Cities Service Oil Co.

National Labor Relations Board - Board Decisions

May 27, 1966

158 N.L.R.B. 1204 (N.L.R.B. 1966)

1204 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
WE WILL immediately make Ann Schuff whole for any loss of pay suf-
fered by her as a result of her layoff.
WE WILL NOT in any manner interfere with, restrain, or coerce our employ-
ees, in the exercise of their right to self-organization, to form labor organi-
zations, to join or assist the above Union or any other labor organization, to
bargain collectively through representatives of their own choosing, and to
engage in any other concerted activities for the purpose of collective bargain-
ing or other mutual aid or protection, or to refrain from any or all such
activities.
TENNESSEE PACKERS, INC., FROSTY MORN DIVISION,
Employer.
Dated-------------------- By-------------------------------------------
(Representative) (Title)
This notice must remain posted for 60 consecutive days from the date of post-
ing, and must not be altered, defaced, or covered by any other material.
If employees have any question concerning this notice or compliance with its pro-
visions, they may communicate directly with the Board's Regional Office, 746
Federal Office Building, 167 North Main Street, Memphis, Tennessee, Telephone
No. 534-3161.
Cities Service Oil Company and Drivers and Employees of the
Petroleum Industry , Local Union 273, a/w International Broth-
erhood of Teamsters, Chauffeurs, Warehousemen and Helpers
of America . Case No. 6-CA-3014. May 27,1966
DECISION AND ORDER
On November 5, 1964, Trial Examiner Thomas A. Ricci issued his
Decision in the above-entitled proceeding, finding that Respondent
on April 1, 1964, unilaterally canceled and transferred certain sales
accounts without first bargaining collectively with the Union as the
exclusive representative of the employees in the appropriate bar-
gaining units. Inasmuch as Respondent's unilateral action caused
the removal of work from units represented by the Union to a unit
of another employer's employees, the Trial Examiner concluded, as
set forth in his attached Trial Examiner's Decision, that Respondent
thereby committed and was committing unfair labor practices within
the meaning of Section 8(a) (5) and (1) of the National Labor Re-
lations Act, as amended. In reaching this conclusion, the Trial Ex-
aminer did not rely on certain evidence in the record tending to
show that the removal of the work in question adversely affected
terms and conditions of employment in the units, because, as he
stated in his Decision, he did not consider the matter of impact on
working conditions to be relevant to the issue whether a violation
had occurred. The latter holding was consistent with the Trial
Examiner's rulings at the hearing-affirmed in his Decision-wherein
he precluded Respondent from rebutting the foregoing evidence and
from adducing evidence to support its claim that its action had not
caused significant injury to the terms, conditions, or tenure of em-
ployment &f its employees.
158 NLRB No. 120.
CITIES SERVICE OIL 'COtiIPANY - - 1205
Respondent filed timely exceptions with a supporting brief to. the
Trial Examiner 's Decision and to his foregoing evidentiary rulings.
Thereafter, the National Labor Relations - Board issued an Order
remanding the proceeding to the same Trial Examiner to receive
further evidence from the parties concerning the actual or expected -
impact upon work opportunities , overtime or other terms and con-
ditions of employment in the units resulting from Respondent's
unilateral action. ' The Board 's Order also directed the Trial Exam-
iner to make findings ' of fact on these matters and such other con-
clusions and recommendations as were warranted . After holding a
hearing pursuant to the order of remand , Trial Examiner Ricci
issued his attached Supplemental Decision , dated January 5, 1966,
finding that Respondent 's unilateral Faction did cause employees in
Respondent 's driver-N^arehousemen unit a significant loss of cus-
tomary overtime earnings . He therefore recommended that the
Board adopt his previous findings, conclusions , and recommendations,
as set forth in his original Decision , including his recommendation
that Respondent be ordered to cease and desist from engaging in the
unfair labor practices which he found, and to take certain affirmative
action. Thereafter , Respondent filed exceptions to the Supplemental
Decision and a supporting brief.
Pursuant to the provisions of Section 3(b) of the Act, -the
Board has delegated its powers in connection with this case to a
three-member panel [ Chairman McCulloch and Members Fanning
and Brown].
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.2
The rulings are hereby affirmed. The Board has considered the Trial
Examiner's Decision of November 5, 1964, his Supplemental Decision
of January 5, 1966, the exceptions and briefs , and the entire record
in the case , and hereby adopts the findings,3 conclusions , and recom-
mendations of the Trial Examiner , except as modified herein.
As more fully set forth in the Trial Examiner 's Decision , Respond-
ent, on April 1, 1964, without prior notification to or bargaining with.
the Union, eliminated certain unit work by • canceling 45 of its ac-
1 This Order, which was not published in printed volumes of Board Decisions and
Orders, was issued on April 27, 1965 . Member Jenkins dissented from the determination
to remand the proceeding
3 whatever prejudice Respondent may have suffered as the result of the Trial Examiner's
exclusion of certain evidence at the original hearing was cured by the reopening of the
hearing to receive such evidence.
8 We hereby correct certain of the findings of fact in the Trial Examiner's Supplemedtal
Decision which do not affect the Trial Examiner's ultimate conclusions or our own.. At
p. 1221 of the Supplemental Decision the phrase "34 illness" is corrected to "35 illness"
and on the following line , the phrase "130 vacation" Is corrected to "115 vacation "
At p. 1221, of the Supplemental Decision the expression "608/4 hours to 491/ hours or
18 percent" is corrected to read 11808/4 hours to 491/2 hours or 39 percent."
1206 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
counts and by entering into a distributor agreement with U.S. Oil
Company, Inc., pursuant to which the latter is now servicing virtu-
ally all -of these accounts.4 It is clear that the work of servicing
these accounts had formerly been performed by Respondent's em-
ployees in the units here involved,5 but is now being performed by
the employees of U.S. Oil. There is, however, no indication in the
record that Respondent, during its past history of bargaining with
the Union, has ever engaged in a similar wholesale transfer of ac-
counts for service by an independent distributor, nor do Respondent's
collective-bargaining agreements with the Union reserve to Respond-
ent the right to transfer unit work to another employer without
prior notification to the Union. Further, as the Trial Examiner
found in his Supplemental Decision, Respondent's employees in its
driver-warehousemen units suffered a substantial loss of customary
overtime earnings on account of this transfer of unit work to U.S.
Oil.' In these circumstances the Trial Examiner concluded, and we
agree, that Respondent's action of April 1, 1964, whereby it unilater-
ally transferred this work, constituted a change in, and caused signifi-
cant detriment to employees in the driver-warehousemen unit in terms
of their wages, hours, and other terms and conditions of employment.
We find, accordingly, as did the Trial Examiner, that Respondent
thereby violated Section 8 (a) (5) and (1) of the Act."
THE REMEDY
In his original Decision the Trial Examiner recommended a
remedial order, requiring, inter alia, that Respondent "reinstitute its
system of making direct sales deliveries of its products to those
customer accounts unilaterally transferred to U.S. Oil [and] resume
using its own employees to accomplish such work...." The Trial
Examiner reiterated this recommendation in his Supplemental De-
cision. In its exceptions, Respondent argues that such an order, re-
quiring it to restore the status quo ante, is not warranted in the cir-
cumstances of this case. We find merit in this aspect of Respondent's
exceptions.
The "reinstitution" order recommended by the Trial Examiner is,
in effect, the same affirmative remedial order that the Board entered
in Fibreboard, supra, an order which the Supreme Court upheld as
4 The record indicates that, subsequent to April 1 , 1964, U.S. Oil has not serviced one
or two of the accounts canceled by Respondent
r The driver-warehousemen unit and clerical unit.
8 The Trial Examiner made no finding as to the significance of the impact , if any, that
the transfer of the 45 accounts may have had upon the clerical unit. There was no
exception to his failure to make findings in this regard
7 The total amount of overtime earnings lost during the 1-year period following the
transfer was some $3000, or an average of over $400 for each of the 7 employees in this unit.
8 Fibreboard Paper Products Corp . v. N.L.R.B., 379 U.S. 203.
CITIES SERVICE OIL COMPANY 1207
a proper exercise of the Board's authority to fashion remedies for
unfair labor practices.9 In devising all our affirmative orders, how-
ever, we bear in mind that the remedy should be appropriate to the
particular situation requiring redress,10 and should be tempered by
practical considerations."
