Leveld Wholesale, Inc.

National Labor Relations Board - Board Decisions

Jun 30, 1975

218 N.L.R.B. 1344 (N.L.R.B. 1975)

1344 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Leveld Wholesale, Inc. and Retail and Wholesale
Warehousemen, Local Union No. 130, Internation-
al Brotherhood of Teamsters , Chauffeurs, Ware-
housemen and Helpers of America , Ind. Case 19-
CA-7428
June 30, 1975
DECISION AND ORDER
BY MEMBERS JENKINS, KENNEDY, AND
PENELLO
On April 11, 1975, Administrative Law Judge
Richard D. Taplitz issued the attached Decision in
this proceeding. Thereafter, the Charging Party filed
exceptions and a supporting brief, and the Respon-
dent filed cross-exceptions and a brief, and the
Charging Party 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
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
briefs and has decided to affirm the rulings, find-
ings, ' and conclusions of the Administrative Law
Judge and to adopt his recommended Order.
called Respondent or the Company, violated Section
8(a)(5) and (1) of the National Labor Relations Act, as
amended.
Issues
The primary issues are:
1. Whether the Union engaged in a strike against
Respondent under a contract wage reopener clause for the
purpose of forcing Respondent to modify terms of the
contract other than wages.
2. Whether Respondent violated Section 8(a)(5) and (1)
of the Act by treating the contract as terminated.
3. Whether Respondent violated Section 8(a)(5) and (1)
of the Act by hiring strike replacements at wage rates
below those provided for in the contract.
4. Whether Respondent violated Section 8(a)(5) and (1)
of the Act by refusing to make payments to various trust
funds which provide employee fringe benefit coverage as
provided for in the contract and by refusing to enforce the
union-security provisions of the contract.
All parties were given full opportunity to participate, to
produce relevant evidence , to examine and cross -examine
witnesses , to argue orally , and to file briefs . Briefs, which
have been carefully considered, were filed on behalf of the
General Counsel and Respondent.
Upon the entire record 2 of the case , and from my
observation of the witnesses and their demeanor, I make
the following:
FINDINGS OF FACT
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommend-
ed Order of the Administrative Law Judge and
hereby orders that the complaint herein be, and it
hereby is, dismissed in its entirety.
I The Charging Party has excepted to certain credibility findings made
by the Administrative Law Judge. It is the Board 's established policy not to
overrule an Administrative Law Judge's resolutions with respect to
credibility unless the clear preponderance of all of the relevant evidence
convinces us that the resolutions are incorrect . Standard Dry Wall Products,
Inc., 91 NLRB 544 (1950), enfd. 188 F.2d 362 (CA 3, 1951). We have
carefully examined the record and find no basis for reversing his findings
DECISION
STATEMENT OF THE CASE
RICHARD D. TAPLITZ, Administrative Law Judge:, This
case was tried at Seattle, Washington, on January 16 and
17, 1975. The charge was filed on November 19, 1974,1 by
Retail and Wholesale Warehousemen , Local Union No.
130, International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, Ind., herein
called the Union. The complaint, which issued on
December 30, alleges that Leveld Wholesale , Inc., herein
1 All dates are in 1974 unless otherwise specified.
1. THE BUSINESS OF RESPONDENT
Respondent is a Washington corporation with its place
of business at 600 South Dakota Street, Seattle, Washing-
ton. It is engaged in the business of wholesale warehousing
and distribution of houseware and other consumer prod-
ucts. During the year immediately preceding issuance of
complaint, Respondent purchased and caused to be
delivered to its Seattle warehouse goods valued in excess of
$50,000 which were transported to its warehouse directly
from States other than the State of Washington. The
complaint alleges, the answer admits, and I find that
Respondent is an employer engaged in commerce within
the meaning of Section 2(6) and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization within the meaning of
Section 2(5) of the Act.
IIl. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Events
1. The background
Respondent is a wholesaler in the drug industry. At one
time Respondent employed approximately 36 warehouse
2 General Counsel 's unopposed motion to correct the transcript of the
record is granted.
218 NLRB No. 206
LEVELD WHOLESALE, INC. i345
employees, but by September 5, 1974 (the date of the strike
which is discussed in detail below), there had been a
substantial decline in business and Respondent then
employed only 12 or 13.
For many years Respondent and the Union were parties
to successive collective-bargaining agreements covering
Respondent's warehouse employees.3 Respondent is not
part of any multiemployer bargaining unit. Individual
contracts have been signed even though they have
generally been patterned on contracts that the Union
entered into with the Drug Industry Distributor Associa-
tion (herein called the Association).
On August 7, 1972, Respondent and the Union entered
into a collective-bargaining contract which by its terms was
to remain in full force and effect until June 1, 1975.4 This
agreement contained a wage reopener clause that read as
follows:
ARTICLE XXII(b) . . . it is understood and agreed
that if during the period June 1, 1973 through June 1,
1975, wage controls under the Economic Stabilization
Act or any other substitute regulations are removed,
the contract may be opened for changes in hourly wage
rates only, to be effective from the time of opening until
the expiration of the contract . Either party may give
notice to the other party to open the contract under the
terms of this paragraph . After such notice is received,
the parties shall have sixty (60) days in which to
conclude negotiations, after which time either party
shall have the right to take economic action.
