Adams Dairy, Inc.

National Labor Relations Board - Board Decisions

Jun 25, 1962

137 N.L.R.B. 815 (N.L.R.B. 1962)

ADAMS DAIRY, INC. 815
(c) Notify the said Regional Director , in writing , within 20 days from, ,the date
of the'receipt of this Intermediate Reportwhat steps the,Respondent!' has taken to
comply herewith 24
2' In the event that this Recommended Order be adopted by the Board , this provision
shall be modified to read: "Notify said Regional Director , In writing , within 10 days from
the date of this Order , what steps the Respondent has taken to comply herewith."
APPENDIX
NOTICE TO ALL MEMBERS OF TEAMSTERS , CHAUFFEURS, WAREHOUSEMEN AND
HELPERS, LOCAL 901 INTERNATIONAL BROTHERHOOD OF TEAMSTERS , CHAUFFEURS,
WAREHOUSEMEN AND HELPERS OF AMERICA , AND TO ALL'. EMPLOYEES .AND'INDI-
VIDUALS EMPLOYED BY VALENCIA BAXT EXPRESS, INC.
Pursuant to the recommendations of a Trial Examiner of the National Labor
Relations Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify you that:
WE WILL NOT engage in, or induce or encourage any individual employed
by Valencia Baxt Express , Inc., or by any person engaged in commerce, to
engage in , a strike or refusal to perform services , and we will not threaten,
coerce , or restrain the said company , where an object thereof is to force or
require the said company to recognize and bargain with Respondent, Team-
sters Local 901 as the collective bargaining representative of the Company's
employees , if and so long as Seafarers International Union of North America,
Atlantic, Gulf, Lakes and Inland Waters District , P.R. Division , AFL-CIO, is
certified as the representative of such employees under the provision of Section 9
of the National Labor Relations Act.
TEAMSTERS , CHAUFFEURS , WAREHOUSEMEN AND,.HELPERS,
LOCAL 901, INTERNATIONAL BROTHERHOOD OF' TEAM-
STERS, CHAUFFEURS , WAREHOUSEMEN AND HELPERS OF
AMERICA,
Labor Organization.
Dated------------------- By-------------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 days from the date hereof, and must not be
altered, defaced , or covered by any other material.
Employees may communicate directly with the Board 's Regional Office , Credito
Building, P.O. Box 11007 , 1506 Ponce de Leon Avenue , Fernandez Juncos Station,
Santurce , Puerto Rico , Telephone Number 723-3200, if they have any. questions
concerning this notice or compliance with its provisions.
Adams Dairy, Inc.' and The Independent Wholesale Dairy Prod-
ucts Salesmen 's Association . Cases Nos. 14-CA-2268 and 14-
CA-2268-2. June 25, 1962
DECISION AND ORDER
On December 14, 1960, Trial Examiner Arnold Ordman issued his
Intermediate Report in the above-entitled proceeding, finding that the
Respondent had engaged in certain unfair labor practices and :recom-
mending that it cease and desist therefrom and take certain affirmative
action, as set forth in the Intermediate Report attached hereto. There-
after, the Respondent and the General Counsel filed exceptions' and
1 Respondent 's name appears as corrected by stipulation of the parties at the hearing.
2 The General Counsel excepted only to the failure of the Trial Examiner to include an
essential element of the recommended Board order in the "Notice to All Employees." We
find merit in the exception and have therefore revised the notice as requested.
137 NLRB No. 87.
816 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
;the Respondent filed a supporting brief. The Charging Party filed a
brief in support of the Intermediate Report.
Pursuant to the provisions of Section 3(b) of the Act, the Board
has delegated its powers in connection with this case to a three-member
panel [Members Leedom, Fanning, and Brown].
The Board has reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was committed. The
-rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and briefs, and the entire record in
these cases, and hereby adopts the Trial Examiner's findings, con-
clusions, and recommendations with the following modifications :
1. We find,' as did the Trial Examiner, that by engaging independ-
ent distributors to take over the routes of its driver-salesmen, without
-prior notice to, or consultation or bargaining with, the Union, the
Respondent has engaged in and is engaging in unfair labor practices
within the meaning of Section 8(a) (5) and (1) of the Act.4
2. The Trial Examiner found that the termination of the employ-
ment of the driver-salesmen was directly attributable to the Respond-
ent's refusal to bargain in violation of Section 8(a) (5) of the Act.
He further found that the inherent effect of the refusal to bargain was
to discourage the employees in the exercise of their rights guaranteed
in Section 7 of the Act. He therefore concluded that the termination
,of the employment of the driver-salesmen was violative of Section
8(a) (3) of the Act. Since our remedy for the violation of Sec-
tion 8(a) (5) of the Act contains provisions for reinstatement and
backpay, the customary remedies for a violation of Section 8(a) (3),
we deem it unnecessary to pass upon the validity of this conclusion of
the Trial Examiner.'
3. The Trial Examiner found that the Respondent also violated
Section 8 (a) (5) of the Act by failing to comply with the termination
and modification procedures prescribed by Section 8 (d) of the Act.
Here, too, the additional finding would not change the scope of the
Order and we shall therefore not pass upon such finding by the Trial
Examiner.
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, Adams Dairy,
' Member Leedom concurs with the Trial Examiner's finding that the Respondent vio-
lated Section 3(a) (5) by its unilateral action in terminating its distribution operations
without consulting the Union However, in accordance with his position in Town and
Counts y Manufacturing Company, Inc, et at ., 136 NLRB 1022, he bases his finding of a
violation solely on the ground that the Respondent was under a statutory duty to bargain
as to the benefits which the drivers would be entitled to receive, and not because it failed
to bargain over the economic decision to subcontract
4 Town and Country Manufacturing Company, Inc., supra.
5 Ibid, at section IV.
ADAMS DAIRY, INC. 817
Inc., St. Louis, Missouri , its officers , agents, successors , and assigns,
shall :
1. Cease and desist from :
(a) Failing and refusing to bargain collectively with The Inde-
pendent Wholesale Dairy Products Salesmen 's Association as the
exclusive representative of its wholesale driver-salesmen , including
relief drivers and special drivers, but excluding inside dairy workers,
office employees , supervisors , executives , and professionals as defined
in the Act , with respect to the utilization of independent distributors
to replace driver-salesmen.
