Crest Litho

National Labor Relations Board - Board Decisions

Jul 31, 1992

308 N.L.R.B. 108 (N.L.R.B. 1992)

108
308 NLRB No. 24
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 Charging Party Graphic Communications International Union,
Local 259-M, AFL–CIO filed unfair labor practice charges on June
11 and August 13, 1991. On August 30, 1991, the Regional Director
for Region 3, acting on behalf of the General Counsel, issued an
amended consolidated complaint alleging that Respondent Crest
Litho, Inc. has violated Sec. 8(a)(5) and (1) of the National Labor
Relations Act. On September 23, 1991, the Regional Director issued
an order dismissing certain allegations of the amended consolidated
complaint.
On October 7, 1991, the General Counsel, the Respondent, and the
Charging Party filed with the Board a stipulation of facts, with at-
tachments, and moved to transfer this proceeding directly to the
Board for findings of fact, conclusions of law, and a Decision and
Order. On December 2, 1991, the Board issued an order granting the
motion to transfer and approving the stipulation of facts. Thereafter,
the General Counsel filed a memorandum brief in support of the
amended complaint allegations.
The National Labor Relations Board has delegated its authority in
this matter to a three-member panel. 2 Subsequent dates are in 1991, unless otherwise stated.
Crest Litho, Inc. and Graphic Communications
International Union, Local 259-M, AFL–CIO.
Cases 3–CA–16376 and 3–CA–16528
July 31, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND RAUDABAUGH
The question presented in this case is whether Crest
Litho, Inc., the Respondent, violated Section 8(a)(5)
and (1) of the Act by failing to abide by several provi-
sions of its current collective-bargaining agreement
with Graphic Communications International Union,
Local 259-M, AFL–CIO, the Union.1 For the reasons
set forth below, we find that the Respondent unlaw-
fully failed to comply with contractual provisions re-
garding vacation, dues checkoff, and fringe benefit
contributions. We further find that the Respondent un-
lawfully failed to comply with contractual require-
ments when laying off some unit employees, but that
it lawfully laid off other employees in reliance on a
reasonable good-faith interpretation of those require-
ments.
On the entire record in this case, the Board makes
the following findings.
I. JURISDICTION
The Respondent is a New York State corporation
with its principal office and place of business at 2550
Ninth Avenue, Watervliet, New York, where it has
been engaged as a commercial printer providing lithog-
raphy, offset, photoengraving, and related services.
During the 12 months preceding the parties’ execution
of the stipulation of facts, the Respondent, in the
course and conduct of operations at the Watervliet fa-
cility, derived gross revenues in excess of $50,000
from services provided to other employers directly en-
gaged in interstate commerce. The parties have stipu-
lated, and we find, that the Respondent is an employer
engaged in commerce within the meaning of Section
2(6) and (7) of the Act. We also find that the Union
is a labor organization within the meaning of Section
2(5) of the Act.
II. THE UNFAIR LABOR PRACTICES
A. Facts
At all times material, the Union has been the exclu-
sive representative of a bargaining unit of certain of
the Respondent’s employees at the Watervliet facility.
The parties have had a series of collective-bargaining
agreements, the most recent of which is effective by
its terms from January 3, 1991, until January 3, 1993.
The current contract contains provisions for, inter alia,
dues checkoff (art. 6), vacation pay (art. 14), payment
of wages and interlocal pension deduction (article 31),
and payments to employee benefit funds for edu-
cational training and retraining (art. 15), retirement
(art. 49), and supplemental retirement and disability
(art. 30).
Article 11 of the contract governs unit employee
layoffs. In relevant part, that article provides:
Section 1. An employee may be laid off in the
normal course of the operation of the business;
employees may be discharged for just cause.
When layoffs or discharges are to be made, the
Company agrees to notify the Union in advance
to give the Union representatives an opportunity
to discuss the matter with the Company represent-
atives.
Section 2. The Company shall give regular em-
ployees one week’s notice or pay in lieu thereof
in the event of a permanent layoff. An employee
must have completed one month of continuous
service to be eligible.
On May 24, 1991,2 the Respondent filed a petition
under Chapter 11 of the Bankruptcy Code in United
States Bankruptcy Court for the Northern District of
New York. On this date, the Respondent had little or
no cash on hand after paying operating expenses. Its
only source of income since the filing of the bank-
ruptcy petition has been proceeds from accounts re-
ceivable. As of June 6, the Respondent had no cash or
bank deposits.
