Gibbs & Cox, Inc.

National Labor Relations Board - Board Decisions

Jan 31, 1989

292 N.L.R.B. 757 (N.L.R.B. 1989)

GIBBS & COX INC 757
Gibbs & Cox, Inc and Marine Technicians Guild
Cases 2-CA-18324 and 2-CA-18748
January 31, 1989
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
JOHANSEN AND CRACRAFT
On August 15, 1985, Administrative Law Judge
Robert M Schwarzbart issued the attached deci-
sion The General Counsel and the Respondent
filed exceptions and supporting briefs, and the Gen
eral Counsel filed an answering brief
The National Labor Relations Board has delegat
ed its authority in this proceeding to a three
member panel
The Board has considered the decision and the
record in light of the exceptions and briefs and has
decided to affirm the judge's rulings, findings, and
conclusions only to the extent consistent with this
Decision and Order
1 We agree with the judge that the Respond
ent's unilateral cessation of payments to the Phoe-
nix Mutual major medical plan did not violate Sec-
tion 8(a)(5) and (1), but find it unnecessary to pass
on the judge's conclusion that the plan was unlaw-
ful under Section 302 of the Labor Management
Relations Act, 29 US C § 186 Instead, we find
that the Union waived its right to bargain over the
cessation of payments i
In a letter sent on April 16, 1982, the Respond-
ent advised the Union that it would discontinue
payments to the Phoenix Mutual Plan effective
May 1, 1982 The Union did not request bargaining
over this matter There was no collective bargain
ing agreement in effect, so all the Respondent was
required to do was give notice of its planned uni-
lateral change and afford a reasonable opportunity
for bargaining Owens-Corning Fiberglas Corp, 282
NLRB 609 fn 1 (1987) We find that, under the
circumstances present here, the Respondent gave
sufficient notice to the Union and the Union had a
reasonable amount of time within which to request
bargaining on whether the Respondent should
cease payments into the Phoenix Mutual plan
Given the background of the Respondent's repeat
ed questions about the coverage provided and its
expressions of dissatisfaction with the Union's ad-
ministration of the plan, the union representative
should have had no doubt about what it might
have done to forestall a decision to cease payments
to the plan
1 Chairman Stephens would find that the unlawfulness of the plan is
not established on this record
2 We do not agree with the judge that the Re-
spondent violated Section 8(a)(5) by unilaterally
substituting its own major medical plan In the
same April 16, 1982 letter noted above, the Re-
spondent told the Union of its intention to substi-
tute the company policy effective May 1, 1982
The Union did not request bargaining The record
shows that pursuant to a request by the Union, the
Respondent had provided the Union with a copy
of the company plan on July 28, 1981 Company
Senior Vice President Erlich testified that there
were no changes in the plan as of May 1982 The
Union, therefore, had had full information concern-
ing the provisions of the company plan in its pos
session for a substantial period of time Because the
Union clearly had detailed information concerning
the company plan, had 2 weeks' notice of the Re
spondent's intention to substitute the company
plan, and did not request bargaining, we find that
the Union also waived its right to bargain over the
implementation of the company plan We will dis-
miss this allegation of the complaint
3 We do not agree with the judge's recommen-
dation that a hearing be held concerning whether
the Board should revoke the Union's certification
First, it seems inappropriate for that question to be
considered in an unfair labor practice proceeding in
which the Union is not the respondent Additional-
ly, even if true, the alleged acts of misconduct that
the judge cited in recommending consideration of
revoking the Union's certification would not war-
rant this extreme remedy See Teamsters Local 703
(Kennicott Bros), 284 NLRB 1125 (1987) As we
find the hearing recommended by the judge to be
inappropriate, we find it unnecessary to pass on the
judge's conclusion concerning union misconduct
ORDER
The complaint is dismissed
Haywood E Banks Esq and Polly Chill Esq for the
General Counsel
Anne Gordon Greever and Hill B Wellford Esqs (Hunton
& Williams) of Richmond, Virginia, for the Respond
ent
Stephen E Klausner Esq (Klausner & Hunter), of Somer
ville New Jersey, for the Charging Party
DECISION
STATEMENT OF THE CASE
ROBERT M SCHWARZBART, Administrative Law
Judge This case' was heard in New York, New York,
' As a settlement was approved in Case 2-CA-18324 that provided
among other things for adjusted withdrawal of the charge and dismissal
of the related complaint allegations in that matter Case 2-CA-18748
alone was litigated
292 NLRB No 78
758 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
pursuant to a charge2 filed by Marine Technicians Guild
(the Union, the Guild, or MTG) and complaint. The
complaint, as amended at the hearing, alleges that Gibbs
& Cox, Inc. (the Respondent) violated Section 8(a)(5)
and (1) of the National Labor Relations Act (the Act) by
unilaterally, and without bargaining with the Union as
the certified bargaining representative of certain of its
employees, discontinuing premium contributions to the
Union's major medical plan on behalf of certain unit em-
ployees, and by unilaterally putting into effect its own
substitute major medical plan for those employees. The
Respondent in answering the complaint denies the com-
mission of unfair labor practices.
