Kingwood Mining Co.

National Labor Relations Board - Board Decisions

May 23, 1974

210 N.L.R.B. 844 (N.L.R.B. 1974)

844 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Kingwood Mining Company and United Mine Work-
ers of America. Case 6-CA-6335
May 23, 1974
DECISION AND ORDER
BY MEMBERS JENKINS, KENNEDY, AND
PENELLO
On October 30, 1973, Administrative Law Judge
Thomas S. Wilson issued the attached Decision in
this proceeding. Thereafter, the Respondent filed
exceptions and a supporting brief, and the General
Counsel filed "cross-exceptions" which is more in the
nature of 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
authority in this proceeding to a three-member panel.
The Board has considered the record' and the
attached Decision in light of the exceptions and brief
and has decided to affirm the rulings, findings, and
conclusions of the Administrative Law Judge to the
extent consistent herein.
The Administrative Law Judge found that Respon-
dent's shutdown of its coal mining operations and
the subcontracting of such work was discriminatorily
motivated and unilaterally implemented, in violation
of Section 8(a)(5) and (1) of the Act.
We are unwilling to rely upon the Administrative
Law Judge's finding of a discriminatory motivation
for Respondent's conduct, because that is not the
theory of the complaint herein and, even though
Respondent produced some evidence at the hearing
to explain that the basis for its action was economic
in nature, we are not satisfied that Respondent was
sufficiently put on notice that the motivation for its
shutdown and subcontracting, as well as the unilater-
al aspect thereof, was an issue to be litigated in the
case.
While we find that Respondent acted unilaterally
in terminating its mining operation and subcontract-
ing such work, we believe that it did not violate the
Act thereby, nor that it unlawfully failed and refused
to discuss with the Union the impact of its closing on
the unit employees.
Since 1964, the Respondent has operated a coal
tipple near Kingwood, West Virginia, where it
processes and sells coal mined by its own employees
on land owned or leased by Respondent, as well as
coal purchased from various independent mining
1 In view of our disposition of the proceeding, we need not pass upon the
Respondent 's motion for rehearing and reopening of the record.
2 Three of the companies are Rockville Mining Co , Alexander Brothers,
and Garbart Mining Co.
3 It is not alleged that this conduct was unlawful
companies. About eight or nine of these companies
mine coal on Respondent's properties and are under
contract with Respondent to sell their coal to it; 2
other companies sell coal to Respondent which is
mined at locations in which Respondent has no
financial interest, which companies have no contrac-
tual obligation to sell to Respondent. Prior to
October 12, 1972, at which time it ceased mining coal
with its own employees, Respondent produced about
30 percent of its total coal sales with its own
employees, the remaining 70 percent being produced
by the independent companies.
The Union represents all production and mainte-
nance employees, including those engaged in mining
and tipple operations, and it met several times with
the Respondent for collective-bargaining purposes
since January 1971, but no contract resulted.
As found by the Administrative Law Judge, from
December 1971, when Respondent sold 85,000 tons
of coal, its monthly sales decreased to about 30,000
tons a month by September 1972. As of April 1, 1972,
Respondent lost its biggest single customer, Monon-
gahela Power Company. That company's purchases
averaged about 29,000 tons of coal per month and it
canceled its orders from Respondent because of the
high sulphur content of the coal. In May, Respon-
dent reduced the work hours of its employees from
48 to 40 per week.3 At a meeting of employees in
August, Respondent's president, Fry, advised of the
necessity of a cutback in operations and the
possibility of a complete shutdown in the future due
to the decrease in production.4 On October 11, Fry
decided to shut down operations and arranged for a
meeting with employees to be held on the following
day. At an October 12 meeting with employees,
which was attended by union representatives, Fry
announced that he was shutting down and was not
sure when, if ever, the operations would reopen.
Within 10 days of the shutdown, Respondent
recalled a crew of 8 to 12 employees to work at the
tipple to load a previously ordered coal train. This
crew continued to work thereafter, processing the
coal purchased from the various independent mining
companies; but Respondent's own employees have
not been used to mine coal since October 12.
After the shutdown, Respondent sold the machin-
ery that was used by its employees, including a large
Manitowoc 4600 high front shovel for which it
received about $250,000. By November 7, Rockville
Mining Co., an independent company that was
already mining coal in the area, requested and
4 A meeting between Respondent and union representatives was held
later that day According to the testimony of Steve Nikses , the Union's
district representative, Plant Superintendent Wilkinson proposed a layoff of
eight employees , but the Union was able to negotiate a layoff of only two or
three.
210 NLRB No. 139
KINGWOOD MINING CO.
received permission from Respondent, because of the
high content of sulphur in the coal Rockville had
been mining, to move its operations to Respondent's
"job I" location which had been strip-mined by
Respondent's own employees prior to the shutdown.5
Since the shutdown, Respondent has continued its
tipple operation only and, as of the hearing, was
engaged in erecting a new, modern tipple which will
process coal so as to eliminate excess sulphur content
and make the coal saleable under present environ-
mental standards.
In our view, the practical effect of Respondent's
shutdown and subcontracting, and its sale of
equipment and machinery, was to take Respondent
out of the business of mining coal. The tipple
operation which has continued involves work of a
different type and was maintained independently of
the coal mining business; as already noted, about 70
percent of the coal which Respondent processed at
the tipple before it ceased mining coal was produced
by other mining companies. The decision of Respon-
dent to close out its mining operations was manifest-
ly a major one and entailed a substantial withdrawal
of capital investment. To require Respondent to
bargain about such a basic management decision
would significantly abridge its freedom to manage its
own affairs and is not contemplated by the Act.6 We
accordingly find that Respondent's decision to
terminate its mining operations was a management
determination which was exercisable without union
negotiation and not violative of Section 8(a)(5).
