with the Guild over their applicability to the agreement then in effect.

The Board affirmed part and rejected part of the ALJ's conclusions. It held that the Mercury had no duty to bargain with the Guild about the substantive provisions of the Ethics Code,22 but that it did have such a duty with respect to its penalty provisions. The Board affirmed the ALJ's holding that the Office Rules are mandatory bargaining subjects, both substantively and with respect to penalties.23

Explaining its decision, the Board stated that the substantive provisions of the Code constitute a legitimate attempt by the publisher to protect and preserve the credibility and quality of his publication, and that they are for that reason beyond the scope of mandatory bargaining under the Act. In arriving at this conclusion, the Board relied primarily upon its recent holding in The Capital Times Company, 223 N.L.R.B. 651 (1976), which it regarded as standing for the proposition that newspaper codes of ethics are not, in and of themselves, mandatory bargaining subjects.

On the other hand, the Board concluded that the Office Rules (except for Rule 11) directly affect the conditions of employment and are not exempt from mandatory bargaining on any basis similar to that which sustained the exemption of the Code. With respect to its ruling that the penalty provisions are mandatory bargaining subjects across-the-board, it reasoned, again relying on Capital Times, that to require an employee to adhere to the rules under penalty of discipline is to affect his employment security, and that the company must therefore bargain concerning this subject.24

The Board ordered the Mercury to cease and desist from the illegal conduct and to take affirmative action to effectuate the policies of the Act. It specifically required the company to bargain with the Guild on all aspects of the Office Rules (except for Rule 11) as well as concerning the penalty provisions of both the Code and the Office Rules. Chairman Fanning dissented from that much of the order as held that the substantive provisions of the Code and of Rule 11 of the Office Rules are not mandatory bargaining subjects (see also Part VII infra ).

Section 8(a)(5) of the Act, 29 U.S.C. § 158(a)(5), provides that it shall be an unfair labor practice for an employer to refuse to bargain collectively with the representative of his employees, and section 8(d), 29 U.S.C. § 158(d), defines collective bargaining as meeting and conferring in good faith with respect to wages, hours, and "other terms and conditions of employment." The basic issue before the court is whether, notwithstanding the apparently broad sweep of section 8(d), there is a valid basis for exempting the Code of Ethics and the Office Rules from the Act's bargaining requirements.

The parties have taken widely disparate positions on these issues. The Mercury contends that under the First Amendment to the Constitution it has an absolute right to impose the conditions and penalties embodied in the two sets of rules, and that it therefore cannot be compelled to bargain concerning such matters, irrespective of the language of the statute. It also argues that, in any event, the dispute here may be resolved by arbitration and is for that reason outside the scope of collective bargaining. The Guild contends that every matter, touching in any way upon conditions of employment, is mandatorily, bargainable under the Act, including all of the rules at issue here. The Board concluded and argues here that the Office Rules (except for Rule 11) are subjects for mandatory bargaining in all their aspects; that the substantive provisions of the Code constitute a subject properly reserved for management and are not bargainable; and that enforcement of any of these provisions through punitive action is subject to mandatory bargaining.

For different reasons, and in different degrees, we disagree with the positions of all three parties.

The Mercury's reliance on the First Amendment is plainly foreclosed by long-standing precedent. It is firmly established that a newspaper is not immune from the coverage of the National Labor Relations Act merely because it is an agency of the press. See, e. g., Associated Press v. NLRB, 301 U.S. 103, 132-33, 57 S. Ct. 650, 655, 81 L. Ed. 953 (1937). What the Supreme Court stated in Branzburg v. Hayes, 408 U.S. 665, 682-83, 92 S. Ct. 2646, 2657, 33 L. Ed. 2d 626 (1972) in another context is fully applicable here: "It is clear that the First Amendment does not invalidate every incidental burdening of the press that may result from the enforcement of civil or criminal statutes of general applicability, (and) otherwise valid laws serving substantial public interests may be enforced against the press as against others, despite the possible burden that may be imposed." See also, Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 192-93, 66 S. Ct. 494, 497, 90 L. Ed. 2d 614 (1946) (Fair Labor Standards Act); Associated Press v. United States, 326 U.S. 1, 65 S. Ct. 1416, 89 L. Ed. 2013 (1945) (antitrust laws); Grosjean v. American Press Co., 297 U.S. 233, 250-51, 56 S. Ct. 444, 449, 80 L. Ed. 660 (1936) (general taxation).