(b) In any like or related manner interfering with, restraining,
or coercing employees in the exercise of the right to self-organization,
to form labor organizations , to join or assist the above-named or any
other labor organization , to bargain collectively through representa-
tives of their own choosing , and to engage in other concerted activities
for the purpose of collective bargaining or other mutual aid or protec-
tion, or to refrain from any or all such activities , except to the extent
that such right may be affected by an agreement requiring member-
ship in a labor organization as a condition of employment, as author-
ized in Section 8(a) (3) of the Act, as modified by the Labor-
Management Reporting and Disclosure Act of 1959.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Bargain, upon request, with The Independent Wholesale Dairy
Products Salesmen's Association concerning the utilization of inde-
pendent distributors to replace driver-salesmen.
(b) Offer all driver-salesmen named in Appendix A, attached
hereto, who were replaced by independent distributors during the
month of February 1960, immediate and full reinstatement to their
former or substantially equivalent positions , without prejudice to
seniority or other rights and privileges, and make each of them whole
as provided in the section of the Intermediate Report entitled "The
Remedy ," for earnings lost as a result of their replacement by inde-
pendent distributors.
(c) Preserve and, upon request , make available to the Board or its
agents, for examination and copying , all payroll records, social security
payment records , timecards , personnel records and reports, and all
other records in the Respondent 's possession necessary for computa-
tion of lost earnings due hereunder.
(d) Post at its plant in St. Louis, Missouri, copies of the notice at-
tached hereto marked "Appendix A." 6 Copies of said notice, to be
furnished by the Regional Director for the Fourteenth Region, shall,
6In the event that this Order is enforced by a decree of a United States Court of
Appeals , there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order."
649856-63-vol. 137-53
818 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
after being duly signed by Respondent , be posted immediately upon
receipt thereof , and be maintained by it for 60 consecutive days there-
after, in conspicuous places, including all places where notices to em-
ployees are customarily posted. Respondent shall take reasonable
steps to insure that such notices are not altered , defaced, or covered
by any other material.
(e) Notify the said Regional Director for the Fourteenth Region,
in writing , within 10 days from the date of this Order, what steps
Respondent has taken to comply herewith.
APPENDIX A
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify our employees that :
WE WILL bargain collectively, upon request, with The Independ-
ent Wholesale Dairy Products Salesmen's Association with re-
spect to the utilization of independent distributors to replace
driver-salesmen.
WE WILL NOT interfere with, restrain , or coerce employees in
the exercise of the right to self-organization, to form labor organi-
zations, to join or assist the above -named or any other labor
organizations , to bargain collectively through representatives of
their own choosing , and to engage in other concerted activities for
the purpose of collective bargaining or other mutual aid or protec-
tion, or to refrain from any or all such activities , except to the ex-
tent that such right may be affected by an agreement requiring
membership in a labor organization as a condition of employment,
as authorized in Section 8 (a) (3) of the Act, as modified by the
Labor-Management Reporting and Disclosure Act of 1959.
WE WILL offer the below-named driver-salesmen immediate and
full reinstatement to their former or substantially equivalent posi-
tions, without prejudice to their seniority or other rights and
privileges , and to make them whole for earnings lost as a result
of the discrimination against them.
Stanley Doe James Frye
Walter Berry William Province
Elgin D. Hartshorn George Powell
George Lewis Henry Stahr
Kenneth McFarland Arthur Wideman
Gilbert Pounds Oscar Wideman
Ollie Caddell Arthur Riley
Rolla Dietz David Hockensmith
ADAMS DAIRY, INC. 819
John H. Hartshorn Gilbert Schumacher
Howard Deschamp Kevin Laughlin
Clarence Schnieder Mikal Wallace
Laurence Bridge John Luby
ADAMS DAIRY, INC.,
Employer.
Dated---------------- By-------------------------------------
(Representative) (Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
Employees may communicate directly with the Board's Regional
Office, 4459 Federal Building, 1520 Market Street, St. Louis, Missouri,
Telephone Number, Main 1-8100, Extension 2142, if they have any
question concerning this notice or compliance with its provisions.
INTERMEDIATE REPORT
STATEMENT OF THE CASE
This proceeding was heard before Trial Examiner Arnold Ordman on May 30
and June 1, 1960, in St. Louis, Missouri, on a consolidated complaint issued by
General Counsel and on answer of Adams Dairy, Inc.,' Respondent herein. The
issues litigated were whether Respondent had violated Section 8(a)(1), (3), and
(5) of the National Labor Relations Act, as amended. At the close of the hearing
the parties waived oral argument and subsequently filed briefs which have been
duly considered.
Upon the entire record, and from my observation of the witnesses, I hereby make
the following:
FINDINGS AND CONCLUSIONS
1. THE BUSINESS OF THE RESPONDENT
Respondent is a Missouri corporation with its principal office and place of busi-
ness in St . Louis, Missouri , where it is engaged in the processing, sale, and distribu-
tion at wholesale of milk and dairy products . During the 12-month period pre-
ceding the issuance of the complaint , Respondent made interstate purchases of
goods and materials , the value of which was in excess of $50,000. Accordingly, I
find that Respondent is engaged in commerce within the meaning of Section 2(6)
and (7 ) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
The Independent Wholesale Dairy Products Salesmen's Association, the Charging
Party, herein called the Union, is a labor organization within the meaning of Section
2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. Background and issues
Respondent processes and sells milk and other dairy products at wholesale to
retail outlets for ultimate resale to the customer. Respondent makes no retail sales
or home deliveries. In fact, about 80 percent of its sales are to two retail chains,
A & P and Kroger. Deliveries are made by truck operated by employees known
as driver-salesmen. Over the years, Respondent has also made some of its sales to
independent contractors, also known as independent distributors, at "dockside,"
i.e., at the loading platform of Respondent's plant. Generally speaking, the driver-
salesmen made deliveries in the area of the city and county of St. Louis, Missouri,
while the independent distributors handled outlying areas such as portions of
Illinois adjacent to St. Louis and St. Louis County.