All parties were given full opportunity to participate,
to introduce relevant evidence, to examine and cross-ex-
amine witnesses , and to file briefs. Briefs, filed by the
General Counsel and the Respondent, have been careful-
ly considered.
On the entire record of this case and my observation
of witnesses and their demeanor, I make the following
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
The Respondent, a New York corporation with offices
and places of business in New York, New York, Arling-
ton, Virginia, and Newport News, Virginia, is in the
business of marine designing on a contract basis. Annual-
ly during the course of its operations, the Respondent
performs services valued in excess of $50,000 directly for
firms located in States of the United States other than
the States where it is located.
The complaint alleges, the answer admits, I find that
the Respondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the
Act.
II. THE LABOR ORGANIZATION INVOLVED
Marine Technicians Guild (the Union) is a labor orga-
nization within the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background; Appropriate Bargaining Unit;
Relevant Contract Provisions
In Gibbs & Cox, Inc.,3 involving these same parties,
Administrative Law judge Raymond P. Green found
that in August 1980 the Respondent Company had vio-
lated Section 8(a)(5) and (1) of the Act by withdrawing
recognition from the Union as collective-bargaining rep-
resentative of its unit employees employed at its Arling-
8 The relevant docket entries are as follows: The charge in Case 2-
CA-18748 was filed on 20 April 1982; the order consolidating Cases 2-
CA-18324 and 2-CA-18748 and consolidated complaint issued 30 June
1983; and hearing was held on 22, 23, and 24 August and 14 , 15, 16, and
17 November 1983. Because , as noted , Case 2-CA-18324 was settled
after the start of the hearing, docket information relating to that matter is
omitted.
Cases 2-CA-17515 and 2-CA-17588 (JD-(NY)9--82) issued 29 Janu-
ary 1982 , presently by pending on exceptions before the Board.
ton, Virginia division,4 bargaining to impasse with the
Union on its contention that Arlington division employ-
ees be excluded from the bargaining unit, and by unilat-
erally granting to its Arlington division employees wage
increases and other benefits.
It will be recommended that the Board consider the
conclusions and proposed Order contained herein before
issuing its Decision and Order on the appeal from the
Judge Green's decision.
As found by Judge Green, the Respondent primarily is
involved in providing engineering and design services re-
lating to the conception, planning and construction of
naval structures. Although much of the Respondent's
work involves designing ships for the United States
Navy, it also does such work for commercial customers
and for foreign governments. In addition, the Respond-
ent designs various types of ocean platforms, such as oil
rigs. In this work the Respondent employees such techni-
cal employees as draftsmen and designers, or advanced
draftsmen, who translate architectural and engineering
specifications into blueprints and other drawings. These
technical employees who are within the unit are termed
"white badge" employees, as opposed to the nonunit
"blue badge" managerial/supervisory employees. The
Respondent also employs a large number of professional
employees, such as naval architects and engineers, most
of whom are excluded from the unit as "blue badge" per-
sonnel. Judge Green found, however, that some profes-
sional employees were not considered to be man-
agerial/supervisory and, consistent with the bargaining
history, he included such employees in the unit.
The bargaining unit issue whether both the New York
and Arlington employees were to be included in one unit
was fully litigated before Judge Green who, as prerequi-
site to his conclusion that the Act had been violated,
found the following unit appropriate for purposes of col-
lective bargaining within the meaning of Section 9(b) of
the Act:
All technical employees (including but not limited
to such classifications as draftsmen, senior designers,
junior designers, designer aides, learners and ship
arrangement specialists), and all professional em-
ployees having white badge status (including, but
not limited to naval architects, marine engineers,
electrical engineers, electronic engineers, ocean en-
gineers, hearing-ventilation-air conditioning
(H.V.A.C.) engineers, mechanical engineers civil
engineers, structural engineers, and sedimentolo-
gists), employed by Gibbs & Cox, Inc., at its New
York, New York, place of business and its Arling-
ton, Virginia, Division, excluding all office clerical
employees, managerial and executive employees,
guards and supervisors as defined in Section 2(5) of
the Act.