Respondent was, of course, required to afford the
Union an opportunity to discuss the impact of the
shutdown on the unit employees, but we do not find
that it breached its obligation in this regard. In
reaching this conclusion, we are not unaware of the
fact, as reported in the Decision of the Administra-
tive Law Judge, that at Respondent's October 12
meeting with employees, Union Representative
Zivkovich asked a question concerning the employ-
ees' pension benefits and was asked by Fry "who
invited him there to begin with," and that Fry then
ordered Zivkovich to leave.? But this was a meeting
of employees called by Respondent and was not
intended to serve also as a bargaining session with
the Union. While we are finding in effect that
Respondent's decision to shut down was announced
as a fait accompli on this occasion, it also appears to
S Prior to the shutdown , Respondent 's employees mined at three
locations known as jobs 1, 3, and 4 After Rockville moved its operation to
job 1, Alexander Brothers began mine -strapping a new plot adjacent to job
3, which Respondent's employees had uncovered prior to the shutdown.
Contrary to the finding of the Administrative Law Judge that Garbart
Mining Co also began mining on property which prior to October 12
Respondent's employees had been working , the General Counsel stated on
the record that such property was a new operation on land not previously
mined by Respondent 's employees
6 Summit Tooling Company and Ace Tool Engineering Co, Inc, 195
845
us that Respondent's conduct at the meeting and
subsequent thereto did not reflect a purpose to
foreclose bargaining negotiations regarding the
consequences of the shutdown. Nor did the Union
ever test Respondent's willingness to satisfy its
bargaining obligation in this respect. Until about
May 1973, the Union, although on notice since
October 1972 of Respondent' s intentions, never
requested bargaining relating to any aspect of the
mining operation's termination. When the parties
finally met in July, no question was raised by the
union men then about the effect of the decision
which resulted in the mining employees' separation.
Under all the circumstances, we do not believe that
the General Counsel has sustained the burden of
establishing a violation on this aspect of the case.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that the complaint
herein be, and it hereby is, dismissed in its entirety.
MEMBER JENKINS, dissenting in part:
I cannot agree with my colleagues' conclusion that
Respondent's unilateral subcontracting out of unit
work was a basic management decision which
alleviated any necessity or requirement for consulta-
tion and bargaining with the Union. Respondent did
not go out of business, but only temporarily ceased
operations to permit a changeover in the employees
performing mining operations. Thus, the record
shows that soon after the announced temporary
shutdown on October 12, the Respondent reopened
its tipple and, under subcontracts with various
employers, permitted employees of those subcontrac-
tors to mine coal on land owned or leased by
Respondent, including work locations where coal
was being mined by unit employees at the time of the
announced temporary shutdown. Nor does the sale
of certain equipment and machinery evidence a
withdrawal of capital investment. Respondent
"loaned," "rented," or "sold" one machine to a
contractor who used it in mining operations on
property owned by Respondent, and other machines
were purchased by PBS Coal Company of which
Respondent is a wholly owned subsidiary; and
NLRB 479, 480, and cases cited therein . Therefore , even if the issue of
motivation for the shutdown had been fully litigated and shown to have
been discriminatory, it would not warrant a different disposition than we
are making herein.
r Union Representative Nikses and other employees who were members
of the Union 's negotiating team remained at the meeting . Sherbine,
Respondent 's vice president , also present, discussed certain fringe benefits
relating to vacation pay, insurance, and pensions , and thereafter met with
employees to answer questions regarding these matters
846 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Leonard S. Fry is president of both Respondent and
PBS.8 In point of fact, there is little difference in the
nature of Respondent's operations prior to and after
the subcontracting. The only distinction of any
importance is that the unit work has been transferred
from the unit employees to employees of subcontrac-
tors who are now working Respondent's mines. Such
an action may not be lawfully taken without prior
notification and bargaining with the employees'
bargaining representative.9
I likewise cannot agree that the Union, in effect,
waived its right to bargain over the effects of the
subcontracting. Certainly, Union Representative
Zivkovich's question concerning employees' pension
benefits at the October 12 meeting demonstrates an
attempt to raise this matter. That effort by the Union
was met with more than a mere refusal; Respon-
dent's President Fry asked "who invited him there to
begin with" and ordered Zivkovich to leave. Under
these circumstances, and in view of Respondent's
past refusals to bargain, there can be no justification
for requiring the Union to perform an act which
would be futile.
In all other respects, I join in the determination
made by my colleagues.
8 It might be added that there was testimony to suggest that an
underlying motive for the sale of the Manitowoc 4600 high level shovel to a
Pennsylvania purchaser was that the machine was having trouble manuver-
ing in rugged West Virginia terrain and with meeting West Virginia strip
mine regulations
9 Fibreboard Paper Products Corp. v. N LR B, 379 U.S 203 (1964)
DECISION
STATEMENT OF THE CASE
THOMAS S. WILSON, Administrative Law Judge: Upon
charges duly filed on September 25, 1972, and amended on
October 11, 1972, and April 30, 1973, by United Mine
Workers of America, herein referred to as the Party or the
Union, the General Counsel of the National Labor
Relations Board, herein referred to as the General
Counsels and the Board respectively, the Regional Direc-
tor for Region 6 (Pittsburgh, Pennsylvania), issued its
complaint dated April 30, 1973, against Kingwood Mining
Company, herein referred to as the Respondent.
The complaint alleged that Respondent had engaged in
and was engaging in unfair labor practices affecting
commerce within the meaning of Section 8(a)(1) and (5)
and Section 2(6) and (7) of the Labor Management
Relations Act, 1947, as amended herein referred to as the
Act.
Respondent duly filed its answer admitting certain
allegations of the complaint but denying the commission of
any unfair labor practices.
Pursuant to notice a hearing thereon was held before me
in Fairmont, West Virginia, on August 2, 1973. All parties
appeared at the hearing, were represented by counsel, and
were afforded full opportunity to be heard, to produce and
cross-examine witnesses, and to introduce evidence materi-
al and pertinent to the issues. At the conclusion of the
hearing oral argument was waived. Briefs have been
received from General Counsel and Respondent on August
30, 1973.