By letter dated May 1, the Union gave proper notice to
Respondent that it was exercising its option to reopen the
agreement for the negotiation of hourly wages .5 On the
same day, the Union notified both the Federal Mediation
and Conciliation Service and the Washington State
Mediation Service of the proposed termination or modifi-
cation of the existing collective -bargaining contract. The
notice specified that the reopener was for "wages only due
to removal of controls."
9 The contract executed on August 7, 1972, which by its terms (except for
a wage reopener) was to run until June 1, 1975, provides for recognition in
the classifications listed in an appendix which specifies a number of
different categories of warehouse employees
4 The contract has a provision for binding arbitration of disputes and
provides that "Me right to process and settle employees' grievances is
wholly, to the exclusion of any other means available , dependent upon the
provisions of this Section of this Agreement "
5 The letter read in part : "This will serve as notice by Local 130 of its
desire , pursuant to the above provision, to open its current collective-
bargaining agreement with you for the purpose of negotiating changes in
hourly rates only."
6 The text of the Union's proposed memorandum of understanding is as
follows-
MEMORANDUM OF UNDERSTANDING
The undersigned , as authorized representatives of Leveld Drug
Company, and Warehousemen 's Local 130, representing the employees
therein, hereby agree to the following changes as full and final
settlement of the reopening clause in the Agreement by and between
Leveld Drug Company and Warehousemen's Local 130 signed August
7, 1972.
1. Contract wage rates shall be increased an additional 53 .50 per hour
By letter dated May 16, the Union informed Respondent
that the demands formulated by the union membership in
a meeting on May 14 consisted of a $2-per-hour across-the-
board ihcrease effective May 1, 1974, And a meaningful
cost-of-living clause as set forth in detail in an appendix to
the letter.
The Union did not contact Respondent again until July
29, 1974 . Between May 16 and July 29 the Union
negotiated with the Association and other drug houses.
During that time and thereafter, the Uhion entered into a
number of contracts. Contracts were not all the same and
there were differences in the duration of some contracts,
the amount of fringes, the amount of hourly wages, and
other matters.
On July 25, the Union and the Association executed a
memorandum of understanding. The Union used this
memorandum as a pattern in other settlements it sought to
obtain. There were 10 drug wholesalers in what the Union
considered its drdg division. Three of those wholesalers
were members of the Association and one of them
negotiated some contract provisions dikI'erent than the
Association agreement. The Union sent copies of the
Association agreement to the seveh othef companies
including Respondent. Subsequently some of the compa-
nies other than Respondent negotiated contracts with
differing provisions and terms.
On July 29, the Union sent copies of the Association
agreement to Respondent. The letter said that Respondent
should call the Union if there were any questions aiid that
if there were none that Respondent should sign the
agreement. The proposed agreement attached to the letter
contained 12 provisions. Three of these pertained to wage
rates and another to cost-of-living increases. The other
eight provisions were contract changes relating to pensions,
prescription drugs, health and welfare payments, dental
payments, future pension contribtitions, holiday for em-
ployee's birthday, extension of the contract to June 1, 1976,
and an agreement that remaining terms of the 1972
contract should remain "part of the new agreement."6
retroactive to June 1, 1974.
2. The Employer Pension contributions shall be increased 56 per hour
retroactive to June 1, 1974.
3 Contract wage rates shall be increased an additional 02.5e per
hour effective August 1, 1974.
4. Prescription Drugs in the existing Agreement shall be eliminated
effective August 1, 1974.
5 The Employer contribution under Health and Welfare, shall be
increased in the amount necessary to provide the new level of
benefits designated as Plan 101 effective August I , 1974, on July
hours worked. The cost increases from $45.80 per month to
$59.38.
6. The Employer contribution tinder Dental, shall be increased from
$13 84 per month to $17 56 per month effective August I, 1974,
on July hours worked.
7. All contract wage rates shall be increased 10% effective June 1,
1975
8. A cost of hvmg provisions as follows:
"A. In event the Cost of Living Bureau of Labor Statistics Index (U.S.
Large Cities - 1967 Base) increases more than 6% during the
period April 15, 1975 to April 15, 1976, wage rates as set forth
above shall be increased effective as set forth below on the
basis of Ie per hour increases for each 3 points increase above
6% in the Index
"B. In the event cost of living adjustments result from the above, they
shall be applied, based on the latest available index , effective
(Continued)
1346 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In August, Edward W. Phipps, the Union's business
agent , contacted Herbert Levin, Respondent's president
and general manager.7 Levin requested his attorney John
Sinsheimer to contact Phipps. Sinsheimer called Phipps'
office the morning of September 4 and a meeting was
arranged for 3 p.m. that day at Sinsheimer's office.