4 The unit asserted as appropriate by the General Counsel and the
Union in the matter before Judge Green and here consists of the Re-
spondent 's technical employees in New York, New York, and Arlington,
Virginia, while the Respondent asserts that only the New York City em-
ployees are properly within the unit.
GIBBS & COX INC 759
The present complaint, however, alleges as appropriate
the following bargaining unit that excludes all profession
al employees from a unit that includes nonprofessional
employees
All technical employees including staff design engi
neers, design engineers , senior designers , associate
design engineers , designers assistant design engi
neers , junior designers , junior designer engineers,
designer aides , engineer aides and learners em
ployed at Respondent's New York, New York, and
Arlington, Virginia, locations, but excluding all
other employees, managerial employees, profession
al employees, contract staff employees, employees
borrowed from other firms, summer employees,
office clerical employees, guards and supervisors as
defined in the Act
The General Counsel and the Union continue to con
tend here, in agreement with Judge Green, that the ap
propriate unit must include employees at both the Re
spondent s New York, New York, and Arlington, Vir
ginia facilities,5 but the Respondent maintains its position
that the bargaining unit should be restricted to include
only employees at the New York City location, exclud
ing those at Arlington The Respondent does not dis
agree with that part of the unit description alleged in the
complaint relating to job classifications or categories to
be included or excluded 6
The unit issue is now before the Board as part of the
appeal from Judge Green s decision As the parties are of
the view that they have fully litigated the unit matter in
that proceeding, and as the Respondent has preserved its
position in the exceptions and supporting arguments filed
in connection with that case , the parties have elected not
to relitigate here the question whether a single or dual
location unit is appropriate Rather, they will await the
Board's ruling on Judge Green s decision The conclu
sions reached in this case however can be presented
without awaiting final resolution of unit
The Union, which negotiates only on behalf of the Re
spondent s employees has been the certified bargaining
representative since 1946 In 1967 the Board denied an
effort by the Union to expand the unit by way of a peti
tion for clarification 7
5 The parties agree that the Respondents third location at Newport
News Virginia is not within the relevant bargaining unit although em
ployees at that facility were once covered by the same collective bargain
ing agreement between the Respondent and Union and also by the
Union s major medical plan the subject of this proceeding
6 The parties accord in the present matter that professional employees
be excluded from a unit that also contains nonprofessional employees
comports with Sec 9 (b)(1) of the Act which precludes Board certifica
tion of such mixed units unless most of the professional employees vote
for inclusion This agreement apparently removes an issue that was
argued by the General Counsel before Judge Green
° 168 NLRB 220 (1967) In that matter the Union had petitioned for
unit clarification to include certain professional employees who the
Union claimed had been promoted out of the unit In dismissing the pets
non on grounds that the Union never had represented such employees
and that to include them would be contrary to Sec 9(b)(1) of the Act the
Board noted that the unit as it then existed contained both professional
and nonprofessional employees although not the professional employees
in dispute
Since the Union's certification as bargaining represent
ative, the parties have executed a series of collective bar
gaining agreements, the most recent of which was effec
tive from 22 August 1977 until 22 August 1980 In the
fall of 1980, after expiration, the parties met several times
to try to negotiate a new contract, but were unsuccess
ful Accordingly, the Respondent and the Union have
been without a collective bargaining agreement since
August 1980
The contract that expired in 1980 provided for a modi
fled union secunty/agency sop arrangement, whereby
employees, after a 30 day grace period were required to
become and remain members of the Union or in the al
ternative, to pay a specified weekly fee to the Union for
representing their interest with the Employer' 8 Article
XVII of the contract provided in relevant part that the
Respondent would pay the costs of a group life insur
ance plan9 and trial and travel insurance, make available
to a pension plan and, most germanely, contribute on
behalf of unit employees to the Union s major medical
plan pursuant to the following contractual provision
XVII 3 The Employers contribution toward the
group Major Medical plan of the Guild shall be a
maximum amount of $10 25 monthly per covered
employee payable to an insurance company desig
nated by the Guild
Hospitalization under a Blue Cross/Blue Shield policy
to which both the Respondent and employees contribut
ed also was provided under article XVII
B The Parties' Positions
The General Counsel and the Union contend that, of
fective 1 May 1982 the Respondent, contrary to the
above quoted article XVII 3 contract provision, unilater
