Dolly Madison Industries, Inc.

National Labor Relations Board - Board Decisions

Jun 2, 1970

182 N.L.R.B. 1037 (N.L.R.B. 1970)

DOLLY MADISON INDUSTRIES, INC.
Dolly Madison Industries , Inc., Richmond Dairy Division
and Truck Drivers & Helpers Local No. 592 , Interna-
tional Brotherhood of Teamsters , Chauffeurs, Ware-
housemen & Helpers Of America ., Case 5-CA-3475
June 2, 1970
DECISION AND ORDER
By CHAIRMAN MCCULLOCH AND MEMBERS FANNING,
BROWN, AND JENKINS
On July 24, 1967, Trial Examiner Rosanna A. Blake
issued her Decision in the above-entitled proceeding,
finding that the Respondent had engaged in and was
engaging in certain unfair labor practices within the
meaning of the National Labor Relations Act, as amend-
ed, and recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in the
attached Trial Examiner's Decision. Thereafter, the Gen-
eral Counsel and the Charging Party filed exceptions
to the Trial Examiner's Decision and supporting briefs.
The Respondent filed exceptions to the Trial Examiner's
Decision and an answering brief to the exceptions filed
by the General Counsel and the Charging Party.'
The Board has reviewed the rulings of the Trial Exam-
iner made at the hearing and finds that no prejudicial
error was committed. The rulings are hereby affirmed.
The Board has considered the Trial Examiner's Decision,
the exceptions and briefs, and the entire record in this
case, and hereby adopts the findings, conclusions, and
recommendations' of the Trial Examiner only. to, the
extent,that they are consistent with, this Decision and
Order.. , . .t„1 1,11 11 I
The complaint in this case is based upon Responderit's
alleged unlawful insistence upon the inclusion in the
collective-bargaining agreement of a provision referred
to by the parties as a "Most Favored Nations" clause
(MFNC). The General Counsel and Charging Union
argue that the provision involved is illegal and contra-
venes the Act's policy, and therefore that Respondent's
adamant insistence upon such a clause during contract
negotiations constitutes a bad-faith refusal to bargain
in violation of Section 8(a)(5) of the Act.
As more fully set forth in the attached Trial Examin-
er's Decision, the Union and the Respondent have been
parties to collective-bargaining agreements for several
years covering certain employees located at the Respond-
ent's Richmond, Virginia, facility.2 The most recent
contract between the parties, which was due to expire
on February 28, 1966, provided in article XIV that
the Union would not make any contract with any compe-
titor of the Respondent containing more favorable terms
with regard to wages, hours, and other conditions of
employment. This provision, generally referred to as
a MFNC, further provided that in the event the Union
' Respondent's request for oral argument is hereby denied, as the
record, including the exceptions and briefs, adequately presents the
issues and the positions of the parties
4 Respondent is one of five dames operating in the Richmond area
Only one of the other dairies is organized
1037
did enter into such an agreement with a competitor
the Respondent's collective-bargaining agreement would
be automatically amended so as to give the Respondent
the full benefit thereof. , ,
In ensuing negotiations for a collective-bargaining
agreement to -succeed the agreement due to expire on
February 28, 1966, the Union insisted that the MFNC
be deleted from any future agreement, pointing out
that such clause, in the light of the Supreme Court's
decision in United Mine Workers of America v. Penning-
ton, 381 U.S. 657 might well be construed to be in
violation of the Federal antitrust laws. The Respondent
persisted in its demand for a MFNC. Respondent did
not insist on the precise wording of the preexisting
contract term. Rather it 'suggested alternative language
making the execution of a more advantageous contract
with a competitor of the Respondent, discretionary, but
still allowing the Respondent the privilege of adopting
such advantageous terms. The Respondent's new propos-
al further provided that, in the event such, revised MFNC
is' declared illegal, the parties` would not be bound by
it in any way. Subsequently, during the final bargaining
session on April 29, 1966, the attorneys for the Union
and the Respondent agreed to execute,a contract contain-
ing the revised MFNC, provision3 with the understanding
that the Union would immediately file an unfair labor
practice charge with the Board for the purposes of
testing both the legality of the disputed provision and
the Respondent's prerogative to insist to point of impasse
on the inclusion thereof in light-of the Supreme Court's
decision in N.L.R.B: v. Wooster Division of Borg-War-
ner Corp., 356 U.S.,342. ,
,'"Upon the 'basis°'of'-the foregoing, the Trial Examiner
conchideda thaat,' while the revised MFNC• -was not in
and of 'itself'violative^ of 'any Federal antitrust laws,
in any event it was a permissive rather than a mandatory
subject of bargaining, and that the Respondent violated
Section 8(a)(5) of the Act by insisting to point of impasse
on its inclusion. The General Counsel's and the Union's
exceptions are directed to the Trial Examiner's former
conclusion, while the Respondent's exceptions are, of
course, directed to the latter. For the reasons set forth
below, we find merit in the Respondent's exceptions.
