R.E.C. Corp

National Labor Relations Board - Board Decisions

Apr 28, 1992

307 N.L.R.B. 330 (N.L.R.B. 1992)

330
307 NLRB No. 48
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The Respondent excepts to the judge’s finding that it was un-
aware of the identity of the union auditor until March 1990, rather
than December 1989. We find this fact irrelevant as the Respondent
never questioned the Union, at any time, concerning the auditor’s
competence or qualifications.
1 All dates hereinafter are in 1989 unless otherwise indicated.
2 It was found that Respondent refused to sign the contract because
the shop steward had refused to execute a retirement letter to which
he had allegedly agreed. The Board concluded that Respondent could
not lawfully refuse to sign the contract on this basis.
R.E.C. Corporation and District Lodge No. 15 of
the International Association of Machinists and
Aerospace Workers, AFL–CIO. Case 2–CA–
24027
April 28, 1992
DECISION AND ORDER
BY MEMBERS DEVANEY, OVIATT, AND
RAUDABAUGH
On June 4, 1991, Administrative Law Judge Steven
B. Fish issued the attached decision. The Respondent
and the Charging Party filed exceptions and supporting
briefs.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions and briefs and has de-
cided to affirm the judge’s rulings, findings,1 and con-
clusions and to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, R.E.C. Corporation, Mount
Vernon, New York, its officers, agents, successors, and
assigns, shall take the action set forth in the Order.
Geoffrey E. Dunham, Esq. and David E. Leach, Esq., for the
General Counsel.
Robert Brinker, of Mount Vernon, New York, for the Re-
spondent.
Larry Cary, Esq. (Vladeck, Waldman, Elias & Englehard, P.
C.), of New York, New York, for the Charging Party.
DECISION
STATEMENT OF THE CASE
STEVEN B. FISH, Administrative Law Judge. Pursuant to
charges filed by District Lodge No. 15 of the International
Association of Machinists and Aerospace Workers, AFL–
CIO (the Union), on December 21, 1989,1 the Regional Di-
rector for Region 2 issued a complaint and notice of hearing
on March 28, 1990. The complaint alleges that R.E.C. Cor-
poration (Respondent) has violated Section 8(a)(1) and (5) of
the Act by, in substance, refusing to permit the Union to in-
spect its financial books and records.
The trial with respect to the issues raised in the complaint
was held before me on October 10, 1990, in New York, New
York. Briefs have been received from all parties, and have
been carefully considered.
On the entire record, including my observation of the de-
meanor of the witnesses, I make the following
FINDINGS OF FACT
I. JURISDICTION AND LABOR ORGANIZATION
Respondent is a New York corporation with an office and
place of business in Mount Vernon, New York, where it is
engaged in the manufacture and nonretail sale of industrial
fasteners.
Annually, Respondent sells and ships from its facility
products, goods, and materials valued in excess of $50,000
directly to firms located outside the State of New York. It
is admitted and I so find that Respondent is an employer
within the meaning of Section 2(2), (6), and (7) of the Act.
It is also admitted and I find that the Union is a labor or-
ganization within the meaning of the Act.
II. PRIOR RELATED CASES
A. R.E.C. Corporation (R.E.C. I) Case 2–CA–20864
On December 17, 1985, the Board issued a Decision and
Order in the above case (277 NLRB 1107) finding that Re-
spondent violated Section 8(a)(1) and (5) of the Act by refus-
ing to execute a collective-bargaining agreement, the terms
of which it had agreed to with the Union on December 20,
1984.2 Respondent was ordered to execute, on request the
contract to which the parties had agreed, which ran from De-
cember 21, 1984, to September 30, 1987. Respondent was
also ordered to give retroactive effect to the agreement, and
reimburse employees for wages or benefits owed plus inter-
est.
B. R.E.C. Corporation (R.E.C. II) Cases 2–CA–22108,
2–CA–22658
On October 11, 1989, the Board issued a Decision and
Order in the above-entitled cases (296 NLRB 1293 (1989)),
finding that Respondent violated Section 8(a)(1) and (5) of
the Act by laying off employees in retaliation for rejecting
Respondent’s contract modification proposals, ceasing to
make payments to the union welfare and pension funds, fail-
ing to pay wages specified in the contract, failing to remit
union dues, implementing various other unilateral changes in
terms of employment of its employees, dealing directly with
unit employees and bypassing the Union, and demanding as
a condition of consummating a collective-bargaining agree-
ment that the Union agree to a retroactive midterm modifica-
tion of the prior contract.
The decision found that Respondent as of October 1, 1986
(in an attempt to pressure the Union to agree to modifica-
tions of the contract), unilaterally began to fail to make pen-
sion and welfare contributions and did not grant a wage in-
331R.E.C. CORP.
3 The contract involved was apparently the collective-bargaining
agreement that Respondent was ordered to sign in R.E.C. I., which
was executed on March 13, 1986.
4 The parties had agreed to extend the contract to October 10,
1987.
crease provided for in the contract,3 and continued to fail to
make such payments past the expiration date of the agree-
ment.4
The Board ordered that Respondent abide by the terms of
the prior contract, and make whole the employees for any
loss of pay and benefits including payments into the Union’s
funds, from the date of the unilateral changes until a new
contract is reached or good-faith bargaining leads to impasse.