ally discontinued making its contributions of $10 25 per
employee per month to the Union s major medical plan
on behalf of its New York employees This plan had
been carried by the Phoenix Mutual Life Insurance Corn
pany Instead the Respondent on the same day, then
unilaterally placed these employees under a company
sponsored major medical plan underwritten by the Equi
table Life Assurance Society of the United States (Equi
table) While the Union paid the premium to Phoenix
Mutual for another month in order to continue coverage
for unit personnel, that policy was discontinued on 31
May 1982 as the Respondent refused to resume pay
ments Both the unilateral cessation of payments to the
Unions plan and the unilateral substitution of the Com
pany s plan are alleged as unlawful
The General Counsel does not assert that the Equita
ble major medical plan put into effect by the Respondent
is necessarily inferior in available benefits to that previ
ously provided by the Union through Phoenix Mutual, a
8 Although the contract was applied to both the New York and Ar
lington employees the union secunty/agency shop provision was opera
tive only in New York but not in Arlington as Virginia is a right to
work State Accordingly nonmember employees referred to later in this
decision were located in Arlington
8 The Respondent selected the carrier for the life insurance plan and
was the sole administrator
760 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
point on which the Union denied having information and
that the General Counsel did not develop, but that the
Respondent unlawfully had changed employment condi-
tions by unilaterally discontinuing an insurance policy
that, until then, had been administered solely by the
Union, and by substituting its own plan and insurance
company. The Respondent's conduct in the present
matter relates only to the employees at its New York
City facility because as discussed in Judge Green's
above-referred decision, the Respondent had discontin-
ued such contributions for its Arlington employees in
August 1980, almost 2 years earlier, when it withdrew
recognition from the Union as bargaining representative
of those employees.
The Respondent argues that it, in fact, had met its ob-
ligation by offering to bargain with the Union in March
and April 1980 concerning major medical insurance, at
which times the Union had refused to meet or to discuss
the matter with the Company. The Respondent argues
with even greater force, however, that the Union had
acted in bad faith in administering the major medical
program. The Respondent asserts that for an extended
period the Union had overcharged the Company by pro-
viding unit employees with fewer major medical benefits
than could have been purchased from the Respondent's
contributions with the result that a large surplus fund
had aggregated, held in an escrow account by Phoenix
Mutual subject to the Union's exclusive direction. The
Union had not accounted to the Respondent for this
monetary surplus , but used it to encourage membership
in its organization by unilaterally purchasing additional
types of insurance coverage for unit employees beyond
the straight major medical protection specified in the col-
lective-bargaining agreement. The Company asserts that
not only was this done without bargaining with or ob-
taining agreement from the Respondent, but also without
even informing the Respondent, and by actively reject-
ing the Respondent's various efforts to obtain informa-
tion concerning the major medical plan's status and ad-
ministration. The Respondent also contends that the
Union further encouraged membership by using the sur-
plus fund, while it lasted, to defray the costs of subse-
quent premium increases imposed by Phoenix Mutual for
member employees, although employees who did not
belong to the Union or who did not pay the agency fee
were assessed a $1 monthly adminstration fee not
charged to members or agency fee subscribers to com-
pensate the Union for administering the plan. At the
same time nonmembers, only, also were charged a
monthly premium payment of $2.80 that was to be for-
warded to the insurance company. 10
The Respondent argues that it had not unilaterally
changed the major medical plan because, first, it never
had agreed to the plan as it was constituted in April
1982, with dependent life and accidental death and dis-
memberment insurance (AD&D) when the Company
served notice that it would cease contributions to the
to As will be discussed , the Union was not successful in its efforts to
collect the $3.80 in monthly surcharges from nonmembers unit employ-
ees.
Union's major medical plan.11 The contract had speci-
fied that employer contributions be made only to the
Union's major medical plan, which was all that had been
provided under prior collective-bargaining agreements.
Also, the payroll deduction authority cards signed by
employees to authorize withholding for insurance pur-
poses had authorized such payroll deductions only for
major medical coverage. All other insurance programs
provided under the collective-bargaining agreement were
fully funded and administered solely by the Respondent.
The Respondent therefore argues that it could not have
invoked an unlawful unilateral change to a term and con-
dition of employment to which it never had agreed and
which had not become legitimately established by agree-
ment of the parties.
