Empire Terminal Warehouse Co.

National Labor Relations Board - Board DecisionsMar 31, 1965

151 N.L.R.B. 1359 (N.L.R.B. 1965)

EMPIRE TERMINAL WAREHOUSE COMPANY 1359 employees in the performance of their regular duties. They are classified as warehousemen and included in grade VII of the Em- ployer's "Schedule of Activities (Job-Title) by Job Grade," the highest paying labor category. The fact that both their wages and job classification are substantially higher than the wages or classifica- tion of employees at other locations who are engaged in other ware- housing work is a patent indication of the Employer's recognition of the substantive differences in their job functions and skills.8 Based upon the record facts detailed above, we reject the Employer's con- tention that its operations are so integrated as to preclude the estab- lishment of any unit of less than storewide scope.9 In view of the foregoing, we find that the following employees of the Employer constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: All employees engaged in warehouse operations at the 128 East Water Street warehouse, Flint, Michigan, excluding office clerical employees,"' guards, and supervisors as defined in the Act. [Text of Direction of Election omitted from publication.] 8 The classification of "Warehousemen " appears only in grade VII which consists of seven types of assistant managers , furniture iefinishers , installers , mechanics , and serv- icemen. With the exceptions of maintenance engineer , grade VIII ( the next higher grade) consists of various types of managers . Stockmen are included in grade V. An exhibit prepared by the Employer indicates that the lowest weekly wage paid to the warehouse- men in the Water Street warehouse was $105 per week. Five employees received $105 plus additional amounts with two employees receiving $118 per week. In contrast, eight other employees engaged in warehousing type work elsewhere receive from $ 65 to $99 per week ( three work on the dock at the retail store , two are stockmen , one receiving and marking, the remaining two are employed at the building center building and ap- pliance center ). Four other employees receive from $109 to $125 , including the shipping and receiving clerk at the retail store, the receiving and marking manager, a stockman and an employee at the automotive center. 6 The Employer apparently contends that Sears, Roebuck & Company, 117 NLRB 133, may be read as implying a departure from the principles enunciated in A. Harris, as delineated above Contrary to the Employer , we do not read Sears as precluding us from establishing a separate warehouse unit where the facts clearly demonstrate essen- tial differences in the work and a separate community of interest of the warehouse employees. io Since it appears from the Employer ' s offer of proof at the hearing and its brief that the clerical employees located at the Water Street warehouse are plant clericals we shall include these employees in the unit. Empire Terminal Warehouse Company and Dallas General Drivers, Local Union 745, International Brotherhood of Team- sters, Chauffeurs , Warehousemen and Helpers of America. Case No. 16-CA-172. March 31, 1965 DECISION AND ORDER On May 23, 1963, Trial Examiner George A. Downing issued his Intermediate Report in the above-entitled proceeding, finding that 151 NLRB No. 125. 1360 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the Respondent had engaged in and was engaging in certain unfair labor practices and recommending that it cease and desist therefrom and take certain affirmative action, as set forth in the attached Inter- mediate Report. The Trial Examiner also found that the Respond- ent had not engaged in certain other unfair labor practices alleged in the complaint. Thereafter, the General Counsel, Charging Party, and the Respondent filed exceptions to the Intermediate Report together with supporting briefs. The National Labor Relations Board has reviewed the rulings made by the Trial Examiner at the hearing and finds that no preju- dicial error was committed. The rulings are hereby affirmed. The Board has considered the Intermediate Report, the exceptions and briefs, and the entire record in the case, and finds merit in certain of the Respondent's exceptions. Accordingly, the Board adopts the Trial Examiner's findings, conclusions, and recommendations only to the extent consistent herewith. 1. We agree with the Trial Examiner's finding that the Respondent did not violate Section 8(a) (5) and (1) of the National Labor Rela- tions Act, as amended, by refusing to produce its financial records and other data as requested by the Union. As the Trial Examiner found, the record clearly shows that at no time during negotiations did the Respondent claim that it was unable to meet the Union's increased wage demands. Indeed, the Respondent agreed that it had a lucrative business, and pointed out that it was not pleading poverty or inability to pay. The Respondent's only position on the wage issue was that it was placed at a competitive disadvantage, and was therefore unable to get more business, because it was paying sub- stantially more in wages than were its competitors. It presented proof of this. The Union not only had independent knowledge of the accuracy of the Respondent's position, but also ignored the pre- sented proof. Under these circumstances, we find that the Respond- ent did not violate the Act by refusing to produce the financial records requested by the Union.' 2. We further agree with the Trial Examiner's conclusion that the Respondent did not violate Section 8 (a) (5) and (1) of the Act by reducing wages on or about August 17, 1962. In this regard, how- ever, unlike the Trial Examiner, we find that the record clearly reveals that the parties had bargained to an impasse on the wage issue before the Respondent effected its proposed wage changes. On July 13, 1962, negotiations between the parties for a new con- tract began with the Union's presentation of a complete proposed contract which, inter alia, called for a 25-cent-per-hour across-the- board wage increase for each year of a 3-year term, plus other mone- s Cf. N.L.R. B. v. Truitt Mfg. Co., 351 U.S. 149. EMPIRE TERMINAL 'WAREHOUSE COMPANY 1361 tary fringe demands. On July 24, the Respondent presented its counterproposals which, although containing many modifications of the Union's proposals, contained no provision for wage rates. The Respondent, however, without specifying the exact amount, clearly informed the Union that it desired to reduce its wage rates (which were approximately 25 percent higher than those of its competitors) in order to maintain its competitive position. Although the Respond- ent sought to discuss these economic factors, the union negotiator refused to discuss "cost" items until "basic" contractual issues had been worked out. During the following three bargaining sessions (from July 30 through August 6) both sides continued to bargain as to other matters, but the Union remained firm in its refusal to discuss the wage issue and countered the Respondent's request to do so by demanding that the Respondent produce its books and records to prove its inability to pay the wage increase sought by the Union. The Respondent rejected this request and, as indicated above, in- formed the Union that it had a lucrative business, that it was not pleading poverty or inability to pay, that its position was solely that it was not competitive as regards wages, and that it would not agree to a wage increase but indeed was seeking a wage decrease. On August 8, 1962, the Respondent by letter to the Union reviewed its position, sought any solutions the Union might have whereby the Respondent might operate more competitively, and proposed to decrease the existing wage rate from $2 per hour to $1.60 per hour effective August 17, 1962, the termination date of the existing con- tract between the parties. Thereafter, on August 13, 1962, a union representative met with the Respondent's employees, brought them up to date on the status of negotiations, and informed them that "we had got to the point where we were more or less at a standstill." The employees voted to reject the Respondent's wage proposal and to strike if Respondent effectuated its proposed wage changes. Further bargaining sessions were held on August 15 and 16, 1962. Neither the Union nor the Respondent showed any disposition to recede from its respective basic position-the Union demanding a wage increase and the Respondent insisting on a decrease. Toward the end of the August 16 meeting, the Respondent's representative announced that the Respondent intended to reduce its wage rates, suggested that perhaps during ensuing negotiations the matter of wages could be worked out, and further suggested that the Union come forward in the future with any solution it might have. At the conclusion of this meeting neither party desired to set a date for a future meeting although both parties indicated a willingness to meet at any time. The meeting ended with the understanding that 783-133-66-vol . 