Federal Cartridge Corp.

National Labor Relations Board - Board Decisions

Jun 21, 1968

172 N.L.R.B. 121 (N.L.R.B. 1968)

FEDERAL CARTRIDGE CORPORATION 121
Federal Cartridge Corporation and Office Employes
International Union , Local No . 12, AFL-CIO.
Case 18-CA-2418
Upon the basis of the stipulation, the briefs, and
the entire record in this case, the Board makes the
following:
June 21, 1968
DECISION AND ORDER
By CHAIRMAN MCCULLOCH AND MEMBERS JENKINS
AND ZAGORIA
Upon charges filed on May 16 , 1967, by Office
Employes International Union , Local No. 12,
AFL-CIO, herein called the Union , the General
Counsel of the National Labor Relations Board, by
the Regional Director for Region 18, issued a com-
plaint dated November 17, 1967 , against Federal
Cartridge Corporation , herein called the Respon-
dent , alleging that the Respondent had engaged in
and was engaging in unfair labor practices within
the meaning of Sections 8(a)(1) and ( 5) and 2(6)
and (7) of the National Labor Relations Act, as
amended . Copies of the charge , complaint, and
notice of hearing were served on Respondent and
the Union.'
The complaint alleges in substance that the
Union has for many years been the exclusive bar-
gaining representative of an appropriate unit of of-
fice and clerical employees of the Respondent, and
that , since on or about April 18, 1967 , the Respon-
dent has refused and continues to refuse to recog-
nize or bargain with the Union as such exclusive
bargaining representative concerning pensions for
the employees represented by said Union in viola-
tion of Section 8(a)(5) and (1) of the Act. On
November 27, 1967, Respondent filed an answer
admitting certain allegations in the complaint , affir-
matively pleading certain facts , and denying the
commission of any unfair labor practices alleged in
the complaint.
On December 20, 1967, all parties to this
proceeding entered into a stipulation by which they
waived a hearing before a Trial Examiner and the
issuance by him of a Trial Examiner's Decision and
Recommended Order and agreed to submit the
case to the Board for findings of fact, conclusions
of law, and an order, based upon a record consist-
ing of the charge, the complaint, the answer, the
stipulation of facts, and the exhibits. On January 5,
1968, the Board approved the stipulation and or-
dered the proceedings transferred to the Board.
Thereafter, the General Counsel, the Charging Par-
ty, and the Respondent filed briefs.
' Copies of the complaint and notice of hearing were also served on
Local No 459 of District Lodge No 77 , International Association of
FINDINGS OF FACT
I. THE BUSINESS OF THE RESPONDENT
Respondent Federal Cartridge Company is a
Minnesota Corporation with its principal place of
business located in New Brighton, Minnesota,
where it is engaged in the manufacture of small
arms ammunition and electrical products. During
the 12-month period ending December 31, 1966,
which period is representative of all times material
herein, Respondent manufactured, sold, and
shipped from its location in New Brighton, Min-
nesota, finished products valued in excess of $1
million to points outside the State of Minnesota.
During the same 12-month period Respondent
purchased, transferred, and caused to be delivered
to its plant atNew Brighton , Minnesota , brass,
steel, and other raw material valued in excess of $1
million directly from States of the United States
other than the State of Minnesota . We find, as
stipulated by the parties , that the Respondent is an
employer engaged in commerce within the meaning
of Section 2(6) and (7) of the Act, and that it will
effectuate the policies of the Act to assert jurisdic-
tion herein.
II. THE LABOR ORGANIZATION INVOLVED
We find, as stipulated by the parties, that Office
Employes International Union, Local No. 12,
AFL-CIO, is, and at all times material herein has
been , a labor organization within the meaning of
Section 2 (5) of the Act.
