The Reece Corp.

National Labor Relations Board - Board Decisions

Jul 23, 1989

294 N.L.R.B. 448 (N.L.R.B. 1989)

448 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
The Reece Corporation and International Union,
United Automobile , Aerospace and Agricultural
Implement Workers of America, UAW and its
Local 1596 . Case 1-CA-18619
DECISION AND ORDER
July 23, 1989
BY CHAIRMAN STEPHENS AND MEMBERS
JOHANSEN AND CRACRAFT
On July 23, 1982, Administrative Law Judge
James L. Rose issued the attached decision. The
Charging Party and the General Counsel filed ex-
ceptions and supporting briefs. The Respondent
filed a brief in answer to the exceptions and a brief
in support of the judge's decision.
The National Labor Relations Board has delegat-
ed 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
decided to affirm the judge's rulings, findings,' and
conclusions only to the extent consistent with this
Decision and Order.
1. FACTUAL BACKGROUND
The Respondent is engaged in the manufacture,
sale, and distribution of industrial sewing machines
and related products . Its principal manufacturing
facility was in Waltham , Massachusetts , and it has
additional plants in Leiden , Holland ; Gorham,
Maine; Stantonsburg , North Carolina; and a satel-
lite plant in Wilmington , Massachusetts . The Re-
spondent and the Union have a long bargaining his-
tory and a series of collective -bargaining agree-
ments, the most recent of which was effective from
March 1, 1980, to February 28, 1983 . Article III of
the agreement , entitled "Management," states:
The Union recognizes that, subject to the ex-
press provisions of this Contract, the supervision,
management and control of the Company's busi-
ness, operations, working force and plant, are ex-
clusively vested in the management of the Com-
pany. Without limiting the generality of the fore-
going, the Union recognizes that, subject to the
express provisions of this Contract, the right to
plan, direct and control the Company 's business
operations and working force, to hire , suspend,
promote or demote , transfer or lay off employ-
1 The General Counsel and Charging Party have excepted to some of
the judge's credibility findings The Board's established policy is not to
overrule an administrative law judge's credibility resolutions unless the
clear preponderance of all the relevant evidence convinces us that they
are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd
188 F 2d 362 (3d Cir 1951) We have carefully examined the record and
find no basis for reversing the findings
ees, and , for just and proper cause, discipline
or discharge employees, and the right to deter-
mine the hours of work, and to assign employ-
ees to work, to determine the methods by
which the work shall be performed, the job
classifications, the work tasks and standards of
performance for employees, and the right to
abandon or discontinue any production, methods
or facilities, or to introduce new or improved
materials , production, methods or facilities, to
purchase or otherwise acquire raw, semi-fin-
ished or finished materials from such source as
is deemed desirable, and to sub-contract any
work, is vested exclusively in the Management
of the Company. [Emphasis added.]
The agreement also includes a severance al-
lowance provision that states: When in the sole
judgment of the Company, it decides to close
permanently the plant or discontinue permanent-
ly a department of the plant or portion thereof
and terminate the employment of individuals, an
employee whose employment is terminated as
a result thereof . . . shall be entitled to a sev-
erance allowance. [Emphasis added.]
In negotiations for the 1980-1983 contract in
January 1980, the Respondent stated that it needed
relief from the economic and operating effects of
prior contracts with the Union, contending that
direct labor and operating costs were too high. The
Respondent, however, was unable to obtain the
relief it sought, and in its first quarter report and
annual meeting review of 1980, issued after the
contract had gone into effect, expressed concern
about the continued viability of the Waltham plant.
Numerous letters and meetings followed between
the Union and the Respondent. The Respondent's
position was that owing to adverse market condi-
tions it found itself with excess manufacturing ca-
pacity and a sharp decline in the demand for its
products. As the Waltham facility was its most
costly plant to operate, the Respondent recom-
mended to its board of directors that Waltham be
closed and the remaining production transferred to
other facilities. The Respondent and the Union
were unable to reach an agreement to keep the
Waltham facility operational.
On April 16, 1981, the board of directors, after
two postponements of its decision for further dis-
cussion between the parties, approved manage-
ment's recommendation to close the Waltham plant
and transfer the work. On June 3, 1981, the Re-
spondent began to shut down its Waltham facility
and transfer the work to its plants at Stantonsburg,
North Carolina; Gorham, Maine ; and Leiden, Hol-
land. The Waltham plant was closed on December
294 NLRB No. 33
REECE CORP.
18, 1981. On December 29, 1981, the Respondent
completed the sale of the Waltham office, plant,
and land , taking back a long-term lease on the
office and a short-term lease on the plant for pur-
poses of selling the nontransferred equipment. Ap-
proximately 57 percent of the production machin-
ery was transferred to the Respondent's other fa-
cilities.
During the discussions between the Respondent
and the Union over closing, the Union requested
certain information to ascertain whether the Re-
spondent's contention that the Waltham plant was
too costly was in fact true. The Respondent for the
most part refused to supply the information, al-
though it did make a presentation to the Union re-
garding production costs at Waltham.
Following the decision to close the plant, the
parties met to discuss the effects of the decision
and the Respondent paid $1,046,356.76 in severance
pay to the 120 active employees and approximately
70 other employees who were then on layoff
status.
H. THE JUDGE'S DECISION
The judge concluded that the Respondent did
not violate the Act by closing its manufacturing fa-
cility in Waltham and transferring unit work else-
where. He found that the Respondent's decision to
close and transfer was not motivated by union
animus , but rather was prompted by the Respond-
ent's legitimate economic concerns-specifically
the direct and indirect costs of the collective-bar-
gaining agreement with the Union.
The judge also held that the Respondent's deci-
sion to close was not a mandatory subject of bar-
gaining . He found that the Respondent had made a
management decision to expand its business that ul-
timately proved costly to the Company. As a
result, the Respondent decided to close its costliest
facility and consolidate manufacturing elsewhere.
The judge found that the decision to close and
transfer involved a significant investment of capital
and affected the scope and direction of the Re-
spondent's business and thus was a matter of "en-
treprenurial control" that did not require bargain-
ing.2 The judge also found the decision to close the
Waltham facility, with or without the concomitant
transfer of bargaining unit work, was not a mid-
term modification or repudiation of the collective-
bargaining agreement . He found that the Respond-
ent complied with the terms of the agreement, in-
cluding the payment of $1,046,365.76 in severance
pay. The judge also determined that even assuming
that the matter was a mandatory subject of bar-
2 Citing General Motors Corp, 191 NLRB 951 (1971), and National Car
Rental System, 252 NLRB 159 (1980)
449
gaining, or a matter that would require the consent
of the Union whether there was bargaining or not,
the Union did in fact consent by agreeing to the
management-rights and severance pay clauses and
thus by "clear implication," the Respondent had
the specific contractual right to close the facility.
The judge thus found there was no violation. He
also found no violation in the Respondent's failure
to supply the Union with requested information be-
cause the Respondent had no duty to bargain.
III. ANALYSIS
We do not adopt the judge's conclusions, and for
the reasons set forth below, we find that the Re-
spondent violated Section 8(a)(5) and (1) by closing
its Waltham facility and transferring the work to its
other plants, by terminating its employees, and by
refusing to furnish information to the Union.3 First,
we find that the decision to close the Waltham fa-
cility and terminate the employees was not in fact a
decision to terminate all the production that oc-
curred there, but rather, a decision to transfer work
to a different location, where it would be done by
other employees. For reasons set forth below, we
find, contrary to the judge, that this decision was a
mandatory subject of bargaining. Second, we find,
contrary to the judge and our dissenting colleague,
that the collective-bargaining agreement, as con-
strued in light of its bargaining history, does not es-
tablish that the Union waived the right to bargain
over this decision. Finally, we find, as to an issue
the judge found it unnecessary to reach, that al-
though the Respondent had initially engaged in
some bargaining with the Union over the possibili-
ty of avoiding the relocation of operations, it made
and implemented the decision without having satis-
fied its statutory bargaining obligation. That failure
to bargain in good faith entailed two interrelated
violations: implementing the decision without
having bargained to impasse and refusing to supply
relevant information requested by the Union.