151-87 1362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the parties would meet again "when the spirit moved them." The Respondent instituted its wage decrease on August 17, 1962, and the Union struck the Respondent on September 10, 1962. In our view, the foregoing record evidence clearly reveals that the issue of wages was the sole impediment to reaching a contract at the time the Respondent placed in effect the wage decrease, and that after the bargaining sessions of August 16 and 17 the parties had arrived at a bargaining impasse on that issue. Moreover, we cannot find, as did the Trial Examiner, that the Respondent's willingness to discuss the wage issue in the future bars a finding that the parties had negotiated to an impasse. In our view, Respondent's agreement to meet with the Union in the future on the matter of wages reflected nothing more than a recognition of its continuing obligation to meet with the Union. Clearly, such agreement did not remove the wage impasse at which the parties had arrived by August 17. In addition, we note the argument of the General Counsel and the Union that Respondent unduly delayed proposing its wage reduction by waiting "until the last minute" before making a "first offer" in wages . We find no merit in this contention. The facts show that the Union knew almost from the outset of negotiations of the Re- spondent's desire for, and its reasons in support of, a wage reduction. The Union, however, for reasons of its own, refused to discuss wages despite the Respondent's repeated requests to do so, until noncost items were "worked out," and thus, in effect, precluded earlier discus- sion on this matter. In addition, the record supports the conclusion that the Respondent did not adopt an arbitrary attitude subsequent to specifying the amount of its proposed wage change on August 8, but in good faith was willing to, and did fully, discuss the wage issue with the Union 2 Accordingly, on the basis of the entire record, we find that the Respondent, by reducing its wage rates on August 17, 1962, after bargaining with the Union to an impasse on such a wage reduction, did not thereby violate Section 8(a) (5) and (1) of the Act as alleged in the complaint .3 3. The Trial Examiner found that the Respondent violated Section 8(a) (5) and (1) of the Act by unilaterally subcontracting out unit work without notice to, or consultation with, the Union. The Re- spondent excepted to this finding, and we find merit in the exception. 3 Instrument Division, Rockwell Register Corporation, 142 NLRB 634, 642 3 Cf. N.L.R.B. v Andrew Jergens Co , 175 F. 2d 130, 136 (C.A. 9), cert. denied 338 U S. 827 ; Bi-Rite Foods, Inc., 147 NLRB 59; Albert Leonard, et al , Co-partners, jointly and severally, d/b/a Davis Furniture Co., et at., 100 NLRB 1016, 1020. See also N.L.R.B. v. Benne Satz, etc., d/b/a Williamsburg Steel Products Co., 369 U.S. 736, footnote 12 ; N.L R.S. v. Crompton-Highland Mills, Inc ., 337 U S 217; Morand Brothers Beverage Co., et at. , 99 NLRB 1448, 1465 . In view of our finding that the parties had bargained to an impasse as to the issue of wages before the Respondent placed in effect a reduction in wages, we find it unnecessary to consider the Trial Examiner's findings that the Respondent did not violate Section 8 ( a) (5) even in the absence of an impasse. EMPIRE TERMINAL WAREHOUSE COMPANY 1363 On September 10, 1962, the Union commenced an economic strike against the Respondent. Within 2 days, all of the strikers, constitut- ing practically all of the Respondent's employees, were permanently replaced. However, the Respondent continued to recognize and bar- gain with the Union as bargaining representative of both the strikers and their replacements. The patieS met on September 24 and again on September 27. At the September 27 meeting the Union presented its draft of a manage- ment rights provision, which was agreed to after the following amendment was added: "The employer reserves the right to subcon- tract delivery work where past practice has demonstrated such sub- contracting to be economically sound." 4 The parties met again on October 3 and 12, and on October 12 the Union presented a strike settlement proposal calling, in part, for reinstatement of all strikers, restoration of former wages, extension of the old contract for 1 year, increased contributions of 50 cents a week to the health and welfare fund, and a wage increase of 6 cents per hour for all employees 6 months after the execution of the contract. Respondent rejected the proposal, whereupon Union Representative Roseborough stated that although the Union hesitated to do so, it would use every means within its power to break the Company. In the meantime, on October 9, the Union had notified two of the Respondent's customers, A & P and Safeway, of its strike against Respondent, and in its letter also stated: It is our intention to employ all legal and legitimate means in conducting a consumer appeal at your stores that sell the prod- ucts warehoused and distributed by Empire Terminal Warehouse Company. The campaign will be conducted by handbills, and other lawful methods of publicizing our appeals to the con- sumers. It will be limited to consumer entrances to your stores and away from employee or service entrances. We do not intend that any of your employees cease working or refuse to handle any product as a result of this campaign. You may wish to post this letter so that your employees will be aware of the purpose of our consumer campaign. In addition, the Union also notified A & P and Safeway that it intended to picket all delivery trucks of those "allied with Empire." Thereafter, both A & P and Safeway requested Respondent to make no more deliveries by Respondent's trucks. Accordingly, an arrangement was worked out whereby Respondent contracted out to English City all deliveries it had previously made from its Austin Street Terminal to A & P and Safeway; and all A & P and Safeway 4 Apparently , the Respondent normally subcontracted various deliveries from the Bengal Street and Amelia Street warehouses, and on occasion used "casual" employees to per- form unloading at the main warehouse. 1364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD goods which formerly had been picked up at Respondent's dock by contract haulers of A & P and Safeway were thenceforth loaded into boxcars at Austin Street and sent by rail to A & P and Safeway.' The Union did not handbill or picket any A & P or Safeway store. On December 17, when the Union learned of the subcontracting, it protested Respondent's action and requested the Respondent to dis- continue such subcontracting and to restore the work to the employ- ees in the bargaining unit. On December 20, Respondent advised the Union that "There has been no subcontracting other than that dis- cussed with you in negotiations, excepting that forced on the Com- pany by union actions during the strike." However, Respondent indicated a readiness to discuss the matter further if the Union deemed it necessary. On February 21, Respondent again notified the Union that it was anxious to meet and bargain on the subject of sub- contracting and on the matter of wages. Finally, on March 12 the parties met, and while taking the position that the amount of sub- contracting was minimal and had been necessitated by the Union's correspondence and communication to A & P and Safeway, neverthe- less, Respondent agreed to discontinue the subcontracting. Although all such subcontracting was thereafter discontinued, the strike, never- theless, still continued as of the time of the hearing. In finding that the Respondent's unilateral subcontracting was vio- lative of Section 8(a) (5), the Trial Examiner relied on the Board's findings in Town & Country,6 Fibreboardj and Hawaii Meat.8 In addition, the Trial Examiner concluded that the unlawful subcon- tracting converted the economic strike into an unfair labor practice strike. On the other hand, the Respondent contends, inter alia, that the facts in those cases relied on by the Trial Examiner are clearly distinguishable from the facts herein presented, and that the subcon- tracting in the instant case was not a permanent change in its busi- ness operations, but was only a stopgap measure necessitated by the Union's strike activities. The Respondent further contends that the subcontracting neither caused harm to the unit employees nor altered the composition of the bargaining unit. Therefore, the Respondent argues, it did not refuse to bargain in good faith by unilaterally sub- s Although this arrangement reduced the workload of its employees, apparently Re- spondent did not reduce its work force , but had the employees performing other work. Nevertheless , the Respondent appears to admit that this subcontracting did reduce the workday at least 1 hour. 6Town & Country Manufacturing Company , Inc, et al ., 136 NLRB 1022, enfd. 316 F. 2d 846 (CA.5). 7 Fibreboard Paper Products Corporation , 138 NLRB 550, enfd sub nom . East Bay Union of Machinists , Local 1304, United Steelworkers of America , AFL-CIO, et al. v. NL.R.B., 322 F. 2d 411 (C.A.D.C.), affd 379 US 203 8 Hawaii Meat Company, Limited, 139 NLRB 966 , enforcement denied 321 F. 2d 397 (C.A. 9). EMPIRE TERMINAL WAREHOUSE COMPANY 1365 contracting this small portion of unit work to English City as a stopgap measure to continue serving its customers during the strike, and that the complaint alleging such violation should be dismissed. We agree. As we recently stated, the principles of those cases relied on by the Trial Examiner were not meant to be hard and fast rules to be mechanically applied irrespective of the circumstances of the cases Moreover, we recently held that an employer was not under a duty to bargain over temporary subcontracting necessitated by a strike where such subcontracting did not transcend the reasonable measures necessary in order to maintain operations in such circumstances.10 Applying those guidelines recently set forth by the Board to the facts of the instant case, we find that Respondent's subcontracting in issue herein did not violate its statutory bargaining obligation. Thus, the record here clearly shows that the subcontracting was prompted, not by the Respondent's desire to have others do work which employees in the unit had been performing, but by the request of the Respondent's customers, and that the Respondent instituted the subcontracting arrangement solely as a stopgap or temporary measure in order to continue its business relationship with these cus- tomers. This latter fact is evidenced by the Respondent's good-faith bargaining throughout the entire period of the dispute. In this regard, it is to be noted first that, although all of the strikers, who constituted virtually all of the Respondent's employees, had been permanently replaced several months prior to, and for reasons other than, the subcontracting, the Respondent continued to recognize the Union as bargaining representative of both the strikers and their replacements. In addition, the Respondent sought not to undercut the Union, but instead offered on December 20, 1962, and again on February 21, 1963, to meet and bargain with the Union on the sub- contracting issue. The Union, however, did not accept these offers, and it was not until March 12, 1963, that a meeting took place between the parties, at which time the matter was discussed and an agreement reached to discontinue the subcontracting. Finally, the Respondent did not, despite the subcontracting, eliminate, perma- nently or otherwise, any unit jobs or otherwise alter or impair the bargaining unit, and the subcontracting here did not exceed what was necessary to protect Respondent's customers whose deliveries were in jeopardy. 