Everlock Fastening Systems

National Labor Relations Board - Board Decisions

Sep 25, 1992

308 N.L.R.B. 1018 (N.L.R.B. 1992)

1018
308 NLRB No. 144
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 We correct the date on p. 4, L. 6 of the judge’s decision to read
‘‘October 23, 1990’’ rather than ‘‘October 10, 1990.’’
2 As Member Oviatt stated in Tammy Sportswear Corp., 302
NLRB 860 fn. 1 (1991), he is of the view that in certain limited
circumstances an employer’s financial inability to pay may constitute
a defense to an allegation that it unilaterally and unlawfully failed
to make contractually required payments to a benefit fund. Member
Oviatt, however, finds that those circumstances are not present in
this case.
3 Although we agree with the judge’s finding that the Respondent’s
failure to make the contractually required payments to the employ-
ees’ retirement fund violated Sec. 8(a)(5), we do not rely on the
judge’s reasoning that sec. 1113 of the Bankruptcy Code applied to
those payments. We instead base our finding on the reasoning set
out above. We note, however, that if the October 1 to 19 retirement
fund contributions were not due to be paid until after October 19,
the date that the bankruptcy petition was filed, then sec. 1113 would
apply, and based on the reasoning set out in the judge’s decision and
clarified in our decision, the Respondent’s failure to make the con-
tributions would still constitute a violation of Sec. 8(a)(5).
4 Sec. 1113 also provides emergency relief necessary to prevent ir-
reparable damage to the debtor’s business.
International Screw Division of Everlock Fastening
Systems, Inc., Employer and Debtor in Posses-
sion in Bankruptcy and Mechanics Educational
Society of America, AFL–CIO. Case 7–CA–
31463
September 25, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS OVIATT
AND RAUDABAUGH
On March 31, 1992, Administrative Law Judge Karl
H. Buschmann issued the attached decision. The Re-
spondent filed exceptions and a brief in support.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and record in
light of the exceptions and brief and has decided to af-
firm the judge’s rulings, findings,1 and conclusions and
to adopt the recommended Order.
The judge found, and we agree, that the Respond-
ent’s failure to make retirement fund contributions,
failure to pay certain accrued vacation pay, and failure
to pay certain health insurance premiums, each re-
quired by the collective-bargaining agreement, con-
stituted violations of Section 8(a)(5) and (1) of the
Act.
The parties are in agreement as to the relevant facts.
The Respondent did not make contractually required
payments into the employees’ retirement fund from
October 1–19, 1990, and did not pay contractually re-
quired premiums to the CIGNA health insurance plan
from October 15, 1990, through March 25, 1991. On
October 19, 1990, the Respondent filed a petition for
bankruptcy. From February 12 to March 25, 1991, the
Respondent did not pay certain employees for the
amount of vacation that they accrued prior to October
19, 1990.
1. It is well established that an employer’s failure to
make contractual payments to an employees’ benefit
fund or to employees for accrued vacation, without
first bargaining with the union, constitutes a unilateral
change in the terms of the collective-bargaining agree-
ment and that such a unilateral modification is a viola-
tion of Section 8(a)(5). See Rapid Fur Dressing, 278
NLRB 905 (1986). Therefore, the Respondent’s failure
to make the payments required in this case would nor-
mally constitute a unilateral change in the terms of the
agreement and a violation of Section 8(a)(5).2
The Respondent, however, contends that the Bank-
ruptcy Code requires that claims that accrue prior to
filing a bankruptcy petition cannot be paid by the debt-
or, but must instead be submitted to the bankruptcy
court as an unsecured claim. Thus, the Respondent ar-
gues, the Bankruptcy Code specifically prohibited the
Respondent from making payments to both the em-
ployees’ retirement fund and to certain employees for
accrued vacation because these obligations arose ‘‘pre-
petition.’’ The Respondent maintains that it was not at-
tempting to modify or alter the terms of the collective-
bargaining agreement, but rather was merely comply-
ing with the provisions of the Bankruptcy Code.
The judge correctly rejected the Respondent’s argu-
ment. First, it is obvious that the Respondent’s argu-
ment must be rejected as it is applied to the Respond-
ent’s failure to make payments to the employees’ re-
tirement fund. These payments were due and owing
from October 1 through 19—before the Respondent
filed for bankruptcy. Accordingly, the bankruptcy pro-
ceeding cannot be a defense to the Respondent’s fail-
ure to make the retirement fund payments and we find,
as did the judge, that the Respondent failed to make
the payments in violation of Section 8(a)(5). Crest
Litho, 308 NLRB No. 24 (July 31, 1992).3
2. Next, we turn to the Respondent’s argument that
its status as a debtor in possession is a defense to its
failure to pay accrued vacation to certain employees.