III. THE UNFAIR LABOR PRACTICES
In their stipulation, the parties stated that:
Since April 23, 1952, the Union has been the
certified bargaining representative of the Respon-
dent's office and clerical employees. Presently, this
unit consists of some 400 persons , but at the time
of the execution of the November 17, 1965, collec-
tive-bargaining agreement, wherein the Union
waived its right to bargain regarding pensions, the
unit consisted of only 18 employees.
In the 1965 negotiations between the Respondent
and the Union, three separate pension plans to
cover the office employees were discussed.
Machinists and Aerospace Workers, AFL-CIO, and the I .A M Labor-
Management Pension Fund.
172 NLRB No. 14
122 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Although the Employer had agreed to participate in
the Western States Office Employees International
Union Pension Trust Fund , the trustees of this fund
declined to accept the application of these em-
ployees because of adverse census data. The
proposed employee -participants were substantially
older and had more past service to be credited than
the other employees covered by the fund.
Thereafter , the Respondent offered to include the
office employees represented by the Union in a
plan it maintained for its guards and firemen. The
Union refused this offer and instead proposed that
the employees it represented be covered by the In-
ternational Association of Machinists Labor-
Management Pension Fund , hereinafter the IAM
Pension Plan. Since September 1, 1963, the Com-
pany had been contributing to the IAM Pension
Plan on behalf of its production and machinists em-
ployees, pursuant to the terms of an agreement
made with their representative , District Lodge No.
77, IAM.
The Respondent and the Union reached an
agreement to include the office employees as par-
ticipants in the IAM Pension Plan in September
1965. This agreement was reflected in certain
provisions of their collective -bargaining agreement
entered into on November 17, 1965:
It is mutually agreed that the Office Em-
ployees covered by this Agreement shall be
covered as participants in the I.A.M. LABOR-
MANAGEMENT PENSION FUND . Contribu-
tions to the Fund for Office Employees shall
continue so long as Federal Cartridge Corpora-
tion has employees for whom it is obliged to
contribute to the I.A.M. LABOR-MANAGE-
MENT PENSION FUND in accordance with
collective bargaining agreements with the In-
ternational Association of Machinists. Any
change in the contribution rate , amount or
level of benefits or the length of time which the
I.A.M. LABOR-MANAGEMENT PENSION
FUND shall cover employees represented by
the Office Employees International Union,
Local 12, shall be governed exclusively by
agreements negotiated from time to time by
the International Association of Machinists and
Federal Cartridge Corporation without regard
to employees represented by O.E.I.U., Local
12. In consideration of the aforementioned
agreement and because of the FUND require-
ments, the UNION releases , relinquishes and
waives any and all rights to collective bargain-
ing with respect to all matters pertaining to
pension only, for as long as there is an em-
ployee of the EMPLOYER who is represented
by the International Association of Machinists
and for whom contributions are made to the
I.A.M. LABOR-MANAGEMENT PENSION
FUND by the EMPLOYER.
The collective -bargaining agreement itself was to
be effective for 1 year from May 9 , 1965, and from
year to year thereafter unless written notice to ter-
minate or amend should be given at least 60 days
prior to the expiration date or until such time as the
Employer , with or without notice , should cease to
operate its plant at New Brighton , Minnesota.
At the same time that the November 17 collec-
tive-bargaining agreement was executed, the
Respondent and the Union entered into two other
agreements , a participation agreement and a pen-
sion fund agreement and declaration of trust. The
participation agreement details the amount of the
contributions to be made by the Respondent to the
IAM Pension Plan on behalf of its office employees
and provides , among other things, that the Respon-
dent will continue making contributions to the fund
for the benefit of the office employees as long as
the Company has employees for whom it is
obligated to contribute to the pension fund in ac-
cordance with a collective-bargaining agreement
with a District Lodge of the IAM. This participation
agreement was incorporated by reference into the
November 17, 1965, collective-bargaining agree-
ment . The pension fund agreement and declaration
of trust , granting broad but typical fiduicary powers
to the trustees , provides , among other things, that
the Company and the Union assent to be bound by
said agreement and declaration of trust and by the
designation of trustees thereunder , and agree to be
bound by all actions taken by the trustees ursuant
to said agreement and declaration of trust.