6 Westinghouse Electric Corporation (Mansfield Plant), 150 NLRB 1574; Shell Oil Company, 149 NLRB 305. 10 Shell Oil Company, 149 NLRB 283, Shell Chemical Company, a Division of Shell Oil Company, 149 NLRB 298. 1366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Accordingly, as we find in the circumstances of this case that the Respondent did not violate Section 8(a) (5) of the Act by uni- laterally subcontracting the work in issue, we shall also dismiss this allegation in the complaint.I" [The Board dismissed the complaint]. "Shell Oil Company, 149 NLRB 283; Shell Chemical Company, a Division of Shell Oil Company, 149 NLRB 298. See also Westinghouse Electric Corporation ( Mansfield Plant ), supra. Based on his findings that the September 10 strike was an economic strike and that the Respondent ' s subsequent subcontracting was unlawful , the Trial Examiner further found that this unlawful action converted the strike into an unfair labor practice strike The Trial Examiner concluded, however, that the conversion did not give the strikers any reinstatement rights because such rights had been lost when the strikers were law- fully replaced prior to the conversion. Inasmuch as we have found that the subcontract- ing was not unlawful, we also find, contrary to the Trial Examiner, that the economic strike was not converted into an unfair labor practice strike and that the economic strikers lost their reinstatement rights simply because they were replaced. INTERMEDIATE REPORT STATEMENT OF THE CASE This proceeding, brought under Section 10(b) of the National Labor Relations Act, as amended (61 Stat. 136; 73 Stat. 519), was heard before Trial Examiner George A. Downing at Dallas, Texas, on March 27 and 28, 1963, pursuant to due notice. The complaint , issued on February 8, 1963, by the General Counsel of the National Labor Relations Board, on a charge dated September 7, 1962, alleged that Respondent engaged in unfair labor practices proscribed by Section 8(a)(5) and (1) of the Act on and after June 7, 1962, by refusing to bargain with the Union as the exclusive bargaining representative of its employees in an appropriate unit. Re- spondent answered denying the unfair labor practices. Upon the entire record in the case, and from my observation of the witnesses, I make the following: FINDINGS OF FACT 1. JURISDICTIONAL FINDINGS Respondent, a Texas corporation with its principal office, place of business, and warehouse at Dallas, Texas, is engaged in storage and delivery services constituting a link in the chain of interstate commerce. Its gross annual revenue derived from said operations for enterprises located outside the State of Texas exceed $50,000. Respondent is therefore engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Charging Party, herein called the Union, is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. Introduction and issues The Union was certified by the Board's Regional Director in 1956 as the collective- bargaining representative of Respondent 's employees in an appropriate unit (see Conclusion of Law No. 1 infra ), and Respondent and Union have since enjoyed contractual relations. The last contract was due to expire on August 17, 1962, and bargaining negotiations looking toward a new contract were conducted by commit- tees whose chief spokesmen were Attorney Allen P. Schoolfield and Vice President Jack S. Huntington for Respondent, and Business Representative C. M. Roseborough and Attorney David R. Richards for the Union. Meetings were held on July 13, 24, and 30; August 1, 6, 15, and 16; September 24 and 27; and October 3 and 12, 1962; and March 12, 1963; but no agreement was reached. A strike was called on Sep- tember 10 which is still pending. The strikers were replaced within 2 days. EMPIRE TERMINAL WAREHOUSE COMPANY 1367 The issues in the case are whether Respondent refused to bargain with the Union in the following respects as charged in the complaint , as amended : (a) By refusing to furnish on request financial records relating to Respondent 's explanation of, and jus- tification for, making a wage decrease ; (b) by unilaterally changing existing wage rates and other terms and conditions of employment on August 17; and (c) by uni- laterally changing terms and conditions of employment by subcontracting to English City Delivery on September 10 certain cartage work performed by employees within the unit.1 There is a further issue as to whether the strike was an unfair labor prac- tice strike from its inception and, if it was not , whether it was converted to one by the subsequent unfair labor practice of unilateral subcontracting. B. The negotiations; the wage decrease; the strike Negotiations began on July 13 with the Union presenting as its proposal a draft of the existing contract in which it had interlined a few minor changes. Moneywise, the Union was proposing an increase in the employer's contribution to the health and welfare fund of 50 cents per employee per week, and a flat across-the-board wage increase of 25 cents for each year of a 3-year term. At the next meeting on July 24, the Company presented its counterproposal, which contained substantial modifica- tions of the existing contract but no provision for wage rates. Roseborough testified that there was discussion of a number of the changes which Respondent proposed, including seniority, on which the Union agreed to work out something to afford some relief. When Schoolfield sought to discuss the "economic factors," Roseborough suggested they endeavor to work out the other issues which did not affect cost. The discussions were mainly general in character, without defi- nite agreement being reached, and with both sides agreeing to take "under advise- ment" specific proposals advanced by the other side. Huntington testified that both Respondent and Union stated their position on wages at the July 24 meeting. The Company stated that it was paying from 35 to 50 cents an hour more for wages than its competitors, that it could obtain labor for less than it was paying, and that it was unwilling to continue any longer to pay more than its competitors. Respondent advanced the argument that it would not pay 35 cents a gallon for gasoline if it could get it for 25 cents, nor $5,000 for a truck which it could buy for $4,000 and that therefore it should not be expected to pay more for the "wage commodity" than its competitors were paying. The Union's position was that it would not sign a contract which did not provide for a wage increase, and later, on July 30, it added that any new contract must also provide for an increase in health and welfare benefits. Roseborough, who admitted his recollection was faulty as to specific discussions at particular meetings, admitted on cross-examination that the positions of the parties were as stated by Huntington, that Respondent indicated early in the negotiations that it was seeking a wage reduction, and that he (Roseborough) made the statement that "the union would not bargain down, but always bargain up." Roseborough also testified that in the August 1 meeting Schoolfield "kept asking" him about a wage proposal and that he replied that the Union had submitted a wage proposal and that the next move was the Company's, since it had given the Union no reason to believe it could not pay more money. Schoolfield responded that the Company had a lucrative business and was not pleading poverty, or inability to pay, but that the Company was not in a competitive position as regarded wages, that it was losing accounts because of that fact, and that it would not agree to any kind of a wage increase. Roseborough nevertheless demanded that the Company should submit proof, by producing its books and records, that it could not pay more for wages, but Schoolfield refused. i Although the complaint also alleged a general refusal to bargain concerning wages, hours, and terms and conditions of employment, the General Counsel asks in his brief for findings that Respondent violated the Act only in the three specific respects above set forth, which position accords with his apparent theory of the case as he litigated it. Though there were occasional suggestions in argument that Respondent's bargaining manifested some lack of good faith, such claims were themselves related to Respondent's actions in the three respects above specified. In any event, I find no basis in the evidence for a finding generally that Respondent did not bargain in good faith, and I accordingly confine my summary of the negotiations below to the specific points on which the bargain- ing foundered. 