1. In Otis Elevator Co., 269 NLRB 891 (1984),
which applied the principles of the Supreme
Court's decision in First National Maintenance
Corp. v. NLRB, 452 U.S. 666 (1981), to a decision
to transfer and consolidate research and develop-
ment operations to another location, the Board, in
a plurality opinion, stated that the critical factor in
determining whether a management decision is sub-
3 However, for the reasons set forth in Milwaukee Spring Division, 268
NLRB 601 (1984), affd sub nom Auto Workers v NLRB, 765 F 2d 175
(D C Cir 1985), we find no merit in the General Counsel's and the
Charging Party's exceptions insofar as they contend that the relocation of
unit work constituted a repudiation of the collective-bargaining agree-
ment in violation of Sec 8 (d) and Sec 8 (a)(5), and that the resulting ter-
mination of employees violated Sec 8(a)(3)
450 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ject to mandatory bargaining under Section 8(d) is
"the essence of the decision itself, i.e., whether it
turns upon a change in the nature or direction of
the business, or turns upon labor costs . . . ." Id.
at 892. As explained below, we fmd that the deci-
sion at issue in this case did turn essentially on
labor costs, although other factors were also in-
volved. For that reason, it is a mandatory subject
under the Otis plurality test. We also fmd that it
meets the separate tests proposed by former Mem-
bers Zimmerman and Dennis.4
As the judge found, a decline in demand for the
Respondent's products was the initial impetus for
the Respondent's decision to consolidate oper-
ations, but the reasons for the selection of Waltham
as the plant whose operations would be relocated
were essentially reflected in the bargaining over
the 1980-1983 agreement and the Respondent's
abortive efforts after the contract had gone into
effect to achieve changes in that agreement with
respect to matters that are indisputably related to
labor costs.
At the outset of negotiations for the 1980-1983
contract, the Respondent's vice president of manu-
facturing, Joseph Tyminski, expressed concern that
the collective-bargaining agreement imposed exces-
sive costs on the Waltham plant in the form of
wages, benefits, and uneconomical operating re-
strictions. Nevertheless, the Respondent entered
into a contract with the Union for the 1980-1983
period that did not provide it with the claimed
needed relief. At the 1980 annual stockholders
meeting, held after the contract had gone into
effect, President and Chief Operating Officer Hugh
R. Silbaugh stated that the Respondent's failure to
obtain relief from the Union put the future of the
Waltham plant at serious risk.
In subsequent meetings with the Respondent and
in written communications, the Union expressed a
willingness to make concessions in order to revital-
ize the Waltham plant. The Respondent replied
that changes were needed in wages, benefits, and
working time spent on union matters, and argued
that it needed more freedom to move products and
parts from facility to facility. As explained in more
detail below, the parties did not reach agreement
on contractual changes before the Respondent im-
plemented its decision to close Waltham and trans-
fer the work, but throughout the unsuccessful ne-
gotiations, the Respondent made it appear to the
Union that the decision to close Waltham and send
its work elsewhere could be avoided if the Union
4 See Eltec Corp, 286 NLRB 890 fn 8 (1987), enfd 870 F 2d 1112 (6th
Cir. 1989), for a brief summary of former Members Dennis' and Zimmer-
man's proposed tests . The application of their tests to the facts of this
case is set out in fn 5 , infra.
would make contractual concessions to the Re-
spondent's satisfaction.5 Had the Respondent ade-
quately responded to the Union's requests for fi-
nancial information, it might either have achieved
the concessions that would make the relocation un-
necessary or, failing that, have reached an impasse
that would render its subsequent implementation
lawful. In light of its bargaining positions, howev-
er, it is unreasonable for the Respondent now to
argue that the decision turned essentially on factors
other than labor costs. Accordingly, we conclude
that the decision to close Waltham and relocate
much of its equipment and operations to other fa-
cilities was a mandatory subject of bargaining
under Otis Elevator, supra.6
2. Having determined that the decision at issue
here was a mandatory subject, we next must decide
whether, as the judge found, the Union contrac-
tually waived its statutory right to bargain over the
subject.
We begin by analyzing the provisions of the col-
lective-bargaining agreement-the management-
rights clause and the severance pay clause-on
which the judge and our dissenting colleague rely
for their conclusion that the Union waived its bar-
gaining rights. We note that although the manage-
ment-rights clause refers to the right to "abandon
or discontinue any production, methods or facili-
ties" and the severance pay clause refers to a deci-
sion to "close permanently the plant or discontinue
permanently a department of the plant or portion
thereof and terminate the employment of individ-
uals," neither clause addresses the situation in
which production and equipment are not perma-
nently discontinued or sold, but rather are trans-
ferred elsewhere. See Allied Mills, 218 NLRB 281,
285-286 (1975), enfd. mem. sub nom. Grain Millers
Local 110 v. NLRB, 543 F.2d 417 (D.C. Cir. 1976),
cert. denied 431 U.S. 937 (1977) (clause granting
5 By contrast , there was no similar pattern of seeking union contract
concessions in Otis Elevator, supra. In addition , a significant factor in the
relocation there was the desirability of locating research and develop-
ment operations near the parent corporation 's plant and merging "prod-
uct improvement" operations with research and development operations
Those considerations had nothing to do with matters governed by the
collective-bargaining agreement
9 Applying former Member Dennis' test, we conclude that a factor
over which the Union had control (i e , labor costs) was a "significant
consideration in the employer's decision " and that "the benefit for the
collective -bargaining process outweigh[ed] the burden on the business,"
in view of the significant impact on the employees and the Respondent's
own effective admission (through its contract demands) that concessions
by the Union might negate the necessity of going through the extensive
effort required for the relocation Otis Elevator, supra, 269 NLRB at 897.
The decision at issue in this case would clearly be a mandatory subject
under the test applied by former Member Zimmerman , who would find
any decision "amenable to collective bargaining" to be a mandatory sub-
ject, and would regard any decision as amenable if it is "motivated by
labor costs" or even if "union concessions may substantially mitigate the
concerns underlying the employer 's decision " Id at 900, 901
REECE CORP
severance pay when production permanently dis-
continued not a waiver of right to bargain over
transfer of production from closed plant). The
management-rights clause also reserves the right to
"subcontract" work. In neither clause, however,
did the Respondent reserve the right unilaterally to
transfer or relocate work from one of its own
plants to another. Unlike the judge, we cannot find,
simply on the basis of the contract language, that
the Union has waived its right to bargain over such
a relocation decision because we do not find that
the language meets the "clear and unmistakable"
standard that governs the waiver of statutory
rights. Metropolitan Edison Co. v. NLRB, 460 U.S.
693, 708 (1983); Litton Systems, 283 NLRB 973
(1987), enf. denied 868 F.2d 854 (6th Cir. 1989).'
Neither do we find that extrinsic evidence, includ-
ing the relevant bargaining history-evidence on
which our dissenting colleague relies-establishes a
waiver. Indeed, in our view that evidence rein-
forces our finding that no waiver of bargaining
rights existed.
Bargaining history can establish a waiver only if
"[i]t can be said from an evaluation of the prior ne-
gotiations that the matter was `fully discussed' or
`consciously explored' and that the union 'con-
sciously yielded' or clearly and unmistakably
waived its interest in the matter." Park-Ohio Indus-
tries v. NLRB, 702 F.2d 624, 628 (6th Cir. 1983).