III. FACTS
Shortly after the issuance of the Board’s decision in R.E.C.
II, Larry Cary, the Union’s attorney, telephoned Robert
Brinker, Respondent’s president, to arrange a meeting for
bargaining concerning a contract. Pursuant thereto, a meeting
was scheduled and held on December 1, at Cary’s office. Joe
Armao, business representative for the Union, was present,
along with Cary and Brinker.
Cary began the meeting by asserting that he hoped that the
parties could put the years of litigation between the parties
behind them and sit down and negotiate a contract. The
Union then presented Brinker with a list of its proposals for
a new agreement, which included a wage increase of $1 per
hour per employee, and increases in employer contributions
to the Union’s welfare and pension funds.
The parties discussed the Union’s proposals in some detail,
after which Brinker presented counterproposals on behalf of
Respondent.
These proposals included a request for a wage reduction
of $1.20 per hour per employee from current wages, in the
first year of the contract. The parties proceeded to discuss all
of Respondent’s proposals, with particular emphasis on its
demand for a wage reduction. Cary asked Brinker why Re-
spondent needed to reduce the wages. Brinker replied that he
would be willing to explain why, but he demanded that the
Union make a request for an explanation in writing. Cary re-
sponded that he didn’t understand why it was necessary to
make a written request for an explanation of Respondent’s
position, but stated that as an accommodation and courtesy
to Brinker, he would do so. Cary then tore a piece of paper
from his yellow pad, and wrote out a request for an expla-
nation of Respondent’s basis for proposing a reduction.
After reading the request, Brinker cited three reasons for
Respondent’s proposal to reduce wages. They were: (1) gen-
eral downturn in the capital industry, including a substantial
reduction in the amount of business done with one particular
customer, (2) Respondent’s bank had called a $500,000 note,
and (3) Respondent’s estimate that it owed $100,000 as a re-
sult of the NLRB decision in R.E.C. II.
Cary asked twice if what Brinker was saying was that Re-
spondent could not afford to either grant a wage increase or
maintain current wages. Brinker twice responded yes that is
what he was saying. Cary then told Brinker that the Union
might want to send in an auditor to verify the truthfulness
of Respondent’s assertion of an inability to pay.
Brinker replied that he would provide the Union with Re-
spondent’s financial statements for the 3 previous years,
which were uncertified, plus certified financial statements for
the 3 years previous to those 2 years. Cary answered that the
uncertified statements for the past 2 years would not be suffi-
cient for the Union to verify the truthfulness of Respondent’s
assertions, since Brinker himself had prepared these docu-
ments. Cary added that the Union had information that Re-
spondent was paying some employees with checks drawn on
a different corporate name, and there had been testimony
during the earlier trial that Respondent paid some employees
in cash. Thus, Cary asserted that because of the ‘‘looseness’’
in paying employees, and given the uncertified nature of the
financial records, he would not accept those documents as
proof of Respondent’s inability to pay.
Brinker responded that he might consider a request for an
auditor to look at his records if the Union would pay for the
audit. The discussion then turned to the other items in Re-
spondent’s proposal.
The parties subsequently returned to the request for a pay
cut, and the Union’s request for an audit. Again, Brinker as-
serted that he would consider it, if the Union paid for the
auditor. Cary then asked for a caucus.
During the caucus, Cary asked Armao if the Union was
willing to pay for an auditor. Armao replied that the Union
would pay for an auditor if necessary, and told Cary that the
Union uses an accounting firm where his son, Sal Armao,
was employed to perform such services.
After the caucus, Cary informed Brinker that the Union
did wish to audit Respondent’s records and was willing to
pay for the auditor. Initially, Brinker responded that he
would refuse to permit an audit, but then asserted that he
would consider the request if the Union made the request in
writing. Cary replied that he didn’t think that Brinker had the
right to demand that the Union make the request in writing,
but as a courtesy he would make the request in writing.
Brinker then changed his position again, and reverted to as-
serting that he would refuse to permit an audit.
Brinker then asked to continue discussing the rest of the
proposals. Cary explained that since Respondent was stating
quite clearly that it could not afford to maintain current
wages, before the Union could discuss Respondent’s propos-
als, it was necessary to verify the truth of Respondent’s fi-
nancial inability to pay and the Union needed to do an audit.
The meeting concluded on that note. There was no discus-
sion at the bargaining session between the parties concerning
who the Union would use as the auditor, nor was there any
mention of Sal Armao at that time. Shortly after the meeting,
Cary called Sal Armao and asked what kinds of records he
would need to have access to, in order to perform an audit,
particularly where there was a possibility of employees being
paid out of a different corporate account. Pursuant to
Armao’s responses, Cary prepared a letter to Brinker, dated
December 12. This letter after summarizing the events at the
December 1 meeting, makes the request that Respondent per-
mit the Union to audit its records. The letter requests that
‘‘our auditor be given your financial statements and access
to any and all books and records or original entity [sic], in-
cluding if they exist the general ledger, sales journals, pur-
chase journals and records of cash receipts and of cash dis-
bursements, all bank statements and canceled checks of REC
Corporation, as well as copies of corporate tax returns and
payroll tax returns. This request should be considered by you
to run to any other entity by another name through which
332 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Although this charge was not introduced into the record, it is ap-
propriate to and I shall take official notice of such charge. Cf. Ad-
vertisers Mfg. Co., 275 NLRB 100, 102 (1985).
