Interstate Brands Corp.

National Labor Relations Board - Administrative Judge Opinions

Sep 17, 2003

25-CA-028592 (N.L.R.B. Sep. 17, 2003)

JD–102–03
Anderson, IN
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
INTERSTATE BRANDS CORPORATION
and
TEAMSTERS, LOCAL UNION No. 135, a/w
INTERNATIONAL BROTHERHOOD OF TEAMSTERS
Walter Steele, Esq., of Indianapolis, Indiana, for the
General Counsel.
James R. Holland II, Esq. (Bioff, Finucane, Coffey,
Holland & Hosler, LLP), of Kansas City, Missouri,
for the Respondent.
Robin S. Greene, Business Representative, of
Indianapolis, Indiana, for the Charging Party.
DECISION
STATEMENT OF THE CASE
Case 25-CA-28592
MARK D. RUBIN, Administrative Law Judge. This case was tried in Indianapolis, Indiana,
on June 9, 2003, based upon a charge filed on February 21, 2003, by Teamsters, Local 135,
a/w International Brotherhood of Teamsters (“Charging Party” or “Union”) against Interstate
Brands Corporation (the Respondent).
The Regional Director’s complaint, dated April 29, 2003, alleges that the Respondent
violated Section 8(a)(5) and (1) of the Act by refusing to execute a collective-bargaining
agreement with the Charging Party after reaching complete agreement on the terms of said
agreement. The Respondent denies these complaint allegations. The issue presented is
whether the bargaining unit’s refusal to ratify the collective-bargaining agreement precludes the
formation of a binding agreement so as to negate any duty the Respondent may have had to
execute the contract.
At the trial, the parties were afforded a full opportunity to examine and to cross-
examine witnesses, to adduce competent, relevant, and material evidence, to argue their
positions orally, and to file post-trial briefs. The parties waived oral argument and, with the
exception of the Charging Party, filed post-trial briefs. On the entire record, including my
observation of the demeanor of the witnesses, and after considering the briefs of the
Respondent and the General Counsel, I make the following
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Findings of Fact
I. Jurisdiction
The Respondent maintains an office and place of business in Anderson, Indiana, where
it is engaged in the manufacture and wholesale distribution of bread and cake items, and the
operation of a bakery thrift store (store). The store is the only facility involved herein. During
the year ending January 31, 2003, the Respondent purchased and received at its Anderson,
Indiana facility goods valued in excess of $50,000 directly from points outside the State of
Indiana. It is admitted, and I find, that the Respondent is now, and has been at all times
material herein, an employer engaged in commerce within the meaning of Section 2(2), (6), and
(7) of the Act.
II. Labor Organization
It is admitted, and I find, that the Union is, and has been at all times material herein, a
labor organization within the meaning of Section 2(5) of the Act.
III. Unfair Labor Practice
The Union was certified as the exclusive bargaining representative of the store’s
employees on February 8, 2002. On April 17, 2002, the Union’s business representative, Robin
Greene (Greene), faxed the Union’s initial proposal to the Respondent’s human resources
manager, Tonia Gordon (Gordon). This proposal consisted of the Master Bakery Agreement
(MBA), which covered the thrift store employees at the Respondent’s other central Indiana
locations. Article 27 of the MBA “Duration of Agreement” set forth explicit dates upon which the
agreement became effective and expired. In a follow-up telephone conversation, Gordon told
Greene that the Respondent had not yet decided who would represent the Respondent in
negotiations, that she would get back to him as to this, and that in the meantime he could send
any proposals to her attention.
Eventually the Respondent and the Union held their first bargaining sessions on
September 9 and 10, 2002, with Greene serving as the Union’s chief negotiator and Dari
Buckner (Buckner) serving in said capacity for the Respondent.1 During these meetings, the
parties agreed to work on an agreement limited to the Anderson thrift shop. The parties did not
discuss ground rules for the negotiations. The Respondent presented the Union with two
written contract proposals, both of which explicitly set forth effective and expiration dates, and
dates for annual wage increases. Greene proposed that the contract should be effective upon
ratification, and testified that under his proposal, “There would be no agreement prior to
ratification.”
1 Buckner and Greene were the two principal witnesses. I rely mainly on Greene for the
facts I have found herein, and credit Greene as to any differences in their testimony. Based on
my observation of Buckner’s demeanor, including her propensity to glance at the Respondent’s
counsel frequently before answering questions of counsel for the General Counsel, and the
administrative law judge, and her repeatedly evasive and inconsistent answers to questions on
cross-examination, and by the administrative law judge, I find her to be less than a reliable
witness. Contrariwise, Greene answered questions forthrightly and, generally, without
hesitation, even when it was obvious that the answers were not necessarily helpful to the
Charging Party’s legal argument.
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The parties did not meet again until January 17, 2003, but exchanged mailed or faxed
proposals in the interim. On September 26, 2002, the Union responded to the Respondent’s
proposals of September 9-10, with a written counterproposal, which included a provision that
mandated Respondent contributions to a Union safety, training, and education trust fund,
“effective upon ratification” (emphasis supplied). This proposal was the first mention of
ratification in any of the written proposals. On December 3, 2002, the Respondent sent its
counterproposal to the Union. Nothing in this counterproposal referred to ratification. The dates
for yearly wage increases, contract effectiveness and expiration, and the date of the contract
itself, were left blank.
At the January 17, 2003 meeting between the parties, Buckner presented a written offer
to Greene in an attempt to resolve the entire contract. The cover page of the proposal sets forth
the dates as “January 20, 2003 through January 20, 2007,” but the duration provision adopted
the Union’s proposal as to ratification and provided, in pertinent part, “This agreement shall be
in full force and effect upon ratification to and including January 20, 2007 . . . .” The proposal
contained specific dates for yearly wage increases for each successive year of the contract, but
the initial wage increase was to be effective “upon ratification.” The Union requested that the
contract be changed from 4 years to 3 years and that the Respondent increase its wage
proposal by $.10 per hour per year. Later that day, the Respondent provided the Union with the
requested changes, and a new written proposal that changed the dates on the cover sheet, but
left the “upon ratification” language elsewhere in the agreement. Both Greene and Buckner
