H. P. Hood & Sons, Inc.

National Labor Relations Board - Board Decisions

Apr 28, 1970

182 N.L.R.B. 194 (N.L.R.B. 1970)

194 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
H. P. Hood & Sons, Inc. and Milk Wagon Drivers and
Creamery Workers, Local 380 , International Brother-
hood of Teamsters , Chauffeurs , Warehousemen and
Helpers of America , Petitioner . Case 1-RC-10,106
April 28,1970
SUPPLEMENTAL DECISION AND
CERTIFICATION OF REPRESENTATIVE
By CHAIRMAN MCCULLOCH AND MEMBERS FANNING
AND BROWN
Pursuant to a Decision and Direction of Election
issued on September 19, 1968, and amended on Septem-
ber 26, 1968, the Regional Director for Region I conduct-
ed an election on October 22, 1968, among certain
employees of H. P. Hood & Sons, Inc. (herein called
the Employer or Hood). The tally of ballots showed
that there were approximately 156 eligible voters, 87
of whom cast ballots for Petitioner and 56 cast ballots
against Petitioner. There were also one void ballot and
six challenged ballots. The challenges were not determi-
native of the results.
Thereafter, on October 28, 1968, the Employer timely
filed objections to the election,' contending that the
Petitioner (sometimes referred to as the Union or Local
380) was not qualified to represent the employees in
question, by reason of certain loans made by Teamsters
Central States, Southeast and Southwest Areas Pension
Fund (herein called the Fund) to a competitor of the
Employer-Whiting Milk Company, Inc.'
Hearings on the Employer's objections were held
before Hearing Officer Robert C. Rosemere between
November 26, 1968, and April 16, 1969.3 The Employer,
the Union, the Regional Director, and, to a limited
extent, Whiting appeared and participated in the hearing.
On July 22, 1969, the Hearing Officer issued his report
in which he found no disqualifying conflict of interest
in the Union, and accordingly recommended that the
objections be overruled and that the Union be certified
as the employees' bargaining representative.4 Thereafter,
' The petition was filed on May 27, 1968, and an initial set of
hearings was held June 24 and July 2 and I I On August 28, 1968,
following the court's opinion in N L R B v David Buttrick Company,
399 F 2d 505 (C A I), the Employer moved to reopen the record
to develop additional facts made relevant by that decision The Regional
Director denied the motion, but permitted the Employer to raise the
same matters in the form of an election objection
2 The original loans were made to Whiting Milk Company, but were
assumed by Whiting Milk Company, Inc , as part of the May 1966
sale agreement We shall use " Whiting" to refer to both companies
The Fund's debt interest in Whiting has been the subject of other
litigation See David Buttrick Co , 154 NLRB 1468, remanded 361
F 2d 300 (C A 1), Supplemental Decision, 167 NLRB 438, enfd 399
F.2d 505 (C.A I) See also H P Hood & Sons, Inc, 167 NLRB
437, H P Hood & Sons, Inc , Case 1-RC-8251 The parties stipulated
that the records in these cases be incorporated into the present record
3 The amended notice of hearing limited the introduction of evidence
to matters subsequent to March 8, 1965, the close of the hearing
in David Buttock Company, 154 NLRB 1468
He also recommended that the Board entertain a motion to rescind
Local 380's certification in the event the Fund or the International
acquired control of Whiting or intervened in bargaining "in order to
the Employer filed exceptions to the Hearing Officer's
report and a brief in support thereof. The Union filed
an answering 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 con-
nection with this case to a three-member panel.
The Board has reviewed the Hearing Officer's rulings
made at the hearing and finds that no prejudicial error
was committed. The rulings are hereby affirmed. The
Board has considered the objections, the Hearing
Officer's report, the exceptions and briefs, and the entire
record in this case, and hereby adopts the Hearing
Officer's findings and recommendations as modified here-,
in -
We are faced once again with the task of determining
whether there is a proximate danger that the Fund's
loans to Whiting will "poison [Local 380 ' s] collective
bargaining process by subjecting every issue to the
questioning of ulterior motives,"5 and whether the
Employer here has met its "considerable burden" of
showing that the "danger of a conflict of interest interfer-
ing with the collective bargaining process is clear and
present ""
As we read the opinions of the Court of Appeals for
the First Circuit in the Buttrick cases,' the Board is
to inquire into two interrelated areas: (1) the power
of the International or its general president to control
the conduct of Local 380 ' s bargaining with Whiting
and the Employer , and (2 ) the temptation , likelihood,
or incentive for exercising that power in order to protect
the Fund's debt interest in Whiting . The Employer and
the Union have devoted much argument as to whether
these two factors should be read in the disjunctive
(whereby the existence of either one disqualifies the
Union ) or in the conjunctive (so that there is no disquali-
fication unless both are shown ). In our opinion, the
court did not prescribe any such discrete classification
and quantitative measurement of each of these two
aspects of the conflict of interest issue . That issue
simply cannot be reduced to a formula of (1) and/
or (2) equals "clear and present" danger . A very minimal
amount of power over local bargaining may suffice if
the temptation is great ; and complete bargaining control
may be insufficient where the temptation is nonexistent
or slight . In short , our task is to carefully scrutinize
and weigh elements of both power and temptation, and,
from this overall appraisal , determine the proximity
of the danger that a remote financial interest will infect
the bargaining process.'
