American Oil Co.

National Labor Relations Board - Board Decisions

Nov 8, 1965

155 N.L.R.B. 639 (N.L.R.B. 1965)

AMERICAN OIL COMPANY 639
American Oil Company and Drivers and Employees of Petroleum
Industry, Local Union 273, a/w International Brotherhood of
Teamsters , Chauffeurs , Warehousemen and Helpers of Amer-
ica. Case No. 6-CA-f955. November 8, 1965
DECISION AND ORDER
On March 31, 1965, Trial Examiner Irving Rogosin issued his Deci-
sion in the above-entitled proceeding, finding that Respondent had not
engaged in any unfair labor practices 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 filed exceptions to the Decision and a supporting
brief. The Respondent filed cross-exceptions and a brief in support
thereof, to which the General Counsel filed an answer.
The National Labor Relations Board has reviewed the rulings of
the Trial Examiner made at the hearing and finds that no prejudi-
cial error was committed. The rulings are hereby affirmed. The
Board has considered the Trial Examiner's Decision, the exceptions,
cross-exceptions, briefs in answer to exceptions and cross-exceptions,
and the entire record in this case, and hereby adopts the Trial Exam-
iner's findings, conclusions, and recommendations.
[The Board adopted the Trial Examiner's Recommended Order dis-
missing the complaint.]
MEMBER BROWN took no part in the consideration of the aboN e
Decision and Order.
DECISION OF TRIAL EXAMINER
STATEMENT OF THE CASE
This proceeding , under the National Labor Relations Act, as amended (29 U.S.C.
Sec. 151, et seq., 61 Stat. 136 ), herein called the Act, is based upon a complaint,
issued June 10, 1964 , as amended , alleging that American Oil Company, herein called
Respondent or the Company, as the context may require, has engaged in unfair
labor practices within the meaning of Section 8 ( a)(1) and (5) of the Act.'
Specifically, the complaint , as amended ,2 alleges that, since on or about De-
cember 18 , 1963, and continuously thereafter , Respondent has subcontracted to
Coastal Tank Lines, Inc., the work of servicing commercial and service station
accounts in the Uniontown , Pennsylvania , area, and the work of making deliveries
of gasoline to Respondent 's bulk plant in Uniontown , Pennsylvania and has sub-
contracted to Chemical -Leaman Tank Lines, Inc., the work of making deliveries of
fuel oil and kerosene to Respondent 's bulk plant in Uniontown , Pennsylvania, all of
which work had previously been performed by employees in the appropriate unit
described in the complaint . By the foregoing conduct, the complaint alleges, Respond-
1 The original charge, filed February 10, 1964 , was served on February 11, 1964 ; the
amended charge, filed on March 16, 1964, was served on the same (late; the second
amended charge , filed June 10, 1964, was served with the complaint and notice of hearing
on the same day.
2 Hereinafter referred 'to for convenience as the complaint.
155 NLRB No. 64.
640 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ent has, since on or about said date , and notwithstanding the Union's demand, since
on or about January 17, 1964, refused to bargain with the Union as the representative
of its employees in an appropriate unit, thereby engaging in unfair labor practices
within the meaning of Section 8(a) (5), and interfering with, restraining, and coercing
employees in the exercise of rights guaranteed in Section 7, thereby engaging in
unfair labor practices within the meaning of Section 8 (a) (1) of the Act.3
Respondent's answer substantially admits the jurisdictional allegations of the com-
plaint, the definition of the appropriate unit, the status of the Union as a labor
organization, and as the exclusive representative of the employees in the appropriate
unit, but denies generally the remaining allegations of the complaint and the com-
mission of any unfair labor practices .4
Pursuant to notice duly served, a hearing was held before Trial Examiner Irving
Rogosin on July 27 to 30, 1964, both inclusive, at Pittsburgh, Pennsylvania. All
parties were represented by counsel and were afforded full opportunity to be heard,
to examine and cross-examine witnesses, to introduce evidence, oral and docu-
mentary, relevant and material to the issues, to argue orally, and to file briefs and
proposed findings and conclusions. The parties declined to argue orally. Pursuant
to an extension duly granted, upon application of the General Counsel,5 briefs were
filed by Respondent and General Counsel on September 14 and 15, 1964, respectively.6
Motion of Respondent, at the conclusion of the General Counsel's case, renewed at
the close of the bearing, to dismiss the complaint, was denied. Over the objection
of Respondent, motion of the General Counsel to conform the pleadings to the proof
with respect to formal matters, not affecting the substantive issues, was granted.?
Upon the entire record in the case,8 including my observation of the witnesses,
I make the following:
FINDINGS OF FACT
1. THE BUSINESS OF RESPONDENT
The complaint alleges, and Respondent's answer admits, in substance, that Amer-
ican Oil Company, a Maryland corporation, and wholly owned subsidiary of Standard
Oil Company of Indiana, an Indiana corporation, engaged in the manufacture and
sale of petroleum and petroleum products, is, and at all times material has been,
an employer engaged in commerce within the meaning of the Act.
During the 12-month period preceding the issuance of the complaint, Respondent
shipped to its terminal located at Hays, Pittsburgh, Pennsylvania, from points outside
the Commonwealth of Pennsylvania, goods valued in excess of $50,000. During the
same period, Respondent shipped from its terminal at Hays, Pittsburgh, Pennsylvania,
to points outside the Commonwealth of Pennsylvania, goods valued in excess of
$50,000.
Upon the basis of the foregoing, I conclude and find that Respondent is, and at all
times material herein has been, engaged in commerce within the meaning of the Act.
8 The complaint was amended, without objection , at the outset of the hearing , pursuant
to telegraphic notice given on July 17, 1964, to allege the acts recited in the text as unfair
labor practices . This amendment , in effect, superseded the bill of particulars , filed and
served by the General Counsel in response to an order of Trial Examiner Frederick U.
Reel, granting , in part , Respondent's motion to make complaint more specific , as well as
subsequent notice by the General Counsel of intention to amend the complaint.
4 With the granting of the motion to amend the complaint , Respondent's answer was
regarded as responsive to the amended complaint.
5 Unless otherwise indicated , all references to the General Counsel are to trial counsel
at the hearing.
9 Respondent included in the title of its brief , proposed findings and conclusions, but
made no request for specific findings of fact or conclusions of law. No specific findings
and conclusions have, therefore, been made, except as indicated by the ultimate findings
of fact and conclusions of law.
7In view of Respondent's objection to the motion to conform generally, and particularly
insofar as it related to the answer, the ruling was limited to the complaint.
8 Subsequent to the close of the hearing, by motion filed September 16, 1964 , the General
Counsel filed and served a motion to correct the official transcript in certain respects. No
objections having been filed , the motion has been granted by a separate order entered
contemporaneously herewith , and the motion is hereby received in evidence as General
Counsel's Exhibit No. 12 , and filed with the formal exhibits in the official report of
proceedings.
AMERICAN OIL COMPANY 641
II. THE LABOR ORGANIZATION INVOLVED
Drivers and Employees of Petroleum Industry, Local Union 273, a/w International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America,
herein called the Union or the Charging Party, is a labor organization within the
meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The refusal to bargain
1. The appropriate unit and representation of majority therein
The complaint alleges, in substance, Respondent's answer admits, for the purpose
of this proceeding, and the parties have stipulated, that the following employees at
Respondent's terminal located at Hays, Pittsburgh, Pennsylvania, constitute an
appropriate unit for the purposes of collective bargaining within the meaning of
Section 9(b) of the Act:
Working foremen auto mechanics, working foremen-yard-warehouse, mechanics-
auto first class, mechanics first class and plant maintenance, truckdrivers, ware-
housemen, yardmen, washer-greasers, plant clerks, mechanics first class, mechan-
ics second class, and transport trailer drivers, but excluding guards, professional
employees, and supervisors as defined in the Act, and excluding all other
employees .9
Since 1947, and continuously thereafter, Respondent has recognized the Union as
the exclusive representative of all employees in the appropriate unit above described
for the purposes of collective bargaining with respect to rates of pay, wages, hours of
employment, and other terms and conditions of employment.
Upon the basis of the foregoing, it is found that the above-described unit is now,
and at all times material has been, an appropriate unit within the meaning of Section
9(b), and that the Union is now, and at all times material has been, the exclusive
bargaining representative of the employees in said unit within the meaning of Section
9(a) of the Act.