then signed off on this proposal. Greene testified that his signature meant he was in
agreement with the Respondent on all of the terms of the proposal and that he “. . . . was going
back to the membership and let them decide on a vote.” The bargaining unit voted to reject the
contract on January 25, 2003.
Greene and Buckner met again on February 5, 2003. At this meeting the Respondent
agreed to a change in the health insurance provision. On February 12, 2003, Greene
convened a meeting attended by all five bargaining unit members. Greene informed them that
the contract was basically the same as the one they rejected, but with improvements in health
insurance, that they had to vote on the contract, and they would have two choices on the ballot:
“Yes, I accept the company’s final offer or no, I vote to strike.” Following a caucus among
themselves, the members refused to vote on the offer. Greene then informed the members that
the Union had the right to accept the agreement, or reject the agreement and put the unit on
strike.
The next morning Greene called Union President Barton for advice. Greene told Barton
that he had been negotiating the contract for almost a year, that the unit had turned it down the
first time and refused to vote the second time because they didn’t like the agreement, but that
they did not want to strike. Greene also told Barton “. . . they had made it known to me that they
actually no longer wanted to be Teamster members.” Barton responded, “You have been
working on this for an entire year. They asked for certification and you have the right to accept
this agreement. So, accept the agreement.”
On February 13, 2003, Greene called Buckner and asked if the Respondent could
improve the wage and insurance benefits. On February 14, Buckner called Greene and
informed Greene that the Respondent would not improve its offer. Greene responded that he
was, then, going to accept the contract. Buckner asked Greene if he had such authority.
Greene responded that he did. Buckner responded that she thought the entire contract was
contingent on the members ratifying the agreement, and that she would have to “check into that”
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because she was not sure if he had the authority or not. Greene told Buckner that it was never
the case that the contract was contingent on member ratification.2
On February 14, 2003, Greene wrote to the Respondent’s regional manager, Jerry
Williams, accepting the “…Company’s final offer of settlement dated February 5, 2003 . . . .” In
the letter Greene requested that Williams sign the agreement. Greene’s letter further stated,
“The effective date of this agreement is February 14, 2003 for a three (3) year duration.” In a
letter dated February 19, 2003, Buckner informed Greene, “In response to your letter dated
February 14, 2003, since the contract was not ratified by the membership, there is no contract to
accept. The Employer is withdrawing our final offer of settlement dated 02/05/03.”
On February 21, 2003, a bargaining unit member filed a decertification petition with the
National Labor Relations Board, seeking the decertification of the Union as representative of the
Anderson thrift store unit. All of the showing of interest signatures were dated February 20,
2003. This petition was dismissed on April 30, 2003, based on the unfair labor practice alleged
in the complaint herein.
On February 24, 2003, Greene mailed a letter to Regional Manager Williams with two
copies of the contract prepared by the Union, and signed by Union Secretary-Treasurer Ron
Hall. In the letter, Greene requested that Williams sign the contract and return one copy to
Greene. These copies of the contract, essentially the Respondent’s February 5 offer, contained
certain changes the Union unilaterally made from the Respondent’s last written proposal, with
the pages retyped to reflect the changes. These changes are as follows: the Union filled in the
dates on the cover page as “February 14, 2003 through February 15, 2006”; the Union filled in
the dates of the second and third of the three yearly increases as “2/16/04 and 2/14/05” (the first
year was left “upon ratification”); and the Union changed the expiration date from the date set
forth in the Respondent’s last proposal of January 21, 2006 to February 15, 2006. The Union
had never previously discussed these changes with the Respondent.
Analysis and Conclusions
Both parties essentially set forth the issue as whether the parties had agreed to a
ratification vote as a condition precedent to the formation of a contract, with the Respondent
maintaining they had, and General Counsel arguing they had not. It is well settled that an
employer’s obligation to bargain collectively under the Act includes the execution of a written
contract incorporating any agreement reached, if requested by the union. N.L.R.B. v. Strong
Roofing, 393 U.S. 357 (1967), and H.J. Heinz Co. v. N.L.R.B., 311 U.S. 514 (1941).
Ratification only attains the status of being a condition precedent to the formation of a
contract when the parties have reached an express agreement to such effect. Observer-
Dispatch, 334 NLRB 1067 (2001). When the parties have reached such an express agreement
as to ratification, the Board finds that a contract cannot become effective until ratification occurs.
Hertz Corp., 304 NLRB 469 (1991). Thus, under such circumstances, an employer is not
obligated to execute a contract if the contract has not been ratified. See Santa Rosa Hospital,
272 NLRB 1004, 1006 (1984). But where ratification was merely a requirement self-imposed
by the union, the Board has long held that an employer must sign the agreement upon request,
regardless of whether or not ratification has taken place. North Country Motors, 146 NLRB 671
(1964). See also C & W Lektra Bat Co., 209 NLRB 1038 (1974).
2 This was contrary to his credited record testimony as to the significance of ratification in
this contract.
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Here, the Respondent contends, contrary to the General Counsel, that the parties
bargained for, and agreed to, ratification as a condition precedent to the formation of a contract.
The Respondent maintains, thus, that because the contract was never ratified it is under no
obligation to execute the contract. Counsel for the General Counsel argues in his brief that, in
fact, the parties never negotiated over whether or not the contract was subject to ratification,
and that the Respondent slipped the ratification language into its January 17, 2003 offer,
essentially unnoticed by the Union.
Relying on Greene’s testimony, which I have credited, I conclude that the parties never
actually discussed or negotiated over whether or not ratification was necessary to the formation
of a collective-bargaining agreement. Nevertheless, it is clear from Business Representative
Greene’s uncontradicted and fully credited testimony that the parties had reached a mutual
understanding as to the contractual ratification language, that ratification was a condition
precedent to the formation of a contract. Greene’s testimony included the following:
Respondent’s Counsel: “…I just want to make sure I am clear. Your

