The American Ship Building Co.

National Labor Relations Board - Board Decisions

Jun 21, 1963

142 N.L.R.B. 1362 (N.L.R.B. 1963)

1362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ORDER
IT Is HEREBY ORDERED that the unit covered by the certification here-
tofore issued in the above-captioned proceeding be, and hereby is,
clarified to read as follows :
All production and maintenance employees of the Blake Rivet
Company, at its Firestone Boulevard, South Gate, California,
plants, including those engaged in the manufacture of rivets and
bolts, but excluding all office and clerical employees, watchmen,
guards, professional employees, and supervisors as defined in
the Act.
The American Ship Building Company and Local 374, Inter-
national Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers. Case No. 13-CA-4504.
June 21, 1963
DECISION AND ORDER
On May 31, 1962, Trial Examiner George J. Bott issued his Inter-
mediate Report in the above-entitled proceeding, finding that the
Respondent had not engaged in unfair labor practices and recom-
mending that the complaint be dismissed in its entirety, as set forth
in the attached, Intermediate Report. Thereafter, the General Coun-
sel and Charging Party filed exceptions to the Intermediate Report
and supporting briefs.
The Board has reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was committed. The rul-
ings are hereby affirmed. The Board has considered the Intermedi-
ate Report, the exceptions and briefs, and the entire record in this
case , and hereby adopts the findings and conclusions of the Trial
Examiner only to the extent consistent with this Decision and Order.'
Contrary to the conclusion of the Trial Examiner, we find that the
American Ship Building Company, hereinafter called Respondent,
violated Section 8(a) (1) and (3) of the Act when it laid off its em-
ployees at the South Chicago, Illinois, shipyard.
On August 11, 1961, Respondent notified its employees at the
Chicago yard that they were being laid off. The Trial Examiner
found that the layoff was precipitated by Respondent's fear of a strike
either when a ship was brought in for repairs, or at a later time as
Respondent's busy season drew near. He concluded that Respond-
ent "locked out" its employees as a defensive measure in order to pro-
tect the property of its customers from being tied up in a strike.
I The request of the Charging Party for oral argument is hereby denied inasmuch as the
issues are adequately presented in the record and in the briefs
142 NLRB No. 133.
THE AMERICAN SHIP BUILDING COMPANY 1363
In our opinion, the record does not support the Trial Examiner's
conclusion that Respondent had reasonable grounds to fear a strike.
As more fully set forth in the Intermediate Report, employees at
Respondent's four shipyards have been represented jointly by a group
of eight unions,2 herein referred to as the Unions, and Respondent has
bargained with this group since 1952. Sometime before May 1, 1961,
the Unions gave Respondent timely notice of their desire to modify
the terms of a contract expiring on August 1, 1961. Following the
giving of this notice, bargaining sessions took place. At several of
these sessions, the Unions' chief negotiator, along with other union
officials, reminded the Respondent that although each prior contract
negotiation had resulted in a strike, it was the intention of the Unions
in 1961 to reach an agreement without resort to a strike, and that, in
any event, any work brought into the yard before a strike would be
completed. On July 19, 1961, it appearing likely that agreement
would not be reached by August 1, the Unions offered to extend for
6 months the expiring contract which contained a no-strike clause.
The Respondent rejected this offer on the ground that such an exten-
sion would expire at the height of its busy season.
At a meeting on July 31, the Unions again offered a 6-month exten-
sion; alternatively, the Unions offered to extend indefinitely the old
contract until a new agreement was reached, with the new agreement
to be retroactive to August 1. Respondent also rejected these offers.
At this meeting, Respondent's attorney asked if the Unions were go-
ing to close down the yards the next morning. The Unions' repre-
sentative answered in the negative, repeating the Unions' position
that there would be no strike.
On August 9 the parties met again. The Respondent made, but the
Unions rejected, a new contract offer. Respondent's representative
then inquired again whether the Unions would strike; and, again, the
Unions' representative replied that there would be no strike.
The next day, August 10, Respondent's officials and yard managers
met to discuss the situation. Among other things, it was decided that
the South Chicago yard would be shut down completely .3
2 The joint bargaining representative is composed of the following unions: International
Brotherhood of Boilermakers , Iron Ship Builders , Blacksmiths , Forgers and Helpers ;
United Association of Journeymen & Apprentices of the Plumbing and Pipefitting In-
dustry of the U.S. and Canada ; United Brotherhood of Carpenters and Joiners of
America ; International Brotherhood of Electrical workers ; Brotherhood of Painters,
Decorators & Paper Hangers of America ; International Brotherhood of Firemen and
Oilers ; International Union of Operating Engineers ; and Patternmakers League of North
America. All of these unions are affiliated with the AFL-CIO.
International Association of Machinists , AFL-CIO, represented the machine shop em-
ployees at the South Chicago, Illinois , shipyard in a separate unit.
8 Respondent also decided to and did lay off, on and after August 11, 1961, the em-
ployees at its other yards as the work diminished . However, as no complaint issued as
to these employees , their status is not in issue herein.
712-548-64-vol. 142-87
1364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
On August 11, all employees at Chicago and Toledo, as well as some
at Buffalo, were issued layoff notices which read as follows :
Because of the labor dispute which has been unresolved since
August 1, 1961, you are laid off until further notice 4
The Board has held that when a strike is imminent, an employer is
privileged to lock out its employees in order to protect the property
of customers,5 or to prevent waste or spoilage of perishable inven-
tories,' or where the public safety and welfare are in danger.' How-
ever, in each of these situations the validity of the lockout was
premised on the essential fact that there was a real strike threat. On
the other hand, where the union has given the employer assurances
that no sudden strike would be called, or that, in the event a strike
were called, adequate safeguards would be taken by the union to pro-
tect`the employer's facilities and work commitments during the course
of the shutdown, a lockout is illegal; for in such a situation the lock-
out is deemed an offensive weapon intended to force the abandonment
of the union's contract demands and the acceptance of the employer's."
Here, it appears that the Unions made every effort to convey to
the Respondent their intention not to strike; and they also gave as-
surances that if a strike were called, any work brought into Respond-
ent's yard before the strike would be completed. The Unions further
offered to extend the existing contract for 6 months, or indefinitely,
until contract terms were reached ; in either case, the no-strike clause
was to remain in effect during the negotiations.
In these circumstances, Respondent, having refused to accept the
Unions' assurances that there would be no strike and having also
rejected the Unions' offer to continue the existing contract, cannot
now claim that there was reasonable ground to fear that the Unions
would strike at some indeterminate date. Indeed, we find that there
was, in fact, no reasonable ground for such a fear.
Accordingly, we conclude that Respondent, by curtailing its opera-
tions at the South Chicago yard with the consequent layoff of the em-
a Cavanno , Respondent' s attorney, admitted that the language in such layoff notices
was decided upon for the purpose of preventing the employees from securing unemploy-
ment compensation under Illinois law. Under Illinois law , Respondent was obligated to
notify the State agency as to the reason of the layoff at the time the layoff occurred.
(Under New York and Ohio law, the employer is not required to make any statement until
after the employees have filed for compensation and then the employer may file a protest
to an award , which Respondent did in the instant case. ) The Illinois Unemployment
Compensation Board found that the employees were laid off as a result of a labor dispute
and accordingly they were denied benefits.
Betts Cadillac- Olds, Inc., at aL, 96 NLRB 268.
9 Duluth Bottling Association , at al., 48 NLRB 1335.
T Building Contractors Association of Rockford , Inc, 138 NLRB 1405.
8 Quaker State Oil Refining Corporation, 121 NLRB 334, enfd. 270 F. 2d 40 (C.A. 3).
See also Utah Plumbing and Heating Contractors Association and its Members , 126 NLRB
973, enfd 294 F. 2d 165 (C.A. 10).
THE AMERICAN SHIP BUILDING COMPANY 1365
ployees, coerced employees in the exercise of their bargaining rights
in violation of Section 8 (a) (1) of the Act, and discriminated against
its employees within the meaning of Section 8(a) (3) of the Act.9
THE EFFECT OF THE UNFAIR LABOR PRACTICE ON COMMERCE
The conduct of the Respondent set forth above, occurring in con-
nection with the operations of the Respondent as set forth in section I
of the Intermediate Report, has a close, intimate , and substantial rela-
tion to trade , traffic, and commerce among the several States , and tends
to lead to labor disputes burdening and obstructing the free flow of
commerce.
THE REMEDY
Having found that Respondent has engaged in unfair labor prac-
tices, we shall order it to cease and desist therefrom and take certain
affirmative action designed to effectuate the policies of the Act.
We have found that Respondent unlawfully laid off its employees
at its South Chicago, Illinois, shipyard on August 11, 1961. The com-
plaint, however, alleged that Respondent's unlawful conduct in lock-
ing out and laying off its employees continued from August 11 until
October 27, 1961. In view of this fact and the fact that the parties
executed a new contract on October 28,1961, and in the absence of any
evidence to show that any employee was not recalled or reinstated on
or before October 28, 1961, we will not order the reinstatement of any
employee. We shall, however, order that Respondent make whole
each of the laid-off employees for any loss of pay he may have suffered
by reason of his unlawful layoff during the period from the date of
his layoff through October 27, 1961, by payment to him of a sum of
money equal to that which he would normally have earned as wages
during such period, less his net earnings during that period, such
sums to be computed in accordance with the formula set forth in F. W.
