American Oil Co.

National Labor Relations Board - Board Decisions

Mar 3, 1965

151 N.L.R.B. 421 (N.L.R.B. 1965)

AMERICAN OIL COMPANY 421
Couch Electric Company, Inc., Assured Plumbing Contractors,
Olsen Roofing Co., or any other person engaged in commerce or
in an industry affecting commerce, to engage in, a strike or
refusal in the course of their employment to use, manufacture,
process, transport, or otherwise handle or work on materials,
or to perform any services; or threaten, coerce, or restrain
the aforesaid employers or persons; where an object in either
case is to force or require Melody to enter into any agreement
prohibited by Section 8(e) of the Act.
WE WILL NOT maintain, give effect to, or enforce paragraph
IX of the agreement entered into between us and Melody,
insofar as it is violative of Section 8 (e) of the Act.
Los ANGELES BUILDING AND CONSTRUCTION
TRADES COUNCIL,
Labor Organization.
Dated---------------- By-------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 consecutive days from the
date of posting, and must not be altered, defaced, or covered by any
other material.
Employees may communicate directly with the Board's Regional
Office, Eastern Columbia Building, 849 South Broadway, Los An-
geles , California, Telephone No. 688-5204, if they have any questions
concerning this notice or compliance with its provisions.
American Oil Company and Independent Petroleum Workers of
America, Inc., Local No. 1, affiliated with Independent Oil
Workers Union . Case No. 13-CA-5611. March, 3, 1965
DECISION AND ORDER
On April 8, 1964, Trial Examiner Abraham H. Mailer issued
his Decision in the above-entitled proceeding, finding that Respond-
ent had not violated the National Labor Relations Act as alleged
in the complaint and recommending that the complaint be dismissed
in its entirety, as set forth in the attached Trial Examiner's
Decision. Thereafter, the General Counsel and the Charging Party
filed exceptions to the Trial Examiner's Decision and briefs in
support thereof. Respondent filed cross-exceptions and a brief in
support of the Trial Examiner's Decision?
l Respondent's request for oral argument is hereby denied, as the record, exceptions,
and briefs adequately present the issues and the positions of the parties,
151 NLRB No. 45.
422 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
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
Trial Examiner's Decision, the exceptions and briefs, and the entire
record in this case, and agrees with the Trial Examiner that the
complaint should be dismissed. The Board, therefore, adopts the
findings, conclusions, and recommendations of the Trial Examiner
with the following modifications.
In agreeing with the Trial Examiner's finding that Respondent
did not violate the Act, we do not adopt his statement that the
principles enunciated in our decision in Fibreboard Paper Products
Corporation,2 apply only in those situations where an employer
subcontracts the work of employees in the bargaining unit without
prior notice to or consultation with the employees' bargaining
representative which results in the "permanent elimination of an
entire department ... the entire unit ... or ... of any individual
jobs." As we recently indicated in Kennecott Copper Corporation
(Chino Mines Dirvision),3 subcontracting of unit work without
notice to or consultation with the bargaining representative would
constitute a violation of the Act where such subcontracting resulted
in a "significant detriment" to the employees in the unit. However,
as it appears in this case that the subcontracting in question did
not cause a significant detriment to the employees in the bargaining
unit and resulted in no real change in their terms and conditions
of employment, we agree with the Trial Examiner's conclusion that
Respondent's conduct herein did not violate Section 8( a) (5) as
alleged in the complaint.
In addition, we have not indicated in any of our decisions that
an employer's duty to bargain with respect to the subject of sub-
contracting is limited to those periods when the parties are engaged
in negotiations for a new agreement. On the contrary, as we have
stated in Westinghouse Electric Corporation (Mans field Plant),
150 NLRB 1574, in the absence of a specific contract clause
covering the matter, an employer is under a. continuing duty to
bargain on request with respect to subcontracting affecting unit
work and, therefore, must bargain with the union in good faith
upon demand as to such subcontracting even during the term of an
existing agreement. Therefore, to the extent that the Trial Exam-
iner expresses a different opinion in footnote 13 of his Decision,
we do not adopt it.
Accordingly, we shall dismiss the complaint in its entirety.
2138 NLRB 550, affd. sub nom. East Bay Union of Machinists , Local 1304, United
Steelworkers of America, AFL-CIO, at al v. N.L.R B, 379 U.S. 203.
