Central Rufina

National Labor Relations Board - Board Decisions

Nov 1, 1966

161 N.L.R.B. 696 (N.L.R.B. 1966)

696 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
refrain from any or all such activities, except to the extent that such rights
may be affected by an agreement requiring membership in a labor organiza-
tion as authorized in Section 8(a)(3) of the Act.
TRW INC., TRW MICHIGAN DIVISION,
Employer.
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.
If employees have any question concerning this notice or compliance with its
provisions , they may communicate directly with the Board 's Regional Office, 500
Book Building , 1249 Washington Boulevard , Detroit, Michigan 48226, Telephone
226-3244.
Sucesion Mario Mercado E Hijos d/b/a Central Rufina and Sindi-
cato De Obreros Unidos Del Sur De Puerto Rico . Case 944-CA-
2115. November 1, 1966
DECISION AND ORDER
On March 16, 1966, Trial Examiner Jerry B. Stone 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 therefrom and take certain
affirmative action, as set forth in the attached Trial Examiner's
Decision. Thereafter, the Respondent filed exceptions to the Trial
Examiner's Decision together with a supporting brief.l
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 brief, and the entire record
in this case, and finds merit in certain of the Respondent's exceptions.
Accordingly, the Board adopts the findings of the Trial Examiner
only to the extent that they are consistent herewith.
The Trial Examiner, relying basically on Fibreboard,2 found, in
effect, that the Respondent, although economically motivated, vio-
lated Section 8 (a) (5) and (1) of the Act by unilaterally deciding
to cease prematurely its sugarcane grinding operation for the 1965
grinding season, by unilaterally subcontracting the unit work of
grinding such of the sugarcane as remained to to be ground during
this season, and by thereafter refusing to bargain with the Union
1 At the hearing , the Trial Examiner permitted the Association of Sugar Producers of
Puerto Rico to intervene in this proceeding for the limited purpose of filing a brief with
the Trial Examiner.
' Fibreboard Paper Products Corporation , 138 NLRB 550, enfd. 322 F.2d 411 (C.A.D.C.),
affd. 379 U.S. 203.
161 NLRB No. 59.
SUCESION MARIO MERCADO E HIJOS 697
in grievance meetings concerning these unilateral actions, thereby
continuing the Respondent's original unlawful conduct. We do not
agree.
The Respondent has a mill located in Puerto Rico where it is
engaged in the business of grinding sugarcane into raw sugar from
cane which is grown on farms owned by individual members of the
partnership of which the Respondent is comprised and by indepen-
dent sugar farmers. The Union is the certified representative of the
Respondent's grinding mill employees and has a collective-bargaining
agreement with the Respondent. We are not herein directly con-
cerned with the Respondent's agricultural pursuits. Relevant to this
proceeding, however, are the general characteristics inherent in the
Puerto Rican sugar industry and the seasonal nature and operating
methods involved in the Respondent's grinding business. In this
regard, the record shows that, in Puerto Rico, the sugar year is
divided into two unequal segments; the slack season, during which
time cane is grown and the grinding mills are readied for the coming
season, and the grinding season. The grinding season begins when the
cane is ripe , and traditionally ends when the supply of cane is
exhausted, or, if the cane supply is not exhausted, then when there is
insufficient remaining to continue grinding operations economically;
when abnormal weather conditions, such as excessive rain, adversely
affect the percentage of recovery of raw sugar, which averages only
10 percent under normal conditions; or when terminated by a "force
majeure," a force beyond the control of man. Accordingly, there is no
fixed time for either beginning or ending grinding operations, and
such timing has never been a subject of bargaining.
With regard to the controversy in issue, the record shows, as
indicated above, that the Respondent's business is seasonal in nature
and can begin only when the cane is ripe. Once the cane is cut, how-
ever , it must thereafter be ground as soon as possible in order to
avoid a rapid deterioration, or loss, of sugar content. An uninter-
rupted production-line method of operation is thus required to obtain
the best yield possible. With these factors apparently in mind, the
Respondent purchased and installed new machinery and equipment
in 1964 in preparation for the 1965 grinding season. The Respondent
also obtained bank loans for the aforesaid purchases as well as for
repairs and other improvements to its mill, financing sugarcane
crops, and generally readying itself for the 1965 season . As was cus-
tomary, the Respondent pledged, as collateral for the loans, its
forthcoming grinding season's sugar production.
On February 11, 1965, the Respondent began grinding operations
for this season . Almost from the outset, however, and continuing
698 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
throughout its entire 1965 grinding season, the Respondent's mill
developed mechanical troubles which severely curtailed its production
outflows despite continuing but unsuccessful efforts to solve the
problems. Although the Respondent continued to grind, it did so
at a greatly reduced rate and was , therefore, unable to process the
grain fast enough. Consequently, the Respondent unilaterally sub-
contracted the grinding of 21,000 tons of cane to other mills through-
out the entire 1965 season in order to avoid spoilage of cane which
was ready for grinding. There is no contention, however, that the
Respondent acted improperly or was obligated either to notify or
consult with the Union with regard to this subcontracting. In this
connection, it is to be noted that the Respondent has in the past
unilaterally subcontracted grinding work to other mills. This was
done in 1951, and again in 1956, when the Respondent suffered tur-
bine breakdowns and was unable to grind such cane as was ready
for grinding and which otherwise would have rotted. In addition,
the Respondent also unilaterally ceased grinding operations in the
1964 season and contracted out this work because there was insuffi-
cient cane on hand to warrant a continuation of grinding.
The Union was fully aware of the mechanical difficulties at the mill
and, moreover, was notified by the Respondent as early as March 2,
1965, that "if the [mechanical] difficulties could not be corrected .. .
Respondent would have to cease grinding and have the cane ground
elsewhere." The Union, however, neither protested nor sought to
bargain in this regard.
Although the Respondent continued to grind, it did so at a steadily
decreasing rate so that by the second week in May it was actually
grinding at a monetary loss. The Respondent's lowered production
yield caused it to fall in arrears in the payments on its bank loans,
and this, in turn, brought notification from its bank that the bank
had stopped the Respondent's credit lines and was going to recall
the Respondent's loans. Accordingly, on May 12, 1965, with the
grinding season drawing to a close and with 37,124 tons of cane
remaining to be ground, the Respondent decided to cease grinding
at a loss and to subcontract this amount of cane to other mills for
grinding. On May 21, the Respondent ceased its grinding operations
for the 1965 season and contracted out this work.4 These actions,
however, were not unprecedented, for, as indicated above, the
Respondent had unilaterally taken similar actions in 1951 and 1956.
3In 1965, the Respondent ground 155 ,898 tons of cane. During each of the previous
four grinding seasons , the Respondent ground an average of 322,949 tons , the least amount
ground during any of these seasons being 309 ,144 tons.
6 The Trial Examiner found that the Respondent enjoyed economic benefits by its sub-
contracting arrangement The record, however , shows that the small amounts gained by
the subcontracting arrangement were far overshadowed by the huge losses sustained by
the Respondent and resulted in large net losses to the Respondent.
SUCESION MARIO MERCADO E HIJOS 699
In addition, the record shows that there have been numerous instances
in the past where Puerto Rican ' sugar mills had ceased grinding
operations before all of the ready cane had been ground because of
serious mechanical breakdown, and that both management and labor
considered such a situation to be a "force majeure."
Thereafter, the Union, exercising the provisions of the grievance
procedure contained in the contract between the parties, notified the
Respondent that the cessation of grinding constituted a lockout in
violation of - the contract and that "we claim for each worker the
amount of $225.00 for time lost, inasmuch as sugar cane sent to other
mills would have been sufficient for five (5) more weeks of forty (40)
hours each, grinding sugar cane at Central Rufina" (Respondent's
mill).5 The parties subsequently met on several occasions to discuss
the foregoing claim along with other grievances not relevant here.
The Respondent explained fully the reasons for its actions, but
refused to submit the Union's claim to arbitration, or enter into
discussions regarding this grievance, contending that its actions
were lawful.