In 1954 a number of Respondent's driver-salesmen, who then were members of,
and represented by, Teamsters Local 603, formed an independent labor organiza-
' Respondent's name appears as corrected by stipulation of the parties at the hearing.
820 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tion, the Union herein. In August 1954 the National Labor Relations Board certi-
fied the Union as the collective-bargaining representative of the "wholesale driver-
salesmen, including relief drivers and special drivers, employed by the Respondent,
but excluding inside dairy workers, office employees, supervisory employees, execu-
tives, and professionals as defined in the Act." 2 Following the Board certification,
Respondent and the Union entered into a succession of collective-bargaining agree-
ments covering the employees in the bargaining unit. The first agreement was for
a 2-year period ending September 1, 1956; the second was for a 3-year period ending
September 1, 1959; and the third and final agreement was for a 3-year period which
began on September 1, 1959, and was to expire on September 1, 1962. In Febru-
ary 1960, however, while the third and final agreement was still in force, Respondent
engaged an additional number of independent distributors to perform its delivery
functions and terminated the employment of all 24 of its driver-salesmen. The
issues in this case turn on whether these terminations were in derogation of Re-
spondent's collective-bargaining obligation within the meaning of Section 8(a)(5)
and (1) of the Act and whether they were discriminatory within the meaning of
Section 8(a) (3) and (1) of the Act.
B. The history of bargaining negotiations between the parties relating
to the use of independent distributors
Compensation to the driver-salesmen over the years has been based on a combined
salary and commission basis, the commission being computed on the volume of sales
each driver-salesman made on his assigned route. To the extent that "dockside"
or independent distributor sales would be made to customers on assigned routes
of driver-salesmen, the latter's compensation would be adversely affected unless
they were paid the commission on such sales. In the negotiations leading to the
three contracts already described, the Union sought to obtain guarantees protecting
the driver-salesmen from prejudice in that regard. Respondent, on the other hand,
resisted the inclusion of contractual provisions limiting its freedom to make sales
through independent distributors or compelling it to pay commission on such sales
to drivers whose income would thereby be affected. None of the three contracts
contained any express language in that regard.3 In the negotiations leading to the
third contract, that of 1959, the Union, as its president testified, asked for inclusion
of a clause which would have precluded Respondent from utilizing independent
distributors to make inroads on the routes serviced by its driver-salesmen. Respond-
ent successfully resisted this demand and such a clause was not included in the
contract. On the other hand, no language in the contract vested exclusive discretion
in Respondent in that regard. At no time during the negotiations did Respondent
suggest that it proposed or contemplated changing its method of distribution so
as to replace all its drivers with independent distributors. Respondent did mention
during the negotiations that Quality of O'Fallon, a small rival dairy, was using
independent distributors. Its point of emphasis here, however, was that that
concern had low delivery costs and that Respondent wanted to keep its own delivery
costs in line. Respondent did not propose that it wished to release its driver-salesmen
altogether and substitute independent distributors.
The contract of 1959 was finally agreed upon on August 24, 1959, after the
Union demonstrated that its wage demands were less than those obtained by Team-
sters Local 603 in the latter's negotiations with rival dairies in the St. Louis area.
Respondent thereupon made a counteroffer to the Union as to wages which the
Union accepted.
As already noted, the 1959 contract, a 3-year contract, was made effective as of
September 1, 1959. The driver-salesmen continued to service their routes as before.
In November 1959, however, Respondent initiated a new series of meetings with
the Union, four meetings in all, which were held in November and December of
that year. Respondent reopened the subject of delivery costs and complained that
it was being hurt by competition .4 Respondent also informed the Union that in
2 Teamsters Local 603 still represents the inside dairy workers employed by Respondent
S Accordingly, in 1956, Respondent and the Union submitted to arbitration the question
whether Respondent owed commissions to a driver-salesman for dairy predicts sold "at
dockside" to a cafe which was located in the driver-salesman's territory. The arbitration
panel, taking the language of the 1954 contract as its sole guide, held that "there is
nothing in the contract between these parties, which limits or in any other way prohibits
Company from exercising its management prerogative in malting such dockside sales with-
-out paying commission to driver salesmen " [Emphasis supplied J
A This assertion must be viewed against the testimony of E C Adams, Jr, Respondent's
vice president and general manager, that Respondent was doing 80 percent of its business
with A & P and Kroger and that as to this portion of its business, Respondent was com-
ADAMS DAIRY, INC. 821
conjunction with other dairies it was contemplating a merchandising plan which
would increase its sales. Respondent divulged no details concerning this plan nor
did it make any particularized requests of the Union. Apparently, it did make a
generalized request for aid and advice from the Union respecting delivery costs; the
Union during this period held a meeting of its own in which the members voted
not to reopen the 1959 contract but to continue to operate under the terms of that
contract. In any event, Respondent did not during the November or December
negotiations tell the Union that it was contemplating a changeover from delivery
of its products by its own driver-salesmen to delivery of its products by independent
distributors. Respondent likewise did not during this period offer independent dis-
tributorships to the individual driver-salesmen, nor did it make such an offer to the
Union in their behalf. The November and December meetings ended inconclusively
and no further meetings were held with the Union or the driver-salesmen until
February 22, 1960. In sum, as Respondent's vice president and general manager,
E. C. Adams, Jr., acknowledged at the hearing, at no time after Respondent entered
into the 1959 contract was an opportunity given to the Union or to the driver-
salesmen to accept or reject an individual distributorship arrangement.
C. The changeover in February 1960 to independent distributorships
and the termination of the driver-salesmen
Until February 1960 Respondent conducted its operations as before with its own
driver-salesmen servicing the areas of St. Louis and St. Louis County in Missouri
and with a number of independent distributors servicing other areas. Back in 1955
Respondent, notwithstanding its then contract with the Union, had contacted its
drivers individually and had asked each of them whether he would be interested in
an individual distributorship. Upon receiving negative replies to this query, Re-
spondent made no further effort in that regard and, as E. C. Adams, Jr., testified,
there has been no substantial change since that time either in the routes or in the
personnel 5
On February 9, 1960, however, with no advance notice whatever, Respondent
assigned the route serviced by driver-salesman Stanley Doe to an independent dis-
tributor. Stanley Doe was told that nothing personal was involved and that the
change was made for economic reasons. He was not discharged but put on special
duties which substantially reduced his earnings. On February 10, 1960, the day after
his route was sold, the Union filed an unfair labor practice charge against Respond-
ent. In reply to Respondent's inquiry concerning the charge, Doe explained that the
Union felt this was the way to handle the situation. A few days later on February 13,
Sam Scott, Respondent's sales manager, privately imparted to driver-salesman George
Powell that E. C. Adams, Jr., had postponed for a week putting independent dis-
tributors on all routes.