6 Cary’s December 12, 1989 letter to Brinker, listed Sal Armao as
the recipient of a carbon copy of the letter.
you are conducting the business of R.E.C. Corporation.’’ The
letter further indicates that the Union’s auditor is available to
conduct an audit on January 8, 1990, and is expected to need
10 business days at the Respondent’s premises to complete
the audit.
Respondent replied by letter dated December 15, 1989.
The letter stated, ‘‘R.E.C. will not permit your auditor to ex-
amine R.E.C.’s books.’’ The letter also requested that the
Union reconsider its position not to change its demands with-
out looking at the books, and asked to continue negotiations.
On December 21, the Union filed its charge with the
Board in the instant case, alleging that Respondent violated
Section 8(a)(1) and (5) of the Act by refusing to agree to
allow the Union’s auditor to examine Respondent’s books
and records.
On January 2, 1990, Respondent filed a charge against the
Union in Case 2–CB–13076, alleging that the Union has vio-
lated Section 8(b)(3) of the Act, by refusing to continue ne-
gotiations with Respondent. The charge asserts that the
Union at the December 1 meeting, ‘‘demanded as a condition
of bargaining that the Union be permitted to examine
R.E.C.’s books.’’ Robert Brinker, president of R.E.C. re-
jected the Union’s demand.
The charge further refers to the December letters between
the parties, characterizing the Union’s letter as ‘‘requesting
that the Union audit R.E.C.’s books,’’ and Respondent’s
reply as ‘‘rejecting his request.’’5
On or about March 2, 1990, Brinker telephoned Cary, and
asked if Sal Armao6 was Joe Armao’s son. Cary acknowl-
edged this fact and added that the accounting firm for whom
Sal Armao works, does work for the Union. Brinker asked
if Sal Armao was the accountant for the Union’s pension
fund. Cary replied that he had no idea.
Brinker then informed Cary that he did not ‘‘trust’’ Joe
Armao’s son, and he did not like the idea of Sal Armao per-
forming an audit on Respondent’s records. Brinker told Cary
that he wanted the Union to agree to use a ‘‘different’’ audi-
tor. Cary responded that he would discuss the matter with the
Union. Cary did so, and the Union decided that there was
no point in getting into a discussion about what auditor
would be permitted by Respondent, and that it would not ne-
gotiate with Respondent over which accountant to use. Since
Respondent had raised no questions about the competence or
ability of Sal Armao to act as an accountant, Cary and the
Union felt that Respondent had no right to tell the Union
whom it could use as an auditor.
Brinker then sent a letter to Cary, dated March 5, in which
he purports to summarize that March 2 telephone conversa-
tion. Brinker asserts therein his position on an audit, that he
would not let a ‘‘Union auditor’’ look at his books, because
a union audit would not ‘‘be an objective and fair audit.
On March 29, 1990, Respondent further clarified its posi-
tion on the issue. This letter reads as follows:
Dear Larry:
After our phone call yesterday I felt that a misunder-
standing existed between us about R.E.C.’s willingness
to have its financial statements audited. Let me try
again to make our position clear.
R.E.C. has been and is willing to provide you with
annual profit/loss statements and balance sheets. If you
wish to have these statements audited R.E.C. has been
and is willing to consider having the financial informa-
tion audited by a mutually acceptable independent pub-
lic accountant at your expense.
I’m sorry if you thought I mislead you on this mat-
ter; but my concern (which I gather you did not recog-
nize) is that I do not consider the business agent’s son
as an independent and unbiased auditor. I refuse to let
him audit R.E.C’s books because his audit may not re-
flect the true financial condition of R.E.C.
Once again I request that you meet with me to try
to resolve the problem of finding a way to have
R.E.C.’s hourly employees receive a wage increase.
Also I would like to try to negotiate a new labor agree-
ment with the Machinists. These things cannot be done
if you refuse to meet with me.
Please call me. Thank you.
Very truly yours,
Robert S. Brinker
The instant complaint was issued on March 28, 1990. On
September 4, 1990, Brinker sent another letter to Cary, re-
peating Respondent’s offer to meet and bargain with the
Union. The letter also refers to the question of supplying in-
formation. After offering its uncertified financial statements
as he had previously, Brinker again discussed the question of
an audit. The letter states, ‘‘If you require more financial in-
formation and/or substantiation of the statements R.E.C. will
be glad to supply to an independent mutually acceptable pub-
lic accountant all the information that he would require to do
a review of our financial statements.’’
Cary responded by letter dated September 19, 1990. He re-
counted the history of Respondent’s December refusal to per-
mit the Union’s auditor to examine Respondent’s books and
referred to its March 5, 1990 letter wherein Brinker asserted
that he did not consider the Union’s auditor to be objective
and fair. Cary observed that apart from this assertion, Brinker
did not add a single fact to establish that the auditor selected
by the Union was not professionally qualified, and that
Brinker did not ask about the auditor’s professional qualifica-
tions.