The record amply supports the Trial Examiner's
finding that the Respondent insisted to point of impasse
on the inclusion of the revised MFNC. However, there
is no suggestion in this case of any predatory purpose
underlying Respondent's insistence on the clause, and
we have no basis for concluding that a tribunal of
competent jurisdiction would find the revised MFNC
7 This revised provision provides
Should the Union at anytime hereafter enter into an agreement
with any milk company operating within the Richmond, Virginia
area served by the Employer with terms and conditions more
advantageous to such milk company, or should the Union in the
case of any milk company which has signed this form of agreement
countenance a course of conduct by such company enabling it
to operate under more advantageous terms and conditions than
is provided for in this agreement, the Employer, party to this
agreement, shall be privileged to adopt such advantageous terms
and conditions provided the Employer has sent written notice to
the Union calling the matter to its attention
182 NLRB No. 147
1038 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
provision to be violative of any Federal antitrust laws
Thus, the sole question remaining is whether the clause
related to a mandatory subject of bargaining on which
Respondent, consistent with the policies of the Act,
could lawfully insist
In finding that Respondent was not lawfully permitted
to insist upon inclusion of the revised MFNC to point
of impasse, the Trial Examiner relied on the Supreme
Court's decision in Pennington, supra, wherein the Court
found that the contract provision there involved imposed
such a restraining influence on collective bargaining that
it would of necessity thwart and offend the Act's pur-
pose Likening the instant MFNC provision to the disput-
ed provision in Pennington, the Trial Examiner found
that the present MFNC provision would also thwart
and offend the purposes of the Act and concluded that
in such circumstances it "may not be regarded as a
mandatory subject of bargaining upon which a party
is privileged adamantly to insist" to point of impasse
We do not agree
Our analysis of the rationale underlying the Supreme
Court's decision in Pennington, supra, leads us to con-
clude that the Trial Examiner failed to consider the
obvious differences existing between the provision
involved in Pennington and the one in the instant case
In Pennington, the contractual clause provided that the
union would impose upon all other coal operators in
the area the terms of the agreement without regard
to their ability to pay, but the contractual provision
herein imposes no such mandate In Pennington, as
pointed out by the Supreme Court, the union by reason
of the clause there involved abandoned the right to
which it and those of its members who were employed
by other employers were entitled under the Act to
bargain collectively with such other employers concern-
ing substantial terms and conditions of employment-
and this to the detriment of itself and other members,
thereby frustrating the purposes of the Act In contrast
to Pennington, the MFNC provision upon which the
Respondent here insisted was manifestly not an effort
to impose wages and working conditions on other
employers or employees in other bargaining units but
was designed only to assure that this Employer could
be relieved of any disadvantage that it might otherwise
suffer if the Union subsequently negotiated more favora-
ble wage and benefit levels with other employers As
this adjustment provision did not go beyond setting
forth an agreed-upon procedure by which the Respondent
could conform the benefit levels of the contract estab-
lished for its employees to those negotiated by the
Union for employees of its competitors, and did not
straitjacket the Union in its negotiations with other
employers, we find that it was limited to matters directly
related to "wages, hours and working conditions," and
was therefore a mandatory subject of bargaining We
cannot conclude, therefore, that Respondent's insistence
upon this clause was prohibited by the Act
Accordingly, we find that the revised MFNC provision
here involved is an integral part of the parties' agreement
as to the "wages, hours and other terms and conditions
of employment" of Respondent's employees and that
the Respondent's insistence thereon to a point of impasse
was not violative of Section 8(a)(5) of the Act
In these circumstances, we reverse the Trial Examiner
and shall dismiss the complaint in its entirety
ORDER
Pursuant to Section 10(c) of the National Labor Rela-
tions Act, as amended , the National Labor Relations
Board orders that the complaint herein be, and it hereby
is, dismissed in its entirety
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
ROSANNA A BLAKE, Trial Examiner Upon a charge
filed May 3, 1966, by Truck Drivers & Helpers Local
No 592, International Brotherhood of Teamsters, Chau
ffeurs, Warehousemen & Helpers of America, herein
called the Union, against Dolly Madison Industries, Inc ,
Richmond Dairy Division, herein called the Respondent,