A debtor in possession may assume or reject a collec-
tive-bargaining agreement in accordance with the pro-
visions of section 1113 of the Bankruptcy Code. Be-
fore a debtor may reject or modify a collective-bar-
gaining agreement, section 1113 requires that the debt-
or must notify and negotiate with an authorized rep-
resentative of the employees to attempt to reach an
agreement. After taking these steps, the debtor may
apply to the bankruptcy court for permission to reject
or modify the collective-bargaining agreement.4
The Respondent argues that it did not pay employ-
ees for vacation accrued prior to October 19, 1990, be-
cause it was complying with the provisions of the
Bankruptcy Code that prohibit payment of claims that
accrued prepetition. Because it was merely complying
1019EVERLOCK FASTENING SYSTEMS
5 The court stated :
In sum, our reading of 11 U.S.C. § 1113 leads us to the con-
clusion that Congress intended to give broad protection to col-
lectively bargained for rights which are threatened by a cor-
porate reorganization under Chapter 11 of the Bankruptcy Code.
Our conclusion that 11 U.S.C. § 1113 applies to all provisions
of a collective bargaining agreement does no violence to the
plain language of the statute or the legislative history as we per-
ceive it. [842 F.2d at 885. Accord: Crest Litho, supra.]
6 Further, the Respondent’s asserted reliance on the presence of a
31-day grace period is belied by its failure to make any premium
payments between October 15, 1990, and March 25, 1991, including
within the purported grace period following the October 15, 1990
payment due date.
7 We do not rely on the judge’s speculative finding that even if
the issue were deferred, that the ‘‘Respondent’s reaction would prob-
ably have [sic] the same, that is the bankruptcy proceeding is a bar
to its contractual obligation and the dispute should be resolved by
the bankruptcy court.’’
8 In addition, we note that the Respondent has requested deferral
on only one of the three issues presented in this case, i.e., the Re-
spondent’s failure to pay contractually required health insurance pre-
Continued
with the Bankruptcy Code and was not attempting to
modify the collective-bargaining agreement, the Re-
spondent contends that section 1113 of the Bankruptcy
Code is inapplicable. The Respondent’s argument,
however, is directly contrary to the plain language of
section 1113(f), which states that ‘‘no other provision
of [the Bankruptcy Code] shall be construed to permit
a trustee to unilaterally terminate or alter any provi-
sions of a collective bargaining agreement prior to
compliance with the provisions of this section.’’ (Em-
phasis added.)
A similar argument was rejected by the Sixth Circuit
in Unimet Corp., 842 F.2d 879 (1988), cert. denied
488 U.S. 828 (1988). In Unimet, the employer argued
that it had no duty to pay health insurance premiums
for retirees as required by the collective-bargaining
agreement because the insurance premiums were not
administrative expenses under the Bankruptcy Code.
The Sixth Circuit, however, found that section 1113(f)
‘‘unequivocally prohibits the employer from unilater-
ally modifying any provision of the collective bargain-
ing agreement.’’ 842 F.2d at 884. The court went on
to hold that the employer could not escape its obliga-
tions under the collective-bargaining agreement by ar-
guing that the administrative expense provision of the
Bankruptcy Code prohibited it from making the pay-
ments required by the collective-bargaining agree-
ment.5
In the case before us, the bankruptcy court did not
issue an order allowing the Respondent to reject or
modify the collective-bargaining agreement—in fact,
the Respondent never filed a motion pursuant to sec-
tion 1113 of the Bankruptcy Code requesting such re-
lief. Therefore, on the basis of precedent and the clear
language of section 1113(f), we agree with the judge
that the Respondent’s failure to pay certain employees
for vacation that accrued prior to October 19, 1990,
constituted a unilateral change in the collective-bar-
gaining agreement and a violation of Section 8(a)(5).