Article VIII , section 4 of the Rules and Regula-
tions of the IAM Pension Plan adopted by the
trustees, regarding the termination of the trust, pro-
vides as follows:
In the event that a Contributing Employer
ceases to be obligated to make contributions to
the Fund at any time after the period ending
48 months after its Contribution Date, and
should that Employer or its successor
thereafter continue in business , all years of
Past Service credit based on employment with
such Employer shall be cancelled retroactively,
notwithstanding any contrary provisions con-
tained elsewhere in this Plan. This Section shall
not apply to any Pensioner whose benefits first
became payable prior to the time the Con-
tributing Employer ceased to be obligated to
make contributions to the Fund , nor shall this
Section apply to the Past Service credit of any
Covered Employee whose employment with
such Employer had terminated at least 24
FEDERAL CARTRIDGE CORPORATION 123
months prior to the time the Contributing Em-
ployer ceased to be obligated to make con-
tributions to the Fund.
In addition, each employee represented by the
Union signed an individual waiver agreement
wherein he agreed that matters concerning pen-
sions would be governed exclusively by agreements
negotiated by the International Association of
Machinists and the Respondent and that all rights
to collective bargaining with respect to all matters
pertaining to pensions were waived as long as any
employee of the Respondent is represented by the
International Association of Machinists for whom
contributions are made to the IAM Pension Plan.
Beneficiary rights become vested under the IAM
Pension Plan after an employee attains the age of
50 with 15 years of credited service. If an employee
changes employment prior to meeting these vesting
requirements , his beneficiary rights under the Plan
are portable only if he is employed by a firm which
is also a participant in the plan . In September 1965,
at the time the Respondent and the Union first
reached agreement on the IAM Pension Plan, there
were 18 office employees in the unit in question, all
but two of whom were hired between 1950 and
1953. The other two were hired in the spring of
1965. The terms of the participation agreement
required that the Respondent contribute on behalf
of the office employees back to the date it first
began to contribute on behalf of its production and
machinist employees ; namely September 1, 1963.
The Respondent advised the Union that since it had
only first agreed to make contributions to some
pension fund on behalf of the office employees in
May 1964, it expected the members of the Union to
pay the contributions between September 1963 and
May 1964. It was agreed and, in fact, contributions
were made by the Respondent for this 9-month
period by reducing the amount of a wage increase
granted to the employees that year. In addition, by
virtue of a "special benefit level" clause of the
agreement, 5 of the 18 employees, 55 years of age
or more on the date the Respondent first began to
contribute were to receive reduced benefits. Some-
time subsequent to September 1965, 2 of the 18 of-
fice employees retired and received , and are still
receiving, pensions as provided by the IAM Pen-
sion Plan. Five others are eligible to receive pen-
sions immediately under the Plan should they
choose to retire at this time.
During 1966 employment in all departments of
the Respondent increased substantially due to a
sharp increase in procurement by the United States
of small arms ammunition. Correspondingly, the
number of employees in the bargaining unit
represented by the Union increased from 18 to ap-
proximately 400. After this increase, which resulted
in large unforeseen contributions to the IAM Pen-
sion Plan, the trustees of the Plan agreed to rescind
the special benefit level provision regarding em-
ployees 55 years of age or older when the Plan
commenced and to pay full benefits effective June
1, 1966, for all persons already retired or who
would retire in the future.
During the negotiations for the 1967 collective-
bargaining agreement the Union informed the
Respondent that it had determined that the chances
of the newly hired employees achieving 15 years
service for eligibility benefits under the IAM Pen-
sion Plan were remote and that it wished to discuss
the entire pension section of the collective-bargain-
ing agreement. The Respondent refused to bargain
on pensions , and on May 10, 1967, the parties en-
tered into a collective-bargaining agreement which
provided that pensions would remain as negotiated
in 1965, subject to the following provision: "The
parties agree that the signing of this agreement does
not in any way constitute a waiver of the Union's
right to further proceed with the Unfair Labor
practice charge, Case No. 18-CA-2418."