favor the security of the loan "
N L R B v David Buttrick Company , 361 F 2d 300 , 307 (C A
I)
N L R B N Daiid Battruk Compani 399 F 2d 505 507 (C A
For the sake of brevity, we shall refer to the two court decisions
as "Buttrick I"and "Buttrick II "
I But , as will appear, even under the Employer's "disjunctive"
approach, we Ind insufficient evidence of a disqualifying conflict of
interest on the present record
182 NLRB No. 28
H. P. HOOD & SONS
One other aspect of the general principles to be applied
requires some further clarification. The Hearing Officer
at times implied that a "clear and present" danger
could only be found where there is actual intervention
by the Fund or the International to bend Local 380's
conduct towards loan protection. While such intervention
would, of course, constitute a clear manifestation of
a disabling conflict of interest, we do not think the
court made overt abuse of the representative function
the critical test. Rather, the court held that"it is the
innate danger to be guarded against [and] the existence
of this danger does not require proof of abuse of trust,
so long as there is sufficient, power and temptation
to commit such abuse."B Applying these principles to
the facts presented here, we find, in agreement with
the Hearing Officer, that the Employer has not estab-
lished a "clear and present" or "proximate danger of
infection of the bargaining process."10
In its Supplemental Decision in Buttrick (167 NLRB
438), the Board analyzed the constitutional powers which
the International and its general president" could bring
to bear on Local 380 bargaining conduct. The Board
there found that these powers "permit[ted] only a limited
entry into Local bargaining activity," and that there
was no evidence that the limited powers had ever been
utilized to shape or alter the course of Local 380 bargain-
ing.12 { .,
In the present case, the Employer sought to show
that International power has in fact been exercised over
Local 380's negotiations, especially in respect to the
1966-67 dispute with Whiting over the elimination or
reduction of its retail delivery routes. The record shows
that, in response to Whiting's proposed abandonment
of the retail routes,13 Local 380 inititated a series of
meetings which were presided over by John Hartigan,
" Buttrtck 1, 361 F 2d at 307
1 ° Buttrtck 11, 399 F 2d at 507-508
The parties stipulated that Frank E Fitzsimmons is presently general
vice president acting for the president. and that he is now, and has
been, a trustee of the Fund
12 The court affirmed these findings Buttrtck 11, 399 F 2d 505, 507
(C A I)
13 In November 1966, Whiting sought to reopen the contract in order
to change from 7- to 6-day delivery for retail routes The Union did
not accede and, in December 1966, Whiting announced its intention
to discontinue the retail delivery routes In October 1967 the Union,
in return for certain concessions, agreed to a 6-day schedule for retail
deliveries, omitting Sunday.
The Employer reads much significance into certain statements Whiting
made to the Union in announcing the "discontinuance" of retail routes
Whiting's December 9, 1966, letters pointed out that the retail routes
and their goodwill and customer lists were part of the security pledged
for the Fund's loans, and stated that "every effort must be made
by the company and the union to protect and enhance the value of
these assets so that the most advantageous disposition of them can
be made " However, it is clear that these statements were not directed
at influencing Local 380's bargaining conduct They merely asked for
union assistance in preserving assets pending sale-a sale which never
took place Such a request would seem to be a reasonable one for
any employer contemplating a disposition of assets In addition, there
is no evidence that the Union endorsed Whiting's request or took
any action because of it. Rather, Local 380 went to considerable effort
to prevent the sale of retail routes and exacted a heavy "price" for
agreeing to the reduced 6-day delivery schedule In short, we are
unable to infer any conflict of interest overtones from Whiting's unheeded
call for union aid in protecting asset values
195
director of the dairy division of the Eastern Conference
of Teamsters. Under the Teamsters constitution of the
Eastern Conference is "at all times subject to the unqual-
ified supervision, direction and control of the General
President." (Art. XVI, sec. 1.) However, we agree
with the Hearing Officer that these meetings and Harti-
gan's limited role in them do not rise to the level
of International control over Local 380's course of bar-
gaining.