Accordingly, having examined the record in the present case and
having weighed its particular facts and circumstances, including :
(a) the absence of evidence of any prior unfair labor practices by
Respondent in its dealings with the Union; (b) the conceded eco-
nomic motivation for the transfer of the 45 accounts; (c) the ap-
parent economic hardship to the interests of U.S. Oil and its em-
ployees that full restoration of the status quo ante would entail; and
(d) the fact that no employee of Respondent was laid off or dis-
charged as the result of its unilateral action, we believe, contrary to
the Trial Examiner, that it would be inappropriate in this case to
direct that the status quo ante be restored 12
Effectuation of the policies of the Act does, nonetheless, require
that Respondent be directed to cease and desist from failing to notify
the Union before making any future decision to transfer work from
the units represented by the Union, to other employers, and also to
bargain, upon request, with the Union, as the exclusive representative
of the employees in the appropriate units, with respect to any such
proposed decision insofar as it affects rates of pay, wages, hours of
employment, and other terms and conditions of employment. Ac-
cordingly, we adopt, with modification, the Trial Examiner's recom-
mended remedial order.
It is clear that, had Respondent honored its statutory bargaining
obligation in the first instance, employees in the driver-warehousemen
unit would not have lost substantial customary overtime earnings
without the protection afforded them by the bargaining process. As
the result of such bargaining process the work of servicing the 45
accounts might have been retained in the unit, in which instance the
driver-warehousemen would have lost no overtime at all.13 In any
event, the opportunity to bargain about the transfer-before it took
place-was an opportunity the Respondent was obliged under the
Act to afford the Union as the exclusive bargaining representative
IId., pp. 215-217.
10 N.L.R.B. v. Mackay Radio & Telegraph Co., 304 U S. 333, 348.
11 Winn-Dixie Stores, Inc., 147 NLRB 788, 791.
12 Renton News Record, 136 NLRB 1294, 1297-1298; W1nn-Dixie Stores, Inc., supra,
791; Jersey Farms Milk Service, 148 NLRB 1392 ; Fairbanks Dairy Division of Cooper-
dale Dairy Company, Inc., 146 NLRB 893, 903.
13 See the Court 's discussion of national labor policy as determined by Congress in the
Act and the consequent propriety of submitting this type of economic dispute-retention of
unit work-to collective bargaining Fibreboard Paper Products Corp. v. N.L R.B , supra,
379 U.S. at pp . 213-215.
1208 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of the affected employees.'' We shall therefore adopt the Trial
Examiner's additional' recommendation to require Respondent to
make whole the employees in the driver-warehousemen unit for the
loss of overtime earnings they have suffered as the result of Respond-
ent's unilateral action.15 In view of an agreement of the parties at
the hearing, we shall, however, limit this remedial monetary relief
to the period from April 1, 1964, to March 31, 1965.16
[The Board adopted the Trial Examiner's Recommended Order
with the following modification :
[1. Delete subparagraph "(a)" of paragraph 2, in the Recom-
mended Order and substitute the following :
[(a) Make whole each of its employees in the driver-
warehousemen unit for the loss of overtime earnings suffered by
them during the period April 1, 1964, to March 31, 1965, as the
consequence of Respondent's unilateral transfer of accounts to
U.S. Oil Company on or about April 1, 1964, in the manner other-
wise set forth in that section of the Trial Examiner's Decision en-
titled "The Remedy," as well as interest on the backpay due each
employee to be computed at the rate of 6 percent per annum in
the manner set forth in that section of our Decision entitled
"The Remedy."
[2. Delete from subparagraph "b" of paragraph 2 of the Recom-
mended Order the phrase "and embody any understanding reached
in a signed agreement."
[3. Delete from subparagraph "c" of paragraph 2 of the Recom-
mended Order the words-"and rights of reinstatement, if any."
[4. In the Appendix to the Recommended Order, entitled "Notice
to All Employees," delete the second full paragraph and substitute
the following :
[WE WILL make whole the employees in the driver-warehousemen
unit for the loss of overtime pay which they suffered during the
period April 1, 1964, to March 31, 1965, as the result of our
bypassing the above-named exclusive bargaining representative
and unilaterally transferring customer accounts to U.S. Oil
Company, Inc.]
14 Id.
is We shall also require that Respondent pay interest at the rate of 6 percent per annum
on the backpay due each employee in accordance with the formula set forth in the Board's
Decision in Isis Plumbing & Heating Co ., 138 NLRB 716.
16 At the hearing , as noted in the Trial Examiner's Supplemental Decision, 'the parties
agreed to limit the matters to be litigated to the 1 -year period immediately following
the transfer of accounts on April 1, 1964. Consistent with this agreement we also limit
backpay to the same 1 -year period . In any event , because of other changes in Respond-
ent's operation, we are also not convinced that any reduction in overtime earnings after
April 1, 1965, could be attributed to Respondent's unilateral action of April 1, 1964.
CITIES SERVICE OIL COMPANY 1209
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
A hearing was held before Trial Examiner Thomas A. Ricci in Pittsburgh,
Pennsylvania , on August 17, 1964, on complaint of the General Counsel against
Cities Service Oil Company,' herein called the Respondent , or the Company. The
issue litigated was whether the Respondent had violated Section 8 (a)(5) of the
Act. Briefs were filed after the close of the hearing by the Respondent and the
General Counsel.
Upon the entire record , and from my observation of the witnesses , I make the
following findings:
1. THE BUSINESS OF THE RESPONDENT
Cities Service Oil Company , a Delaware corporation with its principal place
of business in Bartlesville , Oklahoma, is engaged in producing , refining, and mar-
keting of petroleum and related products in several States of the United States.
During the past 12 -month period the Respondent received goods and materials
valued in excess of $50 ,000 from directly outside the Commonwealth of Penn-
sylvania for use at its Coraopolis , Pennsylvania , plant.
I find that the Respondent is engaged in commerce within the meaning of the
Act and that it will effectuate the policies of the Act to assert jurisdiction herein.
H. THE LABOR ORGANIZATION INVOLVED
Drivers and Employees of the Petroleum Industry, Local Union 273, a/w Inter-
national Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of
America, herein called the Union, is a labor organization within the meaning of
Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. The issue in litigation and the pertinent facts
On April 1, 1964, the Respondent discontinued a substantial portion of the
operations it had regularly been conducting-,at its Coraopolis bulk distribution
plant, the sole location involved in this proceeding.. The work required for these
operations had long been performed by employees of the Company represented
under contract between the Respondent and the Union, and from that day for-
ward such work has been instead performed by employees of a new and separate
employer. The principal allegation of the complaint, and the sole issue presented
by the pleadings, involves the question whether the Respondent's conduct in making
this change in its method of operations, with no advance notice to the Union,
and without first offering to discuss it with the collective-bargaining agent of the
employees adversely affected, constituted a refusal to bargain with the majority
representative in violation of Section 8(a)(5) of the Act. There is no allegation
in the complaint, nor does the General Counsel advance any contention, that in
consequence of this unilateral discontinuance of operations, the Respondent unlaw-
fully discriminated against the employees in violation of Section 8(a)(3) of the
statute. The following facts, upon which the charge of illegal conduct rests, are
not seriously disputed.
B. Appropriate units and majority status
The complaint alleges, the answer admits, and I find that:
1. All drivers and warehousemen at Respondent's Pittsburgh District Bulk
Plant, excluding all other employees, office clerical employees and guards, pro-
fessional employees and supervisors,as defined in the Act, constitute a unit appro-
priate for the purposes of collective bargaining within the meaning of Section 9(b)
of the Act.
2. At all times since 1946, and continuing to date, the Union has been the
representative for the purpose of collective bargaining of all such employees, and,
by virtue of Section 9(a) of the Act, has been, and is now the exclusive represent-
ative of all the employees in said unit for the purposes of collective bargaining
with respect to rates of pay, wages, hours of employment, and other terms and
conditions of employment.
3. All office-clerical employees at the Respondent's Pittsburgh District Bulk
Plant, excluding all other employees, drivers, warehousemen and guards, profess
1210 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sional employees and supervisors as defined in the Act, constitute a unit appro-
priate for the purposes of collective bargaining within the meaning of Section 9(b)
of the Act.
4. At all times since March 4, 1957, and continuing to date, the Union has
been, and is now the exclusive, bargaining representative of all employees in the
above-described bargaining unit for the purposes of collective bargaining with
respect to rates of pay, wages, hours of employment, and other terms and condi-
tions of employment.