3. We also find no merit in the Respondent’s con-
tentions that its actions did not cause cancellation of
the CIGNA health insurance policy, but rather that
CIGNA, the insurer, disregarded the policy’s 31-day
grace period for payment of premiums and improperly
canceled the policy. The record reveals that the Re-
spondent had difficulty making its premium payments
to CIGNA during mid-1990 and that, as a result, the
Respondent and CIGNA modified the schedule for
payment of premiums. The modified payment terms
did not include a 31-day grace period following each
premium’s due date. After making two payments pur-
suant to the modified payment schedule, the Respond-
ent failed to pay the premium due on October 15,
1990, and CIGNA canceled the health insurance pol-
icy. In these circumstances, we agree with the judge
that the Respondent’s failure to pay the health insur-
ance premium to CIGNA on the October due date re-
sulted in cancellation of the CIGNA insurance policy.6
4. Finally, we find no merit in the Respondent’s ar-
gument that the Board should defer this issue to the
grievance-arbitration procedure set forth in the parties’
collective-bargaining agreement. We agree with the
judge that this issue should not be deferred because the
Respondent has not unequivocally expressed its will-
ingness to arbitrate. In response to the grievances filed
by the Union concerning the Respondent’s failure to
maintain the CIGNA health insurance policy, the Re-
spondent stated that the grievances ‘‘must be held in
abeyance’’ because the bankruptcy proceeding prohib-
ited the Respondent from paying any debts, including
payment of insurance benefits due to the employees. In
fact, in addition to suggesting that the health insurance
issue is not arbitrable because of the bankruptcy pro-
ceeding, the Respondent did not, in its response to the
complaint or during the hearing, affirmatively state that
it would agree to participate in the grievance-arbitra-
tion procedure. Instead, the Respondent, in its brief,
simply asserts that the collective-bargaining agreement
allows the Union to force the Respondent to arbitrate.
The Board has refused to defer an issue or case when
the respondent has failed to affirmatively assert a will-
ingness to participate in the grievance-arbitration pro-
cedure and has, in fact, expressed its belief that the
issue may not be arbitrable. Collyer Insulated Wire,
192 NLRB 837 (1971); United Technologies Corp.,
268 NLRB 557 (1984); and Burroughs Credit Union,
280 NLRB 292 fn. 3 (1986). On the basis of the
record, we affirm the judge’s findings that the Re-
spondent has not affirmatively expressed its willing-
ness to arbitrate the Union’s health insurance griev-
ances 7 and that the dispute is not well suited for reso-
lution by the grievance process.8
1020 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
miums. Because the health insurance allegation is legally and factu-
ally related to the other two complaint allegations, which we must
necessarily resolve, we find that it would not serve the purposes un-
derlying our deferral policy to defer that single aspect of this case
to the grievance-arbitration procedure. See S.Q.I. Roofing, 271
NLRB 1 fn. 3 (1984); George Koch Sons, Inc., 199 NLRB 166, 168
(1972), enfd. 85 LRRM 2548 (1st Cir. 1973).
1 The Mt. Clemens, Michigan place of business is the only facility
involved in this proceeding. 2 The complaint was amended accordingly (Tr. 21–22).
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, International Screw Divi-
sion of Everlock Fastening Systems, Inc., Employer
and Debtor in Possession in Bankruptcy, Mt. Clemens,
Michigan, its trustee, officers, agents, successors, and
assigns, shall take the action set forth in the Order.
Dennis Boren, Esq., for the General Counsel.
Michael Alaimo, Esq. (Dickinson, Wright, Moon, Van Dusen
& Freeman), of Detroit, Michigan, for the Respondent.
Robert W. Briggs, Esq., of Detroit, Michigan, on behalf of
the Charging Party.
DECISION
STATEMENT OF THE CASE
KARL H. BUSCHMANN, Administrative Law Judge. This
case was tried on June 24, 1991, in Detroit, Michigan. The
Charge in Case 7–CA–31463 was filed by Mechanics Edu-
cational Society of America, AFL–CIO (the Union) on Janu-
ary 30, 1991, and the complaint issued on March 11, 1991,
charging International Screw Division of Everlock Fastening
Systems, Inc. (the Respondent) with violations of Section
8(a)(1) and (5) of the National Labor Relations Act (the Act)
by failing and refusing to make contractual payments for the
employees’ pension funds and health insurance funds and by
failing and refusing to meet vacation payment obligations
from February 12 until March 25, 1991. The Respondent
filed an answer on March 25, 1991, in which it admitted the
jurisdictional elements of the complaint and averred that its
conduct complied with the U.S. Bankruptcy Code.