3148 NLRB 1653.
AMERICAN OIL COMPANY
ORDER
423
Pursuant to Section 10 (c) of the National Labor Relations Act,
as amended, the National Labor Relations Board hereby adopts as
its Order the Order recommended by the Trial Examiner, and orders
that the complaint herein be, and it hereby is, dismissed in its
entirety.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
Upon a charge filed May 14, and an amended charge filed May 29, 1963, by Inde-
pendent Petroleum Workers of America, Inc., Local No. 1, affiliated with Inde-
pendent Oil Workers Union, herein referred to as the Union, the Regional Director
for Region 13 of the National Labor Relations Board, herein called the Board, on
August 20, 1963, issued a complaint on behalf of the General Counsel of the Board
against American Oil Company, herein called the Respondent, alleging that the
Respondent unilaterally changed existing working conditions in the appropriate unit
by subcontracting two specific maintenance jobs and refused to bargain collectively
with the Union with regard to said subcontracting, in violation of Section 8(a)(1)
and (5) of the Act. In its duly filed answer, the Respondent denied the commission
of any unfair labor practice.
Pursuant to notice, a hearing was held before Trial Examiner Abraham H. Mailer
at Chicago, Illinois, on October 22, 23, 24, and 25, 1963. All parties were repre-
sented and were afforded full opportunity to be heard, to introduce relevant evi-
dence, to present oral argument, and to file briefs with me. Helpful briefs were filed
by all parties. Upon consideration of the entire record,1 including the briefs of the
parties, and upon my observation of each of the witnesses,) I make the following:
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
The Respondent, a Maryland corporation, is a wholly owned subsidiary of Standard
Oil Company and maintains a plant and refinery at Whiting, Indiana, at which it is
engaged in the manufacture and sale of petroleum and petroleum products. During
the year preceding the issuance of the complaint, the Respondent in the course and
conduct of its business operations, manufactured and sold petroleum products
valued in excess of $50,000 which were shipped from its Whiting, Indiana, plant
and refinery directly to States of the United States other than the State of Indiana.
In view of the foregoing, I find and conclude that the Respondent is engaging in
commerce within the meaning of the Act and that it will effectuate the policies of the
Act for the Board to assert jurisdiction here.
II. THE LABOR ORGANIZATION INVOLVED
Independent Petroleum Workers of America, Inc., Local No. 1, affiliated with
Independent Oil Workers Union, is a labor organization within the meaning of Sec-
tion 2(5) of the Act.
'On December 18, 1963, I received from counsel for the General Counsel a motion
to correct the record in certain particulars therein specified No opposition to such
motion has been filed . Upon consideration of the motion (which is hereby received in
evidence as Trial Examiner's Exhibit No. 1), it is hereby ordered that the motion be
and it is hereby granted.
2 Unless specifically indicated to the contrary, any credibility evaluation I make of
the testimony of any witness appearing before me is based, at least in part, upon his
demeanor as I observed it at the time the testimony was given. Cf. Retail Clerks Inter-
national Association, AFL-CIO, Local 219 (National Food Stores, Inc.), 134 NLRB
1680 , 1683, footnote 3; Bryan Brothers Packing Company, 129 NLRB 285. To the extent
that I indicate that I do not rely on or reject in part or entirely the testimony of any given
witness, It is my intent thereby to indicate that such part or whole of the testimony,
as the case may be, is discredited by me. Cf. Jackson Maintenance Corporation, 126
NLRB 115, 117, footnote 1, enfd. 283 P. 2d 569 (C.A. 2).
424 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
III. THE ISSUE
Whether the Respondent by contracting out (sometimes referred to as "subcon-
tracting") the work of emptying the sludge pits and the installation of three doors,
without notice to, and bargaining with, the Union violated Section 8(a)(5) and (1)
of the Act.
IV. THE ALLEGED UNFAIR LABOR PRACTICES
A. History of Respondent's contracting practices
Respondent's Whiting refinery covers about 1,700 acres within which there is a
complex maze of refining, storage, research, administrative, and other facilities. A
substantial number of employees are required to maintain these vast facilities. In
May 1963, of the approximately 2,800 employees in the overall bargaining unit
represented by the Union, about 1,300 were in the mechanical division which has the
responsibility for these maintenance functions. The general maintenance of the
refinery, except for major shutdowns, "turnarounds," 3 construction, dismantling, etc.,
is handled mainly by the field maintenance and stores departments in the mechanical
division. There are, in support of these functions, many specialized shops, such as
machine, boiler, welding, tin, carpentry, pipe, print, and tool shops, an electrical
department, an instrument service and repairs department, and a transportation
department providing truck and equipment maintenance.