2. The meeting of September 4, the telephone
conversation of September 5, and the strike
The September 4 meeting was attended by Union
Business Agent Phipps, Respondent's president, Herbert
Levin, and Respondent's attorney, Sinsheimer. At the
meetmg, Phipps referred to the demands set forth in the
July 29 letter from the Union to Respondent. That was the
letter which contained the 12 separate items, most of which
were unrelated to wages. Phipps asked them to sign so that
they would be in line with the rest of the companies in the
area . Sinsheimer told Phipps that Respondent was in a
difficult financial position; that sales had gone from $10
million to $2 million a year; that the Company was
operating at a net loss; and that there had been a
substantial change in the direction of the business and loss
of customers. Sinsheimer also said that Respondent would
formulate a proposal and contact Phipps about it the
following morning.
The findings with regard to the September 4 meeting are
based upon the credited testimony of Levin and Sinsheim-
er. Phipps' version of the meeting conflicted with that of
the other witnesses in one major area. Phipps averred that
at the outset of the meeting he told the representatives of
the Company that they could talk about things other than
wages only by agreement. He averred that he told Levin
and Sinsheimer that each side would have to agree to the
extension of the contract proposed by the Union because
the contract opener called only for wages unless both sides
agreed otherwise. He also testified that he spoke of
alternative patterns for a settlement. Both Sinsheimer and
Levin denied that Phipps made any such remarks. Both
testified that Phipps said nothing to the effect that
Respondent would have to bargain on proposals outside of
wages only if there was mutual agreement to do so. They
also testified that he referred only to the one pattern for
June 1 , 1975, September I, 1975, December 1, 1975, March 1,
1976 and/or June 1, 1976."
9. The Employer Pension contributions shall be increased 58 per hour
effective June 1, 1975, on May hours worked, and an additional
58 per hour effective December 1, 1975, on November hours
worked.
10. Effective June 1, 1975, an employee's birthday shall be designated
as an additional holiday.
11. Under Duration Clause paragraph (a), the termination of the
Agreement shall be changed to June 1, 1976 and paragraph (b)
thereof ehnunated.
12. All other provisions of the Agreement signed August 7, 1972, not
changed as above, shall remain part of the new Agreement
I It is admitted and I find that Levin is an agent of Respondent.
8 Some of the matters in addition to his demeanor which led me to this
conclusion were: Phipps ' evasive answeirs concerning his knowledge of the
July 29 letter the Union sent to the Company; Phipps' misleading testimony
concerning his notes on the September 4 meeting (Phipps testified "1 made
notes, but they are not here " Upon being pressed on the issue, he
acknowledged that the notes were present in the hearing room), and Phipps'
misstatements as to what lus notes contained (Plupps testified that his notes
indicated that the Union was the first to propose a June 1, 1975, termination
date, but when pressed on the matter he acknowledged that it probably was
settlement . I credit Sinsheimer and Levin, both of whom
testified in a direct, convincing manner . I do not credit
Phipps in this or any other part of his testimony which
conflicted with the testimony of Sinsheimer or Levin.
Phipps convinced me that he was an evasive, unreliable
witness who was unworthy of credence.8 Phipps' own notes
concerning the September 4 meeting do not corroborate his
testimony. Those notes make no mention of Phipps telling
Respondent's representatives that they need bargain only
for wages.
Sometime before 10 a.m. on September 5, the Union
commenced a strike and began picketing Respondent's
premises. All of Respondent's warehouse employees
participated in the strike .9 At or about 9:30 a.m., on
September 5, before he had learned of the strike,
Sinsheimer called the union office and asked to speak to
Phipps. He was told that Phipps was not available. A short
time later, Respondent informed Sinsheimer of the strike,
and Sinsheimer called the union office once again . Phipps
was still out and Sinsheimer spoke to Norman E. Ramsey,
the Union's secretary-treasurer. Sinsheimer expressed
surprise at the strike and said that he had an offer. Ramsey
asked what the proposal was and Sinsheimer replied that
Respondent would agree to the increment in the fringe
benefits and would offer 15 cents more an hour on wages.
Ramsey replied that the offer was rejected. Sinsheimer
asked how the offer could be rejected when it wasn't even
presented to the employees. Ramsey replied that the
employees had had a union meeting, together with the
employees of all the employers that the Union was
involved with, and the Union had been authorized by a
vote to hold out for the "pattern settlement." io
3. Respondent's notification to the Union that the
contract was terminated and negotiations were
open on all issues
By letter dated September 9, Sinsheimer told Phipps that
the Union's actions had terminated the contract and that
negotiations were open on all issues .ii The letter went on
to outline Respondent's proposals to the Union.12 The
letter stated that the Company's offer represented the limit
of its financial ability; that it was therefore a final offer;
not on that particular entry).
9 At the tune of the hearing , the strike was still in progress
io These findings are based on the credited testimony of Sinsheimer.