Woolworth Company, 90 NLRB 289. Interest at the rate of 6 percent
per annum shall be added to the backpay to be computed in the manner
set forth in Isis Plumbing & Heating Co., 138 NLRB 716.
O Quaker State Oil (defining Corporation, supra, and Utah Plumbing and Heating Con-
tractors Association and its Members, supra.
Although such conduct has also been found to be the antithesis of good -faith bargaining
as contemplated by Section 8(a) (5) of the Act, we find it unnecessary to pass on this
issue herein . For it appears that on October 28, 1961, the parties entered into a new
agreement , and thus no real purpose would be served by entering a bargaining order at
this time Moreover , the cease-and-desist provisions of the 8(a) (1) and ( 3) order entered
here will substantially forestall the objectionable conduct which gave rise to the 8(a) (5)
issue.
In view of the scope of the backpay order , we also find it unnecessary to pass on the
allegation that Respondent violated Section 8(a) (1) of the Act by interfering with the
employees ' claims to unemployment compensation during the period they were unlawfully
locked out
712-548-64-vol. 142-88
1366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF LAW
1. The Respondent is engaged in commerce within the meaning of
the Act.
2. By locking out its employees at the South Chicago, Illinois,
shipyard, Respondent has engaged in unfair labor practices within
the meaning of Section 8 (a) (1) and (3) of the Act.
3. The aforesaid unfair labor practices are unfair labor practices
affecting commerce within the meaning of Section 2(6) and (7) of
the Act.
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, The American
Ship Building Company, South Chicago, Illinois, its officers, agents,
successors , and assigns, shall :
1. Cease and desist from :
(a) Discouraging membership in International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers;
United Association of Journeymen & Apprentices of the Plumbing
and Pipefitting Industry of the U.S. and Canada; United Brother-
hood of Carpenters and Joiners of America; International Brother-
hood of Electrical Workers; Brotherhood of Painters, Decorators &
Paper Hangers of America; International Brotherhood of Firemen
and Oilers; International Union of Operating Engineers; and Pat-
ternmakers League of North America, all of which Unions are affiliated
with the AFL-CIO and compose the joint bargaining representative of
the Respondent's employees, or any other labor organization of its
employees, by discriminatorily locking out or laying off its employees.
(b) In any other manner interfering with, restraining, or coerc-
ing its employees in the exercise of their right to self-organization,
to form labor organizations, to join or assist the group of eight Unions
listed above, or any other labor organization or group of labor or-
ganizations , to bargain collectively through representatives of their
own choosing, and to engage in concerted activities for the purpose
of collective bargaining or other mutual aid or protection as guar-
anteed in Section 7 of the Act, or to refrain from any and all such
activities, except to the extent that such right may be affected by an
agreement requiring membership in a labor organization as a condi-
tion of employment, as authorized in Section 8(a) (3) of the Act, as
modified by the Labor-Management Reporting and Disclosure Act
of 1959.
2. Take the following affirmative action designed to effectuate the
policies of the Act :
THE AMERICAN SHIP BUILDING COMPANY 1367
(a) Make whole all employees listed in the attached Appendix for
any loss of pay they may have suffered by reason of the discrimina-
tion against them, in the manner set forth in the section of this Deci-
sion and Order entitled "The Remedy."
(b) Preserve and, upon request, make available to the Board or
its agents, for examination and copying, all payroll records, social
security payment records, timecards, personnel records and reports,
and all other records necessary to analyze and compute the amounts
of backpay due under the terms of this Order.
(c) Post at its South Chicago, Illinois, shipyard, copies of the at-
tached notice marked "Appendix." 1° Copies of said notice, to be fur-
nished by the Regional Director for the Thirteenth Region, shall,
after being duly signed by a representative of the Respondent, be
posted by it immediately upon receipt thereof, and be maintained by
it for 60 consecutive days thereafter, in conspicuous places, including
all places where notices to its employees are customarily posted. Rea-
sonable steps shall be taken by the Respondent to insure that said
notices are not altered, defaced, or covered by any other material.
(d) Notify the said Regional Director for the Thirteenth Region,
in writing, within 10 days from the date of this Order, what steps have
been taken to comply herewith.
CIIAIRMAN MCCULLOCII and MEMBER RODGERS, dissenting :
We agree with the Trial Examiner's conclusion that Respondent
committed no violation of the Act when it suspended operations at
its South Chicago shipyard on August 11, 1961. Like the Trial Ex-
aminer, we would find that Respondent's fears of a strategically timed
strike by the Unions with resultant unusual economic consequences
were reasonable under the circumstances, and provided legitimate
justification for its decision to decline further work commitments until
bargaining developments became more certain.
One thing clear in this case is that Respondent's decision to suspend
operations was based neither on union hostility nor a desire to avoid
its bargaining obligations under the Act. There are no allegations
of independent unfair labor practices, and Respondent had bargained
in good faith with these Unions since 1952. Indeed, it was Respond-
ent who requested the early opening of contract negotiations so that
timely agreement might more easily be reached.
In concluding that Respondent's shutdown was justified, we have
overlooked neither the oral statements by International Representa-
tive Alexander that a strike was not his "hope," nor the statements by
several other union officials that the Unions did not intend to strike
10 In the event that this Order is enforced by a decree of a United States Court of
Appeals, the notice shall be amended by substituting for the words "Pursuant to a Deci-
sion and Order ," the words "Pursuant to a Decree .of the United States Court of Annear'
Enforcing an Order."
1368 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
during these negotiations. However, it seems to us, as it did to the
Trial Examiner, that these statements pale beside the other circum-
stances in the case.
Thus, it appears Respondent had therefore negotiated five times
with the Unions since 1952. And it had experienced five strikes, that
is, one strike per negotiation. On one of these occasions, in 1955, em-
ployees had engaged in a slowdown before the agreement had expired,
causing a customer's ship to be caught in the yard during the ensuing
.strike. In addition, in February 1961 there had been a "wildcat"
strike in this same Chicago yard. Against that background, Respond-
ent during the current bargaining had been specifically informed that
a strike vote had been taken among the locals, and that the vote was
overwhelmingly in favor of a strike if the Unions' demands were not
met. Finally, on August 9, the day before Respondent decided to sus-
pend operations, the Unions had refused even to take Respondent's
offer back to their members, and made no counteroffer of their own.
As the Trial Examiner observed, "these facts alone could have led
Respondent to reasonably believe that a strike would occur at any time
after August 10, 1961."
Moreover, Respondent harbored justifiable concern that if the
Unions did strike, they would choose a time when economic hardship
affecting Respondent's customers would be greatest. The Respond-
ent could reasonably infer that such a strategically timed strike was
under consideration by the Unions from the Unions' past conduct,
particularly their strike in 1955 when an 8-million dollar ship was
caught in the yard and thereby lost to the customer for 4 weeks dur-
ing the customer's busiest season. Though the Unions offered Re-
spondent an indefinite extension of the current contract, such an ex-
tension would have left the Unions free to strike at their pleasure."
Nor was the Unions' alternative offer of a 6-month extension of the
contract calculated to relieve Respondent of its reasonable strike
fears. Such an extension would have terminated the contract, as
well as future renewals, during Respondent's own busiest season, the
winter months. From Respondent's point of view, such an extension
would have been little better than none at all, as it would have been
left in the unenviable position of bargaining initially under an uneasy
truce, and then being faced with the very real possibility of a shut-
down during its own peak season. As the Trial Examiner, and by
adoption, the Board, stated in Betts Cadillac," "the pedestrian need
not wait to be struck before leaping for the curb."
We note also the particular vulnerability of Respondent's customers
due to the long-term nature of the work commitments involved and
the extraordinary economic consequences of any delay in work. The
11 Cf. Pacific Coast Association of Pulp and Paper Manufacturers , 121 NLRB 990, 993.
12 Betts Cadillac-Olds, Inc., et al., 96 NLRB 268, 286.
THE AMERICAN SHIP BUILDING COMPANY 1369
shipping season on the Great Lakes ends of necessity with the winter
months. Thus, a tieup of a ship for several weeks during the shipping
season has relatively great impact on operations for the year. More-
over, even a strike during the winter months might have a significant
impact on the owners, because a work stoppage at Respondent's yards
during a major overhaul could cause a delay in a ship's reentry into
service at, the opening of the shipping season. In these circumstances,
it seems to us, as it did to the Trial Examiner, that Respondent had
good reason for taking precautionary measures to protect the property
of its customers.
In essence, that is what Respondent attempted to do in refusing to
take new work at the South Chicago yard. The record shows not
only that Respondent took pains to explain its labor situation to its
customers, but also that many of its customers, otherwise aware of
Respondent's precarious situation, hesitated for that reason to bring
ships to Respondent's yards for repairs. As a result, there was no
ship repair work to be done,13 and no prospects of new work, when
Respondent decided on August 11 to suspend operations at the South
Chicago yard and await further developments.14
In the circumstances present here, we, like the Trial Examiner, are
persuaded that the Respondent's decision to suspend operations was
primarily powered by valid economic considerations defensive in
character. We do not go so far as to say that an employer may in all
situations suspend operations during the course of collective bargain-
ing simply because an agreement has not been reached and a possible
strike may be in the offing. But we think it at least clear that an
employer ought not be compelled to invite injury to its own business,
and to that of its customers, by soliciting or accepting new orders for
work to be done during a period when it has a genuine basis to fear
strike delays leading to serious damage to its customers' interests,
resultant customer ill will, and an attendant loss of future business.