At the conclusion of the Respondent's 1965 grinding season, the
Respondent began repair operations in preparation for the following
season and, as it had always done in the past, employed such of its
regular mill employees as were necessary for this work.
In view of all of the foregoing, we cannot conclude, as did the
Trial Examiner, that in the circumstances of this case the Respond-
ent's unilateral decision to subcontract and its contracting out of
unit work constitutes a "premature" cessation of grinding operations
in violation of Section 8(a) (5) and (1) of the Act within the mean-
ing of the Supreme Court's decision in Fibreboard. Instead, we agree
with the Respondent that the facts in the instant case are readily
distinguishable from the facts presented in Fibreboard. Unlike Fibre-
board and related cases , the Respondent in the instant case was not
seeking to gain an economic advantage at the expense of its employees
or of the Union. Rather, the Respondent was faced not only with the
inability to operate efficiently because of matters beyond its control,
but, also, in view of the curtailment of its bank credit on which the
Respondent's operation was completely dependent, with the inability
to operate at all. It would appear, therefore, that in the circumstances
of this case, the factors which led to the Respondent 's decisions to
"Beyond comparing the amount of cane ground daily by the Respondent in 1965 with the
amounts ground daily in the preceding 4 years, and considering that each grinding season
was subject to different conditions and began and ended on different dates, there is no
way of definitely ascertaining the exact duration of the Respondent 's 1965 grinding season.
Although the Union claims, in effect, that the season would have been extended by 5 weeks,
Respondent's engineer estimated that with the Respondent 's defective machinery , it would
have taken the Respondent 75 days to grind the cane remaining to be ground. Evidence
in the record indicates that in Puerto Rico , the grinding season is normally over by
June 30, although some mills may finish in May and others in July.
700 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
subcontract and to terminate its grinding are not "peculiarly suit-
able for resolution within the collective bargaining framework"; 6
on the contrary, it seems certain that no amount of give-and-take
in bargaining negotiations could have forestalled the Respondents'
inevitable decision to cease operations for the season. Moreover, it
it a well-established principle in the Puerto Rican sugar industry
that a "force majeure" may be sufficient cause for curtailment of the
grinding season, and Respondent's response to the "force majeure"
present in this case was consistent with its past practice and the past
practice for the Puerto Rican sugar industry generally. Finally, we
emphasize our recent statement that "our condemnation in Fibre-
board and like cases of unilateral subcontracting of unit work was
not intended as laying down a hard and fast new rule to be mechani-
cally applied regardless of the situation involved." 7
We also disagree with the Trial Examiner's implied finding that
the Respondent violated Section 8(a) (5) and (1) by failing to bar-
gain with the Union with regard to the effect of the shutdown on the
employees. To the extent that the Respondent was so obligated, we
believe that the Respondent satisfactorily discharged this obligation.
The record clearly shows in this regard that the Union at no time
questioned the Respondent's right to subcontract unilaterally in
accordance with established traditions in the sugar industry, that the
Union was informed of the Respondent's problem and of the impend-
ing shutdown nearly 21/9 months prior to the cessation of grinding,
that subsequent to the shutdown the Respondent met with the Union
on several occasions during which times the Union listed its griev-
ances and the Respondent fully explained the reasons which com-
pelled a curtailed season. Moreover, it is clear that the Union at no
time either expressed an interest in or requested bargaining as to
the results flowing from the subcontracting of the grinding work.
Instead, the Union argued that the Respondent's cessation of grind-
ing operations constituted a lockout, in violation of its contract, and
merely presented, through the grievance procedure, a claim for
wages allegedly lost. Whether or not the Respondent's refusal to
arbitrate the claim constituted a breach of the collective-bargaining
agreement, it did not, in itself, constitute a violation of Section
8 (a) (5) and (1) of the Act.,' Accordingly, we shall dismiss the
complaint.
ORDER
Pursuant to Section 10(c) of the National Labor Relations Act,
as amended, the National Labor Relations Board hereby orders that
the complaint herein be, and it hereby is, dismissed in its entirety.
CFibreboard Paper Products Corp, 379 U.S 203, 213-214.
Westinghouse Electric Corpo,ation (Mansfield Plant), 150 NLRB 1574.
e Cf. Textron Puerto Paco (Tricot Division), 107 NLRB 583, 584.
SUCESION MARIO MERCADO E HIJOS 701
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
Upon a charge and an amended charge filed on June 23 and September 23, 1965,
respectively by Sindicato Obreros Unidos Del Sur De Puerto Rico (herein some-
times called the Charging Party or Union ), the General Counsel for the National
Labor Relations Board, by the Regional Director of Region 24 (Santurce , Puerto
Rico ), issued a complaint dated September 23; 1965, against Sucesion Mario Mer-
cado E Hijos d/b/a Central Rufina (herein sometimes called Respondent ), alleging
violations of Section 8(a)(5) and ( 1) of the Act. The essential issue is whether
Respondent was obligated to notify and bargain with the Union concerning its
actions in ceasing grinding operations for the current season and contracting for
grinding, during the current season, of the remaining sugarcane (for the season).
The Respondent 's answer filed in this matter admits many of the facts , denies the
commission of unfair labor practices , and alleges certain affirmative defenses.
Briefly stated , the main issues raised by the pleadings concern ( 1) whether
Respondent ( a) unilaterally (without notice to the Union ) decided to shut down
its grinding mill during the season of 1965 and contracted grinding work to other
mills, (b ) shut down its grinding mill, contracted grinding work to other mills, and
laid off its employees involved in the grinding operations , and (2 ) whether Respond-
ent refused to negotiate in good faith concerning grievances concerning its "shut
down" and "layoff" of employees.
In connection with the above issues the Respondent 's answer averred that the
"shut down" was caused by factors beyond Respondent 's control, that the decision
to "shut down" in the sugar grinding industry has been solely an exclusive preroga-
tive of Respondent 's management , and that the "shut down" decision placed employ-
ees in the position of being "agricultural labor" and therefore the "ex-employees"
were not employees within the meaning of Section 2 (3) of the Act. The Respond-
ent's answer averred that it did negotiate in good faith concerning grievances relat-
ing to the "shut down" but that if it did not that it had not violated the Act since
the matter involved was governed by the terms and conditions of the collective-
bargaining agreement and the Union had not exhausted its remedies under other
sections of the law.
Pursuant to appropriate notice, a hearing was held before Trial Examiner Jerry
B. Stone at Ponce, Puerto Rico, on December 6, 7, 8, and 9, 1965. The General
Counsel and the Respondent were represented at the hearing , participated therein,
and were afforded the right to present evidence , to examine and cross -examine wit-
nesses, to offer oral argument , and to file briefs . Briefs were filed by the General
Counsel , the Respondent , and the Association of Sugar Producers of Puerto Rico,
and have been considered.'
Upon the entire record in this case and from my observation of the witnesses,
the following findings of fact, conclusions of law, and recommendations are made 2
FINDINGS OF FACT
1. THE BUSINESS OF THE EMPLOYER INVOLVED
The facts pertaining to the business of the Employer involved are based upon the
pleadings and admissions therein .3
Sucesion Mario Mercado E Hijos d/b/a Central Rufina (Respondent) is and
has been at all times material herein a civil law partnership organized and doing
business under the laws of the Commonwealth of Puerto Rico. At all times material
herein Respondent has maintained its principal office and place of business at
Guayanilla, Puerto Rico, and has been at all times material herein engaged in said
plant and location in the elaboration, processing, sale, and distribution of raw
sugar. During the 12 months preceding September 23, 1965, the Respondent caused
to be shipped directly to the Commonwealth of Puerto Rico from points and places
outside thereof, goods and materials valued in excess of $50,000. During the 12
months preceding September 23, 1965, the Respondent caused to be refined, sold,
and distributed products valued in excess of $50,000, which products were sold and
'The Association of Sugar Producers of Puerto Rico was granted the limited right of
filing a brief with me in this case
2All credibility resolutions made with respect to the witnesses' testimony are based on
a composite evaluation of witness demeanor and logical consistency of the evidence.
