XMGM Refrigeration

National Labor Relations Board - Board Decisions

May 21, 1992

307 N.L.R.B. 640 (N.L.R.B. 1992)

640
307 NLRB No. 102
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The Charging Party is not signatory to this agreement.
2 Since 1989, by virtue of Sec. 9(a) of the Act, the Union has
been, and is, the exclusive representative of the employees in the fol-
lowing appropriate unit:
3 The Respondent employed unit employees when it ceased mak-
ing these payments.
XMGM Refrigeration, Inc. and Automobile Me-
chanics’ Local 701, Union & Industry Pension
& Welfare Funds. Case 13–CA–29824
May 21, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND OVIATT
Upon a charge filed on November 6, 1990, by Auto-
mobile Mechanics’ Local 701, Union & Industry Pen-
sion & Welfare Funds (the Charging Party), the Gen-
eral Counsel of the National Labor Relations Board
issued a complaint on December 17, 1990, alleging
that the Respondent has engaged in unfair labor prac-
tices within the meaning of Section 8(a)(5) and (1) and
Section 8(d) by failing and refusing to make contrac-
tually mandated fringe benefit trust fund payments.
Copies of the complaint were served on the Respond-
ent. The Respondent filed a timely answer denying the
commission of any unfair labor practices and asserting
certain affirmative defenses.
On April 15, 1991, the parties jointly filed with the
Board a motion to transfer the proceeding to the Board
without benefit of a hearing before an administrative
law judge and submitted a proposed record consisting
of formal papers and the parties’ stipulation of facts
with attached exhibits. On June 4, 1991, the Board
issued an order granting the motion, transferring the
proceeding to the Board, and approving the stipulation.
Thereafter, the General Counsel and the Respondent
filed briefs.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
On the entire record in this case, the Board makes
the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent, an Illinois corporation with an of-
fice and place of business in Chicago, Illinois, is en-
gaged in the sale and distribution of refrigerated carrier
units. During the calendar or fiscal year preceding the
issuance of the complaint, a representative period, the
Respondent, in the course and conduct of its business
operations, derived gross revenues in excess of
$500,000. During the same period, the Respondent also
sold and shipped from its Chicago, Illinois facility
products, goods, and materials valued in excess of
$50,000 directly to points outside the State of Illinois.
We find that the Respondent is an employer engaged
in commerce within the meaning of Section 2(6) and
(7) of the Act.
II. LABOR ORGANIZATION
The General Counsel alleged, the Respondent ad-
mits, and we find that the Automobile Mechanics’
Local 701, International Association of Machinists &
Aerospace Workers, AFL–CIO is a labor organization
within the meaning of Section 2(5) of the Act.
III. ALLEGED UNFAIR LABOR PRACTICE
The issue presented is whether the Respondent en-
gaged in unfair labor practices within the meaning of
Section 8(a)(5) and (1) and Section 8(d) of the Act by
failing and refusing to make trust fund payments re-
quired by the collective-bargaining agreement for its
unit employees represented by the Union.
A. Facts
The Respondent is engaged in the sale and distribu-
tion of refrigerated carrier units. The Respondent and
the Union are parties to a collective-bargaining agree-
ment effective by its terms from July 1, 1989, to June
30, 1992.1 During the period of July 1, 1989, to De-
cember 21, 1990, the Respondent employed unit em-
ployees who worked under the contract.2
All employees including mechanics, apprentices,
helpers, and service maintenance employees, ex-
cluding office clerical employees, professional
employees, guards and supervisors as defined in
the Act.
Articles 6 and 7 of the contract require the Respond-
ent to make employer contributions on behalf of unit
employees to the health and welfare fund and the pen-
sion fund, respectively. Consistent with these contrac-
tual provisions, the Respondent made the employer
contributions on behalf of unit employees beginning
July 1, 1989. The Respondent submitted payments to
the Charging Party, the administrator of the trust
agreements which established the funds. Since June 1
and August 1, 1990, respectively, the Respondent,
however, ceased making the required payments to the
pension fund and the health and welfare fund without
giving prior notice to the Union or the Charging
Party.3 Neither the Union nor the Charging Party con-
sented to the Respondent’s cessation of the required
payments to the funds. In addition, there were no oral
or written modifications to Articles 6 and 7 of the par-
ties’ contract.