Yet-under our view of the facts-that is the practical effect of the
majority's holding in this case.
The conclusion we reach here is not altered by the fact that the
Respondent's decision to suspend operations may also have been
motivated, although only subordinately as the Trial Examiner found,
by a desire to impose pressure on the Unions to force an earlier and
more favorable agreement. We need not now pass on the question of
whether the use of such a pressure device, standing alone, may prop-
erly be viewed as trenching upon employees' statutory rights." For
Is The last ship in the South Chicago yard left several weeks before Respondent's sus-
pension of operations.
"The record shows that , in its other yards, where Respondent had work to be per-
formed, those employees who had work to do were not laid off.
15 Cf. Morand Brothers Beverage Co. v. N.L.R B., 204 F. 2d 529, 531 (C.A. 7), cert
denied 346 U.S. 909.
1370 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
even if that is so, there would still remain the necessity, in line with
the teaching of the Supreme Court in analogous situations-
of weighing the interest of employees in concerted activity against
the interest of the employer in operating his business in a partic-
ular manner and of balancing in the light of the Act and its
policy the intended consequences upon employee rights against
the business ends to be served by the employer's conduct.
N.L.R.B. v. Erie Resistor Corporation, et al., 373 U.S. 221. See also
cases cited in footnote 7 thereof.
On the record before us, we, no less than the Trial Examiner, are
persuaded that, on balance, the Respondent's legitimate business con-
siderations outweighed and justified any incidental invasion of em-
ployee rights that might have been involved. In short, it is our con-
sidered judgment that the factual situation now before us fits more
nearly into the pattern of cases such as Betts Cadillac 16 than into
that of the Quaker State Oil case upon which the majority opinion
principally relies.
Accordingly, we would affirm the Trial Examiner's findings and
would dismiss the complaint in its entirety.
16 Supra, footnote 12 See also Packard Bell Electronics Corporation , 130 NLRB 1122;
International Shoe Company, 93 NLRB 907; Duluth Bottling Association , at al., 48
NLRB 1335.
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, as amended, we hereby notify our employees that :
WE WILL NOT discourage membership in International Brother-
hood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers
and Helpers; United Association of Journeymen & Apprentices
of the Plumbing and Pipefitting Industry of the U.S. and
Canada; United Brotherhood of Carpenters and Joiners of Amer-
ica; International Brotherhood of Electrical Workers; Brother-
hood of Painters, Decorators & Paperhangers of America; Inter-
national Brotherhood of Firemen and Oilers; International
Union of Operating Engineers; and Patternmakers League of
North America, acting jointly as the collective-bargaining repre-
sentative of our employees, or any other labor organization or
group of labor organizations, by discriminatorily locking out or
laying off our employees.
WE WILL NOT in any other manner interfere with, restrain, or
coerce our employees in the exercise of their right to self-
organization, to form labor organizations, to join or assist the
THE AMERICAN SHIP BUILDING COMPANY 1371
group of eight unions listed above, or any other labor organiza-
tion, to bargain collectively through representatives of their own
choosing, and to engage in concerted activities for the purpose of
collective bargaining or other mutual aid or protection as guar-
anteed in Section 7 of the Act, or to refrain from any and all such
activities, except to the extent that such right may be affected by
an agreement requiring membership in a labor organization as a
condition of employment as authorized in Section 8(a) (3) of
the Act, as modified by the Labor-Management Reporting and
Disclosure Act of 1959.
WE WILL make whole the below-named employees for earnings
lost as a result of the discrimination against them.
J. Couillard A. N. Chorak J. McGrory
G. Homan A. Rigoni C. F. Mierendorf
F. Blazic T. Delaney E. D. Mantz
L. Ferguson W. Steinken F. Krisco
T. Franciscovich N. T. Rosenquist F. Jansky
L. F. Williams J. W. Oman V. Dalla Costa
F. Dudek P. Miller A. Barclay
D. J. Thompson L. Deneve F. S. Machowski
A. J. Serapin J. Barrick W. Klassen
A. Picciola M. Cox R. Ferry
P. Mungas E. Lipka P. Cruse
C. I. Bulak J. J. Salakar H. G. Kutzer
M. Horvatich E. Jansky, Jr. R. Jansky
H. Calhoun E. J. Wolff H. Dombrowski
R. Scott H. W. Signs M. Boich
J. Piltaver
THE AMERICAN SHIP BUILDING COOMPANY,
Employer.
Dated---------------- By-------------------------------------
(Representative) (Title)
This notice must remain posted for 60 consecutive days from the
date of posting, and must not be altered, defaced, or covered by any
other material.
Employees may communicate directly with the Board's Regional
Office, Midland Building, 176 West Adams St., Chicago, Illinois,
60603, Telephone No. Central 6-9660, if they have any question con-
cerning this notice or compliance with its provisions.
INTERMEDIATE REPORT AND RECOMMENDED ORDER
STATEMENT OF THE CASE
Upon a charge of unfair labor practices duly filed on October 24, 1961 , against
The American Ship Building Company, herein called the Company or Respondent,
the General Counsel of the National Labor Relations Board issued a complaint and
notice of hearing dated December 22, 1961, alleging that Respondent had violated
Section 8(a)(1), (3 ), and (5) of the Act. An answer admitting certain allega-
tions of the complaint but denying the commission of any unfair labor practices
1372 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
was filed by Respondent and a hearing was held before Trial Examiner George J.
Bott in Chicago, Illinois, on February 14, 15, and 16, 1962. All parties were rep-
resented at the hearing and have filed briefs which I have considered.
Upon the entire record in the case, and from my observation of the witnesses,
I make the following:
FINDINGS OF FACT
1. RESPONDENT'S BUSINESS
The complaint alleged and Respondent admitted that:
(a) Respondent is, and has been at all times material herein, a corporation duly
organized under, and existing by virtue of, the laws of the State of New Jersey.
(b) At all times material herein, Respondent has been engaged in the manu-
facture, repair, and conversion of steamships and operates shipyards in Buffalo,
New York; Lorain and Toledo, Ohio; and, South Chicago, Illinois.
(c) During the past year, Respondent, in the course and conduct of its business
operations, performed services valued in excess of $100,000 at each of its ship-
yards in the States of New York, Illinois, and Ohio for various shipowners and
steamship companies operating on the Great Lakes.
(d) During the past year, Respondent, in the course and conduct of its business
operations, purchased, transferred, and received at its Lorain, Ohio, shipyard, steel,
ship parts, and other materials valued in excess of $100,000, which materials were
transported to said shipyard directly from States of the United States other than
the State of Ohio.
(e) During the past year, Respondent, in the course and conduct of its business
operations, purchased, transferred, and received at its South Chicago, Illinois, ship-
yard, steel, ship parts, and other materials valued in excess of $100,000, which
materials were transported to said shipyard directly from States of the United States
other than the State of Illinois and/or in foreign commerce directly from foreign
countries.
Respondent concedes, and I find, that it is an Employer engaged in commerce
within the meaning of the Act.
H. THE LABOR ORGANIZATIONS INVOLVED
The complaint alleged, Respondent admitted, and I find that each of the follow-
ing named organizations is, and has been at all times material herein, a labor or-
ganization within the meaning of Section 2(5) of the Act: International Brother-
hood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers; United
Association of Journeymen & Apprentices of the Plumbing and Pipefitting Industry
of the U.S. & Canada; United Brotherhood of Carpenters and Joiners of America;
International Brotherhood of Electrical Workers; Brotherhood of Painters, Decora-
tors & Paperhangers of America; International Brotherhood of Firemen and Oilers;
International Union of Operating Engineers; and Patternmakers League of North
America; all of which unions are affiliated with the AFL-CIO, and are hereinafter
referred to as the Unions; and International Association of Machinists, AFL-CIO,
hereinafter referred to as Machinists Union.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The facts
1. Negotiations prior to the layoff of employees on August 11, 1961
Since as early as 1952, Respondent and the eight craft Unions have been parties
to a collective-bargaining contract which expired on August 1, 1961.1 In May 1961
the Unions and Respondent exchanged contract change proposals by mail and
subsequently the first negotiating session was arranged for June 6, 1961, at Cleve-
land, Ohio.
At the first negotiating session the Unions selected Charles Alexander, Jr., rep-
resentative of the International Boilermakers Union, as chief negotiator and spokes-
man for all of them. Charles Cavano, Respondent's attorney, and Stanley A. Mid-
night, Respondent's executive vice president, were chief spokesmen for the Company.
In addition, representatives of the various local unions as well as the Company's
'The agreement was with the International Unions, not the locals Respondent also
had an agreement with the International Association of Machinists which expired on
August 1, 1961, but which was negotiated separately
THE AMERICAN SHIP BUILDING COMPANY 1373
plant managers were present . As a general rule the same representatives were
present at all subsequent bargaining meetings.