An examination of the record does not disclose
that the parties specifically discussed and that the
Union "consciously yielded" its right to bargain
over transfers of unit work. In fact, it appears from
the bargaining history that the Respondent be-
lieved that it did not have the right unilaterally to
relocate work, as evidenced by its proposals during
discussions prior to the Waltham closing. On No-
vember 24, 1980, the Respondent wrote the Union,
stating, inter alia, that "[W]e must have the free-
dom in our multi-plant system of today, to move
products and parts from facility to facility as
' The court of appeals in Litton Systems denied enforcement on the
ground that the union there had waived its bargaining rights over work
relocations We respectfully disagree with the court's decision, but in any
event we note that the court also relied on evidence that it construed as
showing that the union itself had read the contract language as giving the
employer the right to act unilaterally with respect to work relocations
As we note in our discussion, infra, we see the evidence here as indicat-
ing that the Respondent believed changes in the contract language to be
necessary before it would be able unilaterally to relocate work from one
plant to another
Also distinguishable is Consolidated Foods Corp, 183 NLRB 832 (1970),
on which the judge relied In that case, in which the Board concluded
that the union had waived rights to bargain over a transfer of operations,
the management-rights clause permitted the employer to "change,
modify, or cease its production" and in doing so, to be the sole
judge of the "location of business and personnel " Id at 832-833 More-
over, unlike the present case, the employer did not make statements in-
dicative of a belief that it did not possess authority under the contract to
act unilaterally in the matter
451
market and production requirements dictate." In
February and March 1981, the Respondent in-
formed the Union that it needed the right to trans-
fer work interplant and proposed "no restrictions
on work movement (inter-plant)." Significantly, the
Respondent sought to include in the management-
rights clause the right "to transfer work among
company facilities." Surely, the Respondent's ac-
tions indicated that it believed that the contract did
not allow it to transfer work without bargaining.
Given the well-settled law that a waiver of bar-
gaining rights must be "clear and unmistakable,"
the Respondent's own conduct refutes its argument
that a waiver existed in this case.8
Finally, the fact that the Union sought severance
pay for laid-off employees and did not challenge
the transfer of work in a 1979 grievance does not
establish the Union's acquiescence in the Respond-
ent's present reading of the contract. The judge
failed to consider the background, particularly an
earlier settlement of a series of grievances over
work transfers, giving the Respondent the right to
transfer certain work in exchange for an agreement
not to transfer work to the Gorham plant if that
would cause the layoff of Waltham employees. We
cannot conclude that the position taken by the
Union in that one arbitration proceeding, without
reference to the surrounding circumstances, sup-
ports a finding that it forever waived bargaining
rights regarding the transfer of work, at issue
here.9 As indicated above, the Respondent, by its
own subsequent conduct, indicated that it did not
believe it had the right freely to transfer work
without bargaining. If the contract and the Union's
interpretation of it clearly reserved this right to the
Respondent, the Respondent would not have
needed to make the proposals it did in 1980 and
1981.
Accordingly, we conclude that there is nothing
in the management-rights clause and/or the sever-
ance pay clause that affirmatively authorized the
Respondent to transfer bargaining work outside the
unit, nor is there any evidence in the parties' bar-
gaining history that would compel such an inter-
pretation.
3. Having found that the work relocation deci-
sion was a mandatory subject of bargaining and
that the Union did not waive its statutory bargain-
8 The judge and our dissenting colleague also ignored evidence that
when the severance pay clause was agreed to in 1974, there was a strike
in progress Thus, although it may be argued that the clause was agreed
to in exchange for a waiver of bargaining rights, it could be argued at
least as persuasively that what the Respondent gained from agreeing to
the severance pay clause was the employees' return to work
8 This is a fortiori true if the Respondent had no obligation to bargain
about the transfers that were the subject of grievances See Westinghouse
Electric Corp, 150 NLRB 1574 (1965)
452 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ing rights, we finally must decide whether, as the
General Counsel alleges, the Respondent failed to
satisfy its bargaining obligation . As indicated in the
fact statement, the parties did in fact bargain over
the Respondent's proposal to close the Waltham
plant and relocate the work at other plants. For the
reasons set forth below, however, we find that the
Respondent violated Section 8(a)(5) by implement-
ing its decision before reaching a lawful impasse
with the Union.
As recited in the statement of facts, not long
after the 1980-1983 contract went into effect, the
Respondent publicly expressed doubts about the
continuing viability of the Waltham plant . Meetings
between representatives of the Respondent and the
Union were held on September 10, November 25,
and December 18, 1980. In the course of those
meetings , supplemented by written communica-
tions , the Respondent described what it regarded as
changes in the contract that were essential to the
resolution of the economic problems of the Wal-
tham plant; the Union counterproposed; and the
Respondent rejected the counterproposal. A re-
quest by the Union made after the December meet-
ing for profit-and-loss statements from the Wal-
tham plant and the corporation was rejected. No
progress was made in January, and on January 30,
1981, the Respondent announced that it was trans-
ferring the production of a particular product line
to another plant . It also announced it was under-
taking a study to determine the economic viability
of the Waltham plant generally. The Union filed
grievances over the product transfer, alleging it to
be a violation of the contract, and bargaining con-
tinued on the general subject of cost savings at
Waltham, with the Union making another proposal
at a meeting on February 27. This was rejected by
the Respondent 's representative , who made a pres-
entation on Waltham labor costs based on a docu-
ment that contained bottom line figures in various
broad categories. At the end of the meeting the
Respondent 's representatives said that management
was prepared to recommend the closing of Wal-
tham at the March 4 meeting of the board of direc-
tors.
There were two subsequent postponements of
the presentation of the closing proposal to the
board of directors to permit further union re-
sponses on the Respondent's demands for contrac-
tual changes. In the interim, the Union indicated
unwillingness to agree to all the concessions the
Respondent was demanding , but the Union contin-
ued to press its request for financial information
that could explain the necessity for the Respond-
ent's demands . In a telegram sent to Vice President
Tyminski on March 19, a union representative
stated that , "as painful as this may be for our mem-
bers," they would give "good faith consideration"
to the Respondent 's demands for concessions if
"sufficient documentation is made available by the
Company to prove economic necessity." The
Union had requested , inter alia, income statements
for the Waltham plant and any written documenta-
tion that was being presented to the board of direc-
tors as a basis for the recommended plant closing
decision. The Respondent furnished the Union
some operating cost data , but stated it had no
income statements of the kind requested, and it re-
fused to supply documentation furnished the board
of directors, arguing that those were confidential
communications. In particular, it refused the
Union's request, made on April 1, for the manage-
ment study of Waltham that had been represented
as being a basis for determining the viability of the
Waltham plant. The Respondent advised the Union
that this was not "public information," and that the
Union should be content with certain charts that
the Union was asked to take on faith represented
the essence of the information provided to the
board of directors so they could decide whether to
close Waltham and transfer the work.
On April 13, the Union presented further propos-
als for concessions and conditions to be maintained
while bargaining over further concessions. Among
the Union 's conditions was agreement by the Re-
spondent that a union financial expert could exam-
ine the Respondent 's operating statements to verify
the accuracy of the Respondent's descriptions of its
financial situation . In a meeting held on April 14,
and in a letter dated that day, the Respondent re-
jected the Union's proposals as a totally insufficient
response to the Respondent's economic problems.
In a letter of April 15 , the Union stated that it was
unwilling at that time to recommend all the Re-
spondent 's demands to the membership , but that it
remained open to discussing terms for an amended
contract. The Union had still not received the fi-
nancial information it was requesting , and the Re-
spondent had rejected the request for access to its
operating statements by a union financial expert.
On April 16, the Respondent notified the Union
that the board of directors had approved manage-
ment's recommendation to close the plant. In a
written announcement to the employees the next
day, the Respondent lamented the necessity of clos-
ing the plant . In giving the "background " against
which the decision was made, it described its con-
tractual change proposals made to the Union as
those that "would attain the necessary competitive
cost level," and it castigated the Union for its inad-
equate counterproposals.