Ramsey testified that he did not recall (and at another point in his testimony
he denied) talking to Smsheuner about a union meeting or vote, but he
acknowledged that when he rejected Sinsheimer 's offer , he did not consider
the offer up to any of the so-called patterns the Union had tried to establish.
I believe that Smsheimer was a careful and accurate witness and that his
recollection of the conversation was credible
u The letter reads in part:
You have reopened the existing Collective Bargaining Agreement by
letter notice to LeVeld dated May 1, 1974. In addition, you have
submitted a proposed "Memorandum of Understanding " setting forth
the Union's position on new wage rates and a wide range of additional
issues having to do primarily with extension of the contract term by one
year and increases in contributions for pension and health and welfare
Your notice, under Article XXII of the old contract has terminated the
contract, and negotiations are open on all issues.
12 The proposals were - 5 cents an hour pension contributions retroactive
to June 1; health and welfare contributions increased 8 cents per hour
effective August 1, contributions to the dental plan increased 2 cents per
hour effective August 1 ; wage rates increased an additional 15 cents per
LEVELD WHOLESALE, INC. 1347
and that it would be placed in effect with or without the
Union's agreement effective with the pay period commenc-
ing September 16.
As is set forth in detail below, there were a number of
bargaining meetings after the September 9 letter. In none
of those meetings did the Union refer or object to the
assertion in the September 9 letter that the contract was
terminated and all issues were open for negotiation. The
Union did bargain on a number of issues unrelated to
hourly wages. The first indication that the Union gave that
it disagreed with Respondent's position that the contract
was terminated and all issues were reopened was in a letter
to Respondent dated November 25, 1974. That was after
Respondent had filed a petition for an election with the
Board. In that letter, Ramsey stated that the Union was
taking economic action to support its demands under the
wage reopener and that the remainder of the contract was
still in full force and effect. The letter went on to state that
Respondent had an obligation to make contributions
necessary to maintain the benefits provided in the
collective-bargaining agreement , specifically its health and
welfare, dental, prescription drugs, and pensions benefits.
The letter also stated that the union-security clause was
still in effect and requested Respondent to hand to each of
the employees hired since September 5 a notice setting
forth their obligations under the union-security clause.
By letter dated December 2, Respondent replied to the
Union's letter of November 25. Respondent stated that it
disagreed that the Union acted within the terms of the
wage reopener, that to the contrary, the Union had
proposed a pattern settlement beyond the wage reopener
which included an increase in health and welfare contnbu-
tions , an increase in pension, and a contract duration 1
year longer than the 1972 contract; that Respondent
regarded the Union's proposals beyond the wage reopener
as a proposal to open the whole contract and they had
negotiated on that basis; that the Company's position was
clearly outlined to the Federal mediator and both
Respondent and the Union expressed agreement; and that
in Respondent's view the 1972 contract was terminated by
mutual agreement.13
On December 26 Respondent wrote to the Union stating
that Respondent had been informed by the Regional Office
of the NLRB that the Region had concluded that the
collective-bargaining agreement remained in effect. The
letter stated that Respondent disagreed with that conclu-
sion but was willing to proceed as though it were correct.
The letter also stated that Respondent would honor the
1972 contract except for those matters opened for midterm
renegotiation by mutual agreement; and that the employ-
ees would be notified of their obligation to become union
members . Thereafter, Respondent sent a letter to the
employees advising them that they should join the Union
hour retroactive to June 1 , in addition to the 28 cent hourly increase which
automatically took effect June 1 , pursuant to the former agreement, a
contract expiration date of June 1, 1975; contributions to health and welfare
as requested by the Union or in the alternative an equivalent schedule of
benefits and coverage through a company-purchased policy of insurance;
and an additional pension contribution as requested by the Union or in the
alternative the Company to pay the same gross sums into an existing
company retirement plan
13 The letter went on to state that , with regard to the obligation to
continue contributions to health and welfare and pension trusts, reference
as a condition of employment even though Respondent did
not necessarily agree with the ruling on that matter.
4. The strike replacements and Respondent's
refusal to pay into the Union's fringe benefit
funds
The strike occurred on Thursday, September 5. On the
following Monday, September 10, Respondent began
hiring temporary strike replacements. All of the new hires
were told that they were temporary employees. The new
hires were less skilled than the employees on strike and all
of them were hired at wages below the existing contract
rates. On or about October 22, the temporary strike
replacements were made permanent. By the date of the
trial there were 13 or 14 employees working, including 3
exstrikers who had crossed the picket line and returned to
work on about November 1. Respondent has paid fringe
benefit contributions under the contract to the retirement,
health and welfare, and dental funds for the month of
August, but has not made any contributions to those fringe
benefit trusts for any month after August. No payments
have been made on behalf of the strike replacements, nor
have any such payments been made on behalf of the three
exstrikers who returned to work. Those three exstrikers
were paid 15 cents an hour over the amount they had
received when they went on strike. That 15-cent-an-hour
increase had been offered to the Union in Sinsheimer's
September 5 phone call to Ramsey.14 On or about October
22, when they became permanent replacements, the strike
replacements were covered under the company health and
welfare plan and pension plan. When the three exstrikers
returned to work about November 1, they also were
covered under the Company's plans.