This changeover did take place on February 23, 1960. The previous afternoon
E. C. Adams, Jr., and Superintendent Deschamp held a meeting, arranged by Adams,
with Union President Bridge and Union Treasurer Hartshorn. After some general
conversation Adams asked Bridge to notify all the driver-salesmen to check with
Supervisors Scott and Collins the following morning before going out on their
routes to see if there were any changes in their routes. Bridge asked for an ex-
planation and Adams said he had people who were interested in buying Respond-
ent's products and reselling them. Bridge then asked who these individuals were
and whether they were the present distributors. Adams replied that it could be
anybody. Bridge inquired further whether any of the driver-salesmen would be
petitive with the large dairies and was not being undersold by them. It also appears that
on occasion, such as on weekend specials and the like, Respondent would sometimes under-
sell its competitors
5 Two incidents merit note in this connection On one occasion a few years before 1960
Respondent unilaterally allocated part of a route serviced by one of its driver-salesmen to
an independent distributor. The allocated part of the route involved an area in Illinois,
a territory which fell outside the area normally serviced by the driver-salesmen The
particular driver-salesman, though not consulted by Respondent, was satisfied with the
change and the Union, after consultation with the driver-salesman, decided not to press
the matter The second incident occurred in 1958 Powell, .i driver-salesman, had had a
heart attack and his doctor told him lie could go back to work if he had a helper.
E. C. Adams, Jr , denied Powell's request for helper on the ground that this would set a
precedent, but offered Powell an independent distributorship so that the latter could have
his own helper. When Powell indicated that as an independent distributor he would not
undersell the driver-salesmen , nothing came of the offer and Powell eventually returned
to his old route as a driver-salesman
'822 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
laid off and Adams said "no." Adams also added later in the conversation that no
complete route would be taken off. Bridge, nevertheless, stated that, as president
of the Union, he disapproved of the proposed action on the ground that Respondent
was taking work from the men which they had bargained for under the 1959
contract.6
E. C. Adams, Jr., did not disclose at this meeting that he had already engaged
four independent distributors the previous day. Moreover, immediately after the
meeting with Bridge and Hartshorn, Adams returned to the plant and, pursuant to
interviews with prospects whose presence had previously been arranged, engaged
six more independent distributors. The equipment used by these independent dis-
tributors was purchased for the most part from Respondent and was the equipment
previously used by its driver-salesmen.?
On the following morning, February 23, the driver-salesman reported to work and
found that all their routes were being serviced by independent distributors. The
driver-salesmen held a meeting among themselves to discuss the new situation and
on the morning of February 24 notified Respondent that they wanted to meet with
Respondent. Such a meeting was held early on the afternoon of that day. The
men asked why Respondent had taken the action it did and whether they were fired.
Respondent replied that it had changed its method of delivery and that their em-
ployment was terminated. Included in this termination was Stanley Doe whose route
had been sold to an independent distributor on February 9 and who had been per-
forming special duties in the interim .8
D. Analysis and concluding findings
The issue in this case is whether Respondent by engaging independent distributors
to take over the routes of its driver-salesmen and by terminating the employment of
its driver-salesmen engaged in unfair labor practices proscribed by the Act. General
Counsel and the Charging Party contend that Respondent took this action without
prior notice to, or consultation with, the Union, thereby violating Section 8(a)(5)
and (1) of the Act. Additionally, they contend that this action constituted a ter-
mination or modification of a labor agreement without the prior steps required by
Section 8(d) of the Act. Finally, they contend that Respondent's action amounted
to a discrimination within the meaning of Section 8(a)(3) and (1) of the Act.
Respondent denies that it engaged in unfair labor practices. A discussion of these
questions follows.
1. The violation of Section 8(a)(5) and (1) of the Act
It is undisputed that the Union was the exclusive bargaining representative of
Respondent's driver-salesmen. It follows that any unilateral change by Respondent
in the terms and conditions of employment of the driver-salesmen made without
prior notice to and consultation with the Union would constitute a refusal to bargain
within the meaning of Section 8(a)(5) and (1) of the Act. The first question to be
resolved, therefore, is whether Respondent's action, i.e., the subcontracting of de-
livery services to independent distributors and the consequent termination of the
"The findings as to the February 22 meeting are based on the credited testimony of
Bridge E C Adams, Jr., testified that the meeting was "substantially like Mr. Bridge
described It"
7 Respondent did not finance the purchase of this equipment or arrange for such financ-
ing. The areas serviced by the independent distributors do not correspond to the areas
formerly serviced by the driver-salesmen. Nor does Respondent make deductions for
social security or withholding purposes so far as the independent distributors are con-
cerned. Although Respondent, in order to insure that its business not be prejudiced, re-
quires the independent distributors to maintain certain standards of efficiency and sanita-
tion, the distributors have complete latitude in such critical matters as the price they
charge their customers, the use of helpers, the selection of drivers, and the selection of
parking places for their vehicles In view of the foregoing and other undisputed facts of
record, the Trial Examiner rejects as without merit the contention made by the Charging
Party, but not by General Counsel, that the independent distributors were "employees"
within the meaning of the Act, and not independent contractors
8 The driver-salesmen thus terminated were as follows: Stanley Doe, Walter Berry,
Elgin D. Hartshorn, George Lewis, Kenneth McFarland, Gilbert Pounds, Ollie Caddell,
Rolla Dietz, James Frye, William Province, George Powell, Henry Stahr, Arthur Wideman,
Oscar Wideman, Arthur Riley, David Hockensmith, John H. Hartshorn, Howard Deschamp,
Clarence Schnieder, Laurence Bridge, Gilbert Schumacher, Kevin Laughlin, Mikal Wallace,
and John Luby.