To be sure, otherwise valid laws may become invalidated in their application when they invade constitutional guarantees, including the First Amendment's guarantee of a free press. See, Near v. Minnesota, 283 U.S. 697, 51 S. Ct. 625, 75 L. Ed. 1357 (1931); New York Times Co. v. United States, 403 U.S. 713, 91 S. Ct. 2140, 29 L. Ed. 2d 822 (1971). So it would be with an interference by government with editorial content or other matters lying at the heart of a newspaper's independence. Cf. Wichita Eagle & Beacon Publishing Co. v. NLRB, 480 F.2d 52 (10th Cir. 1973), cert. denied, 416 U.S. 982, 94 S. Ct. 2383, 40 L. Ed. 2d 758 (1974); cf., Grosjean v. American Press Co., supra. But our ruling in this case (see Part V infra ) preserves to the Mercury exclusive control over those aspects of its operation, without the burden of mandatory bargaining,25 which are fundamental to the enterprise and it thus avoids any possible constitutional problem. Thus, the First Amendment claim may be dismissed as without substance.

The Mercury suggests that the dispute herein, because it may be resolved by arbitration, is outside the scope of mandatory collective bargaining. The argument is that, even if the various rules it has adopted constitute mandatory bargaining subjects, its legal obligations have been satisfied because it stands ready to resolve disputes as to their interpretation and application through the existing grievance-arbitration machinery.

While arbitration is deemed a preferred means for settling labor disputes, Steelworkers v. Warrior & Gulf Co., 363 U.S. 574, 581-82, 80 S. Ct. 1347, 1352, 4 L. Ed. 2d 1409 (1960), it is likewise settled that the Labor Board need not refrain from exercising its authority to enforce the Act merely because arbitration procedures are available. See, e. g., NLRB v. C&C Plywood Corp., 385 U.S. 421, 87 S. Ct. 559, 17 L. Ed. 2d 486 (1967); NLRB v. Acme Industrial Co., 385 U.S. 432, 436-37, 87 S. Ct. 565, 568, 17 L. Ed. 2d 495 (1967); NLRB v. Huttig Sash & Door Co., 377 F.2d 964 (8th Cir. 1967). The Board's policy has been to defer to arbitration where disputes turn on collective bargaining agreements,26 but not where they rest upon interpretations of the Act itself. See Local Union No. 2188 v. NLRB, 161 U.S.App.D.C. 168, 170-2, 494 F.2d 1087, 1088-91 (1974), cert. denied, 419 U.S. 835, 95 S. Ct. 61, 42 L. Ed. 2d 61 (1974); Office and Professional Emp. Int. U. Local 425 v. NLRB, 136 U.S.App.D.C. 12, 17-18, 419 F.2d 314, 319-20 (1969).27

This is a matter for the Board to decide, and since its decision was based on considerations involving a rational policy choice, the court would not be justified in interfering with its expert judgment. Meat Cutters v. Jewel Tea Co., Inc., 381 U.S. 676, 685, 85 S. Ct. 1596, 1599, 14 L. Ed. 2d 640 (1965); Richfield Oil Corp. v. NLRB, 97 U.S.App.D.C. 383, 231 F.2d 717, 724 (1956), cert. denied, 351 U.S. 909, 76 S. Ct. 695, 100 L. Ed. 1444 (1956).

The Guild's position presents more difficult problems. Nevertheless, we think it to be clear that a subject may affect conditions of employment and still be outside the scope of section 8(d).28

The point of departure for a discussion of this issue must be the concurring opinion of Justice Stewart (with whom Justices Douglas and Harlan agreed) in Fibreboard Corp. v. NLRB, 379 U.S. 203, 217, 85 S. Ct. 398, 406, 13 L. Ed. 2d 233 (1964). That case involved the question whether an employer was required to bargain with respect to its decision to refer to an independent contractor certain maintenance work previously performed by union employees. The Court agreed with the Labor Board that such a decision was included within the concept of "other terms and conditions of employment" and therefore constituted a mandatory subject of collective bargaining. The majority's decision was narrow, apparently by deliberate choice.29

The concurring justices, although agreeing with the result, determined to canvas some of the broader issues raised by the case. In their view, and those of seven circuits which had passed upon the issue up to that time,30 the language of section 8(d), while sweeping and apparently all-inclusive, must be construed to exclude various kinds of management decisions from the scope of the duty to bargain if the principle of control by the owner of property over basic decisions concerning his enterprise is to be preserved.

Mr. Justice Stewart demonstrated this exclusion principle by referring to employer decisions to go out of business entirely or, less drastically, to invest in labor-saving machinery (to which might be added reductions in an advertising budget, failures to bid on certain contracts, changes in the line of products being offered, and the like). All such decisions may have the effect, to a greater or lesser degree, of destroying or imperilling the job security of all or some employees. Nevertheless, although ordinarily union demands for contract provisions which would limit an employer's ability to discharge are mandatorily bargainable-on the theory that job security is fundamental to employment31-bargaining has never been required concerning decisions of the type referred to by Justice Stewart. That is so because, in his phrasing, they "lie at the core at entrepreneurial control . . . are fundamental to the basic direction of a corporate enterprise . . . or concern its basic scope . . ." 379 U.S. at 223, 225, 85 S. Ct. at 410.