Upon the entire record in the case and from my
observation of the witnesses, I make the following:
FINDINGS OF FACT
I. BUSINESS OF RESPONDENT
Kingwood Mining Company is a West Virginia corpora-
tion engaged in coal mining with its principal office in
Mercersburg, Pennsylvania. Solely involved herein are
Respondent's mining operations located at Kingwood,
Preston County, West Virginia. During the 12-month
period immediately preceding the issuance of the instant
complaint, Respondent sold and shipped from its King-
wood, West Virginia, location coal valued in excess of
$50,000 directly to points located outside the State of West
Virginia.
Accordingly, I find that Respondent is now, and has
been at all times material herein, an employer engaged in
commerce within the meaning of Section 2(6) and (7) of
the Act.
II. THE LABOR ORGANIZATION INVOLVED
United Mine Workers of America is a labor organization
admitting to membership employees of Respondent.
III. THE UNFAIR LABOR PRACTICES
A. Prologue
The instant case by the General Counsel is not
Respondent's initial experience in testing its labor relations
policies before the Board or the courts. In fact there exists
a prologue of some length before the Board and the courts
to the instant case. This prologue began back in early 1967
soon after the union organizing campaign began in late
1966 in Preston County, West Virginia, where Respondent
has its operations.
On July 31, 1967, following a hearing, the Board issued
its first Decision and Order, 166 NLRB 957, against
Respondent for various and sundry violations of Section
8(a)(1) of the Act including, among others, "expressly or
impliedly threatening its employees with loss of employ-
ment or discontinuation of its operations because of their
choice of a collective bargaining representative."
Then on April 30, 1968, after another hearing before
another trial examiner, the Board issued another Decision
and Order against Respondent, 171 NLRB 125. This time
the Board found that Respondent had interfered with,
restrained, and coerced its employees in numerous ways
including that of "threatening the employees with cessation
of operations if they selected the Union as their bargaining
representative" in Preston County. More importantly for
r This term specifically includes the attorney appearing on behalf of the
General Counsel at the heanng.
KINGWOOD MINING CO. 847
the instant case, in this Decsion and Order the Board also
found that the Union had been selected as the exclusive
representative for collective bargaining of Respondent's
then 75-80 employees and that the Respondent had
refused to bargain with the Union as such representative
and, therefore, ordered Respondent to bargain, upon
request, in good faith with the Union as such representa-
tive.
This Decision and Order of the Board was enforced by
the Circuit Court of Appeals for the Fourth Circuit in a
decision dated December 2, 1968, 404 F.2d 483.2
Thereafter, on February 17, 1970, the Board issued
another Decision and Order, 181 NLRB 181, against this
Respondent, after sua sponte reconsidering its prior
Decision and Order in the light of the Supreme Court's
decision in the Gissel case, 395 U.S. 575 (1969). In this
Decision the Board reaffirmed its prior decision ordering
Respondent to bargain with the Union because of
Respondent's "excessive" prior unfair labor practices.
This decision was enforced by the Circuit Court of
Appeals for the Fourth Circuit in a per curiam decision
dated December 14, 1970.
That constitutes the prologue to the instant case.
Since that time to date Respondent and the Union have
met several times at .. anous times and locations but, as yet,
have reached no collective-bargaining agreement.3
B. Other Facts
At all times since its purchase in 1964 Respondent has
operated a coal tipple near Kingwood, West Virginia,
where it processes not only the coal which it has produced
from its own operations with its own employees in the
appropriate unit in Preston County but also coal purchased
by it from various and sundry small independent, family
strip mining companies operating either on Respondent's
properties or on their own properties.
These independent companies above mentioned are all
small family concerns which strip coal on properties to
which they own the rights or else on Respondent's
properties under contract with Respondent and with
Respondent's permission. Among these independent fami-
ly stripping operators are the Rockville Mining Co.,
Alexander Brothers, and Garbart Coal Company.
At the time material herein Respondent was step mining
with its own employees at three different locations known
in this record as jobs 1, 3, and 4. In addition to these three
strip mines, in September 1972 Respondent had also just
uncovered a new plot near job 3 in preparation for further
strip mining there.
Prior to October 13, 1972, Respondent produced about
30 percent of the coal it was selling on its own operations
with its own then 60-70 employees whereas the remaining
70 percent of the coal sold by Respondent was being
produced by these family independents and purchased
from them at the tipple by Respondent for resale.
Admittedly Respondent was making money on its tipple
operations as well as in the buying and selling of coal at the
tipple.4 During 1971, Fry estimated, without company
records, that Respondent was losing money on jobs 1, 3,
and 4. Vice President Wilkinson, however, testified that
Respondent was making money on job I which had
Respondent's best coal.
In September 1971, Respondent sold 81 ,000 tons of coal.
But it sold only 19,000 tons in October and 43,000 tons in
November due to a union strike in the neighborhood.
In late 1971 Fry testified that he nearly closed down the
Respondent's operations in Preston County for good. At
this point of time, according to Fry, "plus additional cost
of union welfare, by additional cost, we were running a
border line, a very marginal operation, between the tipple
and competing with other coal." 5 At this time he told
Respondent's employees, with Union Representatives
Pnakovich, Nikses, and Zivokovich present, that " either we
have a better working attitude, better work habits, or I am
shutting it [Respondent] down." According to Fry, "that
seemed to help a little for about 4 to 6 months here. We
made a little money. Then we got back in the same old rut,
back in 1972."
In December 1971 Respondent sold 85, 000 tons of coal,
in January 1972 69,000 tons, in February 54,000 tons, and
March 65,000 tons.
In March 1972, Monongahela Power Company, Respon-
dent's biggest single customer which averaged about 29,000
tons of coal purchased per month, cancelled its orders as of
April 1 because of the high sulphur content of Respon-
dent's coal and because Respondent refused to reduce its
price. Thereafter through the month of September 1972
Respondent's monthly sales of coal dropped from about
60,000 to around 30,000 tons per month.