None of the parties to this proceeding have around the
applicability of Section 302 of the Labor Management
Relations Act, as amended, which will be discussed
below. 1 2
C. The Facts
1. The Respondent's cessation of contributions to
the Union's major medical plan; substitution of the
Respondent's own plan
The union-sponsored major medical plan as carried by
Phoenix Mutual was put in place in March 1975, when
the Union, with company permission, selected that carri-
er to replace New England Mutual Life Insurance Com-
pany as the underwriter of its major medical policy. As
testified to by Union President Ronald A. Carlson,13
New England Mutual originally had been named in the
immediately preceding collective-bargaining agreement,
effective from 1974 to June 1977, as the carrier of that
policy. However, when Phoenix Mutual was designated,
the then-existing collective-bargaining agreement was
amended deleting New England Mutual and substituting
"an insurance company designated by the Guild." The
predecessor major medical plan with New England
Mutual had provided no additional insurance coverages.
The Phoenix Mutual plan, as will be discussed, was
later amended in 1979 and 1981.
The General Counsel's case is that on 16 April 1982,
the Respondent, over the signature of its chairman, Rich-
ard M. Ehrlich,14 sent the following letter to Carlson
11 The Union explained that the additional coverages for life insurance
and AD&D had been added as required by the insurer in order to enable
the Union to obtain the particularly favorable major medical package rate
that it claimed it was able to get in 1975 when purchasing its initial
policy from Phoenix Mutual.
12 The relevant provisions of Sec . 302 of the LMRA are set forth in
the appendix to this decision.
13 Carlson, a design engineer on the Respondent's New York staff, has
been with the Company for more than 30 years and has been union presi-
dent since 1973 . Most of the record testimony in this proceeding was pro-
vided by Carlson , the General Counsel's only witness, who also was ex-
tensively examined during the Respondent's direct case.
14 Ehrlich who, while a vice president of the Respondent with labor
relations' responsibilities, also appeared as a witness in the proceeding
before Judge Green was the Respondent 's only other witness at this hear-
ing. Ehrlich, who also has been with the Company for about 30 years,
has been chairman since February 1982.
GIBBS & COX INC
notifying the Union that the Respondent was discontinu
mg its contributions to the Union s major medical plan
for New York technical (white badge) employees and
was implementing its own fully paid coverage in its
place
In your letter to me of April 14, 1982 you re
fused to meet with me to discuss major medical in
surance You also failed to provide certain docu
ments and information which the company needs to
assess technical employees current major medical
coverage and premiums As you know, we have re
peatedly requested this information and you have
refused to give it to us
The information we have been able to obtain re
veals very serious mishandling by the Guild of com
pany contributions for major medical premiums Re
cently, facts have come to my attention which con
vince me that
(1) The Guild has overcharged the company
by substantial amounts for major medical premi
ums
(2) Despite a sizable surplus in our aggregate
premium payments the Guild has imposed unnec
essary premium charges on bargaining unit em
ployees and has increased the deductible amount
required to be paid by them
(3) The Guild has misrepresented the reason
for the employee premium charge by telling em
ployees that the company contribution was mad
equate, while in fact the Guild knew that the
company overpayments were sufficient to pro
vide full company paid coverage for both em
ployees and their dependents
(4) The Guild's mishandling of major medical
administration had resulted in a significant
number of employees being deprived of coverage
for their dependents
(5) The Guild has consistently attempted to
conceal the overpayments by refusing repeated
company requests for premium costs and related
information
(6) The Guild has discriminated against techni
cal employees who are not Guild members by
telling them that they must be Guild members to
receive major medical coverage
(7) The Guild has coerced technical employees
to become members by representing to them that
they must sign membership cards in order to
enroll the major medical insurance
(8) The Guild has discriminated against techni
cal employees who are not Guild members by
failing to inform them of premium charges, by
failing to allow them a choice in the selection of
coverage options, and by threatening to deprive
them of coverage
I am convinced that immediate corrective action
must be taken in order to give our technical em
ployees the comprehensive company paid major
medical coverage now enjoyed by other firm em
ployees As you will recall, during our 1980 negoti
ations I proposed on numerous occasions to provide
761
fully paid major medical coverage for both employ
ees and their dependents under the company plan
Each time the Guild rejected this proposal, insisting
instead that the company pay the premium directly
to the Guild As I am sure you know a direct pay
ment of that type would have violated Section 302
of the Labor Management Relations Act 15
Throughout those negotiations you never once
proposed a specific increase in the company s pre
mium contribution undoubtedly because you knew
that such a proposal would require you to reveal
the premium charges which you had worked so
hard to conceal