Other decisions have elaborated and embroidered upon those concepts since 1964, without adding to the substance of the Fibreboard concurrence. See Allied Chemical Workers v. Pittsburgh Glass Co., 404 U.S. 157, 179 n.19, 92 S. Ct. 383, 397, n.19, 30 L. Ed. 2d 341 (1971); International Ladies Garment Workers U. v. NLRB, 150 U.S.App.D.C. 71, 79-80, 463 F.2d 907, 915-16 (1972); NLRB v. Royal Plating & Polishing Co., 350 F.2d 191, 195-96 (3rd Cir. 1965).32 In none of the decided cases was any expressed agreement with the Fibreboard concurrence critical to the outcome, and there is therefore no binding precedent. However, in our view that concurrence correctly interprets the law, and we shall apply it here.

The Guild argues that, whatever may be the precedential value of the Fibreboard concurrence, its rationale should be limited to the commitment of capital investment and similar subjects, and that the protection of a news publication from conflicts of interest among its staff is in a different category.

We agree with the conclusion reached by the Board in this case and in Capital Times, supra, that protection of the editorial integrity of a newspaper lies at the core of publishing control. In a very real sense, that characteristic is to a newspaper or magazine what machinery is to a manufacturer. At least with respect to most news publications, credibility is central to their ultimate product and to the conduct of the enterprise.33 Moreover, as noted supra, editorial control and the ability to shield that control from outside influences are within the First Amendment's zone of protection and therefore entitled to special consideration.34

In order to preserve these qualities, a news publication must be free to establish without interference,35 reasonable rules36 designed to prevent its employees from engaging in activities which may directly compromise their standing as responsible journalists and that of the publication for which they work as a medium of integrity. See note 50 infra.

On this basis, we reject the Guild's position that collective bargaining is mandatory on all aspects of the Newspaper's Ethics Code and its Office Rules.37

As its decisions in this case and in Capital Times demonstrate, the Labor Board is cognizant of the problems presented by the tension between the employees' right to bargain collectively and the right of the owner of a newspaper to safeguard the credibility of his publication from injury through improper conflicts of interest. However, it sought to solve these problems through means which are faulty in two basic respects. First, the Board improperly lumped together the entire Code of Ethics (including Rule 11 of the Office Rules) in a single category, holding all of it, without individualized analysis, exempt from mandatory bargaining.38 Second, it erroneously determined that, notwithstanding its broadly negative conclusion on the substance of the Code, disciplinary actions for violations of the rules established thereby are nevertheless subject to mandatory bargaining. We will consider each of these aspects of the Board's ruling in turn.

In regard to the substantive rules, the Board made no attempt to distinguish between those provisions of the Code which, while central to the Mercury's interest in the preservation of its legitimate managerial prerogatives, affect the employees only minimally, and those which, although not essential to the publication's freedom to conduct its business, do have a significant impact on the employees. Yet such a distinction must be made, for several reasons.

In the first place, labor law presumes that a matter which affects the terms and conditions of employment will be a subject of mandatory bargaining.39 The Congress intended the concept "terms and conditions of employment" to be generally inclusive for, as Mr. Justice Black, speaking for the Court in Railroad Telegraphers v. Chicago & N.W.R. Co., 362 U.S. 330, 335, 80 S. Ct. 761, 764, 4 L. Ed. 2d 774 (1960), said with respect to the analogous section 13(c) of the Norris-LaGuardia Act,40 "Congress made the definition broad because it wanted it to be broad."41 There is no evidence that the Board took these principles into account when it determined that all of the substantive provisions of the Mercury's Code of Ethics, without distinction, are exempt from mandatory bargaining.

Moreover, when there is a conflict between an employer's freedom to manage his business in areas involving the basic direction of the enterprise and the right of employees to bargain on subjects which affect the terms and conditions of their employment, a balance must be struck, if possible,42 which will take account of the relative importance of the proposed actions to the two parties. Fibreboard Corp. v. NLRB, supra, 379 U.S. at 223, 85 S. Ct. at 409;43 Allied Chemical Workers v. Pittsburgh Plate Glass Co., supra, 404 U.S. at 179, 92 S. Ct. at 397;44 International Ladies Garment Workers Union v. NLRB, 150 U.S.App.D.C. at 79-80, 463 F.2d at 915-16.45 Again, there is no indication that the Board engaged in this kind of analysis.