At the first meeting of the parties on June 6, 1961, Midnight spoke about Re-
spondent's poor competitive position in the industry and proposed that Respondent
keep its rates of wages constant until such time as its competitors' rates rose. He
pointed out that conditions in the Great Lakes area were generally poor for all
shipbuilders because of various economic factors, and that, in particular, one
competitor company had wage rates as much as 42 cents per hour less than Re-
spondent.2 During the meeting, the Unions' chief negotiator stated that he under-
stood that in the past there "seemed to have been a strike . . . during every negotia-
tion . . ." but it was his hope that the parties could reach agreement on this occasion
without a strike. He added that he disliked strikes and would do everything he
could to prevent a strike and complete negotiations amicably .3 Nothing of major
importance was accomplished in the June 6 meeting, and the parties again met on
June 7 and 8 without success.
The parties met, again on June 19, 20, 21, 22, and 23, but only minor changes
in contract language were agreed to. During the June 20 meeting the Unions left
their wage demand open but suggested the discussion of fringe benefits such as
pensions, vacations, guaranteed holidays, and the like. The Company computed
these requested fringe benefits at 28 cents per hour and the Unions at 20 cents.
The Unions agreed to submit revised proposals to the Company and did so in time
for a bargaining session held on July 5. On July 5 and 6 the parties met again.
The Union had revised downward some of its requests for fringe benefits, but it
requested that 10 cents per hour be set aside for pensions where no specific cost
had been suggested before. The Unions still made no specific demand for wages
preferring to negotiate the other matters first. The parties met again on July 6
without coming to agreement on economic issues of any substance, and Respondent
suggested that the services of the Federal Mediation and Conciliation Service be
utilized if the parties hoped to reach agreement before the contract's expiration date.
Cavano called the Conciliation Service and a meeting was arranged for July 19.
During the July 19 meeting with the Conciliation Service, the Unions revealed
their demand for a 20-cent per hour across-the-board increase. Other economic
issues remained in the picture and although some progress was made on certain
sections of the agreement no appreciable progress appeared with respect to the eco-
nomic matters. At this session the Unions proposed a 6-month extension of the agree-
ment which contained a no-strike clause. Respondent refused the extension on
the ground that the contract would then expire in its busiest season of the year.
During a meeting on July 20 the parties discussed wages and other items. Although
certain matters were resolved, the important economic issues, including wages,
remained a stumbling block. During this meeting, while discussing wages, Alexander
stated that the Company was "crying" about not being able to afford a wage in-
crease and that it had used the same argument in 1958, but, after a 10- or 12-week
strike, the Company granted an 8-cent per hour increase in each year of a 3-year
agreement and yet was not forced out of business. Alexander added, however, that
the Unions did not wish to strike and urged further negotiations.
The parties met again on July 28, 29, and 31. By July 31, the last day of the
existing contract, the issues had been narrowed to five or six but they were primarily
monetary or fringe benefits.
The Company presented two proposals to the Unions covering the unresolved
issues, but the Unions rejected the proposals. The Unions made a counterproposal
to Respondent. First, they suggested a 1-year agreement covering their wage and
fringe benefit proposals which included, at this point in the negotiations, a 9-cent
per hour increase and 5 cents for a pension plan, and secondly, proposed a 6-month
extension of the existing contract. Respondent rejected the Unions' proposals. The
Company asked that its proposals be submitted to the employees for a vote and
the Unions agreed to do so, but stated that they would not recommend adoption.
Alexander asked that the labor agreement be extended until a new agreement was
reached the effective date to be retroactive to August 1, but this was refused by
2 Months before the labor agreement expired, Alexander, at Respondent' s request, had
discussed with Respondent's representatives the possibility of an early opening of the
contract In these conversations the general economic conditions in the industry were
mentioned.
31t appears that a strike occurred in all negotiations beginning in 1952, followed by
1953, 1955, 1956, and 1958. The strikes lasted for about 3 weeks at a time, with the
exception of the 1958 strike which lasted about 10. There was also a stoppage in 1961
over a grievance.
1374 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Respondent. Alexander then requested that the agreement be extended long
enough to take Respondent's proposals back to the membership and Respondent
agreed to do so.
At the close of the July 31 meeting, Respondent asked the Unions if they in-
tended to close down the yards the next morning but Alexander replied that the
Unions did not intend to and were not going to strike. On August 8, 1961, the
Unions told the Company that the employees had "overwhelmingly" rejected the
Company's August 1 offer. Respondent asked why the Unions had not struck
and Alexander told Respondent that the Unions had consistently stated that they
did not intend to.
On August 9 the parties met again. Respondent offered the Unions a 3-year
agreement with a package increase of 5 cents each year, which the Union could
divide in any way they wished, for pensions, group hospitalization, or a wage in-
crease in the respective years. The Unions refused to take the offer back to the
membership and made no counterproposal. Plans for another meeting seemed up
in the air but it is Alexander's recollection that the meeting was adjourned with
the understanding that ". . . the Conciliator would call the next meeting at the time
that he thought proper."
2. The layoff of August 11, 1961
When the August 9 bargaining session at which the Unions had rejected the
Company's offer adjourned, Respondent's executive vice president, Stanley Midnight,
called a meeting of Respondent's plant managers and Cavano to determine what
course of action Respondent would take. The meeting of officials occurred on
August 10 and it was decided to completely shut down the Chicago yard and lay
off all but two employees at Toledo. At Buffalo the yard was completing some
miscellaneous jobs and there were about 50 men employed. These men were
gradually laid off as the work was completed. At Lorain Respondent was working
on a large vessel, the Atlantic Dealer, and Respondent retained a comparatively
large force to complete the job. Respondent, however, gradually reduced the force
at Lorain as it completed the work on the vessel.
Pursuant to the discussions and plan evolved at the above meeting of officials,
Respondent took action of August 11. On that date all South Chicago and Toledo
personnel in the bargaining unit, as well as some from Buffalo, were issued a layoff
notice which stated, "Because of the labor dispute which has been unresolved since
August 1, 1961, you are laid off until further notice."
At the August 10 meeting of company officials where the layoff was planned,
Respondent decided on the precise language it would use in the layoff notices which
it determined would have the result of depriving laid-off employees of unemployment
compensation. In Illinois, for example, Respondent notified the Division of Un-
employment Compensation that the South Chicago layoffs were due to a labor dis-
pute Attorney Cavano testified that he knew and intended that such notice would
deprive the employees of compensation under Illinois law, and they subsequently
were so disqualified. In Ohio and New York the procedure is different. When em-
ployees file for beneffts the employer is notified and at that time may protest an
allowance. Respondent did protest the New York and Ohio claims and made the
determination to do so at the August 10 meeting.
3. Negotiations after the August 11 layoff; execution of a new labor
agreement on October 27, 1961
The parties met again on August 19 and 20 at the Conciliation Service. The
Unions asked for a 2-year contract costing about 10 cents each year, and the Com-
pany offered a 3-year agreement costing 5 cents the first year, 8 cents the second,
and about 2 cents the third. The Unions rejected the Company's proposal, but
continued to bargain. Finally, the parties broke off the sessions because they
had become deadlocked on the effective date of the agreement, the Unions insist-
ing on date of execution and Respondent on August 1.
At a session held on August 28 at The Conciliation Service, where the parties
did not meet face-to-face but exchanged views through the conciliators, the Unions
rejected a company proposal for a 1-year agreement costing about 7 cents with an
August 1 expiration date. The next day the parties met again and Respondent made
a proposal for a 2-year agreement, expiring August 1, 1963, and providing for 5
cents in pensions the first year; 4 cents for health and welfare 6 months later; and
5 cents for a wage increase at the beginning of the second year. This proposal was
put in writing for presentation to the membership.
The various locals voted on the Company's proposal and a majority rejected it
with the stipulation that it would be acceptable if the expiration date coincided
THE AMERICAN SHIP BUILDING COMPANY 1375
with the date of execution and hospitalization benefits were altered . At a meeting
on September 18, Respondent was notified of the rejection. At this meeting, A. F.
Young, representing the International Boilermakers Union, told Respondent that
the Unions would do all "in their power" to secure unemployment compensation
benefits for the employees who had been laid off during the bargaining.
The last of the bargaining meetings took place on October 20, 21, and 22. The
parties disposed of the "effective date" problem by agreeing to an August 15 ex-
piration date, and also settled the hospitalization issue. The Unions then insisted,
and the Company agreed to withdraw its protests to unemployment compensation
in New York and Ohio, and to do whatever possible to aid Illinois employees to get
compensation. The final agreement was signed on October 27, 1961, for a term
of 2 years.
4. The issues and contentions
The General Counsel contends that Respondent violated Section 8(a)(1), (3),
and (5) of the Act by laying off and locking out its employees 4 on August 11, 1961,
for the purpose of coercing them and the Unions to abandon the Union's contract
demands and to accept instead those terms offered by the Company. He contends
further, that the notification to the Illinois Department of Labor that employees
were laid off because of a "labor dispute ," designed as it was to deprive them of
compensation , was an additional violation of the Act.