About August I I Fry held a meeting with Respondent's
employees at Kingwood as, in Fry's words, "a matter of
courtesy to the employees, the Union involved, they might
as well know the cold, hard facts of life." On this occasion
Fry bemoaned his sad duty to have to notify the employees
of the economics of the situation , of the necessity of a
"severe" cutback in Respondent's operations, and the
"distinct possibility" of a complete shutdown of Respon-
dent's operations in the future. According to Fry's
testimony, the trouble at this point of time was due "to the
controversy, low morale of labor, some for the Union,
some against." For this reason, according to Fry , Respon-
dent's "production kept right on dwindling on a month to
month basis."
In May 1972, with the loss of the Monongahela order
Respondent reduced the work hours of its employees from
48 to 40 per week.
Sometime in August or September, the exact date not
having been given in this record, a decertification petition
involving Respondent's employees was filed with the
Board. The decertification election was scheduled to be
held on September 29.
On September 23 Fry, Vice President Sherbine, and
Attorney Rice for the Respondent met with high union
2 The Court did restrict the Board's Order that Respondent cease and in surface bargaining
desist from engaging in unfair labor practices ' in arv other manner" to the 4 A profit of over $300,000 was mentioned during the hearing
more restrictive phrase "in any like or related manner " 5 Like his other financial "estimates ," Fry's testimony here can only be
3 However fortunately, the issue here posed i , m ,t whether Respondent characterized as nebulous and self-serving rather than factual
has been bargaining in good faith during these meetings or merely engaging
848 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
officials of the United Mine Workers in Washington, D.C.,
for a negotiation session . At this time Fry reiterated the
same economic forebodings which he had expressed to the
employees on August 11. No agreement on a collective-
bargaining contract was reached at this session. At the end
of the meeting it was agreed that the parties would meet
again at the call of the Union which, according to Fry, had
become the "customary procedure" for the calling of such
meetings . It was mutually agreed that this call would be
made after the four then pending elections had been held.6
By this time in September, however, despite the cutback
in hours, Respondent had built up an inventory of some
30,000 tons of high sulphur coal around the tipple which
was "hot" and unsold.
On September 25, the Union filed an unfair labor
practice charge with the Board that Respondent was
refusing to bargain in good faith with the Union. This
effectively blocked the decertification election which was
not held as scheduled on September 29 or thereafter.
On October I1 Fry and Respondent's treasurer, Phillip
Michaels, took a "cursory" look at Respondent's prelimi-
nary financial figures for Respondent's operations for the
month of September. Upon determining from these
preliminary figures that Respondent had "another loser,"
as Fry phrased it, Fry from his Mercersburg, Pennsylvania,
headquarters telephoned Respondent's vice president,
James Wilkinson, at Kingwood and "shocked," Fry's
phrase, Wilkinson by informing him that it had been
determined "to close it [the Kingwood operation] down"
the following day, that Fry would helicopter up to
Kingwood for a 3:30 p.m. meeting the next day with all
Respondent 's employees to explain the situation to them.
Fry testified that he ordered Wilkinson to notify all the
employees-and the union officials in Fairmont, West
Virginia-of the 3:30 p.m. meeting at Kingwood. Despite
Fry's comment at the hearing that "people have a way of
carrying out my instructions" Wilkinson did have all
Respondent employees notified of the scheduled meeting
but admittedly made no effort to notify the union officials
at Fairmont.
Among the employees of Respondent notified of the
meeting on October 12 was employee and union commit-
teeman , Dwight Liston. Upon receipt of this intelligence
Liston promptly telephoned his wife and instructed her to
notify union headquarters in Fairmont of the meeting.
Thus did Union Official Zivokovich in Fairmont learn of
the meeting . He in turn notified union Official Nikses.
As Fry was about to enter the meeting room on October
12, he saw and spoke to Zivkovich stating that he "was
glad the union people were there, as there was a meeting
scheduled here today"
In the meeting Fry announced, after mentioning the
economic situation, that he was sorry that he had to bring
the employees the bad news that he was shutting the job
down "temporarily." He was not sure when, if ever, the
operations would reopen. He also told them that Vice
President Sherbine would spend a couple of days at
Kingwood in the near future to answer any questions the
employees might have. Before the meeting closed Zivko-
vich asked Fry a question concerning the union pensions
of the employees. Fry became irritated and inquired "who
invited him there to begin with" and then ordered him off
Respondent's property. Fry did not answer the question
but Zivkovich left.
During the meeting it was arranged that Respondent
would give each of the employees a weekly temporary
layoff notice which the employees would collect each week
at Respondent's office in Kingwood.? This procedure of
the weekly distribution of temporary layoff slips continued
until January 1973.
Since October 13, with the possible exception of a few
hundred tons of coal produced by supervisors, Respondent
has not stripped a single ton of coal from its properties in
West Virginia with its own employees.
Within 10 days of the Fry announcement of the
shutdown on October 12, Respondent, without announce-
ment to the Union, recalled to work its crew of 8 to 12
employees who worked Respondent's tipple at Kingwood.
This tipple crew worked on a coal train which Respondent
had previously ordered for departure late in the month of
October. The train left on schedule. So far as this record
shows this tipple crew has continued to work at all times
after their recall.
By November 7 the independent contractor strippers,
Rockville Mining Co., had requested and received permis-
sion from Respondent to move its then operations from its
own location in Preston County to Respondent's job 1
which contained the best coal of any of Respondent's
jobsites and which up to that time Respondent had
stripped with its own unit employees. Rockville Mining has
been operating in that location every since.
A little later another independent contractor, Alexander
Brothers, began strapping a new plot adjacent to job 3
which Respondent's unit employees had uncovered prepar-
atory to mining immediately prior to October 12. In its
operations there Alexander Brothers used a shovel
"loaned," "rented," or "bought" from Respondent .8
Also a third independent contractor, Garbart, began
mining on another of Respondent's mines which prior to
October 12 unit employees had been working.