Without meaning to be exhaustive or definitive, since these are matters which must be decided initially by the Board,46 we perceive significant differences between, for example, a gift47 from a news source designed to influence news coverage, and a freebie48 (e. g., a ticket to a major league baseball game) given relatively indiscriminately to journalists and other well-known persons.49 Similarly, it would seem to be appropriate to distinguish between a reporter's secondary employment constituting a clear conflict of interest (e. g., public relations work for a major advertiser or an organization the reporter is covering) and such activities-all proscribed by the Mercury's Code of Ethics-as employees' compromising "political involvement, holding public office, and service in community organizations" and their failure so to "conduct their personal lives (as would protect them) from conflict of interest." There may also be a legitimate distinction, for ethics code-mandatory bargaining purposes, between categories of employees, e. g., reporters and editorial personnel vs. maintenance and circulation employees.50

In each instance, regulation of the former category would appear to be reasonably related to the core concerns of a newspaper's management without vitally affecting the interests of the employees; regulation of the latter interferes substantially with the civil and economic rights of the employees (and indeed their private lives) without clearly defined, directly necessary compensating benefits in terms of the employer's legitimate concerns.

We do not mean to render final judgments on the application of these principles to the facts of this case. The responsibility for making such decisions is vested in the Board. That agency possesses the requisite special expertise for making specific determinations in this highly delicate field which encompasses both labor relations and the workings of the press, and its detailed factual findings are likely to illuminate the framework of mere general principles. Allied Chemical Workers v. Pittsburgh Glass, supra, 404 U.S. at 182, 92 S. Ct. at 399; Richfield Oil Corp. v. NLRB, 99 U.S.App.D.C. at 389-90, 231 F.2d at 723-24; NLRB v. Erie Resister Corp., 373 U.S. 221, 236, 83 S. Ct. 1149, 10 L. Ed. 2d 308 (1963). But in our view the Board did not, in the decision under review here, make the necessary judgments with the particularity and sensitivity that is required in these circumstances.

The Board sought to discharge its obligation with respect to the Code of Ethics and Rule 11 of the Office Rules by holding the substantive rules themselves excluded in toto from the mandatory bargaining requirement while concluding that the penalty provisions attached to these rules are in every respect subject to such bargaining.

We agree with Chairman Fanning of the Board who said in his dissent in the Capital Times case:

. . . Not the least of my difficulties lies in trying to understand how the penalty provision, in isolation, can be a mandatory bargaining subject. And, if it is, how the parties are to bargain about it .... Even were we bereft of guidance in this area, the conclusion that the penalty provision is a condition of employment, but the code enforcing it is not, would necessarily fall as contrary to reason and at war with the practical considerations of collective bargaining .... As a practical matter, requiring that the Respondent bargain over the penalty provision but not the rules is simply unworkable. The penalty provision is a constituent part of the rules. It has no separate existence and, standing alone, has no meaning whatsoever. "Multiple violations will result in discharge." Violations of what? The provision has meaning only insofar as it is infused of meaning by its relation to the rules as a whole, of which it is but a constituent part. Forcing one party or the other to accept a pig in a poke will not effect meaningful collective bargaining. 223 N.L.R.B. at 656-67.

In a footnote, Mr. Fanning further observed:

Rules without penalties, express or implied, are only opinion. The expression of opinion, barren of any threat or promise of benefit, is not only protected by the Constitution of the United States, NLRB v. Virginia Electric & Power Company, 314 U.S. 469 (, 62 S. Ct. 344, 86 L. Ed. 348) (1941), but also has been accorded explicit protection under the National Labor Relations Act in Sec. 8(c). If rules and their enforcement are severable, then we can never find a violation with respect to a rule. To do so would be contrary to both the Constitution and Sec. 8(c). Without meaning to impinge on theology, I suggest that where there is no effect there can be no cause. If there is no requirement that the rule be observed, it cannot affect, or be, a term or condition of employment. Conversely, rules with penalties, express or implied, are conditions of employment; cause and effect. That does not even require a leap of faith. 223 N.L.R.B. at 656, n. 7.

Like Mr. Fanning, we are unable to understand how, either on conceptual or on practical grounds, penalties can be separated for Labor Act purposes from the substantive provisions which they are designed to enforce. Both are either mandatorily bargainable or they are not.51

The majority of the Board in its decision, and the representatives of the Board in their brief here, failed to address these concerns. Instead, the Board simply noted in its decision in Capital Times (223 NLRB at 654) that it had previously held rules and regulations to constitute mandatory subjects for bargaining, "particularly where penalties are prescribed for their violation" (citing such cases as Murphy Diesel Company, 184 N.L.R.B. 757, 762 (1970), enf'd., 454 F.2d 303 (7th Cir. 1971)).52 But that is an inadequate justification for a decision which makes penalties bargainable but not the underlying rules and regulations.

Upon remand, the Board will be expected to make substantive determinations with respect to the various provisions of the Code of Ethics and the Office Rules and come to a decision whether, in light of the principles laid down herein, any particular subject matter is or is not within the mandatory bargaining category. To the extent that it is, any penalty attaching to a substantive rule must be regarded as being likewise mandatorily bargainable; to the extent that it is not, the related penalty provisions will also have to be regarded as exempt from the bargaining requirement.

For the reasons stated, these cases are remanded to the National Labor Relations Board for proceedings not inconsistent with this opinion.

So ordered.