Thus, Cary continued to insist that the Union be free to
select its own auditor, and offered to make such an auditor
available. Cary also reiterated the Union’s position that until
its auditor has had the opportunity to verify Respondent’s as-
sertions about its financial conditions, the Union cannot rely
upon its unaudited financial statements, and Respondent’s
word that it must lower wages as proposed at the December
1, 1989 session. Thus, Cary concludes by again urging Re-
spondent to permit ‘‘our audit.’’
IV. ANALYSIS
It is well settled that an employer has a statutory obliga-
tion to provide a union with relevant information that the
union needs for the proper performance of its duties as a col-
lective-bargaining representative. NLRB v. Acme Industrial,
385 U.S. 431 (967); Doubarn Sheet Metal, 243 NLRB 821,
823 (1979). It is equally well established that where an em-
333R.E.C. CORP.
ployer, either in response to bargaining demands from the
union, or in support of its own proposals, makes a claim of
inability to pay, the duty to supply relevant information, re-
quires the employer to provide, on request, financial informa-
tion to the union to substantiate its claim. NLRB v. Truitt
Mfg. Co., 351 U.S. 149 (1956); Clemson Bros., 290 NLRB
944 (1988).
However, the union’s interest in arguably relevant infor-
mation does not always predominate over all other interests.
There are situations where an employer may be justified in
limiting or conditioning the disclosure of otherwise relevant
information. Detroit Edison Co. v. NLRB, 440 U.S. 301
(1979); Yakima Frozen Foods, 130 NLRB 1269, 1273
(1960), enfd. in pertinent part 316 F.2d 389 (D.C. Cir. 1963).
In evaluating a requested condition, the important question
to be decided is whether the employer has asserted a legiti-
mate and substantial justification for limiting the disclosure.
Detroit Edison, supra; Plough, Inc., 262 NLRB 1095, 1096
(1982). The party asserting the need for the limitation or
condition has the burden of proof on that question. Wash-
ington Gas Light Co., 273 NLRB 116, 117 (1984); Boise
Cascade Co., 279 NLRB 422, 431 (1986); McDonnell Doug-
las Corp., 224 NLRB 881, 890 (1976).
An equally well-established principle holds that ‘‘in the
absence of special circumstances, an employer does not have
the right of choice either affirmative or negative as to who
is to represent employees for any of the purposes of collec-
tive bargaining.’’ Oates Bros., 135 NLRB 1295, 1297
(1962); Procter & Gamble Mfg. Co., 237 NLRB 747, 751
(1978). Thus, in order to justify its refusal to meet and bar-
gain with a particular individual, an employer must present
persuasive evidence that the presence of that individual
would result in such ‘‘ill will’’ or ‘‘conflict of interest as to
make good faith bargaining impractical.’’ Teamsters Local
70 (Kockos Bros.), 183 NLRB 1330 (1970); General Electric
v. NLRB, 412 F.2d 512, 517 (2d Cir. 1969); KDEN Broad-
casting Co., 225 NLRB 25, 35 (1976). This line of cases has
been applied in cases involving an employer’s purported con-
ditions on supplying information under Truitt. St. Joseph’s
Hospital, 269 NLRB 862, 866 1984, enf. denied 755 F.2d
260 (2d Cir. 1985); Facet Enterprises, 290 NLRB 152
(1988).
Moreover, it is also clear that an unreasonable delay in
furnishing relevant information can be as much of a violation
as a refusal to furnish the information at all. Tubari Ltd., 299
NLRB 1223 (1990); Valley Inventory Service, 295 NLRB
900 (1989); Globe Gear Co., 189 NLRB 422, 424 (1971).
Turning to the facts herein, Respondent concedes and the
record fully supports that it has pleaded an inability to pay,
in support of its refusal to agree to the Union’s demands, and
its own request to reduce wages. Thus, the issue to be deter-
mined is whether Respondent complied with its obligations
under Truitt to relevant information to the Union to substan-
tiate its bargaining position.
Respondent argues initially that on December 1 it offered
to supply the Union with information adequate to support its
claim of financial inability to pay. Albany Garage, 126
NLRB 417, 418 (1960). I do not agree.
While Respondent did offer to supply the Union its finan-
cial statements for the past 5 years, these statements for the
past 2 years were not certified, and more importantly, were
prepared by Brinker himself. The Union refused to accept
these statements as proof of Respondent’s inability to pay
and insisted on having an audit performed on Respondent’s
records. Cary explained that the Union had information that
Respondent was paying employees with checks drawn on a
different corporate name, and testimony during the previous
unfair labor practice trial had revealed that Respondent paid
some employees in cash. In my view, the Union’s legitimate
concern for the ‘‘looseness’’ of Respondent’s payment prac-
tices is more than sufficient grounds for it to insist on an
audit of Respondent’s records. Indeed even absent such evi-
dence of financial ‘‘looseness’’ of employers, uncertified fi-
nancial statements have not been deemed sufficient to meet
the employers’ obligations under Truitt. American Model &
Pattern, 277 NLRB 176, 184 (1985); Hiney Printing Co.,
262 NLRB 157, 162 (1982); see also Tony’s Meats, 211
NLRB 625, 626 (1974). (Employer must permit CPA to ex-
amine employer’s records.)