According to Respondent's testimony, promptly after the
October 12 shutdown it advertised its large Manitowoc
4600 high front shovel for sale. It was sold "fortunately" to
unnamed people in Clearfield County for almost a quarter
of a million dollars cash. This money was said to have been
used to take care of some pressing, but unspecified, bills
and payments which were due from Respondent . It also
developed that this machine was having trouble maneuver-
ing in the rugged West Virginia terrain as well as having
some trouble with West Virginia strip mine regulations.
6 The four elections referred to were (1) the decertification election
scheduled for September 29, (2) the 1972 presidential election in November,
(3) the November West Virginia gubernatorial election between Moore and
Rockefeller which was of considerable importance to these parties because
Moore favored strip mining whereas Rockefeller had opposed it, and, of
course , (4) the UMW presidential election between Boyle and Miller Each
of these elections could have some effect upon the situation between the
parties
7 Respondent 's testimony indicates that Respondent "thought " that the
employees could collect their unemployment benefits faster with such
weekly layoff slips
8 Sherbine used all three terms in describing the transaction , whatever it
might have been.
KINGWOOD MINING CO.
Other machines of Respondent were repaired and
purchased by PBS Coal Company which moved them to
Somerset County, Pennsylvania, for its operations in that
county .9
Since October 12, 1972, Fry testified that Respondent
has not stripped one ton of coal with its own employees.
However the record also shows that, after a bad month in
November when only 10,000 tons of coal were sold due to
a union work stoppage, Respondent has sold from its
Kingwood operations 30,000 tons in December 1972;
30,000 tons in January 1973; 31,000 tons in February;
33,000 tons in March; 39,000 tons in April; 41,000 tons in
May, and 41,000 tons in June. All of this coal sold by
Respondent was purchased by Respondent from contrac-
tors for resale at Respondent's tipple in Kingwood. As
noted at least three of these stripping companies were
mining with Respondent's consent on Respondent's
property mined by Respondent's own unit employees prior
to October 12. As also noted, the only employees
Respondent has had in Preston County since October 12,
1972, have been the employees of the tipple crew.
As of the time of the hearing Respondent was engaged in
erecting a new, modem tipple at Kingwood with a capacity
of 120,000 tons per month. The new tipple will be able to
process Preston County coal so as to eliminate excess
sulphur content and make the coal saleable under present
environmental standards. The new tipple, according to
Fry, "will contribute greatly to the economy of the
County."
When asked if any of the subcontractors used by
Respondent to mine its coal were unionized, Fry answered
"There are none of them unionized, absolutely none of
them."
At some indefinite time in November or December
Union Representative Nikses suddenly discovered, while
wandering on Respondent's property, thatjob 1 was being
mined by contractor Rockville Mining Co.
On April 30, 1973, the Union amended its previously
filed Section 8(a)(5) charge of September 25, 1972, and the
instant complaint issued.
C. Conclusions
When the plethora of facts occurring over a multitude of
years last past between these parties are properly correlat-
ed, this becomes a relatively simple case.
As Respondent President Fry acknowledged in his
testimony , "of course , naturally, we have been under
bargaining orders since 1971, ...." 10 Following this
Court decision Respondent for the first time met with the
Union as the exclusive representative of Respondent's
employees at Kingwood and, according to Fry, "explained
to them our economic conditions , made it very clear to
them . Due to the controversy, low moral of labor , some for
the Union, some against ." These meetings have been
9 Respondent is a wholly owned subsidiary of PBS Coals. The same
Leonard S Fry, who is president of Respondent, is also president of PBS
10 The actual date of the Court's per curiam decision was December 14,
1970
11 On August 11 Fry had announced to the employees a "severe"
cutback in Respondent s operations, the closing ofjob 4, and the possibility
of a shutdown in the near future Actually three employees were laid off at
$49
universally unsuccessful in that no mutually acceptable
collective-bargaining agreement has resulted to date. The
last such meeting was on September 23, 1972, at which
time it was mutually agreed not to meet again until after
the four then pending elections which could possibly affect
the situation had been held. This meeting of September 23
was held while a decertification election was scheduled but
this election was blocked by a filing of another refusal-to-
bargain charge by the Union against the Respondent a few
days after the meeting.
With matters in this posture Fry called a meeting of all
of Respondent's employees in Kingwood on October 12.
After a review of the economic situation i i Fry announced
the complete, but temporary, shutdown of Respondent's
operations at Kingwood and the "temporary" layoff of all
Respondent's employees. He provided that thereafter these
employees would be given "temporary" layoff slips at
Respondent's office in Kingwood each week.
Contrary to Fry's testimony, Respondent's brief admits
that Respondent gave the Union no notice or notification
of this meeting or of the decision to shut down operations
at Kingwood.12 The decision to shut down operations was
the unilateral act of Respondent. There was no bargaining
with the Union in regard to that decision. The Union was
presented with a fait accompli.
With that business as usual ceased for Respondent's unit
employees. As the facts would have it, these employees
never again worked one hour for Respondent. They joined
the Appalachian unemployed.
It was, however, business as usual for Respondent 10
days later. At that time Respondent recalled its tipple crew
of 8-12 employees. Their services were required to prepare
for a coal train scheduled for departure from Kingwood in
late October. This train departed Kingwood on schedule
with the coal required to fill the orders of Respondent's
customers. Nor does this record contain evidence of any
subsequent coal train filled with orders for Respondent's
customers ever being cancelled or delayed.
Admittedly Respondent gave the Union no notice or
notification of this resumption of Respondent' s business at
Kingwood.
Prior to October 12 Respondent admits that 30 percent
of its coal requirements had been mined by its own
employees from Respondent's own strip mines known as
jobs 1, 3, and 4. The remaining 70 percent of Respondent's
coal requirements was purchased at its tipple by Respon-
dent from small independent family companies mining
either on their own properties or on Respondent's
properties with Respondent's knowledge and consent.13
Among such companies, apparently operating prior to
October 12 on their own properties, were Rockville Mining
Co., Alexander Brothers, and Garbart Mining Co. In Fry's
words, "absolutely none or, these subcontractors is
unionized in Preston County.