FINDINGS OF FACT
I. JURISDICTION
The Company, International Screw Division of Everlock
Fastening Systems, Inc., is a Delaware corporation with its
principal office at 431 Stephenson Highway, Troy, Michigan,
and, until March 25, 1991, with a place of business at 50631
East Russell Schmidt Blvd., Mt. Clemens, Michigan, where
it is engaged in the manufacture and distribution of auto-
mobile parts.1 On October 19, 1990, the Respondent filed a
bankruptcy petition pursuant to chapter 11 of the U.S. Bank-
ruptcy Code, 11 U.S.C. § 101 et. seq., and has been des-
ignated as a debtor in possession by the U.S. Bankruptcy
Court for the Eastern District of Michigan, Southern Division
of Detroit. With gross revenues exceeding $1 million during
1990 and with purchases in excess of $50,000 from suppliers
from outside the State of Michigan, the Respondent is an
employer engaged in commerce within the meaning of Sec-
tion 2(2), (6), and (7) of the Act.
The Charging Party, Mechanics Educational Society of
America, AFL–CIO, is a labor organization engaged in com-
merce within the meaning of Section 2(2), (6), and (7) of the
Act.
II. FACTS
Since 1951, the Company and the Union had a bargaining
relationship for the employees in the following unit:
All full-time and regular part-time toolmaker,
lathe/grinder operator, header setup and operator, head-
er operator, secondary equipment setup, secondary op-
erator, reheader setup and operator, washer operator,
shipping clerk, shipper clerk assistant, shipping clerk,
shipper clerk assistant, shipping clerk helper, truck driv-
er, hi-lo driver, inspector-A, maintenance-A, mainte-
nance-B, centerless grinder operator, centerless grinder
setup, toolmaker/electrician, janitor, sorter, press opera-
tor, tool crib attendant, work cell setup and operator,
and toolroom helper employed by Respondent at its Mt.
Clemens, Michigan place of business; but excluding all
guards and supervisors as defined in the Act.
The latest collective-bargaining agreement, dated March 1,
1990, and effective until March 1, 1993, contains certain pro-
visions relevant to the instant controversy. Article X under
the heading ‘‘Vacation with Pay’’ provides for the accrual of
vacation days based on an employee’s seniority (G.C. Exh.
2). Another proviso, entitled ‘‘Insurance’’ obligates the Com-
pany ‘‘to continue in effect the current health insurance and
drug program without cost to the employee,’’ and gave the
Company ‘‘the right to select the insurance carrier to provide
the benefits specified in this Article’’ (G.C. Exh. 2, art. XII).
The collective-bargaining agreement also provided for the
Company’s contributions towards the hourly employees’ re-
tirement savings plan. (G.C. Exh. 2, art. XII, sec. 5.)
The record shows pursuant to a stipulation between the
parties ‘‘that since on or about October 1 through 19, 1990,
the Respondent did not make the contractual payments into
the employees’ pension, retirement saving and fringe benefit
fund on behalf of the employees and the unit set forth’’ (Tr.
21–22).2 In addition the stipulated facts are that certain em-
ployees who had earned vacation pay prior to October 19,
1990, did not receive their vacation pay because ‘‘[a]fter
February 12, 1991, until March 25, 1991, persons who
sought to have their vacation paid, had that vacation prorated
to pre and post vacation petition.’’ (Tr. 15–18; G.C. Exh. 3.)
In a posted notice, dated February 12, 1991, the Respondent
informed the bargaining unit employees that the Company
had filed for chapter 11 protection and how the Company
would process accrued vacation payments (Tr. 57; G.C. Exh.
3). The employees were informed, inter alia, that payments
for vacation time accrued after October 19, 1990, the date of
filing for chapter 11 protection, were postpetition obligations
which could be paid to the employees because the money
was considered ‘‘administrative expenses.’’ However, ac-
crued vacation time prior to that date was considered
1021EVERLOCK FASTENING SYSTEMS
3 The Respondent apparently abandoned its affirmative defense
that the issues are barred by Sec. 10(b) of the Act. In any case, the
alleged practices occurred within the 6-month period prior to the fil-
ing of the charge.
prepetition obligations for which claims could be made to the
U.S. Bankruptcy Court and which, according to the Com-
pany, it was not permitted to pay.