C. The unilateral action
From its bulk plant the Company sells and distributes petroleum products, essen-
tially gasoline, oils, and greases. Its customer, as distinguished from "distributor"
accounts, are retailers (gasoline stations) and large industrial consumers, such as
dairies, trucking companies, and other commercial purchasers. As an aid for
these operations it owns gasoline tanks, gasoline pumps, grease pits, dollies, drum
pumps, and equipment of this type, which it keeps and maintains at the prem-
ises of the purchaser customers. The total operation of this direct sales business
out of the bulk plant includes between 200 and 300 such accounts. The Company
also owns its own trucks to deliver the products to these accounts. The Respond-
ent also makes sales, at its bulk plant, to distributors, independent employers who,
with their own trucks and employees, obtain oil products from the Respondent and
resell it to their own accounts-such as retail gasoline stations and commercial
consumers.
The Respondent's employees involved in this case are (1) truckdrivers, who
deliver from the plant to the customers , and warehousemen , working at the plant,
and (2) office clerks who maintain the records required for the overall delivery
business. Both groups have been represented by the Union under separate con-
tracts for some years, the agreement in effect at the time of the events here in
question having been made in October 1962 to run to September 30, 1964.
On March 10, 1964, the Respondent signed a contract with U.S. Oil Company,
a venture newly established for the express purpose of acting as a wholesale dis-
tributor of the Company's products from this bulk plant, to retailers and com-
mercial consumers. U.S. Oil was organized in March 1964, and by May its presi-
dent was Dudley Hain, 14 years an employee of the Company and 2 years district
manager over this bulk plant, and who had quit the Respondent on April 30, 1964.
The contract is called Branded Distributor Agreement, runs for 5 years, and pro-
vides for U.S. Oil to purchase gasoline, fuel oil , motor oil , and greases from the
Respondent . Simultaneously with this agreement , the Company also sold to U.S.
Oil the equipment-tanks, pumps, etc.-which it owned and had been using at
51 business locations of its customer accounts , for a total price of $23,000. It
also sold to U.S. Oil two trucks which it had been using for delivery of its prod-
ucts to these customers . The effective date of the new wholesale distributor agree-
ment was April 1. At that time the Respondent canceled its direct sales agree-
ments with 45 customer accounts, retail gasoline stations and bulk consumers;
these are the customers who operate the 51 locations where operational equipment
was transferred from the Respondent to U.S. Oil. At the same time U.S. Oil, by
direct agreement between itself and these 45 customers, began to sell and make
deliveries of the Respondent's products to them from the'same bulk plants and to
the same 51 locations. On April 1 the two trucks which had been sold to U.S.
Oil appeared at the bulk station with drivers employed by the new company, and
loaded up to make deliveries to the various accounts in question.
From that day on all deliveries of the Company's products have been made to
these 45 accounts by employees-of U.S. Oil, and office clerks employed by the
Respondent, who previously kept the record accounting to service these accounts,
have ceased performing that work.'
There were balances- due the Respondent from 22 of the 45 accounts' so trans-
ferred. By written instrument dated April 29 the Company "assigned" the bal-
ances due-totaling over $23,000-to U.S. Oil. The letter of assignment, received
in evidence, on its face shows that there was at the same time executed another
"agreement" between the parties, whereby U.S. Oil obligated itself to collect these
balances from the various customers, and to forward collections by weekly checks
to the Respondent. The Respondent also advised each such account, by separate
letter, of the assignment of U.S . Oil to act as collection agency for the Company.
Hathazy, terminal manager, and David , labor relations manager of the Respond-
ent, each admitted at the hearing that no officer or official of the Union was
advised of this arrangement with U .S. Oil in advance of its effective implemen-
tation on April 1 . Toward the end of March , McDonald , president of the local
CITIES SERVICE OIL COMPANY 1211
union , heard a rumor that the Company was going to give away some of its
accounts. He called David and inquired of,the labor relations manager, who said
"he knew nothing about it," but would check with his main office. The next day
David called McDonald back to say, "there was no truth to it." On the morning
of April 1, when U.S. Oil started loading-at the plant with its own employees
using the Respondent's trucks, Christian, a driver and union steward, quickly
reported by telephone to McDonald. McDonald again called David and pro-
tested the unilateral action; David asked for time to check into the matter and
promised -to call him back, but did not do so. Again McDonald -called him and
now David replied "it was through; it had already happened." That same day
McDonald wrote to the Company, protesting the unannounced sale of company
trucks and the transfer of 45 accounts, and advancing a formal grievance on the
matter; he also stated that he was filing unfair labor practice charges, and requested
a meeting to discuss the matter.
David and Hathazy met with the union president and its employee steward on
April 9. Again McDonald accused the Company of wrongdoing for not having
told the Union of its intentions before taking the final step. The company repre-
sentative replied: "It is already done, there is nothing they can do about it." On
April 16 the Respondent confirmed this position to the Union in a letter saying
there was no impropriety in the company actions and denying the grievance.
Analysis and Conclusion
The drivers had designated the Union as their exclusive bargaining represent-
ative. . . . This having been done, the statute imposed on Respondent the
mandatory duty to bargain with that representative concerning the drivers'
rates of pay, wages, hours of employment, and other terms and conditions
of employment. . an employer does not fulfill this obligation where he
takes unilateral action affecting these topics of bargaining.
. the elimination of unit jobs, albeit for economic reasons, is a matter
within the statutory phrase "other terms and conditions of employment" and is
a mandatory subject of collective bargaining within-the meaning of Section
8(a) (5) of the Act. Town & Country Manufacturing Company, Inc., 136
NLRB 1022, 1226, 1027, enfd. 316 F. 2d 846 (C.A. 5). -
The foregoing is a precise statement-of Board law applicable to the uncontro-
vertible facts of this case, and requires a conclusion that when the Respondent
unilaterally altered its method of operations by using U.S. Oil, instead of its own
employees, to dispose of its products for a price, without notice to the Union, the
Respondent failed in its statutory duty to accord the Union exclusive recognition,
and thereby refused to bargain with it, in violation of Section 8(a)(5) of the
Act, as the complaint alleges.
This was no trivial change having only incidental or routine effect upon the
quantum of work normally performed by the employees in the bargaining units,
whether drivers and warehousemen, or office clerks. Forty-five accounts out of a
total of less than 300 is too substantial a matter to be viewed in the same light as
the ordinary turnover of individual customers or acquisition of new accounts from
time to time. There is evidence that during March, and for some time earlier, the
Respondent ran six or so trucks for deliveries to its customers; two were transferred
to U.S. Oil. Whether the change made, by the Company be called a "sale," "trans-
fer," or outright "gift" of customers ,to the new wholesale distributor, the stark fact
is that truck driving and delivery work long performed by employees represented by
the Union, from that day forward was assigned to another Company's employees
instead. And so with the bookkeeping work performed by the clerks. Whatever
recording, billing, and things of that kind, they had previously done in their offices,
thereafter was the work of the U.S:• Oil office employees.
The Respondent would distinguish this case from other situations because, liter-
ally, it did not engage U.S. Oil as a "contractor" to do the work of its regular
employees , and that it did not in so-many words "transfer" the 45 accounts, but
canceled its sales agreements outright. But the law in this area is concerned with
the substance of things, not legal frills or any play on words. The cancellation
of the Respondent's direct sales arrangement with the users of its products must
be considered together with the simultaneous contract binding U.S. Oil to buy
products from the.same source , the also concomitant sale of the customer, loca-
tion equipment to the new distributor, or trucking agency , as it were, and the
equally interlaced sales contracts made for this very purpose by U.S. Oil to con-
tinue the same deliveries to the same customers without interruption as in the
1212 DECISIONS OF NATIONAL LABOR. RELATIONS BOARD
past. The material change in the conditions of employment of the employees
involved, and the effective flouting of their bargaining agent was not lessened
by the complex legalities.
The Respondent advances a number of contentions in defense, none of which
suffices to excuse its total disregard of the Union's bargaining rights as spokesman
for the employees with respect to their conditions of employment. The General
Counsel did not dispute the Company's assertion that the change in operations was
made for economic reasons , and not to further any direct antiunion scheme; in any
event he made no contrary argument. The Board has repeatedly held that the
duty to advise the majority representative of planned changes affecting the
employee's work interests applies with equal force where the transfer away of
part of their work rests on economic advisability, or even necessity.'