In about early July 1990, the Respondent informed
the Union’s business representative that it was experi-
encing financial difficulties, but its intent was to pay
641XMGM REFRIGERATION
4 Contrary to the Respondent’s claim, par. 11 of the parties’ stipu-
lation of facts does not state that the Respondent told the Union that
it intended to make full payment ‘‘as soon as the funds became
available after the shutdown of its business.’’ We also reject that
portion of the Respondent’s brief indicating that ‘‘Respondent is still
in the process of negotiating with the company for which it was a
distributor regarding the funds owed to Respondent for inventory re-
turned by Respondent for reimbursement.’’ This information was not
included in the parties’ stipulation of facts or the record.
5 In fact, the record does not indicate whether the Union’s proposal
was solicited or that the Respondent even responded to it in any
way. Indeed, the stipulation and the document, Exh. 6, merely estab-
lish that the Respondent did not execute the agreement.
6 Flood City Brass & Pump Co., 296 NLRB No. 28, slip op. at
2–3 (Aug. 22, 1989) (not reported in Board volumes), citing Inter-
national Distribution Centers, 281 NLRB 742, 743 (1986); Westing-
house Electric Corp., 278 NLRB 424, 432 (1986). See also Tammy
Sportswear Corp., 302 NLRB 860 (1991); Martin & Keller Roofing
Co., 297 NLRB 787 (1990).
all amounts due to the funds.4 By a letter dated Sep-
tember 26, 1990, the Union proposed an agreement
setting out terms for the closing of the Respondent’s
business operations, including a request that the Re-
spondent ‘‘pay any health insurance and pension
through the date of shutdown.’’ The Respondent did
not execute the Union’s proposed agreement. There
have been no other written or oral proposals exchanged
between the parties concerning the Respondent’s pay-
ment of employer contributions to the funds.
By a letter dated August 2, 1990, counsel for the
Charging Party notified the Respondent that it was
‘‘seriously delinquent’’ in making the required con-
tributions to the funds and that past efforts by the
Charging Party and the Union to obtain payment have
been ‘‘unsuccessful.’’ Counsel for the Charging Party
then requested immediate payment from the Respond-
ent. Sometime after August 2, 1990, the Respondent
made a partial payment of the employer contributions
it owed the funds. The Respondent, however, still
owes some employer contributions, the exact amounts
of which are reflected by the Charging Party’s records.
No payments from the Respondent have been received
by the Charging Party since October 1990.
B. Contentions of the Parties
The General Counsel contends that under Board law
an employer violates Section 8(a)(5) and (1) of the Act
by failing to pay the contractually required employer
contributions to the pension and health and welfare
funds without giving notice to or affording the union
an opportunity to bargain. The General Counsel further
argues that without the union’s consent such employer
action constitutes an unlawful modification of the
terms and conditions of employment of unit employees
established by the existing contract. The General
Counsel seeks a finding of a violation of Section
8(a)(5) and (1) against the Respondent and requests
that the remedy include the mailing of appropriate
Board notices to employees.
The Respondent admits that it ceased making the re-
quired employer contributions to the funds. The Re-
spondent, however, contends that it provided notice to
the Union and afforded the Union an opportunity to
bargain over the delinquent contributions. The Re-
spondent also argues that the evidence shows that it re-
affirmed and acknowledged to the Union its continuing
obligation to make the required contributions and that
it neither repudiated its contractual obligations nor pro-
posed or implemented any changes in the contract
terms. The Respondent further argues that the evidence
shows that it told the Union that it intended to make
full payment as soon as the money became available
after the shutdown of its operations and that it notified
the Union and the Charging Party of its inability to
make timely payments to the funds because of finan-
cial difficulties. As an alternative argument, the Re-
spondent urges the Board to reexamine and reject well-
established Board precedent which holds that an em-
ployer’s claim of financial inability to pay does not
constitute an adequate defense to an allegation that an
employer has violated Section 8(a)(5) and (1) of the
Act by failing to abide by a provision of a collective-
bargaining agreement.
C. Discussion
The record clearly shows that during the term of the
contract the Respondent admittedly ceased making the
required employer contributions to the health and wel-
fare and pension funds for unit employees without
prior notice to, or the consent of, the Union. The Re-
spondent, however, asserts that the Union’s September
26 proposed agreement concerning the shutdown estab-
lishes that the Respondent afforded the Union an op-
portunity to negotiate and bargain over these delin-
quent contributions. We disagree. The September 26
proposal merely indicates that the Union wanted the
Respondent, inter alia, to make good on all of its out-
standing financial obligations regarding unit employees
in view of the purported impending shutdown of oper-
ations. Contrary to the Respondent’s claim, the fact
that the Union tendered a proposal for the shutdown
does not establish that the Respondent offered to nego-
tiate with the Union over the nonpayment of benefits.5
The Respondent also asserts that its failure to make
these payments should be excused because it was then
experiencing financial difficulties, but intended to pay
the amounts due later. ‘‘Neither a claim of economic
necessity nor a lack of subjective bad-faith intent, even
if proven, constitutes an adequate defense to an allega-
tion that an employer has violated Section 8(a)(5) of
the Act by failing to abide by provisions of a collec-
tive-bargaining agreement.’’6
Accordingly, we find that the Respondent engaged
in unfair labor practices within the meaning of Section
642 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
7 Because the provisions of employee benefit fund agreements are
variable and complex, we leave to the compliance stage the question
whether the Respondent must pay any additional amounts into the
benefit funds in order to satisfy our ‘‘make-whole’’ remedy.