The Company offered its employees three medical plans,
the Health Alliance Plan, the Wellness Plan, and a traditional
medical Plan, the CIGNA plan. The parties stipulated that the
Respondent failed to pay the insurance premium for the
CIGNA insurance plan from October 15, 1990, to March 25,
1991 (Tr. 25). Approximately 11 to 14 unit employees who
were insured by CIGNA thereby lost their coverage for a
certain time. Although the policy provides for an automatic
cancellation if the premium is not paid, it also contains a
‘‘Grace Period’’ provision which extends the policy by 31
days beyond the payment of the premium. (R. Exh. 1.) By
letter of August 30, 1990, the Respondent had informed
CIGNA that it would reduce its accrued premiums of over
$421,000 by making monthly installments for August, Sep-
tember, October, and November 1990 (R. Exh. 2). The
record shows that $100,000 was paid in August and
$107,176 on September 15, 1990 (R. Exh. 2). But the Re-
spondent failed to pay the October 1990 installment and any
subsequent payments through March 25, 1991 (Tr. 37). Dur-
ing this period, 10 to 14 employees were no longer insured
under the CIGNA plan. Several employees who lost their
coverage joined the Health Alliance Plan, an HMO, as of
November 1, 1990, and others joined the Health Alliance
Preferred Provider Organization (Tr. 38). Nevertheless, as of
the end of the grace period of October 15 to November 1,
1990, several CIGNA insured employees were uninsured and
other CIGNA insured employees who opted to join the
Health Alliance Preferred Provider Organization remained
uninsured until December 1, 1990 (Tr. 37–38). The employ-
ees who joined either of the two insurance plans had less
choice in the selection of their health providers than they
would have had with CIGNA. Accordingly, Donald Larkins,
director of industrial relations, contacted an insurance broker
in January 1991 to explore an insurance coverage similar to
that of CIGNA. However, the Respondent never contracted
with an insurance carrier which offered benefits similar to
CIGNA. Larkins conceded that the health care plans in exist-
ence after October 15, 1990, did not comply with the collec-
tive-bargaining agreement (Tr. 39).
The record shows that the Company did not notify the
Union and it did not offer to bargain with the Union about
its failure to make the contractual contributions. On October
23, 1990, the Company notified the employees during an em-
ployee meeting where the employees were informed that the
Company had filed for chapter 11 bankruptcy and that the
insurance programs were not in effect (Tr. 56–57). On the
same date, the Company informed the employees by memo-
randum that CIGNA stopped the paying of claims for em-
ployees’ medical and dental bills and that the employees had
the option of joining the Health Alliance PPO plan effective
November 1, 1990, or the Health Alliance traditional plan ef-
fective January 1, 1991, neither of which offered an adequate
replacement coverage comparable to the CIGNA insurance,
as stated above. (G.C. Exh. 6.)
Employee grievances challenging the Company’s failure to
maintain the insurance plan were held ‘‘in abeyance’’ by the
Union. (G.C. Exhs. 7, 10.) By memorandum dated October
10, 1990, the Company informed the grievant of the bank-
ruptcy proceeding and stated that ‘‘such grievance must be
held in abeyance unless the bankruptcy court orders other-
wise [and that the] Company is presently investigating the
status of insurance coverage prior to October 19, and is un-
dertaking an investigation of alternate methods to provide
. . . insurance benefits due . . . as of October 19 that may
not have been paid’’ (G.C. Exh. 8).
In sum, the Company admittedly (a) failed to make con-
tractual payments into the employees’ retirement savings
plan from October 1 to 19, 1990, in accordance with article
XII, paragraph 5 of the collective-bargaining agreement, (b)
failed to pay certain unit employees their accrued vacation
pay in accordance with article X of the agreement, and (c)
failed to pay its premiums for the CIGNA health insurance
plan or for a new carrier with comparable benefits as re-
quired by article XII of the collective-bargaining agreement
(G.C. Exhs. 2, 3; Tr. 22, 39). Respondent’s failure in this re-
gard as well as its failure to notify the Union and to bargain
collectively, violated Section 8(a)(1) and (5) of the Act, ac-
cording to the General Counsel. The Respondent argues that
its receivership in a bankruptcy proceeding justified its con-
duct and that the matter should have been deferred to the
grievance procedure in the contract.3
Analysis
The question whether a debtor in possession may reject a
collective- bargaining agreement is now governed by section
1113 of the Bankruptcy Code (11 U.S.C. § 1113) entitled
‘‘Reorganization.’’ This law was enacted by Congress in re-
sponse to the decision NLRB v. Bildisco & Bildisco, 464
U.S. 513 (1984), where the Court held that a debtor in pos-
session does not commit an unfair labor practice when it uni-
laterally alters the terms of a bargaining agreement. Accord-
ing to section 1113, a debtor in possession or the trustee
‘‘may issue or reject a collective-bargaining agreement only
in accordance with the provisions of this section.’’ (11
U.S.C. § 1113(a).) The statute outlines in several paragraphs
the specific steps required before a collective-bargaining
agreement can be changed or modified. The effect of the
provisions assures that a debtor in possession may not unilat-
erally change the terms of a collective-bargaining agreement.