By November 7 contractor Rockville had moved on to
this time.
12 Actually two union representatives were in attendance but they were
notified of the meeting through the union grapevine-not the Respondent.
Fry had one of these union representatives expelled
13 Respondent's Vice President Wilkinson testified that Respondent
always made money in buying and selling coal at its tipple
850 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and was mining coal from Respondent's best mine, job 1,
which prior to October 12 had always been mined by
Respondent 's own employees.
At or about the same time Alexander Brothers moved on
to and began mining another of Respondent's properties
which Respondent had uncovered preparatory to mining
with its own employees just prior to the October shutdown.
In this operation Alexander was using at least one piece of
Respondent 's equipment which, according to Vice Presi-
dent Sherbine , Respondent had "loaned ," "rented, " or
"sold" to Alexander for the purpose.
Also at or about this same time contractor Garbart
moved on to and began mining adjacent to another of
Respondent 's jobs previously mined by Responden"s own
employees . All these changes above noted were admittedly
with Respondent 's approval and consent.
Again admittedly Respondent gave the Union, the
exclusive representative of Respondent's unit employees no
notice or notification of Respondent 's resumption of
operations with contractors on properties previously
operated by those unit employees.
Thus Respondent succeeded in continuing its previous
operations of mining its own coal from its own properties
and selling the same to customers . Fry admits that since
October 12 Respondent "has not stripped one ton of coal"
from its own operations , or any other, with its own
employees and further testified that in January 1973 he
vowed that Respondent would never again strip a single
ton of coal . Fry's decision was arrived at because of in
Fry's words, "the bad labor situation, the very poor
management itself job foreman. A combination of some of
the people , some of the men union , anti-union , contention
all over the place. My health was not going to permit that
at all."
So in January, after discovering that the contractors
could fill Respondent's requirements for coal , Respondent
notified its unit employees-but not the Union-that their
layoffs were permanent. Thus finally Fry made good on his
often repeated threats of a cessation of Respondent's
operations if the employees supported the Union or
selected it as their bargaining representative. This threat
had been repeated many times since 1967. It was also a
threat which the aforementioned Court order had ordered
Fry to cease and desist from making.
So Respondent 's business of mining and selling coal at
Kingwood goes on as usual . The only change in Respon-
dent's operations there is that since October 13 the coal has
been mined by a new crew of miners, the nonunion
employees of the nonunion contractors, instead of by
Respondent 's own unit employees represented by the
Union. The 30 percent of Respondent's requirements of
coal previously produced by its own unit employees has
thus been totally eliminated . The unit employees have been
replaced by the contractors' nonunion employees. This is
the sole difference in Respondent's operations before and
after October 12, 1972.
That Respondent intends to continue these same
operations in the same location for a long time in the
future is clear from the fact that it is presently building a
new tipple having a 120,000 ton capacity at Kingwood
which, according to Fry, "will contribute greatly to the
economy of Preston County"-and to Respondent with its
45,000 acres of coal located therein.
Why the change?
Fry and the other Respondent officials at first said that it
was due to the fact that production was diminishing month
by month due to "labor problems ," the "controversy, some
[employees] for the Union and some against" and the
"constant [Union] agitation."
Respondent's production records disprove this claim. In
August 1971 Respondent had a production of 94,000 tons.
By March 1972 Respondent' s coal requirements were
down to 65,000 tons due to the high sulphur content of the
coal and then Respondent lost the Monongahela 29,000
ton per month order so that sales were further diminished
by that amount. Therefore in May 1972 Respondent had to
reduce the hours of work from 48 to 40 due to poor
sales-not poor production. Even with this reduction in
hours of work, by September 1972 Respondent had built
up a 30,000 ton unsold inventory around its tipple, thus
effectively disproving Fry's contention of "diminishing
production." Hence Respondent 's unilateral change in
operations was not caused by "diminishing production."
But then Fry, being a versatile witness , complained about
the building up of the inventory. The trouble was lack of
sales-not of production.
Next Fry and Respondent 's brief claim that Respon-
dent's "serious financial situation" at the time required not
only a "basic organizational change ," i.e., subcontracting
unit work, but also a change in its capital structure due to
its many "pressing" debts. According to Fry's testimony,
Respondent was laboring under a debt of 2-1/2 million
dollars on a property originally purchased in 1964 for
740,000 dollars with an "estimated" loss of about 15,000
dollars per month from its mining operations. Fry's
testimony was no more specific than that . Nor did
Respondent see fit to prove Fry 's generalizations with
facts, figures or company records. Fry also testified that
Respondent had always been a "cat and dog" since its
purchase-but he has operated it steadily ever since the
purchase and the new tipple Respondent is building
indicates that he intends to continue Respondent 's opera-
tions there for some time in the future . After all
Respondent has 45,000 acres of coal in the county. And
Fry, as president of four other companies operating in his
words "quite profitable operations," testified he "lays off
when you have a losing operation because we have other
companies." But Respondent' s Kingwood operation con-
tinues business as usual . Fry was a glib and versatile
witness but hardly a consistent one.
Despite his above financial estimates , Fry disclaimed
having sufficient knowledge of Respondent 's finances to
know whether Respondent made a tipple profit of over
300,000 dollars in fiscal 1972. Wilkinson acknowledged,
however, that Respondent always made a profit on tipple
sales. Nor is there any indication as to whether that tipple
profit was included in Fry's financial estimates and other
financial generalizations
With only this sort of nebulous testimony to rely upon I
KINGWOOD MINING CO. 851
cannot make a finding that Respondent was in financial
trouble as claimed.