Respondent contends, in brief, that it was confronted with the threat of a strike
or prolongation of bargaining until a ship was in the docks (at which time a strike
would occur ); that no work was on hand and none was anticipated since customers
were refusing to send work in; that an impasse had been reached in bargaining on
August 10; and that, therefore, under such circumstances, the Respondent had a
right to curtail operations before the precise moment when a strike occurred. With
respect to the denial of unemployment benefits, Respondent urges that : "If the
employees were to be laid off because of lack of work , Respondent , in effect, would
be financing the labor dispute , in that employees would collect unemployment bene-
fits up to 26 weeks, the cost of the premiums being borne by Respondent, alone,
and this would extend the bargaining into the winter months , which it was apparent
to Respondent the Unions were trying very had to do." 5
General Counsel , while not admitting Respondent 's conclusions even if its premises
were conceded , denies the imminence of a strike ; contends that there was no eco-
nomic justification for defensive action by Respondent; and urges that no impasse
was ever reached in bargaining . All these contentions require additional findings
as follows.
5. The Company's belief in the imminence of a strike
By August 10 the parties had met at least a dozen times in long bargaining
sessions, which sometimes lasted into the early hours of the following morning,
but were still far apart on monetary items and had no agreement about the term
or effective date of the agreement . At the last session before the layoff the Unions
rejected a new company proposal, refused to take it to the membership, and made
no counteroffer. Further meetings were to be called when the conciliator "thought
proper." Earlier, sometime between the expiration of the old agreement and the
August 9 meeting, the employees had overwhelmingly rejected the Respondent's
offer of July 31. The record also shows a history of strikes at each contract
negotiations since 1952, and strike votes taken by the locals during the 1961 bargain-
ing. These facts alone could have led Respondent to reasonably believe that a
strike would occur at any time after August 10, 1961.
On the other hand , at the first bargaining session the Unions' chief negotiator,
Alexander, stated that although there had been strikes in the past, it was his sincere
hope that the parties could reach an agreement without a strike in the current bar-
gaining. At subsequent meetings he made similar statements . For example, the
Company emphasized during meetings in July that it wanted to reach an agreement
before contract expiration in order to be able to bid on work. Alexander assured
the Company that it could bid, for the Unions did not intend to strike. Francis
De Jac, representing the Buffalo local of the Boilermakers Union, told the Company
it could take work and his men would complete it. Grambo and Jamgochian, local
business representatives of the Boilermakers at the South Chicago and Toledo yards,
* The complaint covers only the layoff of employees at South Chicago and no other
yard The charge, filed by the local union, not the International, related to the South
Chicago yard only No charges were filed by other locals.
5 Respondent 's brief.
1376 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
respectively , also assured the Company that the men would complete any work the
Company was able to get . Alexander repeated his assurance that the men did not
intend to strike on a number of other occasions prior to the layoff.
In addition to the Unions ' oral assurances to Respondent that no strike was in-
tended on August 11 , certain other Unions ' conduct has a bearing on Respondent's
claim that it believed a strike would occur . Although the labor agreement expired
on July 31 , the men worked at all the yards without interfering with the Respondent's
operation in any way until the layoff of August 11. Important work on the vessel
Atlantic Dealer was being done at Respondent 's Lorain yard during the negotiations,
and hundreds of employees continued to work on this job without interruption, even
though a strike at the yard would have injured Respondent . Similarly , at Buffalo,
where a certain amount of miscellaneous work continued , the men continued to work
while there was work in the yard.
Moreover , Respondent never asked the Unions for assurances that the men would
not strike , nor did it ask for reasonable notice in the case of a strike . The Com-
pany never asked for assurances that any work in progress would be completed.
The Unions, however, twice offered to extend the contract for 6 months, and when,
on July 31, the second offer was refused , proposed that the existing contract be
extended indefinitely until a new agreement was reached, the effective date of any
agreement to be retroactive to August 1. This proposal was also turned down.
On the basis of the above facts alone no one can say with any certainty, long
after the layoff of August 11, that a strike actually was impending on that date
or that it would have occurred when a vessel was brought into Respondent 's yards.
On the other hand , neither can I find, on the basis of the facts set forth , even with-
out reference to the nature of Respondent 's business operations, that Respondent did
not actually believe that a strike might immediately occur , or occur if a vessel were
in the yard . The fact that a strike did not take place cannot be of great significance
in retrospect because the layoff and closing of the yards may have diverted the
normal flow of events . On the Union 's side we have principally the assurances of
peace given by Alexander and other representatives .6 I do not think the offer to
extend the agreement for 6 months adds much weight to the assurances for it would
permit the contract to expire during Respondent 's busy season , and at an ideal
time for the Unions. Similarly , an indefinite extension was only part of the strategy
of bargaining for Respondent would have no firm agreement during the time. More-
over, Respondent 's rejection of an indefinite extension of the agreement during
bargaining is consonant with a desire to get an immediate agreement on more favor-
able terms and not inconsistent with an honest belief that it would be confronted
with a strike when the situation was ripe . An indefinite extension would be an
uneasy peace at best.
Despite Alexander's assurances , we have on the Company 's side of the ledger,
as set out above , the long history of strikes , the gulf between the parties, and the
apparent impasse after exhaustive attempts with the aid of Federal Mediation and
Conciliation to reach agreement . When these facts are viewed in the light of Re-
spondent's operations they lead me to conclude that when Respondent laid off its
employees after the August 10 bargaining meeting it did so in the belief that a strike
would occur then or at such time as a vessel was docked at one of its yards.
Respondent 's busy season is in the winter months when the vessels which sail
the Lakes are laid up because of the weather . Emergency work does occur during
the summer months, and Respondent usually kept "nucleus" crews in its yards who
would , in the absence of customer work , perform maintenance work . The work
situation in its yards on August 11 was as follows:
At Lorain a large ship was in the dock that had been under construction for a
year before the agreement expired. The men working on this vessel were gradually
laid off as the work progressed and the ship finally left the yard . At Chicago and
Toledo, no vessels were in the yards and the nucleus crews doing maintenance work
were laid off . At Buffalo , no ship was in the yard and employees were doing mis-
cellaneous work. They too were gradually laid off. Midnight testified that if a
vessel were brought into the yard there was a real possibility of it being tied up in
the event of a strike . He recounted an incident occurring in the 1955 negotiations
where a valuable vessel was tied up and unable to sail because caught in the Re-
spondent's dock during the strike of that year. He testified that he was motivated
6 Despite Alexander's assurances that the Unions did not intend to strike, he never said,
as no union representative 'could, that the men would not strike if necessary Moreover,
he did not appear overly impressed with Respondent 's plea regarding economics , for in the
July 20 meeting , as set forth above, he referred to the 8 -cent increase granted after an
earlier strike in spite of the Company's assertion then that it was unable to afford it.
THE AMERICAN SHIP BUILDING COMPANY 1377
in part in closing the yard because of a fear of such incidents.? I credit Midnight's
testimony and find that Respondent reasonably believed that a strike was possible
on August 11, or thereafter, if ships were put into the Respondent's docks.
6. Lack of work at Respondent's yards in the summer of 1961 and the
reasons therefor
Midnight, in explaining the Respondent's layoff of August 11, testified that there
was at the time practically no work at the South Chicago, Toledo, and Buffalo
yards. He stated that the Company in the past had maintained a nucleus crew
in the summer months so that it could handle emergency work as it arose. He
added that the Respondent did not keep a nucleus crew on just for maintenance
work in the absence of emergency work for there was always in the past some
amount of productive work. In August 1961, however, according to Midnight, the
situation in the yards was different for Respondent found, after reviewing the situa-
tion, that it "had no possibility of any work in our Toledo, Chicago and Buffalo
plants." Midnight based his conclusion, he said, on the fact that customers, because
of newspaper reports about the dispute, were continually calling him to inquire
about the status of the labor negotiations. He considered negotiations to be at a
"stalemate" and felt that customers would not risk bringing their ships into Respond-
ent's yards. He stated, however, that yard managers were instructed to take what
work they could get and that Respondent did not refuse work offered it by shipowners.
With respect to Midnight's contention that there was no work at all in the Chicago
yard when the men were laid off the record shows that, at least for the last 17 years
no employee had been laid off in the summer months but were retained to do
maintenance and emergency work. Although the Respondent frequently lost money
by keeping a nucleus crew employed during its slack season, Yard Manager
Dalrymple explained, ". . . if you want to [get] work you have got to give some
service irrespective of what it costs. You must keep some men around you. Other-
wise when it comes to big jobs in the winter here, you're out of luck." Midnight
also stated that Respondent lost money in the summer months but maintained a
crew for emergency repair work to satisfy customers and keep their good will. On
the other hand, both he and Dalrymple testified without contradiction that there
was ". . . a little more work . . ." in the Chicago yard in prior years. No records
were produced by either side to support or impeach this testimony but the record
does show from daily labor reports in evidence that the last ship in the Chicago docks
for productive work prior to August 11 was the Zanzibar on July 19. I find, in
accordance with Dalrymple's testimony, that work requirements were "a little
bit better in 1960 than . . . in 1961. " 8 Immediately after the dispute was
settled and a new contract executed in October 1961, Respondent recalled its mini-
mum nucleus crew to the Chicago yard to stand by for whatever emergency jobs
might arise. In addition, certain employees in the group picked up at the same
maintenance work they had been doing prior to the layoff. On the basis of the
above facts with respect to summer work, I find that, in all probability, Respondent
would have kept the same nucleus crew in the summer of 1961 as it had in prior
years, despite the fact that business was "a little" worse in 1961, if it had not been
for the fact that a new labor agreement had not been signed. This does not fully
answer the question about Respondent's motivation, however, for Respondent also
argues, in addition, that there was no likelihood of future business while it had no
firm labor contract because customers would not risk tying up their ships in a
yard which might be struck. The evidence on this issue is as follows:
Although Midnight testified that customers were "continually" calling him about
the labor negotiations he was able to remember the name of only one such cus-
tomer, and could not recall the date of that call. On the other hand, it appears
from his testimony that, normally, calls for emergency repairs would go directly
to the local yard manager.