2. Introduction
Respondent has been engaged in refining, distributing, and selling petroleum and
related products throughout areas of the United States, including the Baltimore region,
which comprises the States of Delaware, Maryland, Pennsylvania, Virginia, and West
Virginia and the District of Columbia. This proceeding involves only the Baltimore
region. Respondent maintains and operates a terminal at Hays, Pittsburgh, generally
referred to as the Hays terminal, in Pittsburgh, Pennsylvania, and another terminal at
Morgantown, West Virginia, also referred to as the Morgantown or Granville termi-
nal. These terminals are situated on the Monongahela River.'° The system of
marketing and distribution of Respondent's products throughout its operations entails
transportation by pipeline, tanker, barge, tank car, and truck from the refineries to
storage and supply terminals like those at Hays and Morgantown. These products
are distributed, in turn, from the terminals by truck to the Company's bulk plants,
service stations, and commercial customers in the market areas served by the particu-
lar terminal. About 95 percent of these petroleum products are transported from the
refinery at Texas City, Texas, to Morgantown, West Virginia, by barge; the remainder,
in about equal proportions, by tank car and truck. Products shipped from the Com-
pany's refinery at El Dorado, Arkansas, are transported by common carrier pipeline
to the Mississippi River, and shipped from a staging point by common carrier barge
to Morgantown. Some petroleum products, referred to as packaged goods, consisting
of cases of motor oil in quart or gallon containers, 5-gallon drums, or 50-gallon steel
drums, are delivered to Morgantown by truck.
The market area with which this proceeding is concerned is designated as the Union-
town market area, and encompasses a bulk plant operated by the Company at
Uniontown, 17 retail service stations,11 and commercial accounts in Uniontown and
9 The description of the unit as set forth in Respondent 's answer, to which the General
Counsel stipulated , amending the complaint accordingly.
10 Uniontown, situated in the southwest part of Pennsylvania, is approximately 45 miles
from the Hays terminal, and 28 miles from the Morgantown terminal, which is located
near the border between West Virginia and Pennsylvania
it Three of these service stations were closed in the latter part of 1963; another has
been serviced from the Morgantown terminal since December 18, 1963, date of the change-
over to transportation by common carrier.
642 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
outlying communities . 12 Prior to the latter part of December 1963, and at least
since mid- 1962, the Uniontown area was supplied from the Hays terminal, and
deliveries were made to service stations by unit drivers operating out of that terminal.13
During this period, distribution of products from the Hays terminal was generally
made by company owned trucks operated by unit drivers , by common carriers, cus-
tomers' trucks , and sales agents , also identified in the record as cartage agents, con-
tractors , or commission agents. According to compilations prepared by the Company
from its records , for some 31/2 years prior to these proceedings , approximately 65 to
70 percent of the total product distributed from the Hays terminal annually was
transported by the truckdrivers in the appropriate unit, herein sometimes referred to
as the unit drivers,14 in company owned trucks. The remainder of Respondent 's total
annual product distributed from the Hays terminal was transported by common car-
riers (designated in company records as for hire ), customers ' trucks ( designated as
customer ). Hauling by common carriers accounted for less than 10 percent of the
total product.15
12 Referred to as the Uniontown , Connellsville , and Brownsville area
13 During the period September 1 to December 17, 1963, 25 unit drivers were engaged
in making gasoline deliveries to service stations in the area.
14 These employees are designated in company records by the code S & T ( for supply and
transportation).
15 According to these compilations, actual shipments by truck from the Hays terminal,
expressed in terms of thousand barrels, were as follows:
1961 1962 1963 1964
(Jan -May)
For Hire --------------------------------- 139 4 135 6 172 8 74 3
S & T----------------------------------- 1,621 1 1,650 5 1,582 8 587.5
Customer*------------------------------- 569 2 569 5 251.2
Grand Total ----------------------------- 2,355 3 2,325 I 913 0
*Not available.
According to similar compilations , for the period September 3 to December 18, 1963, ship-
ments of petroleum products , including gasoline , furnace oil, diesel oil, and kerosene,
from Hays terminal to Respondent 's bulk plant in Uniontown , were made as follows:
By Company By Chemical-Leaman
(unit drivers) (common carrier)
September ---_---__ 30 deliveries (125,000 gals of gas)** 4 deliveries (25,000 gals gas).
(44,000 gals of distillate)
October--------___ 41 deliveries (224,000 gals of gas) 1 delivery (5,600 gals furnace oil).
(28,000 gals of distillate)
November--------_ 20 deliveries (130,000 gals of gas ) (5,600 6 deliveries (12,800 gals. of gas) (23,000
gals of distillate) gals. of distillate).
December 3-18_--_ 8 deliveries (30,289 gals. of gas) (11,200 7 deliveries (32,100 gals of gas ) ( 11,100
gals of distillate). gals. of distillate).
**All gallonages in round figures
As will presently appear , commencing December 18 , 1963, Coastal took over all deliveries
of gasoline to the bulk plant and service stations in the Uniontown area from the Morgan-
town terminal , Chemical , for all practical purposes-except for two deliveries by unit
drivers in January 1964-took over deliveries of fuel oil and kerosene to the Uniontown
bulk plant from the Hays terminal.
During the corresponding period , unit drivers made the following deliveries of gasoline
from the Hays terminal to service stations in the Uniontown area.
September------------------------------- 42 deliveries --------------------- 171,000 gals of gas.
October_________________________________ 55 deliveries --------------------- 190,000 gals of gas.
November_______________________________ 52 deliveries --------------------- 187,000 gals. of gas.
December 1-17-------------------------- 41 deliveries ---------------------- 188,000 gals of gas.
AMERICAN OIL COMPANY 643
3. History of collective bargaining
As has been noted, Respondent has voluntarily recognized the Union since 1947 as
the exclusive bargaining representative of the employees in the appropriate unit,
described earlier, at its Hays terminal . There is no suggestion of animosity or hostility
by Respondent toward the Union ; relations between the parties appear to have been
amicable and generally harmonious . Presumably collective -bargaining agreements
have been in effect between the parties for some years . The earliest contract revealed
by the record , however, was executed on November 7, 1960, effective from Septem-
ber 1, 1960 , to and including October 31 , 1961, automatically renewable annually
thereafter in the absence of 60 days ' written notice prior to November 1, 1961.1a
The agreement contained a union-authorization clause, as well as a provision for
checkoff, upon appropriate authorization . It did not, however , contain a management
prerogative clause or grievance and arbitration provision . It is evident from the
compilation prepared by Respondent , that, at least , during a portion of the term
covered by this contract , shipments of petroleum products by truck from the Hays
terminal were made by common carriers and customers of the Company , as well as
by unit drivers.17
On August 23, 1961, the Union served written notice on Respondent , advising of
the expiration of labor contracts at its Pittsburgh , West Bridgewater , and Greensburg,
Pennsylvania , operations on October 31, 1961, and advising that contract proposals
would soon follow. Accordingly , on October 2, 1961, the Union submitted its
proposals and requested an early meeting . The only item having a direct bearing on
the issue in this proceeding read:
4. New Article-The Company agrees that they [sic] will not use any contract
haulers or outside help while there are any Bargaining Unit employees laid off.
Thereafter , two bargaining sessions were held on October 16 and 26, 1961, at the
Fort Pitt Hotel, in Pittsburgh . Representing the Company were, D T. Lane,
employee relations manager at Baltimore , J. R. Whitley , general superintendent of
plants, Baltimore region , Richard G . Kreusler , Lane's predecessor , and Charles G.
Weibel, division manager of distribution , Baltimore.18 Representing the Union at
these meetings were Elmer J. Shoup, secretary -treasurer of the local , and the negotiat-
ing committee , consisting of some eight members. Kreusler was the principal spokes-
man for the Company ; Shoup, for the Union . At the first meeting, consisting of a
morning and afternoon session , Shoup read aloud the Union 's proposals , offering
reasons for and clarification of the demands as he went along. Not unexpectedly,
the items relating to wages, shift differential , and restriction upon the use of contract
haulers, received most attention.
On the subject of contract hauling, Shoup explained that the Union was "very
serious, " pointing out the urgency of job security for the unit employees , and observ-
ing that, without such a contract provision , the Company would have unrestricted
right to use contract carriers Replying to each of the Union 's demands , Kreusler
asserted , with regard to the issue of contract hauling , that there existed at the Hays
terminal a history of transportation of products by outside carriers , and that the
Company intended to retain this right as a management prerogative "as the economics
might dictate " Questioned as to whether the Union intended the provision to apply
merely to outside carriers already hauling for the Company , or to hauling by carriers
in the future , or both , Shoup told Kreusler that the terminology was meant to apply
to commissioned agent haulers , as well as contract and common carriers. Shoup also
mentioned two individual cartage agents , Mock and Palma , both former employees of
Respondent , who had performed hauling operations at the Hays terminal with the
acquiescence of the Union . In this regard, Shoup expressed regret that the Union had
ever consented to the arrangement.
The parties recessed for lunch, the company negotiators utilizing the opportunity to
caucus. When the parties reconvened , the company negotiators reiterated the Com-
pany's position that it had engaged common carriers to transport petroleum products
"The article covering the term of the agreement does not expressly provide for termina-
tion upon 60 days ' notice on any anniversary date subsequent to November 1, 1961.