The argument that because the decision to use U.S. Oil instead of its own
employees to distribute its products was only for legitimate reasons, the Board may
not pass judgment upon the Act and brand it illegal, has been considered and
rejected in past decisions. This defense, as articulated here and as posed in
earlier cases, misconceives the Board's holding and mistates the applicable rule of
law. The vice in the Respondent's conduct lies not in the fact that it chose to
alter the method of operations and thereby to eliminate permanently a substantial
portion i,f gainful employment previously enjoyed by its own employees. An
employer is always free to discontinue direct employer-employee relations, and to
engace indeeendent contractors instead, with or without reason, and certainly with
no obligation to justify its action to the satisfaction of the National Labor Rela-
tions Board. The wrong here, and therefore the conduct found to have been vio-
lative of the statutory duty to bargain, is confined to the Respondent's failure to
afford the collective-bargaining agent an opportunity, before final implementation
of its decision, to discuss the matter with management representatives. As clearly
stated in the Town & Country case, supra, 1027, the law
... in nowise restrains an employer from formulating or effectuating an
economic decision to terminate a phase of his business operations. Nor
does it obligate him to yield to a union's demand that a subcontract not be
let, or that it be let on terms inconsistent with management's business judg-
ment. Experience has shown, however, that candid discussion of mutual
problems by labor and management frequently results in their resolution
with attendant benefit to both sides. Business operations may profitably
continue and jobs may be preserved. Such prior discussion with a duly desig-
nated bargaining representative is - all --that the Act contemplates. But it
commands no less.
As a separate defense to the entire complaint the Respondent offered to prove
that the employees included in the two bargaining units who-were still at work
on the morning of April 1, when the change in operations took effect, continued,
even after that date, to perform as many hours of work and to receive as much
pay, as they had before these accounts were canceled, or transferred to the inde-
pendent distributor. The General Counsel objected to this kind of evidence as
premature at this stage of the proceedings, and his objection was sustained. He
took the position that as there is no allegation in the complaint of any violation
of Section 8(a)(3) of the Act-discrimination inn employment based on union
animus-this entire subject pertains only to the question of remedy after the
compliance stage of the proceeding, in the event the Board concludes that an
illegal refusal to bargain in fact has been proved in this case. Having shown, as
the Respondent's witnesses candidly conceded, that work previously performed by
the employees in each of the two bargaining units was thereafter assigned to
stranger workmen, the General Counsel rested.2 He contended that beyond this
the amount of work that was in fact lost to the company employees, and the
question of whether or not any specific employees were released outright-both
1 Fibreboard Paper Products Corporation, 138 NLRB 550, enfd. sub nom. East Bay
Union of Machinists, Local 1304, 322 F. 2d 411 (C.A.D.C.), cert . granted 375 U.S. 963
[379 D.S. 203].
2A delivery record chart placed into evidence by the Company shows that whereas
monthly deliveries to its direct customers during the months of January, February, and
March 1964, were 719,100, 709,700, and 703,600 gallons respectively, for the months
starting in April they fell to 606,800, 608,500, 639,500, and 616,500. Theme are also
indications-not proof positive in view of the ruling on pertinence and admissibility-
that overtime previously performed was no longer worked after April 1 by the employees
who remained. -
CITIES SERVICE OIL COMPANY 1213
in consequence of the unilateral action-are proper subjects of, inquiry only after
the commission of the unfair labor practices alleged has been established:
At times the General Counsel seemed to vacillate as to his definitive conten-
tion, but at one point, following an off-the-record discussion of 'the matter, his
final position was clearly set out in the record as follows:
TRIAL EXAMINER: Mr. Reporter, on the record.
The last few answers given by the witness aimed at explaining the Respond-
ent's assertion as to why the clerk was released raised the question in my mind
as to whether that matter properly is litigable at this stage of this proceeding.
In an off the record discussion, I have attempted to clarify with the General
Counsel, as well as with Respondent's attorney, just what their respective con-
tentions are as they relate to this offered testimony. It is clear to me, and I take it
the General Counsel agrees now, that there being no allegation in the complaint of
an unlawful discharge, a violation of Section 8(a) (3), and the case being limited
strictly to a violation of Section 8(a)(5), to wit, whether the company failed in
its duty to discuss the change of April 1 with the collective bargaining agent,
then in consequence of all this the question of whether or not the clerk, Schisler,
lost his job because of these events is not litigable now.
The General Counsel's position, as I now understand it, is that if the com-
plaint prevails, if the Board finds that this changed method of operation was
a violation of the statute because of its not being discussed with the Union,
and if in consequence of this the Company is ordered to resume its earlier
method of operation, then the question of whether any clerks lost their jobs
because of it, or whether any of them lost work for which they must be made
whole and how much such work was lost are properly violations to be con-
sidered at the compliance stage of the proceedings. Is this a correct state-
ment of your position?
Mr. SURPRENANT: Yes, it is. _
As the hearing proceeded certain facts concerning this subject nevertheless
came to light, largely from witnesses called by the Union and the Respondent.
While questions directed to the pertinence now, and therefore the admissibility,
of such evidence were being considered, statements were made on the record indi-
cating that Schisler, one of the approximately five office clerks used before April 1,
left the Respondent's employ during the month of March. It also appears that
Madden, a truckdriver, was released shortly before April. No replacements have
been hired for these men. The Respondent offered to prove that both of them
were released for reasons unrelated to the change in method of operations which
gave rise to this proceeding . The offer of proof was rejected.
There is no allegation in the complaint that Schisler or Madden lost their jobs
because of the new U.S. Oil distribution system , and it may well be, as the
Respondent asserts, that each -of them would have left its employ in any event,
and that in some fashion sufficient work was found for the remaining employees
after April 1, so that none of them suffered any loss of earnings thereafter. In
that event a compliance investigation on the question of backpay will satisfy the
Regional Director that no claim ought to be made on behalf of these particular
individual employees. Regardless of what the precise quantum of lost work may
have been-a matter not here decided because litigation of the question was not
appropriate and was not permitted at the hearing-and 'even assuming that
Schisler and Madden suffered no loss attributable to the U.S. Oil innovation, the
fact still remains that work available for the group of employees in each of the
two bargaining units was drastically reduced by the Respondent's unilateral action.
Later inquiry, after the merits of the .complaint have been settled, may also reveal
that had the Respondent not made, the ' change over to U.S. Oil ^ on April 1, it
would have- hired new employees in both the office clerk and truckdriver category
to take the place of Schisler and Madden. The exclusive representative for, an
appropriate bargaining unit bargains not only for the particular employees who
chance to hold positions in that unit-at any given moment, but also for'employees
who, in the normal turnover in regular business operations, may enter or leave-that
single denominator employee group.3 The legality of the Respondent's act in
3 H. P. Wasson and Company, 105 NLRB 373: ". . . the Board's unit delineations are
based on functionally related work categories, and all employees performing like work
are necessarily included in the unit regardless of their tenure of employment." See, also
16th Annual Report of the National Labor Relations Board, page 120- "Our unit finding
is based upon functionally related occupational categories, and all employees working at
jobs within the unit are necessarily included and entitled to representation, irrespective
of the tenure of their employment."
1214 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
bypassing the majority representative when it substantially reduced the amount of
work available to,the bargaining unit employee group, as a whole, therefore, can-
not turn upon the question whether any particular employee suffered personal loss.
Had the complaint in fact alleged violations of Section 8 (a) (3) as to any employee,
a different question would have been presented. As the case stands, the fact that
a substantial work opportunity has been permanently taken away from the Re-
spondent's drivers and clerks without consultation with their. union has definitely
been established and requires a finding that Section 8(a) (5) has been violated.
A final defense is that whatever right the Union may have had to be consulted
concerning the loss of so much work by its members, it waived its legal preroga-
tive by agreeing, in the current contracts, to specific severance provisions, by not
demanding that its successive contracts specifically recognize the Union's right to
be advised of or to bargain on' these matters, by not protesting against occasional
unilateral cancellation or transfer of single customer accounts over the years, and
by the fact that the Respondent 'did advise the Union of the proposed U S. Oil
transaction in advance of its implementation. There is no merit in any. of these
contentions.