Albany Garage, supra, cited by Respondent is clearly dis-
tinguishable. There the Board concluded that the employers
had furnished the union financial statements, plus compara-
tive profit and sales and profit statements; no question was
ever issued regarding the accuracy of the financial informa-
tion submitted by the union; these statements had been ac-
cepted as adequate by banks with which respondent did busi-
ness and the Internal Revenue Service (IRS); and the union
had been furnished in prior years with the same records and
had never rejected such documents as inadequate. Here, the
factors relied on by the Board in Albany Garage were not
present. Most importantly, the Union did question the accu-
racy of the documents offered by Respondent, and in fact
had reasonable grounds for making such a contention. More-
over, there is no evidence that these records had been accept-
ed as adequate by the IRS or by any bank served by Re-
spondent and the Union had never, as in Albany Garage,
been satisfied with such documents in prior negotiations.
Accordingly, I conclude that Respondent has not satisfied
its obligations under Truitt by its offer on December 1 to
submit uncertified statements prepared by Brinker himself.
With respect to Respondent’s response to the Union’s de-
mand for an audit, its position was somewhat ambiguous
during the December 1 meeting. At first, Brinker refused the
request, then asserted that he would consider it if he received
a written request, and finally Brinker again asserted that he
would not permit such an audit.
However, after the Union, as Respondent had demanded,
made such a written request, dated December 12, Respondent
unequivocally refused by its response dated December 15. I
conclude that Brinker’s statement in the letter, ‘‘R.E.C. will
not permit your auditor to examine R.E.C.’s books,’’ can
have no other meaning in the instant circumstances. Re-
spondent argues, however, that its position in December was
the same as its position in March 1990, i.e., that it would
not permit the business agent’s son to conduct the audit. I
find this contention untenable, and not supported by any
record testimony or evidence.
Thus, while it is true that the Union did discuss in its cau-
cus on December 1 that it might use Sal Armao as the audi-
tor, it did not communicate this to Respondent at that time.
Nor does the record contain any evidence that Respondent
was aware of the Union’s discussions in this regard or its
possible intention to use Armao or the firm for whom Armao
334 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
7 I note in this connection that Brinker did not testify herein.
8 I would also note that Sal Armao as an accountant can be pre-
sumed to perform his job, absent evidence to the contrary, in a pro-
fessional manner and in accordance with the ethical standards of the
profession.
works to audit Respondent’s books.7 It is undisputed that Re-
spondent made no reference to the Union’s use of Armao as
the auditor, either at the December meeting or in its Decem-
ber letter refusing the Union’s request. Moreover, Respond-
ent’s unfair labor practice charge, filed in January 1990,
states only that it rejected the Union’s request to examine
Respondent’s books (while requesting that the Union con-
tinue bargaining), and made no reference to either the
Union’s use of Armao as the auditor, or any question about
the identity of the auditor as a reason for Respondent’s re-
fusal.
Therefore, I conclude that Respondent by its letter of De-
cember 15 has refused to permit the Union to audit its
records, and has thereby violated Section 8(a)(1) and (5) of
the Act.
Subsequently, Brinker in a March 2 telephone conversation
with Cary, for the first time objected to the Union’s use of
Sal Armao as the auditor and wanted the Union to agree to
a ‘‘different’’ auditor. Whether or not this offer would be
sufficient to meet Respondent’s Truitt obligations, since it
was made 3 months after the request was made (and after
an initial refusal by Respondent), and no explanation was
given for the delay, I conclude that Respondent’s delay in of-
fering to comply with its obligations was unreasonable and
in further violation of Section 8(a)(1) and (5) of the Act.
Grey Line Scenic Tours, 283 NLRB 58, 67–68 (1987) (delay
of 2 months unreasonable); Globe Gear, supra at 424 (delay
of 2 months plus 9 days unreasonable); International Credit
Service, 240 NLRB 715, 718–719 (1979) (delay of 6 weeks
unreasonable).
Turning to the legality of Respondent’s position subse-
quent to March 1990, I note that whether the matter is con-
strued as an attempt by Respondent to limit or condition the
disclosure of otherwise relevant information, or to interfere
with the Union’s choice of representatives, Respondent faces
a heavy burden of establishing the necessity for its limitation
of the Union’s rights. As noted, either the Respondent must
establish ‘‘a legitimate and substantial justification for lim-
iting disclosure’’of the information to Sal Armao, Detroit
Edison, supra; Plough, supra; Washington Gas, supra; Boise
Cascade, supra, and/or present persuasive evidence that the
presence of Sal Armao would result in such ‘‘ill will or con-
flict of interest as to make good faith bargaining imprac-
tical’’ Kockos Bros., supra; General Electric, supra; KDEN,
supra.
I conclude that Respondent has fallen far short of meeting
either of the above-required justifications for its position. I
note initially that Brinker did not testify, so he has not ex-
plained under oath Respondent’s reasons for rejecting Sal
Armao as the auditor. Respondent is content to rely on the
evidence of record with respect to this issue, which consists
of Brinker’s statements and letters to Cary. Essentially, Re-
spondent’s position appears to be that it does not ‘‘trust’’ Sal
Armao, since he is the business agent’s son, to be an ‘‘inde-
pendent and unbiased auditor.’’ Thus, Respondent will not
allow him to audit its books ‘‘because his audit may not re-
flect the true financial condition of R.E.C.’’ Finally, Re-
spondent offered to have its books audited by ‘‘a mutually
acceptable independent public accountant.’’