Manufacturer’s Hanover Trust Company (MHTC)
had a first security interest in all the Respondent’s ac-
counts receivable. CIT Group/-Equipment Financing,
Inc. (CIT) had a second security interest in these as-
sets. In order to meet payroll and other operating ex-
penses, the Respondent had to obtain orders from the
bankruptcy court with consents by the U.S. Trustee,
counsel for the creditors’ committee, and the attorney
for MHTC and CIT. The first such order was dated
109CREST LITHO
3 The orders themselves are not part of the record in this case.
4 The dates of layoff and affected employees were:
May 24: Keith Pepicelli, Brian Bradt, Helen Myosin; May 28:
Timothy Davis, Charles Quick, Michael Quick, Frank
Degennaro; May 31: Monica Halfacre; June 3: Lucille A. Akins,
Mitt Selke; June 5: Michael Schrell; June 6: James Bollacker;
June 7: William Seredensky; June 19: William Mitchell, Carl
Rivenburg; June 26: Barry Burns, Richard Cozzy; June 27: An-
nette Chakrumaninan, Eric Price, Theodore Hahn, John Sokol,
Bob McNamee, Gerald Bernard, James Ballocker, Ronald
Singley, Quinton Jones, Phillip Jackson, Richard Butler, Tom
Gorham; June 28: Pete Dominici, Eric Ortiz, Bobby Ballocker,
David Fleming; June 29: Harry Vanderhule; July 8: Robert
Doterer; July 12: John Harper, Carol E. Olsen; July 26: Patrick
Sullivan, William Wakely, Charles Bollacker, William J. Peper;
August 2: Eugene A. Kromey, Joseph Belleville, Kenneth A.
McDonald, Edward Sokol.
5 The Respondent did not file a statement of position with the
Board. Its position was set forth in two letters submitted to the
Board’s Regional Office during the investigation of the unfair labor
practice charges filed in this case. The stipulation of facts includes
these letters.
6 It is well established that the Board’s jurisdiction and authority
to hear and determine an unfair labor practice case to its final dis-
position are exempted from the automatic stay provisions of the
Bankruptcy Act under the exception of 11 U.S.C. § 362(b)(4) and
(5). See Katco, Inc., 295 NLRB No. 92, slip op. at 2 (June 30, 1989)
Continued
June 1. There has been a series of orders since that
date.3 In each case, the Respondent’s requests were re-
duced. Nothing was allowed for the May 1 payments
to the supplemental retirement and disability fund and
the educational training and retraining fund. After July
1, nothing was allowed for dues checkoff, pension de-
duction, and retirement fund payments.
Other than paying basic wages to unit employees
who continued to work, the Respondent ceased making
required contractual payments: on May 1, for the sup-
plemental retirement and disability fund and the edu-
cational training and retraining fund; on May 24, for
vacations; and on July 1, for dues checkoff, pension
deduction, and the retirement fund. In late September,
the Respondent was in the process of permanent liq-
uidation.
On or about May 24 and 28, the Employer informed
employees at work and the Union that a bankruptcy
petition had been filed and that employees would be
terminated as in-house work was completed. The Re-
spondent permanently laid off unit employees on var-
ious dates from May 24 to August 2.4 Other than the
May 24 and 28 announcements, the Respondent did
not give the Union any advance notice of individual
layoff actions pursuant to article 11, section 1 of the
parties’ collective-bargaining agreement. The Respond-
ent also did not otherwise give specific 1 week’s no-
tice or pay-in-lieu to permanently laid-off employees
pursuant to article 11, section 2.
B. Contentions of the parties
The General Counsel contends that the Respondent
has violated Section 8(a)(5) by failing to make contrac-
tually required payments and by failing to comply with
contractual provisions governing permanent layoffs of
unit employees. The General Counsel argues that eco-
nomic inability to pay does not excuse the statutory
obligation to comply with the obligations of a collec-
tive-bargaining agreement. Furthermore, the pendency
of bankruptcy proceedings does not stay the Board’s
jurisdiction to hear and resolve unfair labor practice
issues.
The Respondent contends5 that the restrictions im-
posed by the Bankruptcy Code, the bankruptcy court,
and its creditors precluded compliance with the mone-
tary provisions of the collective-bargaining agreement.
With respect to the layoffs, the Respondent contends
that its May 24 and 28 notices to employees and the
Union satisfied its contractual obligations, except as to
two employees laid off on May 24 (Brian Bradt and
Helen Myosin).