For many years, the Respondent has consistently, as a regular business practice,
contracted out many different kinds of work and services a substantial portion of
which might have been performed by someone within the bargaining unit.4 Generally,
Respondent did not notify, or bargain with, the Union before contracting out work,
although on some occasions Respondent discussed specific jobs with the Union where,
as Respondent's witness Mecklin testified, such action would "create a pleasant labor
relation atmosphere where we felt this communication with the Union would be
advantageous to them in carrying out their responsibilities to their constituents." The
number of jobs contracted out since 1958 is substantial. Thus, for the year 1962,
the Respondent contracted out over 1,000 different jobs. The dollar volume of such
contracted work also has been substantial in absolute terms but, as Respondent points
out, has been small in terms of proportion of all maintenance expenditures. This is
illustrated by the following tabulation:
1958 1959 1960 1961 1962 1963
(Approx.)
Total contracted work excluding major
capital expenditures (in thousands)--- $624 5 $540.5 464 440 9 395 4 329.7
Gross mechanical expenditures (in
thousands)___________________________ $26,811 $26,791 $25,466 $22,468 $19,570 $16,685
Ratio of total contract work to gross
mechanical expenditures (percent)---- 2 32 2 01 1.82 1.96 2 02 1.97
Average number of mechanical em•
ployees------------------------------- 2,475 2,635 2,556 1,993 1, 696 1,392
The General Counsel points out correctly that a number of the jobs listed by the
Respondent could not possibly be performed by employees in the bargaining unit.
Examples of such jobs which are included in the foregoing tabulation are: certifica-
tion of thermometers by the National Bureau of Standards, freight charges, chrome
and other plating, casting, aerial surveys, urinalysis, and bookbinding and printing.
Because the evidence of past contracting-out practices includes jobs which the
Respondent's employees could not have performed, General Counsel argues that it
was incumbent on Respondent to show which jobs, by general category, were capable
of being performed by employees in the unit; that absent such a showing the evidence
does not establish a pattern. General Counsel's criticism goes to the weight of the
evidence. Both General Counsel and the Union were afforded full opportunity to
cross-examine Respondent's witness Mecklin who qualified the exhibit. In addition,
3 "Turnaround" Is the common term used in the refinery to describe a major overhaul
of a process unit, which is dismantled, repaired, and put back together again.
S Evidence In support of this is in the form of a listing of purchase orders for the
years 1958 to and Including August 1963.
AMERICAN OIL COMPANY 425
Respondent offered to produce any purchase orders listed in the exhibit that they
desired to inspect. The items above mentioned were the only ones as to which they
secured an admission that employees in the unit were not qualified to perform. It is
clear that, disregarding the above items and others like them, there still remains a
substantial number of jobs which could have been performed by employees in the
bargaining unit which were contracted out by Respondent. Moreover, Respondent
at the hearing produced some 40 to 45 purchase orders, selected at random, issued
during the period from 1958 through August 1963, which, it was stipulated, involved
the contracting out of work similar to the two instances set forth in the complaint.
Respondent's course of conduct has been open and notorious and has been the
subject of considerable discussion with the Union, particularly in negotiations for
the collective-bargaining agreements which were entered into during the course of
these years .5
B. History of the contract negotiations with the Union
1. Negotiations for the 1956 contract
Since 1955 the Respondent and the Union have bargained on the subject of con-
tracting out in four different contract negotiations . In the negotiations for the 1956
collective-bargaining agreement, the Union's notice of its contract demands included
one for a clause limiting the contracting out of work. This demand was discussed
at the meeting of January 26, 1956, at which the Union pointed out specifically
instances of contracted out work and took the position that some of the work being
contracted out was wrong and that there were contracting-out clauses in the contracts
of other oil companies. The union negotiators conceded that some of the work was
properly contracted out. On February 15, 1956, the Union told the Respondent that
there were four important subjects still to be settled. One of these was the demand
for a limitation on contracting out. During the course of this session, this demand was
withdrawn. After further negotiating sessions, an agreement on a contract was
reached on February 18, 1956. At no point did the Union submit a specific language
proposal with respect to contracting out. The collective-bargaining agreement arrived
at contained no limitation on the Respondent's right to contract out work.