3 Certain amendments as to the complaint and answer were allowed at the hearing.
702 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
transferred to purchasers in the Commonwealth of Puerto Rico, said purchasers in
turn shipping said products valued in excess of $50,000 to points outside the
Commonwealth of Puerto Rico. During the 12 months preceding September 23,
1965, the Respondent caused to be shipped to its plants goods and materials valued
in excess of $50,000 from sellers located within the Commonwealth of Puerto
Rico, said goods and materials valued in excess of $50,000 having been shipped to
said sellers directly from points located outside the Commonwealth of Puerto Rico.
Considering the foregoing and all of the evidence in the case, I conclude and find
that the Respondent is now and has been at all times material herein an employer
engaged in commerce within the meaning of Section 2(6) and (7) of the Act4
H. THE LABOR ORGANIZATION INVOLVED
The facts pertaining to the labor organization involved are based upon the plead-
ings and admissions therein.
Sindicato Obreros Unidos Del Sur De Puerto Rico (the Union) is now and has
been at all times material herein a labor organization within the meaning of $ee-
tion 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. Preliminary issues
Unless indicated otherwise , the facts relating to the preliminary issues herein are
based upon the pleadings and admissions thereto.
1. The appropriate unit
All production and maintenance employees employed by the Respondent at its
Central Rufina, Guayanilla, Puerto Rico, mill but exclusive of all office clerical
employees , analysts, administrative and executive personnel , guards, and supervisors,
as defined in the Act, constitute a unit appropriate for the purpose of collective bar-
gaining within the meaning of Section 9(b) of the Act.
2. Selection of the Union-certification of Union's status
On or about February 13, 1963, the majority of the employees of Respondent
in the unit described above, by a secret-ballot election conducted under the super-
vision of the Regional Director for Region 24 of the National Labor Relations
Board, designated and selected the Union as their representative for the purpose of
bargaining with Respondent and on or about February 21, 1963, said Regional
Director certified the Union as the exclusive collective-bargaining representative of
the said unit.
The Respondent's answer denied in effect the complaint allegation that the Union
had continued to be the exclusive bargaining representative of the employees in the
appropriate unit described above. The evidence reveals, however, that a collective-
bargaining agreement between the Respondent and the Union was in effect from
January 16, 1963, to December 31, 1965. Considering all the foregoing and the
absence of evidence to offset the presumptions therefrom, I conclude and find as
follows: At all times since February 21, 1963, and continuing to date, the Union
has been the representative for the purposes of collective bargaining of the employ-
ees in the unit described above, and by virtue of Section 9(a) of the Act has been
and is now the exclusive representative of all the employees in said unit for the
purposes of collective bargaining with respect to rates of pay, hours of employment,
and other terms and conditions of employment.
B. Backgrounds
The Respondent has been engaged in the operation of its mill at Guayanilla,
Puerto Rico, for approximately 70 years . The operation of Respondent 's mill is
4 The Respondent admitted the foregoing conclusion of law except as answered In a
special defense that the "shut down" of operations (around May 22, 1965) changed the
status of the "employees" to "agricultural laborers " and eliminated the status of "em-
ployees." As indicated later in this Decision, in accordance with and wtihin the meaning
of the decision and approved remedial action in Fibreboard Paper Products Corp. V.
N L R B., 379 U.S. 203, I find no merit to Respondent's referred to contention.
5 The background facts are based upon the credited testimony of Juan V. Diaz.
SUCESION MARIO MERCADO E HIJOS 703
intertwined with the flow of sugarcane from the farms nearby. Thus, after the
sugar cane has been cut , it is transported to the mill for processing into sugar. A
byproduct of the cut sugarcane is bagasse which is used as a fuel supply to run
the boilers at the mill . The sugarcane processed at Respondent 's mill comes from
farms owned by Respondent , from farms owned by partners in Respondent 's civil
law partnership , and from independent farmers.6
1. Sending of cane to other mills 7
Juan V. Diaz, manager of Respondent, credibly testified to the following effect:
(1) that Respondent had only had two or three instances in the past 70 years
wherein it had had to have sugarcane processed at other mills ; ( 2) that in 1956,
because of problems with a "turbine ," Respondent had made arrangements with
other mills to grind sugarcane so as to avoid spoilage and rotting of the cane at
Respondent's mill ; (3) that after the turbine problem was solved in 1956, the
Respondent, with difficulty , resumed its own grinding operations ; (4) that Respond-
ent had promptly handled a situation in 1951, similar to the above-described 1956
situation ); (5) that Respondent at the end of 1964 grinding season had sent sugar-
cane to other mills for grinding because the amount of sugarcane was insufficient
to maintain Respondent 's normal operations ; ( 6) the Respondent , almost from the
beginning of the 1965 grinding season (February 11, 1965 ) and until May 21,
1965, had sent sugarcane to other mills to avoid spoilage and rotting ; (7) that
Respondent on the above occasions that it sent sugarcane to other mills did so
without prior notification or discussion with the Union; and ( 8) that the complete
cessation of seasonal operations on May 22, 1965 , was the first time in Respondent's
history that such had happened because of mechanical failures.
The amount of sugarcane sent by Respondent to other mills in the 1956 grinding
season (referred to in ( 6) above ) was 21 ,001.87 tons and included sugarcane from
Respondent 's farm , from the farms of partners in Respondent 's civil law partner-
ship , and from farms of independent farmers.
Considering all the foregoing and all of the evidence in this case , I am con-
vinced and conclude and find that the facts do not reveal that Respondent has an
established past practice of subcontracting the grinding of the sugarcane to other
mills as related to the actions in May 1965 and described later herein.
2. The grinding season .8
The Respondent's grinding season operation for 1964 was from around Janu-
ary 26 to around June 14, 1964 . During this season Respondent encountered pro-
duction and mechanical problems which resulted in an unsatisfactory grinding
season from Respondent's viewpoint . During the "dead" season (June 14 , 1964, to
around February 11, 1965-when made) the Respondent undertook a compre-
hensive and expensive renovation program.
3. Problems during the 1965 grinding season 9
The Respondent commenced its 1965 grinding season at its mill around Febru-
ary 11, 1965, and continued its grinding operations until May 22, 1965. The
Respondent encountered many problems in its operations and in the related growth
of the sugarcane crop. Climatic conditions (drought-and rains) interfered with
the cycle of growth of crops and potential sugar yield. The main problems however
were those of mechanical breakdowns and failure of equipment. For efficiency in
total operations the crops must mature timely, be cut timely, and processed timely
at the grinding operation. Problems at any stage of the cycle may have an adverse
effect on the ultimate sugar yield and profit therefrom. The mechanical problems
besetting the Respondent from February 11, 1965, and thereafter, as previously
6 The named suppliers of sugar cane all normally had their sugar cane processed at
Respondent 's mill.
7 The facts as to the sending of sugar cane to other mills are based upon exhibits and
the credited testimony of Juan V. Diaz.
8 The facts as to the 1964 grinding season are based upon the credited testimony of
Juan V. Diaz.
9 The facts as to the problems besetting the Respondent during the grinding season are
based upon a composite evaluation of the credited testimony of Porrata , Torres, Sosa, and
Diaz and the production records.
704 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
indicated, necessitated the sending of some sugarcane (between February 11 and
May 21, 1965) to other mills to eliminate spoilage and rotting of the sugarcane.
The Respondent's grinding operations produced substantially below the estimated
normal production for the period of time involved herein (February 11-May 21,
1965). Although at all times prior to May 1965 the Respondent attempted to solve
its mechanical problems, it was unable to do so.
The Respondent finances its operations by boirowing money from the banks for
repairs, etc., and, as the grinding operation commences, in pledging the sugar
produced for money with which to pay back the earlier loans. During the 1965
grinding season, as a result of the effect of the mechanical problems on production,
this financial cycle was interfered with and Respondent was unable to timely repay
its loans. The First National City Bank (branch in Ponce, Puerto Rico), around
May 1, 1965, commenced complaining about the security of loans to Respondent
and apparently suggested that Respondent that steps to insure the payment of such
loans.