ADAMS DAIRY, INC. 823
driver-salesmen constituted a change in terms and conditions of employment con-
cerning which Respondent was obliged to bargain.
Termination of employment is manifestly a most drastic change in terms and
conditions of employment. However, the termination here flowed from Respondent's
action in subcontracting its delivery services to independent distributors. Respond-
ent apparently takes the preliminary position that the determination by an employer
to subcontract work done by its employees is a matter of "managerial prerogative"
and is not subject to the collective-bargaining obligation at all. In support of this
position, Respondent cites the decision of the arbitrators in the instant case (see
footnote 3, supra), and also a decision by the Circuit Court of Wayne County,
Michigan, United Dairy Workers v. Detroit Creamery Co., 38 LRRM 2303, decided
April 18, 1956. But controlling law is to the contrary. See Local 24, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
AFL-CIO, et at. v. Oliver et al., 358 U.S. 283, 294-295, citing with approval The
Timken Roller Bearing Company, 70 NLRB 500, 518, reversed on other grounds
161 F. 2d 949 (C.A. 6); Local 24, Teamsters v. Oliver, 80 S. Ct. 923, 924. "With-
out attempting to delimit the subject matter properly included within the scope of
collective bargaining [footnote omitted), it seems apparent that respondent's sys-
tem of sub-contracting work may vitally affect its employees by progressively under-
mining their tenure of employment in removing or withdrawing more and more
work, and hence more and more jobs, from the unit." Timken, supra, at 518.
Accordingly, the Board has uniformly held that where, as here, an employer proposes
to subcontract work performed by employees in a bargaining unit, he is first re-
quired to bargain collectively thereon with the bargaining representative of those
employees. Smith's Van & Transport Company, Inc., et al., 126 NLRB 1059;
Shamrock Dairy, Inc., et al., 119 NLRB 998, 1005-1006 idem., 124 NLRB 494,
enfd. 280 F. 2d 665 (C.A.D.C.). As the cited cases also establish, this requirement
obtains even if the proposal is motivated by purely economic considerations.
Respondent argues, however, that even assuming an obligation on its part to
bargain with the Union respecting the changeover from delivery by its own driver-
salesmen to delivery by independent distributors, it had fulfilled that obligation,
had bargained to an impasse on that subject, and hence was entitled thereafter to
take unilateral action. An ancillary argument in this connection is that it had
engaged independent distributors in the past, that the Union had not questioned
its authority to do so, and that the Union thereby "waived" the right to object
thereafter.
So far as relevant here, these arguments raise only issues of fact. As already
noted, Respondent had for some years utilized independent distributors as well as its
own driver-salesmen to deliver its products. Generally speaking, the driver-salesmen
made deliveries in the City of St. Louis, Missouri, and in the county of St. Louis,
Missouri, and the independent distributors made deliveries in the outlying areas.
The driver-salesmen were, of course, concerned that the independent distributors make
no inroads in the areas which the driver-salesmen serviced. Accordingly, in the
course of contract negotiations, the Union regularly sought the inclusion of con-
tractual provisions guaranteeing that driver-salesmen would be paid commissions on
all sales to customers within their assigned routes, whether such sales were made
"dockside" or by independent distributors. Alternatively, the Union would seek, as
it did in the negotiations for the current agreement, contractual provisions to insure
that the driver-salesmen's routes not be altered for the duration of the agreement.
Respondent successfully resisted these demands.
At all times, however, the controversy here involved only the question whether
Respondent would be free to utilize independent distributors to make inroads on the
driver-salesmen's routes; never the question of replacing driver-salesmen altogether.
Respondent did repeatedly raise the factor of its delivery costs in relation to its com-
petitors and even after the 1959 contract was consummated sought to reopen that
issue. But at no time did Respondent suggest, or did the parties discuss, the question
whether Respondent should be given the authority to replace all its driver-salesmen
and subcontract all its delivery operations.9 Indeed, as late as February 22, 1960,
when Respondent had already engaged four independent distributors to replace its
driver-salesmen and was on the verge of hiring six more, Respondent told the union
representatives in reply to a direct inquiry that it would not discharge any of the
driver-salesmen and that it would not completely eliminate any route serviced by
9 The only time such a suggestion was made albeit indirectly, was in 1955 when Re-
spondent approached, not the Union, but the driver-salesmen individually to ask whether
they would be interested in independent distributorships. As already noted, the driver-
salesmen rebuffed Respondent's suggestion on that occasion.
824 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the latter. In the light of this unequivocal position, Respondent's claim that it bar-
gained with the Union concerning the subcontracting of its delivery services and the
elimination of its driver-salesmen is patently without merit. Nor can Respondent
retroactively remedy its default by pointing out that in its meeting with the employees
on February 24, 1960, when the subcontracting operation and the consequent dis-
charge of the driver-salesmen was already a fait accompli, neither the Union nor the
employees sought to discuss or bargain concerning that action. The significant fact
is that Respondent did not give the Union notice of, or discuss, its proposed action
with the Union prior to taking that action. I find that by taking this action without
prior notice to and discussion with the Union, Respondent violated Section 8(a)(5)
and (1) of the Act. Smith's Van & Transport Company, Inc., supra, Shamrock
Dairy, Inc., et al., supra.
The foregoing discussion serves also to rebut Respondent's "waiver" argument.
