David Buttrick Co.

National Labor Relations Board - Board Decisions

Sep 15, 1967

167 N.L.R.B. 438 (N.L.R.B. 1967)

438 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
David Buttrick Company and Milk Wagon Drivers
and Creamery Workers Union, Local No. 380, af-
filiated with International Brotherhood of Team-
sters, Chauffeurs, Warehousemen and Helpers of
America. Case 1-CA-4816
September 15, 1967
SUPPLEMENTAL DECISION AND ORDER
On May 26, 1966, the United States Court of
Appeals for the First Circuit announced its decision
which declined to enforce the Board's initial Deci-
sion and Order in this proceeding,' and remanded
the case to the Board for reconsideration in light of
the court's opinion 2 We accepted the court's re-
mand and, on August 5, 1966, issued to the parties
and to interested organizations a notice of opportu-
nity to submit statements of position and briefs.
Statements and briefs were submitted by Respond-
ent, General Counsel, and Local 380, and, as
amicus curiae, by International Brotherhood of
Teamsters and United Mine Workers. With the aid
of these statements and briefs, the Board has recon-
sidered the record in light of the court's opinion,
and has decided to reaffirm its original conclusion
that Local 380 is not presently disqualified to serve
as the bargaining representative of Respondent's
employees.
In our prior decision we found insufficient
evidence of "any definite or substantial connec-
tion" between Local 380 and the loans by the fund3
to Respondent's competitor Whiting4 which asser-
tedly created a disabling conflict of interest in Local
380. 154 NLRB 1468, footnote 1. Finding such a
connection lacking, we expressed no views on
whether these loans nonetheless posed such a
threat to the full and fair performance of the duties
imposed upon Local 380 as a Section 9(a) repre-
sentative as to disqualify it from serving as the
bargaining agent for Respondent's employees.
The court felt that our "lack-of-connection" ap-
proach, emphasizing the absence of formal affilia-
tion and participation in the loans, was inadequate
to cope with the conflict-of-interest problem. For,
"it is the interrelationship of powers and tempta-
tions created by the Fund's loans . . . which gives
rise to the problem, without regard to the circum-
stances leading to the existence of the loans." 361
F.2d at p. 304. The better approach, the court sug-
gests, is to determine whether there is an "innate"
or "proximate" danger that the International
Brotherhood of Teamsters, through its constitu-
tional powers, will subject Local 380's bargaining
conduct to the advancement of the "ulterior" pur-
pose of protecting the fund's loans to Whiting. Id.
at p. 307. "What is required is a selective scrutiny
of those key powers which a local bargaining agent
must be able to exercise with undivided loyalty if it
is to engender confidence at the bargaining table."
Ibid. Thus, the court's remand directs us to assess
the "potential, not merely the actuality of conflict
of interest," to consider the "feasibility of devising
reasonable proscriptions and safeguards," and to
"frame an order which, hopefully, will balance the
legitimate interest of the Fund, respondent, Interna-
tional, Local 380, and respondent's employees." Id.
at pp. 308-309.
Accepting the court's views as to the proper stand-
ard to be applied, we shall assume, as the court
did, that the object of the loans to Whiting was to
secure maximum gain at minimum risk for the fund
beneficiaries,5 and that the Teamsters general pres-
ident, as one of 16 trustees on the fund, has an in-
terest in seeing Whiting prosper in order to imple-
ment that object.6 Our task is thus to gauge the
likelihood that the general president and the general
executive board,' through the exercise of authority
under the Teamsters constitution, can and will pur-
sue the International's loan protection interest by
altering Local 380's bargaining conduct. On this
record we find the possibility of such intervention
in local bargaining is too remote to disqualify Local
380 from representing Respondent's employees.
It is true that the Teamsters constitution gives the
general president certain enumerated powers which
could be used to influence bargaining activity of the
locals. Thus, he can refuse a local's request to ex-
clude lessees, "vendors," or "owner-equipment
drivers" in a contract (art. II, sec. 2(b)-(d));8 direct
a vote among local membership on "any matter,
issue or proposition" (art. VI, sec. 1(h)), including
the employer's final contract offer (art. XII, sec.