1368 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Beginning August 6, all meetings were held in the presence of a Federal mediator, called in by the Union. At that meeting, though Respondent did not produce its financial records, it did produce evidence that it was operating at a substantial com- petitive disadvantage as regarded wage costs Thus it presented to the Union a wage survey made by Schoolfield among Respondent's competitors which concealed the identities of individual competitors under lettered designations, A through G. The survey purported to show that the average wage rate paid by the competitors for warehouse labor was $1.40 an hour, and for drivers $1.56 an hour, as against the rate of $2 an hour under the existing contract and a rate of $2 25 sought by the Union for the new contract. Roseborough demurred that he did not know who the lettered companies were or where their warehouses were. Schoolfield offered to disclose to some third party, such as the Federal mediator, the identities of the competitors so that the Union could verify the correctness of the wage rates listed in the survey, but Roseborough disclaimed any interest, stating that the Union was interested in bargaining only for Empire's employees. Actually, Roseborough was well aware that all of the com- petitors' warehouses were unorganized, and he was "reasonably sure" that their wages were lower than Respondent's. There was also testimony by Roseborough that on August 6, Schoolfield renewed his inquiry about a wage proposal and that he (Roseborough) replied that until they worked out the "basic" items in the contract, he saw no point in discussing the "cost" items. Roseborough proposed instead that since the contract expiration was close, the contract be extended temporarily, subject only to an increase of 50 cents a week to be paid into the health and welfare fund, negotiations be continued, and that in the meantime he would ascertain whether the employees would agree to a lesser wage offer. Schoolfield agreed to give Roseborough an answer later. On August 8 Schoolfield wrote Roseborough at length (see Appendix A), repeating Respondent's arguments for "economic relief," referring to the wage survey among competitors previously submitted, and notifying Roseborough that Respondent's wage proposal was for a decrease to $1.60 an hour for all classifications and that Respond- ent proposed to put the decrease into effect on August 17. The letter concluded with expressions of willingness to meet as often as necessary on short notice to resolve all matters and with the request that the Union present at its earliest convenience any solution which it might have whereby the Company could operate more com- petitively on an economic basis. Two meetings were held on August 15 and 16 in which Respondent stated its inten- tion to put the proposed wage decrease into effect over the Union's objections. Upon renewal by the Union of its request that Respondent produce its financial records, Respondent repeated its position as previously stated. Roseborough testified that on August 15 he suggested that he would present a proposal on seniority which would give Respondent more flexibility in its operations, and also suggested the possibility of working out a rate range under which new employees would start at a lower rate and progress gradually to the top of the range. Respondent, however, stated that it would be interested in no range which would extend beyond $1.60 per hour maximum, and the Union in turn did not agree to any rate less than the 25-cent increase which it originally proposed. Roseborough testified that he presented his seniority proposal on August 16, and that Schoolfield agreed that it would help to cure a problem concerning the assign- ment of work. Schoolfield stated, however, that the wage decrease would be put into effect as of midnight on that day, that the change in seniority would also be effected, and that the rest of the contract would remain the same except for the checkoff. Roseborough again suggested that the contract be extended for 60 days, with rates of pay unchanged, and that negotiations be continued. He also renewed his inquiry about a lower starting rate for new employees, but Schoolfield repeated his former position and stated that the Company would put its wage decrease into effect and that perhaps during the ensuing negotiations the matter of wages could be worked out. On August 17 Schoolfield wrote Roseborough (see Appendix B) informing him that the Company's proposals of August 8 (with an exception relating to article 4 2) had been put into effect, "there being no satisfactory counterproposals from you on wages." The letter also reviewed at some length the prior positions of the parties and assured the Union that the Company was anxious to bargain on economic mat- ters and to receive any proposals which the Union might make. The final paragraph contained the following reference to the August 16 meeting: This is to confirm your final statement in the session of August 16 when you said there was no point to further bargaining unless either side changes its posi- tion. Please be advised that we will advise you of any change in our position and I assume you will so notify us. EMPIRE TERMINAL WAREHOUSE COMPANY 1369 Roseborough responded on August 23 with a lengthy recital of the Union's appraisal of the bargaining situation, with particular reference to the August 16 meeting (see Appendix C). The heart of the Union's position is well summarized in the following excerpt- The Company advised that effective August 17, 1962, it was putting into effect a drastic reduction in the wages of the covered employees as well as adopting certain changes in work rules and practices. This action was announced despite the fact that no impasse had been reached and the Union was attempting to nego- tiate concerning wages. Admittedly the Union is placed in a difficult position to discuss wages, when, in fact, the employer declines to give consideration to union proposals and refuse to apprise the Union of the economic condition of the Company. The only impasse that could have been reached is one unilaterally created by the employer's adamant refusal to negotiate in good faith. These changes were protested by the union as another instance of bad faith bargaining by the company, and despite the union's renewed request to inspect the financial records of the company, the company denied the request. The letter concluded with the request that the Company rescind the wage decrease and that it reenter upon good-faith negotiations. Schoolfield replied on August 27 that his prior letters stated the Company's posi- tion, but again expressed readiness to meet and to discuss whatever proposals the Union might have to offer. Following a strike vote, a strike was called on September 10, and practically all of the employees went out on strike. All of the strikers were replaced by September 12. Though further meetings were held on September 24 and 27 and on October 3 and 12, neither the scant testimony nor the correspondence contained anything of significance concerning either contract issues or the strike. The following facts are relevant mainly as background to the matter of subcontracting, the evidence con- cerning which is summarized in section C, below On September 27, the Union presented its draft of a management rights provision, which was agreed to tentatively, with the following amendment added at the meet- ing: "The employer reserves the right to subcontract delivery work where past practice has demonstrated such subcontracting to be economically sound." Richards testified that that amendment was made in the light of discussions of the fact that Respondent sometimes picked up "casual" employees to do unloading work and that there had also been instances of subcontracting deliveries at two subsidiary warehouses on Bengal Street and Amelia Street On October 12, the Union presented a strike settlement proposal which called (in part) for the reinstatment of all strikers, restoration of the wage reduction, extension of the old contract for 1 year, increased contributions of 50 cents a week to the health and welfare fund, and a wage increase of 6 cents per hour for all employees, 6 months after the contract is executed, upon their return to work. The Company rejected the proposal. Huntington testified that thereupon Roseborough stated that although the Union hesitated to do so, it would use every means within its power to break the Company, if that was necessary, and thereupon concluded the meeting. C. Subcontracting All facts which are relevant to the issue of subcontracting were either stipulated or are undisputed. On or about October 12, Respondent subcontracted to English City Delivery cer- tain deliveries to A & P and Safeway warehouses from its main warehouse on Austin Street which had formerly been made by Respondent's employees within the bargain- ing unit. The Union was given no notice of Respondent's intention to subcontract the deliveries in question and no opportunity to consult or negotiate about the matter. Though the foregoing facts will alone make out a case according to the General Counsel and the Union, considerable additional evidence was adduced in connection with Respondent's defenses. Respondent's warehousing facilities consisted of its main warehouse on South Austin Street and two small warehouses on Bengal Street and Amelia Street. The Bengal Street warehouse was opened in January 1962, or earlier, and Amelia Street in August.2 Respondent did not make any of its deliveries from either of these warehouses but contracted all such cartage work to English City Delivery. Though it customarily performed its own cartage work at Austin Street, there were occasions 2 Both of those warehouses were closed shortly before the hearing. but Respondent now operates a new warehouse on the corner of