The notes and testimony on the meetings show that
the topics discussed ranged far beyond Local 380's
immediate dispute with Whiting, extending to the general
problems facing the retail dairy industry. And, while
Hartigan appears to have acted as "spokesman" for
the locals" during several joint meetings with employer
representatives, he was clearly not functioning in any
negotiating capacity. At most, Hartigan was promoting
harmony among the locals and furthering a broad
exchange of information between union and manage-
ment . In our opinion, this does not evidence any signi-
ficant involvement by the International in Local 380's
negotiations with Whiting.
The record firmly shows that it was Local 380, not
the Eastern Conference, the International, or the Fund,
that handled the 1966-67 bargaining with Whiting. The
Union's own bargaining committee, headed by Business
Agent Luke Kramer, met with Whiting and hammered
out the ultimate October 1967 accord. Kramer testified
that no representative of the International or the Fund
participated, directly or indirectly, in these or any other
negotiations with Whiting. We find nothing in the course
of the 1966-67 negotiations themselves or in the final
agreement on retail routes which indicates pressure or
influence toward loan protection.15 In short, we conclude
that the evidence as to actual conduct of negotiations
does not amplify the power of the International and
the general president.'6 Rather, the record serves to
confirm our earlier Buttrick ruling that the International's
powers are limited, that Local 380 has the dominant
voice in its dealings with employers.
The record contains much evidence pertaining to the
subject of temptation for intervention into Local 380
bargaining in order to protect the Fund's interest in
Whiting. In the Buttrick proceeding, the Board found
no evidence of such temptation.17 And, the court in
Buttrick II noted that the nature of the Fund's interest
reduced the likelihood of any bargaining intervention.
For, unlike the holder of an "equity-like interest," the
14 Apparently the Teamsters locals dealing with Dairyman's League
(Whiting's parent) were represented in these meetings
'$ In January 1966, Whiting had presented its case for 6-day delivery
on a no-Wednesday basis to General President Hoffa However, the
facts show that Whiting's plea received "very little encouragement"
during the short meeting with Hoffa, who "was sympathetic but [not]
helpful " And, there is no evidence that Hoffa subsequently did encour-
age, help, or intervene in the negotiations leading to the October 1967
agreement on the matter
19 We agree with the Hearing Officer that President Hoffa's May
or June 1966 statement that he would "take care of" Local 380 Business
Agent Kramer if he (Kramer) gave Whiting's president, Friedlander,
"too hard a time," was unrelated to collective bargaining and constituted
"mock-serious joviality "
17 167 NLRB 438 at 442
196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Fund has no incentive to improve Whiting ' s day-by-
day competitive position through favorable adjustments
of labor costs. The only concern of the Fund is the
monthly receipt of principal and interest on its loans-
an objective which is assured and protected "So long
as Whiting does not go out of business or its assets
fail to cover its liabilities . " 1B On the record there present-
ed, the court felt there was adequate security for the
loans and no evidence of a "danger of default ." 19 The
Employer here contends that Whiting ' s default is now
imminent ( if not already accomplished ), and that its
assets are insufficient to cover the loan obligation to
the Fund
In many respects it is true that Whiting's financial
situation leaves much to be desired , and its operations
since 1965 would not attract a cautious or "reasonable,
prudent " investor. Thus, between January 1, 1965, and
March 31, 1968 , Whiting had an operating loss of some
$110,000 . As a result , the principal payments on the
Fund ' s loans have largely been financed out of deprecia-
tion charges and sale of assets , a practice which, if
continued , could result in ultimate liquidation of the
business. In addition , Whiting has encountered a persist-
ent deficit in "working capital ";10 and, under the standard
interpretive ratios used by security analysts, Whiting
appears in far poorer position than the industry in general
or the eight dairy companies selected for comparison,
although admittedly not all of these are good compari-
sons. Whiting ' s difficulties have to some extent affected
the Fund ' s debt interest , since , in April 1966 , the original
schedule of payments on principal was scaled down
from about $60,000 a month to $10 ,000 a month (for
the first 24 months ) and then to $37,000 a month.21
This revised schedule means that Whiting must make
a final "ballon " payment of $1,796 , 000 in April 1973.
However , there is another , brighter side of the Whiting
financial picture . First and most important is the fact
that Whiting has faithfully met each and every payment
of interest and principal (as per the revised schedule).