However , this may have been due to an oversight.
17 Thus, shipments hauled by common carrier truck ( designated for hire ), amounted in
1961 to 139 ,400 barrels, as compared with 1 , 621,100 barrels hauled by unit drivers in
company owned trucks ( designated S & T). See footnote 15, supra.
18 At the time of the hearing, Weibel occupied the position of coordinator of terminals,
marketing department, Chicago , having been transferred from Baltimore in February 1963,,
after serving in his former position since October 1, 1960.
212-809-66-vol. 155-42
'644 DECISIONS OF NATIONAL- LABOR RELATIONS BOARD
from the Hays plant for a number of years; that the engagement of Mock and Palma
as cartage agents had been undertaken with the Union's consent; that the Company
had no intention of reversing its policy; and that it regarded the use of outside car-
riers as a management prerogative, which it intended to exercise as economic circum-
stances dictated. In short, the Company rejected the Union's proposal for a contract
provision restricting or prohibiting contracting out work performed by unit drivers
at the Hays terminal.
Included among the Union's proposals was a demand for a grievance procedure.19
Consequently, the Union submitted proposed language for a grievance procedure,
which contained no provision for arbitration. The Company made no counter-
proposals at this time, and the meeting adjourned without agreement on any of the
issues.
At the second meeting, which also consisted of a morning and afternoon session,
the company representatives stated initially that the Company was not in a position
to grant any of the Union's proposals, and requested that the agreement be renewed
for another year without change. Discussion continued, however, until the meeting
recessed for lunch. Expressing dissatisfaction with the Company's position, Shoup
urged that the Company give serious consideration to the Union's proposals, and
warned of a possibility of a work stoppage if an agreement could not be achieved.
When the bargaining session resumed after lunch, the Company's position remained
unchanged. Shoup pointed out the disparity between the Company's wage scales
and those of competitors on the gulf and Atlantic coasts, and again urged the Com-
pany to give serious consideration to the Union's demands. After caucusing, the
company representatives submitted counterproposals on wages and other issues, but
reiterated its position on restrictions on contract hauling. On this issue, the Company
suggested that it would not engage common carriers not previously used in the
transportation of petroleum products from the Hays terminal to service stations. The
Company also proposed that it would not engage cartage agents, other than the two
already used by the Company, while any unit drivers were laid off. The company
representatives declined, however, to include such a provision in the contract, asserting
that this would place the Company in a disadvantageous position with its competitors
whose union contracts did not contain such a provision.
With regard to a proposed grievance procedure, the Company submitted language
for a procedure culminating in arbitration, coupled with a no-strike, no-lockout pro-
vision. After some modifications, the parties arrived at a mutually acceptable griev-
ance and arbitration procedure.20 As these counterproposals were presented orally,
Shoup requested the Company to reduce to writing the matters upon which agreement
had been reached so that he could submit the Company's offer to the union member-
ship. Kreusler agreed, and sent Shoup a typewritten memorandum entitled, "Contract
Negotiation-10/26/61 5 p.m.," listing eight items on which the parties had agreed.
Item 7 on this memorandum reads:
Contract Haulers working out of Hays, Pa. will be put off 2 months and discussed
then.
Shoup agreed to submit the counterproposals at a union meeting soon afterward.
Early in November, the Union notified the Company it had accepted its offer, and
under date of November 21, 1961, the parties executed a collective-bargaining agree-
ment, effective from November 1, 1961, to and including October 31, 1962, auto-
matically renewable annually thereafter unless terminated on 60 days' notice prior to
November 1, 1962, or any anniversary date. The agreement provided for one wage
reopening at any time after November 1, 1961, with the proviso that, in the event
the parties failed to reach agreement, either party could, upon 60 days' written notice,
elect to suspend the no-strike, no-lockout provisions of the agreement. Included in
the agreement was the grievance and arbitration procedure upon which the parties
had agreed. The agreement did not contain a management prerogative provision.
On September 6, 1962, the parties executed a first supplemental agreement, acknowl-
edging that the wage reopening provisions of the November 21, 1961, agreement had
been exercised and fully satisfied, continuing the same wage scales for the period
from November 1, 1962, to and including October 31, 1963, and providing for auto-
matic renewal annually in the absence of specified notice. As thus amended, the
agreement was to remain in full force and effect in accordance with its terms and
- The proposal was stated in terms of a request that article VI be rewritten. This
article merely covered the subject of the Company's right to discharge for cause, specifying
two grounds constituting just cause.
20 Although Division Manager Weibel testified at one point that the Company offered the
Union the grievance and arbitration provision in lieu of a restriction on contract hauling,
this does not appear to be borne out by the record, as will later appear.
AMERICAN OIL COMPANY 645
provisions. So far as the record discloses, the subject of management prerogatives or
restriction upon the use of contract carriers was not discussed during the negotiations
culminating in this extension of the agreement.
Early in 1963, although the supplemental agreement contained no wage reopening
provision, the Company requested the Union to meet to discuss wages, among other
things. The Union acceded to the Company's request and, as a result of negotiations,
executed a new collective-bargaining agreement, dated February 11, 1963, covering
a term from January 1, 1963, to October 31, 1964, inclusive, automatically renewable
annually thereafter, in the absence of 60 days' written notice of termination prior to
October 31, 1964, or any anniversary date thereafter. This agreement also provided
for one wage reopening after January 1, 1964, with a similar proviso permitting
suspension of the no-strike, no-lockout provisions upon 60 days' notice in the event
of failure to reach agreement as to wages, and canceled and superseded all previous
contracts and supplements. Like the previous agreement, this contract contained a
grievance and arbitration procedure.21 Again, the record is silent as to whether the
subject of hauling by common carriers was discussed during these negotiations.
On August 2, 1963, the parties executed a first supplemental agreement, amending
the agreement of February 11, 1963, by substituting new wage scales, effective July 1,
1963, and overtime provisions, but otherwise reaffirming the outstanding collective-
bargaining agreement of February 11. The agreement, as thus amended, was in
effect at the time of the hearing 22
4. The contracting out to Coastal and Chemical
Since December 18, 1963, Respondent has shipped gasoline to its bulk plant at
Uniontown, as well as to service stations in the area (with the possible exception of
one or two stations still served from the Hays terminal), out of its Morgantown termi-
nal. On about that date, Respondent commenced using Coastal almost exclusively
to transport gasoline from the Morgantown terminal to Uniontown.
Although shipments of other petroleum products, such as furnace fuel, diesel oil,
and kerosene, continued to be shipped from the Hays terminal to the Uniontown area,
about the same time, Respondent commenced delivering those products by using
Chemical as a common carrier.
Approximately 40,000 barrels a year are delivered to the Uniontown bulk plant
from all sources; approximately 30,000 barrels a year to the service stations in the
area. Of the total of 70,000 barrels of petroleum products, previously transported
from the Hays terminal to the Uniontown area, the bulk of these products is shipped
from Morgantown. Petroleum products are transported to Morgantown by rail,
truck, and barge, mostly barge, over the Monongahela River from Pittsburgh, a por-
tion of the product originating in tanks at the Hays terminal, and a portion being
transshipped from larger barges, which are unable to navigate the river, and then
pumped across to a smaller barge which transports the product over the Monongahela
River to Morgantown.
a. The arrangement with Coastal
Coastal Tank Lines, Inc., is a petroleum and liquid chemical carrier, operating
under authority of the Interstate Commerce Commission and Public Service Commis-
sion, with a terminal located at Westover, West Virginia. Late in November or
early in December 1963, Clarence Wandell, superintendent of Respondent's Morgan-
town plant at Granville, West Virginia, also sometimes referred to as the Granville
bulk terminal, informed Bernard G. Bennett, manager of Coastal's terminal at West-
over, that "there might be some additional business" for Coastal in the Uniontown
area, and asked him if he would be able to handle it. Bennett assured Wandell that
Coastal had the necessary equipment and manpower.23 About December 11,
Wandell confirmed to Bennett that the business he had offered Coastal would be
21 It is noted that this agreement, like the previous agreements, contained a provision
granting credit, for purpose of vacations, for length of continuous service to employees
of Kenny Cartage Company (not otherwise identified in the record), as well as employees
of the Company, engaged in transporting company products, immediately prior to
March 21, 1951. Although on explanation was offered for including service with the other
company in determining the length of vacations and choice of vacation periods, this sug-
gests that Respondent may have used common carriers, other than Coastal and Chemical,
to haul company products as early as 1951. However, since this situation was not explored
at the hearing, no finding is based on the existence of this provision of the contract.
as It will be noted that, although the agreement provided for one wage reopening, on or
after January 1, 1964, the parties apparently agreed to an earlier reopening.
as According to Bennett , he had nine men on layoff status at the time.