Jupiter and King Streets 1370 DECISIONS OF NATIONAL LABOR RELATIONS BOARD when deliveries were made for it by other concerns; e.g., rush orders when Respond- ent had no truck available, parcel deliveries to the post office, and deliveries of large orders where its equipment was inadequate. A & P and Safeway Stores were customers of Respondent, and deliveries were made to them from the Austin Street warehouse prior to the strike in normal fashion; i.e., if the goods were purchased f.o.b. the customer's dock, the Respondent made the deliveries with its own trucks, but if f.o.b. Respondent's dock, then A & P and Safeway sent their respective contract haulers to pick up the goods. After the strike began the Union wrote letters to A & P and Safeway on October 9, informed them of its strike against Empire, referred to their patronage of Empire's warehouses and of the deliveries of goods to them by persons other than striking employees, and continued in part: It is our intention to employ all legal and legitimate means in conducting a consumer appeal at your stores that sell the products warehoused and distributed by Empire Terminal Warehouse Company. The campaign will be conducted by handbills, and other lawful methods of publicizing our appeals to the con- sumers. It will be limited to consumer entrances to your stores and away from employee or service entrances. We do not intend that any of your employees cease working or refuse to handle any product as a result of this campaign. You may wish to post this let- ter so that your employees will be aware of the purposes of our consumer campaign. The letter also mentioned the possibility that deliveries were being made by firms who were allied with Empire in the labor dispute and stated the Union's intention to picket the delivery trucks at times when they were on the addressee's premises, which picketing would clearly indicate that the dispute was limited to Empire or its allies. Permission was requested, in order to limit any possible "radial effects" of the picketing, to come onto the premises so that the picketing could be conducted in close proximity to the situs of the labor dispute; i.e., the delivery truck. Absent permission, the Union stated that its ambulatory picketing would have to be con- ducted on the public way, as close as possible to the area in which employees of Empire or its allies were performing work. Respondent called witnesses from both A & P and Safeway who testified to receiv- ing calls from a union representative in which statements and appeals were made which corresponded to those contained in the letter. Thereafter Respondent con- ferred with representatives of both customers, who requested that Respondent not send its trucks to make deliveries. An arrangement was worked out with them for making all deliveries, whether f.o.b. Respondent's dock or f.o.b. the customer's dock, which involved in part Respondent's subcontracting to English City the deliveries to A & P and Safeway from the Austin Street terminal. A & P goods f.o.b. Respond- ent's dock, which had formerly been picked up by Cathey & Carrell, contract hauler for A & P, were thenceforth loaded into boxcars at Austin Street and sent by rail to A & P, and rail cars were also used in making similar deliveries to Safeway. The Union conducted no ambulatory picketing, handbilling, or "leafletting" at any A & P or Safeway Stores, or at other retail stores in Dallas. News about the subcontracting finally reached the Union in a report from the striking employees around December 17,3 and on the latter date, Roseborough wrote Respondent protesting the action and requesting the Respondent discontinue it promptly and restore the work to the employees in the bargaining unit. Schoolfield replied on December 20, advising that the allegations in the letter were incorrect, and that "There has been no subcontracting other than that discussed with you in negotiations, excepting that forced on the Company by union actions during the strike." Schoolfield also indicated readiness to discuss the matter further if the Union deemed it necessary. On February 21 Schoolfield wrote further that Respondent was anxious to meet and bargain on the subject of subcontracting and on the subject of wages, and after further correspondence and telephone calls a meeting was set up for Tuesday, March 12. Attorney Richards testified that the Union protested the subcontracting of the bar- gaining unit work, that Schoolfield admitted that there had been subcontracting to English City for deliveries to A & P and Safeway, that it had been done without notice to the Union, and that insofar as the main warehouse on Austin Street was concerned, those deliveries had formerly been made by employees in the bargaining 3 Though the evidence does not show when knowledge reached the strikers, it was presumably at or about the time they reported the fact to the Union. EMPIRE TERMINAL WAREHOUSE COMPANY 1371 unit. Schoolfield contended, however, that the subcontracting was minimal in amount and had had no substantial impact on the work of the bargaining unit, and that the subcontracting had been necessitated by the Union's correspondence or communi- cations to A & P and Safeway. Schoolfield announced that Respondent was imme- diately discontinuing that subcontracting, and it did so. Respondent also offered testimony and various transcriptions from its records to support Schoolfield's contentions concerning minimal impact. General Manager Richard Williams testified that Respondent laid off no employees as a result of the subcontracting in question and that in fact the employees lost no employment, or hours of work, because Respondent arranged to keep the employees busy for their full normal workdays by giving them other work to do. His latter testimony became plainly suspect on further examination, as well as from an analysis of Respondent's records. Thus, Williams admitted that the work to be done following the subcontract- ing "would have to come down some," because the employees no longer had to load and stack the goods or make the deliveries to A & P and Safeway; that the hours worked by the employees fluctuated not only from month to month and week to week, but also from day to day; and he estimated that only 1 hour a day, on an aver- age, had formerly been spent in making the deliveries in question. Respondent's transcriptions, though inconclusive on most points, showed frequent daily fluctuation in the number of employees on the payroll and a consistent fluctua- tion in the total weekly hours worked, both in regular and in overtime hours. When this is viewed in the light of Williams' concession that Respondent did not pay employ- ees for work which they were not performing (e.g., for not delivering to A & P and Safeway), it is plain that Respondent did not "make work" for employees to make up for the time which they might otherwise have spent on the A & P and Safeway work. In addition Respondent's records exposed Williams' attempt to reduce to de mini- mis the subcontracting work. Thus the transcripts showed the following amounts paid for making the A & P and Safeway deliveries in the months following the strike: 4 October---------------------------------------- $210.89 November -------------------------------------- 297.38 December--------------------------------------- 238.30 January ----------------------------------------- 468.72 Even allowing a substantial margin for other management costs and for profit, it is plain that the labor cost involved in performing contract services in such amounts was substantial, and certainly above de minimis. Certainly it would have exceeded by a wide margin compensation for the hours a day which Williams estimated. D. Concluding findings 1. The refusal to produce financial information It was plain from the evidence that, either intentionally or unintentionally, the Union misinterpreted the nature of Respondent's position on the wage issue and that, ignoring the disclaimer of inability to pay, it insisted that Respondent produce rec- ords to establish whether the Company was in fact financially able to meet the Union's increased wage demands. What Schoolfield produced was evidence which supported Respondent's true contention that its competitors (whom the Union had failed to organize) were paying substantially less for the "wage commodity" than Respondent and that Respondent was being required to operate at a corresponding competitive disadvantage. The Union made no attempt to check on the accuracy of the survey, though it could easily have done so. Indeed, it did not need to do so, for Roseborough had every reason to believe that Schoolfield's representations were correct. The Union purported instead to ignore the evidence on the excuse that it was bargaining only for Respondent's employees. Though General Counsel and Union rely strongly on testimony by Huntington that Respondent was losing customers and "things are getting rough," that testimony was plainly related, not to any claimed inability to pay, but to the disadvantage which Respondent was suffering on wage rates, a condition which would be aggravated by the Union's proposed wage increase. I am aware of no authorities which would support a refusal-to-bargain finding under the circumstances which are found in this case. Such cases as General Coun- sel and Union have cited are plainly distinguishable. As the Board acknowledged in 4In the period from September 1961 through September 1962, there had been no such payments save for a single item of $9 60 in September 1962 (presumably after the strike). 