REECE CORP
On the basis of the foregoing facts, we conclude
that the Respondent did not reach a bargaining im-
passe before implementing the work relocation, and
therefore it violated Section 8(a)(5) and (1) of the
Act. The parties were precluded from reaching a
lawful impasse at that point by the Respondent's
refusal adequately to respond to the Union's re-
quests for financial information that would make it
possible for the Union to evaluate the necessity for
the Respondent's demands for large concessions
and, thereby, to determine whether it could recom-
mend the demands to the membership with any
hope of acceptance.
When requested financial information is relevant
to the subject under negotiation, an employer vio-
lates Section 8(a)(5) of the Act by refusing to
supply it. NLRB v. Truitt Mfg. Co., 351 U.S. 149,
152 (1956). -Here, as shown above, the Respondent
presented its concessionary demands as essential to
the continuation of Waltham as a viable component
of its overall operations. The Union sought infor-
mation beyond conclusionary charts and statements
that would substantiate the Respondent's position.
"Good-faith bargaining necessarily requires that
claims made by, either bargainer should be honest
claims. . . •. If . . . an argument is important
,enough to present in the give and take of bargain-
ing, it is important enough to require some sort of
proof of its accuracy." Id. at 152-153. See also
Teleprompter Corp. v. NLRB, 570 F.2d 4, 8-11 (1st
Cir. 1977); Clemson Bros., 290 NLRB 944 (1988).
By refusing the Union's request, the Respondent
violated its obligation to bargain in good faith. Be-
cause prior good-faith bargaining is a prerequisite
to a lawful impasse, the Respondent's subsequent
unilateral implementation of its decision also violat-
ed Section 8(a)(5). Marine & Shipbuilding Workers
v. NLRB, 320 F.2d 615, 621 (3d Cir. 1965); Taft
Broadcasting Co., 163 NLRB 475, 478 (1967), peti-
tion for review denied sub nom. Television Artists
AFTRA v. NLRB, 395 F.2d 622 (D.C. Cir. 1968).
CONCLUSIONS OF LAW
1. By refusing to bargain collectively and in
good faith with the Union as the exclusive repre-
sentative of its employees in the appropriate unit
concerning the decision to close the Waltham plant
and to relocate work permanently to other plants,
the Company has engaged in unfair labor practices
affecting commerce within the meaning of Section
8(a)(5) and (1) and Section 2(6) and (7) of the Act.
2. By refusing to furnish the Union with informa-
tion necessary for and relevant to its function as
bargaining representative, the Company has en-
gaged in unfair labor practices affecting commerce
453
within the meaning of Section 2(6) and (7) of the
Act.
THE REMEDY
Having found that the Respondent has engaged
in certain unfair labor practices within the meaning
of Section 8(a)(5) and (1) of the Act, we shall
order it to cease and desist and take certain affirm-
ative action designed to effectuate the policies of
the Act.
The usual remedy for failing to bargain about a
decision to close a facility and transfer work else-
where is to order the respondent to. restore the
status quo ante , bargain about the decision, and re-
instate and make whole the employees who lost
jobs as a result of the unlawful conduct. See, e.g.,
Park-Ohio Industries, 257 NLRB 413 (1981), enfd.
702 F.2d 624 (6th Cir. 1983). If, however, such an
order would be unduly burdensome, restoration of
the status quo ante will not be required. See Fibre-
board Corp. v. NLRB, 379 U.S. 203, 215-216
(1964).
We believe the record shows that an order re-
quiring reopening the Waltham plant would be
unduly burdensome. The Respondent paid to bar-
gaining unit employees over $1 million in sever-
ance pay and the total costs related to closing were
over $2. 3 million . More than half the production
machinery used in the Waltham plant has been
transferred to other company facilities. Finally, the
Respondent has sold the Waltham office, plant, and
land. We believe that these circumstances warrant
a finding that requiring the Respondent to reopen
the Waltham facility would require a major capital
expenditure and would "impose an undue or unfair
burden" on the Respondent. Fibreboard, supra, 379
U.S. at 216.
We shall, however, order the following reinstate-
ment and make-whole remedy, which we believe
will effectively remedy the Respondent's violation
of the Act. We shall order the Respondent to offer
Waltham bargaining unit employees reinstatement
to their former positions at the facilities to which
the Respondent unlawfully transferred unit work,
dismissing, if necessary, any persons hired after the
closing of the Waltham plant. In addition, we shall
- order the Respondent to offer to pay. employees
travel and moving expenses. See Royal Norton Mfg.
Co., 189 NLRB 489 (1971). If there is insufficient
work for all employees to be offered reinstatement,
the Respondent shall place the names of those for
whom work is not available on a preferential hiring
list, in the order of their seniority, and shall offer
them jobs in the future before hiring other persons.
Employees offered reinstatement shall be allowed a
reasonable period of time for accepting such offers.
454 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Further , we shall order the Respondent to make
whole the Waltham employees by paying them
what they would have normally earned from the
date of their termination to the date of the offer of
reinstatement or, for the employees who decide not
to relocate, until the date they secure substantially
equivalent employment with other employers. See
Royal Norton Mfg. Co., supra .1 ° Backpay shall be
based on the earnings that employees normally
would have received during the applicable period
less any net interim earnings , and shall be comput-
ed in the manner set forth in F. W. Woolworth Co.,
90 NLRB 289 (1950), with interest computed in the
manner set forth in New Horizons for the Retard-
ed.11
Finally, under the circumstances of this case, we
believe it is unnecessary to require the Respondent
to furnish the requested information it unlawfully
refused to provide the Union . The information was
necessary in order for the Union to be able to bar-
gain intelligently about the Respondent's decision
to close the Waltham operation and transfer the
unit work. In view of the fact that we do not order
the Respondent to restore the status quo ante and
bargain about its decision , we believe it is unneces-
sary to provide an affirmative order for the refusal
to furnish information violation.
ORDER
The National Labor Relations Board orders that
the Respondent, The Reece Corporation, Waltham,
Massachusetts, its officers, agents, successors, and
assigns, shall
1. Cease and desist from
(a) Refusing to bargain collectively and in good
faith with International Union, United Automobile,
Aerospace and Agricultural Implement Workers of
America, UAW and its Local 1596 as the exclusive
representative of its employees in the appropriate
unit set forth below, concerning the decision to
close the Waltham, Massachusetts plant and to re-
locate work permanently to other plants. The ap-
propriate unit is:
All production and maintenance employees of
the Respondent employed at its Waltham
plant, exclusive of office and clerical employ-
ees, outside salesmen and servicemen, develop-
mental and factory engineering department
employees, production clerks, time study em-
ployees and cost estimators, watchmen, and all
supervisors as defined in Section 2(11) of the
Act.
10 In determining the backpay amount due, the Respondent may offset
the severance payment each employee received.
1i283 NLRB 1173 (1987).
(b) Refusing to furnish the Union with informa-
tion necessary for and relevant to its function as
bargaining representative.
(c) In any like or related manner interfering
with, restraining, or coercing employees in the ex-
ercise of the rights guaranteed them by Section 7
of the Act.
2. Take the following affirmative action neces-
sary to effectuate the policies of the Act.
(a) Offer the Waltham employees immediate and
full reinstatement to their former jobs or, if those
jobs no longer exist , to substantially equivalent po-
sitions, at the other plants where the bargaining
unit work has been relocated, with necessary trav-
eling and moving expenses for them and their fami-
lies and their household effects, without prejudice
to their seniority or any other rights or privileges
previously enjoyed, dismissing , if necessary, any
persons hired after the closing of the Waltham
plant. If there are not a sufficient number of jobs
for all the employees to be offered reinstatement,
the Respondent shall place the names of those for
whom jobs are not available on a preferential list in
the order of their seniority, and thereafter offer
them reinstatement before other persons are hired.
Employees offered reinstatement shall be allowed a
reasonable period of time for accepting such offers.
(b) Make the Waltham employees whole for any
loss of earnings and other benefits suffered in the
manner set forth in the remedy section of this deci-
sion.
(c) Preserve and, on request, make available to
the Board or its agents for examination and copy-
ing, all payroll records, social security payment
records, timecards, personnel records and reports,
and all other records necessary to analyze the
amount of backpay due under the terms of this
Order.