During the period of time, May I to May 22, 1965, the Respondent continued
to try to solve its mechanical problems unsuccessfully. On May 12, 1965, the cycle
of production was of such a nature that instead of using its own bagasse (residue
from grinding of sugarcane) Respondent had to get bagasse from other mills to
use as fuel for its boilers.
4. Respondent's May 1965 decision to cease operations, etc.ro
On May 12, 1965, the Respondent decided that it must make other arrangements
for the completion of the sugarcane grinding, that it should contact nearby mills
and obtain contractual considerations for the diverting of sugarcane to such mills
for grinding, and that it should stop its 1965 sugarcane grinding.
On May 12, 1965, or shortly thereafter, the Respondent contacted several nearby
mills with reference to entering into agreements concerning the grinding of sugar-
cane which normally would have been ground at Respondent's mill.
5. Arrangement with Central Mercedita, Inc."
After May 12 and before May 20, 1965, the Respondent had three or four
meetings with officials of "Central Mercedita, Inc." On May 20, 1965, Respondent
and Central Mercedita, Inc., exchanged letters reflecting the agreement of the parties
as to the grinding of sugarcane normally ground at Respondent's mill. These letters
are herein set out.
Central Mercedita, Inc.
Mercedita, Puerto Rico
Gentlemen:
May 20, 1965
We are confirming conversations had between your Messrs. John Serralles
Tristani, Felix J. Serralles Nevarez, and Pedro Juan Santiago, with our
Messrs. Pedro H. Porrata and Juan V. Diaz, yesterday evening.
As you were informed, we have decided to end the operations of our Central
Rufina during the present grinding season and to send you, to be ground, the
sugar cane that is ripe and ready to be cut that has not been cut as yet which,
on May 13, 1965, and according to the list we showed you and left with you,
had been estimated on that date as being about 80,000 tons of sugar cane
belonging to our company and the farmers.
You will proceed to grind this sugar cane at your Central Mercedita under
the following terms and conditions agreed to in said conversation:
1. We shall be free to deliver daily all the sugar cane that personnel and
equipment available permits.
2. You shall pay the following hauling and unloading rates for this sugar
cane:
a. From the Guayanilla and Yauco areas, one dollar and twenty-five cents
($1.25) per ton.
b. From the Sabana Grande, San German, Lajas and Hormigueros areas,
one dollar and seventy-five cents ($1.75) per ton.
10 The facts as to Respondent's May 1965 decision to cease operations are based upon a
composite of the credited testimony of Diaz and Porrata.
n The facts as to Respondent's May 1965 arrangements with Central Mercedita are based
upon a composite of the credited testimony of Juan V Diaz, Porrata, and Pedro Juan
Santiago.
SUCESION MARIO MERCADO E HIJOS 705
3. You will pay us a one dollar ($1.00) bonus per ton of sugar cane, as a
bonus, for each ton of sugar cane belonging to the company or to the farmers
that is delivered to you to be ground.
This bonus is in addition to payments for sugar, molasses and others that
the federal and insular rules and laws establish, and same is also applicable to
sugar cane sent by us to that mill for grinding prior to this date and pursuant
to our prior conversations and commitments.
4. You have knowledge of the contract of sale of raw sugar signed by us
with the Galban Lobo Puerto Rico, Inc. company, of which Puerto Rican
American Sugar Refinery, Inc. is the guarantor It is agreed that it shall be
considered as sugar delivered by us under said contract, the total amount of
sugar produced by the cane belonging to this company and to the farmers that
is delivered for grinding at yosr mill, and that in this same manner a five cent
premium per hundred pounds-4f sugar above the average price agreed to in
said contract will be paid to us in the final liquidation of the contract of sale
of raw sugar we have referred to above.
Very truly yours,
MARIO MERCADO E Hijos
(S) Marico Mercado Riera
By: MARIO MERCADO RIERA
Du ector-Manager
APPROVED:
CENTRAL MERCEDITA, INC.
Messrs. Mario Mercado e Hijos
Central Rufina
Guayanilla, P.R.
Gentlemen:
We wish, through this means, to make a clarification in regards to the
agreement for the grinding of sugar signed by us on this date, that nothing of
what is mentioned in same must be interpreted as limiting our right to termi-
nate the grinding at Central Mercedita at any time in which, due to insufficient
unloading, because of a drop in the produce or for any cause including force
majeure, in our opinion , it is anti-economical to continue grinding.
Very truly yours,
CENTRAL MERCEDITA, INC.
ACCEPTABLE: but for similar reasons we
cutting of sugar cane to be ground. O.K.
MARIO MERCADO E Hijos
(S) Mario Mercado Riera
MARIO MERCADO RIERA
Director Manager
(S) O. de Aragon
Executive Vice President
reserve the right to suspend the
6. The Union's knowledge of problems 12
It is clear that the Union knew of the serious mechanical problems affecting
Respondent's operations and the effect of such problems on the potentiality of a
cessation of operations. On February 16, 1965, the Union filed a grievance concern-
ing 90 persons not hired at the beginning of the season . During the discussion of
this grievance on March 2, 1965, the Respondent's position was that improvements
and new machinery eliminated the need for the 90 persons because of elimination
of certain manual operations. Diaz credibly testified that in discussing the grievance
he stated in effect that the necessity of the grievance committee might be eliminated
inasmuch as the Respondent was contemplating discontinuance of operation as it
could not go on because of the pool operation of the factory. Porrata credibly
testified to the effect that in discussions with the Union that he had told Jose
Caraballo (for the Union) that if the difficulties could not be corrected that
Respondent would have to cease grinding cane and have the cane ground elsewhere.
12 The facts as to the Union ' s knowledge of Respondent ' s problems are based upon a
composite of the credited testimony of Ratael Torres Lugo, Angel Rodriguez , Juan Morales
Vasquez , Boris D Perez, Juan V. Diaz, and Pedro Porrata.
264-188-67----vol. 161- 4 6
706 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Rafael Torres Lugo (referred to sometimes herein as Torres ), president of
Local 7 of the Union, credibly testified to the effect that he visited Respondent's
mill twice weekly and that he knew of the mechanical problems affecting operations
of the Respondent . The facts reveal that a common characteristic of sugarcane, not
timely cut , is a lower sugar yield. I am convinced that in an operation such as the
Respondent 's that a considerable number of employees and experienced labor
leaders would know the reasonable expectation of the lower sugar yield problem
where operations were affected by mechanical problems.13 It is reasonable to
believe and I am convinced that the workers involved at the mill would discuss the
problems with Torres and that Torres and the employees would communicate with
Jose Caraballo (president of the Union ) about the problems and the effect on their
hours of work.14
7. Lack of notification or discussion with Union-as to termination of grinding 15
At no time prior to the commencement of its effectuation of its decision to
terminate its grinding operations and to divert sugarcane to other mills for grinding
did the Respondent notify (or discuss with) the Union of the said decision. The
foregoing fact is not seriously disputed in the evidence or in the briefs . Jose A.
Carraballo credibly testified to the effect that the Respondent did not notify him
or discuss with him prior to the evening of May 22, 1965, its decision to cease
operations and to divert its and others' sugarcane to other mills for grinding.
Rafael Torres Lugo (president of Local 9 of the Union-at Respondent 's mill)
only learned from employees at the mill on the evening of May 21, 1965, that
Respondent was ceasing its grinding operation.16
On May 21, 1965, Respondent 's supervisor (in charge of personnel and super-
visor of the factory) notified the various shifts that the Respondent would complete
its production work on May 22, 1965, at 6 a.m.17 On May 22, 1965, the Respond-
ent ceased grinding sugarcane at 9 a.m. and the employment of its employees for
grinding season work was terminated as of the end of the morning shift on May 22,
1965. Around 9 a.m. Rafael Torres Lugo was at Respondent 's mill and saw Gen-
eroso Rullan Rodriguez ( Respondent's supervisor of the factory and person in
charge of personnel ). Rafael Tones Lugo asked Generoso Rullan Rodriguez what
was happening . Generoso Rullan Rodriguez told Rafael Tones Lugo that the
"grinding was stopped."