The waiver of a statutory right to bargain-by an exclusive majority representa-
tive must above all be "clear and unmistakable." 4 The severance clauses in the
existing agreements between the parties detail the monetary benefits to be paid
employees who leave the Respondent's employ; they are in no sense concerned with
the circumstances under which separations may be effected or with whether or
not employees are properly discharged. As to the failure of a union to demand
contract provisions guaranteeing that the employer will comply with the statutory
obligation to accord recognition to the bargaining agent, the short answer is that
a union is not required to reestablish, in the collective-bargaining agreement,
rights which flow from overriding law .5 At best both these arguments require
devious and highly inferential reasoning, and fall short of the "unequivocal"
waiver by a union of which case precedent speaks.
In the normal course of this bulk plant operation individual customers are
added or removed from its active accounts. These changes come about from time
to time by a consumer going out of business or changing gasoline supplier, and
by such a consumer buyer or even a retail gasoline station becoming unprofitable to
the Company because of reduced gallonage and therefore being canceled out by
the Respondent.
The evidence of prior discontinuance of direct company accounts covers the
period 1961 through early 1964. A number of letters, or copies of letters and
intracompany memoranda from the Company's files, were placed in evidence.
They reveal that over that 3-year period or longer, the Respondent canceled its
sales agreements with retail gasoline stations or otherwise deactivated such retail
outlets, with respect to about 10 or 12 such locations, for the reason that they
were no longer profitable accounts. The company correspondence also shows
that during 1962, 1963, and'1964_about 10 wholesale purchasers of the company
products-such as trucking concerns, bakeries,- beer distributors, laundries, etc.-
either were cut off by the Respondent because their purchases fell to too low a
volume, or themselves discontinued purchases because they changed to other gas-
oline companies . There was also placed in evidence a written statement of con-
sumer accounts lost by the Company during their same 3-year period; it lists 24
accounts, some of them duplications of cancellations reflected in the correspond-
ence exhibits. A last statement in evidence lists nine retail gasoline stations
lost, again duplicating , to an extent not ascertainable, some of the stations men-
tioned in the letters and memoranda exhibits. From the witness stand Hain, who
used to be the district manager , said he had transferred one or two accounts, a
number of small and one large commercial account during his period of employ-
ment. Lastly, Hathazy, the terminal manager , testified he once gave a direct
sales service station account to an independent wholesale distributor, who con-
tinued to obtain gasoline at this bulk plant.
Clearly all this closing out of individual accounts of the bulk plant is a normal
aspect of a business of this kind. Over a period of years it is to be expected that,
for one reason or another, customers will be lost. It is also to be assumed, how-
4 The Item Company, 220 F. 2d 956 (C.A. 5), cert. denied 352 U S. 917.
5 The Timken Roller Bearing Co. v. N.L.R.B., 325 F. 2d 746 (C.A. 6).
CITIES SERVICE OIL COMPANY 1215
ever, that in thatf same normal course of business new accounts , like those
described , will be acquired and the overall operations continue as usual. The
Company's correspondence speaks of its salesmen and shows their activity is
aimed at this very replacement purpose.
The contention is made that the broadside , single-stroke transfer of 45 accounts
to the newly formed U .S. Oil company in April of 1964 must be likened to the
occasional single-account changes that occur in the normal course of business,
and that the Union's acquiescence in this unilateral activity by management proves
a permanent waiver sufficient to require dismissal of this complaint. The knowl-
edge imputable to the Union is said to rest upon the fact that the clerks and
drivers necessarily learned of these changes in the course of their work. , It is
conceded , however, that in no instance of transfer of accounts to indirect dis-
tributors , such as U.S. Oil , was the Union advised of the fact . For all the employ-
ees could know , therefore, every discontinuance of an account in the past was
simply a matter of a' customer being unprofitable, or abandoning this supplier
for another . 1. • , -
Moreover , there is no substantial analogy between the routine closing and
opening of individual accounts in past years„ and the unilateral contracting away
in April 1964 of a major portion of the direct sales business done by the
Company. The fact that the Union made no protest when certain customers were
discontinued , has no real bearing upon whatever its representative rights . may be,
for it is in the nature of a business of this kind that accounts , will vary at times.
The unpublicized April deal with U .S. Oil was also different in kind , for- it did
not increase or decrease the total amount of products disposed of from the plant.
All it did was alter the method for achieving the ultimate consumption of the
product , and in so doing substituted the employees of U.S. Oil in place of those
represented by the Union and employed by the Respondent . If the realities of
the total picture require that unilateral transfer of perhaps 20 percent of the
delivery work in a single day be excused because the Company once or twice
assigned away one account or another , it follows that tomorrow a unilateral con-
tracting away of 40 percent of the remaining delivery work should be permitted
by analogy to the U .S. Oil transaction . And, thus, the reasoning must eventually
permit complete transfer of all the direct sales of the Company, with its con-
comitant discharge of all the drivers , all without any obligation to consult the
Union in the matter.
Both Labor Relations Manager David and Terminal Manager Hathazy admitted
they did not tell the union officers of any definite intentions to transfer accounts
to U.S . Oil in advance of April 1 . Counsel for the Respondent nevertheless asserts
that the Union did have knowledge of the proposed action in advance and con-
sciously raised no objection . Hathazy, testified that in January certain company
officials from its Cleveland plant told him direct sales deliveries had been" aban-
doned there , and that there was such intention for Coraopolis also. He added that
employees heard him talk about that. "I mentioned this to . the clerks in conver-
sation , and they all realized it . . . I told them . . . that certain accounts, com-
mercial accounts were not serviced by company trucks in Cleveland and that
undoubtedly the same phase would be employed here at some future date." He
added he did not tell them anything would happen by April 1.
Nothing more concrete than the foregoing was offered by the Respondent to
satisfy the legal requirement to advise the Union in advance of contemplated
change in working conditions , and the testimony falls far short of adequate notice,
such as might warrant a conclusion that by its silence the Union waived any right
to bargain on this essential subject . More significant is the testimony of McDon-
ald, the union president , that when he heard rumors , about March 24, that there
might be come sort of work transfer to other employees, and called Labor Rela-
tions Manager David to inquire into the truth of the report , David said he would
check and called back the next day to deny the rumor entirely . But the con-
tract with U.S. Oil had been signed on March 10, and David, called as a witness
by the Respondent , did not deny McDonald's testimony . It would appear , there-
fore, that rather than intend advance notice to the Union , the Respondent's pur-
pose was to keep it ignorant of the planned deprivation of work from its members.
In these circumstances any defense based on waiver is now entirely unpersuasive.