Inasmuch as Respondent had never proposed to the Union the complete abolition of
its driver-salesmen operation and the replacement of its driver-salesmen by independ-
ent distributors, the Union cannot be found either to have agreed with that proposal
or to have waived its objections in that regard. It is true that Respondent had for
years and even before the Union appeared on the scene been utilizing independent
distributors to make deliveries but the separate areas of operation of the independent
distributors on the one hand and of the driver-salesmen on the other were for the
most part clearly defined. There was no indication at any of the bargaining con-
ferences between Respondent and the Union, and certainly the Union did not contem-
plate, that Respondent could in effect unilaterally abrogate any contract between
them by using independent distributorships to eliminate all driver-salesmen. It
strains credulity to believe that if this had been the case, no mention of this critical
fact would have been made at any of the bargaining conferences. On the con-
trary, the only issue raised in this regard arose out of the Unions effort to preclude
even partial inroads on the routes serviced by the driver-salesmen. In the single
instance where a situation of this kind occurred, it appeared that Respondent had
allocated a portion of a route serviced by a driver- salesman to an independent dis-
tributor. Because the allocated portion fell outside the area normally serviced by the
driver-salesmen and because the affected driver-salesman was satisfied with the
change, the Union after due consideration filed no objection. This special situation
affords no warrant for any conclusion that the Union thereby waived objection to
elimination of all driver-salesmen operations in areas consistently serviced by these
employees or even to the elimination of one such area. In fact, on February 9, 1960,
when Respondent allocated Stanley Doe's entire route to an independent distributor,
the Union promptly filed an unfair labor practice charge, a copy of which was served
forthwith upon Respondent. Hence Respondent could have been under no illusions
of union acquiescence when, about 2 weeks later, it subcontracted all its delivery op-
erations and terminated all its drivers. Accordingly, I conclude, as heretofore found,
that Respondent was obligated to bargain as to such action and that it defaulted in
this obligation.10
2. The refusal to bargain predicated on Respondent's failure to
comply with the requirements of Section 8(d)
The foregoing finding of an unlawful refusal to bargain militates against the neces-
sity of finding whether Respondent further violated its bargaining obligation by fail-
ing to comply with the requirements of Section 8(d). However, inasmuch as General
Counsel alleged and Respondent denied such a violation, brief treatment of that issue
seems appropriate.
So far as here relevant, Section 8(d) provides that ". .. where there is in effect a
collective bargaining contract covering employees . ., the duty to bargain collec-
tively shall also mean that no party to such contract shall terminate or modify such
contract, unless the party desiring such termination or modification" serves written
10 Speidel Corporation. 120 NLRB 733, upon which Respondent relies, is distinguishable
There the employer had made it unmistakably clear during the course of bargaining nego-
tiations that it wished payment of bonuses to be deemed a management prerogative The
union by its conduct plainly indicated that it acquiesced in that view Accordingly, the
Board, while emphasizing that it would not "readily infer a waiver of statutory bargain-
ing rights," concluded that a finding of waiver was warranted In the instant case the
Union, while unsuccessful in its efforts to get a specific contractual commitment from
Respondent against piecemeal diminution of the driver-salesmen's routes never conceded
that Respondent had unilateral power even in that regard A fortiori, the Union never
conceded what had not been suggested, namely, a unilateral power on the part of Respond-
ent to subcontract all driver-salesmen operations to independent distributors.
ADAMS DAIRY, INC. 825
notices 60 days prior to the expiration date of the contract and continues in full force
and effect, without resorting to strike or lockout, "the existing contract for a period
of sixty days after such notice is given or until the expiration date of such contract,
which ever occurs later. . . " In the instant case a collective-bargaining contract
was in effect for a 3-year period beginning September 1, 1959, and ending Septem-
ber 1, 1962. Respondent took the action here complained of, namely, the sub-
contracting of its delivery services and the termination of its driver-salesmen, in
February 1960. It did not serve the notices prescribed by Section 8(d). Moreover, in
the instant case, unlike the situation in the Smith's Van and Shamrock cases already
cited, Respondent did not subcontract its services to persons who formerly performed
these services in their capacity as employees. Instead, it awarded those subcontracts
to third parties and dismissed all its driver-salesmen. By thus eliminating both the
work which was the subject matter of the collective-bargaining contract and the em-
ployees who performed that work, Respondent in the most real sense terminated
that contract since there was no area left in which it could be operative.ii Without
more, therefore, it appears that Respondent's failure to follow the procedure pre-
scribed by Section 8(d) as a precondition to such termination constitutes a violation
of Section 8(a) (5). I so find.
3. The violation of Section 8(a)(3) and (1) of the Act
The complaint alleges, and the answer denies, that Respondent by terminating the
employment of its driver-salesmen violated Section 8(a)(3) and (1) of the Act.
Section 8(a)(3) of the Act makes it an unfair labor practice for an employer to en-
courage or discourage membership in a labor organization by discrimination in re-
gard to hire or tenure of employment. In the instant case Respondent discharged all
its driver-salesmen who were members of and/or represented by the Union and re-
placed them with independent distributors whom the Union did not represent. None
of the driver-salesmen were offered independent distributorships. General Counsel
contends that this action on the part of Respondent constituted a discrimination in
regard to hire or tenure of employment which discouraged membership in the Union
within the meaning of Section 8(a) (3), and a corresponding interference with Section
7 rights proscribed by Section 8(a)(1). Respondent argues that the termination of
the driver-salesmen was not motivated by any hostility to the Union or to unioniza-
tion in general, that the terminations in question were economically motivated, and
that it was innocent of any unlawful discrimination or unlawful interference with em-
ployee rights.
In this connection General Counsel in his brief argues that Respondent was hostile
to the Union, and to unionization in general, from the very outset; that it dealt with
the Union only to avoid having to deal with Teamsters Local 603 which theretofore
represented its driver-salesmen; and that the summary dismissal of the drivers was
"motivated, at least in part, by the Empolyer's desire to avoid dealing with the
Union." I find that General Counsel overstates his case. During the period here
relevant Respondent had collective-bargaining relationships with three different
unions (including Teamsters Local 603) which respectively represented segments of
its working force. It has had collective-bargaining relationships with unions for
years. The record is devoid of antiunion statements or attitudes usually present
where there is a strong opposition to unions by an employer. Nor is there any
pattern of conduct which would support a finding that Respondent was hostile to
labor organizations generally or to the Union in particular.