the General Counsel of the National Labor Relations
Board, herein called the Board, by the Regional Director
for Region 5, issued his complaint dated August 2,
1966 The complaint, as amended, alleges the Respond
ent's violation of Section 8(a)(5) and (1) of the National
Labor Relations Act, as amended The Respondent's
answer denies the statutory violation alleged Pursuant
to notice, a hearing was held before me at Richmond,
Virginia, on September 1, 1966 All parties were repre-
sented by counsel After the close of the hearing, briefs
were filed which have been considered
Upon the basis of the entire record and from my
observation of the witnesses, I make the following
FINDINGS OF FACT
I COMMERCE FACTS
The Respondent is a Minnesota corporation engaged
at Richmond, Virginia, in the production and wholesale
and retail delivery of milk and ice cream In the year
preceding issuance of the complaint the Respondent
sold and shipped across state lines products valued
in excess of $50,000 and in the same period purchased
materials shipped to its plant directly from points outside
Virginia valued in excess of $50,000 I find from the
foregoing that the Respondent is engaged in interstate
commerce within the Act's meaning and that the Act's
purposes are effectuated by the Board's assertion in
this proceeding of jurisdiction over the Respondent's
business
II THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization admitting to mem-
bership the Respondent's employees
DOLLY MADISON INDUSTRIES, INC 1039
III THE UNFAIR LABOR PRACTICES
At issue in this case is the Respondent's alleged
unlawful insistence to impasse upon the inclusion in
the collective agreement negotiated with the Union of
a provision referred to by the parties as a "Most Favored
Nations" (MFN) clause The General Counsel and the
Union contend that the provision specifically involved
is illegal and contravenes the Act's policy and, therefore,
that the Respondent's adamant insistence upon its inclu-
sion in the contract during negotiations constitutes a
bad-faith refusal to bargain violative of Section 8(a)(5)
of the Act They further maintain that at best the provi-
sion constitutes a permissive or nonmandatory bargaining
subject which the Respondent unlawfully insisted upon
during negotiations to impasse In complete disagreement
with these positions, the Respondent insists that the
provision in question may not in this proceeding be
found to be illegal, that it constitutes a mandatory and
not a permissive bargaining subject which the Respond-
ent was lawfully entitled by the Act to insist upon
even to impasse, and, in any event, that the Respondent
did not adamantly insist to impasse upon its inclusion
in the contract but reached agreement with the Union
for its inclusion without any impasse having occurred
The Union is the collective bargaining representative
of the Respondent's route salesman and special delivery-
men and has had contractual relations with the Respond-
ent for several years ' In December 1965 the Union
notified the Respondent of its intention to negotiate
a new contract to supersede the contract to expire
on February 28, 1966 In January 1966 the Union submit-
ted in writing to the Respondent various changes it
desired in the expiring contract Included was a request
for deletion in toto of article XIV which stated
The Union agrees that it will not make any contract
with any competitor of the Company more favorable
to the competitor as to rates of pay, hours of
labor and other conditions of employment than
are specified herein It is further agreed that the
making of any such contract more favorable to
a competitor shall immediately and automatically
amend the terms of this Agreement so as to give
the Company the full benefit of any terms of such
other agreement or agreements which Company
may deem better
It is clear that by seeking deletion of the foregoing
clause the Union was concerned over possible antitrust
violations which might ensue from continuation of article
XIV in a new agreement and that its fears were actuated
by the Supreme Court's decision in United Mine Workers
of America v Pennington, 381 U S 657 At a March
17, 1966, negotiating meeting the Respondent submitted
for the Union's consideration the following modification
of article XIV
' The appropriate unit consists of all the Respondents route milk
salesmen (wholesale and retail) special deliverymen and ice cream
deliverymen employed at its Richmond Virginia plant excluding guards
watchmen office clerical employees and supervisors as defined in
the Act
Should the Union at any time hereafter enter into
an agreement with any milk company operating
within the Richmond, Virginia area, served by the
Employer, with terms and conditions more advanta-
geous to such milk company, or should the Union
in the case of any Milk company which has signed
this form of agreement countenance a course of
conduct by such company enabling it to operate
under more advantageous terms and conditions than
it provided for in this agreement , the Employer,