646 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
made available to it. No contract, oral or written, was entered into between Coastal
and Respondent, the arrangement merely requiring- Coastal to transport whatever
products were tendered to Coastal, as a common carrier, for shipment to the con-
signees. In practice, Respondent notifies Coastal's dispatcher each day of its hauling
requirements for the following day, and arrangements are made to accommodate
Respondent's needs. Respondent is under no contractual commitment to utilize
Coastal's services exclusively nor to guarantee Coastal a minimum number of loads.
At the time of the hearing, Coastal employed 17 truckdrivers at its Westover terminal,
5 or 6 of whom were assigned to haul Respondent's products from the Morgantown
terminal to the Uniontown area.24
On December 18, 1963, Coastal made its first delivery of gasoline from the Morgan-
town terminal to the bulk plant at Uniontown, as well as a delivery to service stations
in the Uniontown area.23 Deliveries by Coastal are made upon bills of lading, which
are copied from a daily trip sheet to a daily field log. The original of the log, together
with the bill of lading, is transmitted to Coastal's traffic department at York, Penn-
sylvania, for billing.26 Coastal assigned five drivers and two tank trucks, with
capacities of 7,500 and 6,800 gallons, respectively, to make deliveries from Morgan-
town to the Uniontown area. No deliveries of gasoline had previously been made by
Coastal for Respondent from Morgantown to Uniontown.27 According to John P.
Bunting, agent in charge of the bulk plant at Uniontown, since December 18, 1963,
Coastal has been delivering 6 or 7 truckloads of gasoline, each having a capacity of
7,500 gallons, per week to the bulk plant.
b. Transportation by Chemical
Since some time in 1962, Chemical has transported petroleum products, consisting
of fuel, furnace, diesel oil, and kerosene, from the Hays terminal to the Uniontown
bulk plant. Prior to December 18, 1963, deliveries of these products from the Hays
terminal to the Uniontown bulk plant were made in about equal proportions by unit
drivers and by Chemical. According to Bunting, no deliveries of these products have
been made by unit drivers since early 1964, at the latest.28 Nor have any deliveries
of gasoline been made by unit drivers from the Hays terminal to Uniontown, since
December 18, 1963, when Coastal took over the transportation.
There is no serious doubt that Respondent, at no time prior to December 18, 1963,
notified the Union of its intention to use Coastal and Chemical, as common carriers,
exclusively, or offered it an opportunity to discuss or negotiate the impending change 2°
24 Bennett testified that, at the time of the hearing, Coastal was making deliveries of
petroleum products for Esso-Humble Oil Company, Sinclair Refining Company, Pure Oil
Company, Texaco, Inc, and other oil companies, in addition to Respondent.
27 The Morgantown terminal is a combination of rail and river terminal. Coastal's
undertaking with Respondent involved intrastate hauling of petroleum products between
Morgantown and other points in the State of West Virginia, and interstate hauling be-
tween Morgantown and the Uniontown area, consisting of Uniontown, Connellsville,
Brownsville, and Markleyburg.
2' Complications appearing in footnote 15, supra, were made partly from these daily
field logs.
27 Employees of Coastal are represented by their own bargaining agent, Local Union 789,
affiliated with the parent Union, which also represents Respondent's drivers at
Morgantown.
28 Questioned as to when unit drivers last made deliveries of these products, Bunting
testified, "I would have to guess at it, some where around January, February, maybe even
March. It is just a guess."
29 Weibel testified that he "did not direct that anything be done to that end," and that
he had no personal knowledge of whether his subordinate, "a couple of levels below me in
supervision," who would normally have been responsible for doing so, notified the Union
In advance. Respondent contends, however, that with regard to Chemical, there was no
affirmative showing that Respondent did not notify the Union in advance and offer it an
opportunity to bargain about the issue Although Respondent did not maintain that it
actually gave the Union advance notice of the contracting out to Chemical, Respondent
denied generally this allegation of the complaint and contended, therefore, that the
General Counsel had failed to sustain the burden of proof insofar as the allegations
related to Chemical. While most of the evidence concerning the failure to notify the
Union in advance pertained to Coastal, the absence of affirmative evidence as to Chemical
appears to have been due to oversight and Inadvertence. Nevertheless, Respondent's con-
tention, however technical, is not without some basis. In view of the ultimate findings,
however, which have not been based on this narrow ground, it is unnecessary to resolve
this issue.
AMERICAN OIL COMPANY 647
Shop Steward Robert C. Berry, who had been employed by Respondent 11 years,
the last 9 as a truckdriver, was one of the unit drivers delivering gasoline, fuel oil, and
kerosene to service stations and commercial accounts in the Uniontown area prior to
December 18, 1963 About this time, as the result of a personal investigation
prompted by a telephone call he had received, he discovered a Coastal truck making
a delivery at a service station in Uniontown. Berry reported this to the union officials
and learned that the Union had not been aware of the Company's action. Both Union
Representative Shoup and Union Steward Berry testified credibly, and without contra-
diction, that the Company never notified the Union in advance of its decision to con-
tract out to Coastal the transportation of gasoline.
Soon afterward, Berry discussed this with other unit drivers at the Hays terminal,
and as a result it was decided to lodge a formal protest with the Company. Unron
Representative Shoup communicated with Lindsey A Willey, superintendent at the
terminal, told him that he was greatly concerned at the Company's use of Coastal to
perform the work of unit drivers, and notified him that he intended to take the matter
up with Employee Relations Manager Lane. Shoup discussed this with Willey on
more than one occasion, protesting the Company's decision as unfair because it elimi-
nated work of unit drivers. Willey replied that he was only following orders.
On January 17, 1964, pursuant to the wage reopening provision, a meeting was held
at the Fort Pitt Hotel. Present on behalf of the Company were Lane, Willey, Weibel,
and others whose identity is not clearly established by the record Representing the
Union were Shoup, Union Steward Berry, and a committeeman representing each of
the departments. After some desultory discussions on wages, Shoup raised the con-
tracting-out issue. Directing his remarks primarily to Lane, Shoup told him that he
had "unpleasant matters to discuss," and proceeded to read aloud a petition which
had been prepared by Berry and other drivers. Lane asked to examine the petition,
and Shoup handed it to him. After reading the petition, Lane suggested a short recess
so that the company representatives could consider the matter. After the recess, when
the company representatives returned, Lane told Shoup that they could do nothing
and would have to let matters stand. Shoup expressed his dissatisfaction with the
Company's position, and stated that he was left with no alternative but to file an
unfair labor practice charge with the Board. The dispute remaining unresolved, the
Union subsequently filed the charge which initiated these proceedings.30 Shoup stren-
uously protested the Company's action in contracting out the hauling to Coastal, and
urged the Company to desist from pursuing this policy. He did not, however,
endeavor to negotiate about the matter, apparently concluding, in view of the Com-
pany's attitude, that it would be futile to do so Nevertheless, he did point out that
unit employees had been laid off as a result, in his view, of the change in method of
transportation. Although he did not mention these employees by name, Shoup testi-
fied that the employees he had in mind were David M. Gray, Cyril V. Gallagher and
Harold Muschick, transport drivers at the Hays terminal.31
20 During the hearing, the General Counsel sought to adduce evidence that since on or
about December 30, 1963, Respondent, without prior notice to or consultation with the
Union, assigned the work of delivering petroleum products, formerly delivered by Hays'
unit drivers to a service station in the Uniontown area, to Respondent's drivers at its
Granville (Morgantown) terminal (As has been noted elsewhere, the latter employees
have been represented by Local Union 789, affiliated with the International Union ) Upon
objection, on the ground that the evidence sought to be adduced was not within the scope
of the complaint, the bill of particulars, or the amended complaint, ruling was reserved
on the objection, pending the decision of the General Counsel on whether to further amend
the complaint to include these allegations (the General Counsel contending that the evi-
dence was not discovered until the production of certain company records under a sub-
poena duce8 tecum ) Although afforded an opportunity to further amend the complaint,
upon reconsideration, the General Counsel decided not to do so, and withdrew the pending
question. No consideration has, therefore , been given to this alleged conduct in arriving
at a decision.
31 All three employees had received notices of termination from Superintendent Willey
about the second week of December 1963, and were laid off as truck drivers on January 31,
1964. These employees had the lowest seniority among the transport trailer-truck drivers,
and had been placed at the bottom of the seniority list by vote of the union membership
when the Company changed the classification of transport driver to truck driver on or
about July 1, 1963. Muschick, who had previously been classified as plant clerk, was
restored to his classification as a plant clerk; instead of being terminated on January 31,
because of his 22 years' service with the Company. On April 4, 1964, however, he volun-
tarily resigned because of the objections of unit employees. Respondent's contention, that
the layoff of these employees was not attributable to the contracting out to common
carriers , will be considered later.
648 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
On July 29, 1964, the day before the hearing in this matter closed, the Union
served Respondent with notice of termination of the existing collective-bargaining
agreement as of September 30, 1964, and requested negotiation for a new agreement.