own proposal, on September 10th, had nothing to do with acceptance

of the contract; it had to do with the ratification of the contract. Is that

not correct?”

Greene: “It does say ratification.”

Respondent’s Counsel: “And that was what the parties’ agreement

was is that prior to ratification, there would be no contract. That was

the parties’ agreement?”

Greene: “Upon ratification. Prior to, there would be no contract.”

At another point Greene testified as follows:
Respondent’s Counsel: “The last question, Judge, to Mr. Greene

was prior to ratification, there was no agreement.”

Greene: “There would be no agreement prior to ratification.”

And finally, at another point upon being asked by the undersigned as to why his signature and
the signature of a representative of the Respondent appeared on the Respondent’s final
proposal to the Union, which the unit voted down, Greene testified as follows:
Judge Rubin: “Okay and the fact is, on R-4, your signature appears

on page 11.

Greene: “Yes, it does.”

Judge Rubin: “Was it your expectation that the fact that you signed it

and Mr. Williams . . . had also signed it that . . . in your mind, meant

that there was a contract.”

Greene: “No.”

Judge Rubin: “That meant that this was subject to ratification in order

to have a --.”

Greene: “Yes. The only thing that I was putting my signature on is

that this document here include all of the changes that have been

agreed upon by both parties.”

Judge Rubin: “Okay.”

Greene: “That I was going back to the membership and let them

decide on a vote.”