party to this agreement , shall be privileged to adopt
such advantageous terms and conditions provided
the Employer has sent written notice to the Union
calling the matter to its attention
The Union's negotiators objected to the Respondent's
proposed modification on the ground that it, too, was
illegal To overcome this objection, the Respondent,
at a March 29, 1966, negotiating session, offered that
the following sentence be added to the modification
In the event the foregoing is illegal , the parties
shall not be bound by it in any way
In a document dated March 29, 1966, received early
in April by the Union, the Respondent forwarded its
counterproposals to the Union's negotiating demands
This document, captioned "Final Offer" included the
above-recited modification of the MFN provision with
the savings clause added By letter dated April 1, 1966,
the Union's president and negotiator, A B Buchanan,
Jr , notified the Respondent that the Union's legal depart
ment had advised that the proposed MFN clause ' may
be in violation of the anti-trust law "I The letter included
the Union's insistence that "this clause be deleted from
the contract completely " The Respondent's offer was
nevertheless presented to the Union's membership which
voted its rejection Notification of this action was trans-
mitted to the Respondent by letter dated April 18, 1966
On April 29, 1966, the negotiators for both sides
again met in Richmond, Virginia Counsel for the
Respondent, John Pelino, was present at this meeting
ostensibly to assist in overcoming the legal objections
to the Respondent's proposed MFN clause During the
day Pelino communicated by telephone with Hugh Beins,
counsel for the Teamsters Eastern Conference, who
was at his office in Washington, D C Over the telephone
Beins reached agreement with Pelino whereby the Union
would conclude a contract with the Respondent contain-
ing the disputed clause with the understanding that a
charge would immediately be filed by the Union initiaing
an unfair labor practice proceeding to test the legality
of the Respondent's insistence upon inclusion of the
clause in the contract 3 Following these conversations,
2 Counsel for the Eastern Conference of the Teamsters International
who had advised the Union concerning the legality of the proposed
MFN clause was unaware of the Respondent s proposed savings clause
until he learned of it at the hearing in this case
9 Bems testified credibly without contradiction that he had told
Pelino over the telephone that he and the Union s negotiator Buchanan
had decided to agree to a stipulation that the Employer was adamantly
insisting on inclusion of the clause in the contract and that we were
refusing He related that he had also told Pelino I would then
file a friendly lawsuit with the Labor Board testing the v'ilidity of
(Cont )
1040 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the Respondent's contract proposals, including the MFN
clause, were presented to the Union's membership which
voted its approval. This action by the membership was
taken without any reservation as to the acceptability
of the MFN clause. The contract, including the clause,
was executed by the parties on May 11, 1966.
On April 29, 1966, the day that Beins had agreed
with Pelino to institute a "friendly" action before the
Board, he prepared a charge which was signed by the
Union's representative and filed on May 3, 1966. At
the same time Beins sent Pelino a letter outlining their
understanding. Pelino did not respond to the letter or
in any way notify Beins of his disagreement with its
contents. The letter stated:
In accordance with our conversation and under-
standing, I am filing unfair labor practice charges
against the Employer alleging violations of Section
8(a)(1) :and (5) by adamantly insisting against the
Union's vigorous objection that your so-called Most
Favored Nations clause be included in the contract.
We are contending that such a clause is not a
mandatory subject of bargaining under the Borg-
Warner decision but at best is a permissive subject
and the Union has insisted that the clause be deleted
and that the subject not be a part of negotiations.
It is understood that the clause will be included
in the contract because of the Employer's insistence
and in order to avoid a labor dispute, but with
the understanding that should the Board or the
courts agree with the Union's, position, that this
is not a mandatory subject of bargaining, the clause
will be deleted.
If the General Counsel decides to issue a complaint
in this matter, I imagine we could present the
issue directly to the Board by way of stipulation.
In a May 6, 1966, letter to the Board's agent investigat-
ing the Union's charge (this letter was offered in evidence
by the Respondent) Pelino made the following acknow-
ledgments:
At an early stage in negotiations, the Union pro-
posed a deletion of the More [sic] Favored Nations
clause from the current collective-bargaining agree-
ment.
The Company refused to accede to this demand
but did offer a modified version, a copy of which
is attached to this letter.