1372 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Lloyd J. Taylor, d/b/a Taylor Foundry Company, 141 NLRB 765 (cited by General Counsel and Union), it is understandable that an increase in operating costs may place an employer in a disadvantageous position with respect to its competitors, and a mere assertion thereof is not necessarily a claim of inability to pay which would call for some substantiating proof under N.L R.B. v. Truitt Mfg. Co., 351 U.S. 149. The Board found in Taylor, however, that the employer went beyond asserting that position, citing testimony on the employer's behalf that "if we increased our labor costs that we would lose a margin of profit that we have and we can't exist." When the union asked the employer to produce information to support its claim that it could not afford to pay a wage increase, the employer furnished information com- paring his own wage scales with his competitors, but the Board held that, without more, was insufficient in view of the employer's asserted inability "to exist" if he granted a wage increase. But here Respondent neither directly nor indirectly suggested the possibility of going out of business if it gave a wage increase, and it expressly disclaimed financial inability, and the wage survey was not offered to support any claim of inability "to exist " In Cincinnati Cordage and Paper Company, 141 NLRB 72, also cited by General Counsel and Union, the Board affirmed findings by the Trial Examiner that the employer "harbored within its own breast" the view that some wage increase might have been in order but that it "sat tight" and waited for the union to "push the but- ton " Here, to the contrary, there was no indication or suggestion that Respondent was willing to accede to a more modest increase than the Union sought; indeed, both its words and its actions were consistent with its own demands for a decrease Neither is there anything in the leading case of N.L.R B v Truitt Mfg Co, supra, which requires a refusal-to-bargain finding here There the employer raised directly the issue of economic inability to pay incieased wages, but nevertheless refused the union's request to produce evidence substantiating its contention. I therefore conclude and find that Respondent did not refuse to bargain by refus- ing to produce the financial information which the Union requested. 2. The unilateral wage decrease The evidence showed that early in the negotiations Respondent informed the Union that it was no longer willing to continue paying wages which were substan- tially higher than those of its competitors and that it was seeking a wage decrease; that on August 6 it submitted evidence supporting its position; that on August 8 it informed the Union it was proposing a wage cut to $1 60 an hour and further pro- posing (without prejudice to further negotiations) to put the decrease into effect upon expiration of the contract term on August 17 Thereafter two bargaining sessions were held in which the issue was fully discussed, but without basic change. Though the Union suggested a lower starting rate for new employees, it made no reduction in the increases which it sought for old ones It also proposed that the contract be extended temporarily during further bargaining, but Respondent coun- tered that bargaining be continued with the decreased rates in effect, and that the Union present any solution it might have. I conclude and find, first, that as further bargaining was plainly contemplated at the time, there was no impasse on the wage issue, which was alone the real impedi- ment at the time to reaching a contract. I conclude and find, second, that Respond- ent's action in reducing wages was unilaterally taken over the Union's objections, but that it was done only after due notice and full consultation on the issue. The two meetings between August 8 and 17 were plainly adequate for enabling the parties to explore further and fully their respective positions which had been stated in general terms early in the negotiations, i e., the Union was demanding a 25-cent increase; the Company, unwilling to pay longer substantially higher wages than its competitors, was seeking a decrease This is therefore not a case of "Unilateral action by an employer without prior discussion with the union" which would "amount to a refusal to negotiate" and would "of necessity obstruct bargaining." N.L.R.B. v. Benue Katz, etc., d/b/a Williams- burg Steel Products Co, 369 U S. 736, 747. The Supreme Court there distinguished the situation before it from "one wherein an employer, after notice and consultation, `unilaterally' institutes a wage increase identical with one which the union has rejected as too low," citing N L.R B. v. Bradley Wash fountain Co., 192 F. 2d 144, 150-152 (C.A. 7), and N.L.R.B. v. Landis Tool Company, 193 F 2d 279 (C A. 3). The foregoing holdings effectually answer contentions made by General Counsel and Union that actual impasse is necessary before an employer may legally put into effect a wage change which he has proposed during negotiations. See also the recent EMPIRE TERMINAL WAREHOUSE COMPANY 1373 case of Braswell Motor Freight Lines, Inc., et al., 141 NLRB 1154, in which the Board affirmed the Trial Examiner's finding that the employer did not unlawfully terminate overtime pay without consulting the union because, among other things, the employer notified the union of the contemplated change and bargained with it on the subject, because no final action was taken until after the discussion of the subject, and because the employer's final letter to the union left the matter open for further discussion or counterproposals. To the extent that Servette, Inc , 133 NLRB 132, 139, is in point, I find that the facts here bring the present case within the ambit of the Board's holding, cited by the General Counsel, that the Union, as the established bargaining representative, was entitled to reasonable notice and an opportunity to bargain over the proposed change. Other cases cited by General Counsel and Union need not be discussed; all are distinguishable on their facts. I conclude and find that Respondent did not refuse to bargain on or about Au- gust 17 by putting into effect decreased wage rates concerning which it had formerly given notice and consulted with the Union. 3. The unilateral subcontracting Contrary to its procedure on the wage decrease, Respondent took unilateral action on subcontracting without notice to or consultation with the Union. The law is well established that such action in a situation like the present one constitutes a refusal to bargain. Hawaii Meat Company, Limited, 139 NLRB 966; Fibreboard Paper Prod- ucts Corporation (Supplemental Decision), 138 NLRB 550; Town & Country Manu- facturing Company, Inc., et al., 136 NLRB 1022, enfd. 316 F. 2d 846 (C A. 5). The Board's rationale is spelled out at length in Town & Country and in Fibreboard, supra. See also N.L.R.B. v. Brown-Dunkin Company, Inc., 287 F. 2d 17, 20 (C.A. 10). Closest in point factually to the present case is the Hawaii Meat case, supra, where the employer subcontracted, without notice, certain delivery work after the union had called a strike. The Board held the decision to be a mandatory subject of bar- gaining, even though it may have been motivated by economic considerations rather than by opposition to the principals of collective bargaining. The Board pointed out that it was not holding that before a strike ensued an employer must advise the union in advance of his plans to counteract the impact of a strike, but that after a strike begins, he must give the union an opportunity to bargain about an action which involves elimination of unit jobs and the consequent erosion of the bargaining repr- resentative's status, as well as the permanency of the job classifications which were held by employees when the strike began. Contrary to Respondent's contention, I find the foregoing cases to be controlling, rather than N.L R.B. v. Mackay Radio & Telegraph Co., 304 U.S. 333, on which Respondent relies and which dealt with an employer's right to run his business during a strike by permanently replacing the striking employees. Respondent's action here was not a matter of replacing striking employees in order to carry on its business, for it had already filled the places left vacant by the strikers. Instead, the calculable effect of its action was to alter the composition of the bargaining unit and to impair both the status and the authority of the certified representative to conduct bargaining for all the employees in the unit. The evidence did not establish Respondent's defense that its action was without substantial impact on the bargaining unit work. The amounts of the contract pay- ments alone plainly showed that the labor cost involved was more than de minimis.5 Similarly without merit was Respondent's defense that its action was forced by the Union's written and oral appeals to some of its customers. Notice to and con- sultation with the Union regarding its contemplated action would doubtless have rendered any action unnecessary, as plainly indicated by the amicable settlement of the issue during the single short conference on March 12. But regardless of whether 5 Respondent's defense is reminiscent of the story of the man who cut off the dog's tail an inch at a time As the court observed in U.A W., Local 391 v Webster Electric Co, 299 F 2d 195 (CA 7). in holding that an employer's action in contracting out the work of a few members of the bargaining unit constituted a breach of a contiactual union-shop clause, If this small group can be thus replaced, then other groups could meet the same fate, and eventually it would be possible to deplete a major part of the "protected" union shop force We hold it would be inconsistent with the basic purpose of the agreement to approve the contracting out of the janitorial jobs here involved 1374 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Respondent could reasonably have expected approval of the Union or other settlement of the matter, its legal duty was to