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Counsel for the General Counsel, in his brief, maintains that the Respondent slipped the
ratification language into its final proposal, hinting that somehow Greene didn’t notice this
addition. Counsel for the General Counsel further argues that “Greene’s silence and decision
not to comment on or object to the Respondent’s language shall not be deemed an admission to
the Respondent’s requirement that the Union obtain such unit employee ratification.” This
argument, however, fails to acknowledge that the Respondent’s use of the language in its
proposal was preceded by Greene’s verbal proposal for such language at the bargaining table,
and that the first time any such language was utilized in either of the parties’ written proposals
was on September 26, 2002, as part of the Union’s proposal as to the Respondent contributions
to a union fund. The Respondent’s representative Buckner and the Union’s representative
Greene both testified that they understood the contract language to mean that without
ratification there was no contract. Counsel for the General Counsel, thus, would have me
disregard the testimony of the two witnesses, labor relations professionals, and conclude that
they both didn’t understand what they were agreeing to. This I am not willing to do.
Accordingly, I conclude that while there was no explicit discussion at the bargaining
table, both parties understood that the ratification language in the proposed contract mandated
ratification prior to the formation of a contract. Inasmuch as the parties had agreed to this
process, I further conclude that the Respondent was under no obligation to execute the
agreement, absent ratification. See Hertz Corp., supra, and Beatrice/Hunt Wesson, 302 NLRB
224 (1991).
In the oft-cited C & W Lektra Bat Co., supra at 1039, the Board held that ratification was
not a condition precedent in circumstances where “the Union was merely stating its intention,
albeit forcefully, to take any contract reached to the membership for approval.” The Board went
on to say as to ratification, “Since this item was not offered as a proposal, there could be no
acceptance by the Respondent in any event.” Here, unlike C & W Lektra Bat, the disputed
language appears in the contract, and was originally proposed by the Union.
In his brief, counsel for the General Counsel cites several cases in support of his
argument that there was no condition precedent of ratification. But those cases are
distinguishable. In Williamhouse-Regency of Delaware, 297 NLRB 199 (1989), where the
Board found an employer’s failure to execute the contract a violation of Section 8(a)(5), the
parties never reached a written or verbal agreement as to ratification, unlike the instant case.
Other cases cited by counsel for the General Counsel stand for the well-settled propositions that
ratification and ratification procedures are nonmandatory subjects of bargaining, and that any
such obligation self-imposed by a union does not equate to a condition precedent to the
formation of a contract. These principles are inapplicable here because the ratification
language, understood by both parties to mandate ratification prior to the formation of a contract,
and initially proposed by the Union, was part of the written agreement. The only question here
is: do the contractual words mean what they say? Both witnesses testified in the affirmative.
I note that the complaint pleads the parties had reached agreement on all terms to be
incorporated into a collective-bargaining agreement, which pleading the answer denies. Neither
side presented arguments as to this issue, except as to whether ratification had been agreed to
as part of the contract. Significantly, the final offer, which the Union accepted, does not contain
an effective date in the duration provision and contains no date for the first year wage increase
other than “upon ratification.”
It is well settled that mutual agreement as to the term of an agreement, including the
effective commencement and termination dates, is an essential element of a binding collective-
bargaining agreement. Sheridan Manor Nursing Home, 329 NLRB 476, 478 (1999). Clearly,
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both sides had agreed to a 3-year duration, after earlier discussing a 4-year agreement. But
because, as found herein, the parties had contemplated ratification as part of the process, and
had turned their attention to the “meat and potatoes” of reaching an agreement, there was no
discussion of an effective date of the agreement or wage increase, other than “upon ratification.”
Thus, even had I decided that ratification was not a condition precedent, I would still have
concluded that the Respondent was not obligated to execute the agreement because the parties
had not reached agreement as to the effective date of the agreement, or the wage increase, at
least in the first year. I recognize that, under certain circumstances, it may be possible to infer
that the parties reached agreement on an identifiable effective date. See Sheridan, supra at fn.
8. However, here, with the parties only contemplating effectiveness upon ratification, and not
further discussing the issue, I see no basis to make such an inference. I further find that the
legal analysis in Cheese Barn, Inc., d/b/a Hickory Farms of Ohio, 222 NLRB 418, enf. 558 F.2d
526 (9th Cir. 1977) is inapposite. In that case the administrative law judge concluded that the
language of the duration provision “passed unnoticed and was not discussed by the parties.”
Here, the disputed language was initially proposed by the Union, and first appeared in writing in
a union proposal.
Conclusions of Law
1. The Respondent is engaged in commerce within the meaning of Section 2(6) and (7)
of the Act.
2. The Union is a labor organization within the meaning of Section 2(5) of the Act.
3. The allegations of the complaint that the Respondent has engaged in conduct
violative of Section 8(a)(1) and (5) of the Act have not been supported by substantial
evidence.
4. By failing and refusing to execute a collective-bargaining agreement with the
Charging Party, the Respondent has not violated Section 8(a)(1) and (5) of the Act.
On these findings of fact and conclusions of law, and on the entire record, I issue the
following3
ORDER
The complaint be dismissed in its entirety.
Dated, Washington, D.C.
____________________
Mark D. Rubin
Administrative Law Judge
3 If no exceptions are filed as provided by Section 102.46 of the Board’s Rules and
Regulations, the Board shall as provided in Section 102.48 of the Rules, adopt the findings,
conclusions, and recommended Order and all objections to them shall be deemed waived for all
purposes.
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