By letter of the same date, Respondent acknowledged the Union's notice of termina-
tion, and concluded,
We assure you that we are willing to discuss with you any matters in our pres-
ent contract, or any other matters that you may wish to negotiate.
This is the posture in which the case stands submitted.
B. Issues; contentions; conclusions
This case represents another in the burgeoning number of cases involving the
so-called Fibre board 32 doctrine. The material facts are substantially undisputed. As
in the Fibreboard case, there is no allegation or contention that, in contracting out
the hauling of petroleum products from its Hays terminal to the Uniontown area to
common carriers, Respondent was motivated by any but economic considerations.
The complaint, as amended, alleges that Respondent "subcontracted" work for-
merly performed by unit employees to Coastal and Chemical, without first notifying
the Union and affording it an opportunity to bargain about this issue.33 Although
Respondent's answer generally denies this allegation, it is undisputed that, since on or
about December 18, 1963, Respondent has used the services of both Coast and Chem-
ical to transport petroleum products formerly hauled by unit drivers. It is also
apparent that unit drivers have not transported or delivered petroleum products from
the Hays terminal to the Uniontown area since that date.
Respondent's counsel takes issue in their brief with the General Counsel's delinea-
tion of the arrangement, whereby Coastal and Chemical assumed the hauling of prod-
ucts formerly performed by unit drivers as "subcontracting." It is not altogether clear
whether ,in taking this position Respondent is relying upon the fact that no express
contract, oral or written, was entered into with the common carriers covering the sub-
ject matter. Indeed, the record clearly establishes that, as common carriers, both
Coastal and Chemical are obligated only to accept for transportation and delivery
such shipments as are tendered to them by Respondent. Respondent, for its part,
is under no legal obligation to utilize the services of these carriers, nor is it committed
to furnish the carriers with a specified number of tankloads for shipment to con-
signees of such products. Respondent may suspend or terminate shipments without
notice to the carriers, or merely discontinue the use of common carriers, without obli-
gation. To the extent, however, that Respondent may be contending that the absence
of any oral or written contract with the common carriers removes this case from the
holding of the Board and the Court in the Fibreboard case, the contention is without
merit. The term "subcontracting" is not a word of art.34 A formal contract between
an employer and a common carrier is not an indispensable requirement to a finding
of the existence of a "subcontracting" or "contracting out" arrangement. The issue
is not one of semantics, but rather of the impact of the arrangement upon the work
previously performed by the unit employees. As the Court said, "[W]e are con-
cerned here only with whether the subject upon which the employer allegedly refused
to bargain-contracting out of plant maintenance work previously performed by
employees in the bargaining unit, which the employees were capable of continuing to
perform-is covered by the phrase `terms and conditions of employment' within the
meaning of Sec. 8(d)." 35 It is assumed, however, that Respondent does not rely upon
sa East Bay Union of Machinists, Local 1304, United Steelworkers of America, AFL-CIO,
et al. (Fibreboard Paper Products Corp.) v. N L.R B., 379 U.S. 203, decided December 14,
1964, after the close of the hearing in the present case.
sa It need hardly be pointed out that the accidental discovery by the Union at or about
the time Respondent began contracting out the work of unit drivers does not satisfy the
requirements of prior notice and opportunity to bargain. See Jersey Farms Milk Service,
Inc., 148 NLRB 1392.
34 "As the Solicitor General points out, the terms 'contracting out' and 'subcontracting'
have no precise meaning They are used to describe a variety of business arrangements
altogether different from that involved in this case." Fiberboard Paper Products Corp., v.
N.L.R.B., 379 U.S. 203, 215, footnote 8.
ae Fiberboard Paper Products Corp. v. N.L.R.B., supra, 210. We must assume that any
question as to whether "contracting out" is a mandatory subject of collective bargaining,
has now been laid to rest. "The subject matter [subcontracting of maintenance work] of
the present dispute is well within the literal meaning of the phrase 'terms and conditions
of employment.' " Nothing in the Fibreboard decision suggests that its holding is limited
to cases in which an actual contract exists between the employer and the independent
contractor for the performance of work previously done by unit employees.
AMERICAN OIL COMPANY 649,
the narrow ground that the absence of an express contract for the transportation of
Respondent's products, renders the Fibreboard principles inapplicable.
Respondent contends, in effect, that the use of common carriers after December 18,
1963, to deliver petroleum products from the Morgantown terminal to its bulk plant
at Uniontown, as well as to service stations and commercial accounts in the area, and
from the Hays terminal to Uniontown, was merely an extension of a practice which
had previously existed of transporting products from the Hays terminal by common
carrier, as well as by a company owned fleet, operated by unit drivers.
Moreover, Respondent contends, in the normal course of its operation, decisions as
to the "terminal source" from which customers are to be served are made, subject to
management approval, by the Company 's economic section, at its general office in
Chicago According to Respondent, as many as 1,000 changes a year may be made in
selecting the terminals serving marketing areas.
Respondent established that, late in November or early in December 1963, as a
result of an economic survey made between September and December 1963, under
the supervision of Coordinator of Terminals Weibel, and based upon his recommenda-
tions, Respondent determined that it could serve the Uniontown area more economi-
cally and efficiently from its terminal at Morgantown, West Virginia, than from the
terminal at Hays, Pittsburgh, Pennsylvania.36 Accordingly, in December, Respond-
ent implemented this decision, and commenced supplying the Uniontown area with
gasoline from the Morgantown terminal, using Coastal to make deliveries. By so
doing, Respondent argues, it was merely changing the source of supply from which it
distributed its products to specific markets.
Respondent attempts to distinguish this obviously unilateral conduct from a deci-
sion of an employer to subconti act the manufacture of a product formerly produced
by its own employees, or, arguably, from a decision by an employer, such as the one
here, to turn over the transportation of its products, previously delivered by unit
employees, to an independent carrier. This argument, presupposes that an employ-
er's obligation to notify and bargain with the majority representative of his employ-
ees regarding a change in terms and conditions of employment, is dependent, contrac-
tual managerial prerogative aside, on the nature of the proposed change, irrespective
of the impact of the decision upon the unit work. Such a sweeping view is not sup-
ported by logic or legal precedent
Respondent further contends, moreover, that it is immaterial, and, at least, of no
concern to the unit drivers at Hays, whether in the transportation of products from
the Morgantown terminal to Uniontown, Respondent utilizes drivers employed by it at
the Morgantown terminal (represented, incidentally, by another union local), or uses
common carriers or other methods of transportation, since the work of transporting
products from Morgantown to Uniontown would not, in any event, be performed by
the unit drivers at Hays, represented by the Union in this proceeding. Whatever
plausibility may be found in this argument, it does not meet the fundamental issue of
whether Respondent was under a duty to notify and bargain with the Union before
making the change in its method of transportation, the result of which impinged on
the work of the unit employees.
While the Supreme Court held in Fibi eboard Corp. v. N.L.R.B., supra, 218 that a
decision to subcontract work performed by employees in the bargaining unit, even
where based solely on economic considerations, is a mandatory subject of collective
bargaining under the Act, the Court made it abundantly clear that its holding was
based "on the facts of this case" and did not "encompass other forms of `contracting
out' or `subcontracting' which arise daily in our complex economy." This view
was further underscored in the concurring opinion of Justice Stewart, in which Jus-
tices Douglas and Harlan joined.37
"For relative distances between Hays and Uniontown , and between Morgantown and
Uniontown , see, supra, footnote 10. This, however, does not appear to have been the
primary consideration for the changeover . No similar reason was advanced by Respondent
for turning over the hauling of the other petroleum products entirely to Chemical, since
the "terminal source" for these products still remained at Hays. Presumably , Respondent
was relying upon its contention that the quantities of such products hauled by Chemical
since December 18, 1963, did not increase materially over the amounts hauled by that
carrier prior to that date.
84 "The question posed is whether the particular decision sought to be made unilaterally
by the employer in this case is a subject of mandatory collective bargaining within the
statutory phrase `terms and conditions of employment .' That is all the Court decides
The Court most assuredly does not decide that every managerial decision which neces-
sarily terminates an individual 's employment is subject to the duty to bargain . Nor does
the Court decide that subcontracting decisions are as a general matter subject to that
650 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Board has had occasion in a succession of cases involving variations on the same
theme to apply the principles enunciated both in its own decision and in the Supreme
Court decision in the Fibieboard case.38
In the recent case of Westinghouse Electric Corporation (Mansfield Plant), 150
NLRB 1574, 1576, the Board, holding that the employer did not violate Section 8(a)
'(5) and (1), by failing to notify and consult with the Union before subcontracting
work, and that its decision in Fibreboard and similar cases, in which the Board con-
,demned unilateral subcontracting of unit work as violative of Section 8(a)(5), were
not controlling, said,
Thus, it is wrong to assume that, in the absence of an existing contractual waiver,
it is a per se unfair labor practice in all situations for an employer to let out unit
work without consulting the unit bargaining representative As the Supreme
Court has indicated in a broader context, even where a subject of mandatory
bargaining is involved, there may be `circumstances which the Board could or
should accept as excusing or justifying unilateral action.' [Citing N.L.R.B. v.