Dalrymple, manager of the South Chicago yard which was completely shut down
on August 11, testified that he had no telephone calls for emergency repair work
in August 1961. He admitted, however, that the word had spread "within [the]
trade . . . faster than it does at a girl's koffee klatch . . ." that "American Ship
71-le also testified that Respondent's customers also were aware of such incidents and
possibilities, and this caused a diminution of business during the 1961 negotiations.
This subject will be discussed below.
8 Employee Ferry, called by General Counsel, admitted that there was no productive
work in the Chicago yard in the summer of 1961 but such was not true in 1959 and 1960.
1378 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Yards on the Great Lakes .. had shut down. He added that he would have
taken any business that "wouldn 't be jeopardizing a ship ... " but none was offered.
Walter Knapp, manager of the Toledo yard of Respondent, testified that on
-August 10 he had about 24 unit employees working on maintenance with no repair
work of any kind for them to do and none on order. He described contacts he,
had with the owners of nine vessels who refused to bring their ships into Respond-
ent's drydocks between August 1 and September 7, 1961, after conversations with
him concerning the status of Respondent's labor agreement. He admitted that all
managers had been told as early as July by Midnight to inform customers about the
labor contract when they telephoned. He volunteered the information to those
who did not ask, and those who did ask were told that the situation was "not
too good." He conceded, that although it was part of his job to get business for
the yard, he did not plead with customers for work but merely gave them informa-
tion about the labor negotiations.
Jerry Thoman, manager of the Buffalo yard, testified that he attended the meet-
ing of the managers after the August 10 bargaining session and was unable at that
'time to justify the retention of the summer nucleus crew in Buffalo because he
had no prospects of work that would return a reasonable amount of revenue. He
stated that he sought work and did secure a small amount of a kind that would not
make a vessel unseaworthy, but that large repair orders were not forthcoming. He
described an incident involving a vessel purchased for scrap by a dealer who wished
it made seaworthy for transportation overseas. Thoman gave the customer a price
estimate, but when the customer discovered that Respondent had no labor agree-
ment, it refused Respondent the work.
Thoman also related incidents involving the vessels Mataafa and Ingalls which
Respondent anticipated drydocking during its labor negotiations. When the owners
of the vessels learned of the uncertain state of Respondent's labor agreement they
took the Mataafa to Canada for repair, but the Ingalls was permitted to operate by
the Coast Guard until the end of the operating season In addition, he testified
that the owners of the Drekenmiller took the ship to a competitior during the same
period when they learned that Respondent had no labor agreement He added
that the Drekenmiller owners were the same people who had a vessel caught in one
of Respondent's yards during a previous strike.
Thoman testified that a negligible amount of work was obtained by him between
August 1 and October 1 to keep some men busy but this was not the kind of
work that would make a ship unseaworthy and involve the vessel in the event of
a strike. He stated that he refused no work offered him but admitted that in his
opinion ". . . the owner that brought the boat into the dock would have rocks in
his head if he would have taken the chance." He conceded that he could have
made that statement to owners during the unsettled period.
Gordon Stafford, manager of repair sales at the Cleveland office of the Company,
who primarily handles large repair or conversion jobs, also testified with respect to
asserted reluctance on the part of customers to dock their vessels in Respondent's
yards during the contract negotiations. Stafford stated that the owners or agents of
four vessels, the U.S.S. Prescott, a United States Navy ship; the Markam, a United
States Coast Guard vessel; the Ishpeming, owned by Cleveland Cliffs Co.; and the
Challenger, owned by Pioneer Steamship Company, failed to put the vessels in
Respondent's drydocks during contract negotiations when they learned that negotia-
tions were still going on.
Nathan Louis, a Navy contract specialist, with whom Stafford dealt regarding
the Prescott, denied that the Navy was at all reluctant to put the Prescott in dry-
dock even though he was told by Stafford about the labor negotiations and informed
by him that the employees would walk off the job if the vessel were docked. He
testified that he had repeatedly asked Respondent to do the needed work but Re-
spondent had refused, stating that due to labor difficulties it was not in a position
to take work at any of its yards. Louis testified from records made at the time
of the conversations with Stafford, and I credit his testimony.
Stafford's testimony was also shaken by his admission that he had no personal
knowledge about the Ishpeming and that the first time he talked to the customer
about it was in November 1961. Stafford was uncontradicted about the Challenger,
but he admitted that he had both the Challenger and Ishpeming owners write letters
in November 1961 indicating reluctance to have repair work done because of labor
trouble, and had the letters backdated to August 11, 1961. These letters were sent
to the National Labor Relations Board during the investigation of the instant case.
With respect to the Markham, Stafford volunteered the information to the Corps
of Engineers about Respondent 's labor negotiations . On the other hand , his testi-
mony that the Corps of Engineers was reluctant to dock the vessel was uncontradicted
THE AMERICAN SHIP BUILDING COMPANY 1379
and, in fact , corroborated by Walter Knapp 's testimony about the same vessel, as
well as the dredge Hayes, about which he was contacted by the Corps of Engineers.
Despite Stafford's refutation by Louis, whom I have credited, and his backdating
of the letters, I do not discredit him entirely but find, on the basis of his whole
testimony , some evidence that customers were reluctant to bring work to Respond-
ent during Respondent's labor negotiations.
General Counsel argues that the testimony of the Respondent's own representa-
tives, namely , Midnight, Dalrymple , Knapp, Thoman , and Stafford , as summarized
above, shows that any lack of work existing in Respondent 's yards on August 11
was not caused by customer refusal to supply Respondent with work, but by Re-
spondent 's determined plan to avoid taking work into its yards in order to force the
employees to submit to the Company 's proposed contract terms.
I do not agree with General Counsel 's argument insofar as it implies that the
absence of work at the yards on or about August 11, and in the period prior to the
execution of a new agreement, was unconnected with customer reluctance or refusal
to give Respondent work. Respondent has but 14 or 15 shipowner customers and
Midnight testified credibly that Respondent's unresolved labor problem was well
known from newspaper accounts . I also credit his testimony that customers knew
that no contract had been signed from conversations with him. Although I credit
Navy representative Louis as against Stafford, and find that Stafford refused work
on the Prescott on or about August 31, I also credit Thoman and Knapp, managers
of the Buffalo and Toledo yards, respectively, in their testimony that a substantial
number of owners were reluctant to bring their vessels into Respondent 's yards
during the crucial periods. One of the owners had had a vessel tied up in a strike
once before, and the others must be assumed to be aware of the facts of life, par-
ticularly that neutrals are endangered when caught between the fire of even once
friendly powers. On the other hand, I think it a fair appraisal of the record, based
on Thoman's and Knapp's testimony, that information about the unsettled contract
was volunteered to customers coupled with gloomy predictions designed to dis-
courage the unwary customer. But nevertheless, even here the deliberate discour-
agement of customers cannot be viewed apart from Respondent's belief that a strike
was possible at any time , for good customer relations is as reasonable an explanation
of the discouragement as is an intention to put pressure on the employees by lock-
ing them out for no reason other than a desire to impose Respondent 's terms on
them Finally , no ultimate finding regarding motive in the circumstances can be
fairly made without relation to what Respondent believed its customers believed
and would do as a class with respect to placing their property in Respondent's yards
when Respondent had no labor agreement for a definite term, regardless of the
merits or exact status of the controversy as between the immediate parties.
Viewing the situation as I believe it realistically appeared to Respondent at the
time, I find that Respondent had little more than maintenance work in its yards
on August 11; that, as found above, it believed a strike was a reasonable hypothesis;
that it knew or reasonably believed that customers as a class would give it little
business during such a period; and that it discouraged all potential customers from
entrusting vessels to Respondent .9 I find that Respondent was in large measure
motivated in discouraging orders and laying off its employees by its realistic appraisal
of the economics of the situation . I also believe , of which more later, that Respond-
ent, confronted with a situation such as I have described , was also motivated, in
part, in laying off the employees as it did in order to break what it believed to be an
impasse in bargaining and bring economic pressure on the employees to take less
favorable terms and to take them before Respondent became more vulnerable to
strike action in its busy season which was approaching.
7. The existence of an "impasse" on August 10, 1961
Recognizing that in certain cases the existence of a stalemate or impasse in col-
lective bargaining is deemed relevant in assessing the validity of certain employer
9I think it of only very minor significance that some of Respondent's customers went
to Respondent's competitor during the layoff of the Chicago yard even though the cam-
petitor also had an unresolved dispute with the Boilermakers Union Most of the work
done was not done at the dock of the competitor In addition, we know little about the
relative . sizes of Respondent and its competitor to judge the importance of the respective
companies in the Unions ' view Nothing appears about past strike activity in the record
to assist in evaluating the possibilities of a strike at the competitor.
1380 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
conduct , such as unilateral 10 or defensive action , " Respondent and General Coun-
sel are at issue about the existence of an impasse when the layoff occurred.