The foregoing opinion is an excellent analysis and I agree generally with the result it reaches; however, I desire to elaborate on several points and there are a few minor points of disagreement that I feel should be discussed. At the outset the Code of Ethics of April 15, 1974 (hereinafter Code) (J.A. 179) and the General Office Rules of May 10, 1972 (hereinafter "Rules") (J.A. 180-81) are set forth in their entirety as an Appendix.

* First, as to a point of disagreement, it is contradictory to state that Justice Stewart's famous concurrence in Fibreboard Corp. v. NLRB, 379 U.S. 203, 217, 85 S. Ct. 398, 406, 13 L. Ed. 2d 233 (1964) "correctly interprets the law, and we shall apply it here" (Maj. op. at 560) and then subsequently state, "We agree with Chairman Fanning of the Board who said in his dissent in the Capital Times case: . . . rules with penalties, express or implied, are conditions of employment . . . (and hence mandatorily bargainable.)" Maj. op. at 564 (Emphasis added).

By that statement the dissent in Capital Times would convert every rule that carried a penalty into a mandatory subject for collective bargaining between management and the union. The Capital Times dissent gave as its reason for this construction of the Act "that if employment is to continue only so long as an employee adheres to certain rules, then adherence to those rules is a condition of employment (and hence a mandatory subject of bargaining)". The Capitol Times Company, 223 N.L.R.B. at 657 (dissent). This simplistic construction of the Act, which was rejected by the Board in Capital Times and in this case, fails to recognize the broader Congressional intent which Justice Stewart in Fibreboard Corp. v. Labor Board, 379 U.S. 203, 85 S. Ct. 398, 13 L. Ed. 2d 233 (1964)1 discerned as recognizing that certain "prerogatives of private business management" constituted an area of employer-employee relationship that is exempt from mandatory collective bargaining. Such widely varied intellects as Justices Douglas and Harlan also joined in his concurring opinion, and it has since acquired wide national recognition and support. It is also significant that Chief Justice Warren's Opinion for the Court in Fibreboard recognized management prerogatives when he pointed out that the decision would only affect them to a limited extent, i. e.: "Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage his business." 379 U.S. at 213, 85 S.Ct. at 404. Congress also recognized the wide freedom of employers to manage their businesses through supervisors by § 14(a) of the Act:

. . . (No) employer subject to this (Act) shall be compelled to deem individuals defined herein as supervisors as employees for the purpose of any law, either national or local, relating to collective bargaining.

29 U.S.C. § 164(a). 1 Legislative History of the Labor Management Relations Act 434.

Justice Stewart's concurring opinion also states:

. . . it surely does not follow that every decision which may affect job security is a subject of compulsory collective bargaining.

379 U.S. at 223, 85 S. Ct. at 409. This is a direct contradiction of the Fanning dissent and there is more of the same. So we cannot agree both with Justice Stewart's concurrence and the Fanning dissent. The majority, however, in n. 51 indicates that it does not construe the Fanning dissent as making every rule that carries a penalty mandatorily bargainable.2

The Stewart opinion then cited several Courts of Appeals decisions that supported his interpretation of the Act as carving out a class of "managerial decisions, which lie at the core of entrepreneurial control", 379 U.S. at 223, 85 S. Ct. at 409, from the statutory obligation of mandatory collective bargaining. In conclusion his concurring opinion states:

If, as I think clear, the purpose of § 8(d) is to describe a limited area subject to the duty of collective bargaining, those management decisions (3 which are fundamental to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from that area.

379 U.S. at 223, 85 S. Ct. at 409. (Emphasis added).

The Stewart concurrence followed prior decisions of Courts of Appeals which had recognized an area of business decisions by management that were not mandatorily bargainable. The description of such decisions varied: NLRB v. Adams Dairy, Inc., 322 F.2d 553, 556, 557 (8th Cir. 1963) (exercise of "purely managerial prerogative(s)" "motivated by economic necessity"); NLRB v. New England Web, Inc., 309 F.2d 696, 702 (1st Cir. 1962) ("legitimate managerial prerogatives"); NLRB v. Rapid Bindery, Inc., 293 F.2d 170, 172 (2d Cir. 1961) ("legitimate exercise of managerial discretion"); Jays Foods, Inc. v. NLRB, 292 F.2d 316, 320 (7th Cir. 1961) ("right of management to avert a threatened economic loss and operate its business according to established principles"); NLRB v. Houston Chronicle Pub. Co., 211 F.2d 848, 855 (5th Cir. 1954) ("ordinary act(s) of business management").

Thus, Justice Stewart's concurrence with which we agree concluded that mandatory collective bargaining did not extend to "such larger entrepreneurial questions as what shall be produced, how capital shall be invested in fixed assets, or what the basic scope of the enterprise shall be." 379 U.S. at 225, 85 S. Ct. at 410. (Emphasis added). The last category comes closest to covering the circumstances of this case. These exceptions to mandatory collective bargaining do not exhaust the class. To them must be added circumstances which might be considered as having a general relationship to "the basic scope of the enterprise" but which could be described more specifically and would include a number of the circumstances of employer-employee relationships that are present in this case.