Fry and Respondent's brief point to the sale of
Respondent's Manitowoc 480014 in November 1972, for
250,000 dollars as proof of the claimed change in
Respondent's capital structure caused by this "severe
financial situation." Fry, however, convemently forgot to
mention the fact, as testified to by Vice President Sherbine,
that the Manitowoc was having trouble both in maneuver-
ing in the rugged West Virginia terrain as well as with the
West Virginia mining laws . Thus the sale of this machine in
November to a Pennsylvania purchaser appears to have
been the liquidation of a bad buy rather than a change in
Respondent's capital structure. The same is true of the
"loan," "rental," or "sale" of the machine to contractor
Alexander Brothers for use in doing unit work and the
alleged "sale" of other equipment to PBS, of which
Respondent just happens to be the wholly owned subsidi-
ary. And further the alleged financial crisis of Respondent
proved insufficient to require Respondent to dispose of its
helicopter in which Fry was transported to Kingwood to
bring the bad news to the employees on October 12. These
facts, in addition to the failure of proof by Respondent,
make it all too obvious that this claimed financial crisis
allegedly causing the shutdown of October 12 was at the
very least grossly exaggerated, if not the pure figment of
somebody' s imagination . I so find.
So there having been no diminution of production by
Respondent's employees month by month nor any eco-
nomic crisis requiring a change in Respondent's capital
structure as claimed, the shutdown of October 12 of unit
work was not caused by either of the reasons advanced by
Respondent. I so find.
So we have to look for another reason for the October 12
shutdown.
We do not have far to look.
As noted the union campaign among Respondent's unit
employees began in late 1966. As also noted, by early 1967
and ever since Respondent through Fry and Wilkinson, at
least , has been continuously threatening a cessation of
Respondent's business in Kingwood if its unit employees
continued their interest in union representative and/or
selected the Union as their bargaining representative. Even
Board and Court orders failed to stop the making of these
threats which Respondent continued even as late as August
and September 1972. By 1971 the unit employees had
selected the Union as their bargaining representative and
Respondent was under orders to bargain with the Union as
their exclusive bargaining representative.
Every Respondent official who testified in the instant
case succinctly blamed all of Respondent's alleged troubles
on the Union because of the union "controversy," the
continual "agitation," diminishing production because
.,some [employees] were for, some against," the Union, etc.
Admittedly Rockville was given Respondent's best mine,
job I to operate after October 13 because it had no "labor
problems, no fighting going on." Also the other contractors
who replaced Respondent's employees, in Fry's words,
"are none of them unionized, absolutely none of them."
Hence the loss of the Monogahela order gave the
Respondent the chance, which it took on October 12, 1972,
of carrying out Fry's repeated threat by substituting
nonunion contractors' nonunion employees for its own set
of union employees.
Thus the facts prove, and I therefore conclude and find,
that Respondent 's decision to subcontract its mining
operations at Kingwood was made for the discriminatory
purpose of eliminating both its union employees and, with
them, their exclusive bargaining representative by substi-
tuting therefor the nonunion contractors with their
nonunion employees to do the unit work.
In an analogous case , Town and Manufacturing Co., Inc.,
136 NLRB 1022 at 1027, the Board said:
In our opinion , the precedents cited and discussed by
the majority and minority decisions in that case [the
early Fibreboard case ] support the conclusion that the
elimination of unit jobs , albeit for economic reasons, is
a matter within the statutory phrase "other terms and
conditions of employment" and is a mandatory subject
of collective bargaining within the meaning of Section
8(a)(5) of the Act. Moreover the duty of bargain about
a decision to subcontract work does not impose an
undue or unfair burden upon the employer involved.
This obligation to bargain in nowise restrains an
employer from formulating or effectuating an econom-
ic decision to terminate a phase of his business
operations . Nor does it obligate him to yield to a
union's demand that a subcontract not be let , or that it
be let on terms inconsistent with management's
business judgment. Experience has shown, however,
that candid discussion of mutual problems of labor and
management frequently results in their resolution with
attendant benefit to both sides . Business operations
may profitably continue and jobs may be preserved.
Such prior discussion with a duly designated bargain-
ing representative is all that the Act contemplates. But
it commands no less . [Footnote omitted]
Accordingly, even if Respondent 's subcontract was
impelled by economic or I.C.C. considerations, we
would nevertheless find that Respondent violated
Section 8 (a)(5) by failing to fulfill its mandatory
obligation to consult with the Union regarding its
decision to subcontract . To the extent that the majority
opinion in Fibreboard holds otherwise , it is hereby
overruled.
In Fibreboard Paper Products Corp. v. N.L.R. B., 379 U.S.
203 (1964), the 55 majority opinion states , in pertinent part,
as follows:
The facts of the present case illustrate the propriety
of submitting the dispute to collective negotiation. The
Company's decision to contract out the maintenance
work did not alter the Company's basic operation. The
maintenance work still had to be performed in the
plant. No capital investment was contemplated; the
Company merely replaced existing employees with
those of an independent contractor to do the same
work under similar conditions of employment. There-
14 Its purchase price a couple of years before had been 375,000 dollars
852 DECISIONS OF NATIONAL LABOR R ELATIOrqS BOARD
fore, to require the employer to bargain about the
matter would not significantly abridge his freedom to
manage the business.
We are thus not expanding the scope of mandatory
bargaining to hold as we do now that the type of
"contracting out" involved in this case-the replace-
ment of employees in the existing bargaining unit with
those of an independent contractor to do the same
work under similar conditions of employment-is a
statutory subject of collective bargaining under Section
8(d).
The concurring opinion of Justice Stewart therein
contains the following which is applicable here:
Analytically, this case is not far from that which
would be presented if the employer had merely
discharged all his employees and replaced them with
other workers willing to work on the same job in the
same plant without the fringe benefits so costly to the
Company. While such a situation might well be
considered a Section 8(a)(3) upon a finding that the
employer discriminated against the discharged employ-
ees because of their union affiliation, it would be
equally possible to regard the employer's action as a
unilateral act frustrating negotiation on the underlying
questions of work scheduling and renumeration, and so
an evasion of his duty to bargain on these questions,
which are concededly subject to compulsory collective
bargaining. [Footnote omitted.] Similarly, had the
employer in this case chosen to bargain with the union
about the proposed subcontract, negotiations would
have inevitably turned to the underlying questions of
cost, which prompted the subcontracting. In so far as
the employer frustrated collective bargaining with
respect to these concededly bargaining issues by its
unilateral act of subcontracting this work, it can
properly be found to have violated its statutory duty
under Section 8(a)(5).