On May 22, 1965 , approximately at 6:05 p .m., Pedro M . Porrata (Respondent's
general counsel ), transmitted a telegram addressed to Jose Caraballo (president of
33 Respondent contends that the fluctuation in dues transmitted to the Union per check-
off agreement constitutes some notice of Respondent 's operational difficulties . Since the
dues are not directly related to the amount of employees ' wages , I do not find that the
evidence of weekly payroll amounts is of intelligible probative evidentiary value.
14I do not credit Jose Caraballo 's testimony to the effect that he did not know of the
mechanical problems besetting the mill , or to the effect that the employees had not dis-
cussed such problems with him, or to the effect that Porrata (or others of the Respondent)
had not discussed such problems with him.
15 The facts as to Respondent 's failure to notify the Union of Respondent 's May 1965
decision , re : termination of operation, etc., are based upon a composite of the credited testi-
mony of Caraballo and an evaluation of the total consistency of all of the evidence.
111 discredit Rafael Torres Lugo's denial that he learned from employees about the
cessation of grinding operations on May 21, 1965. I attach weight to the statement in his
sworn affidavit of July 14, 1965, to the effect that he did learn from employees of the
cessation of grinding on the evening of May 21, 1965 . I do not credit Generoso Rullan
Rodriguez ' testimony to the effect that he told Rafael Torres Lugo ( around 5 to 6 p.m.
on May 21, 1965 ) that there was a possibility that the grinding season might be stopped,
and to the effect that he did not see Rafael Torres Lugo on May 22, 1965 . I find it hard
to believe , as revealed by Generoso Rullan Rodriguez ' other testimony that he would un-
qualifiedly tell the employees that the grinding season was finished and yet tell Rafael
Torres Lugo that there was a "possibility " I am convinced that Generoso Rullan
Rodriguez was unsure of his testimony and that he was confused as to the timing . I credit
Rafael Torres Lugo in his testimony to the effect that lie was not at the mill on the
evening of May 21 , 1965 , and that he saw Geneioso Rullan Rodriguez on May 22, 1965,
and that Generoso Rullan Rodriguez told hiin at that time of the cessation of grinding.
17 Based upon Rullan 's credited testimony
SUCESION MARIO MERCADO E HIJOS 707
the Union). Porrata's telegram set forth "we have tried to communicate with you
by telephone fruitlessly. Please call us. Thank you." Jose Caraballo, in fact, did
not receive the referred-to telegram until May 24, 1965.18
8. Porrata-Caraballo conversation-May 22, 1965 ie
Around 7 p.m. May 22, 1965, Porrata (general counsel for Respondent) visited
Jose Caraballo (president of the Union) at Caraballo's home. Porrata told Cara-
ballo that Respondent could not grind cane any more that season, that the engineers
could not correct the mechanical problems for grinding, and that Respondent was
in trouble because the bank had stopped Respondent's credit. Caraballo asked where
the sugarcane was to be ground. Porrata told Caraballo that Respondent had been
considering the centrals in the area and that Respondent was going to send the
sugarcane to Serralles (Central Mercedita). Caraballo told Porrata that the Union
represented the employees at Central Mercedita, that this was a good choice. Cara-
ballo told Porrata what he estimated would be the number of grinding days at
Central Mercedita. Porrata told Caraballo that the Respondent had checked with
the engineer to see what could be done with the mill, and that Caraballo's union
workers could be used for repair work on the mill.
28 Pedro M. Porrata (general counsel for Respondent) credibly testified to the effect that
he had had a "heart condition" and that a deposition of his testimony had been made for
that reason. The parties stipulated a substantial portion of Porrata's testimony from the
deposition taken. Porrata also testified in answer to a few questions. It was evident from
observing Porrata testify that the effort of testifying was taxing upon his condition.
From reading the stipulated portions of Porrata's testimony and observing and hearing
his testimony at the hearing, I am convinced that the strain of testifying and the com-
plexities of the issues and questions involved resulted in an implication in some of his
testimony not intended by Porrata. Porrata impressed me with his demeanor as a truthful
and honest witness attempting to tell a complete and truthful story. Considering Porrata's
testimony as a whole, I believe his answers on cross-examination to the effect that he did
not remember communications to the Union prior to May 22, 1965, as to the decision to
terminate grinding on May 22, 1965, and to the effect that after the bank had com-
municated about the problem of loans (around the first of May) that the communications
with the Union were on May 22, 1965, and in grievance meetings wherein the Respondent
told the Union that the bank had stopped the credit. The record reveals that the only
Incidents of grievance discussion after May 1965 concerned the grievances after the
May 22, 1965, shutdown. Considering the totality of all of the evidence and the prob-
abilities thereof, I am convinced that the telephone calls, referred to in the May 22, 1965,
telegram , and in the testimony relating thereto, occurred on May 22, 1965. Any implication
in Porrata's testimony contrary to the foregoing is not believed to have been intended as
such, and in any event, considering a composite of evaluation of Porrata's demeanor as a
witness and the logical consistency of all the evidence, is not credited.
ie The facts as to the Porrata-Caraballo conversation are based upon a composite of the
credited testimony of Porrata and Caraballo. The general thrust of what occurred is not
in great dispute. Caraballo testified to the effect that Porrata referred to sending the sugar-
cane to Central Mercedita, San Francisco, and Guanica. The sugarcane in fact was
diverted to the three mills. Elsewhere in the testimony Diaz referred to contacting the
three referred to centrals but referred to making arrangements with Central Mercedita.
Whether Porrata or Carraballo's version as to the central or centrals is believed does not
affect the overall meaning of the facts. Considering the arrangement as revealed by the
letters between Respondent and Central Mercedita, I find that the preponderance of the
evidence favors a finding as set out in the finding of facts. Caraballo's'testimony appears
to conflict with Porrata's as to what Porrata said with reference to whether all employees
would be employed on repair work. Considering the testimony of both Porrata and
Caraballo and the logical consistency of all of the evidence, I am convinced that Porrata
simply told Caraballo that all union workers would be used on the repair work that could
be used and that Porrata did not use descriptive words to reveal either that "all" would
be used or that only a "few" would be used. I am convinced that Porrata understood that
he was conveying that such employees as would be necessary would be used on repairs,
and that Caraballo construed that the amount of repair work was sufficient to keep all of
the employees employed and believed that this was what Porrata was saying. The testi-
mony of Porrata and Caraballo inconsistent with the finding of facts herein, accordingly,
is discredited.
708 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
When Rafael Torres Lugo was at Respondent's mill on May 22, 1965, he
observed that the Respondent's grinding employees were not working.20 On May 23,
1965, Rafael Torres Lugo and several of Respondent's employees, including Bar-
tolo Caraballo (vice president of Local Union No. 9) and Juan Galazara, visited
Jose Caraballo and reported to him the fact that Respondent's grinding employees
were not working Jose Caraballo construed this report as being contrary to the
situation as reported to him by Porrata.21 On Monday, May 24, 1965, about 9 a.m.,
Jose Caraballo and Rafael Torres Lugo went to Respondent's mill and ascertained
that the grinding employees were not being employed at Respondent's mill.
9. Diversion of sugarcane to other Mills 22
After May 22, and to June 29, 1965, sugarcane normally destined for Central
Rufina was diverted to other centrals. In accordance with Respondent's agreement
with Central Mercedita, Inc., 30,505.15 tons of sugarcane was diverted to Central
Mercedita, Inc. Of this sugarcane 20,222.65 tons belonged to Respondent, 9,704 63
tons belonged to partners in Respondent's civil law partnership, and 577.87 tons
After May 22 and to June 29, 1965, sugarcane normally destined for Central
Rufina was diverted to centrals other than Central Mercedita, Inc. Of the latter
sugarcane 864.96 tons belonged to Respondent, 1,750.85 belonged to partners in
Respondent's civil law partnership, and 4,003.31 tons belonged to independent
farmers.