2. Negotiations for the 1957 contract
The Union's termination notice requested bargaining on more than 30 contract
proposals, among which was one relating to contracting out. In the negotiations
which followed, the Union's demand shifted from an effort to limit directly the
contracting-out practice of the Respondent to a proposal to protect refinery craft
workers against any loss in rates or wages as a result of performance of craftwork
by outside contractors. The Union's demand was discussed at the meeting of Decem-
ber 21, 1956. The union negotiators argued that contractors were not meeting
completion dates and that unit employees were capable of doing some of the work.
The demand was again discussed on February 18 and 28, 1957. At the latter meet-
ing, the Union dropped this demand. Final settlement was reached on a contract on
March 8, 1957.
3. Negotiations for the 1959 contract
During the course of the negotiations for the next contract, the Union demanded
a clause to prevent the contracting out of work normally performed by production
and maintenance employees, except for the construction of large units. This proposal
was discussed on February 11 and March 2, 1959. At the latter meeting, Mr Sullivan,
the Respondent's spokesman, stated that the Respondent had considered the Union's
proposals in previous contract negotiations; that the Respondent's thinking on
contracting-out clauses in the contract had not changed; that the Respondent felt very
strongly about retaining its flexibility to operate the plant efficiently and that a
contracting-out clause would impair the operating flexibility of the plant. He pointed
out further that the management gave first consideration to the refinery employees
when deciding whether to contract out work or perform it within the plant and that
the work is contracted out when the refinery people cannot perform the work as
economically as the contractors; that some of the work that had normally been per-
5 Both the General Counsel and the Union argue that , absent notice , the Union could
not expect to know of each job that was contracted out No attempt is being made to
charge the Union with prior notice Indeed, that is not the issue. The fact is that the
Union was well aware of the Respondent 's contracting-out practices and, as set forth
below, made several attempts to curtail those practices.
426 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
formed by the employees could be performed more cheaply by companies who had
more modern and specialized machinery and that the Respondent could not be
expected to purchase modern machinery every year to handle special jobs. Mr.
Sullivan also pointed out that if the Respondent agreed with the Union not to con-
tract out work which was normally performed by its employees, many jobs would
be delayed in the plant and would have to be performed on an overtime basis. The
Union took the position that the recognition clause in the contract prohibited contract-
ing out. The Union's demand was discussed again on July 23 and 24. At the latter
meeting the Union dropped its demand regarding contracting out, along with 13
others. At the close of the session, the parties were left with only two issues, viz,
offset of overtime and prevention of layoffs. On July 27, the Union struck over at
least one of these two issues. The strike lasted until August 14, 1959, when final
settlement was reached.
4. Negotiations for the 1962 contract
The Union's bargaining notice for this contract requested, utter alia, "a clause
clarifying restriction of your right to contract out work performed by in-plant
employees" and a provision to the effect that bargaining for a particular matter during
contract negotiations, followed by execution of a contract, should not operate as a
waiver of the right to bargain on the subject thereafter, nor an admission that the
matter is not covered by the agreement or was not covered by any previously executed
agreement. The Union's demand for a contracting-out clause was discussed on
January 31, 1962. Respondent asked the Union for a draft of its proposed clause.
Mr. McKenna, the Union's president, stated that the Union did not have a written
clause and promised to submit one at a later date. No specific clause was ever sub-
mitted. The Union's proposal regarding nonwaiver was also discussed at this meeting.
The Respondent rejected the proposal, and the Union promised to submit a clarifica-
tion thereof. This was never done. Neither of these demands was achieved by the
Union, and on March 26, 1962, the Union proposed a minimum settlement which
was accepted by the Respondent. The contract was signed on April 11, 1962, and
was in effect when the contracting-out incidents complained of occurred.
The 1962 agreement expired pursuant to notice on October 9, 1963, and at the
time of the hearing the parties were engaged in negotiations for a new collective-
bargaining agreement.