The 1972 contract provides that contributions are to be
made on behalf of employees into certain health and
welfare, dental, and prescription drug plans for employees
who work more than 80 hours. It also provides for payment
to the Western Conference of Teamsters Pension Trust
Fund.
5. The negotiations after the September 5 meeting
and related correspondence
In response to a request by a Federal mediator, the
parties met in a negotiating session on September 23.
Ramsey, Phipps, Sinsheimer, and Levin and his wife,
together with the Federal mediator, were present. Ramsey
said that the Union's position was conveyed in the memo
of understanding previously submitted to Respondent and
that the Union could hardly consider less when they had
already settled with everyone else. Ramsey referred to that
memorandum, which was on a table. No other pattern
should be made to the last offer set forth in Respondent's September 9
letter , that Respondent had proposed alternates to health and welfare and
pension contributions and, by placing the terms of their last offer into effect,
the Company had exercised their alternate proposals and had covered
employees by company-purchased health, life insurance , and retirement
plans; and that it would be unlawful to require employees to become union
members as a condition of continued employment as there was no
collective-bargaining agreement.
14 The complaint does not allege and the General Counsels brief does
not contend that the 15-cent increase constituted a violation of the Act.
1348 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
settlement was mentioned. Respondent outlined its posi-
tion as set forth in its September 9 letter to the Union.
Ramsey then said that the 53-1/2-cent wage increase
retroactive to June 1 was the Union's bottom position.
Sinsheimer said the Company would consider a contract
without the 1-year extension. Sinsheimer also spoke of the
Company's financial difficulties. Either Ramsey or Phipps
said that the Union wanted the pattern settlement or
nothing. One of them also said that the Union would
consider deferring payment on the retroactive wages until
January 1, 1975.15
The same representatives of the parties met with two
mediators on October 7. Both parties repeated the
positions they had taken at the previous meeting. Sinsheim-
er once again asked for a termination date of June 1, 1975.
He also suggested that they reclassify employees based on
jobs that the employees were in fact doing He pointed out
that the jobs were simpler than they had been in the past.
He invited Phipps and Ramsey to come to the plant and
see for themselves the changes that had taken place. The
union representatives did not respond to Sinsheimer, but
on October I1 they did go and physically inspect the plant.
The next meeting was on October 15. Phipps was not
present but the other representatives of the parties were.
Ramsey said that there was no way that the Union could
settle on behalf of the strikers for less than the strikers had
received before the strike but that the Union could
consider redlining the old employees and giving new
employees a reduced rate based on a scale used in a
department store contract. Smsheimer replied that if the
strikers came back there wouldn't be any need for new
employees and therefore there would be no benefit for
Respondent. Ramsey then made an eight-point proposal.
He proposed a lower rate for newly hired employees based
on a department store rate; a 53-1/2-cent raise for the
striking employees, retroactive to June 1, but with deferred
payment to January 1, 1975; a medical-dental increment
effective a month after the people returned to work or after
they had worked 80 hours; a pension increase of 5 cents
which would be deferred to January 1, 1975; a 2-1/2-cent
contribution to the medical plan, effective November 1; a
53-1/2-cent-an-hour raise effective immediately upon
return to work; a contract expiration date of June 1, 1975,
and a provision that the employees would be called back to
work by seniority. Sinsheimer responded by saying that the
Company could not afford the Union's proposals. Ramsey
replied that the Union would not break its original wage
position.
The next meeting was October 22. Phipps, as well as the
other representatives, were present. The parties reiterated
the positions they had taken at the October 15 meeting and
there was no movement. Ramsey said that the Union had
declared war on Respondent and what had occurred to
date was only a token of what was going to take place.
Sinsheimer replied that the Company had made proposals
15 These findings, as well as the findings set forth below relating to
subsequent meetings, are based on the credited testimony of Smsheimer
That testimony was corroborated in part by the testimony of Levin who was
present at some of the meetings For the reason set forth above, I do not
believe Phipps to be a credible witness and , where his testimony concerning
the meetings differs from that of Sinsheimer , I credit Sinsheimer In part,
Ramsey's testimony was consistent with Sinsheimer's Where it differed, I
and was open for negotiation but that it was the Union that
had produced the position they were in, which was
essentially a continued impasse, because the Union was
unwilling to compromise on its initial offer. The meeting
broke up with no agreement as to future meetings.
On the same day, October 22, Smsheimer wrote to the
Union, stating that the Company's letter of September 9
remained its last and final offer; that economic conditions
would make it difficult for the Company to continue to
make such an offer; that the strike replacements were
permanent replacements; and that, if the strike was settled,
the Company would not terminate permanent replace-
ments in order to reinstate strikers but that, if there were
openings, strikers would be reinstated in accordance with
seniority or qualifications ahead of any new applicant for
employment.