(d) Mail copies of the attached notice marked
"Appendix" 112 to all the Respondent's employees
who were employed at the Waltham plant in the
appropriate unit who were terminated or laid off as
a result of the plant closure and transfer of work.
(e) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps the Respondent has taken to comply.
MEMBER JOHANSEN, dissenting.
Contrary to my colleagues, I find that the Re-
spondent did not violate the Act by closing its
Waltham facility and transferring work to its other
12 If this Otder is enforced by a judgment of a United States court of
appeals , the words in the notice reading "Posted by Order of the Nation-
al 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."
REECE CORP. 455
plants . I find it unnecessary to reach the issue of
whether the Respondent 's decision to close the
Waltham plant and transfer work elsewhere was a
mandatory subject of bargaining under Otis Eleva-
tor Co.' because I fmd that the Union waived the
right to bargain over the decision by agreeing to
inclusion of the management-rights and severance
pay clauses in its collective-bargaining agreement
with the Respondent . This finding is buttressed by
looking to extrinsic evidence including the bargain-
ing history of the parties . In order to determine
contractual intent, we are not restricted to the con-
tractual provisions themselves, but may properly
evaluate them against the "elucidating background
of their bargaining history."2
The Respondent and the Union have a bargain-
ing history dating back to the 1940s . The manage-
ment-rights clause has been included in all the par-
ties' collective-bargaining agreements in basically
the same form since the beginning of the parties'
bargaining relationship . The severance pay clause,
however, was not introduced into the agreements
until the 1974- 1977 agreement . In 1974 the Re-
spondent's Gorham, Maine facility was built. That
same year the Union demanded in negotiations that
its contract with the Respondent contain a sever-
ance pay provision and, at the Union 's insistence,
the Respondent agreed . Although the Union's su-
bregional director , Frank Ceccaroni, testified that
inclusion of the severance pay provision did not
result from the Union's concern about the Gorham,
Maine plant, this testimony was not credited by the
judge , and is contrary to the Union's argument to
an arbitrator in 1979 . In 1979 certain work had
been transferred from Waltham to Gorham that
had resulted in the permanent layoff of some em-
ployees . The Union took the issue to an arbitrator
and demanded severance pay. The arbitrator deter-
mined that some of the layoffs were caused by a
general recession in the industry, but that others re-
sulted from the transfer of work and thus those em-
ployees should receive severance pay. The Union
did not contend in the arbitration proceeding that
the Respondent did not have the right to transfer
the work from Waltham to Gorham, rather the
Union sought severance pay for the laid-off em-
ployees.3 In its brief to the arbitrator in 1979,
counsel for the Union stated:
1269 NLRB 891 ( 1984).
P New York Mirror, 151 NLRB 834 (1965); C & C Plywood Corp, 148
NLRB 414 ( 1963).
a The Union's argument that the severance allowance clause was only
to apply to the Respondent 's going out of business totally without the
transfer of its operations is not borne out by the prior bargaining history
and contract administration of the clause . Work had been previously relo-
cated from the Waltham facility with no closure of the facility and the
Union sought severance pay. The Union's position on the severance
The parties stipulated that the severance al-
lowance provision of the current contract was
first negotiated by the parties into the 1974-
1977 agreement. Both John Reece and Leo
Fitzpatrick [Union representative] agreed that
the Gorham plant was discussed in the context
of negotiating the severance allowance provi-
sion . Both agreed that the union negotiators
expressed great concern about the impact of
the Gorham facility upon the bargaining unit.
Thus I fmd that the Union was concerned with
the Gorham , Maine plant and the possible transfer
of work there. As a result, it demanded and re-
ceived the inclusion of the severance pay provision
in the agreement . It is clear that the statutory right
of a union to bargain about changes in terms and
conditions of employment may be waived by the
union . I find there was a "conscious and unequivo-
cal yielding on a subject within the contemplation
of the parties."4 The parties admittedly discussed
the Gorham plant in relation to severance pay,
they considered the issue and came to a resolution.
I fmd that the Respondent was given the right by
the Union to close the plant and transfer the work.
Reading the management -rights clause in conjunc-
tion with the severance pay provision , the Re-
spondent is "vested exclusively " with the right "to
abandon or discontinue any production , methods or
facilities" and in its "sole judgment" can "close
permanently the plant or discontinue permanently a
department of the plant or portion thereof and ter-
minate the employment of individuals ." The Re-
spondent thus was clearly granted the right to take
the actions it took as it acted on rights specifically
enumerated to it in its collective-bargaining agree-
ment.5 As the judge noted , it is not likely the Re-
spondent would agree to inclusion of the severance
pay provision, which potentially could (and in fact
did) cost it substantial sums of money , without re-
ceiving something in return : the right to close
down the Waltham plant and transfer the work. I
find that the language of the severance pay clause
and management-rights clauses serve as a waiver
that is "clear and unmistakable."e
pay/closure/transfer issue has been inconsistent and it cannot have it
both ways.
4 Pacemaker Yacht Co., 253 NLRB 828 (1980).
a Litton Systems, 283 NLRB 973 (1987).
e Metropolitan Edison Co. v. NLRB, 460 U.S. 693 (1983).
Unlike the majority , I do not view the Respondent's willingness to bar-
gain about contract concessions that could allow it to maintain produc-
tion and employment at the Waltham plant on an economically sound
basis as an indication that Respondent realized it was precluded from
closing the plant without bargaining . Rather, it was giving the Union an
opportunity to furnish an alternative to what it deemed a necessary
move. The same would be true if it offered to bargain about a decision to
subcontract work , another right indisputably clearly reserved to the Re-
spondent in the contract.
456 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
As the Union clearly and unmistakably waived
its right to bargain over the decision to close the
Waltham plant and transfer the work , it follows
that the Respondent had no obligation to provide
information to the Union . Thus I find no 8(a)(5)
violation in the alleged failure to furnish that infor-
mation . Additionally, as any 8(a)(3) violation
would be derivative from a Section 8(a)(5) viola-
tion, I find no violation of Section 8(a)(3). I would
dismiss the complaint in its entirety.
of jobs for all the employees to be offered rein-
statement , we shall place the names of those for
whom jobs are not available on a preferential list in
the order of their seniority, and thereafter offer
them reinstatement before other persons are hired.
Employees offered reinstatement shall be allowed a
reasonable period of time for accepting such offers.
WE WILL make the Waltham employees whole,
with interest , for any loss of earnings and other
benefits suffered.
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 violated 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 International Union , United Auto-
mobile, Aerospace and Agricultural Implement
Workers of America , UAW and its Local 1596 as
the exclusive representative of our employees in
the appropriate unit set forth below, concerning
the decision to close the Waltham , Massachusetts
plant and to relocate work permanently to other
plants . The appropriate unit is:
All production and maintenance employees
employed at our Waltham plant , exclusive of
office and clerical employees, outside salesmen
and servicemen, developmental and factory en-
gineering department employees , production
clerks, time study employees and cost estima-
tors, watchmen, and all supervisors as defined
in Section 2(11) of the Act.
WE WILL NOT refuse to furnish the Union with
information necessary for and relevant to its func-
tion as bargaining representative.
WE WILL NOT in any like or related manner
interfere with, restrain , or coerce you in the exer-
cise of the rights guaranteed you by Section 7 of
the Act.
WE WILL offer the Waltham employees immedi-
ate and full reinstatement to their former jobs or, if
those jobs no longer exist , to substantially equiva-
lent positions , at the other plants where the bar-
gaining unit work has been relocated , with neces-
sary traveling and moving expenses for them and
their families and their household effects, without
prejudice to their seniority or any other rights or
privileges previously enjoyed , dismissing, if neces-
sary, any persons hired after the closing of the
Waltham plant . If there are not a sufficient number
THE REECE CORPORATION
John S. May, Esq., for the General Counsel.