No agreement was • reached and there was little
further discussion of the More [sic] Favored Nations
clause, until April 29, 1966, when, during the final
meeting with the Union Negotiating Committee,
I was informed that Local No. 592 would not
accept a More [sic] Favored Nations clause because
such clauses are illegal. We discussed the matter
the clause, that we would include the clause in the contract with
the understanding that if the Board or the courts found that it was
not a mandatory subject of bargaining that it would be deleted " Pelino,
he said, agreed to this stipulation Beins then informed Buchanan over
the telephone of the agreement and the latter indicated to Beins that
pursuant to his "0 K " the MFN clause would be included in the
contract
at length and I had the opportunity to speak with
Mr. Beins, who was counsel to the Eastern Confer-
ence of Teamsters.
The General Counsel and the Union assert that a
bargaining impasse in this case is clearly established
by Beins' uncontradicted testimony concerning his April
29, 1966, telephonic understanding with Pelino. Beins'
testimony shows that his stipulation with Pelino had
cast the Respondent' s insistence upon the inclusion of
the MFN clause in the contract in the mold of an
impasse and that the Union had agreed under protest
to yield to the Respondent in order to gain a contract.
The Respondent, while not denying the substance of
Beins' testimony, maintains that the agreement to insti-
tute a friendly unfair labor practice proceeding was
at best a futile effort to have the Board determine
whether the MFN clause violates Federal antitrust laws.
Such determination, the Respondent observes, the Board
may not make as it would involve its decision respecting
the meaning of statutes administered by other Federal
agencies. The Respdndent, moreover, argues that the
General Counsel has failed to prove the existence in
fact of a bargaining impasse because the Respondent
had not during the negotiations expressly declared it
would refuse to conclude a contract which did not
include the disputed MFN clause. The ultimate approval
without reservation by the Union's membership of the
Respondent's contract proposals including the MFN
clause is also advanced by the Respondent to denote
the absence of an impasse.
I find that until the conversations between Beins
and Pelino on April 29, 1966, the negotiators for the
Union and the Respondent were unable to conclude
an agreement because of their polarized positions con-
cerning the inclusion in the contract, as demanded by
the Respondent and opposed by the Union, of the MFN
clause. Until that time both sides were unyielding in
their legal positions and there is no indication that absent
the understanding achieved by counsel that a contract
would have been negotiated notwithstanding agreement
as to all other terms offered by the Respondent. Beins'
credited testimony reflects that the contract which was
finally reached was a result only of the stipulation pro-
posed by him and accepted by Pelino to test the validity
of the Respondent's adamant insistence upon inclusion
of the disputed clause. I am persuaded this is so even
though, as argued, the Respondent had not expressly
stated its refusal to reach any agreement without the
clause. The fact that the Union's membership approved
the Respondent's proposals, including the MFN clause
does not alter the fact that the Respondent's insistence
upon the clause had produced an impasse . Whether
an impasse occurred during the bargaining is determined
from the positions of the negotiators and not by the
vote of the Union's membership approving or disapprov-
ing the stand taken by their bargaining representative.
Furthermore, in deciding that an impasse in fact had
existed between the negotiating parties it is immaterial
that the stipulation by counsel to institute friendly pro-
ceedings before the Board may have envisioned a deter-
mination by the Board which it would not make that
DOLLY MADISON INDUSTRIES, INC.
the MFN clause violated antitrust laws. Whai alone
is here decided is that the Respondent's adamant insist-
ence upon inclusion of the clause had brought about
the stalemate in negotiations which constitutes the bar-
gaining impasse herein found to have existed.
There remains to be decided whether the impasse
created by the Respondent's insistence violated the col-
lective-bargaining requirement of Section 9(a)(5) of the
Act. The General Counsel and the Union, as noted,
support their claim of violation with two reasons. They
say first that the MFN clause infringes the Sherman
Antitrust Act as they regard the Supreme Court's holding
in the Pennington case, supra. Second, they argue that
even if the clause may not for that reason be found
to be illegal it constitutes a permissive and not a mandato-
ry bargaining subject which the Respondent was not
lawfully permitted to insist upon to impasse. This latter
argument is premised on the Supreme Court's holding
in N.L.R.B. v. Wooster Div. of Borg-Warner Corp.,
356 U.S. 342, that "good faith does not license the
employer to refuse to enter into agreements on the
ground that they do not include some proposal which
is not a mandatory subject of bargaining." The Respond-
ent asserts the legality of the MFN clause and denies
that anything in the Supreme Court's Pennington decision
warrants a contrary view. The disputed clause is defend-
ed as one dealing with wages, hours, and conditions
of employment and hence a mandatory subject which
may lawfully be bargained to impasse.