10. Events concerning the grievance meeting 23
At sometime between May 24 and June 8, 1965, the union officials checked with
their attorney. The Union then through Jose Caraballo transmitted a letter on
June 8, 1965, to Porrata (for the Respondent). Caraballo's letter set forth a
request for a meeting of the Complaints and Grievances Committee to be held at
the Union's office on June 14, 1965. The requested meeting, among other things,
was to be held concerning grievances as to the May 22, 1965, layoff. The June 8,
1965, letter asserted, among other things, in effect that the Union had not been
notified as to the reasons for the May 22, 1965, layoff, that the Union was inter-
ested in resolving the problem as a grievance although it could defend its and the
employees' rights by other methods, and that the Respondent was not living up to
its contractual obligations. The Union claimed $225 for 5 weeks' work for each
worker affected by the May 22, 1965, layoff.
Following the receipt of the Union's letter of June 8, 1965, and at sometime
prior to June 11, 1965, Attorney Cuprill (one of Respondent's counsels) tele-
phoned Jose Caraballo and requested postponement of the suggested June 14, 1965,
meeting on the grounds that Cuprill would be out of town and in the United States
on such date. On June 11, 1965, Jose Caraballo (for the Union) transmitted a
telegram to Porrata (for the Respondent) referring to Cuprill's telephonic request,
denying the same, and insisting that the meeting be held but agreeing to a post-
ponement to 2 p.m. on June 14, 1965.
On June 14, 1965, Porrata (for the Respondent) and Jose Caraballo (for the
Union) discussed the setting of a meeting date. Porrata denied the imputations of
contractual violations in the Union's letter of June 8, 1965, and in Caraballo' s tele-
gram of June 11, 1965. Porrata asserted that the Respondent could not meet on
June 14, 1965. Porrata and Caraballo agreed to a grievance meeting on June 21,
1965, at 9 a.m. Porrata, on June 14, 1965, transmitted a confirming letter as to the
June 14, 1965, conversation with Caraballo.
On June 21, 1965, the parties met at the office of the Depaitment of Labor in
Yauco, Puerto Rico. Among those present representing the Union were Jose Cara-
ballo and Rafael Torres Lugo. Among those present representing the Respondent
were Porrata and Juan V. Diaz. Caraballo spoke at length concerning various cases
of grievance including the grievance as to the May 22, 1965, layoffs. One of the
grievances referred to was one concerning a man named Rodriguez. This grievance
was not one of the specific grievances referred to in Caraballo's June 8, 1965,
21 The facts are based upon Torres' credited testimony.
u This finding of fact is based upon Caraballo's credited testimony
22 The facts are based upon a composite evaluation of Diaz' credited testimony and
exhibits in the record.
2a The facts are based upon a composite of the exhibits and the credited testimony of
Porrata, Diaz, Caraballo, Torres, and Angel Rodriguez.
SUCESION MARIO MERCADO E HIJOS 709
letter. Caraballo mentioned that he would like to have a letter concerning the
May 22, 1965, layoff for use as to employees ' unemployment benefits. Respondent's
representatives ( Porrata and Diaz ) told Caraballo that the Respondent had acted
in the cases referred to within its rights and was not obliged to discuss anything
with the Union . Caraballo insisted that the parties discuss the grievances . Respond-
ent's representatives ( Porrata and Diaz ) thereupon told Caraballo to give them
specific details as to each grievance . The parties agreed that Caraballo would
furnish such details and that the parties would meet again on June 23 , 1965, around
10 a.m. in Porrata 's law office.
Caraballo, after the June 21 , 1965, meeting , prepared a letter (dated June 21,
1965 ) summarizing the details of the various grievances ( including the grievances
as to the May 22, 1965, cessation of grinding ) and had the same delivered to
Porrata's office on June 21, 1965 . The content of Caraballo 's June 21, 1965, letter
was substantially similar to his June 8 , 1965, letter with the exception of the addi-
tion of a grievance concerning money due a man named Rodriguez.
On June 23, 1965, Jose Caraballo and several others for the Union, appeared at
Porrata's law office at the designated time. Caraballo informed Porrata's secretary
of their presence and in turn were informed by Porrata 's secretary that Porrata
was busy with several persons. Around 11:45 in the morning Caraballo, under-
standing that Porrata always left his office for the day at noon, decided to leave.
Caraballo, thereupon , went to San Juan, Puerto Rico, to file unfair labor practice
charges in the instant case.
On the same day, June 23, 1965, Caraballo returned from San Juan, Puerto
Rico, to his home. That afternoon, Porrata called Caraballo and told Caraballo
that Caraballo had left without having the meeting. Porrata suggested that there
be another grievance meeting at Porrata's office. Caraballo proposed that the
meeting be held in the office of the Department of Labor (located at Yauco,
Puerto Rico ). Caraballo and Porrata agreed on a meeting on June 28 , 1965, in
the office of the Department of Labor.
On June 25, 1965, Porrata transmitted a letter to Caraballo in which Porrata
(for the Respondent ) denied the Union 's allegations of contract violations and
bad faith therein.
On June 28 , 1965, the Union and the Respondent held the grievance meeting
as scheduled. Among those present for the Union were Jose Caraballo, Rafael
Torres Lugo, and Angel Rodriguez . Among those present for the Respondent were
Porrata , Juan V. Diaz , Weasler (an attorney for the Respondent ), and Sosa.24
Jose Caraballo stated the Union's position as regards to the various alleged
grievances including the grievance concerning the May 22 , 1965, cessation of
grinding, layoff of employees , and diverting of sugarcane to other centrals. Juan
V. Diaz ( for the Respondent ) expressed the Respondent 's reasons for the May 22,
1965, cessation of grinding , layoff of employees , and diverting of sugarcane to
other centrals . The reasons for the May 22, 1965, action, as asserted by Diaz, were
inefficiency of operations , the bank's iefusal of loans, and the bank's recommenda-
tion that the sugarcane be sent to other mills. Caraballo asked Diaz to name the
bank involved but Diaz did not do so. Caraballo asked Diaz if Porrata had told
the truth to the effect that all employees would be used on repairs of the mills.
Diaz told Caraballo that employees necessary for work on repairs would be used.
Diaz asked Caraballo about the contract terms for the next grinding season. Cara-
ballo told Diaz that discussion of the next contract was premature at this time.
Diaz told Caraballo that the problems must be settled , and that if the Union
insisted on its claims , that the central would never grind any more. Diaz told
Caraballo that the Respondent had acted correctly in its actions and that there was
nothing to discuss about the grievances. Caraballo (for the Union) proposed arbi-
tration of the grievances and proposed the names of three arbitrators . Diaz told
Caraballo that he would like to wait until July 10, 1965, to answer the Union
as to whether Respondent would accept the Union 's proposed arbitrators or whether
Respondent would propose others.
During the meeting of June 28, 1965 , the parties discussed other grievances
than the one concerning the May 22 , 1965, cessation of grinding. At sometime in
the meeting Porrata told the parties that the numerous complaints had tired him
and left the meeting. The parties continued to discuss various grievances after
24 Cuprill ( an attorney for the Respondent ) was also present at one or both of the
June 21 and 28 1963 , meetings
710 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Porrata left.25 The Respondent after the June 28, 1965, meeting (and as of the
hearing in this matter ) did not answer the Union's request as to the proposed
arbitrators.
11. Conclusions
In summary with respect to Respondent 's May 1965 decision to cease grinding
operations , to layoff the employees involved in the grinding operations, and to
divert its and other sugarcane to other mills for grinding , it is noted (1) that the
Respondent was economically motivated in its decision and (2) that the Respond-
ent did not afford the Union an effective opportunity to bargain about said decision
prior to the effectuation of said decision on May 21 and 22, 1965.
The General Counsel contends that the instant case is controlled by the decision
of the Supreme Court of the United States in Fibreboard Paper Products Corp.
v. N.L.R.B., 379 U.S. 203. The Respondent contends that the facts involved in
the instant case are distinguishable from the facts involved in the Fibreboard case
and that under the rationale of Fibreboard case that the facts do not reveal a
violation.