C. Additional union attempts to limit Respondent's contracting practices
During the effective period of the 1957 contract, the Union instituted a grievance
proceeding on a complaint involving the resurfacing of a garage by an independent
contractor (sometimes referred to in the record as the Tymstone case). At the con-
clusion of the grievance procedure, the Union unsuccessfully sought to have the
issue submitted to arbitration. It thereupon instituted a proceeding in the United
States district court to compel arbitration. After decision, the case was appealed to
the United States Court of Appeals for the Seventh Circuit which held that the
Respondent was not required under the 1957 contract to submit the issue to arbitra-
tion. Independent Petroleum Workers v. Standard Oil Co., 275 F. 2d 706.
Later, the Union instituted another proceeding to compel arbitration of another
instance of contracting out, basing its request for relief on the theory that the effect
of the recognition clause was to prohibit contracting out without first bargaining with
the Union and that the Respondent was required to submit this issue to arbitration.
The Court of Appeals held that the Respondent was not obligated by the terms of
the agreement to submit the issue to arbitration and that, even if it were, the Union
was barred from maintaining the present action by reason of the adverse decision
in the earlier proceeding. Petroleum Workers, etc., v. American Oil Company, 324
F. 2d 903.
On April 27, 1961, the Union by letter protested two of Respondent's contracts
with independent contractors. One involved the operation of cranes and became the
subject of the second litigated case referred to above. The other involved the repair
and replacement of switch hugs on Respondent's railroad track and became the sub-
ject of an unfair labor practice charge which was subsequently withdrawn by the
Union. In its letter, the Union insisted that the Respondent notify the Union in
advance of any "changes relative to contracting-out of work performed by .. [its
members] in the past."
D. The sludge-hauling contract
The first instance of alleged unlawful contracting out of work involved the work of
hauling waste material known as sludge. There are several sludge pits at the refinery
where petroleum wastes or sludge are dumped. The function of these pits is to pro-
AMERICAN OIL COMPANY 427
vide a place where the sludge can be dehydrated. The water evaporates and perco-
lates, leaving the accumulated sludge. When these pits are filled, the sludge is
removed by means of a large bucket crane, front-end loader, and dump trucks and is
hauled away to a dump several miles away. Both the sludge pits and the dump are
located on the Respondent's property. Obviously, the sludge pits cannot be used when
they are full, nor can they be used while they are being cleaned. Therefore they are
-cleaned one at a time, and timing and the time expended are important. In the past
both the cleaning and hauling had sometimes been done by the Respondent with its
-own trucks and drivers and sometimes by outside contractors 6
When the hauling had been done by Respondent's employees, 6-wheel dump trucks
had been used for that purpose. These trucks have a capacity of 10 cubic yards,
when equipped with temporary sideboards. When Mecklin planned this job in April
1963, the Respondent had nine such trucks, but three of them were not serviceable
and had been set aside for disposal since their licenses had expired on March 1. The
remaining six had seen extremely rough service and were in poor condition. They
could not have been used effectively for sludge hauling. When these trucks had pre-
viously been used, the city of Whiting had complained of leakage and spillage of
sludge on the public streets over which the trucks traveled on their way to the dumps.
The city had threatened legal action, as a result of which the Respondent had been
obliged to clean the streets and to pay damage claims to private property owners.
To haul the sludge in the Respondent's trucks would have required 13 days to com-
plete the job. This meant that the sludge pits would be out of use for that period and
the crane and front-end loader would be tied up during that period. Also, these
trucks were assigned to other necessary maintenance and construction work at the
time, and the Respondent had no other equipment available to haul the sludge. The
Respondent also considered the use of railroad cars to haul the sludge, but it was
found that the siding would not bear the engine load, and it was not feasible for the
railroad to repair the track bed. The Respondent also inquired about the rental of
semidump trucks with a capacity of 20 to 22 cubic yards. It was estimated that the
use of such equipment would enable the Respondent to finish the job in about 5ih
to 6 days. However, Respondent learned that semidump trucks could not be leased
without operators.
Without consulting the Union, the Respondent arranged to have the sludge hauled
by Justak & Sons, a concern with which it has had an "open end" leasing agreement
since January 1, 1960. The agreement provided for the leasing of equipment with
-or without operators, at least with respect to 6-wheel dump trucks Pursuant to this
agreement, the Respondent arranged to have Justak to do the hauling, while its own
employees operated the crane and front-end loader. Justak used from 8 to 12 semi-
dump trucks and 6-wheels, and the job took 5 working days.