At this point it is appropriate to comment on a few specific provisions of the Code and Rules and to set forth my general views as to their being mandatorily bargainable. In my opinion an employing newspaper has a right unilaterally to determine the nature, character and quality of the newspaper it will publish and to prescribe such goals in a Code and Rules which provide for discipline up to discharge for employees whose conduct defeats or threatens the realization of the stated objectives. The newspaper can determine certain qualifications for the original employment of workers and their subsequent performance that are so fundamental to the basic nature and public character of the newspaper that violations can be made dischargeable offenses and need not be the subject of collective bargaining. Such standards of employment and performance might require a degree of ability and individual character that the employee must maintain to avoid disciplinary actions, including discharge. The basic skill level to qualify for the job is not a bargainable subject. A newspaper must have untrammeled authority to set standards of workmanship that determine its intrinsic excellence and its quality and public character. I refer primarily to the work of reporters, editorial writers, officers and management personnel, though there may be other positions that could be subjected to similar requirements.

In addition, in my view, an employer has an absolute right and need not bargain about his right to discharge a person for what is generally considered good "cause". This right is expressly recognized by § 10(c) of the Act.4 Included in this class of general misconduct is disorderly conduct on the newspaper's premises (Rule 9); violating state laws concerning gambling on company premises (Rule 6); being intoxicated or under the influence of drugs on company premises (Rule 5); furnishing false employment information (Rule 4). Other recognized grounds for dismissal or discipline would include engaging in work stoppages on company property (slow-downs or sit-downs) during working hours. Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S. Ct. 982, 84 L. Ed. 1311 (1940); NLRB v. Fansteel Metallurgical Corp., 306 U.S. 240, 59 S. Ct. 490, 83 L. Ed. 627 (1939); NLRB v. Blades Mfg. Corp., 344 F.2d 998 (8th Cir. 1965); Kheel, Labor Law § 29.02 (1974). Likewise, the acceptance of gifts that "compromise(s) the integrity" of the employees and threatens the quality of the newspaper (Code, Ethics, 1), and "secondary employment . . . (that) compromises the integrity of newspaper employees and their employers" (Code, Ethics, 2), may violate the basic loyalty that an employee owes to his employer. The establishment of such standards should not be mandatorily bargainable.

However, I do question whether it is proper in the Code to require newspaper people to "acknowledge the newsman's ethic of protecting confidential sources of information." Code, Ethics, 5. Following this "ethic" to its logical conclusion has not been supported by the courts, in the absence of statutory recognition. Pennsylvania law should be examined on this point. If the law has not shielded such conduct the "ethic" might require newspaper employees to commit a violation of law. Under such circumstances it would be my view that a newspaper has no right to require or enforce such a provision.

In my opinion a newspaper also has the absolute right to determine the qualifications of reporters and discharge or otherwise discipline them if their "objectivity in reporting" does not meet the newspaper's standards. Code, Accuracy and Objectivity, 2. However, if this requirement were strictly applied and reporters were discharged for not making a "clear distinction between news reports and expressions of opinion", it would seem that many reporters would be out of work. The same goes for the requirement that "news reports should be free of opinion or bias and represent all sides of an issue." Id., 5.

The law in my opinion also authorizes a newspaper to protect its editorial integrity by disciplining or discharging employees whom it considers to constitute a threat to such objectives. To the extent that the Code and Rules contain such provisions, in my opinion, they would not be mandatory subjects for bargaining. Such discretion must rest with the newspaper.

Further, I believe that each substantive provision of the Code and Rules is to be considered separately, but in conjunction with the applicable penalty, if any. The substantive provisions cannot generally be considered apart from the penalty. The Court's opinion states as follows:

Upon remand, the Board will be expected to make substantive determinations with respect to the various provisions of the Code of Ethics and the Office Rules and come to a decision whether, in light of the principles laid down herein, any particular subject matter is or is not within the mandatory bargaining category. To the extent that it is, any penalty attaching to a substantive rule must be regarded as being likewise mandatorily bargainable; to the extent that it is not, the related penalty provisions will also have to be regarded as exempt from the bargaining requirement.

Maj. op. at pp. 564-565. (Emphasis added.)

I would not look first at the substantive rule and then at the penalty only if the Rule is considered bargainable. I would view such substantive rule and its penalty together in the first instance. This may be only a slight difference from the Court's opinion but I feel the two generally go together.