Moreover, there is also evidence in support of Respondent's claim that the change-
over from delivery by its own driver-salesmen to delivery by independent distributors
had an economic motivation. It is undisputed that during the entire course of ne-
gotiations here relevant Respondent consistently complained of its delivery costs in
relation to its competitors. General Counsel and the Charging Party question the
legitimacy of this complaint, particularly in view of Respondent's admission that
80 percent of its business was with A & P and Kroger and that with respect to these
customers it was not being undersold by its major competitors. But the issue here
1The instant case is therefore sharply distinguishable from Shamrock Dairy, Inc,
et al , 124 NLRB 494. In that case the collective-bargaining contract covered not only the
distributors, but also drivers who were not given distributorships and continued on in
their regular jobs. The contract also covered nondriver employees who were not directly
affected by the institution of the dristributorship system. Hence, the collective-bargaining
contract remained operative. These were among the considerations upon which Chairman
Leedom in the cited case based his separate opinion that the employer there did not modify
or terminate the collective-bargaining contract and that there was no violation of Section
8(d). 124 NLRB at 497.
826 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
is not whether Respondent was financially hard-pressed. Respondent could properly
seek to lower its delivery costs even if its objective were merely to increase its profits.
On the other hand, I do not believe the foregoing considerations are dispositive of
the question here posed. Economic motivation, or even economic hardship, does
not in and of itself license an employer to violate the Act. See N.L.R.B. v. Gluck
Brewing Company and Bach Transfer and Storage Company, 144 F. 2d 847, 853
(C.A. 8), and cases there cited; N L R.B. v. Harris, Morris, et al., d/b/a Union
Manufacturing Company, 200 F. 2d 656, 659 (C A. 5). Likewise, the proscriptions
of Section 8 ( a ) (3) and (1) of the Act extend far beyond situations in which the
action complained of springs from antipathy to unions as such. The Radio Officers'
Union of the Commercial Telegraphers Union, AFL (A. H. Bull Steamship Com-
pany) v. N.L.R.B.' 347 U.S. 17, 45, teaches that "specific evidence of intent to en-
courage or discourage is not an indispensable element of proof of violation of
8(a)(3)." Such proof is unnecessary "where employer conduct inherently en-
courages or discourages membership." (Ibid.) Thus, as in Republic Aviation Cor-
poration v. N L R.B., 324 U.S. 793, discussed by the Supreme Court in the Radio
Officers case, discharges and suspensions of employees were held to be violative of
Section 8(3) even though not "motivated by opposition to the particular union or,
we deduce, to unionism." It was sufficient in the Republic Aviation case that the
discharges sprang from the employer's application of invalid no-solicitation rules
and that these rules interfered with the employees' right to organize. "Since the
rules were no defense and the employers intended to discriminate solely on the
ground of such protected union activity, it did not matter that they did not intend
to discourage union membership, since such was the foreseeable result." The Radio
Officers' Union, etc., supra, at 46.
By parity of reasoning, the discharges in the instant case arose out of Respondent's
denial to its employees of their statutory right to bargain collectively though a repre-
sentative of their own choosing, a right of no less dignity under Section 7 of the
Act than the right to organize involved in Republic Aviation. In 1955 the driver-
salesmen , then likewise represented by the Union, rejected Respondent's suggestion,
made to them individually and not through their bargaining representative, that they
accept independent distributorships. In bargaining negotiations up to and including
the negotiations for the current agreement, the Union resolutely opposed piecemeal
invasion by independent distributors of areas serviced by the driver- salesmen. Re-
spondent apparently anticipated that a total changeover to independent distributor-
ship would likewise be opposed by the Union.12 Accordingly, it elected to ignore
the collective-bargaining rights of the employees altogether and to take unilateral
action. By such action Respondent discouraged union membership since a primary
objective of such membership is to obtain the benefits of collective bargaining
Accordingly, here, as in Republic Aviation, it did not matter that Respondent did
not specifically intend to discourage union membership, "since such was the foresee-
able result." I conclude, therefore, that the prerequisites for a finding of a Sec-
tion 8 (a) (3 ) and (I) violation are satisfied.
At first blush the result here reached might appear inconsistent with the result
reached by the Board in Smith's Van & Transport Company, Inc., et al., 126 NLRB
1059. There, in a somewhat analogous situation, the Board held that the employer
violated Section 8(a)(5) and (1) of the Act by failing to bargain collectively con-
cerning a change in its method of operation. However, the Board held that the
employer's execution of individual contracts to effectuate that change was not a
violation of Section 8(a)(3) and (I) of the Act because the change in method of
operation was motivated by economic considerations and not by any desire to
undermine the Union. Here, too, as I have found, there was economic motivation
for the change in method of operation.
But at this point the analogy ends. The employer in Smith's Van executed the
individual contracts with its incumbent drivers and even suggested that they remain
members of the Union.13 In this frame of reference, the Board held that the em-
ployer's motivation was solely economic and that there was no desire to undermine
the union. Here, on the other hand, that situation does not obtain. In the instant
case Respondent, before it entered into its individual contracts, afforded its drivers,
12 This would be purely conjecture since, as already noted, Respondent never made this
proposal to the Union Assuming, however, that such a proposal would have been re-
jected by the Union and that a good-faith impasse in bargaining resulted, Respondent
could thereafter have taken unilateral action to implement its proposal without disparage-
ment of the collective-bargaining principle. Compare N.L R.B. v. Crompton-Highland Mills,
Inc , 337 U S 217
18 Compare also Shamrock Dairy, Inc, heretofore cited, where the change in method of
operation was likewise made by offering individual contracts to the incumbent drivers.
ADAMS DAIRY, INC. 827
either individually or through the Union, no opportunity to become independent
distributors. Respondent may have concluded that such an effort would be futile.
But conjecture, even well founded, confers no license to violate the guarantees of
the Act. The short of the matter is that Respondent, when it did make the change
to independent distributorships elected to bypass the Union and to bypass its ad-
herents. Phrased otherwise, Respondent's driver-salesmen because they were union
adherents, were denied an opportunity either to dissuade Respondent from its pro-
posed action or, alternatively, to accept individual distributorships. The injury
to the driver-salesmen, specifically, the loss of their jobs, therefore, did not flow
solely from Respondent's economic motivation. In part, at least, it flowed from
Respondent's considered determination to bypass the Union and, derivatively, to
deny the driver-salesmen their statutory bargaining rights. In sum, Respondent's
action was discriminatory and discouraged membership in a labor organization.
I conclude, therefore, that Respondent by terminating the employment of its
driver-salesmen violated Section 8(a)(3) and (1) of the Act.