Respondent argues in its brief that the use of Sal Armao
as the auditor ‘‘has the potential for a gross misrepresenta-
tion of R.E.C.’s financial position. The business agent’s son
would clearly have a conflict of interest as he reviewed
R.E.C.’s records.’’ However, Respondent has adduced no
evidence or facts to support its concern that Armao would
be likely to misrepresent Respondent’s financial position. Re-
spondent’s position is purely speculative and anticipatory.
KDEN, supra at 35 (an employer cannot refuse to meet with
a bargaining committee that included a managerial employee
who had access to confidential records of the employer). See
Kockos, supra at 1330 (Union violated the Act by refusing
to meet with representative of the employer who had pre-
viously been president of the Union). See also Milwhite
Corp., 290 NLRB 1150, 1152 (1983) (an employer cannot
refuse to meet with the president of the union, who is also
an employee of competitor of employer). But cf. Bausch &
Lomb Optical Co., 108 NLRB 155 (1954) (an employer was
justified in refusing to bargain with a union which estab-
lished a company in direct competition with the employer).
Significantly, Respondent misperceives the rationale be-
hind the Truitt requirement to produce records to substantiate
a claim of inability to pay. The purpose of the auditor is not
to act as a neutral arbitrator to adjudicate the differences be-
tween the parties. The auditor will act as an aid to the Union
in attempting to verify the truthfulness of Respondent’s
claims of poverty. There would be no incentive for the
Union to obtain inaccurate information about Respondent’s
finances. Respondent’s purported fear that Sal Armao will
‘‘misrepresent’’ its financial condition makes no sense. It is
in the Union’s interest to receive accurate information as to
Respondent’s ability to grant increases and the necessity for
it to reduce wages. Thus, it is only when the Union is in pos-
session of such accurate and complete information, that it
can make an intelligent decision as to whether to take eco-
nomic action, to reduce its demands, to agree to Respond-
ent’s wage reductions, and/or to convince the employees in
the unit of Respondent’s precarious financial condition as a
basis for such agreements. None of these decisions can be
properly made by the Union, should its accountant ‘‘mis-
represent’’ Respondent’s financial situations. Therefore, I
find absolutely no rational basis for Respondent’s assumption
that Armao would be likely to misrepresent Respondent’s fi-
nancial records.8
Respondent’s reliance on Yakima, supra, in support of its
position is misplaced. There, the Board concluded that the
employer in that case could lawfully insist that its books and
records be audited by ‘‘a qualified accountant not in the
Union’s general employ.’’ However, in that case, the em-
ployer’s representative had explained that he didn’t wish to
have the union agent present when its books were examined,
because he was ‘‘afraid to let the Union know his sources
of supply and his consignees for fear of secondary boycotts;
but he believes that a licensed public accountant, a profes-
sional man, would not disclose confidential information.’’ Id.
at 1271. Indeed, as part of the conditions found reasonable
by the Board, was the insistence by the employer that ‘‘no
335R.E.C. CORP.
information pertaining to whom sales or from whom pur-
chases were made be taken out of the office.’’ Id at 1270.
However, Respondent has expressed no such concerns in
the instant case. It made no reference to any fear of sec-
ondary boycotts or any fears of the Union becoming aware
of his customers or suppliers. It is thus clear that the reason-
ableness of the employer’s condition in Yakima of requiring
an accountant not in the union’s general employ was based
on these reasonable fears, and not as in the instant case, Re-
spondent’s unreasonable belief that Armao or a ‘‘Union’’ ac-
countant was likely to misrepresent Respondent’s financial
records. Respondent has raised no question as to Armao’s
qualifications, and in fact he is not in the Union’s general
employ.
Moreover, I would also note that even applying the literal
language of Yakima, Respondent’s position is not supported.
Thus, the employer was permitted to insist on its books and
records being audited by a qualified accountant not in the
union’s general employ.
While there may be some circumstances where an em-
ployer may be permitted to insist on certain qualifications for
an auditor to examine its records, NLRB v. St. Joseph’s Hos-
pital, 755 F.2d 260 (2d Cir. 1985), generally the Board will
defer to the union’s selection of who, what kind and the na-
ture of the audit to be performed. Facet Enterprises, 290
NLRB 152 (1988). (An employer could not lawfully insist on
a CPA selected by the union, but ‘‘approved’’ by the em-
ployer. An administrative law judge affirmed by the Board
found this requirement to be tantamount a veto power proven
over the union’s selection, and inconsistent with good-faith
bargaining.) Tama Meat Packing Co., 291 NLRB 657 (1988)
(an employer may not lawfully insist on a full scale ACIPA
audit); American Meat Packing Co., 301 NLRB 835 (1991)
(an employer may not condition audit on the union’s con-
ducting an extensive and costly audit covering a period of 5
years).