In the procedure as outlined above by the Court's opinion, it should also be noted that the last clause quoted above (italicized) does not follow logically from its predecessor. In this connection, while I do not have a concrete case, I can foresee that in some cases possibly an excessive penalty, because of its excessiveness, might become a subject for mandatory bargaining. Finally, I do not agree that the facts of this case are so complex or the issue so close as to call for balancing of the "employer's freedom to manage his business" against the employees' "right . . . to bargain on subjects which affect the terms and conditions of their employment." Maj. op. at p. 22. Rather I believe the decision should result solely from giving the language of the statute its normal interpretation.

Subject to the foregoing comments I join in Judge Greene's opinion.APPENDIX

The Mercury Code of Ethics below concerns all employees, who

are all newspaper people

By this posting as of this date the Code of Ethics becomes a

part of the posted office rules for all employees

who shall adhere to them under penalty

of discipline

Employees of this newspaper are carriers of public discussion and information, acting on their Constitutional mandate and freedom to learn and report the facts.

Public enlightenment is the forerunner of justice, and our Constitutional role is to seek the truth as part of the public's right to know the truth. Those responsibilities carry obligations that require newspaper people to perform with intelligence, objectivity, accuracy, and fairness. To these ends, we declare acceptance of the standards of practice here set forth to be the rule:

RESPONSIBILITY: The public's right to know of events of public importance and interest is the overriding mission of this newspaper. The purpose of distributing news and enlightened opinion is to serve the general welfare. Newspaper people who use their professional status as representatives of the public for selfish or other unworthy motives violate a high trust.

FREEDOM OF THE PRESS: Freedom of the press is to be guarded as an inalienable right of people in a free society. It carries with it the freedom and responsibility to discuss, question, and challenge actions and utterances of our government and of our public and private institutions. Newspaper people uphold the right to speak unpopular opinions and the privilege to agree with the majority.

ETHICS: Newspaper people must be free of obligation to any interest other than the public's right to know the truth.

1. Gifts, favors, free travel, special treatment or privileges can compromise the integrity of newspaper people and their employers. Nothing of value should be accepted.

2. Secondary employment, political involvement, holding public office, and service in community organizations should be avoided if it compromises the integrity of newspaper people and their employers. Newspaper people and their employers should conduct their personal lives in a manner which protects them from conflict of interest, real or apparent. Their responsibilities to the public are paramount. That is the nature of their profession.

3. So-called news communications from private sources should not be published or broadcast without substantiation of their claims to news value.

4. Newspaper people will seek news that serves the public interest, despite the obstacles. They will make constant efforts to assure that the public's business is conducted in public and that public records are open to public inspection.

5. Newspaper people acknowledge the newsman's ethic of protecting confidential sources of information.

ACCURACY AND OBJECTIVITY: Good faith with the public and among themselves is the foundation of all worthy newspaper people.

1. Truth in all things is our ultimate goal.

2. Objectivity in reporting the news is another goal, which serves as the mark of an experienced professional. It is a standard of performance toward which we strive. Those who achieve it are to be honored.

3. There is no excuse for inaccuracies or lack of thoroughness.

4. Newspaper headlines should be fully warranted by the contents of the articles they accompany. Photographs and telecasts should give an accurate picture of an event and not highlight a minor incident out of context.

5. Sound practice makes clear distinction between news reports and expressions of opinion. News reports should be free of opinion or bias and represent all sides of an issue.

6. Partisanship in editorial comment which knowingly departs from the truth violates the spirit of American journalism.

7. Newspaper people recognize their responsibility for offering informed analysis, comment, and editorial opinion on public events and issues. They accept the obligation to present such material by individuals whose competence, experience, and judgment qualify them for it.

8. Special articles or presentations devoted to advocacy or the writer's own conclusions and interpretations should be labeled as such.

FAIR PLAY: Newspaper people at all times will show respect for the dignity, privacy, rights, and well-being of people encountered in the course of gathering and presenting the news.

1. The news media should not communicate unofficial charges affecting reputation or moral character without giving the accused a chance to reply.

2. The news media must guard against invading a person's right to privacy.

3. The media should not pander to morbid curiosity about details of vice and crime.

4. It is the duty of news media to make prompt and complete correction of their errors.

5. Newspaper people should be accountable to the public for their reports and the public should be encouraged to voice its grievances against the media. Open dialogue with our readers should be fostered.

PLEDGE: Newspaper people should actively censure and try to prevent violations of these standards, and they should encourage their observance by all their fellow workers. Adherence to this code of ethics is intended to preserve the bond of mutual trust and respect between newspaper people and the public.

Any Mercury employee who does not wholly and fully subscribe to these tenets should make himself known now and state his reasons.

These rules include, but are not limited, to all of the office rules for your department. Your department head may add to these rules more specific rules which apply to your department. Violation of office rules may be deemed cause for discharge except in the case of those rules where discharge is automatic:

1. Before starting employment each employee must file with the business office his name, address and telephone number; and thereafter must report promptly to the business office in writing any change in his address or telephone number.

2. W4 forms and any and all employment forms are to be correctly completed in the presence of the Business Manager or the Publisher. They will be initialled, processed and turned over to the payroll department, otherwise, no hire exists.