give notice and to consult with the Union before contracting away a portion of the bargaining unit work. By brief, Respondent advances for the first time the contention that the Union's letters and oral appeals showed that it was engaging in an unfair labor practice. No such contention was made in Schoolfield's letter of December 20, some 2 months after the action, nor in the negotiation meeting on March 12, 1963, when the issue was discussed and settled. Nor, so far as the record shows, did Respondent file an unfair labor practice charge, which if meritorious, would have made mandatory, under Section 10(1) of the Act, the seeking by the Board of an injunction from the United States district court. Furthermore, Respondent makes the contention flatly and without specificity, leaving wholly conjectural the basis of its claim. Finally, Respondent made no attempt at the hearing to establish that the Union sought to implement its requests, and made no denial of rebuttal evidence that the Union in fact conducted no ambulatory picketing, or handbilling, or "leafletting." Respondent cites the single case of Local 294, International Brotherhood of Team- sters, etc (K-C Refrigeration Transport Company, Inc.), 124 NLRB 1245, enfd. 284 F. 2d 887 (C.A. 2), which is inapposite here in that the appeals for "cooperation" were found in that case to be themselves supplementation of picketing which the Board found to be illegal. (Id. at 1253.) Here to the contrary the Union notified Respondent's customers that it proposed to employ only lawful and legitimate means for the purpose of publicizing appeals to consumers and that it did not intend any of the employees to cease working or to refuse to handle any product. (See the provisos to Sections 8(b)(4) and (7).) To the extent that the possibility of picket- ing was suggested, the phrasing seemed carefully to meet the standards approved by the Board in Sailors' Union of the Pacific, AFL (Moore Dry Dock Company), 92 NLRB 547.6 Finally, even were Respondent correct in characterizing the Union's actions as an unfair labor practice, it was not legally entitled to combat it by committing another unfair labor practice, particularly when ready relief was so available to it under Section 10(1) of the Act. Two wrongs do not make a right under labor law, any more than they do elsewhere, and one unlawful act is not legal justification for another. I therefore conclude and find that by subcontracting, on or about October 12, 1962, without notice to or consultation with the Union, the making of deliveries from its Austin Street warehouse to A & P and Safeway, formerly performed by employees in the bargaining unit, Respondent refused to bargain with the Union within the meaning of Section 8(a)(5) of the Act. 4. The character of the strike I have found that Respondent did not refuse to bargain at any time before the strike began on September 10, and I find accordingly that the strike was an economic one in its inception. I have found also that Respondent's only refusal to bargain occurred on or about October 12, which was stipulated to be the date of the sub- contracting to English City. The Union learned of the subcontracting through the employees around December 17, which presumably was immediately or shortly after the employees learned of it. The Union's letter of December 17 and other evidence introduced by the General Counsel established that Respondent's unfair labor practice thereafter served to pro- long the strike, thereby converting it into an unfair labor practice strike. The evidence is undisputed, however, that Respondent had permanently replaced all strikers by September 12, at a time when the strike was purely economic in character. Under those circumstances the subsequent conversion of the strike to an unfair labor prac- tice strike will be without effect insofar as the reinstatement rights of the strikers are concerned. IV. THE REMEDY Having found that Respondent engaged in certain unfair labor practices, I shall recommend that it cease and desist therefrom and that it take certain affirmative 6 Whether the suggested picketing would have met a further standard prescribed in Brewery and Beverage Drivers and Workers, Local No. 67, International Brotherhood of Teamsters, etc (Washington Coca-Cola Bottling Works, Inc.), 107 NLRB 299, is ques- tionable, but so is the continued vitality of that decision See, for example, the discus- sion of the Board's holding in N.L R B. v. Local 291, International Brotherhood of Team- sters, etc, supra, at 891-892 (cited and relied upon by Respondent above). EMPIRE TERMINAL WAREHOUSE COMPANY 1375 action of the type which is conventionally ordered in such cases as provided in the Recommended Order, which I find necessary to remedy and to remove the effects of the unfair labor practices and to effectuate the policies of the Act. The evidence shows that Respondent itself took the initiative of remedying in part the effects of the unfair labor practices found above, by abandoning, after consultation, with the Union on March 12, 1963, the subcontracting of deliveries from its main warehouse to A & P and Safeway. Nevertheless, it had deliberately continued its practice for some 3 months over the protests of the Union, and its rejection of those protests seemed ambiguously to suggest that the subcontracting in question had been discussed during negotiations. Under all the circumstances, I feel that a full remedy- ing of the effects of the unfair labor practice will require not only the usual cease- and-desist order, but an affirmative order to bargain with the Union on the issue of subcontracting , and I shall so recommend. Upon the basis of the foregoing findings of fact and upon the entire record in the case, I make the following. CONCLUSIONS OF LAW 1. All truckdrivers, helpers, shipping and receiving clerks, leadmen, forklift oper- ators, and warehousemen, exclusive of all other employees, office clerical employees, guards, and supervisors as defined in the Act, constitute a unit appropriate for the purpose of collective bargaining within the meaning of Section 9(b) of the Act. 2. At all times since May 29, 1956, Respondent has recognized the Union as the exclusive representative of all the employees in said unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, and other condi- tions of employment. 3. By refusing to bargain collectively with the Union in the respect found in sec- tion D, 3, above, Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 4. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.] APPENDIX A CERTIFIED-RETURN RECEIPT REQUESTED Mr. C. M. ROSEBOROUGH Assistant Business Agent Dallas General Drivers, Warehousemen & Helpers Local Union 745 1727 Young Street Dallas, Texas Re: Empire Terminal Warehouse Company Dear Mr. Roseborough: August 8, 1962. This letter is directed to you as Chairman of the union negotiating committee in contract negotiations for Empire Terminal Warehouse Company. The company and the union have met in bargaining sessions on July 13, July 24, July 30, August 1 and with Federal Mediation and Concilation on August 6. There has been much discussion of the union demands and the company has pre- sented complete proposals to the union with the exception of the company's proposed wage scale. The company has repeatedly advised the union that the contract between the parties does not permit Empire to maintain a competitive position among the general merchandising warehouse companies in the immediate area and that the company proposes , requests and demands some economic relief in any new contract agreed upon by the parties. The union, on the other hand, has flatly stated that it will not sign or agree to any contract unless said contract contains economic benefits over and above the present contract in force and effect between the parties. Please be advised that the company's wage proposal in negotiations for a new con- tract is $1.60 per hour across the board for all classifications. This proposed wage decrease is necessary in order that the company can improve its profit margin and thereby improve its competitive position among the general merchandising ware- houses in the area. At the last bargaining session on August 6 the company presented to you, even though you stated you were not interested, a wage survey taken among a representative group in general merchandising and household goods warehousing in the area. The wage scale offered by the company is representative of that wage survey. 