C. Discussion and Conclusions
1. Each of the contractual provisions at issue in this
case relates to a mandatory subject of bargaining. A
unilateral modification or repudiation of such provi-
sions during a contract term is a violation of Section
8(a)(5). See Rapid Fur Dressing, 278 NLRB 905
(1986). In this case, the parties have stipulated that the
Respondent failed to comply with contractual require-
ments for vacation, benefit fund, and dues-checkoff
payments. (As discussed below in sec. C,2, the issue
of whether Respondent complied with contractual lay-
off provisions is a disputed matter.) We need to con-
sider only whether the Respondent has presented any
meritorious affirmative defense to its otherwise unlaw-
ful conduct.
The Respondent’s dire economic circumstances are
clear from the stipulated record. It is well established,
however, that economic inability to pay does not con-
stitute an adequate defense to an allegation that an em-
ployer has violated Section 8(a)(5) by failing to abide
by provisions of a collective-bargaining agreement.
E.g., Zimmerman Painting & Decorating, 302 NLRB
856 (1991).
There remains the question whether the bankruptcy
proceeding presents a defense for the Respondent’s
noncompliance with contractual payment obligations.
In this regard, the stipulation of facts shows that the
Respondent ceased making payments into funds for
supplemental retirement and disability and for edu-
cational training and retraining on May 1, prior to the
May 24 filing of a bankruptcy petition. Accordingly,
the bankruptcy proceeding cannot be a defense to the
Respondent’s unlawful failure to make timely
prepetition payments.6
110 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
(not reported in Board volumes); American Fleet Maintenance Co.,
289 NLRB 764 (1988).
7 See In re Ionosphere Clubs, 922 F.2d 984 (2d Cir. 1990).
8 In re Unimet Corp., 842 F.2d 879, 882 (1988).
9 The Respondent does not contend that different requirements
should apply because it is now in the process of permanent liquida-
tion, rather than reorganization.
10 Also see NCR Corp., 271 NLRB 1212, 1213 (1984).
With respect to postpetition conduct, Section 1113
of the Bankruptcy Code describes the ‘‘sole method’’
for the termination or modification of the terms of a
collective-bargaining agreement by a party in bank-
ruptcy.7 Congress enacted this legislation in response
to, and as a reversal of, the Supreme Court’s holding
in NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984),
that a debtor in bankruptcy did not commit an unfair
labor practice by unilaterally terminating or modifying
a collective-bargaining agreement prior to seeking
bankruptcy court approval. Specifically, Section
1113(f) states:
No provision of [the Bankruptcy Code] shall be
construed to permit a trustee to unilaterally termi-
nate or alter any provisions of a collective bar-
gaining agreement prior to compliance with the
provisions of this section.
Although the full text of Section 1113 is relatively
lengthy, the Sixth Circuit has succinctly summarized
the requirements for contract termination or modifica-
tion as follow:
Subsection 1113(b) requires the trustee or debtor-
in-possession to make a proposal to the union
providing for employee benefit modifications that
are necessary to permit the reorganization of the
debtor and to assure that all creditors, the debtor,
and all other affected parties are treated fairly.
The debtor must also provide the union with all
information necessary to effectively evaluate the
proposal. Subsection 1113(b) further requires
meetings between the debtor-in-possession and the
union.
Subsection 1113(c) provides that the court shall
approve an application for rejection of the collec-
tive bargaining agreement only if it finds that the
debtor-in-possession has made a proposal that ful-
fills the requirements of subsection (b); that the
union has refused to accept the proposal without
good cause; and that the balance of the equities
favors rejection of the contract.
Subsection 1113(d) contains a timetable during
which the bankruptcy court must rule on the peti-
tion. Subsection 1113(e) contains a provision al-
lowing emergency relief as necessary to prevent
irreparable damage to the debtor’s business.8
The Respondent bears the burden of proving that its
repudiation of the terms of its contract with the Union
was in accordance with the specific requirements of
Section 1113.9 Clearly, such proof must include a
bankruptcy court order issued (1) in accordance with
the terms of Section 1113(c) or (e), (2) prior to any
change in the terms of the contract, and (3) expressly
authorizing the specific change subsequently under-
taken.
The stipulated record makes reference only to a se-
ries of orders issued by the bankruptcy court on and
after June 1, 1991. These orders present no defense to
the Respondent’s antecedent unilateral cessation of
contract benefits, including not only the prepetition
conduct previously discussed but also the cessation of
vacation payments on and after May 24. Appropriate
proof of bankruptcy court orders could justify the Re-
spondent’s subsequent cessation of contract payments.