Respondent 's chief negotiator and attorney , Cavano, testified that . it was
the Company 's belief that when negotiations broke off on August the 9th, 1961,
that an impasse had been reached between the Company and the Unions , and that
it was necessary for the Company to decide what its future course of action should
be in the light of what it believed to be an impasse ." General Counsel does not
admit that an impasse would justify Respondent 's action , but denies its existence
in any event . In support of his position he points out that there had been progress
in negotiations up to August 11 and beyond , and that at the last session before the
layoff it was understood that the conciliator would call the next meeting . I do not
think that these facts alone can negate a reasonable belief on Respondent 's, or any
experienced negotiator 's, part that negotiations seemed to have broken down. Pro-
gress indeed was made to a point where the parties were perhaps 8 or 9 cents per
hour apart on wages but this was not a petty difference to Respondent in the light
of its plea of competitive disadvantage . Moreover , it had taken a dozen long ses-
sions and the aid of the Conciliation Service to reach that point. The fact that
the Conciliation Service was to call a meeting when it "thought proper " is greatly
different from a meeting scheduled by the parties themselves , for the Conciliation
Service and other third party intervention exist , in part , for the purpose of resolving
deadlocks.
The existence of an impasse judged with hindsight is as difficult to determine as
the reasonableness of Respondent 's belief that a strike would occur . And it is as
equally unfair and unobjective to conclude that , since the parties finally settled their
differences , their apparent deadlock on August 10 was not a reality to them , as it is
to say, that since no strike occurred , none was contemplated . The intervention of
the layoff , the passage of time, the use of the Conciliation Service, and other events,
may have broken the deadlock . In any event , another dozen meetings and the pas-
sage of more than 2 months after the layoff were needed to resolve the issues which
separated the parties , so that there is little, if anything , in the period after August 10
that dilutes the facts which support an inference that a deadlock existed before but,
on the other hand, something to strengthen them.
Impasse cannot be determined by completely objective criteria . Subjective con-
siderations , if held in good faith even if ignorantly , cannot be disregarded. A lab-
yrinth is only a difficult journey for one with the thread , but a locked door is a cell
to one who does not know that the key is in the room . When , on August 10, after
a dozen meetings , the parties were substantially apart on monetary items, and had
no agreement on term of the contract , and the Unions refused to take a new com-
pany proposal to the membership , making no counteroffer , the Respondent had
every reason to believe that negotiations were deadlocked for all practical purposes,
and I so find.12
8. Respondent 's mixed motives in the layoff
For competitive reasons Respondent was eager to reopen the labor agreement
early so that it could be in a more favorable position to bid on or otherwise secure
work . It is essential here not to lose sight of the fact that in the summer months
when lake vessels are sailing Respondent 's business is in the doldrums, and that
the busy, more lucrative season begins when vessels are tied up for the winter.
On two occasions , long before the agreement was to expire , discussions were had
between the parties, in which the condition of the industry on the Great Lakes was
discussed , and Respondent attempted to alert the Unions to the problem and to
reopen the agreement early. After considerable bargaining Respondent believed
that part of the Unions ' strategy when the agreement expired was to continue to
bargain until it could get Respondent into a more vulnerable position and then strike
it. In my opinion , Respondent reacted to this stratagem by closing down the yards
when it was most convenient and less hurtful to it to do so, namely, in the summer
when business was bad , and as I have found in more detail above, when it anticipated
no work of any importance because of the unresolved dispute, in order to prevent
the Unions ' from closing, or threatening to close them , by a strike at a time most
favorable to the Unions. This view of Respondent 's motivation in the layoff is
supported by Respondent's brief. In the brief Respondent states:
10 See N L R B v. Crompton-Highland Mills, Inc, 337 U.S. 217
n See cases cited in footnotes 16, 17 , 18, and 19, infra
In N L.R B v. Crompton -Highland Mills, Inc ., supra , a classic case about the right
of an employer to take unilateral action after an "impasse." the Court, at page 218, stated
that negotiations had reached "something of an impasse."
THE AMERICAN SHIP BUILDING COMPANY 1381
Respondent , at all times after August 1 , 1961 , the date the agreement expired,
had a "sword of Damocles" hanging over its head . From its past strike history,
including a so-called "wildcat" strike at Chicago in February 1961, and the 1955
incident, when the riveters slowed down before the agreement expired, enabling the
Union to strike while a customer's ship was in the dock, it was apparent that a
strike would, occur at any time.
Respondent feels that if ships were in the docks after August 1, 1961, there would
have been a repetition of the same thing that happened through all the previous
years. As it happened, there were no ships in our docks at Chicago, Toledo, or
Buffalo, and the one ship we did have was berthed at Lorain long before the
expiration date of the agreement
It is our opinion the Unions intended to continue the status quo; that is, force
Respondent to continue employees working at Toledo, Chicago, and Buffalo, on
maintenance, nonproductive work, until such time as a ship was docked at those
locations, and then to strike the yard.
The Unions' strategy was.
Keep working at Lorain, keep the nonproductive men on the payroll as long as
possible at the other yards until one of two things occurred: (a) A shipowner
would send a ship into one of the yards, and then by striking, the Respondent would
be forced to his knees in effecting a labor settlement satisfactory to the Union, and
if this didn't occur, then, (b) continue to bargain, into the winter months, and
then execute an agreement effective in November, December, January, or February,
and in this way, when the agreement was reopened, Respondent would be sure to,
have ships in its docks, and a strike at such a time would bring the Respondent to.
its knees in effecting an agreement.
Respondent's position then, was that on August 9, 1961, when the Respondent's
proposal was rejected, no counteroffer was made, the Union refused to take the offer
to the membership for a vote, and no date was set for another meeting, that these
events indicated either a strike would occur, or that bargaining sessions would be
prolonged until a ship was in the dock, and such a situation left Respondent helpless
as to the men working on maintenance in the yards, with no work on hand, none
anticipated , and customers refusing to send work in.
If the employees were to be laid off because of lack of work, Respondent, in effect,
would be financing the labor dispute, in that employees would collect unemployment
benefits up to 26 weeks , the cost of the premiums being borne by Respondent , alone,
and this would extend the bargaining into the winter months, which was apparent
to Respondent the Unions were trying very hard to do.
Respondent believes its action in laying off the employees was a proper defensive
countermeasure to the Unions' objective of delaying negotiations until the Respond-
ent's busy season and then coercing the Respondent into acceptance of the Unions'
demands by strike or threat of strike, especially since the Respondent affirmatively
and honestly was desirous of negotiating and reaching an agreement , and such
action is protected under the Act. Duluth Bottling Association, et al., 48 NLRB
1335; International Shoe Company, 93 NLRB 907; Betts Cadillac-Olds., Inc., et al.,
96 NLRB 268.
This frank statement that Respondent's action of laying off the employees in
the circumstances existing at the time was a defensive countermeasure to the Unions'
objective of delaying negotiations until Respondent 's busy season is supported by
other evidence in the record . Midnight in explaining why Respondent would not
agree to extend the agreement stated that:
our immediate answer was no , ... the ships are sailing for eight months
of the year and the other four months they cannot sail into the ice conditions
on the lakes, so that every possible repair that could be put off until the winter
season is put off and the customer then schedules his ships for dry docking and
repairs during winter season, and if we were to have contract negotiations
come up the 1st of February or sometime during the winter season , the cus-
tomers would be fully aware of that and would not bring their ships in to us
that winter knowing that we were liable to have a strike....
In the light of the admissions , Midnight 's testimony , and the whole record, in-
cluding, for example, the suddenness of the layoff without prior notice to the Unions,
I find that Respondent was partially motivated in laying off its employees when it
did by a desire to break a deadlock and pressure the Unions into an earlier and
generally more favorable agreement. In short, it was Respondent's position that if
there was to be a war-let it begin here and now
712-548-64-v of 142-89
1382 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
B. Concluding findings
1. As to the 8(a)(1), (3), and (5) violations in laying off employees
Laying aside for the moment the ultimate question of the legality of the layoff,
the record shows, and there is no intimation to the contrary by anyone, that the
parties bargained in good faith throughout. I have found earlier that, on August 10,
1961, an impasse in bargaining existed, or that an objective viewer, at least, could
reasonably believe that negotiations were deadlocked. On that date, except for
Lorain, Respondent had little more than unproductive maintenance work in its yards,
and had reasonable grounds to believe that customers would be reluctant to en-
trust their vessels to Respondent so long as the issues between the Respondent and
Union were unresolved. Indeed, the record shows that some customers, at least,
actually sent work elsewhere. In addition, although Respondent discouraged ship-
owners from giving Respondent work, this advice, I have found, was equally con-
sistent with Respondent's intention to protect its customers in the event of a strike,
as with an object of pressuring the Unions to capitulate I have also found that on
August 10, Respondent honestly believed that a strike might take place immedi-
ately, or when a vessel was docked, or that bargaining would be delayed until
closer to the winter months when Respondent would be more vulnerable. I then
concluded that Respondent, on the basis of all the factors mentioned, including its
intention to break the deadlock in the hope of an early and more favorable agree-
ment, laid off its employees and notified the Illinois Department of Labor, Division
of Unemployment Compensation, that the employees were laid off because of a
"labor dispute" and not for lack of work, in order to block benefits for them
under Illinois law.