1(b)); resolve "all grievances and disputes" sub-
154 NLRB 1468
2 N L R B v David Butt rick Co, 361 F 2d 300 (C A 1) On October
26, 1966, the court granted motions to enlarge the record to include four
of Respondent's preelection communications to employees and the cur-
rent Teamsters constitution as revised at its July 1966 convention
The Teamsters Central States, Southeast and Southwest Areas Pen-
sion Fund
4 The nature and degree of competition between Respondent and Whit-
ing were not fully developed at the hearings in the case However, we do
not predicate our conclusion herein on the lack of competition, and shall
assume, for purposes of this proceeding, that the requisite degree of com-
petitiveness exists
5 It has been suggested that considerations other than safe, maximum
return may underlie some union investment decisions See Comment, 67
Columbia Law Review 162 , 163-165 See also Hickey , "The Establish-
ment of Pension Plans in the Labor Relations Process ," 18 Vanderbilt
Law Review 151, 172-173
" We need not determine the precise nature of this interest It should be
noted that Congress is currently considering proposals which impose and
define a "fiduciary" responsibility on administrators of pension funds See
Sec 14 (dHi) of H R 5741 and S 1024 , and Secs 206 and 209 of S
1255 See also Sec 402 of S 1103
' The general executive board is composed of the general president, the
general secretary-treasurer , and the general vice president , and 12 vice
presidents Art I V , sec 1(a) of the International constitution
"The general president 's action is subject to review by the general ex-
ecutive board
167 NLRB No. 58
DAVID BUTTRICK CO.
mitted by joint councils or locals (art. VI, sec. 2(a));
approve local bylaws subject to appeal to the
general executive board (art. VI, sec. 4(a), art.
XXII, sec. 1); under specified procedures and for
limited reasons, impose a trusteeship over the local
(art. VI, sec. 5); "approve, disapprove or modify"
a local's proposed involvement in a strike, boycott,
lawsuit, or "any serious difficulty" (art. XII, sec.
1(c)); approve "out-of-work" benefits for strikes of
fewer than 200 employees which have not been
cleared by the general executive board (art. XII,
sec. 3 5(d)); determine the existence of a lockout for
purposes of "out-of-work" benefits (art. XII, sec.
9); and approve local solicitations for financial aid
from sister locals (art. XIII, sec. 2). Acting with
the general executive board, the general president
has the power to compel a local to arbitrate a
dispute with an employer, "not covered by a Local
Union agreement" (art. VI, sec. 3); terminate Inter-
national financial aid to a local (art. XII, sec. 7); and
appoint negotiating committees and establish
procedure for negotiating area, national, and indus-
trywide agreements, and "do all things necessary to
implement the enforcement of such agreements"
(art. XVI, sec. 4(b)). And, finally, the constitution
requires the locals to submit proposed bargaining
agreements to joint councils or State or area confer-
ences9 (art. XII, sec. 11(a)), and the general execu-
tive board may veto the execution of a contract
calling for less-than-prevailing wages or working
conditions. Art. XII, sec. 1 1(d).
Save for trusteeship, the general tenor of these
powers is that of limited, procedurally safeguarded,
restraint on local bargaining activity. The general
president has no authority either to formulate local
bargaining goals or to compel strike action to carry
them out. The powers in respect to strike votes,
contract approval, arbitration, financial aid, et al.,
are by their terms limited to inhibiting or discourag-
ing action which is initiated by the local itself. In ad-
dition, the constitution impliedly places primary
authority over bargaining in the locals by disavow-
ing International responsibility for local strikes and
boycotts (art. XII, sec. 1(c)) and for contract liabili-
ty (art. XII, sec. 1 1(c) and sec. 14). The question of
whether to join into area, national, or industry bar-
gaining is also decided by the locals (art. XVI, sec.
4(a)), and only then do the powers of the general
president in these negotiations come into play.