Respondent's brief asserted, inter alia, as follows:
Perhaps we anticipate the General Counsel's argument , but we do believe
he places considerable reliance on the Supreme Court's decision in the Fibre-
board case. Any reference to the Fibreboard case should keep two highly
significant points in mind . First, the decision to contract out the maintenance
work in Fibreboard did not change the basic operations of the company
involved. The maintenance work was let out under a terminable contract on a
cost-plus basis. The contractor performed the same work previously per-
formed by company employees on company premises with company machines
and equipment. The contractor was under the direct control of the company.
The company directly enjoyed the benefits of the contractor's work. Second,
the Supreme Court in Fibreboard carefully limited its decision to the facts
presented in that case. At page 209 of 379 U.S., Mr. Chief Justice Warren,
who wrote the majority opinion, stated:
We agree with the Court of Appeals that, on the facts of this case, the "con-
tiacting out" of the work previously peifoinied by members of an existing
bargaining unit is a subject about which the National Labor Relations Act
requires employees and the representatives of their employees to bargain
collectively. [Emphasis supplied.]
At page 215 of 379 U.S., the opinion continues:
We are thus not expanding the scope of mandatory bargaining to hold, as we
do now, that the type of "contracting out" involved in this case-the replace-
ment of employees in the existing bargaining unit with those of an independent
contractor to do the same work under similar conditions of employment-is a
statutory subject of collective bargaining under §8(d). Our decision needed
not and does not encompass other forms of "contracting out" or "subcontract-
ing" which arise daily in our complex economy. [Emphasis supplied.]
With respect to the foregoing I note that Respondent in the instant case did
enjoy some benefits from the arrangements concerning the diverting of sugarcane
to Central Mercedito, Inc. Thus the Respondent received a $1 bonus per ton of
sugarcane diverted to Central Mercedita, Inc. The Respondent, also, apparently
benefited from greater financial return as to its own sugarcane (because of more
timely processing and less loss of yield) or at least suffered less loss therefrom. In
essence the same work as involved in the grinding of sugarcane at Respondent's
mill was performed at the other mills in what would appear to be substantially
similar employment conditions. Although the work was not performed on the same
premises, the arrangements constituted in effect transfering work from Respondent
which normally was performed by Respondent's employees to another mill to be
performed by the employees of the other mill. In my opinion such distinctions as
existed do not vary the impact of the application of the Fibreboard decision on the
instant case.
Contrary to Respondent's contention, I interpret the decision of the Supreme
Court of the United States in Fibreboard as not limiting its finding to the precise
factual situation involved in that case, but as limiting its finding therein to the
z Shortly after the meeting it appears that Porrata had a serious heart attack.
SUCESION MARIO MERCADO E HIJOS 711
type of "contracting out" involved-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.
The Respondent in his brief asserts that issues herein should include (1) to what
extent was the grinding season for 1965 out of control of Respondent and (2) to
what extent were the decisions of management matters solely within the discretion
of management . In essence the above issues really raise again the question of man-
agement prerogatives and mandatory subjects of bargaining . As indicated previously,
the Supreme Court's Fibreboard decision impels a finding that Respondent's May
1965 decision was a mandatory subject of bargaining.
The facts reveal that Respondent did decide, regardless of motivating reason, in
May 1965 to take the action of cessation of grinding operations, of layoff of grind-
ing employees, and of making arrangements to divert sugarcane to other mills.
The Supreme Court of the United States in the Fibreboard decision discussed a
comparable problem of difficulty in possibility of resolving economic problems.
The Court pointed out that problems involved in "contracting out" to gain econo-
mies by reducing the work force, decreasing fringe benefits, and eliminating over-
time payments had "long been regarded as matters peculiarly suitable for resolu-
tion within the collective bargaining framework, and that industrial experience
demonstrates that collective negotiations has been highly successful in achieving
peaceful accommodation of the conflicting interests."
The Court also pointed out at 214:
Yet, it is contended that when an employer can effect cost savings in these
respects by contracting the work out, there is no need to attempt to achieve
similar economies through negotiation with existing employees or to provide
them with an opportunity to negotiate a mutually acceptable alternative. The
short answer is that, although it is not possible to say whether a satisfactory
solution could be reached, the national labor policy is founded upon the con-
gressional determination that the chances are good enough to warrant sub-
jecting such issues to the process of collective negotiation.
The Supreme Court of the United States in the Fibreboard decision pointed out
further with reference to the facts in that case at 214:
As the Court of Appeals pointed out, "it is not necessary that it be likely or
probable that the union will yield or supply a feasible solution but rather that
the union be afforded an opportunity to meet management's legitimate com-
plaints that its maintenance was unduly costly."
From the foregoing it is clear that, even if the problems facing the Respondent
were of such a nature that there might appear scant probability of the Union's
furnishing a solution, the national labor policy is founded on the congressional
determination that the chances are good enough to warrant subjecting such issues
to the process of collective bargaining.
The Respondent 26 argues in effect that the problems of the sugar industry in
Puerto Rico are so unique that the Respondent's May 1965 decision (cessation of
grinding, etc.) was a decision solely within management's prerogative. It would
appear that in most cases involving decisions to subcontract or of cessation of
operations the equities of the situation would constitute a basis for argument as to
the emeigency nature of the need for decision. It would appear that the problem
involved in each case would depend on the facts concerning the need for decision
and the time needed to effectively face the problem. In this case it is clear that
there was ample time within which the Respondent could have notified the Union
of its definitive type of decision prior to actual final determination and effectuation
of the decision. Under such circumstances I see no reason why the National Labor
Policy should be applied differently toward the Respondent or toward the Puerto
Rico sugar industry in general.
The Respondent in his brief asserts that issues herein should include (1) whether
the Union had knowledge of the financial, mechanical, and physical condition
prevalent at Rufina in 1965 and (2) whether there was an obligation on the Union
to initiate "negotiations" with Respondent to the extent operations might have
effect on working conditions of its members.
"The Association of Sugar Producers of Puerto Rico was granted the limited right of
the hearing herein to file a brief in this matter Substantially the Sugar Producers' brief
concurs with Respondent's contention and brief.
712 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The facts are clear, that the -Union did know, of then mechanical problems and
physical conditions prevalent at Respondent' s mill in a general but not necessarily
specific way. The facts do not reveal that the Union knew of Respondent's financial
problems prior to May 22, 1965, or until, after the effectuation of Respondent's
May 1965 decision (to cease grinding, to lay off employees, and to divert the
sugarcane for grinding elsewhere).
It would appear logical'that the party desiring a change in the employment rela-
tionship in the instant case was the Respondent. It would also appear logical that
the party desiring a change in the employment relationship is the party who has
the burden of instituting negotiations concerning the same and not the party from
whom adverse change in position is desired. I find no. reason, under the facts of
this case, to place the burden of initiating negotiations with respect to Respondent's
May 1965 decision on the Union.
The Respondent also contends in effect that the Union should have utilized
forums other than the National Labor Relations Board to obtain a remedy for its
problem. The Respondent refers to the collective-bargaining agreement between
the parties, to an arbitration clause, to the Commonwealth Labor Relations Act
(Puerto Rico), and to Section 301 of the National Labor Relations Act. The
rationale of Smith v. Evening News Association, 371 U.S. 195, 199; Spielberg
Manufacturing Company, 112 NLRB 1080; and George E. Light Boat Storage, Inc.,
153 NLRB 1209, all impel a rejection of this contention. It appears clear that the
existence of other forums for possible remedies does not oust the jurisdiction of
the National Labor Relations Board to remedy unfair labor practices. I find nothing
in the facts pertaining to this case to support a declination by the National Labor
Relations Board of its jurisdictional power herein.