As to the effect, if any, which the contracting out of this job had upon the Respond-
•ent's employees, the record shows that it was Respondent's practice, when chauffeur-
ing work was not available, to reduce the chauffeurs to a lower pay classification, i.e.,
truckmen and truck helpers. Mecklin testified that during the time that the sludge
hauling took place there were not employees who could have driven these trucks that
were not employed on some job deemed by the Respondent to be necessary. The
testimony is somewhat equivocal, for the men may have been employed as truck
helpers at the time. Moreover, the record shows that during the general period of
April and May 1963, there were chauffeurs who had been reduced to truckmen or
truck helpers. Also, on or about May 6, 1963, there were approximately 40 employ-
ees of the Respondent who had applied for the position of chauffeur. Mecklin, how-
ever, testified that although he considered the availability of these applicants, he
decided not to use them "because we made a different business decision."
E. Purchase and installation of doors
The second incident of contracting out complained of involved the purchase of
three patented metal doors and frames on a fully installed basis. In October 1962
6 The record is not entirely clear on this point. Assistant Manager Mecklin, in answer
to a question as to whether this work had ever been done by outside contractors answered,
"I think there are some occasions of this sort." The General Counsel attacks this state-
ment as being speculative. On the other hand, there is no positive evidence in the
record that this work had always been done by Respondent's employees. Moreover,
as the General Counsel concedes (and as previously noted) work similar to sludge hauling
bad been performed by outside contractors in the period between 1958 and the date of
the hearing.
' Since then Respondent has availed itself of Justak's services on numerous occasions,
on many of which the truckdrivers were furnished by Justak
428 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Respondent requested Whiting Lumber and Coal Company to quote on new doors
for the heavy oils building. On February 12, 1963, the Respondent issued a pur-
chase order for the removal of three wooden doors and the installation of three metal
frames and metal doors with glass enclosures. They were installed during the first
week of May. Admittedly, the Respondent did not notify or bargain with the Union
concerning its decision to have the work done by an outside contractor before issu-
ing the purchase order.
While the installation of these doors and frames was principally masonry and
glazing work, Respondent had employees who are classified as carpenters had pre-
viously done work of this type and were qualified to do it. It was Respondent's
practice, when there was insufficient carpentry work to be performed, to reduce
unneeded carpenters to a lower pay classification, i.e., laborers. During the week
that these doors and frames were installed, two carpenters had been reduced to the
laborer classification. Mecklin testified that this circumstance did not affect the
decision to contract out the work.
Concluding Findings
1. The effect of the Union's failure to request bargaining
It is undisputed that the Respondent did not notify the Union of its intention to
contract out either of the two jobs discussed above, nor did it offer to bargain with
the Union about these jobs. The record shows further that the Union did not learn
of these jobs until the work was actually in progress and therefore visible. In the
light of the foregoing, it is difficult to understand one of the defenses advanced by
the Respondent, viz, that the Respondent has never refused to bargain with the
Union about these two jobs. In support of this contention, Respondent points out
that, when the union officials protested about the jobs, they did not request bargain-
ing nor was a grievance filed. I am not impressed. Obviously, it would have been
futile for the Union to have requested bargaining about contracting out jobs which
were then already being performed by an outside contractor. It is familiar law
that a party will not be required to do a useless act. Insofar as the Union's failure
to file a grievance is concerned, this also would have been a futile act, as the Seventh
Circuit had twice held that under the collective-bargaining contracts the Respondent
could not be compelled to submit to arbitration the issue of contracting out.
Respondent seeks to draw a parallel between this case and Motoresearch Company
and Kems Corpoiation, 138 NLRB 1490, where the Board held that the employer
had not refused to bargain about contracting out because the Union did not request
bargaining. The Motoresearch case is inapposite There, in March 1960, the Union
became aware of the fact that work had been contracted out. "Despite this knowl-
edge the Union made no request to bargain nor did it protest the Respondent's action"
(id. at 1493, emphasis supplied). In 18 bargaining sessions held between April and
October of that year, "the Union did not effectively seek to bargain about subcon-
tracting...." (Ibid.) In the case at bar, the Union had on every possible occasion
over a period of several years sought to limit Respondent's practice of contracting
out, had earlier protested in writing about this practice, and had twice instituted
litigation over it. Respondent was well aware of the Union's position.