The October 22 meeting was the last one held by the
parties until after the issuance of complaint. On January 7,
1975, after a 2-1/2-month hiatus, there was another
bargaining meeting. The meeting was attended by Ramsey,
Phipps, Levin, Smsheimer, Union Attorney Davies, and a
mediator. Sinsheimer made a written wage offer which
included changes in certain classifications. The Union
responded by reducing its wage demands. The Union
proposed a 30-cent-an-hour raise for all classifications
retroactive to June 1. The Union repeated its health,
welfare, and dental offer and its offer of 5 cents on the
pension. The Union also proposed that the striking
employees go back according to seniority, and that the
charges pending before the Board be withdrawn. The
company representative said that they would take another
look at it. The parties met again on January 10, at which
time the Company made an offer to the Union which
included a change in employee classifications. The Compa-
ny refused to terminate replacements to make openings for
the strikers but was willing to reinstate strikers as openings
occurred. No agreement was reached.
B. Analysis and Conclusions
1. The object of the strike
On May 1, the Union gave Respondent notice of its
desire to reopen the collective-bargaining contract for
negotiating changes "in hourly rates only." The notice was
given pursuant to the terms of the contract. On the same
date, the Union notified the Federal and State mediation
services of the reopener for "wages only." The Union's
May 16 letter to Respondent demanded the increase in
wages but also added a demand for a meaningful cost-of-
living clause. Arguably, the cost-of-living demand could be
construed as a form of hourly rate. However, in its letter of
July 29, the Union extended its demand to cover 12
provisions, 8 of which had nothing to do with hourly wage
rates. The new demands included matters relating to
pensions, health and welfare, dental plan, holidays, the
believe that more reliance can be placed on Smsheimer's testimony Ramsey
was attempting to recall a number of meetings from memory, out of the very
large number of meetings he attended . His recollection may well have been
fallible Sinsheimer relied on extensive notes he made at these meetings and
impressed me as being a careful , scrupulous witness with an extremely good
memory I therefore rely on Sinsheimer's version of the meetings
LEVELD WHOLESALE, INC. 1349
inclusion of old provisions in a "new agreement," and a
termination date of June 1, 1976. The "pattern agreement"
that the Union sought was in substance a new contract.
The credited evidence establishes that, when Union
Business Agent Phipps began negotiating with Respondent
on September 4, he made it clear that the Union's demands
were set forth in the July 29 letter and that the Union
desired that "pattern agreement." The Union struck on
September 5 before Respondent had presented its counter-
proposals. Within an hour or so after the strike began,
Respondent's attorney, Sinsheimer, spoke to Union Secre-
tary-Treasurer Ramsey and Ramsey informed him that the
Union had been authorized by a vote to hold out for the
"pattern settlement."
The conclusion is inescapable that the purpose of the
strike was to put pressure on Respondent to accept the
proposals set forth in the September 29 letter. The Union
was striking in part for contract changes on matters not
covered by the wage reopener clause.16
2. The termination of the contract and the refusal
to enforce the union -security clause
The Union placed itself and the employees in an
extremely precarious position when it struck in midcon-
tract over major issues which were not subject to the wage
reopener. The facts of the instant case are in some ways
similar to those in United Electrical, Radio and Machine
Workers of America, Local 1113 [Marathon Electric Mfg.
Corp.] v. N.L.R.B., 223 F.2d 338 (C.A.D.C., 1955), cert.
denied 350 U.S. 981 (1956), enfg. Marathon Electric Mfg.
Corp., 106 NLRB 1171 (1953). In that case a union struck
in midcontract . The contract contained a provision for an
additional increase in pay "if permitted by ggvernment
policy ." A joint petition for part of the raise was filed with
the wage stabilization board . That petition was withdrawn
and the union took the position that part of the raise
should be put into effect in the form of fringe benefits. It
was found that by taking such a position the union sought
to modify the existing contract . The employer responded to
the union strike by discharging the participants , terminat-
ing the contract , and refusing to bargain with the union.
The Board and Court held that such action by the
employer did not violate Section 8(a)(5) of the Act. It was
found that the union had not complied with the 8 (d) notice
requirements of the Act and that the employees who
engaged in the strike lost their status as employees. It was
also found that the company was under no obligation to
bargain in the absence of notification that the illegal strike
had been terminated.17
16 The fact that the Union was to a limited extent flexible in further
bargaining with Respondent and that the Union did show flexibility in its
bargaining with other employers does not detract from the conclusion that
the Union struck to secure its stated demands
17 The Court of Appeals held "It is general law that one party to a
contract need not perform if the other party refuses in a material respect to
do so. And that rule applies to labor contracts . Moreover, in cases where the
breach is a strike in violation of a collective bargaining agreement, as in the
instant case , application of the rule is supported by the rationale underlying
such agreements . . The walkout was a material breach which justified
the subsequent recision of the contract by the Company [fns omitted I." Cf.