Benne Katz, . . . 369 U.S. 736, 748.]
In determining that the employer, in Westinghouse, supra, 1577, did not violate the
statutory duty to bargain, the Board took into account ". . . that the recurrent contract-
ing out of work here in question was motivated solely by economic considerations;
that it comported with the traditional methods by which the Respondent conducted
its business operations; that it did not during the period here in question vary signifi-
cantly in kind or degree from what had been customary under past established prac-
tice; that it had no demonstrable adverse impact on employees in the unit, and that
the Union had the opportunity to bargain about changes in [its] existing subcontract-
ing practices at general negotiating meetings...:.
As analysis of the factual circumstances of this case demonstrates that the criteria
established by the Board in the Westinghouse case have been substantially met here.
To begin with, Respondent has voluntarily recognized the Union as the exclusive col-
lective-bargaining agent of the unit employees since 1947. There is no allegation or
contention that, in making greater utilization of common carriers, Respondent was
motivated by an antiunion considerations or by a desire to subvert the bargaining
process by bypassing the bargaining representative. 19
None of the collective-bargaining agreements, commencing with the one executed
on November 7, 1960, contained a so-called management prerogative clause, reserv-
ing to the Company the right to subcontract or contract out work performed by unit
employees, without prior notification and consultation with the Union. Nor did any
of these contracts contain a provision granting the Company the right to take uni-
lateral action regarding other subjects not specifically covered in the contract. Never-
theless, the record establishes that, at least since 1961, petroleum products have been
transported from the Hays terminal by common carriers, by sales agents (cartage
agents, cartage contractors, or commission agents), and customers' trucks, as well as
by company owned trucks operated by unit drivers.
Of the "total annual product" distributed by truck from the Hays terminal during
the past 3ih years, approximately 65 to 70 percent was transported by unit drivers;
less than 10 percent by common carriers; the remainder by customers' trucks. The
ratio has remained relatively constant since December 1963. During the first 5
months of 1964, deliveries by common carrier amounted to 74,300 barrels, as com-
pared with 81,200 barrels, during the corresponding period for 1963. From Novem-
duty. The Court holds no more than this employer's decision to subcontract this work,
involving `the replacement of employees in the existing bargaining unit with those of an
independent contractor to do the same work under similar conditions of employment' is
subject to the duty to bargain collectively. Within the narrow limitations implicit in the
specific facts of this case, I agree with the Court's decision "
39 Cases most nearly approaching the factual situation here are Shell Oil Company, 149
NLRB 283; Shell Chemical Company, A Division of Shell Oil Company, 149 NLRB 298;
Shell Oil Company, 149 NLRB 305 See also American Oil Company, 151 NLRB 421 Cf.
Jersey Farms Milk Service, Inc, 148 NLRB 1392. Cases such as Ador Corporation, 150
NLRB 1658, and General Motors Corporation, Buick-Oldsmobile-Pontiac Assembly Division,
149 NLRB 396, which involved application of management rights provisions, are not
decisive here
39 Hence, cases exemplified by Town & Country Mfg Co., 136 NLRB 1022, enfd. 316 F.
2d 846 (C.A. 5). 'Cf. N.L.R.B. v. Adams Dairy, Inc., 322 F. 2d 553 (CA. 8) enforcement
denied 137 NLRB 815, cert. granted and remanding, January 18, 1965, are not strictly
apposite.
AMERICAN OIL COMPANY 651
ber 1963, to and including May 1964, quantities of petroleum products transported
by common carrier have at no time exceeded the quantities hauled during the months
of January , February, and September , peak months for the year 1963.40
Prior to December 18, 1963, when Coastal commenced transporting gasoline from
the Morgantown terminal to the Uniontown area, shipments of gasoline were made
from the Hays terminal and transported to the Uniontown bulk plant by both Chemi-
cal and company owned trucks operated by the unit drivers in about equal propor-
tions. Since 1962, Chemical has been making about the same deliveries each month
from the Hays terminal to the Uniontown bulk plant . Since December 1963 , Coastal
has been making some six or seven deliveries of gasoline , consisting of approximately
7,500 gallons each, from the Morgantown terminal to the Uniontown bulk plant
each week. That the Union had been aware of the Company's use, if perhaps not
the actual extent of such use, of outside haulers , cannot be doubted.
It is undisputed that no deliveries have been made by unit drivers from the Hays
terminal to the Uniontown area since December 18, 1963 , or early 1964 , at the latest.
Thus, during the 1961 contract negotiations , the Union included among its written
demands a proposal for a new contract provision restricting the use of outside car-
riers by Respondent at the Hays terminal.41 During these negotiations , Union Rep-
resentative Shoup pointed out that he intended the term "contract haulers or outside
help" to encompass , in addition to contract and common carriers , commission agents
( also referred as cartage agents, cartage contractors , and sales agents ) .42 Rejecting
the Union 's demand for a restriction upon the use of common carriers , the Company
reiterated its position that it had a history of using common carriers and that it
intended to retain and exercise its managerial prerogative as the economics might
dictate.
The contract executed on November 7, 1960, and which was reopened on Au-
gust 23, 1961 , contained no grievance or arbitration procedure . Such a provision was
among the demands contained in the Union 's proposal of October 2, 1961. Respond-
ent suggested that the grievance and arbitration provision be utilized to resolve the
issue of any restriction upon the Company 's use of common carriers while unit
employees were on layoff 43 The contract of November 21, 1961, resulting from
these negotiations , did include a grievance and arbitration procedure , but no restric-
tion upon the use of outside carriers . There is no basis for concluding , however, that
the Union had committed itself to resort to the grievance and arbitration procedure as
a means of resolving this dispute.
Subsequent to the execution of the contract, and for the duration of three successive
contracts , including the one in effect at the date of the hearing ( terminated under
circumstances already described ), Respondent continued to utilize common carriers
40A comparison of the total volume of petroleum products transported by unit drivers
with those transported by common carriers during the corresponding months shows the
following:
1963
Jan Feb. Sept
For Hire [common carriers]_________________ 26,700 bbls______ 21,800 bbls______ 19,800 bbls.
S & T [unit drivers]_________________________ 132,300 bbls_ _ _ __ 114,100bbls_____ 125,700 bbls.
41 See section III , A, 3, supra.
11 The reference to cartage agents was to Mock and Palma ( See section III, A, 3,
supra ) There is no contention that by obtaining the Union 's consent to the use of these
agents, Respondent acknowledged any obligation to notify or consult with the Union
prior to engaging other carriers. According to Weibel's undisputed testimony , during
these negotiations , Shoup expressed regret that the Union had consented to the Company's
arrangement with these cartage agents.
43 Weibel testified at one point that the Company proposed the grievance and arbitration
provision in lieu of the Union ' s demand for restrictions upon use of outside haulers.
Since the Union had previously included among its proposals a demand for a grievance
procedure to replace the provision dealing with discharges for cause, it is evident that
the Union had not coupled this demand with the one for a restriction upon the use of
contract carriers . It is more likely that the Company was merely proposing that the
parties resort to the grievance and arbitration machinery to settle the issue of the use
of outside carriers.
652 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and cartage agents as before. There was no showing that the Union protested this
practice until shortly after mid-December 1963, when Respondent began to use
Coastal and Chemical, respectively, to the exclusion of unit drivers, to haul gasoline
from Morgantown to Uniontown, and other petroleum products from the Hays ter-
minal to Uniontown. The record is silent as to whether the Union raised this issue
again during negotiations for the three successive contracts.
This is not to suggest that by executing a contract with Respondent which contained
no restriction upon its use of outside carriers, or by failing during subsequent negotia-
tions to protest the practice, the Union waived or abandoned its right to be notified or
,consulted about the subject. Nor does the fact that a union has made previous unsuc-
cessful attempts to restrict subcontracting or "contracting-out" of work of unit
employees, afford a basis for finding a waiver of its right to prior notice and an oppor-
tunity to bargain about the issue.44 Furthermore, Respondent's contention that, by
executing the November 1961 contract after negotiations, without a restriction upon
the use of outside carriers, with full knowledge of the existence of the practice, the
Union, in effect, acceded to the Company's position, and withdrew its demand for
such a restriction, as a quid pro quo for concessions upon other issues, is not estab-
lished by the record. Moreover, as is seen from the memorandum prepared by the
'Company, following the bargaining meeting of October 26, 1961, the parties agreed
to postpone discussion of this issue 45 Unquestionably, the Union renewed its demand
for restriction on the use of common carriers to perform unit work.