The orders themselves are not part of the record, how-
ever, and there is insufficient evidence of their content
or of the procedures leading to their issuance for us to
find that the Respondent has acted in compliance with
Section 1113. Consequently, the Respondent has failed
to prove that bankruptcy proceedings justified any of
its admitted failures to comply with the terms of its ex-
isting collective-bargaining agreement with the Union.
This conduct therefore violated Section 8(a)(5) and (1)
of the Act.
2. The Respondent’s defense of its layoff action dif-
fers from its defense of other conduct at issue here. In
this regard, the Respondent argues that its oral notice
to employees and the Union on May 24 and 28, 1991,
satisfied its contractual obligations, except for two em-
ployees who were laid off on May 24. On the other
hand, the General Counsel and the Union apparently
believe that article 11 of the parties’ collective-bargain-
ing agreement requires separate advance notices for
each employee’s layoff, or at least for each day’s lay-
off action, from May 24 through August 2.
This dispute between the parties about layoffs is es-
sentially a contractual one. In Atwood & Morrill Co.,
289 NLRB 794, 795 (1988), the Board held: ‘‘Where
. . . the dispute is solely one of contract interpretation,
and there is no evidence of animus, bad faith, or an
intent to undermine the Union, we will not seek to de-
termine which of two equally plausible contract inter-
pretations is correct.’’ In such cases, the Board will not
find an 8(a)(5) unilateral change if the record shows
that ‘‘an employer has a sound arguable basis for as-
cribing a particular meaning to his contract and his ac-
tion is in accordance with the terms of the contract as
he construes it.’’ Vickers, Inc., 153 NLRB 561, 570
(1965).10
Article 11 of the parties’ agreement permits the Re-
spondent to lay off employees, subject to certain con-
111CREST LITHO
11 Apart from the contractual issue, the amended complaint alleged
that the Respondent failed to bargain with the Union about the lay-
offs and their effects. The Respondent’s answer denied this allega-
tion, and the General Counsel has not addressed it in his memoran-
dum brief to the Board. Assuming that the allegation has not effec-
tively been withdrawn, we shall dismiss it as unproven, for the stipu-
lation contains insufficient evidence to establish the violation.
12 We leave to the compliance stage the question whether the Re-
spondent must pay any additional amounts into the benefit funds in
order to satisfy our ‘‘make-whole’’ remedy. Merryweather Optical
Co., 240 NLRB 1213, 1216 fn. 7 (1979).
ditions. Pursuant to section 1, the Respondent must no-
tify the Union in advance to give it an opportunity to
discuss the layoff action. Pursuant to section 2, the Re-
spondent must give employees 1 week’s notice of a
permanent layoff. The Respondent did not give any
laid-off employee pay in lieu. Consequently, its claim
of compliance with article 11 rests entirely on the ade-
quacy of its May 24 and 28 notices to the Union and
to employees that all employees would be permanently
laid off as work was completed.
The Respondent admits that its May 24 and 28 no-
tices were untimely as to the two employees laid off
on May 24. We further find that there is no plausible
basis for finding that these notices were timely with re-
spect to any employee permanently laid off less than
1 week after the notices. The Respondent therefore
violated Section 8(a)(5) by failing to adhere to the lay-
off provisions of its collective-bargaining agreement
with the Union when it laid off Keith Pepicelli, Brian
Bradt, Helen Myosin, Timothy Davis, Charles Quick,
Michael Quick, Frank Degennaro, and Monica
Halfacre.
On the other hand, we find that the Respondent has
a sound arguable basis for contending that its perma-
nent layoff of unit employees on and after June 3,
more than a week after the May 24 notice, comported
with contractual requirements. The terms of article 11,
section 2 do not clearly require separate notices of re-
lated serial layoffs, as opposed to the notice given here
by the Respondent to the Union and to all employees.
Furthermore, article 11, section 1 does not state a spe-
cific time for advance notice to the Union so as to as-
sure the opportunity to discuss the matter of layoffs.
It is reasonable to conclude that a week’s advance no-
tice was at least sufficient time for the Union to re-
quest discussions. There is no evidence that it did so.