N L.R.B v. Sands Mfg. Co, 306 U S. 332, 341 (1939)
The instant case differs from Marathon in one significant
way. Respondent did not protest the Union's actions but
instead construed them as an offer to open all issues for
renegotiation and to terminate the contract. Respondent's
actions were consistent. On September 5, the day the strike
began, Respondent proposed a counteroffer to the Union
which included a number of subjects not subject to the
contract reopener. On September 9, Respondent wrote to
the Union saying that the Union's notice had terminated
the contract and that negotiations were open on all issues.
In subsequent negotiations, the parties negotiated on many
issues not covered by the wage reopener. Respondent
treated the striking employees as strikers and not as
dischargees. There was bargaining concerning retention of
the strike replacements and the recall rights of the strikers.
Respondent negotiated with the Union and did not
exercise whatever rights it may have had to refrain from
bargaining. During the negotiation sessions, the Union
never contested Respondent's assertion that the contract
was terminated and that all issues were open for negotia-
tion. This situation continued for almost 2-1/2 months
after bargaining began. It was not until its letter of
November 25, which was sent after Respondent had filed a
petition for an election, that the Union stated that the
contract was in full force and effect except for the wage
reopener. The position taken by the Union in that letter
was inconsistent with its actions during the 2-1/2 months.
The actions of both the Union and Respondent, viewed
as a whole, lead to the conclusion that the parties on
September 5 terminated the contract and reopened all
issues for negotiations. The union strike could not have
been lawful if the Union were bound by the contract. The
Union cannot, on the one hand, renounce the contract by a
strike to substantially modify its terms during midcontract
and at the same time insist that the contract is binding on
Respondent.
The parties to a contract need not bargain in midcon-
tract over matters not covered by a reopener clause.18
However, the parties can voluntarily agree to bargain on
other matters. They can also terminate the contract and
negotiate on the same basis that they would have, had the
contract ended by its terms. For the reasons stated above, I
find that the contract was terminated.19
After the termination of the contract, Respondent had
no duty to enforce the union-security provisions. As the
Third Circuit Court of Appeals held in Industrial Union of
Marine and Shipbuilding Workers of America, AFL-CIO
[Bethlehem Steel Co.] v. N.LR.B., 320 F.2d 615 (1963)
(which denied enforcement on other grounds to 136 NLRB
1500 (1962)):
There is no indication in the record that the Union sought to question
Respondent 's action through the arbitration process, and therefore the
impact of the strike on the duty to arbitrate need not be considered Cf
Local Union No 721, United Packinghouse, Food & Allied Workers, AFL-
CIO v Needham Packing Co., d/b/a Sioux City Dressed Beef 376 U.S 247
(1964)
ie Firestone Synthetic Rubber & Latex Company, 173 NLRB 1174 (1968)
19 As found above, Respondent accepted the termination of the contract
and negotiated with the Union It did not object to the Union 's failure to
serve the notices required under Section 8 (d) of the Act. Respondent cannot
now successfully maintain that it need not have bargained under Section
8(d) when in fact it did bargain
1350 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
... we agree with the reasoning of the Board. The
right to require union membership as a condition of
employment is dependent upon a contract which meets
the standards prescribed in Section 8(a)(3). The
checkoff is merely a means of implementing union
security. Since there was no contract in existence when
the company discontinued these practices, its action
was in conformity with the law.
For the reasons set forth above, I shall recommend that
those portions of the complaint that allege that Respon-
dent violated Section 8(a)(5) and (1) of the Act by
terminating the contract and by refusing to enforce its
union-security provisions be dismissed.
3. The hiring of strike replacements at lower rates
Respondent began hiring strike replacements on Septem-
ber 10, which was after the contract had been terminated.
As a general rule, even after the termination of a contract,
an employer cannot make unilateral changes in wages and
working conditions unless the change is consistent with an
offer that the Union has rejected and the parties have
reached an impasse. Royal Himmel Distilling Company, 203
NLRB 370 (1973). On September 10, when Respondent
hired new employees at a lower rate, an impasse had not
been reached. The parties were in the midst of a series of
active bargaining sessions and there is no basis for
assuming that further bargaining would have been futile.
Alsey Refractories Company, 215 NLRB No. 146 (1974).
However, the Board has not applied this general rule to
situations where strike replacements have been hired at a
lower rate after termination of a contract. The Board
decision in Imperial Outdoor Advertising, 192 NLRB 1248
(1971), sets forth the controlling law. In that case, the
Board held:
We also do not agree with the Trial Examiner's finding
that Respondent violated Section 8(a)(5) of the Act by
employing strike replacements at wages below those
established in the expired contract without bargaining
with the Union. The record shows that the employees
went on strike on June 1, 1970, upon the expiration of
the contract. On June 6, Respondent began hiring
replacements at a wage rate of less than the hourly rate
contained in the expired contract. We believe, contrary
to the Trial Examiner, that Respondent was under no
obligation to hire the replacements at the wages in the
contract and that it does not violate the Act by paying
them lower rates.