In agreement with the Respondent, I reject the conten-
tion that the MFN clause may in this proceeding be
found illegally to violate Federal antitrust legislation.
The Court's Pennington decision provides no basis for
holding otherwise. There the Court held only that the
union in the case could be found to have acted illegally
if it were proved before the district court to which
the case was remanded that by making the contract
with anticompetitive purpose it had conspired to restrain
and monopolize interstate commerce in violation of the
Sherman Act.4 There is in the present case no evidence
on the face of the Union's contract with the Respondent
or elsewhere in the record of such purpose. Absent
a determination by an agency charged with enforcement
of the Sherman Act that the MFN clause illegally infring-
es that law, the Board will not find, and no such finding
is therefore here made, that the Respondent's insistence
upon inclusion of the clause in its contract with the
Union constituted a refusal to bargain in violation of
Section 8(a)(5) of the Act on the mere ground of the
alleged illegality of the clause. See Lumber & Saw
Mill Workers, Local No. 2647 (Cheney Calif. Lumber
4 The pertinent contract provison in Pennington was the union's
agreement with the companies to impose by various methods upon
other smaller competing companies the wage and royalty scales which
represented the terms agreed upon with the signator companies The
question which the Court was called upon to decide , among others,
was whether such an agreement was exempt from the antitrust laws
because it concerned wage standards The Court held "the relevant
labor and anti-trust policies compel us to conclude that the alleged
agreement between UMW and the large operators to secure uniform
labor standards throughout the industry, if proved , was not exempt
from the anti-trust laws "
1041
Co.), 130 NLRB 235, 241, 242, enfd. 319 F.2d 375
(C. A. 9).
While I have rejected the General Counsel's and
the Union's claim that the MFN clause illegally infringed
Federal Antitrust laws, I nevertheless find that the
Respondent has violated the Act because of its insistence
to impasse upon the inclusion of that clause in the
contract with the Union. I am constrained to reach
this conclusion by the teaching of the Court in Penning-
ton.
In Pennington the Court was faced with the question
whether the agreement by the union with the companies
to impose wage standards on other employers was
exempt from the application of antitrust laws. The major-
ity opinion of the Court held that union-employer negotia-
tions are not "automatically exempt from Sherman Act
scrutiny because the negotiations involve a compulsory
subject of bargaining" and that "a union forfeits its
exemption from the anti-trust laws when it is clearly
shown that it has agreed with one set of employers
to impose a certain wage scale on other bargaining
units." The Court observed that these views do not
conflict with the national labor policy. That policy, as
explicated by the Court, accords recognition to the
legitimate aim of a national labor organization to obtain
uniformity of labor standards although a consequence
of such union activity may be to eliminate competition
based on differences in such standards. The Court then
declared:
But there is nothing in the labor policy indicating
that the union and the employers in one bargaining
unit are free to bargain about the wages, hours
and working conditions of other bargaining units
or to attempt to settle these matters for the entire
industry. On the contrary, the duty to bargain unit
by unit leads to a quite different conclusion. The
union's obligation to its members would seem best
served if the union retained the ability to respond
to each bargaining situation as the individual circum-
stances might warrant without being straitjacketed
by some prior agreement with the favored employ-
ers.