The General Counsel and the Union contend that
the Union's waiver of its right to bargain for an in-
definite period of time regarding the mandatory
subject of pensions, even though entered into in
good faith and for consideration, is unenforceable
beyond the term of the contract in which it was in-
corporated, and that, consequently, the Respon-
dent's admitted refusal to bargain on pensions is
violative of Section 8(a)(5) and (1) of the Act.
They argue, among other things, that because of
the dramatic increase in the size of the unit and
because of the restrictive portability features of the
plan, which carries over only to firms under con-
tract with the IAM, the IAM Pension Plan gains a
large windfall, as a far higher percentage of office
workers than were anticipated by the actuarial as-
sumptions of the plan are likely to leave without
ever qualifying for benefits. They also argue that
Board policy has been to avoid recognizing waivers
of the right to bargain; that such waivers are not en-
forced unless clear and unmistakable;2 and that the
waiver of the right to bargain for an indefinite
period of time regarding a mandatory subject such
2 The General Counsel cites the following cases C & C Plywood Corpora-
tion , 148 NLRB 414 , approved 385 U.S. 411, reversing 351 F 2d 224,
rehearing denied 386 U.S. 939; Proctor Manufacturing Corporation. 131
NLRB 1166, The Press Company, Incorporated, 12I NLRB 976, 978, Tide
Water Associated Oil Company , 85 NLRB 1096, 1098.
124 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
as pensions is unenforcable beyond the term of the
contract in which it was incorporated.3
The Respondent contends that the agreement as
to pensions is separate and distinct from the 1965
collective -bargaining agreement and that it will ex-
pire upon the occurrence of a specified event
described therein , namely the cessation of its em-
ployment of members of the IAM for whom it has
made contributions to the IAM Pension Plan; that
as such it is a contract for a fixed term as opposed
to a contract with an automatic renewal clause or a
contract of indefinite duration ; that under Section
8(d) of the Act it is not obliged to agree to modify
or terminate the terms thereof until the expiration
date ; and that , inasmuch as the expiration date has
not yet occurred, the Respondent has no duty to
bargain on this subject. In addition , the Respondent
points out that if it enters into any other pension ar-
rangement , the contributions it has already made
might never inure to the benefit of the office em-
ployees and those contributions made by the 18
employees in the original unit for the period
between September 1, 1963, and May 1964 might
also be irrevocably lost. Finally , the Respondent ar-
gues that it is unlikely that the trustees of the IAM
Pension Plan would agree to any modification of
the present arrangement inasmuch as a good part of
the contributions made on behalf of the office em-
ployees could well inure to the benefit of the em-
ployees represented by the IAM.
The view we take of this matter makes it un-
necessary to determine whether the pension waiver
is an agreement for a fixed period , as urged by the
Respondent , or one of indefinite duration extending
beyond the term of the collective-bargaining agree-
ment , as contended by the General Counsel and the
Charging Party. Clearly, if the waiver is an agree-
ment for a fixed period the expiration date of which
has not yet occurred , Section 8 (d) would oblige us
to dismiss the Section 8(a)(5) and ( 1) violations al-
leged in the complaint . Just as clearly, on the other
hand , if it were determined that the waiver was an
agreement of indefinite duration , under the princi-
ples of Lion Oil Company4 and Boeing Airplane Co.
v. N.L.R.B.s it would be subject to amendment or
termination after the lapse of a reasonable period
upon the giving of the statutory 60 days' notice.
Under such circumstances , of course, we could find
the alleged violation in the Respondent's admitted
failure to bargain regarding pensions . However, as-
suming for the moment , but without so finding, that
the waiver agreement is one of indefinite duration
within the meaning of Lion Oil Company, we do not
believe , under all the circumstances present here,
that this waiver agreement has yet existed for a
reasonable period to make it vulnerable to- amend-
ment or termination by the action of either party in
giving notice of a desire to terminate or modify.