Merryweather Optical Co., 240 NLRB 1213 (1979).
8 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
8(a)(5) and (1) and Section 8(d) of the Act when it
failed to make the contractually required fringe benefit
trust fund contributions.
CONCLUSION OF LAW
By ceasing during the term of the contract to make
contractually required payments to the pension fund
and the health and welfare fund on and after June 1
and August 1, 1990, respectively, the Respondent has
engaged in unfair labor practices within the meaning of
Section 8(a)(5) and (1) and Section 8(d) and Section
2(6) and (7) of the Act.
REMEDY
Having found that the Respondent has engaged in
certain unfair labor practices, we shall order it to cease
and desist and to take certain affirmative action de-
signed to effectuate the policies of the Act.
We shall order the Respondent to make whole the
pension fund and the health and welfare fund for all
contributions that would have been paid but for the
Respondent’s unlawful discontinuance of payments7
and to make unit employees whole for losses suffered
as a result of the unlawful discontinuance of payments
as set forth in Kraft Plumbing & Heating, 252 NLRB
891 (1980), enfd. mem. 661 F.2d 940 (9th Cir. 1981),
to be computed in the manner set forth in Ogle Protec-
tion Service, 183 NLRB 682 (1970), enfd. 444 F.2d
502 (6th Cir. 1971), and with interest to be computed
in the manner prescribed in New Horizons for the Re-
tarded, 283 NLRB 1173 (1987). In addition, in view
of the apparent shutdown of the Respondent’s oper-
ations, we shall also order the Respondent to mail cop-
ies of an appropriate Board notice to all unit employ-
ees. See P. J. Hamill Transfer Co., 277 NLRB 462,
463 (1985).
ORDER
The National Labor Relations Board orders that the
Respondent, XMGM Refrigeration, Inc., Chicago, Illi-
nois, its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain with Automobile Mechanics’
Local 701, International Association of Machinists &
Aerospace Workers, AFL–CIO by failing and refusing
to make contractually required contributions to the
pension and health and welfare funds.
(b) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of
the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Make all contributions to the pension fund and
the health and welfare fund that have not been paid
since June 1 and August 1, 1990, respectively, and that
would have been paid but for the Respondent’s unlaw-
ful discontinuance of the payments, and make whole
unit employees for any losses resulting from the Re-
spondent’s failure to pay the employer contributions to
these funds, with interest, in the manner set forth in
the remedy section of this decision.
(b) Preserve and, on request, make available to the
Board or its agents for examination and copying, all
payroll records, social security payment records, time-
cards, personnel records and reports, and all other
records necessary to analyze the amount of payment
due under the terms of this Order.
(c) Mail a copy of the attached notice marked ‘‘Ap-
pendix’’8 to the Union and to all unit employees em-
ployed by the Respondent on or after June 1, 1990.
Such notice shall be mailed to the last known address
of each employee. Copies of the notice, on forms pro-
vided by the Regional Director for Region 13, after
being signed by the Respondent’s authorized represent-
ative, shall be mailed immediately upon receipt by the
Respondent, as directed above. This notice shall not be
altered, defaced, or covered by any other material.
(d) Notify the Regional Director in writing within
20 days from the date of this Order what steps the Re-
spondent has taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to mail and abide by this notice.
WE WILL NOT refuse to bargain with Automobile
Mechanics’ Local 701, International Association of
Machinists & Aerospace Workers, AFL–CIO by failing
and refusing to make contractually required contribu-
tions to the pension and health and welfare funds.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL make all contributions to the pension fund
and the health and welfare fund that have not been
643XMGM REFRIGERATION
paid since June 1 and August 1, 1990, respectively,
and that would have been paid but for our unlawful
discontinuance of the payments, with interest.
WE WILL make whole unit employees for any losses
resulting from our failure to pay the employer con-
tributions to the pension fund and the health and wel-
fare fund since June 1 and August 1, 1990, respec-
tively, with interest.
XMGM REFRIGERATION, INC.