In view of the foregoing, I conclude that this defense is without merit.
2. Did the Respondent unilaterally change the working conditions'?
At the outset, it should be noted that the General Counsel does not contend that
the Respondent contracted out the work for discriminatory reasons. The General
Counsel contends that a logical extension of the Board's Decision in Town & Coun-
try,s and Fibreboard 6 makes the contracting out of specific jobs a mandatory subject
of bargaining. Therefore, the General Counsel contends that the Respondent was
required to notify and consult with the bargaining representative before contracting
out work that could have been performed by employees in the bargaining unit.
Respondent challenges the soundness of these decisions and argues that the Board
in Town & Country relied on decisions which do not in fact support the holding, and
that the Court of Appeals for the Fifth Circuit in enforcing the Board's Decision
relied entirely on the 8(a)(3) violations and discriminatory motives in upholding
8 Town 5 Country Manufacturing Company, Inc., et at, 136 NLRB 1022, enfd. 316
F. 2d 846 (C.A. 5).
9 Psbreboard Paper Products Corp., 138 NLRB 550 , enfd 322. F . 2d (C A.D.C.), certiorari
granted 375 D.S. 963.
AMERICAN OIL COMPANY 429
the 8 ( a)(5) findings . Respondent also points out that a subsequent Decision of the
Board in Adams Dairy, Inc., 137 NLRB 815, was denied enforcement by the Eighth
Circuit Court of Appeals, 322 F. 2d 553.10
The above arguments of the Respondent are misaddressed to me. As a Trial
Examiner of the Board, it is my duty to apply established Board precedent which
the Board or the Supreme Court has not reversed. Insurance Agents' International
Union, AFL-CIO (The Prudential Insurance Company of America) 119 NLRB 768,
773. However, I am not required to apply Decisions of the Board which are based
upon factual situations that are materially different from those of the case at bar.
That there are differences between the line of cases represented by Town & Coun-
try and the case at bar is recognized by the General Counsel who argues that his
position is "the logical extension of the Board's Decision in Town & Country .
and Fibreboard." I am satisfied that such differences are so substantial as to make
the holdings in Town & Country and Fibreboard inapplicable to the case at bar.
First, Town & Country involved the discontinuance by a trailer manufacturer of his
delivery operations , thereby eliminating an entire department . Similarly, Fibre-
board eliminated entirely its maintenance operations , thereby eliminating the entire
bargaining unit. In Adorns Dairy , the employer likewise eliminated an entire unit
of driver-salesmen and turned over the operation to independent distributors. Thus,
we have running through these three cases a common element, viz , the permanent
elimination of an entire department-indeed, of an entire bargaining unit. In con-
trast, the case at bar did not involve the elimination of an entire department of a
bargaining unit, or even of any individual jobs. Here, while the contracting out
undoubtedly affected to a slight degree the earnings of some of the employees in the
bargaining unit, there was no permanent elimination of their jobs . No one was
discharged . The work was contracted out on the basis of economic judgment con-
sidered valid at that particular time. The next time the sludge pits are to be emptied
or doors are to be installed the work might well be done by employees in the bar-
gaining unit. General Counsel recognizes that a distinction exists in this regard
between the Town & Country line of cases and the instant case. He argues, how-
ever, that the distinction is quantitative , rather than qualitative . But the distinction
between substantiality and de minim is is also one of degree. Yet the Board and the
courts have frequently taken account of the distinction.
Second, in the Town & Country line of cases, the employer had unilaterally
changed the working conditions . In the case at bar, to decide whether the Respond-
ent had unilaterally changed the working conditions , we must first determine what
the working conditions were. I am of the view that the Respondent 's practice over
a period of years in contracting out work on a job-to-job basis had become ingrained
in its method of operations and constituted a working condition . Because of this
long practice, the employees and the Union had as much reason to expect that the
Respondent would decide to have these jobs done by outside contractors as they did
to assume that they might perform the work themselves. And they were well aware
of the effect which this practice had and would continue to have on the earnings of
the employees. It is precisely this condition which the Union sought to limit by
various proposals made during the negotiations for collective-bargaining agreements
over the past several years. If Respondent's practice of contracting out work was
a working condition , as I believe it was, then the Respondent did not effect any uni-
lateral change therein. To the contrary, it was the Union which sought to effect a
change of that condition. The same result obtains even if we look only at Respond-
ent's past practice of contracting out work of a character similar to the two jobs
involved in the instant case. As noted above, the parties stipulated that over the
past several years there were some 40 to 45 instances picked at random of contract-
ing out by the Respondent of jobs, half of which were similar to the sludge-hauling
job and half of which were similar to the door-installation job. Therefore, even if
we look at the matter on an individual job basis, it appears that the Respondent has
in the past contracted out similar work, and by doing so in the two instances com-
plained of, the Respondent was not effecting a change in the working conditions.11