The agreement that the office employees could be
covered by the IAM Pension Plan was made in
good faith by the Respondent in response to a
request by the Union. In fact, Respondent was
willing to participate in any one of three pension
plans , including one affiliated with various locals of
the International Union to which the Charging
Party belongs . After the trustees of the latter plan
declined to accept the application of the employees
involved, the Respondent then agreed to participate
in the other plan chosen by the Union. Indeed, the
pension plan thus agreed upon was not in any sense
"fixed," for as the IAM negotiated any changes,
modifications, or amendments to the existing plan,
the benefits would of course inure to the office em-
ployees as well . In this context, the situation was for
practical purposes a limited delegation of the bar-
gaining function to the IAM 's negotiations . Signifi-
cantly, at the time the charges were filed in this
case the Respondent 's participation in the plan had
been of less than 2 years' duration. In all these cir-
cumstances , and in view of the fact that the waiver
in question was, for all practical purposes , the con-
sideration given by the Union to obtain for the em-
ployees it represented coverage under the very pen-
sion plan it urged the employer to participate in
and which it now seeks to renegotiate , we believe
that sufficient time has not yet elapsed to justify the
Union unilaterally terminating the waiver agree-
ment . Nor do we find the change in the size and
composition of the unit in question, requires a con-
trary conclusion . Assuredly , the unit could contract
as quickly as it has expanded . The expansion of the
unit , therefore, does not persuade us that the
waiver agreement to which the parties bound them-
selves has been in existence beyond a reasonable
period of time . Accordingly, we find that Respon-
dent did not violate Section 8(a)(5) and (1) in
refusing to bargain with the Union regarding pen-
sions whether the waiver agreement be considered
' Both the General Counsel and the Charging Party rely on J . 1. Case
Company, 71 NLRB 1 145 The Charging Party also cites Pacific Coast As-
sociation of Pulp and Paper Manufacturers , 133 NLRB 690, enfd 304 F.2d
760 (C A 9), and Interborough News Company, 78 NLRB 1089
4 109 NLRB 680, approved N.L.R.B. v Lion Oil Company , 352 U S 282
reversing and remanding 221 F 2d 231 (C.A. 8).
" 174 F 2d 988 (C A.D.C.)
FEDERAL CARTRIDGE CORPORATION 125
either an agreement for a fixed period or one of in-
definite duration . We shall , therefore , dismiss the
complaint in its entirety.
ORDER
It is hereby ordered that the complaint herein be,
and it hereby is, dismissed in its entirety.
MEMBER BROWN, dissenting:
My colleagues assume, and I conclude , that the
waiver agreement in this case is of " indefinite dura-
tion ."' I also agree with my colleagues that an
agreement of indefinite duration is subject to
amendment after a reasonable period of time.
My disagreement , then , is only with their conclu-
sion that a reasonable period of time had not
elapsed when the Union requested bargaining about
the pension plan. In my view, the approaching ex-
piration date of the basic agreement between the
Office Employes Union and the Employer, opening
up all terms and conditions of employment (other
than the pension plan) for renegotiations, is the
touchstone for determining whether the pension
plan itself is similarly open for renegotiations. The
parties, in short, have established a "reasonable
period of time" by their contract covering other
terms and conditions of employment. It would be
anomalous to exclude only this one item from the
general bargaining . Moreover , I think a drastic
change in the composition of the unit ( in this case
from 18 to 400) must be taken into account in
determining what a "reasonable period of time" is
in any situation.
I would, therefore, find the 8(a)(5) violation al-
leged and issue an appropriate bargaining order.
It is obviously so, for its expiration is contingent upon an event, the
IAM ceasing to represent a single employee of the Employer , which may or
may not occur , and which , it it does occur , may happen at any time from its
execution to infinity