While International trusteeship could eliminate
local control over bargaining,10 this danger appears
to be somewhat muted by Sec. 302 of the Landrum-
Griffin Act (29 U.S.C. § 462) which limits the pur-
Area conferences are "subject to the unqualified supervision,
direction and control of the General President " Art XVI, sec I
10 The situation to which the International is the unit representative, by
designation or otherwise , is not , of course , before us , and we express no
views on any conflict of interest problems ansing there
11 It may be that a strong general president might be able to transmute
these limited dejure powers into effect de facto control over local bargain-
439
pose for which trusteeships can be imposed, and the
pursuit of a pension fund financial interest would
appear to fall outside the list of permitted objec-
tives. In sum, we find that the constitutional powers
permit only a limited entry into local bargaining ac-
tivity, and that the local constitutes the initiating
and pervasive force in dealings with employers."
In addition, we find no evidence that the Interna-
tional has been tempted by the fund's loans to Whit-
ing to exercise its limited constitutional powers
over Local 380. There is also no indication on this
record that the general president has ever sought to
alter Local 380's bargaining conduct for any reason.
The possibility that he might intervene in Local
380's negotiations and submerge the employees'
representational interests in favor of protecting the
Whiting loans is, in our opinion, too remote tojusti-
fy overturning the employees' clear-cut selection of
Local 380 as their bargaining agent.12 This is not to
say that we think the Whiting loans are completely
insignificant to Local 380's continued existence as
statutory bargaining agent. We shall be most sensi-
tive to future conduct evidencing pressure, con-
stitutional or other, to bend Local 380's bargaining
course towards loan protection. Existing
procedures are available under the Act to curtail
such pressure or, if necessary, even to withdraw
Local 380's certification in the event of impermissi-
ble pressures. But, as this record stands, it does not
support disqualification of Local 380.
In respect to the establishment of safeguards or
guidelines to govern union and pension fund invest-
ments generally, we share the court's concern over
the "eroding effects" of conflicts between invest-
ment protection and employee representation,
which are "likely to arise with increasing frequen-
cy." 361 F.2d at 305. Yet, we find many compelling
reasons for not formulating general standards in a
single proceeding such as this. First, there are
several elements of the conflict-of-interest problem
- the necessary degree of competition, the different
possible types and amounts of investments, various
methods of fund administration, etc., - which have
not been developed in the case. Thus, we have
reservations as to whether we are sufficiently in-
formed to delimit the relative hazard posed by the
different combinations of investment, fund adminis-
tration, International control over locals, and
degree of competition between employers; the par-
ticipants in this proceeding have not offered a feasi-
ble means for doing so. Moreover, we feel that the
raw data necessary to devise broad guidelines is not
yet available. Respondent in its brief has recognized
mg But we do not think the court intended that we determine and weigh
strength of personalities in deciding the "proximateness" of the conflict-
of-interest hazard
11 The record now establishes that before the election the Company in-
formed the employees of the loans to Whiting and asserted that they con-
stituted a disabling conflict of interest The employees voted 24 to 2 for
the Union in the face of this assertion
440 DECISIONS OF NATIONAL
that the "field of pension fund investment is a vast
one in which much of the basic information is still
in the process of compilation ." In addition, the
President ' s Committee on Corporate Pension Funds
considered regulatory measures other than the ex-
isting disclosure requirements , but failed to recom-
mend such additional regulation in part because of
the "absence of sufficient facts as to the prevalence
of abuses ." " Public Policy and Private Pension
Programs" (GPO 1965 ). We note that Congress is
currently considering several proposals for expand-
ing the regulation of pension funds , including cer-
tain aspects of fund investments . See H . R. 5741, S.
1024, S . 1103, S. 1255 . And, finally, any approach
to such guidelines in the area of pension fund in-
vestments should not be undertaken without
reviewing the impact of those guiding principles on
the not-uncommon practice of unions themselves to
LABOR RELATIONS BOARD
make loans to companies which are in financial dif-
ficulties in order to preserve jobs for the company's
employees . This occurs , we observe , in industries
where competition is intense and where the same
union may represent employees of the competitors.
No comprehensive data concerning these practices
are before us or to our knowledge are yet available.
We think it is desirable to explore fully the con-
sequences of any proposed general investment or
bargaining safeguards in this related field before
adopting them. For these reasons, we believe that
our ruling in this proceeding should be limited to the
facts presented by the record before us.
ORDER
Upon the entire record, the Board reaffirms its
Order of September 23, 1965.