Upon the basis of the foregoing considerations , and on the record as a whole "I
find that by canceling its sales agreements with the 45 customer accounts, and in
effect contracting with U .S. Oil to deliver the Respondent 's products to those
1216 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
accounts instead, without advance notice to the Union, the Respondent has
violated 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 its operations described in section I, above , have a close, intimate,
and a substantial relation to trade , traffic, and commerce among the several States,
and tend to lead to labor disputes burdening and obstructing commerce and the
free flow of commerce
V THE REMEDY
It has been found that the Respondent violated Section 8(a)(5) by unilaterally
transferring the customer accounts to another employer, and thereby reducing the
amount of work available to its employees, without bargaining with the Charging
Union over its decision to do so I shall therefore recommend that it be ordered
to cease and desist from unilaterally transferring such accounts or otherwise mak-
ing unilateral changes in the employees' terms and conditions of employment with-
out consulting their bargaining agent Meaningful remedy for the unfair labor
practices committed also requires that the Respondent be ordered to restore the
status quo ante by reinstituting its system of making direct sales deliveries of its
products to those customer accounts transferred to U S Oil, to resume using its
own employees to accomplish such work, and to fulfill its statutory obligation to
bargain 6 When that obligation has been satisfied after the resumption of bargain-
ing, the Respondent may, of course, lawfully transfer its accounts to independent
distributors Moreover, in accordance with the Board's established practice, and
in order to avoid what the Board has characterized as "an exercise in futility"
in the remedial action, the Respondent shall also be ordered to make whole the
employees-both drivers and warehousemen and office clerks-for any loss of
earnings they may have suffered as a result of the Respondent's unlawful bypass-
ing of their bargaining agent and unilaterally eliminating work previously per-
formed by them, in the manner set forth in F W Woolworth Company, 90 NLRB
289, and N L R B v Seven Up Bottling Company of Miami, Inc, 344 U S 344
Upon the basis of the foregoing findings of fact and upon the entire record m
the case, I make the following
CONCLUSIONS OF LAW
1 Cities Service Oil Company is an employer within the meaning of Section 2(2)
of the Act
2 Drivers and Employees of the Petroleum Industry, Local Union 273, a/w
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers
of America, is a labor organization within the meaning of Section 2(5) of the Act
3 By unilaterally canceling its sales accounts and transferring such accounts to
an independent distributor, without first bargaining collectively with the Union as
the exclusive representative of the employees in the appropriate bargaining units,
the Respondent has committed unfair labor practices within the meaning of Section
8(a)(5) of the Act
4 By the foregoing conduct the Respondent has interfered with, restrained, and
coerced its employees in the exercise of rights guaranteed to them by Section 7 of
the Act and has thereby committed unfair labor piactices within the meaning of
Section 8(a)(1) of the Act
5 The aforesaid unfair labor practices are unfair labor practices within the mean-
ing of Section 2(6) and (7) of the Act
RECOMMENDED ORDER
Upon the basis of the foregoing findings of fact and conclusions of law, and upon
the entire recoid in the case, I iecommend that Cities Service Oil Company, Pitts-
burgh, Pennsylvania, its officers, agents, successors, and assigns, shall
1 Cease and desist from
(a) Refusing to baigain collectively with Drivers and Employees of the Petro-
leum Industry, Local Union 273, a/w International Brotherhood of Teamsters,
6 Town & Country Manufacturing Co, Inc, 136 NLRB 1022 enfd 316 F 2d 846
(C A 5)
CITIES SERVICE OIL COMPANY 1217
Chauffeurs , Warehousemen and Helpers of America , as the exclusive representative
of all employees in the appropriate bargaining units at its Pittsburgh District Bulk
plant , and from unilaterally changing their wages , hours, and other terms and con-
ditions of employment without prior consultation with the above -named Union, or
any other union which they may select as their exclusive bargaining representative.
(b) In any like or related manner interfering with, restraining , or coercing
employees in the exercise of their rights to self-organization , to form labor organi-
zations, to join or assist the above -named Union, or any other labor organization, to
bargain collectively through representatives of their own choosing , and to engage in
other concerted activities for the purposes of collective bargaining or other mutual
aid or protection , and to refrain from any and all such activities , except to the
extent that such rights may be affected by an agreement requiring membership in a
labor organization as a condition of employment , as authorized in Section 8(a)(3)
of the Act.
2. Take the following affirmative action which is designed to effectuate the
policies of the Act:
(a) Reinstitute its system of making direct sales deliveries of its products to
those customer accounts unilaterally transferred to U.S . Oil, resume using its own
employees to accomplish such work , and make whole any of its employees in the
appropriate bargaining units for any loss of pay suffered by them in consequence
of such unilateial action, in the manner set forth in the section above entitled
"The Remedy."
(b) Upon request , bargain collectively with the above -named Union as the exclu-
sive representative of all employees in the appropriate bargaining units in respect
to rates of pay, wages , hours of employment , or other terms and conditions of
employment , and embody any understanding reached in a signed agreement.
(c) Preserve and, upon request , make available to the Board or its agents, for
examination and copying , all payroll records , social security payment records,
timecards , personnel records and reports , and all other records that are necessary
or useful to determine the amount of backpay due and rights of reinstatement, if
any, under the terms of this Order.
(d) Post at is plant in Coraopolis , Pennsylvania , copies of the attached notice
marked "Appendix ." 7 Copies of the said notice , to be furnished by the Regional
Director for Region 6, shall , after being duly signed by the Respondent 's representa-
tive, be posted by Respondent immediately upon receipt thereof, and be maintained
by it for 60 consecutive days thereafter , in conspicuous places, including all places
where notices to employees are customarily posted . Reasonable steps shall be
taken by the Respondent to insure that said notices are not altered , defaced, or
covered by any other material.
(e) Notify the Regional Director for Region 6, in writing , within 20 days from
the receipt of this Decision , what steps the Respondent has taken to comply
herewith .8
7 In the event that this Recommended Order be adopted by the Board , the words "a
Decision and Order " shall be substituted for the words " the Recommended Order of a
Trial Examiner" in the notice . In the further event that the Board 's Order be enforced
by a decree of a United States Court of Appeals, the words "a Decree of the United States
Court of Appeals, Enforcing an Order"' shall be substituted for the words "a Decision
and Order."
81n the event that this Recommended Order be adopted by the Board, this provision
shall be modified to read: "Notify the Regional Director for Region 6, in writing, within
10 days from the date of this Order, what steps the Respondent has taken to comply
herewith."
APPENDIX, , ,
NOTICE TO ALL EMPLOYEES
Pursuant to.the Recommended Order of a Trial Examiner of the National Labor
Relations Board, and in order to effectuate the policies of -the National Labor
Relations -.Act, as amended, we hereby notify our employees that:
WE WILL NOT , refuse to bargain collectively with Drivers and Employees
of the Petroleum 'Industry, Local Union- 273, a/w-International Brotherhood
221-731-67-vol. 158-78
1218 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of Teamsters, Chauffeurs, Warehousemen and Helpers of America, as the
exclusive representative of all our employees in the appropriate bargaining
units at our Pittsburgh District Bulk Plant , or unilaterally change the wages,
hours, rates of pay or other terms and conditions of employment .of such
employees without prior consultation with the above-named Union, or any
other union which they may select as their bargaining representative. The
bargaining units are:
All drivers and warehousemen at our Pittsburgh District Bulk Plant,
excluding all other employees , office clerical employees and guards, pro-
fessional employees and supervisors as defined in the Act.
All office clerical employees at our Pittsburgh District Bulk Plant, exclud-
ing all other employees, drivers, warehousemen and guards ,, professional
employees and supervisors as defined in the Act.
WE WILL reinstitute our system of making direct sales deliveries of our
products to those customer accounts unilaterally transferred to U.S.'Oil Com-
pany, Inc.; WE WILL resume using our own employees to accomplish such
work; and WE WILL make whole the employees in those bargaining units for
any loss of pay they may have suffered as a result of our bypassing the above-
named exclusive bargaining representative and unilaterally transferring such
accounts to another employer.
WE WILL bargain, upon request , with Drivers and Employees of the Petro-
leum Industry, Local No. 273, a/ w International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, as the exclusive bargain-
ing representative of our employees in the appropriate bargaining units with
respect to wages, hours , and other terms and conditions of employment.
CITIES SERVICE OIL COMPANY,
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.
Employees may communicate directly with the Board 's Regional Office, 2107
Clark Building, 701-17 Liberty Avenue, Pittsburgh, Pennsylvania , Telephone No.
471-2977. if they have any questions concerning this notice or compliance with
its provisions.
TRIAL EXAMINER'S SUPPLEMENTAL DECISION
The Trial Examiner's Decision in this case found that the Respondent violated
Section 8 (a)(5) of the Act when, on April 1, 1964, it gave away 25 percent of its
direct delivery business to another employer without notice to the certified
collective-bargaining agent of its employees and without affording it an opportunity,
as the statute commands , to discuss the matter as it might affect the conditions of
employment of the employees . On April 27, 1965, the Board issued an Order
reopening record and remanding proceeding so that the Trial Examiner might
"receive evidence ... relevant to the actual or expected ' impact upon work oppor-
tunities , overtime , other terms and conditions of employment" caused by the
Respondent 's action of April 1, 1964. Upon notice to all parties a hearing pursuant
to that Order was held on November 8, 1965, at Pittsburgh , Pennsylvania. A
brief was received from the General Counsel after the close of the, reopened
hearing.
Upon the record in its entirety , and from my observation of the witnesses, I make
the following further findings of fact:
Reduction in the Number of Employees
Two separate bargaining units are involved in this case: one for office clerical
employees , and one for drivers and warehousemen . In the period preceding the
April 1964 change in the method of operation, there were four office clerks and
eight drivers and warehousemen. M. Schisler, an office clerk , left the Company
on April 1, 1964, leaving three clerical employees in that unit . This number
CITIES SERVICE OIL COMPANY 1219
remained constant until February 26, 1965, when A. Boehm, another clerical em-
ployee, also left. Although his departure is unexplained on the record , the fact of
Boehm's departure is too remote from the issues of this proceeding to warrant any
consideration here. ' In the driver-warehousemen unit there were eight employees
before April 1964. Madden , a truckdriver , was terminated on March 6, 1964,
leaving seven . This number also remained constant thereafter , with no one added
and no one leaving through April 1, 1965. The Respondent produced documentary
evidence , uncontradicted by the other parties, that both Schlisler and Madden were
released for reasons unrelated to the change in delivery methods which reduced
the quantum of work to be performed by each group of employees.