1376 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Your attention is directed to the company's proposals in paragraph 4.2 There has been much discussion of this section between the parties in bargaining sessions. The company must insist on this particular section in order to effectively and efficiently operate its warehousing business. The parties also discussed in bargaining sessions of July 13 and July 24 the work rules posted by the company effective June 13, 1962. In our bargaining session of August 1, 1962, the parties agreed that the contract expired at midnight, August 16, 1962. Because of the competitive necessities outlined above, the company proposes to put in force and effect its wage proposals of $1.60 per hour, paragraph 4.2 of the company's proposals, and enforcement of its work rules as of August 17, 1962, so that it may improve its competitive position as soon as possible. We are ready, willing and anxious to discuss and resolve all of these matters with you and your negotiating team. We hope we can meet as often as necessary before the termination of the contract and thereafter. Please advise me when you can meet to further discuss these issues. The company also wishes to advise you that it is in negotiations for additional warehouse space in the old Schoelkoppf Building at 600 South Austin in order that it may service a new customer. Because of the economic saving involved and the lack of company equipment, the company proposes to sub-contract or use common carrier motor carriers for shipments from this new facility and to unload its boxcars on a sub-contract basis. The company will use employees from the bargaining unit as order fillers and other general warehousing work. We also wish to discuss these matters with you as soon as possible. Please be advised that if you have any solution on an economic basis whereby the company can operate more competitively, please be prepared to present these proposals at your earliest convenience. The company stands ready for bargaining sessions on a few hours' notice at any time in the future. Sincerely, (S) Allen P Schoolfield, Jr., ALLEN P. SCHOOLFIELD, JR., Attorney and Member of the Company Negotiating Team. APPENDIX B CERTIFIED-RETURN RECEIPT REQUESTED Mr. C. M. ROSEBOROUGH Assistant Business Agent Dallas General Drivers. Warehousemen & Helpers Local Union 745 1727 Young Street Dallas, Texas Re: Empire Terminal Warehouse Company Dear Mr. Roseborough: August 17, 1962. I wish to review the company's position in the present negotiations. First, I iefer to my letter of August 8, 1962. wherein I made certain proposals. As of this date, these proposals have been put in force and effect, there being-eing no satisfactory counter proposals from you on wages. I do wish to advise that the company is not placing into effect the complete Article 4.2 of the company's proposal. Rather the company is placing in effect the union's proposal with the changes made therein by you at the last bargaining session on August 16. That is, that seniority rights shall prevail at all times for layoffs, recall and vacations, if qualified, and that the employer retains the right in assignment of work. It is understood that employees not members of the bargaining unit will not be used as replacements for employees on regular classified jobs on any permanent basis This would not include emergency work by supervision or other brief periods. I want you further to understand that this company is not pleading an inability to pay and has never done so in any bargaining session as Mr. Richards implied. This company is a profitable operation but feels it is not good business to pay excessive wages The company maintaining a $1 60 wage scale as of August 17 is done merely to even the cost of the labor commodity with that of its competitors in the area. We simply seek to lower operational costs. I feel certain that if your union would agree to the cost items in our contract pro- posal that this company and your union will easily reach a contract. I have repeatedly stated that the checkoff is offered to you in any contract that is agreed upon between the parties. EMPIRE TERMINAL WAREHOUSE COMPANY 1377 I have no alternative but to regard the problem between the parties as one of wage scale and costs. This company is anxious to bargain on economic matters and anxious to receive any proposals that you may have that could in any way answer the company's position. Your union has never made a wage proposal to this com- pany or any other proposal that would in any way answer the company's competitive cost position. The company, on the other hand, has presented to you a wage survey taken among the general mechandising and household goods warehouses in the area. The company has demonstrated that it believes it can maintain its employment level at the $1.60 per hour scale discussed with you The entire pioblem is that this company is not willing to pay $2.00 or $2.25 an hour when it obviously can employ employees at $1.60 per hour. This is the entire company position and has always been so. This is to confirm your final statement in the session of August 16 when you said there was no point to further bargaining unless either side changes its position. Please be advised that we will advise you of any change in our position and I assume you will so notify us. Sincerely, APPENDIX C (S) Allen P. Schoolfield, Jr., ALLEN P. SCHOOLFIELD, JR. August 23, 1962. Mr. ALLEN P. SCHOOLFIELD, JR. 1200 Republic National Bank Building Dallas 1, Texas Dear Mr. Schoolfield: It is apparent from your letter of August 17, 1962, that you have a faulty recollec- tion of the August 16th bargaining session and I take this opportunity to correct your recollection. The company advised that effective August 17, 1962, it was putting into effect a drastic reduction in the wages of the covered employees as well as adopting certain changes in work rules and practices. This action was announced despite the fact that no impasse had been reached and the union was attempting to negotiate concern- ing wages. Admittedly the union is placed in a difficult position to discuss wages, when, in fact, the employer declines to give consideration to union proposals and refused to apprise the union of the economic condition of the company. The only impasse that could have been reached is one unilaterally created by the employer's adamant refusal to negotiate in good faith. These changes were protested by the union as another instance of bad faith bargaining by the company, and despite the union's renewed request to inspect the financial records of the company, the company denied the request. Contrary to the implications of your letter, the union has made several counter propositions on economic matters, none of which have effected any change in the company position. Specifically, on August 16, in response to a company request for relief from seniority and classification provisions, the union made a proposal designed to afford the employer more flexibility and economy in operation. Employer con- ceded that the proposal did meet its needs and provided the desired relief. In the meeting of August 15, the employer advised that it would reconsider its position on wages if it could receive this relief on seniority and classification practices, the union proposal was made with the understanding that the employer would reconsider its wage proposal. Nevertheless on the 16th the employer, having acknowledged the desirability of the union seniority proposal, immediately indicated that this did not alter its position on the $1.60 per hour wage. By your latest letter you indicate that you intend to put in effect the seniority proposal of the union, this is in contraven- tion of the understanding upon which the proposal was made and the understanding between the parties at the conclusion of the meeting of the 16th. In addition on the 16th the union made two proposals- the extension of the existing agreement for a period of 60 days to permit further development of contract negotia- tions. This proposal was summarily rejected by the employer, who advised that on August 17 it planned to put into effect the across-the-board wage reduction. In addi- tion the union proposed the establishment of a rate range for the covered employees, the top of the range being pegged to the existing wage scales. The employer indicated that the only range it would consider would be one that limited wages to $1.60 per hour. 783-133-66-vol. 151-88 1378 DECISIONS OF NATIONAL LABOR RELATIONS BOARD In sum , it is the position of the union that the employer has bargained in bad faith in violation of its duties under the Labor Management Relations Act as amended. You erroneously characterize the union position at the conclusion of the meeting of the 17th. The union inquired of the employer if it desired to set another date for a meeting, to which the employer replied that it was not interested in setting a future meeting, but would meet upon request . The union indicated that it would like time to consider the company position before setting a new meeting. I hope this will refresh your recollection regarding our last bargaining session. We request again that the employer rescind its unlawful changes in wages and conditions of employment and meet and discuss in good faith the terms of a new collective bar- gaining contract. Sincerely, C. M. Roseborough, DALLAS GENERAL DRIVERS , WAREHOUSEMEN & HELPERS LOCAL UNION 745 Carpenters Local No. 2133, United Brotherhood of Carpenters and Joiners of America , AFL-CIO; and Salem Building and Construction Trades Council , AFL-CIO and Cascade Em- ployers Association , Inc., For and On Behalf of Its Employer- Member, Leonard Ryan , Builder. Case No. 36-CP-?1. April 1, 1965 DECISION AND ORDER On December 24, 1964, Trial Examiner David Karasick issued his Decision in the above-entitled proceeding, finding that Respondents had engaged in and were engaging in certain unfair labor practices and recommending that they cease and desist therefrom and take certain affirmative action, as set forth in the attached Decision. Thereafter the Respondents filed exceptions to the Trial Examiner's Decision and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its powers in connection with this case to a three-member panel [Chairman McCulloch and Members Fanning and Jenkins]. The Board has reviewed the rulings of the Trial Examiner made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Trial Examiner's Decision, the exceptions and brief, and the entire record in this case, and hereby adopts the findings, conclusions, and recom- mendations of the Trial Examiner.' ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the Board adopts as its Order the Order recommended by 'Respondent 's motion to reopen the hearing to permit additional testimony on the question of jurisdiction is hereby denied. We base assertion of our jurisdiction in this ease on the amount of Interstate purchases made for the 34 units of the motel under con- struction at the time of the picketing, without relying on the purchases which will be made for the projected additional construction. 151 NLRB No. 133.