There also is no evidence that the Respondent’s actions
involved animus, bad faith, or an attempt to undermine
the Union’s representative status. Accordingly, we find
that the Respondent’s layoff of unit employees on and
after June 3 did not violate Section 8(a)(5).11
CONCLUSION OF LAW
By failing to adhere to provisions of the January 3,
1991, to January 3, 1993 collective-bargaining agree-
ment with the Union for vacations, dues checkoff, sup-
plemental retirement and disability, payment of wages
and interlocal pension deduction, retirement, edu-
cational training and retraining, and layoffs, the Re-
spondent has engaged in unfair labor practices affect-
ing commerce within the meaning of Section 8(a)(5)
and (1) and Section 2(6) and (7) of the Act.
REMEDY
Having found that the Respondent has engaged in
certain unfair labor practices, we shall order it to cease
and desist and to take certain affirmative action de-
signed to effectuate the policies of the Act. In view of
the permanent layoffs and the Respondent’s liquida-
tion, we shall order that the Respondent mail notices
to the last known address of all unit employees who
were employed by the Respondent in the 2-month pe-
riod preceding May 24, 1991.
We shall order the Respondent to reinstate and ad-
here to the terms and conditions of its current collec-
tive-bargaining agreement with the Union. We shall
also order the Respondent to make whole unit employ-
ees, in the manner prescribed in Ogle Protection Serv-
ice, 183 NLRB 682 (1970), for any loss of wages and
benefits suffered as the result of its unlawful repudi-
ation of contract provisions. The Respondent shall also
reimburse its unit employees for any expenses ensuing
from the Respondent’s unlawful failure to make con-
tractually required payments to benefit funds. Kraft
Plumbing & Heating, 252 NLRB 891 fn. 2 (1980),
enfd. mem. 661 F.2d 940 (9th Cir. 1981). Interest on
amounts owing to unit employees shall be computed in
the manner prescribed in New Horizons for the Re-
tarded, 283 NLRB 1173 (1987).
We shall also order the Respondent to remit to the
Union the contractually required payments for dues de-
ductions which the Respondent unlawfully failed to
make, with interest as provided in New Horizons,
supra. Finally, we shall order the Respondent to make
the contractually required benefit fund payments which
it has unlawfully failed to make.12
ORDER
The National Labor Relations Board orders that that
Respondent, Crest Litho, Inc., Watervliet, New York,
its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain in good faith with Graphic
Communications International Union, Local 259-M,
AFL–CIO as the exclusive bargaining representative of
an appropriate bargaining unit of the Respondent’s em-
ployees, by failing to adhere to provisions of the Janu-
ary 3, 1991, to January 3, 1993 collective-bargaining
agreement with the Union for vacations, dues checkoff,
supplemental retirement and disability, payment of
wages and interlocal pension deduction, retirement,
educational training and retraining, and layoffs.
112 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
13 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
(b) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of
the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Reinstate and adhere to the terms and conditions
of employment of its collective-bargaining agreement
with the Union.
(b) Make whole, in the manner set forth in the rem-
edy section of this decision, unit employees, the
Union, and the contractual benefit funds for any losses
resulting from the Respondent’s failure to comply with
provisions in the 1991–1993 collective-bargaining
agreement with the Union.
(c) Preserve and, on request, make available to the
Board or its agents for examination and copying, all
payroll records, social security payment records, time-
cards, personnel records and reports, and all other
record necessary to analyze the amounts due under the
terms of this Order.
(d) Mail a copy of the attached notice marked ‘‘Ap-
pendix’’13 to all bargaining unit employees who were
employed by the Respondent at any time in the 2-
month period preceding May 24, 1991. Copies of the
notice, on forms provided by the Regional Director for
Region 3, after being signed by the Respondent’s au-
thorized representative, shall be mailed immediately
upon receipt.
(e) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
MAILED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to mail and abide by this notice.
WE WILL NOT refuse to bargain in good faith with
Graphic Communications International Union, Local
259-M, AFL–CIO as the exclusive bargaining rep-
resentative of an appropriate bargaining unit of our
employees, by failing to adhere to provisions of the
January 3, 1991, to January 3, 1993 collective-bargain-
ing agreement with the Union for vacations, dues
checkoff, supplemental retirement and disability, pay-
ment of wages and interlocal pension deduction, retire-
ment, educational training and retraining, and layoffs.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL reinstate and adhere to the terms and con-
ditions of employment of our collective-bargaining
agreement with the Union.
WE WILL make whole unit employees, the Union,
and the contractual benefit funds for any losses result-
ing from our failure to comply with provisions in the
1991–1993 collective-bargaining agreement with the
Union.
CREST LITHO, INC.