Respondent contends, however, that during these negotiations the Union itself
failed to bargain in good faith on the contracting-out issue. Thus, Respondent con-
tends that Shoup failed to make any counterproposal, advance any argument, or
attempt to discuss the issue with the company representatives, beyond making the
naked demand that the Company "cease and desist" from the practice, and when faced
with a rejection, issued an ultimatum that he would file an unfair labor practice charge.
Under these circumstances, according to Respondent, its good faith was never put to
the test.46 In support of this position, Respondent relies upon portions of Shoup's
testimony, some of which are quoted below.47 The record does, indeed, lend some
44 See Cloverleaf Division of Adams Dairy Co., 147 NLRB 1410, 1412, where the Board
also held, "Although a statutory right such as is involved here may be waived by collec-
tive bargaining, a waiver, if it is to be found, must be clearly and unmistakably established
and is not lightly to be inferred." (The Timken Roller Bearing Co., 138 NLRB 15, enfd.
325 F. 2d 746 (C.A. 6) [cert. denied 376 U.S. 971) ; Perkins Machine Company, 141 NLRB
98, enfd. 326 F. 2d 488 (C.A. 1).)
45 See section III, A, 3, supra.
46 Citing Hartmann Luggage Company, 145 NLRB 1572; Edward A:cel Roffman Associ-
ates, Inc., 147 NLRB 717; and Georgia-Pacific Corporation, adopted, without modification,
by the Board, 150 NLRB 885.
47 "Q. Well, did you try to persuade them to anything at that meeting'
A. I only told them since they took that position, that they left me with one other
alternative, and that was to present an unfair labor charge against the Company.
Q. Now, did you offer them any reason why the Company should not do what they
were doing?
A. Well, they left me no alternative. They told me definitely they were not going to
do anything about it, so what was I going to do.
t i k t • • •
Q. What were you asking the Company to do at that meeting?
A. Just what was in the petition, to refrain from such work.
Q. Now, did you give the Company any reasons why they should refrain?
A.
Q.
I asked them to cease and desist.
s s • *
Did you give them any reasons why they
s • •
should cease and desist?
A.
Q.
Yes, because we had people laid off.
Did you give them any other reasons? J
A. Only the fact that we had people laid off.
Q. Did you make any offer to them,of any kind?
A. No, I was not there to bargain on dollars and cents, if that is what you mean.
Q. Well, whether it was on dollars and cents, or anything else, did you make any offer
to them of any kind?
A. No, I made no other offer at all When they came back and told me they was not
going to do a-well, I do not want to use the word-they were not going to do a thing
about it, I told them I only one other alternative, and that was to file an unfair labor
charge against the Company with the National Labor Relations Board.
• i i i i
AMERICAN OIL COMPANY 653
support to this contention . Respondent 's position , however, as reflected in the attitude
of its management representatives during the negotiations , makes it sufficiently clear
that any further attempt by the Union to bargain about this issue would have been an
exercise in futility 48 To the extent that it may be material to any of the issues in this
case, it is found that the Union did not, by its conduct during the 1964 negotiations,
or on any previous occasion, refuse to bargain in good faith with Respondent, thereby
relieving Respondent of any duty to bargain with the Union on the issue of contract-
ing out of work performed by the unit employees. Respondent's contention, there-
fore, that its good faith was never in fact put to the test, has no application here.
Turning to the issue of the impact on the job interests of the unit drivers, it can
hardly be denied that, while Respondent's action left the bargaining unit intact, and
the collective-bargaining agreement unimpaired, the use of Coastal and Chemical, to
the exclusion of unit employees, for the transportation of petroleum products to the
Uniontown area, whether from the Morgantown terminal or the Hays terminal neces-
sarily diminished the amount of work available to these employees.
It is conceded that three truckdrivers, Gray, Gallagher, and Muschick, among the
unit drivers, were laid off on January 31, 1964, after being notified in mid-December
1963.
The General Counsel contends that these layoffs were directly attributable to the
changeover to common carriers for the transportation of Respondent's products.
Despite the coincidence of timing, Respondent denies that this was the reason for their
termination, contending that the layoffs were due, instead, to the introduction of new
methods of distribution and delivery, as well as slack in work. Particularly, Respond-
ent contends that the installation of a meter marketing plan and key-stop deliveries,
which increased storage capacity at service stations, and other improvements, resulted
in larger average deliveries and greater flexibility. Thus, according to Respondent,
average deliveries increased from about 2,200 to 3,600 gallons, with a corresponding
reduction in man-hours and the number of employees required at the Hays terminal.
The evidence discloses, however, that Gray and Muschick had hauled petroleum
products from the Hays terminal, to bulk plants other than the one at Uniontown, and
it does not appear what the situation was at those plants. Moreover, it should be
noted that, according to Superintendent Willey, the meter-marketing plan had been
in operation since June 1963, and two-thirds of the accounts were being served under
this plan. It seems improbable that it would have taken 6 months for the effect of this
plan upon the reduced need for manpower to manifest itself. There is no allegation
or contention, however, that the layoff of these men was motivated by antiunion con-
Q. Did you ask them about any of those things ? [ Referring to changes in delivery
methods.]
A. No, sir, I did not. They gave me a direct answer, that they were not going to do
anything about it.
Q. So really , you did not argue with them and they did not argue with you?
A. They were direct answers . That is all , period.
Q. To a direct question?
A. That is right.
Q. And what was the question?
A. The question was, would they revise their methods in order of our protection , letter
of protest , and their answer was no.
Q. That was enough for you?
A. Well, certainly . I am not going to sit around and argue with people when they
say no."
la Thus, Weibel testified with respect to the negotiations culminating in the Novem-
ber 21 , 1961 , contract , "when it came to the issue in question, the Company replied that
[it] had a history of hauling products from Hays by outside carriers , and that it wished
to retain the management right to so continue to use it as the economics might dictate."
Elsewhere, Weibel testified, "The Company responded that it had had contract haulers,
or common carrier haulers , that is from Pittsburgh , for several years and that the . . .
cartage agents Mock and Palma had been set up with knowledge of the Union, and that
the Company . . . for many economic reasons desired to continue with the use of prior
carriers out of Rays terminal , and they thought it was a management right, and they
fully Intended to do so." With regard to the Company 's position at the 1964 negotiations,
it will be remembered that the Company maintained that the exclusive use of common
carriers had been decided on after several months of economic studies which , according to
it, had demonstrated the feasibility of the change , and there was no showing that Respond-
ent's position had undergone any change from its fundamental position that determinations
as to the method of transportation of company products was a managerial prerogative.
654 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
siderations or for the purpose of discouraging membership in the Union .49 All that
is contended by the General Counsel as to them is that their layoffs were a necessary
consequence of Respondent 's contracting-out unit work to common carriers.
The "petition " presented by Union Representative Shoup at the bargaining meeting
of January 17, 1964, was not offered in evidence . It does not appear, therefore,
whether the petition , which the Company apparently treated as a grievance , also pur-
ported to protest the layoff of the three employees . It appears from Shoup 's testimony
that the petition was concerned broadly with the Union 's objection to the Company's
use of common carriers to perform unit work . In any event , the Union did not pursue
the grievance procedure either with regard to the laid-off employees or the contract-
ing out issue . The General Counsel does, however, seek a remedial order restoring
these employees to their former or substantially equivalent positions , with backpay
and the usual rights, in the event the allegations of the complaint are sustained.
Except to the extent indicated , there is no allegation or contention , nor is there any
showing that the Company 's action otherwise effected any change in the terms or con-
ditions of employment of the unit employees . There is no showing that there has
been any change in the rate of pay, hours of employment , or other terms or condi-
tions of employment of these employees . Manifestly the work of the truckdrivers was
not confined to the transportation and delivery of the Company 's products from the
Hays terminal to the Uniontown area, and there was no showing that deliveries by
these employees were curtailed in other market areas served by the Hays terminal 50
The Union 's concern , however, about the possibility of gradual erosion of the work
performed by unit drivers , if Respondent is permitted to engage in unrestricted use of
common carriers to perform that work , is, of course , understandable . But, it would
be premature to decide the issues here by speculating about Respondent 's future plans
regarding the use of common carriers.