For example, the Act requires that a debtor in bankruptcy
first make a proposal to the union and furnish the union with
relevant information, it must meet with the Union to confer
in a good faith attempt to reach mutually satisfactory modi-
fications, and the bankruptcy court must examine and ap-
prove any modifications according to specific guidelines. The
Company failed to comply with any of these requirements.
Indeed, the Act specifically states: ‘‘No provision of this title
shall be construed to permit a trustee to unilaterally terminate
or alter any provisions of a collective-bargaining agreement
prior to compliance with the provisions of this section.’’ (11
U.S.C. § 1113(f).)
The court in Unimet Corp., 842 F.2d 879, 884 (6th Cir.
1988), cert. denied 488 U.S. 828 (1988), interpreted section
1113 and stated that ‘‘Section 1113 unequivocally prohibits
an employer from unilaterally modifying any provision of
the collective-bargaining agreement.’’ Another circuit court
1022 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
in its analysis of section 1113 stated ‘‘that Congress intended
§ 1113 to be the sole method by which a debtor could termi-
nate or modify a collective-bargaining agreement and that ap-
plication of other provisions of the Bankruptcy Code that
allow to bypass the requirements of § 1113 are prohibited.’’
In Ionosphere Clubs, 922 F.2d 984 (2d Cir. 1990).
By stipulation the record shows that the bankruptcy court
did not issue an order allowing the Respondent to reject the
collective-bargaining agreement, and that the Respondent had
not filed a motion pursuant to section 1113 of the Bank-
ruptcy Code (Tr. 14).
The record here shows that the Respondent not only failed
to make the contractual contributions to the various funds
and to the employees but it also failed to notify the Union
of its actions and it certainly did not offer to bargain with
the Union. Respondent’s failure to pay into the contractually
required retirement savings plan and the failure to make cer-
tain medical insurance payments required by the contract and
that failure to pay certain employees’ vacation pay con-
stitutes a violation of Section 8(a)(5) and (1) of the Act. Zim-
merman Painting & Decorating, 302 NLRB 856 (1991). I
accordingly find that the Respondent violated Section 8(a)(1)
and (5) as alleged in the complaint.
The Respondent’s argument that there ‘‘is nothing in the
record to support that the lapse in medical insurance was
caused by the Respondent’’ and that in any case, the Union
waived its right to bargain over the issue, is plainly contra-
dicted by the record. The payment schedule for four monthly
installments already constituted an accommodation by the
carrier to continue the coverage, provided the payments were
made. The cancellation was a direct consequence of Re-
spondent’s failure to make the required installments and was
in accord with the insurance contract, providing for auto-
matic cancellation in the event of a failure to pay. Moreover,
the Union’s decision to keep the issue in abeyance was not
tantamount to a waiver, particularly, where as here, the Re-
spondent blamed the CIGNA insurance carrier and its chap-
ter 11 posture.
In its brief, the Respondent has raised the issue of deferral.
Initially it is not clear whether the Respondent raised the
issue of deferral only with regard to the Company’s failure
to continue the CIGNA insurance plan and whether the
issues of vacation pay and the retirement fund are part of the
same defense. The Respondent’s answer to the allegations in
the complaint does not contain any reference to deferral. And
the record shows that grievances filed by the employees were
solely concerned with the CIGNA insurance issue (G.C.
Exhs. 7, 10). The General Counsel has taken the position that
deferral on any issue is warranted at this stage of the pro-
ceeding and, in any case, inappropriate. Because the issue of
deferral was not raised in the answer and litigated only with
regard to the health insurance issue, it will be considered rel-
evant only with regard to that issue.
The collective-bargaining agreement provides for a griev-
ance procedure involving four steps, including arbitration.