Interdepartmental correspondence between Hathazy , the personnel director of the
Coraopalis terminal of the Company , and its central marketing sales division,
apparently a higher executive office, shows that on February 27, 1965 W. M. Kittle,
of Cleveland , advised Hathazy that there was too much duplication of work among
the clerks , and that a reduction from four to three persons should be considered;
his memorandum suggested rearrangement of the work assignments and elimina-
tion of the junior man. On March 13 Hathazy sent to Cleveland a very detailed
work assignment sheet whereby he was planning to redistribute all the office work
among only three remaining clerks. On the 20th Hathazy reported again in writ-
ing to Kittle that Schisler would be reduced at the end of the month; this letter
detailed the mechanics of the clerk 's separation and a suggestion he be used else-
where with the Company if possible because of his good employment record. The
letter also notes that Schisler had been advised on March 19 that his employment
would end on March 31. Cleveland answered Hathazy again on March 24 , noting
that paperwork necessary for Schisler 's termination was being processed.
There is nothing of substance in the record to offset the positive indication in
this correspondence that it was a change in the method of maintaining records,
aimed at eliminating waste motion and at improved efficiency , which provoked the
discharge of this clerk . I find that his departure from the Company bore no rela-
tionship to the change in gasoline delivery methods instituted on April 1.
Madden, the truckdriver , was retired because of ill health . The first medical
opinion that it might not be safe for him to operate heavy gasoline equipment is
dated August 21 , 1963. Thereafter there were medical examinations by his own
doctor, a company physician , and finally by a third doctor acting as impartial
examining physician . In November Dr. Motta, Madden's personal physician, be-
he' ed the man could safely work. In December a Dr. Bradley , who had first
questioned the driver 's health , adhered to his earlier view. The Company became
concerned and on February 22 a Dr. Gordon conducted a comprehensive study of
the patient ; in his written report he found high 'suggestion of tuberculosis, among
other things , and stated he would report to the ICC his opinion that Madden could
not safely drive a gasoline truck. Madden left the-Company on March 6, with
life benefits under the Company 's retirement plan.
It is clear this employee . was released because of his health ; I find his separa-
tion from the Company was'also unrelated to the April 1 events when the Com-
pany contracted away a substantial amount of the work performed by the driver
warehousemen group.
Evidence of Reduction in Overtime Work Following the April 1 Contract
The more comprehensive record now made shows that during the period Jan-
uary through ' March 1964 the Company had 245 accounts which it serviced by
direct delivery of its products to retailers or commercial consumers , and that there-
after, for the- remainder of the year 1964 it had only 200 such accounts . It also
is shown that during the 12-month period starting with April 1 the Company's
sales to its directly serviced accounts totaled 7 , 129,800 gallons, while sales to U.S.
Oil during the same period amounted to 3,756 ,000 gallons. At the request of the
General Counsel the Company prepared a chart , received in evidence, showing
dollar amounts of overtime payments made to drivers and warehousemen during
the 12 months before, and the 12 months following the April 1 change; it shows
1 All parties agreed that any data relating to the period after April 1, 1965, is too
remote from the issues involved here and should therefore be deemed irrelevant to any
of the contentions urged by anyone.
1220 DECISIONS 'OF NATIONAL LABOR RELATIONS BOARD
overtime payments by months. Hathazy admitted clearly at the hearing that the
dollar totals represented "overtime paid to the drivers and warehousemen." The
figures are as follows:
1963-64 Overtime
Earned
1964-65 Overtime
Earned
April------------------------------- 182.13 April ------------------------------ 16 52
May------------------------------ 592 01 May--------------------------- 300 27
June------------------------------- 587 11 June------------------------------ 42 68
July-------------------------------- 568 87 July------------------------------- 315 38
August----------------------------- 426 54 August--------------------------- 74 29
September------------------------- 644 37 September ------------------------ 197 64
October---------------------------- 310 33 October--------------------------- 102.13
November------------------------- 372.06 November ------------------------ 82 66
December-------------------------- 518 28 December ------------------------- 142 36
January --------------------- ------- - 256 29 January-------------------------- 40 32
February-------------------------- 66 36 February------------------------- 70 08
March----------------------------- 60 27 March--------------------------- 144 14
Total------------------------ 4,584 62 Total ----------------------- 1,528 47
It thus appears that in this unit overtime work opportunities, and earnings, were
reduced by $3,000 in the one year. Seven men worked, and this means each lost
over $400 in wages. With U.S. Oil handling over 3 million gallons of the fuel
previously delivered by the Respondent's own employees, it also follows that but
for the change the Respondent would at least have hired a man to replace Madden
as a driver, a further reduction in work "opportunity" for the employees repre-
sented by the Union.
As the hearing proceeded, Hathazy, of the Company, under whose direction the
charts in evidence were prepared, testified that these monthly figures for "overtime"
did not really indicate work performed, and that, in a way which he did not clearly
articulate, other variable factors affected the monthly totals. The burden of his
testimony was to avoid the finding that if less money was paid in the second year
it was because there was less work to do. And the exhibit does contain cryptic
wording-set after the money total for each month-of so many days "illness," or
so many "vacation days," or "holiday," or "leave-of-absence," or "holiday on Sat-
urday." Hathazy spoke as follows at the hearing:
The overtime basis means those items that are necessary to determine the
amounts of monies received for services; various reasons; such as holidays,
illness; in one case, a one day strike, which put a burden on the Company;
holiday pay for a Saturday, holidays which fell on Saturday, whereby the
men were receiving time and one-half pay . . . . When a man is on vacation
and a holiday falls within that period, he is then paid an extra day's pay for
that particular holiday.
Hathazy then said there were additional factors, such as "breakdown of equip-
ment," "emergency orders," "sales."
Hathazy's attempted explanation that the "overtime" is not really overtime is
unpersuasive. In words, as he stated it, the relationship between the details of
vacation, illness, and matters of that kind and the amounts appearing in the records
is elusive and not understandable. In fact, a random sampling of any month
proves that the amounts cannot have any direct and clear relationship to such
added data. The month of * April 1964 shows $16.25 overtime payment, and is
followed by the phrase "3 days illness"; does this mean a man was paid sick leave
at the rate of $5.50 per day? More likely, and understandably, it means 31/2 hours
of overtime work was performed and paid for at the rate of $4.71 per hour.
(Another exhibit of the Respondent, discussed below, establishes that in that month
in fact 31/2 hours of overtime work was performed.) In June 1964, $42.68 was
paid; here the chart says "one day illness 15. days vacation." Are vacations, paid
at the rate of $2.66 per day? The Respondent's' hours worked sheet shows 74
hours, and this divides into $42.68 at $5.50 per hour. For November 1964 it
was $82.66 in cash, and "2 days illness, 15 days vac. 2 holidays." At one point
CITIES SERVICE OIL COMPANY 1221
Hathazy spoke of "holidays which fell on Saturday, whereby the men were receiv-
ing time and one-half pay" If this phrase has meaning it is that in November
there were 2 holidays and all 7 men received an extra half-day's pay -an equivalent
of 7 full workdays But with 15 days vacation and 2 of illness, this totaled 24
days, for all of which only $82 66 was paid-an impossible conclusion The
amount instead fits into the number of overtime hours-151/4-at $5 40 per hour
There is no purpose in continuing such detailed study of the successive monthly
amounts and the added data of vacation or holiday or illness appearing in the
chart To a lesser or greater degree like unintelligible and impossible conclusions
are reached in any effoit to give significance to Hathazy 's oral testimony More-
over, even assuming there is a relationship between the two columns-money
amounts and so called "basis"-it would mean little here, for the number of vaca-
tion and illness days appearing for the 2 comparison years are very much alike,
so that the difference of $3,000 overtime retains its significance The first year
shows 34 illness and 120 vacation days, the second shows 45 illness and 130
vacation
There is further reason for accepting the statements of overtime money paid as
in fact representing overtime work performed, and as in fact the company chart
itself says The Respondent offered a further sheet, accepted as ieliable by the
other parties, showing the number of overtime hours worked by the drivers and
warehousemen group over a 15 month period-January 1, 1964, through March 31,
1965 If the number of hours worked is divided into the amounts paid, there
appears the following table
Hours of ooertime Amount paid Per hour?