This is not to overlook the fact that the Board has held that "the principles enunci-
ated in our decision in Fibreboard Paper Products [citation omitted ] [do not] 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' bar-
gaining representative which results in the `permanent elimination of an entire depart-
ment . . . the entire unit ... or ... if any individual jobs.' As we recently indicated
in Kennecott Copper Corporation (Chino Mines Division ), 148 NLRB 1653, sub-
contracting of unit work without notice to or consultation with the bargaining repre-
sentative would constitute a violation of the Act where such subcontracting resulted
in a `significant detriment ' to the employees in the unit." 51
Respondent 's contention , urged in its brief, that it was under no obligation to bar-
gain with the Union on the issue of contracting out during the term of the existing
agreement , may be disposed of by the Board's holding in the same case. "[W]e have
not indicated in any of our decisions that an employer 's duty to bargain with respect to
the subject of subcontracting is limited to those period when the parties are engaged in
negotiations for a new agreement . On the contrary , as we have stated in Westing-
house Electric Corporation ( Mansfield 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, there-
fore, must bargain with the union in good faith upon demand as to such subcontract-
ing even during the term of an existing agreement "
Respondent contends, furthermore , that, assuming , arguendo , that it was under
a duty to bargain concerning the use of outside carriers , the Union's remedy is under
the grievance and arbitration procedure of the collective -bargaining agreement. In
this regard , it may be noted , the agreement in force at the time provided:
Only grievances concerning the interpretation , application , or alleged viola-
tion of any of the terms or provisions of this Agreement may be submitted to
arbitration.
"The first amended charge did allege the discriminatory discharge, on or about Jan-
uary 1, 1964 , and subsequent iefusal to reinstate these employees The allegations,
however, are not part of the complaint.
w Although this aspect of the case was not fully developed at the hearing, Respondent
states in its brief, "The drivers in the unit at the Hays terminal were employed to make
deliveries of Respondent ' s petroleum products from that terminal to destinations within
the market area assigned to that terminal . From 1962 to December 1963 , that market
area included Uniontown and its surroundings . Deliveries to that area during that period
were only a small part of the total work of the Hays drivers . At the time of the hearing
there were about 30 drivers in the bargaining unit."
American Oil Company, 151 NLRB 421
AMERICAN OIL COMPANY 655
This contention , considered at length by the Board in Cloverleaf Division of Adams
Dairy Co., 147 NLRB 1410 ( see, in particular , concurring opinion of Board Member
Brown ), was decided adversely to Respondent 's position here, for reasons fully
discussed.
Nevertheless , assuming that the language of the proviso to the arbitration provision,
quoted above , is sufficiently broad to encompass the issue involved here , as is prob-
able,52 it does not necessarily follow that the failure of the Union to resort to the
arbitration machinery of the contract in the circumstances disclosed by this record,
deprives it of the right to file an unfair labor practice charge, or requires the Board to
defer to the arbitral process . However, it may be pertinent , in evaluating Respond-
ent's overall conduct, to consider the existence of arbitration machinery , and Respond-
ent's apparent willingness to resort to this procedure as a means of resolving the con-
tracting out issue. For , as the Supreme Court has said , "The grievance procedure is
. a part of the continuous collective bargaining process," and "arbitration of labor
disputes under collective bargaining agreements is part and parcel of the collective
bargaining process itself." si
This is not to ignore the fact that the complaint does not allege a refusal to bargain
in good faith generally ( the issue of good faith being immaterial ), but rather spe-
cific refusal to bargain based solely upon Respondent 's unilateral conduct regarding the
use of common carriers . Since, however , in determining whether an employer has
violated Section 8(a)(5) of the Act by unilateral action with regard to a mandatory
subject of collective bargaining , such as that here , the Board has given consideration
to all the circumstances involved in the particular case, it ought not to be amiss to
consider Respondent 's agreement to include arbitration machinery in the collective-
bargaining agreement , and Respondent 's evident willingness to resort to that machin-
ery to resolve the controversy , as a factor in deciding whether, despite a technical vio-
lation, the employer has engaged in unfair labor practices within the meaning of
Section 8 ( a) (5) of the Act.
Finally, Respondent points out that, on July 29, 1964 , upon receipt of the Union's
notice of termination of the contract and request for negotiations , Respondent advised
the Union of its willingness "to discuss with you any matters in our present contract,
or any other matters that you may wish to negotiate " Although Respondent did not
in express terms agree to discuss or negotiate the issue of use of common carriers, it
must be assumed that the language of the reply was not lightly chosen, and was not
meant to exclude that subject from future negotiations . This offer does not, of course,
render the issues moot ; nor would it , in appropriate circumstances , if a finding of
refusal to bargain were otherwise warranted , preclude the Board from issuing a reme-
dial order . It is, however, a further factor to be considered in evaluating Respond-
ent's conduct
A review of the entire record, more particularly , the evidence of the collective-
bargaining history between the parties , the economic considerations which motivated
Respondent's decision ; the evidence of the employer 's past practices , and the Union's
knowledge , concerning the use of common carriers , the absence of any antiunion or
other discriminatory motive; the lack of any evidence of "significant detriment" to
the unit drivers by the use of common carriers ; the absence of any actual changes in
the terms and conditions of employment of the unit drivers, as a result of Respond-
ent's unilateral action; the opportunity afforded the Union during negotiation of the
various contracts to bargain about the use of common carriers , and finally, Respond-
ent's willingness , announced to the Union before the close of the hearing, to discuss
any matters concerning which the Union wished to negotiate , constrain the conclu-
sion that the Respondent has not, since on or about December 18, 1963, violated its
statutory obligation to bargain with the Union , by contracting -out unit work, without
prior notification to or consultation with the Union , and without affording it an oppor-
tunity to bargain with Respondent concerning that decision.54
It is, therefore , found that Respondent has not violated the provisions of Section
8(a) (5) and ( 1) of the Act , as alleged in the complaint, as amended , and it will , there-
fore, be recommended that the complaint be dismissed in its entirety.i5
52 See United Steelworkers of America v Warrior d Gulf Navigation Co., 363 U S. 574,
and companion cases
53 See United Steelworkers of America v Warrior d Gulf Navigation Co., supra, 578, 581.
54 In arriving at this conclusion, no reliance has been placed upon the Union's failure
to resort to the arbitration machinery , or upon the Board 's policy regarding deferral to
the arbitral policy where warranted
55 See , in addition to cases previously cited, Superior Coach Corporation , 151 NLRB 188;
The Fafnir Bearing Company, 151 NLRB 332.
656 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF LAW
1. Respondent, American Oil Company, is, and at all times material herein has
been, engaged in commerce and operations affecting commerce within the meaning
of Section 2(6) and (7) of the Act.
2. The Union, Drivers and Employees of Petroleum Industry, Local Union 273,
a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Help-
ers of America, is, and at all times material herein has been, a labor organization
within the meaning of Section 2(5) of the Act.
3. At all times material herein, the Union has been the exclusive representative for
the purposes of collective bargaining of all the employees in the following appropriate
unit within the meaning of Section 9(a) and (b) of the Act:
Working foremen auto mechanic, working foremen-yard-warehouse, mechan-
ics-auto first class, mechanics first class and plant maintenance, truckdrivers,
warehousemen, yardmen, washer-greasers, plant clerks, mechanics first-class„
mechanics second class, and transport trailer drivers, but excluding guards, pro-
fessional employees and supervisors as defined in the Act, and excluding all other
employees.
4. Respondent has not engaged in unfair labor practices within the meaning of Sec-
tion 8(a)(5) or (1) of the Act, by the conduct alleged in the complaint, as amended.
RECOMMENDED ORDER
Upon the basis of the foregoing findings of fact and conclusions of law, it is recom-
mended that the complaint, as amended, be dismissed in its entirety.
Retail Clerks Union Local No. 1428 and Jones and Jones, Inc.,
Charging Party and Food Employer's Council, Inc., Party tas
the Contract
Retail Clerks Union Local No. 137; Retail Clerks Union Local
No. 324; Retail Clerks Union Local No. 770; Retail Clerks
Union Local No. 899; Retail Clerks Union Local No. 905; Retail
Clerks Union Local No. 1167; Retail Clerks Union Local No.
1222; Retail Clerks Union Local No. 1428; Retail Clerks Union
Local No. 1442; and Food Employer's Council, Inc.; ABC Mar-
kets; Alexander's Markets; Alpha Beta Acme Stores; Arrow
Market; Arvo's Markets; Atlantic Farms; Beach's Groceries;
Better Foods; Big Bear; Big Saver Foods; Boys Markets;
Bradshaw, Inc.; Brooklyn & Ford; Burghardt's Markets;
Carl's Ranch Markets; Chapman Park Market; Crawford
Stores; Crawford's Modern Village; Daylite Super Markets;
Dow's Markets; De Simone Market; Esko , Inc.; E1 Rancho
Markets; Max Fine & Company; Food Giant; Food Palace
Market; Foods Co.; Fox Markets; Gateway Markets; Gordon's
Market; Great A & P Tea Co.; Greater Central Market; Green
Frog Market; Growers Ranch Market; Hollywood Ranch Mar-
ket; Hughes Markets; JonSon's Markets; Jurgensen's Grocery;
King Cole-Los Feliz; Kory's Markets; Land's Markets; La
Perla Market; Leo's Market; Lucky Stores, Inc.; Market Bas-
ket; Mayflower Markets; Mednick Bros. Markets; Menlo,
155 NLRB No. 74.