Allan A. Tepper, Esq. (Snyder, Tepper & Comen), of
Boston , Massachusetts, for the Respondent.
Donald J. Siegel, Esq. (Segal, Roitman & Coleman), of
Boston, Massachusetts , for the Union.
DECISION
STATEMENT OF THE CASE
JAMES L . ROSE, Administrative Law Judge. On April
16, 1981 , the Respondent's "Board of Directors approved
management's recommendation to close the Waltham
plant [whose production employees were represented by
the Charging Party] and consolidate manufacturing ac-
tivities at other more competitive plants ." By this act
General Counsel alleges that the Respondent violated
Section 8(a)(5), Section 8(d), and Section 8(a)(3) of the
National Labor Relations Act, 29 U. S.C. § 151 et seq. It
'is also alleged that the Respondent violated Section
8(a)(5) by refusing to furnish the Charging Party relevant
information it requested concerning the proposed clos-
ing.
The Respondent generally denied that it has commit-
ted any unfair labor practices and affirmatively contends
that it had a right under the existing collective-bargain-
ing agreement to close its facility and terminate the em-
ployees.
This matter was tried before me at Boston, Massachu-
setts, on February 22, 23, and 24, 1982, following which
all counsel submitted exhaustive briefs.
Upon the record as a whole , including my observation
of the witnesses and arguments of counsel , I make the
following
FINDINGS OF FACT AND CONCLUSION OF LAW
1. JURISDICTION
The Respondent is a Massachusetts corporation en-
gaged in the manufacture , sale, and distribution of indus-
trial sewing machines and related products. In the course
and conduct of its business, the Respondent annually
ships finished goods valued in excess of $50,000 directly
to points outside the Commonwealth of Massachusetts.
Respondent admits, and I find , that it is an employer en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
REECE CORP. 457
II. THE LABOR ORGANIZATION INVOLVED
International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America, UAW
and its Local 1596 is admitted to be , and I find is, a labor
organization within the meaning of Section 2 (5) of the
Act.1
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The parties stipulated to the material facts involved in
this dispute . The only area of disagreement involves
what was said during the 1974 negotiations when the
parties discussed, and ultimately agreed to, the severance
pay clause in the collective-bargaining agreement. And
even with regard to this (which will be discussed in
more detail , infra) the parties generally concur about the
context in which the clause was negotiated.
Since 1949 , when it moved from Boston , the Respond-
ent operated its principal manufacturing facility in Wal-
tham, Massachusetts . It also has plants in Leiden, Hol-
land (which began operation in 1959 ), Gorham, Maine
(which began operation in 1974), Stanstonsburg, North
Carolina (which began operation in July 1980), and a sat-
ellite plant of Waltham in Wilmington , Massachusetts.
The Union has been the collective-bargaining repre-
sentative of the Respondent 's Waltham production and
maintenance employees since prior to the Company's
move to that facility. The Respondent and the Union
have had a series of collective -bargaining agreements,
the most recent of which is effective from March 1,
1980, to February 28, 1983.
When negotiations for this contract began in January
1980, officials of the Respondent stated relief was needed
from the economic and operating effects of prior con-
tracts. According to the Company , direct labor and
other operating costs were so high , given its then posi-
tion in the industry , as to cast doubt on the continued vi-
ability of Waltham . However, the Respondent was un-
successful in obtaining the relief it sought during these
negotiations.
In the First Quarter Report and Annual Meeting
Review 1980, management officials stated that having
been unsuccessful in obtaining relief from the Union
"puts the future of the Waltham plant at risk ....
Similar comments had been made in the annual report.
Having reviewed these reports, the Union , through its
attorney Donald Siegel , wrote the Company to arrange a
meeting "to discuss matters of mutual concern ." There
followed an exchange of correspondence and numerous
meetings. In sum , the Company took the position that as
a result of the adverse market conditions, it found itself
with an excess of manufacturing capacity. Because the
Waltham facility waS the most costly to operate, man-
agement intended to recommend to the board of direc-
tors that Waltham be closed and its remaining produc-
tion be transferred to other facilities.
' At all stages of this proceeding the International and the Local have
been treated as a single entity.
The Union expressed its concern about the possibility
of Waltham being closed, and indicated that it was pre-
pared to recommend to the bargaining unit members that
they make substantial concessions and modify the collec-
tive-bargaining agreement . The one concession actually
advanced by the Union was considered insufficient by
the Company ; and the Company's "bottom line" propos-
al was deemed too extreme by the Union . The parties
were thus unable to reach an agreement which would
permit the Company , in its judgment , to keep the Wal-
tham facility open . And after two postponements for fur-
ther discussions on April 16, 1981, management recom-
mended to the board of directors that the Waltham facil-
ity be closed and the remaining work be transferred. The
board of directors adopted this recommendation and,
commencing on June 3 , the Respondent began to shut
down its Waltham facility and transfer the work. This
was completed on December 18, 1981 . On December 29
the Respondent completed the sale of the Waltham
office, plant , and land , taking back a long-term lease on
the office and a short -term on the plant for purposes of
selling nontransferred equipment . About 57 percent of
the production machinery was transferred to. other
plants.
During the course of the discussions between the
Union and the Company , the Union requested certain in-
formation be furnished it so that an economist on the
International Union staff could review it, presumably for
the purposes of analyzing whether in fact the Respond-
ent's contention that the Waltham plant was too costly
was in fact true. While the Company did make a presen-
tation to the Union concerning the production costs at
Waltham, vis-a-vis its other facilities , in large part the
Respondent refused the Union 's request for the informa-
tion.
Following the Company's determination to close the
Waltham plant, the parties did meet to discuss the effects
of this decision , including particularly the Respondent's
payment of severance allowance of the active employees
and approximately 70 other employees who were then
on layoff. The total severance pay was $ 1,046,365.76.
B. Analysis and Concluding Findings
In brief, this case involves a management decision to
change operations the effect of which was the termina-
tion of bargaining unit jobs. In a variety of factual set-
tings, the Board and court shave considered the statutory
obligations of employers who wish to make such
changes . Many of these concern the elimination of bar-
gaining unit jobs in an effort to defeat the employees'
right to bargain collectively . Those cases are not materi-
al to this analysis because there is no contention that the
Respondent 's decision was in any way motivated by an-
tiunion animus or was part S of a plan to rid itself of the
collective-bargaining representative of its employees.
Nor does the General Counsel or the Union contend that
the Respondent was motivated other than by legitimate
economic considerations-though these specifically in-
volved the direct and indirect costs of the collective-bar-
gaining agreement.
458 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Those cases where an employer determines to elimi-
nate bargaining unit jobs for purely economic reasons
fall into two broad categories-where there is a collec-
tive-bargaining agreement covering the bargaining unit
employees and where there is none . In the former, the
question generally concerns whether the company had
the right under the collective-bargaining agreement to do
what it did or whether its act amounted to a midterm
modification , or repudiation, of the contract proscribed
by Section 8(d). Where there is no collective -bargaining
agreement, the issue generally concerns whether the
company's decision is one over which it had a mandato-
ry duty to bargain as required by Section 8(d). In both
types of cases there is the additional issue of whether and
to what extent an employer has a duty to bargain over
the effects of its decision , an issue not involved here be-
cause the parties stipulated that in fact the Respondent
did bargain with the Union about the effects.
The Respondent principally relies on First National
Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), in
which it was held that an employer 's decision to shut
down part of its business for purely economic reasons is
not a mandatory subject of bargaining . The Supreme
Court, however, specifically limited its holding to the
facts before it . Specifically, there was no collective-bar-
gaining agreement covering the employees whose jobs
were terminated , nor did the company 's decision to close
the particular operation involve relocation of any work
which had been performed by bargaining unit employ-
ees. Since here there was a collective-bargaining agree-
ment and the decision meant someone else would do bar-
gaining unit work makes First National Maintenance
Corp. not controlling.