1964
January 54 256 29 4 74
February 14 66 39 4 73
March 123/4 60 27 4 68
tpril 3% 16 52 4 71
14 ay 6 300 27 60 05
June 7% 42 68 5 50
July 123 315 38 25 74
August 15% 74 29 4 78
September 34Y2 197 64 5 72
October 24 102 13 4 25
November 10% 82 66 5 42
December 20% 142 36 4 78
1965
January Of 40 32 4 36
February 15 70 08 4 67
March 2o3/4 144 14 5 70
I cannot understand the results reached by this computation for the months of
May and July 1964, and the Respondent came forth with no rational explana-
tion of how those figures were arrived at The consistent pattern of the remaining
13 months , however, lends support to the ultimate finding that overtime was per-
formed and paid for at the rate of something slightly below $5 per hour
The Respondent placed into evidence other information about its delivery opera-
tions following the April 1 change of method, it did not explain at the hearing
significance is to be attached to them and filed no brief to indicate what conten-
tions will be based upon them It can be assumed, however, that the purpose is to
offset the inference that what loss of overtime is shown to have followed the
change may not be attributed to that fact but resulted instead from other changed
circumstances
One document is the chart mentioned above, revealing the numbei of hours of
overtime worked each month , it covers the last 3 months before the change-
January, February, and March 1964, and the full year following The chart
can only be used to compare the first 3 calendar months of 1964 with the com-
parable period of 1965, and this shows a reduction in overtime between 1964 and
1965 from 603/4 hours to 491/2 hours, or 18 percent
There is a list of 20 accounts "serviced 75 percent by outside carriers prior to
January 1965 now being serviced 100 percent by company trucks," and all it
1222 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
shows is that to these 20 customers 9,862 gallons of gasoline were sold during
the first 3 months of 1965. This means that to these particular locations deliveries
increased by 7,200 gallons.
A second list names 36 accounts, of which 13 represent multiple locations of
only three companies, and all of which never purchased products from the Respond-
ent before January of 1965. This chart shows that 12,642 gallons of gasoline were
delivered during January, February, and March 1965 to all of these accounts
together, with 13 of them receiving none at all. The significance of both 'these
charts as exhibited in this case, eludes me. It is a normal incident of this busi-
ness that accounts come and -go, for a multitude of reasons. With the gross volume
of gallons delivered in a year being over 7 million, even after 45 of the 250
accounts had been transferred, variations of 7,000, or even 12,000 gallons indicate
nothing of substance.
A final gasoline delivery record chart introduced by the Respondent shows the
monthly sales to 14 "marketing stations," meaning retail gasoline stations which
purchase gas from and have it delivered by the Company. This data is also limited
to the 12 months starting April 1964. Seven of, these stations were closed for
varying periods during that particular year; three ere closed for 2 months, two
for 1 month, one 31/2 months and one 7 months. The gallonage delivered to these
selected 14 customers in successive months is as follows: 114,000, 128,000, 159,000,
147,000, 125,000, 114,000, 125,000, 118,000, 140,000, 101,000, 84,000 and 120,000.
What the Company's volume of business was with these same customers during
the comparable 12-month period preceding the April 1, 1964, change, what similar
shutdowns of these same stations there may have been before the critical date, or
why these particular accounts should be deemed of special significance has not
been shown. The monthly gross volume of all 14 together did not change greatly
during the 12 months reflected in the chart-at least when considered in the light
of the overall volume of over 7 million gallons delivered by the Company during
that year. It also appears that in January and February 1965, as a group they
did less per month than during the last 9 months of 1964. Could this minor
variance be explained as a seasonal winter change? Were there other "marketing
stations," selected by the Respondent not to be reported here, which opened during
this period, or which for some reason or other increased their purchases so as to
compensate for the lesser purchase of these? In the total circumstances I infer
nothing meaningful from this out-of-context excerpt from the Respondent's records.
On the basis of the total record I find that the Respondent has not proved
that in consequence of its having divested itself of 20 percent of its direct delivery
business there has not been any change in the "work opportunities, or other terms
and conditions of employment" of the employees in the bargaining units. I also
find that the loss of $3,000 in overtime pay in the 12 months following the change
was in fact a loss of earnings suffered by the employees directly resulting from the
unilateral action taken by the Respondent on April 1, 1964.
Recommendation
In its remand.order the Board directed that the Trial Examiner also make find-
ings "respecting the significance of the detriment, if any, to work opportunities,"
etc., and appropriate recommendations in the premises. No reason appears for
altering any of the findings and conclusions set out in the original decision herein.
These include the following facts: (1) the Respondent did not afford the Union
an-opportunity to bargain respecting its contract transferring 45 accounts to U.S.
Oil; (2) the Respondent took pains to conceal its intent and action from the union
representatives; (3) the Union did not waive its statutory right to be consulted in
such matters;='and (4) the action was not mere continuation of an established
practice.
The Board's more recent decisions involving alleged employer refusals to bargain
based on unilateral action of this type show that the question of its impact upon
the employees' work opportunities or earnings is also a significant factor to be
considered on the question whether unfair labor practice findings are- appropriate.
Inevitably the extent of the effect of such conduct will vary from case-to-case,
and it is perhaps for this reason that in weighing such factor the Board has spoken
of it in comparative or quantitative terms, such as "substantial impact," 2 "signifi-
2 General Tube Company, 151 NLRB 850.
SEVEN UP BOTTLING CO. OF SACRAMENTO 1223
cant detriment," 3 "significant impairment of . . . reasonably anticipated work
opportunities," 4 "minimal effect," 5 "real change," 6 and "detriment to bargaining
unit employees." 7 With this ever variable element of the total picture always
appearing in a different light, and with the more precise components of the unfair
labor practice proof set out above differing, in successive cases, no single case
precedent can logically be said to predetermine a following one. Whether or not
the exact loss of earnings in a given set of facts, or even loss of work opportunities,
is minimal or substantial, must necessarily call for a valued judgment. Here it
is clear that but for the gratuitous gift to U.S. Oil by the Respondent of about 20
percent of its gasoline delivery business, the seven drivers and warehousemen who
remained at work each would have earned an average of approximately $8 per
week more in overtime work during the year following than they in fact were
permitted to enjoy. After due consideration of the Board's language in the many
recent decisions in point, I find that this loss of earnings was neither minimal nor
insignificant. I find that the employees in this bargaining unit in fact suffered a
substantial impairment in their earnings and work opportunities.
Accordingly, I recommend that, on the basis of the total record as it now stands,
the Board adopt the conclusions, findings, and recommendations as set out in the
Trial Examiner's original Decision in the proceeding.
S American Oil Company, 151 NLRB 421.
4 Westinghou8e Electric Corp., 159 NLRB 136.
5 Shell Chemical Co., 149 NLRB 305.
0 American Oil Company , 152 NLRB 56.
7 Allied Chemical Corporation , 151 NLRB 718.
Tonkin Corp. of California, d/b/a Seven Up Bottling Co. of
Sacramento and Edward J. Farrell and Sacramento 7-Up
Employees ' Union, Party to the Contract. Case No. 20-CA-
2657. May 27, 1966
SUPPLEMENTAL DECISION AND ORDER
On June 10, 1964, the National Labor Relations Board issued a
Decision and Order in the above-entitled proceeding,' finding that
the Respondent had engaged in and was engaging in certain unfair
labor practices and ordering that it cease and desist therefrom and
take certain affirmative action designed to effectuate the policies of
the National Labor Relations Act. On November 10, 1965, the
United States Court of Appeals for the Ninth Circuit issued a deci-
sion 2 enforcing the order of the Board insofar as it relates to the
reinstatement, and compensation of employee Barwise, but remand-
ing the issues subsumed in the remaining "lockout" portions of the
order to the Board for further consideration, and such proceedings
as the Board may deem appropriate, in the light of American Ship
Building Co. v. N.L.R.B., 380 U.S. 300, decided by the United States
Supreme Court subsequent to the Board's Decision and Order herein.
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, as amended, the National Labor Relations Board has
1147 NLRB 401.
2 352 F. 2d 509.
158 NLRB No. 110.