This kind of subcontracting falls short of such larger
entrepreneurial questions as what shall be produced,
how capital shall be invested in fixed assests or what
the basis scope of the enterprise shall be. In my view
the Court's decision in this case has nothing to do with
whether any aspects of those larger issues could under
any circumstances be considered subjects of compulso-
ry collective bargaining under the present law.
As this case presents no question of "such larger
entrepreneurial questions" or of required capital structure
changes, this case falls within the purview of the Fibreboard
case rather than the Adams Dairy 15 case which Respondent
claimed to be applicable here.
The present is an exact replica of the "substitution of one
group of employees for another to perform the same task in
the same plant under the ultimate controls of the same
employer" as described by Justice Stewart in Fibreboard.
The instant case presents no "decisions which lie at the
core of entrepreneurial control" or "the investment of
investment capital" or change in capital structure as found
by the Circuit Court of Appeals for the Eighth Circuit in
the Adams Dairy case.
In fact, financial matters get into the instant case only
because Respondent here estimated that it would make
greater profits for itself by subcontracting unit work to
small nonunion contractors without bargaining power than
it would if it had to bargain with the Union over the wages,
hours, and working conditions of its own unit employees.
Although possibly Respondent was right in this regard, this
is not the type of financial problem which would excuse
Respondent from its obligation to notify and bargain with
the Union in regard to unilaterally subcontracting even
under the Adams decision.
I say above that possibly Respondent was right about its
own greater profits under subcontracting for the reason
that under subcontracting Respondent enjoyed two advan-
tages over the subcontractors: (1) due to the cost of
transportation Respondent enjoyed a monopoly on pur-
chasing coal from contractors within a 25-mile radius of its
tipple as Fry acknowledged, and (2) Respondent set the
tipple price!
With these twin advantages no doubt Respondent's
profits would assuredly rise contingent, of course, on the
assumption that Respondent would keep the tipple price of
coal at a level which would allow the contractors to
continue to eat. Also from Respondent 's angle the new
system was much to be preferred to having to bargain with
a union over a living wage for Respondent's unit
employees. The facts prove that these are the considera-
tions which induced Respondent to take the unilateral
actions it took here.
The facts require and I, therefore, find that Respondent
for discriminatory reasons subcontracted its unit work in
mining its coal properties in Preston County, West
Virginia, to nonunion contractors without notice or
notification thereof to the Union as the exclusive bargain-
ing representative of Respondent's unit employees who
had been performing Respondent' s mining operations on
the same properties theretofor and without bargaining with
said collective-bargaining agent about either the decision
to subcontract unit work or the effect of that decision upon
the unit employees thereby refusing to bargain with the
Union as the exclusive representative of its unit employees
in violation of Section 8(a)(1) and (5) of the Act.
IV. THE EFFECT OF UNFAIR LABOR PRACTICES UPON
COMMERCE
The activities of Respondent, set forth in section III,
above, occurring in connection with the operations of
Respondent described in section I, above, have a close,
intimate, and substantial relationship to trade, traffic, and
commerce among the several States and tend to lead to
labor disputes burdening and obstructing commerce and
the free flow of commerce.
V. THE REMEDY
Having found that Respondent has engaged in and is
'5 350 F 2d 108, (C.A. 8, 1965).
KINGWOOD MINING CO. 853
engaging in certain unfair labor practices, I will order them
to cease and desist therefrom and take affirmative action
designed to effectuate the policies of the Act.
To remedy Respondent's violation of Section 8(a)(5) by
its unilateral action in subcontracting of the unit work, I
will order that the Respondent cease and desist from
unilaterally subcontracting unit work or otherwise making
unilateral changes in its employees' terms and conditions
of employment without consultation and bargaining with
their designated representative, the Union.
I have found that the termination of Respondent's
mining operations was motivated by a desire to avoid
dealing with the designated bargaining agent of its
employees and thereby violated Section 8(a)(5) of the Act.
I will also order the Respondent to restore the status quo
ante by resuming its mining operations as conducted prior
to October 12, 1972, and reinstating its then employees to
the positions which they held prior to their unlawful
termination on and after October 12, 1972, together with
their seniority and other rights and privileges and I will
award backpay to these employees based upon the
earnings which they normally would have received from
the date of their layoff and/or discharge to the date of their
reinstatement 16 in the manner set forth in F. W. Woolworth
Company, 90 NLRB 289, together with 6-percent interest
thereon in accordance with Isis Plumbing & Heating Co.,
138 NLRB 716.
Because of the type of unfair labor practices engaged in
by Respondent, I sense an opposition by Respondent to
the policies of the Act in general and I deem it necessary to
order Respondent to cease and desist from in any manner
interfering with the rights guaranteed its employees in
Section 7 of the Act.
Upon the basis of the foregoing findings of fact and
upon the entire record herein I make the following:
CONCLUSIONS OF LAW
1. By unilaterally subcontracting its mining operations
in Preston County, West Virginia , without notice to and
bargaining with the exclusive bargaining representative of
Respondent's employees in the appropriate unit and
without giving said exclusive bargaining representative any
notice or notification of or bargaining with said representa-
tive about the decision to subcontract unit mining work,
Respondent has engaged in and is engaging in unfair labor
practices in violation of Section 8(a)(1) and (5) of the Act.
2. By interfering with, restraining, and coercing its
employees in the rights guaranteed them in Section 7 of the
Act, Respondent has interfered with , restrained, and
coerced its employees in violation of Section 8(a)(l) of the
Act.
3. The aforesaid unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
[Recommended Order omitted from publication.]
18 See Fibreboard Paper Products Corporation v. N.L.R.B., 379 U S. 203
(1964), Town & County Manufacturing Company, Inc, 136 1'JLRB 1022,
1028 Florida-Texas Freight Inc., 203 NLRB No 74. Walker Company, 183
NLRB 1322.