The grievance procedure presumes the filing of a grievance
by an employee and covers any dispute between the Com-
pany and any of its employees as to the meaning and appli-
cation of any provisions of the agreement (G.C. Exh. 2). As
already stated the grievances in this case are only concerned
with the lapse of the CIGNA insurance. According to the tes-
timony of Robert Briggs, the president of the Union, a deci-
sion was made by the Union and the Company to hold the
grievances in abeyance because the Company deemed it
fruitless to go on with the grievance as a result of the bank-
ruptcy proceeding (Tr. 81, 174). The Company responded to
the grievance by memorandum of October 23, 1990, stating,
inter alia (G.C. Exh. 8)
As a result of the bankruptcy filing, any efforts by
any person to collect a debt owed by the Company
prior to October 19, 1990 are prohibited by law. Thus
to the extent that your grievance seeks the immediate
payment of insurance benefits due you as of October
19, the Company’s position is that by virtue of the
Bankruptcy Code, such grievance must be held in abey-
ance unless the Bankruptcy Court orders otherwise.
The Company recognizes its obligation under the
collective bargaining agreement to provide your [sic]
with current Insurance coverage. At the present time the
Company is working diligently with its carriers to en-
sure that such Insurance coverage is provided.
The Company took the position that the grievances should
be held in abeyance and that they could not ‘‘respond be-
cause of the Chapter 11, that they could not do anything that
their hands are tied.’’ (Tr. 84, 163.) In short, the Union was
under the impression that the Company believed ‘‘that it
would be fruitless to go on with it.’’ (Tr. 175.)
Under these circumstances, it is clear that deferring the
issue to arbitration would be inappropriate, Collyer Insulated
Wire, 192 NLRB 837 (1971); United Technologies Corp.,
268 NLRB 557 (1984). The Company had essentially ac-
knowledged its responsibility under the contract, but it took
the position that in view of the bankruptcy proceeding, it
would be futile to process the grievances. Even if the matter
had been taken through the final stage of the grievance proc-
ess with a finding that the Respondent violated the terms of
the collective-bargaining agreement the Respondent’s reac-
tion would probably have the same, that is the bankruptcy
proceeding is a bar to its contractual court obligation and the
dispute should be resolved by the bankruptcy. Accordingly,
I find that the Respondent had failed to assert its willingness
to use arbitration to resolve the dispute and that the dispute
is not well suited to a resolution by the grievance process.
CONCLUSIONS OF LAW
1. The Respondent, International Screw Division of
Everlock Fastening Systems, Inc., is a debtor in possession
and an employer engaged in commerce within the meaning
of Section 2(2), (6), and (7) of the Act.
2. The Charging Party, Mechanics Educational Society of
America, AFL–CIO, is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. The following is an appropriate unit for purposes of col-
lective bargaining:
All full-time and regular part-time toolmaker,
lathe/grinder operator, header setup and operator, head-
er operator, secondary equipment setup, secondary op-
erator, reheader setup and operator, washer operator,
shipping clerk, shipper clerk assistant, shipping clerk,
shipper clerk assistant, shipping clerk helper, truck driv-
er, hi-lo driver, inspector-A, maintenance-A, mainte-
1023EVERLOCK FASTENING SYSTEMS
4 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
5 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.’’
nance-B, centerless grinder operator, centerless grinder
setup, toolmaker/electrician, janitor, sorter, press opera-
tor, tool crib attendant, work cell setup and operator,
and toolroom helper employed by Respondent at its Mt.
Clemens, Michigan place of business; but excluding all
guards and supervisors as defined in the Act.
4. The Respondent violated Section 8(a)(1) and (5) of the
Act by unilaterally, without notice to the Union and without
offering to bargain with it, changing the terms of the collec-
tive-bargaining agreement, by (1) failing from October 1
through 19, 1990, to make payments into the employees’ re-
tirement savings plan, (2) failing to pay certain unit employ-
ees their accrued vacation pay earned prior to October 19,
1990, to March 25, 1991, and (3) failing to pay its health
insurance premiums for the CIGNA medical insurance from
October 15, 1990, to March 25, 1991, as required by the
contractual provisions of the collective-bargaining agreement,
dated March 1, 1990.
5. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Section
2(6) and (7) of the Act.
REMEDY
Having found that the Respondent has engaged in certain
unfair labor practices in violation of Section 8(a)(5) and (1)
of the Act, I recommend that it be ordered to cease and de-
sist, and to take certain affirmative action designed to effec-
tuate the policies of the Act.