3. Employees must comply with any procedure set forth by the office for timekeeping or other purposes, including that procedure established for completion and submission of weekly time cards.

4. False or misleading employment record information furnished by an employee is reason for discharge.

5. Intoxication or drinking on company property, or bringing liquor into the building (except liquor purchased and unopened to be taken home) or keeping liquor in lockers, is prohibited. Appearing in or about the Company premises in an intoxicated condition is absolutely prohibited. Violations of this rule shall subject the offender to immediate discharge. The above applies to drugs in any form.

6. While in or about Company premises, all employees are expected to conform with any and all State laws governing gambling.

7. Employees should handle their affairs in such a manner that creditors will not make complaints to the business office. Employees are expected to pay their legitimate bills, and repeated complaints to the business office will not be tolerated.

8. The office is not responsible for the disposition of personal mail sent to The Mercury. Personal mail should be sent to another address.

9. Loitering on Company premises, stalling, gossiping, or engaging in any unnecessary conversations; visiting between employees or with visitors; uttering profane, loud, abusive or indecent language, whistling or making other unnecessary distracting noise; and quarrelling or engaging in physical violence, disorderly or disturbing conduct of any nature, is prohibited.

10. There shall be no attempt to limit or no limitation on the output of any employee; anyone who, directly or indirectly, encourages, advises, or suggests such limitation, will be promptly dismissed. Engaging in individual or group slow-downs or work stoppages on Company property during working hours will subject the employee involved to immediate dismissal. Carelessness or neglect of duty in carrying out assignments or instructions from those in authority, or insubordination of any kind will be considered an aggravated violation of these rules. All employees shall perform work as directed and at the place or places assigned by the department head.

11. All copy and proof, both news and advertising matter, must be treated as confidential. No information obtained by any employee by reason of his employment shall be made use of for himself or given out, or in any way made known prior to publication. Employees must not deface property of the Company by posting circulars anywhere except on the bulletin board provided for that purpose. Employees are prohibited from writing upon, cutting, scratching or otherwise damaging buildings, walls, floors, furniture, machinery or other equipment or defacing an office sign, or notice, or changing the wording in any way. Wanton destruction of property material or finished work is forbidden. Employees must so conduct themselves outside of office hours as not to reflect adversely on the newspaper or cause loss of business or patronage. Prompt and satisfactory cooperation with fellow workers and other members of this organization is required.

12. Producing matter on machines or by hand for personal use of anyone is strictly forbidden unless requested for the office by the department head or unless permission is first obtained from the department head. The foregoing also applies to all other transactions or work for any person or organization other than the Company while on Company time and premises.

13. Injuries or accidents of any nature must be reported to the department head as soon as possible.

13A. Complete compliance with all Federal, State, or local regulations is required at all times. Any violation is cause for instant dismissal.

14. Employees will not be called to the telephone during working hours except in case of emergency, sickness, etc. Employees should so instruct their families and friends. Outgoing calls will not be permitted, except in case of emergency, sickness, etc., and with the permission of the department head. When the Company's PBX operator is on duty, the number must be given to her to dial any outgoing calls, and when the PBX operator is not on duty, a record of the call shall be made by employees and such record shall be left with the department head who shall promptly deliver the same to the PBX operator. The employee shall, on request of the office, promptly reimburse the office for all toll calls which he has placed.

15. Turn off motors and lights when not needed. Employees must not waste supplies, water, light or power.

16. Hygienic use of waste receptacles, lavatories and toilets is required. Soap is not to be left in sinks to melt away or clog drains. Oily rags or any material of a combustible nature must be placed in covered metal containers before going off duty. All employees must cooperate to keep machines, materials and the floor clean. Do not throw paper scraps, etc., on the floor. In short, each employee should do his share to keep the building clean and orderly.

17. Employees must immediately report breakage or failure of machinery, furniture, or fixtures to the department head.

18. Privately owned goods, material or equipment should not be on the premises without permission and an appraisal release form.

19. Radios and tv should not be used except for news business.

20. Payroll records are confidential and figures will not be provided to anyone other than the department head and the employee concerned.

21. Business matters to be discussed with another department should only be discussed, explained, or otherwise conveyed to the head of the department or the person in charge.

22. The management will not permit the attachment or execution of salaries or assignment of wages. All employees who have their salaries attached or garnished will be subject to dismissal. No advances on salaries will be made before the regularly constituted pay day. Checks will be obtained from the cashier at the business office on that day.

23. In order to receive sick benefits, all employees must have a doctor's certificate stating the nature of the illness, and attesting to the fact that the employee is unable to work on the day specified. The doctor's certificate must be signed only by the doctor on a regular doctor's certificate. The company reserves the right to waive the above rule.

24. No solicitations of funds are permitted on company premises.

25. Persons other than employees are not allowed beyond the lobby except by permission of a department head.