See also St. Joseph’s Hospital, 269 NLRB 862 (1989),
where the Board rejected an employer’s attempt to impose
restrictions on the union’s choice of auditor, by insisting on
the use of an accountant with sufficient expertise and experi-
ence in auditing hospitals, particularly with knowledge of the
New York State reimbursement system. I am cognizant of
the fact that St. Joseph’s, supra, was reversed by the Court
of Appeals for the Second Circuit. See 755 F.2d 260. While
noting of course that I am bound by the Board and not court
precedent, Gas Springs, supra, and cases cited therein, the
court’s decision in St. Joseph’s provides no solace or support
for Respondent’s position herein. The court simply disagreed
with the Board’s assessment of the necessity for expert quali-
fications imposed by the employer therein. The court also re-
lied on what was viewed as a reasonable fear by the em-
ployer of labor strife should an inaccurate report be sub-
mitted to the union, and noted the legislative history of the
health care amendments which demonstrated an overriding
congressional concern that organizational activities not be al-
lowed to disrupt health care. Id. at 264–265.
The opinion also relied on Yakima, supra, and its discus-
sion of that case only reinforces my findings above as to the
significance of that case. Thus, the court of appeals judge in
St. Joseph’s emphasized that the employer’s conditions in
Yakima were based on the fact that the ‘‘company was afraid
to let the union know its sources of supplies and consignees
for fear of secondary boycotts, but believed that a licensed
public accountant would not disclose such confidential infor-
mation.’’ 755 F.2d at 264.
Here, as noted, on the contrary, Respondent has expressed
no fear about letting the Union know about its customers or
suppliers, or about secondary boycotts, but rested its opposi-
tion to the use of Armao solely on its fear that the alleged
conflict of interest of Armao might lead to an inaccurate
audit. Moreover, Respondent at no time expressed any
qualms about Armao’s competence or qualifications, and in-
deed asked no questions about his ability to perform an
audit. Therefore, since unlike in St. Joseph’s, there is no evi-
dence of any special competence or knowledge required to
audit Respondent’s books and records, and no congressional
concern not to disrupt Respondent’s operations, St. Joseph’s
and Yakima are simply not dispositive of the instant matter.
Finally, Respondent argues that the Union has been acting
in bad faith by refusing to continue bargaining, and that Re-
spondent has at all times been bargaining in good faith, as
exemplified by its constant request to the Union to continue
bargaining. I do not agree with either of Respondent’s con-
tentions.
As far as the Union’s position is concerned, I find it per-
fectly reasonable and not indicative of bad faith for the
Union to refuse to continue bargaining, until Respondent per-
mits an audit of its books, under the instant circumstances.
Respondent has entered negotiations by demanding a wage
reduction of $1.20 per hour, while the Union is seeking
raises. Such a large gap in the positions of the parties, moti-
vated by Respondent’s alleged financial problems, makes it
reasonable if not essential, for the Union to be able to verify
Respondent’s claims, before any fruitful bargaining can take
place. Furthermore, as noted above, the Union was aware of
evidence of Respondent’s involvement with another company
and payments to employees in cash which leads to grounds
for suspicion of Respondent’s good faith. Also, Respondent
had twice before been found guilty of violations of refusals
to bargain with the Union, as well as other unfair labor prac-
tices, which provide further support for the Union’s view that
Brinker’s assertions during bargaining may be questionable,
and that documentary support for these assertions are nec-
essary before the Union can intelligently resume bargaining.
Additionally, Respondent’s contention that it has bargained
in good faith at all times during the instant negotiations is
also incorrect. Indeed, I have found that Respondent has un-
lawfully refused in December to supply requested informa-
tion to the Union and to permit the Union to audit its
records, and then unlawfully delayed for 3 more months, be-
fore it even made an offer to, albeit subject to conditions, to
allow an audit of its records. Moreover, Respondent further
demonstrated its bad faith by insisting, without explanation,
that the Union request in writing that Respondent explain its
reasons for seeking a wage cut, and then again demanding
that the Union make another request in writing for an audit
of Respondent’s records. Such demands by Respondent are
hardly conducive to good-faith bargaining.
Therefore, I conclude that unlike the employers in Yakima
and St. Joseph’s, Respondent did not seek to impose its con-
ditions on the Union’s rights to obtain information, in the
context of good-faith bargaining, which is further demonstra-
336 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
9 I also note that in Yakima, the Board observed that the union had
specifically conceded to the employer that its conditions were rea-
sonable. Here, not only did the Union not concede that Respondent’s
conditions were reasonable, but had, as I have discussed, ample
grounds to distrust the good faith of Respondent’s purported offer
to fulfill its statutory obligations.
10 If no exceptions are filed as provided by Sec. l02.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. l02.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
tive of the inapplicability of these cases as support for Re-
spondent’s actions.9
In sum, I conclude that Respondent has not met its burden
of substantiating the necessity for its proposed limitations on
the Union’s admitted right to audit Respondent’s records, and
to do so with an auditor of the Union’s own selection. Thus,
Respondent has further violated Section 8(a)(1) and (5) by
unlawfully conditioning the audit of its records in March
1990, and thereafter, on the Union’s not using Sal Armao for
that purpose.
THE REMEDY
Having found that Respondent has violated Section 8(a)(1)
and (5) of the Act, I shall recommend that it cease and desist
therefrom and take certain affirmative action to effectuate the
purposes of the Act.
The Charging Party observes that Respondent has been
found guilty of unfair labor practices in R.E.C. I and R.E.C.
II, as outlined above, as well as violating the law again in
the instant matter. Therefore, the Charging Party argues that
Respondent through Brinker ‘‘has evidenced a complete dis-
regard for its obligations under the Act and a complete con-
tempt for the Board’s orders.’’ Thus, the Charging Party re-
quests that Respondent be ordered to reimburse the Union
for its legal expenses in R.E.C. I, R.E.C. II, and the instant
case.
