In the case of Banks v. Chicago Grain Trimmers Association, Inc., et al., 1967, the U.S. Supreme Court ruled in favor of a group of African American workers who were denied employment by a union and several grain companies due to racial discrimination. The plaintiffs argued that they had been excluded from membership or expelled from the union because of their race, which subsequently led to them being refused work by various employers who only hired union members. The court held that such discriminatory practices violated Title VII of the Civil Rights Act 1964, which prohibits employment discrimination based on race, color, religion, sex and national origin. This landmark decision affirmed that labor unions could be held liable for racially discriminatory hiring practices if they acted in concert with employers.

In the dissenting opinion for Banks v. Chicago Grain Trimmers Association, Inc., Justice Harlan disagreed with the majority's decision to uphold a labor arbitration award that was based on an interpretation of collective bargaining agreement language not present in the actual text of the agreement. He argued that this approach undermined basic principles of contract law and exceeded arbitrators' authority as defined by federal labor policy. According to him, it is inappropriate for arbitrators to add terms or conditions not explicitly agreed upon by both parties during negotiations, even if they believe these additions are necessary for fairness or equity. Instead, he believed that their role should be limited strictly to interpreting and applying existing contractual provisions without modification or supplementation. In his view, allowing such broad interpretive discretion could lead to unpredictable results and discourage future use of arbitration as a dispute resolution mechanism in labor relations.