Nevertheless, I conclude that the Respondent 's deci-
sion to close its Waltham facility and transfer production
to other facilities was not a mandatory subject of bar-
gaining . In General Motors Corp., 191 NLRB 951 (1971),
the Board held that an employer 's decision to sell an em-
ploying enterprise is not a mandatory subject of bargain-
ing where the decision involves a "significant investment
or withdrawal of capital [and] will affect the scope and
ultimate direction of an enterprise, are matters essentially
financial and managerial in nature ." The Board followed
General Motors Corp. in National Car Rental System, 252
NLRB 159 (1980), a case factually similar to the instant
situation.
In National Car Rental, the employer had determined
to open a satellite facility and reduce , though only mar-
ginally, the number of vehicles to be serviced out of its
principal facility. The company then determined to go
out of business at its initial location, selling many of the
accounts to another employer but transferring some of
the business to the satellite facility . Though finding that
the impact of both decisions (creating satellite facility
and subsequently closing the principal facility and trans-
ferring work to the satellite) meant the elimination of
bargaining unit jobs , the Board nevertheless concluded
that neither of these decisions was a mandatory subject
of bargaining . The Board did conclude that the company
was required to bargain over the effects of its decision.
Here the Respondent built the Gorham , Maine plant in
1974 and in 1979 the one in North Carolina . Then in
1981 it decided to close the Waltham plant, which meant
a capital outlay of about $2.3 million, particularly includ-
ing the payment to unit employees of their more than $1
million in severance allowances . Though there was no
sale of the enterprise (although the Respondent did sell
the building , land, and some machinery and now leases
back the office space) that fact does not seem significant.
The point is that the Respondent undertook a manage-
ment decision to expand its capacity (as in National Car
Rental) but then when the economy took a downturn
and the Respondent's product became less competitive
due to unit costs, it decided to close its most costly facili-
ty and consolidate (as in National Car Rental). This deci-
sion, as in General Motors and National Car Rental, in-
volved a capital investment and certainly affected the
scope and direction of the Respondent 's business which,
under those cases, clearly was a matter of "entrepreneur-
ial control." It was not, therefore, a decision about
which the Respondent was required to bargain.
The test seems to be whether the transfer of unit work
involves "a significant investment or withdrawal of cap-
ital affecting the scope and ultimate direction of the en-
terprise." American Needle & Novelty Co., 206 NLRB 534
(1973). If it does, then the midterm decision does not re-
quire the Union's consent, much less bargaining . General
Motors Corp., supra. If not, then it is an unfair labor prac-
tice to implement the decision without the Union's con-
sent . Brown Co., 243 NLRB 769 (1979).
The line may be vague, but there is a difference be-
tween economic justification for an ace (to avoid losing
money or even a desire to make more) and a significant
investment or withdrawal of capital . Where the company
is about simply trying to be more economically efficient,
then the transfer of work is a condition of employment
which cannot be modified during the term of a contract
absent the union 's consent . But where the transfer of
work is part of the company's broader responsibility to
allocate its capital then it is not annitem the union can
veto by withholding its consent, or even an item which
requires bargaining before implementation.
An attempt to operate more cost-effectively may be of
significance to the company, but does not rise to the
level of "affecting scope and ultimate direction of the en-
terprise." Thus in those cases in which the midterm
transfer of work without consent was found unlawful,
there was no apparent investment or withdrawal of cap-
ital. There was no significant change in the scope of the
business . In Los Angeles Marine Hardware Ca, 235
NLRB 720 (1978), enfd . 692 F.2d 1302 (9th Cir. 1979),
for instance , there was no apparent expenditure of capital
and the only change in the business was the location of
the new facility some 50 miles from the old one. Similar-
ly, in Brown Ca, supra, the transfer of equipment (result-
ing in loss of bargaining unit jobs) was between compo-
nents of a single employer. And in American Needle &
Novelty Ca , supra, there was simply a transfer of work
between plants of an integrated enterprise. There was no
expenditure of capital or sale of assets . The same was the
case in Park-Ohio Industries, 257 NLRB 413 (1981).
Here the Company's decision to close the Waltham
plant and transfer the work involved a capital outlay of
REECE CORP.
about $2 .25 million and the sale of the Waltham plant.
Whether such an expenditure is "significant" would seem
to depend on the circumstances of the company. Here
the cost of closing Waltham was about one -third of the
Respondent 's 1980 capital expenditures ($6,183 ,000 from
its annual report). I conclude that the Respondent's cap-
ital commitment was significant and the decision to shut
down one facility and consolidate manufacturing capac-
ity was more than a mere relocation of work, as in Los
Angeles Marine.
Thus I do not believe that the Respondent 's decision
to close the Waltham plant , whether or not bargaining
unit work was then transferred to other already existing
facilities, was a midterm modification or repudiation of
the collective-bargaining agreement.
Beyond that, even if I were to conclude that the Re-
spondent could not normally close Waltham and transfer
bargaining unit work to other then existing plants with-
out the Union 's consent, the Union here in fact consent-
ed. The Union agreed to the management-rights and sev-
erance pay clauses of the collective-bargaining agree-
ment.
During negotiations in 1974, the Union demanded and
the Company agreed to a severance pay provision which
was then included in the 1977 and 1980 contracts. The
management-rights clause has been in all the collective-
bargaining agreements in substantially the current form.
(A provision stating the "Company normally will not
subcontract" was added in 1969.) The Respondent's wit-
nesses testified that union representatives wanted a sever-
ance pay provision because they were concerned about
the Company 's decision to build a manufacturing facility
in Gotham, Maine. The Union's witnesses testified to the
effect that such was not a particular interest. Rather, for
national policy reasons, the Union was beginning to
demand severance pay provisions in all of their collec-
tive-bargaining agreements.
I conclude that the contract, at least by clear implica-
tion, gave the Respondent a right to close the Waltham
facility and transfer the work. In article III, "Manage-
ment," the Union recognizes the broad right of the Re-
spondent to manage the enterprise including "the right to
abandon or discontinue any production, methods or fa-
cilities . . . ." Management also has the right to subcon-
tract work , though it will not do so "under normal con-
ditions" (a language change in 1974) where such would
cause layoffs.
In material part the "Severance Allowance" clause
reads:
When in the sole judgment of the Company, it
decides to close permanently the plant or discontin-
ue permanently a department of the plant or portion
thereof and terminate the employment of individ-
uals, an employee whose employment is terminated
as a result thereof . . . shall be entitled to a sever-
ance allowance ... .
The General Counsel and the Union argue that these
provisions do not vest in the Respondent the right to
close the Waltham plant and transfer bargaining unit
work because the Union has a right under the statute to
459
prevent such by withholding its consent . Thus to find
the Respondent had the right under the contract to do
what it did would be tantamount to fording that the
Union waived a statutory right, a conclusion the Board
will not make absent "clear and unmistakeable" lan-
guage . Allied Mills, 218 NLRB 281 (1975); Universal Se-
curity Instrument, 250 NLRB 661 (1980). Or as the Board
said in Hearst Corp., 151 NLRB 834 (1965), it "will not
find that contract terms of themselves confer-on the em-
ployer a management right to take unilateral action on a
mandatory subject of bargaining unless the contract ex-
pressly or by necessary implication confers such a right."
Though the precise factual situation of this case is not
set forth in the collective-bargaining agreement, by
"clear implication" the parties must have had in mind the
Respondent's future decision to close all or part of the
plant, with or without transferring some of the work to
another facility. Management specifically has "the right
to abandon or discontinue any production , methods or
facilities or to introduce new or improved materials, pro-
duction methods or facilities ." And language in the sev-
erance allowance clause ("when in the sole judgment of
the Company it decides to close permanently the plant")
can mean only that the Respondent has the right to do
so. It is indeed inconceivable that the Respondent would
have agreed to a contract provision which would
amount to a substantial cost item , for which it received
no production in return , without getting some benefit in
return . That benefit must have been the right to do in
fact what it did.