IV. THE REMEDY
Pursuant to Section 10(c) of the Act, I will recommend that Respondent cease
and desist from engaging in the unfair labor practices found and from like or re-
lated unfair labor practices. I do not believe, however, that the course of Respond-
ent's conduct, as shown by the evidence, betrays any predisposition on its part to
violate generally employees' rights guaranteed by Section 7. Accordingly, I will
not recommend a broad cease-and-desist order. N.L.R.B. v. Express Publishing
Company, 312 U.S. 426, 436-438.
Affirmative relief is also required here in order to effectuate the policies of the
Act. I have found that Respondent failed to fulfill its statutory bargaining obliga-
tion within the meaning of Section 8(a)(5) and (1) of the Act when it replaced is
driver-salesmen with independent distributors without prior notice to or consultation
with the Union which represented the driver-salesmen. I will recommend, here-
fore, that Respondent now take appropriate steps to remedy that failure by bargain-
ing on that issue. I have also found that Respondent discriminatorily discharged its
driver-salesmen in violaion of Section 8 (a) (3) and (1) of the Act. Accordingly, I
will recommend that Respondent reinstate these driver-salesmen and make them
whole for earnings lost as a result of the discrimination. It is important to note in
this connection that an order reinstating the driver-salesmen and making them whole
for lost earnings would be warranted on the basis of the Section 8(a)(5) violation
alone and without regard to the Section 8(a)(3) violation. The termination of em-
ployment of the driver-salesmen flowed directly from Respondent's unilateral action
in replacing them with independent distributors. Unlike the situation in the Smith's
Van & Transport and Shamrock Dairy cases, Respondent here did not award the
independent distributorships to its former drivers but severed their connection with
the company altogether. In the cited cases the unions involved could effectively
represent the drivers in renewed bargaining negotiations since they were still either
in an employment or independent contractor relationship with the respective com-
panies. Here, on the other hand, the relationship of the drivers with Respondent
having been completely severed, any future bargaining by the Union would be a
largely futile and empty gesture. In order, therefore, to adapt the remedy to the
situation which calls for redress (N.L.R.B. v. Mackay Radio & Telegraph Co., 304
U.S. 333, 348), and to give substance to the remedial order to bargain, it is necessary
to restore the status quo ante without which effective bargaining in behalf of the
drivers cannot be conducted. The broad remedial powers vested in the Board by
the Act affords ample authority in the Board to give reinstatement and backpay where
the deprivation of employment status is a consequence of a Section 8(a)(5) viola-
tion. See West Boylston Manufacturing Company of Alabama, 87 NLRB 808, 812-
813. Compare Piasecki Aircraft Corporation v. N.L.R.B., 280 F. 2d 575, 591-592
(C.A. 3); Editorial "El Imparcial" Inc. v. N.L.R.B., 278 F. 2d 184, 187 (CA. 1).
Lost earnings shall be computed on a quarterly basis in the manner set forth in
F. W. Woolworth Company, 90 NLRB 289. To facilitate that computation I shall
recommend that Respondent make available to the Board, upon request, payroll and
other records necessary and appropriate for that purpose . I shall also recommend
that an appropriate notice be posted.
Upon the basis of the foregoing findings and upon the entire record in the case, I
make the following:
CONCLUSIONS OF LAW
.1. Respondent is engaged in commerce within the meaning of Section 2(6) and
(7) of the Act.
2. The Union is a labor organization within the meaning of Section 2 (5) of the Act.
828 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
3. All wholesale driver-salesmen , including relief drivers and special drivers,
,employed by Respondent, but excluding inside dairy workers, office employees,
supervisory employees , executives, and professionals as defined in the Act, constitute
a unit appropriate for purposes of collective bargaining within the meaning of
Section 9(b) of the Act.
4. At all times material herein, the Union has been the exclusive bargaining repre-
sentative of the employees in the aforesaid unit within the meaning of Section 9,(a)
of the Act.
5. By engaging independent distributors to take over the routes of its driver-
salesmen and by terminating the employment of its driver-salesmen , all without prior
notice to , or consultation or bargaining with, the Union , Respondent has engaged
in and is engaging in unfair labor practices within the meaning of Section 8(a) (5)
and (1 ) of the Act.
6. By taking the foregoing actions without complying with the requirements pre-
scribed in Section 8 (d) of the Act, Respondent has further violated Section 8(a) (5)
and (1 ) of the Act.
7. By discriminatorily terminating the employment of its driver-salesmen in the
manner set forth above, Respondent has engaged in and is engaging in unfair labor
practices within the meaning of Section 8(a)(3) and (1) of the Act.
8. Inasmuch as Respondent 's operations affect commerce , the aforesaid unfair
labor practices affect commerce within the meaning of Section 2(6) and (7) of the
Act.
[Recommendations omitted from publication.]
Local 5, United Association of Journeymen and Apprentices of
the Plumbing and Pipefitting Industry of the United States
and Canada, AFL-CIO and Arthur Venneri Company. Case
No. 5-CC-124. June 26, 196.
DECISION AND ORDER
On November 30, 1960, Trial Examiner Louis Plost issued his Inter-
mediate Report in the above-entitled proceeding, finding that the
Respondent had engaged in certain unfair labor practices and recom-
mending that it cease and desist therefrom and take certain affirmative
action, as set forth in the Intermediate Report attached hereto. There-
after, the General Counsel, the Respondent, and the Charging Party
filed exceptions to the Intermediate Report and supporting briefs.
The Board has reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and briefs, and the entire record in
the case, and hereby adopts the findings, conclusions, and recommenda-
tions of the Trial Examiner, with the following additions :
The evidence establishes that Arthur Venneri Company (herein-
after called Venneri) was awarded a contract by the U.S. Corps of
-Engineers for the construction, inter alia, of two hangars at the
Andrews Air Force Base in Maryland; that Venneri entered into a
subcontract with Akron Mechanical Contractors, Inc. (hereinafter
called Akron), for the inside plumbing work, and a subcontract with
Nickles Bros., Inc. (hereinafter called Nickles), for the outside plumb-
137 NLRB No. 100..