An employer is free, whether or not bargaining is in progress at the time, to
suspend operations for business or other reasons unrelated to the exercise by his
employees of their statutory rights. It cannot be gainsaid, therefore, considering
the findings I have made above, that Respondent's layoff of August 11, if it is viewed
apart from its desire to break an impasse before the winter season, cannot be held
illegal because Respondent had no productive work on hand and little anticipated
as a result of its labor problems. I do not think that the circumstances existing
on August 11, as found above, which would have excused Respondent from culpa-
bility in the layoff, became tainted with illegality merely because Respondent, find-
ing itself in a difficult economic position exacerbated by the labor situation, decided
to take whatever advantage it could of it in the hope that the deadlock might be
broken. Although Respondent's motivation could be considered to be a mixture of
clearly permissive and possibly improper, the economic inducements so overshadowed
anything improper that they must be considered primary, particularly when the
economic factors which supported them arose through no fault of Respondent and
anteceded the layoff.
The case at bar falls somewhere within the principles found in a line of cases
where an employer has been found to have taken certain "defensive actions" dur-
ing bargaining. It is well recognized that although employees have the right under
the Act to engage in concerted activities including the right to strike, employers
may, in certain circumstances, take various defensive actions to protect their busi-
nesses against loss or inconvenience to themselves or their customers. An employer
may, of course, replace economic strikers in order to keep his business going,13 and
he may lock out all employees in certain circumstances, such as in the event of a
strike or a threatened strike, in order, for example, to preserve multiemployer bar-
gaining or prevent serious inconvenience to his customers-14 Economic hardship
may justify temporary lockouts or refusals to reopen during a strike, absent reason-
able assurances of a measure of continuous operations.15 In each case "The ulti-
mate problem is the balancing of the conflicting legitimate interest." 1e
General Counsel and Respondent recognize, of course, the principles to be ap-
plied, and are aware that conflicting interests are to be balanced, but they point to
is N.L.R B. v. Mackay Radio & Telegraph Co., 304 U.S 333.
14 N.L R B v. Truck Drivers Local Union No 449, International Brotherhood of Team-
sters, Chauffeurs, Warehousemen and Helpers of America, AFL (Buffalo Linen Supply
Co.), 353 U.S 87; Betts Cadillac-Olds, Inc., et at, 96 NLRB 268, Packard Bell Electronics
Corporation, 130 NLRB 1122.
15 International Shoe Company, 93 NLRB 907; Duluth Bottling Association , et at., 48
NLRB 1335
1e N L R.B. v Truck Drsuers Local Union No 449, International Brotherhood of Team-
sters, Chauffeurs, Warehousemen and Helpers of America, AFL (Buffalo Linen Supply
Co.), 353 U.S. 87, 96-97.
THE AMERICAN SHIP BUILDING COMPANY 1383
Jifferent cases as governing the situation. General Counsel, for example, relies on
the Quaker State Oil Refining Corporation,17 American Brake Shoe Company,
Ramapo Aicx Division,18 and Dalton Brick & Tile Corporation,19 line of cases for
support, and Respondent, on the leading Betts Cadillac-Olds, Inc., et al., authority.
In my view, substantial fact differences in the cases cited distinguish them from ours.
In Betts Cadillac-Olds, Inc., et al., for example, when the members of the employer
association involved closed down, two of their members had already been struck, but
in the instant case a strike was only a possibility, albeit a real one, to respondent, and
its timing was uncertain.
On the other hand, in both Quaker State Oil Refining Corporation, and Dalton
Brick & Tile Corporation, there was no reasonable basis to fear a strike, nor the
existence of a bargaining impasse. Similarly, in American Brake Shoe Company,
Ramapo Ajax Division, the respondent announced its proposed course of action at
the very first bargaining session when it had no reason to believe, the Board found,
that the negotiations would result in disagreement and a strike. Here I have found,
however, both an impasse and reasonable grounds to believe that a strike would
take place at the Unions' convenience.
In addition to- the substantial differences in the cases cited by General Counsel
there exists here two factors which I feel tip the scales in favor of Respondent.
Unlike any of the cited cases. Respondent maintained a nucleus crew in summer
only in expectation that there would be emergency work. The existence of an un-
resolved labor dispute, however, made it unlikely that customers would utilize
Respondent's services in any substantial degree during that dispute. In addition,
the very nature of Respondent's business, namely, the repair of extremely valuable
property of customers at Respondent's premises, made Respondent justifiably wary
of jeopardizing such property at the risk of customer dissatisfaction. From this
point of view the case is stronger for Respondent than Betts Cadillac-Olds, Inc.,
et al., which involved customers' automobiles, or Packard Bell Electronics Corpora-
tion, which concerned customers' television sets.
I conclude, on the basis of all factors involved, that Respondent was economically
justified and motivated in laying off its employees when it did, and that the fact
that its judgment was partially colored by its intention to break the impasse which
existed is immaterial in the peculiar and special circumstances of this case. Re-
spondent, by its actions, therefore, did not violate Section 8(a)(1), (3), and (5)
of the Act.
2. As to the alleged violations in notifying the Division of Unemployment
Compensation that the employees were laid off because of a "labor dispute"
Respondent admits that it knew that under Illinois law employees who are laid
off because of a labor dispute are not entitled to unemployment compensation, and
that it was Respondent's intention to block payments to employees by so describing
the layoff rather then as being merely for lack of work. Respondent states that if
the employees were laid off "for lack of work" Respondent would be in effect
financing the labor dispute, for employees would collect benefits up to 26 weeks,
and that this, in Respondent's view, would extend the bargaining into the winter
months.
Respondent's action, therefore, concededly was in part for the purpose of putting
pressure on employees to refrain from bargaining as they chose. I think, however,
although the case is not free from doubt, that basically the same considerations
which justify Respondent's layoff of employees absolve it of liability in so notifying
the division. I have found that Respondent's shutdown of the yards was caused
in part by customer refusal to send in ships and Respondent's belief that this
condition would continue. These refusals, and Respondent's forecast about the
future, were inextricably interwoven in the labor situation. To describe the layoff
in these circumstances as, "Because of the labor dispute which has been unresolved
since 8/1/61" does not seem to be an inaccurate statement of the facts. Because
Respondent determined that Illinois precedents would disqualify the employees,
does not make Respondent's action in stating the facts as it reasonably saw them
illegal. Since Respondent's notification to the division grew out of a layoff which
I have found to be privileged, and since the notification was not a distortion of the
facts, I find that Respondent was equally privileged in so notifying the Division.
11121 NLRB 334, enfd . 270 F. 2d 40 (C.A. 3), cert. denied 361 U.S. 917.
Is 116 NLRB 820, set aside 244 F. 2d 489 (C.A 7).
19126 NLRB 473, reversed 301 F. 2d 886 (C.A. 5). The court's opinion contains a good
survey of the cases and literature in the field.
1384 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
I conclude that Respondent did not violate Section 8 (a)(1), (3), and (5) of
the Act in its notification to the Illinois Department of Labor.
CONCLUSIONS OF LAW
1. The American Ship Building Company, South Chicago , Illinois, is engaged
in, and during all times material herein was engaged in , commerce within the mean-
ing of Section 2(6) and (7 ) of the Act.
2. The allegations of the complaint that Respondent has engaged in unfair labor
practices within the meaning of Section 8(a) (1), (3 ), and (5 ) of the Act have not
been sustained by substantial evidence.
RECOMMENDATION
It is recommended that the complaint be dismissed in its entirety.
Oilfield Maintenance Co., Inc., and Oilfield Maintenance & En-
gineering Co., Inc. and Building Trades Council of Santa
Barbara County and Building Trades Council of Ventura
County and Oil , Chemical and Atomic Workers International
Union, AFL-CIO, and its Ventura Local Union 1-120, Parties
to the Contract
Oilfield Maintenance Co., Inc. and Southern California District
Council of Hod Carriers & Laborers Locals 585 and 591 and
Oil, Chemical and Atomic Workers International Union, AFL-
CIO, and its Ventura Local Union 1-120, Parties to the Con-
tract. Cases Nos. 21-CA-1,p7792-1 and 21-CA-4772-2. June 21,
1963
DECISION AND ORDER
On November 27, 1962, Trial Examiner Wallace E. Royster issued
his Intermediate Report in the above-entitled proceeding, finding
that the Respondents 1 had engaged in and were engaging in certain
unfair labor practices and recommending that they cease and desist
therefrom and take certain affirmative action, as set forth in the at-
tached Intermediate Report. The Trial Examiner also found that
the Respondents had not engaged in certain other unfair labor prac-
tices alleged in the complaint and recommended dismissal of these
allegations. Thereafter, the Respondents, the General Counsel, and
the Charging Parties filed exceptions to the Intermediate Report and
briefs in support thereof.
Pursuant to the provisions of Section 3(b) of the Act, the Board
has delegated its powers in connection with this case to a three-
member panel [Chairman McCulloch and Members Rodgers and
Fanning].
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.
1Oilfield Maintenance Co., Inc., herein called Oilfield , and Oilfield Maintenance and
Engineering Co., Inc., herein called Engineering . Oilfield and Engineering shall also be
collectively referred to as the Respondents.
142 NLRB No. 141.