The Court noted the several Board decisions declaring
that an employer may not condition the signing of a
collective-bargaining agreement on the union's organiza-
tion of other employers in the industry' and commented
Permitting insistence on an agreement by the union
to attempt to impose a similar contract on other
employers would likewise seem to impose a restrain-
ing influence on the extent of collective bargaining,
for the union could avoid impasse only by surrender-
ing its freedom to act in its own interest vis-a-
vis other employers , something it will be unwilling
to do in many instances. Once again the employer's
interest is a competitive interest rather than an
interest in regulating its own labor relations and
the effect on the union of such an agreement would
be to limit the free exercise of the employees'
American Range Lines, Inc , 13 NLRB 139, 147, Samuel Youlin,
22 NLRB 879, 885, Newton Chet rolet, Inc 37 NLRB 334, 341
1042 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
right to engage in concerted activities according
to their own views of their self-interest In sum,
we cannot conclude that the national labor policy
provides any support for such agreements
The foregoing precepts compel my conclusion that
the MFN clause herein involved imposes such limitations
on the freedom of the Union to bargain collectively
with other employers on a unit-by-unit basis with proper
regard to its own interest vis a-vis these other employers
as to constitute a clear reduction of the extent of collec-
tive bargaining in which the Union may rightfully engage
pursuant to the national labor policy Mindful of the
automatic loss necessitated by the MFN clause of wage
and other economic gains obtained through protracted
bargaining with the Respondent flowing from the negotia-
tion of lesser terms with other employers, the Union
would be too severely constrained thereby to permit
it to make lesser agreements with other employers
This is so notwithstanding that such lesser agreements
might best serve the interest of the employees of those
employers Conceivably these other employers might
not economically be able to pay wages at the levels
provided by the Respondent's contract with the Union
Realization of this fact would place the Union on the
horns of a dilemma from which realistically there could
be no escape To insist upon terms equal to those
in the Respondent's contract could be destructive of
the businesses of these other employers to the obvious
disadvantage of their employees To yield to these reali-
ties and to accept the lower terms which good-faith
collective bargaining might indicate should prevail would
mean the sacrifice of economic benefits obtained from
the Respondent through arduous negotiations The dis-
ruptive effect upon the organization of the Respondent's
employees in this latter circumstance is too evident
to wart ant elaboration The industrial chaos which would
likely ensure as a result of employee disgruntlement
and possible strikes is equally evident The purpose
of the Act to avoid industrial strife would be thwarted
A contract proposal which offends the Act's purposes
may not be regarded as a mandatory subject of bargaining
upon which a party is privileged adamantly to insist
Accordingly, I find that the Act's policies proscribed
the Respondent's insistence upon agreement for he MFN
clause which produced the negotiating impasse herein
found to have occurred The Respondent thereby violat-
ed 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 operations of
the Respondent described in section I, above, have
a close , intimate , and substantial relation to trade, traffic,
It is immaterial to the above finding of violation that the savings
clause of art XIV provides for its suspension in the event of its
legality The savings clause could have excused the Respondent s conduct
and commerce among the several States and tend to
lead to labor disputes burdening and obstructing com-
merce and the free flow thereof
THE REMEDY
Having found that the Respondent has engaged in
certain unfair labor practices I recommend that it be
ordered to cease and desist therefrom and take certain
affirmative action designed to effectuate the policies
of the Act
I have found that the Respondent violated the Act
by insisting to the point of impasse during collective
bargaining negotiations that the contract being negotiated
with the Union provide for the automatic downward
adjustment of wages, hours, and other conditions of
employment in the event that the Union were subsequent-
ly to negotiate labor contracts with other employers
providing for lesser terms I accordingly recommend
that the Respondent be ordered to cease and desist
from insisting to the point of impasse upon the inclusion
of such provision in any contract to be negotiated with
the Union and that it be ordered to cease giving effect
to article XIV of its current contract with the Union
which contains the foregoing provision I further recom-
mend that the Respondent be ordered upon request
to bargain collectively with the Union as the exclusive
representative of the employees in the appropriate unit
with respect to rates of pay, wages, hours of employ-
ment, and other conditions of employment, and, if an
understanding is reached , embody such understanding
in a signed agreement
Upon the basis of the foregoing findings of fact,
and upon the entire record in the case, I make the
following
CONCLUSIONS OF LAW
I Dolly Madison Industries, Inc , Richmond Dairy
Divison is an employer within the meaning of Section
2(2) of the Act and is engaged in commerce within
the meaning of Section 2(6) and (7) of the Act
2 Truck Drivers & Helpers Local No 592 , Interna-
tional Brotherhood of Teamsters, Chauffeurs, Ware-
housemen & Helpers of America, is a labor organization
within the meaning of Section 2(5) of the Act
3 By insisting to the point of impasse during collective
bargaining negotiations with the Union upon the inclusion
of a provision for the automatic downward adjustment
of wages, hours, and other conditions of employment
in the event that the Union were to conclude contracts
with other employers providing for lesser terms Respond-
ent has violated Section 8(a)(5) and (1) of the Act
4 The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act
[Recommended Order omitted from publication ]
in this case only if it had postponed the applicability of art XIV
until its legality had been determined by Board or court proceeding
This it did not do Its terms were immediately obligatory