I shall therefore recommend that those portions of the
complaint that allege that Respondent violated the Act by
paying the strike replacements at lower rates be dismissed.
4. The refusal to make contributions into the
fringe benefit funds on behalf of the strike
replacements
Fringe benefit funds provided for in an expired contract
are terms and conditions of employment that survive the
termination and cannot be altered without bargaining.
Hanson W. Hinson, d/b/a Hen House Market No. 3, 175
NLRB 596 (1969), enfd. 428 F.2d 133 (C.A. 8, 1970). In the
instant case, Respondent did not make contributions on
behalf of strike replacements but instead covered them by
the Company's own plans.20 The pension plan set forth in
the contract does not have a waiting period before
coverage. An impasse had not been reached at the time
some of the strike replacements were hired. Though the
record is not clear on the issue, it is likely that a number of
the strike replacements worked the 80 hours needed for
coverage under other plans before an impasse was reached.
However, the impact of the Imperial Outdoor Advertising,
supra, case must be considered. In that case the Board
found that strike replacements could be hired at lower than
contract rates after the termination of the contract
although no impasse had been reached. Even after
termination of a contract a union represents all the
employees in the bargaining unit. That includes both
strikers and strike replacements. However, the interests of
the two groups are not the same. Strike replacements can
reasonably foresee that, if the union is successful, the
strikers will return to work and the strike replacements will
be out of a job. It is understandable that unions do not
look with favor on persons who cross their picket lines and
perform the work of strikers. In the instant case, the Union
was prepared to redline the wage rates of the strikers and
accept lower pay for the strike replacements. The Union
also sought to have the strikers recalled to the jobs
occupied by the strike replacements. It would be asking a
great deal of any union to require it to negotiate in the best
interests of strike replacements during the pendency of a
strike, where the strikers are on the picket line. The holding
in Imperial Outdoor Advertising is limited to wage rates of
strikers. However, I believe that the same considerations
which free the employer from its obligation to bargain
about wage rates for the strike replacements also apply to
fringe benefits. In the circumstances of this case, I find that
the Company's exclusion of the strike replacements from
the contract fringe benefits and their inclusion in the
company plans did not constitute a violation of Section
8(a) (5) or (1) of the Act. I shall therefore recommend that
those allegations of the complaint be dismissed.
5. The refusal to make contributions into the
fringe benefit funds on behalf of the three
returned strikers
Three of the strikers returned to work on or about
November 1. With regard to fringe benefit plans, they were
treated the same as the strike replacements. As is set forth
above, there is a vast distinction between the interests of a
striker and a strike replacement. To a large extent, the
striker who crosses the Union's picket line and returns to
20 There is no obligation for an employer to make payments into such Electric Co, 80 NLRB 510; The Philip Carey Mfg Co, 140 NLRB 1103,
funds on behalf of strikers for the time the employees are on strike General 1123 (1963), enfd. as modified 331 F.2d 720 (C.A 6, 1964).
LEVELD WHOLESALE, INC.
work adopts the interests of the strike replacement.
However, that issue need not be reached, because at the
time the three strikers returned to work on or about
November 1, an impasse had already been reached. The
Company had offered to cover employees under its own
fringe benefit plans and the Union had not accepted that
offer. At the meeting on October 22, the Union said that it
had "declared war" on Respondent and Respondent
accused the Union of being unwilling to compromise. The
meeting broke up with no agreement as to future meetings,
and in fact no further meetings were held for 2-1/2 months.
The next meeting took place only after issuance of
complaint. The parties had negotiated on September 4,
September 23, October 7, and October 15. At the October
22 meeting, the parties were clearly deadlocked and the
assumption was warranted that further bargaining would
have been futile.21 When the three strikers returned to
work on November 1, the impasse had already been
reached. In covering those employees with its own fringe
benefit plans rather than the ones set out in the contract,
Respondent was making a post impasse unilateral change
in working conditions that was consistent with its rejected
21 Counsel for the General Counsel concedes in his brief. "There can be
very little question that the parties had reached an impasse at the end of
their unfruitful meeting on October 22."
22 In the event no exceptions are filed as provided by Sec . 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
1351
offer to the Union. Cf. Royal Himmel Distilling Company,
supra. I find that by such conduct Respondent did not
violate Section 8(a)(5) and (1) of the Act, and I shall
therefore recommend that those allegations of the com-
plaint be dismissed.
CONCLUSIONS OF LAW
1. Respondent is an employer 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. Respondent has not engaged in the unfair labor
practices alleged in the complaint.
Upon the foregoing findings of fact , conclusions of law,
and the entire record, and pursuant to Section 10(c) of the
Act, I hereby issue the following recommended: 22
ORDER
The complaint is dismissed in its entirety.
conclusions , and recommended Order herem shall, as provided in Sec.
102.48 of the Rules and Regulations, be adopted by the Board and become
its findings, conclusions, and Order, and all objections thereto shall be
deemed waived for all purposes.