In Park-Ohio Industries, supra, cited by the General
Counsel and Union, the Board held that the midterm
transfer of bargaining unit work from one facility to an-
other was unlawful absent the union 's consent. The
Board concluded that a broad management-rights clause
was not a waiver of the union 's statutory right. This
broad language was distinguished from the specific
wording of the contract in Consolidated Foods Corp., 183
NLR3 832 (1970). There the company had "the exclusive
right" to "change, modify or cease its operation , process-
es, or production, in its discretion." The Board thus held
that the company could lawfully transfer bargaining unit
work to another facility. The contract language here is
much closer to Consolidated Foods than Tocco.
The Union and the General Counsel argue that not-
withstanding that the Respondent paid bargaining unit
employees in excess of $1 million in severance pay, its
right to close the plant is limited to going out of business
totally. In short, the General Counsel and the Union
argue that the severance pay clause applied only where
the plant , or a portion of it, closes and there is no trans-
fer of work. Though I believe that the clear wording of
both clauses precludes such a limited construction, the
credible extrinsic evidence does not support the General
Counsel and the Union. They rely principally on the tes-
timony of Frank Ceccaroni , the Union's subregional di-
rector . In explaining the purpose of the severance pay
clause to the Company in 1974, "I said that in the event
the plant closed down, they went out of business." And,
he testified , "Gorham, Maine was never an issue with the
severance pay clause."
460 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
However , in contrast to Ceccaroni 's testimony is the
Union 's argument to arbitrator Fallon in 1979 . Certain
work had been transferred from Waltham to Gorham
which the Union claimed resulted in the permanent lay-
offs of employees ; hence, they should have received sev-
erance pay . Though concluding that some of the layoffs
were caused by a general recession in the industry, the
arbitrator did conclude that some resulted from the
transfer of work and he awarded severance pay accord-
ingly . Nowhere in that proceeding did the Union main-
tain that the Company did not have the right to transfer
work from Waltham to Gorham . On the contrary, the
Union's position was that in such an event, laid-off em-
ployees were entitled to severance pay. Rather than at-
tacking the Company's right to transfer work, the Union
sought severance pay for terminated employees . (During
the 1974 contract the Union did grieve the transfer of
work as such , which was resolved by settlement.)
Further, in his brief to the arbitrator counsel for the
Union stated:
The parties stipulated that the severance allowance
provision of the current contract was first negotiat-
ed by the parties into the 1974-1977 agreement.
Both John Reece and Leo Fitzpatrick agreed that
the Gorham plant was discussed in the context of
negotiating the severance allowance provision. Both
agreed that the union negotiators expressed great
concern about the impact of the Gorham facility
upon the bargaining unit ... .
I believe the Union recognized the Repondent's right
to transfer work, and brought the severance pay clause
as a hedge against losses to the bargaining unit which
would result . Such is consistent with the Union 's position
in 1979. Such is further consistent with the fact that a
severance pay clause was bargained for only after
Gorham was built (earlier such a clause was "orally"
proposed but dropped when the Respondent objected).
Thus I discredit Ceccaroni's assertion that in negotiations
the parties meant to limit severance pay only to closings
where there was no transfer of work.
I conclude that the contract specifically gave the
Company the right to make the unilateral decision to
close the Waltham plant (or part of it). The fact that this
decision was accompanied by transfer of some of the
bargaining unit work did not alter the Company's right
to make that decision.
In sum, I conclude that the Respondent did not have a
duty to bargain about its decision to close its plant in
Waltham, Massachusetts, for purely economic reasons
with or without the concomitant transfer of work to an-
other facility. Second , the decision to close the facility,
with or without the concomitant transfer of bargaining
unit work, was not a midterm modification . or repudi-
ation, of the collective-bargaining agreement. The collec-
tive-bargaining agreement remains in effect. Indeed the
Respondent has complied with its terms including the
payment of a severance allowance to employees . Third-
ly, I conclude that even if this matter were a mandatory
subject of bargaining or a matter which would require
the consent of the Union whether there was bargaining
or not. In fact the Respondent had the specific contract
right to close the facility , with or without the concomi-
tant transfer of unit work.
Notwithstanding the Respondent had no obligation to
bargain with the Union concerning the closure of the
plant, it nevertheless did at least enter into discussions
with the Union about this and did in fact on two occa-
sions postpone the ultimate decision of the board of di-
rectors to close the facility . During the course of these
discussions , the Union requested that the Company fur-
nish certain financial information , arguing that such was
necessary for its study in order to determine whether or
not in fact the Company 's assertion that it had to close
the plant for economic reasons was valid . The Respond-
ent's refusal to supply all the requested information is al-
leged violative of its bargaining duty . In support of this
allegation the General Counsel and Union cite Goodyear
Aerospace Corp., 204 NLRB 831 (1973 ), enfd. denied 497
F.2d 747 (6th Cir . 1974).
There is no doubt a union is entitled to such informa-
tion as is necessary to its performance as a collective-bar-
gaining representative . And the test for entitlement is lib-
eral-a "discovery-type standard" of relevance. NLRB v.
Acme Industrial Co., 385 U .S. 432 (1967).
In evaluating whether the information requested is po-
tentially relevant , one goes back to NLRB v. Truitt Mfg.
Co., 351 U. S. 149 (1956). There the Supreme Court held
that Section 8(a)(5) requires a Company to furnish sub-
stantiating data , on request, when claiming in negotia-
tions an inability to grant a wage increase . Though the
Respondent contends it did not claim an inability to keep
Waltham open , its claim of noncompetitiveness along
with its proposal that benefits would have to be reduced
was "the equivalent of the claims of inability to pay the
wages demanded in Truitt." NLRB v. Goodyear Aerospace
Corp., 497 F.2d 747, 751 (6th Cir. 1974). Nor would the
charts prepared by the Respondent adequately substitute
for the data requested. Designcraft Jewel Industries, 254
NLRB 791 (1981).
But just because a union represents employees does
not mean that it is entitled to all the information it re-
quests. E.g., Detroit Edison v. NLRB, 440 U.S. 301
(1979). The information requested must be viewed in the
context of the Respondent's general duty to bargain with
the Union.
Here the information could not be relevant to bargain-
ing over the Respondent 's decision to close, for the Re-
spondent had no duty to bargain over that issue. Good-
year Aerospace seems to require furnishing information
even where the subject does not require bargaining-the
company was demanding a midterm modification of the
contract to adjust the wages downward. However, there
the company also embarked on an unlawful attempt to
deal directly with employees . The Board held: "We find
the two aspects of this conduct are intertwined and con-
stitute a violation of Section 8(a)(5) and (1) of the Act."
The absence here of such unlawful conduct makes Good-
year Aerospace inapposite.
I conclude that the Respondent was not required to
furnish the information requested by the Union and did
not violate the Act by refusing.
REECE CORP. 461
Further the closure was lawful ; and the parties did
bargain in good faith concerning the effects, including
severance pay and hiring employees at other plants.
There is no contention the denied information was relat-
ed to effects bargaining . And there is no evidence of
union animus . Under such circumstances , even if there
was a technical violation , it would not effectuate the pur-
poses of the Act to require remedial order , which in this
situation would amount to an exercise of futility. Hearst
Corp., supra.
Finally, having concluded that the Respondent did not
violate its obligations under Section 8 (a)(5) of the Act in
its decision to close the Waltham plant , and absent evi-
dence that the decision was based on anything other than
economics , I conclude that there's no basis for fording
that the Company thereby violated Section 8(a)(3) of the
Act by discharging its Waltham employees . While it is
no doubt arguable that the plant closing is inherently de-
structive of employee rights (absent a contractual right
to do so) in this case at a minimum , the Respondent has
come forth with sufficient evidence to sustain its burden
of proving that in fact it had an economic justification
for doing what it did . Cf. NLRB v. Great Dane Trailers,
388 U .S. 26 (1967).
[Recommended Order for dismissal omitted from pub-
lication.]