However, Respondent’s defense herein can hardly be de-
scribed as ‘‘frivolous,’’ particularly in view of Yakima,
supra, which at least arguably supports Respondent’s posi-
tion, although I have found as noted that Yakima is distin-
guishable from the instant case. Therefore, it is not appro-
priate to grant Charging Party’s request for litigation ex-
penses. Park Inn Home, 293 NLRB 1082 fn. 3 (1989);
Heck’s, Inc., 215 NLRB 765 (1964). See also Tama Meat,
supra.
CONCLUSIONS OF LAW
1. The Respondent, R.E.C. Corporation is an employer en-
gaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act.
2. District Lodge No. 15, International Association of Ma-
chinists and Aerospace Workers, AFL–CIO is a labor organi-
zation within the meaning of Section 2(5) of the Act.
3. At all times material and continuing to date, the Union
has been the exclusive representative of all employees in the
appropriate unit described below for the purposes of collec-
tive bargaining within the meaning of Section 9(a) of the
Act.
All production and maintenance employees employed
by Respondent at its facility, excluding office clerical
employees, guards and supervisors as defined in the
Act.
4. By the following acts and conduct, Respondent has en-
gaged and is engaging in unfair labor practices within the
meaning of Section 8(a)(1) and (5) of the Act.
(a) Refusing to furnish the Union information requested in
the Union’s letter of December 12, 1989.
(b) Refusing on December 15, 1989, and thereafter to per-
mit the Union to conduct an examination of Respondent’s
books and records, to substantiate its plea of inability to pay.
(c) Unreasonably delaying offering to permit the Union to
conduct an examination of Respondent’s books and records,
to substantiate its plea of inability to pay.
(d) Refusing on and after March 2, 1990, and thereafter
to permit an auditor designated by the Union to conduct an
examination of Respondent’s books and records, to substan-
tiate its plea of inability to pay.
(e) The aforesaid unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended10
ORDER
The Respondent, R.E.C. Corporation, Mount Vernon, New
York, its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain collectively in good faith with Dis-
trict Lodge No. 8 of the International Association of Machin-
ists and Aerospace Workers, AFL–CIO as the exclusive col-
lective-bargaining representative of its employees in the fol-
lowing appropriate unit:
All production and maintenance employees employed
by Respondent at its facility, excluding office clerical
employees, guards and supervisors as defined in the
Act.
(b) Refusing to furnish the Union information requested in
the Union’s letter of December 12, 1989.
(c) Refusing to permit the Union to conduct an examina-
tion of Respondent’s books and records, to substantiate its
plea of inability to pay.
(d) Unreasonably delaying offering to permit the Union to
conduct an examination of Respondent’s books and records,
to substantiate its plea of inability to pay.
(e) Refusing to permit an accountant designated by the
Union to conduct an examination of Respondent’s books and
records to substantiate its plea of inability to pay.
(f) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of their rights
guaranteed under Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) On request, bargain in good faith with the Union as
the exclusive bargaining representative of the employees in
the unit described above and, if an understanding is reached,
embody such an understanding in a signed agreement.
337R.E.C. CORP.
11 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
(b) On request, furnish to the Union the information re-
quested by the Union in its letter to Respondent of December
12, 1989.
(c) On request, permit an accountant designated by the
Union to examine Respondent’s books and records to sub-
stantiate its plea of inability to pay.
(d) Post at its business office in Mount Vernon, New
York, copies of the attached notice marked ‘‘Appendix.’’11
Copies of the notice, on forms provided by the Regional Di-
rector for Region 2, after being signed by the Respondent’s
authorized representative, shall be posted by the Respondent
immediately upon receipt and maintained for 60 consecutive
days in conspicuous places including all places where notices
to employee are customarily posted. Reasonable steps shall
be taken by the Respondent to ensure that the notices are not
altered, defaced, or covered by any other material.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT refuse to bargain collectively in good faith
with District Lodge No. 15 of the International Association
of Machinists and Aerospace Workers, AFL–CIO as the ex-
clusive collective-bargaining representative of our employees
in the following appropriate unit:
All production and maintenance employees employed
by us at our facility excluding office clerical employ-
ees, guards and supervisors as defined in the Act.
WE WILL NOT refuse to furnish the Union information nec-
essary to substantiate our plea of inability to pay.
WE WILL NOT refuse to permit the Union or an accountant
designed by the Union to conduct an examination of our
books and records, in order to substantiate our plea of inabil-
ity to pay.
WE WILL NOT unreasonably delay offering to permit the
Union, or an accountant designated by the Union, to conduct
an examination of our books and records, to substantiate our
plea of inability to pay.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce employees in the exercise of their rights
guaranteed under Section 7 of the Act.
WE WILL, on request, bargain in good faith with the Union
as the exclusive bargaining representative of our employees
in the unit described above and, if an understanding is
reached, embody such an understanding in a signed agree-
ment.
WE WILL, on request, furnish to the Union the information
requested by the Union in its letter to us of December 12,
1989.
WE WILL, on request, permit the Union or an accountant
designated by the Union to examine our books and records
to substantiate our plea of inability to pay.
R.E.C. CORPORATION