There is no indication that the Fund ever expressed
doubt or concern over the continuation of these timely
payments . While it is true that Whiting has not had
an especially profitable operation since 1965 , neither
has it been entirely adverse In fact, between June
30, 1966, and October 31, 1968, stockholders equity
has increased by about $96,000 and long -term debt has
been reduced by $1,320,000. Monthly profit-and-loss
figures for 1967 and 1968-although not establishing
any trend upwards-do provide some basis for Whiting's
avowed hopes of future improvement . Those hopes are
also supported by the backing of Whiting ' s parent-
Dairyman's League , which is a large milk producers'
cooperative having a big stake in keeping Whiting healthy
in order to provide an outlet for its members' milk
products . And finally, even if we were to overlook
these indications of a better future , we find in agreement
with the Hearing Officer, that Whiting' s assets are ade-
quate to cover its liabilities in the event of liquidation.22
It should be emphasized here that our task is not
to decide whether Whiting is now a sound investment,
suitable for a reasonable , prudent investor . Rather, we
are inquiring into Whiting's financial condition only as
it relates to the ability to make good on the Fund's
loans, either from continued operation or from sale
of assets . The question is whether Whiting ' s ability
to repay is so doubtful as to induce the Fund or the
International into taking action impinging on Local 380's
bargaining so as to protect the loan . There may be,
to be sure, some danger that in the future Whiting's
condition will worsen , that the Fund might step in and
run the Company , or that the International will exercise
its limited powers to induce Local 380 to improve Whit-
ing's competitive position . But, on the record thus far
compiled , such danger of infection of the bargaining
process is surely not a clear and present one. Whiting
is still a going concern , danger of default is not imminent,
and assets are still sufficient to cover the loan in the
event of Whiting's collapse . The Fund continues to
be the holder of an ordinary secured debt , without
any "equity -like" concern for the " . . . everyday fluc-
tuations in Whiting's business. "23
In conclusion , from our overall appraisal of both
the power and temptation to abuse the bargaining proc-
ess, we find on the record before us no "proximate"
or "clear and present " danger of such abuse.24 Accord-
ingly, we affirm the Hearing Officer' s findings and recom-
mendations.25
11 Buttnck II , 399 F 2d 505 , 507 (C A I)
10 Ibid
10 The current assets less current liabilities
21 Unlike the Hearing Officer , we find it unnecessary to determine
whether , under applicable State law , these revisions constitute a
"default " on Whiting ' s obligations under the original loan agreement
or an effective amendment of that agreement through "waiver" or
"estoppel " There has been no court ruling that default exists and
both Whiting and the Fund have conformed their conduct to the revised
terms over a period of several years Our task here is to ascertain
the likelihood of Fund-International intervention into Local 380 bargain-
ing, not to resolve questions of creditors rights In our view, the
fact that the Fund has accepted the revision and has never suggested
that Whiting was in default diminishes the likelihood of a technical
default being seized upon as ground for intervention In other words,
it is too conjectural to infer that the Fund, despite its past acceptance,
might someday seize upon the revision as a "default" justifying an
assumption of control over Whiting
22 This finding is based upon the estimates provided by the Employer's
witness , Carl Blanchard
20 Buttnck II, 399 F 2d at 507
" Thus we do not reach Petitioner ' s argument that Whiting, with
its single ice cream employee in a complement of 1,000, is only peripheral-
ly engaged in the ice cream business and there is therefore nothing
that Local 380 can do to place Hood, whose bargaining unit in the
instant case is comprised of 160 ice cream employees (production,
maintenance, loaders, and drivers at one location), at any kind of
competitive disadvantage
25 On December 15 and 29 , 1969, the Employer filed motions to
supplement the record . Petitioner opposes the proposed supplementation.
The motions to supplement seek to introduce a statement of assets
and liabilities for Whiting's fiscal year ending March 31, 1969 Whiting's
financial statements have same relevance, of course , to its continuing
ability to repay the Fund ' s loans In our view of the case, however,
this document , standing by itself , does not persuade us that any different
result is warranted The motions to supplement are accordingly denied
H P HOOD & SONS 197
CERTIFICATION OF REPRESENTATIVE Teamsters, Chauffeurs, Warehousemen and Helpers of
America, and that said organization is the exclusive
It is hereby certified that a majority of the valid representative of all the employees in the unit herein
ballots has been cast for Milk Wagon Drivers and Cream- involved, within the meaning of Section 9(a) of the
ery Workers, Local 380, International Brotherhood of National Labor Relations Act, as amended