10 Petition for certiorari pending.
"The General Counsel also relies upon a decision by Trial Examiner Reel in Shell Oil
Company, IR-319-63, in which he holds that the Town & Country line of decisions is
applicable to a case somewhat similar factually to the case at bar I note also that Trial
Examiner Dixon has reached the same result in Weatinghouae Electric Corp , Bettis Atomic
Power Laboratory , TXD-96-64. In neither of these cases was consideration given to the
past history of the Company's operating practices with regard to contracting out work
as constituting a working condition . In view of my discussion above, I must respect-
fully disagree with my brothers Reel and Dixon.
430 DECISIONS OF NATIONAL LABOR RELATIONS BOARD'
It is recognized that there could be instances of contracting out which would not,
be in accord with the existing practice and, hence, would be a change in working:
conditions. Thus, Respondent concedes arguendo that a substantial departure from=
the previous pattern of conduct might effect a change in working conditions. But,.
clearly, that is not the situation before us.
General Counsel argues that Respondent's history of contracting out work does;
not constitute a defense and seeks to analogize this course of conduct with a history
of admitted 8(a)(3) violations which would not be a defense to an existing 8(a)(3)!
charge. General Counsel's argument is not valid, as it assumes the very question inr.
issue here, viz, whether Respondent's practices were violative of the Act.12 The
crux of the violation charged is a unilateral change in working conditions. And a,
history of contracting out work over a period of years without prior bargaining with
the Union demonstrates that there was no unilateral change in working conditions..
In view of the foregoing, I conclude that the line of cases exemplified by Town &
Country is not controlling here and that it would be inappropriate to extend and apply
the doctrine set forth in those cases to to the instant case. As I have observed above,.
the nub of the case is whether the Respondent effected a change of existing working
conditions. If it did not, it was not under a duty to notify the Union and bargain'
with it before engaging in such action. In view of the long history of Respondent's.
business practices of contracting out work, its action in the two instances complained'
of did not constitute a unilateral change in working conditions. There was therefore,
no duty to notify the Union and bargain with it.13 I shall therefore recommend that
the complaint be dismissed in its entirety.14
RECOMMENDED ORDER
For the reasons above expressed and on the entire record, it is hereby recommended'
that the complaint be dismissed in its entirety.
12 Cf. Peerless Distributing Company, 144 NLRB 1510.
13 This is not to say that the subject of contracting out is not a proper subject for'
collective bargaining. Clearly, the Respondent is not relieved of the duty to bargain
with the Union about any proposed changes requested by the Union which would limit
in any way the Respondent's right to contract out work of the maintenance unit. But
the time for such bargaining is when the parties are negotiating for a contract.
11 Having reached the conclusion that the Respondent did not effect a unilateral change.
in the working conditions and, hence, was not under a duty to bargain with the Union,
regarding its action, I find it unnecessary to, and do not, reach the question whether
the Union waived its right to notice and to bargain about each specific contracting-out
job or whether the Union had consciously bargained away this right.
Whitfield Pickle Company and Retail , Wholesale and Department.
Store Union , AFL-CIO. Cases Nos. 15-CA-2449 and 15-CA-
2449-2. March 5, 1965
DECISION AND ORDER
On November 30, 1964, Trial Examiner Leo F. Lightner issued
his Decision in the above-entitled proceeding, finding that the
Respondent had engaged in and was engaging in certain unfair'
labor practices, and recommending that it cease and desist there-
from and take certain affirmative action, as set forth in the attached.
Trial Examiner's Decision. Thereafter, the Respondent filed excep-
tions to the Trial Examiner's Decision and a supporting brief.
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, as amended, the National Labor Relations Board
151 NLRB No. 49.