Considering all of the facts in this case, I am convinced that-the rationale of the
majority opinion of the Supreme Court of the United States in Fibreboard Paper
Products Corp. v. N.L.R.B., 379 U.S. 203, controls the decision in•this case.27 In
accordance with the Fibreboard decision it is clear that Respondent's May 1965
decision (to cease grinding operation, to lay off employees, and to divert sugarcane
(by arrangement) to other mills for grinding) was a mandatory subject of bar-
gaining. Respondent's referred-to May 1965 decision and the execution thereof
without prior notification to the Union constituted a refusal to afford the Union
an opportunity to bargain and a refusal to bargain over such decision within the
meaning of Section 8 (a) (5) and (1) of the Act 28
The General Counsel alleged and contended that Respondent refused to bargain
over grievances pertaining to Respondent's May 1965 decision to cease grinding
operations, to lay off employees, and to divert sugarcane to other mills. It is clear
that the facts reveal (1) that Respondent during the grievance meetings (June 21
and 28, 1965) consistently took the position that it had: (a) the right to unilater-
ally make the referred-to May 1965 decision, and (b) that it was not obligated
to bargain about the decision; (2) that Respondent discussed the reasons for its
May 1965 decision; (3) that Respondent made no proposals to remedy the effects
of the May 1965 decision; and (4) that Respondent failed to cooperate with the
selection of arbitrators.
The Board in Town & Country Manufacturing Company, Inc., 136 NLRB 1022
at page 1030, referred to the problem involved concerning remedial action for
the employer's unilaterally subcontracting its trucking operations without bargain-
ing with the Union over the decision to do so. The Board stated "it would be an
exercise in futility to attempt to remedy this type of violation if an employer's
decision to subcontract were to stand. No genuine bargaining over a decision to
terminate a, phase of operations can be conducted where that decision has already
been made and implemented." The Board went on to say in effect that meaningful
bargaining could only be effected by restoration of the status quo of the employees
adversely affected by the unilateral action.
Applying the rationale of the Board in the Town & Country Manufacturing Co.,
Inc., case to the facts of the instant case, it would appear that genuine or meaning-
ful bargaining over the grievances pertaining to the Respondent's May 1965 uni-
21I note that much of the Respondent's argument relies on the minority opinion of
the Court.
In accordance with and within the meaning of the decision and approved remedial
action in Fibreboard Paper Products Corp. v. N.L.R B., supra. I find no merit to Respond-
ent's contention that its May 1965 decision changed the status of the employees involved
to agricultural laborers or persons outside the protection of the Act.
SUCESION MARIO MERCADO E HIJOS 713
lateral decision (and implementation thereof ) to cease grinding operations, to lay
off employees , and to divert sugarcane to other mills, would only be possible were
the Respondent to clearly accept the principle that the employees adversely affected
by the implementation of May 1965 decision be made whole for loss of wages
resulting from said decision.
The Respondent 's conduct in the grievance meeting (June 21 and 28, 1965)
reveals that Respondent did not consider that there was any obligation to make
the adversely affected employees whole for loss of wages resulting from the
May 1965 unilateral decision . The facts also reveal that Respondent has not pro-
posed agreements or entered into agreements which in effect would make the
adversely affected employees whole for loss of wages. Thus facts reveal that
Respondent by its conduct in the grievance negotiations (June 21 and 28, 1965)
has not remedied the unfair labor practices resulting from its May 1965 unilateral
decision ( to cease operations , to lay off employees , and to divert sugarcane to
other mills ). The Respondent 's conduct as regards to the June 21 and 28, 1965,
grievance meeting and thereafter constitutes in effect a continuation of its refusal
to bargain over its unilateral May 1965 decision indicated previously . I thus con-
clude and find that the evidence reveals a continuation in the grievance meetings
(June 21 and 28, 1965 ) and thereafter of Respondent 's conduct of May 1965, as
regards its unilateral decision , in violation of Section 8(a)(5) and ( 1) of the Act.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
The activities of the Respondent set forth in section III, above , occurring in
connection with the operations of the Respondent described in section I, above,
have a close , intimate, and substantial relation to trade, traffic, and commerce
among the several States and the Commonwealth of Puerto Rico and tend to lead
to labor disputes burdening and obstructing commerce and the free flow of
commerce.
V. THE REMEDY
Having found that the Respondent has engaged in unfair labor practices , it will
be recommended that Respondent cease and desist therefrom and take certain
affirmative action designed to effectuate the policies of the Act.
It has been found that the Respondent has refused to bargain collectively with
the Union as the exclusive representative of the employees in the appropriate unit.
It will , therefore , be recommended that the Respondent , upon request , bargain
collectively with the Union as such representative , and in the event that an under-
standing is reached , embody such understanding in a signed agreement 29
Since the Respondent 's unilaterally made May 1965 decision 30 and implementa-
tion thereof 31 resulted in the termination of its employees in the appropriate unit,
it will be recommended that the Respondent be ordered to make whole 32 such
employees for any monetary loss resulting from Respondent 's unilateral action.33
The backpay provided herein shall be computed in accordance with the formula
set forth in F. W . Woolworth Company, 90 NLRB 289 , with interest thereon.
Isis Plumbing & Heating Co ., 138 NLRB 716.
CONCLUSIONS OF LAW
1. Sindicato Obreros Unidos Del Sun De Puerto Rico is a labor organization
within the meaning of Section 2(5) of the Act.
2. Sucesion Mario Mercado E Hijos d/b/a Central Rufina is a employer engaged
in commerce within the meaning of Section 2 ( 6) and (7) of the Act.
3. All production and maintenance employees employed by Sucesion Mario
Mercado E Hijos d/b/a Central Rufina at its Central Rufina, Guayanilla , Puerto
Rico, mill, but exclusive of all office clerical employees , analysts, administrative
21 It is noted that the collective -bargaining agreement in existence at the time of the
May 1965 unilateral decision expired on December 31, 1965
8O To cease grinding operations , to lay off employees , and to make arrangements to
divert sugarcane to other mills for grinding.
11 The decision was made and implemented without prior consultation or bargaining with
the Union.
12 Since the cessation of grinding was designed to affect only the 1965 grinding season
there appears no necessity for a reinstatement order.
83 Town & Country Manufacturing Co . Inc ., 136 NLRB 1022.
'714 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and executive personnel , guards, and supervisors , as defined in the Act , constitute
a unit appropriate for the purpose of collective bargaining within the meaning of
the Act.
4. Sindicato Obreros Unidos Del Sur De Puerto Rico has been since Febru-
ary 13, 1963, and at all times since has been the exclusive representatives of all
-employees in the aforesaid appropriate unit for the purpose of collective bargain-
ing within the meaning of the Act.
5. By Respondent 's decision in May 1965 unilaterally deciding to cease its
seasonal sugarcane grinding operation , to lay off its grinding employees, and to
make arrangements to divert sugarcane from its mill to other mills for grinding,
by implementation of its aforesaid decision by ceasing its sugarcane grinding
operations , by laying off its grinding employees, and diverting sugarcane from its
mill to other mills for grinding , without having consulted with the Union or having
-engaged in collective bargaining about these matters, and by failure to negotiate
in good faith as to grievances about these matters , the Respondent has engaged in,
and is engaging in, unfair labor practices within the meaning of Section 8(a)(5)
and (1 ) of the Act.
6. The aforesaid unfair labor practices are unfair labor practices affecting com-
merce within the meaning of Section 2(6) and (7) of the Act.
[Recommended Order omitted from publication.]
Humble Oil & Refining Company and Local 866, International
Brotherhood of Teamsters, Chauffeurs , Warehousemen and
Helpers of America . Case 22-CA-2598. November 1, 1966
DECISION AND ORDER
On July 15, 1966, Trial Examiner David London issued his Deci-
sion in the above-entitled proceeding, finding that Respondent had
not engaged in and was not engaging in certain unfair labor prac-
tices as alleged in the complaint, and recommending that the com-
plaint be dismissed in its entirety, as set forth in the attached Trial
Examiner's Decision. Thereafter, the General Counsel. filed excep-
tions to the Trial Examiner's Decision and a supporting brief, and
Respondent filed a brief in support of the Trial Examiner's Decision.
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, as amended, the National Labor Relations Board has
delegated its powers in connection with this case to a three-member
panel [Members Fanning, Jenkins, and Zagoria].
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 hereby adopts the findings, conclusions, and recom-
mendations of the Trial Examiner.
[The Board adopted the Trial Examiner's Recommended Order
and dismissed the complaint.]
161 NLRB No. 64.