Having found that the Respondent violated Section 8(a)(5)
and (1) of the Act by failing (1) to make retirement savings
plan contributions, (2) to pay certain employees accrued va-
cation in pay, and (3) to pay insurance premiums, as required
in the collective-bargaining agreement, the Respondent must
be ordered to make the contributions and the payments on
behalf of the unit employees subject to the approval of bank-
ruptcy court with any interest or other sums applicable to the
payments to be computed in accordance with the Board’s de-
cision in Merryweather Optical Co., 240 NLRB 1213 (1979).
The Respondent must make the unit employees whole for
any losses they may have suffered as a result of its failure
to make the contractually required payments and contribu-
tions, Kraft Plumbing & Heating, 252 NLRB 891 (1980),
enfd. mem. 661 F.2d 940 (9th Cir. 1981), to be computed
in the manner set forth in Ogle Protection Service, 183
NLRB 682 (1970), enfd. 444 F.2d 502 (6th Cir. 1971), and
with interest to be computed in the manner prescribed in
New Horizons for the Retarded, 283 NLRB 1173 (1987).
The Respondent would also be ordered to bargain with the
Union as the collective-bargaining representative of the unit
employees.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended4
ORDER
The Respondent, International Screw Division of Everlock
Fastening Systems, Inc., Employer and Debtor in Possession
in Bankruptcy, Mt. Clemens, Michigan, its trustee, officers,
agents, successors, and assigns, shall
1. Cease and desist from
(a) Failing to bargain collectively with the Union and uni-
laterally and without notice to the Union changing the terms
of the collective-bargaining agreement, by failing to make
contributions into contractually required retirement savings
plan or failing to pay employees the accrued vacation pay or
failing to make insurance premium payments.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Make all retirement savings plan contributions and
payment to employees for their accrued vacation pay and all
insurance premium payments which have been unlawfully
withheld, with interest pursuant to the collective-bargaining
agreement and make whole the employees in the unit for any
losses directly attributable to the withholding of those con-
tributions, or payments with interest, as set forth in the rem-
edy section of this decision.
(b) Bargain collectively with the Union as the exclusive
bargaining representative of the employees in the aforemen-
tioned unit.
(c) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of backpay due under the terms of this Order.
(d) Post at its facility in Troy and Mt. Clemens, Michigan,
copies of the attached notice marked ‘‘Appendix.’’5 Copies
of the notice, on forms provided by the Regional Director for
Region 7, after being signed by the Respondent’s authorized
representative, shall be posted by the Respondent imme-
diately upon receipt and maintained for 60 consecutive days
in conspicuous places including all places where notices to
employees are customarily posted. Reasonable steps shall be
taken by the Respondent to ensure that the notices are not
altered, defaced, or covered by any other material.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
1024 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT refuse to bargain with the Mechanics Edu-
cational Society of America, AFL–CIO, and unilaterally and,
with notice to the Union, changing the terms of the collec-
tive-bargaining agreement by failing to make contractually
required contributions to the retirement savings plan or to
make insurance premium payments or payments to employ-
ees for accrued vacation pay.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce you in the exercise of the rights guaran-
teed you by Section 7 of the Act.
WE WILL make the retirement savings plan contributions
and payments to certain employees for their accrued vacation
pay and all insurance payments which we have unlawfully
withheld, with interest, pursuant to the collective-bargaining
agreement between ourselves and the Union.
WE WILL make whole our employees in the unit for any
losses directly attributable to our withholding of the pay-
ments or contributions, with interest. The appropriate unit is:
All full-time and regular part-time toolmaker,
lathe/grinder operator, header setup and operator, head-
er operator, secondary equipment setup, secondary op-
erator, reheader setup and operator, washer operator,
shipping clerk, shipper clerk assistant, shipping clerk,
shipper clerk assistant, shipping clerk helper, truck driv-
er, hi-lo driver, inspector-A, maintenance-A, mainte-
nance-B, centerless grinder operator, centerless grinder
setup, toolmaker/electrician, janitor, sorter, press opera-
tor, tool crib attendant, work cell setup and operator,
and toolroom helper employed by Respondent at its Mt.
Clemens, Michigan place of business; but excluding all
guards and supervisors as defined in the Act.
INTERNATIONAL SCREW DIVISION OF
EVERLOCK FASTENING SYSTEMS, INC., EM-
PLOYER AND DEBTOR IN POSSESSION IN
BANKRUPTCY