The Guild s conduct in this matter is in violation
of its duty to bargain, its duty to fairly represent
employees, its duty under federal law as an employ
ee trust fund fiduciary, and is in breach of our
1977-1980 collective bargaining agreement For the
reasons I have recited immediate corrective action
is needed but you have refused to discuss these
matters with me
Accordingly the company is extending fully paid
major medical coverage under the company policy
to the New York technical employees, effective
May 1 1982 The company will cease monthly pay
ments to Phoenix Mutual as of that date Technical
employees in Arlington are covered by the same
company plan 16
In accordance with the above letter, the Company, as
of 1 May 1982, discontinued its monthly $10 25 per em
ployee contribution to the Union s major medical plan
underwritten by Phoenix Mutual and, as of that date
also put its own major medical policy with Equitable in
effect for the New York employees Carlson testified that
the Respondent instituted these measures unilaterally
without meeting with or discussing these steps with the
Union and without the Union s approval
15 In not affirmatively arguing the applicability of Sec 302 to the
present matter certain parties apparently were of the view as was ex
pressed in Ehrlich s 16 April 1982 letter that for that statute to be violat
ed the premium payment would have to have been made by the Em
ployer directly to the Union rather than as was the practice to the msur
ance carrier Phoenix Mutual In such an interpretation the independent
ly admimstered trust fund and other requirements of Sec 302(c)(5) were
not afforded proper weight
Even so the record reveals that during the unsuccessful contract nego
tiations that took place between July and October 1980 the Union re
peatedly demanded that the Respondent pay it directly for the group
insurance major medical plan which the Respondent refused to do At
first the Respondent countered that the language of the relevant contract
provision should be clarified to ensure that the Company s payment was
for major medical only and that the Union provide to the Company on
request copies of major medical fiduciary records This and the Re
spondent s 19 August proposal that the Employer provide major medical
coverage to all eligible employees under its own plan starting September
1980 was resisted by the Union which continued to insist on its own
demand that company premium contributions be paid directly to the
Union The Respondents 23 September proposal to provide company
major medical coverage effective October 1980 also was rejected by the
Union that noted in written response that if the percentage wage in
crease is acceptable the Guild will settle for the existing Article XVII 3
This was a reference to the then extant contract language
16 As noted because Arlington employees had been covered by the
Company s plan carried by Equitable since around August 1980 this
action affected only the New York staff
762 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Although the Respondents plan became effective for
the New York unit employees on 1 May 1982, the Union
continued the Phoenix Mutual plan in effect for the
month of May by paying the premium from its treasury
When the Company did not resume contributions, the
Phoenix Mutual plan ended for New York employees on
31 May 1982 and, since May, a month of dual coverage
under both the union and company plans, all unit em
ployees have been covered by the Respondents Equita
ble policy on a noncontributory basis 17
As noted, it was the Company s action in unilaterally
stopping its premium contributions to the Union's major
medical plan and in substituting its own policy that the
General Counsel and Union consider as violative of Sec
tion 8(a)(5) and (1) of the Act
2 The Union's administration of the major medical
plan
The parties stipulated that the Union s Phoenix Mutual
major medical plan for unit employees, when in effect,
had not been a trust agreement within the meaning of
Section 302, LMRA, but was a simple insurance policy
covering the unit employees administered by the Union,
itself, in conjunction with the insurance company Com
pany designated administrators had not overseen the plan
in conjunction with the union administrators
Before August 1980, the Union s major medical plan
was applied at both New York and Arlington The New
York facility employed about 200 unit employees while
the Arlington facility had approximately 15 to 20 such
employees At the time of the hearing, there were 15 em
ployees doing unit encompassed work at Arlington
As all unit members were considered enrollees in the
Unions major medical plan the amounts of the Re
spondent s contributions were determined at monthly
meetings of company and union repreentatives when the
additions and subtractions to the bargaining unit since
the last such meeting were recorded The figures agreed
on were entered by the union representative on a copy
of a multicarbon Phoenix Mutual form entitled Group
Insurance Monthly Statement," that was sent to that in
surer each month by the Union Although the Employ
er s representative would sign the form every month, the
Respondent did not receive a fully completed copy of
the insurance statement that contained the information
that was submitted on the copies that the Union sent
month after month to the insurer At most, the Company
was provided with a form copy left largely in blank,
that showed the number of employees who had been
covered when the last statement was prepared, the num
hers of employees who had been added to or decreased
from the unit as eligible for life insurance for accidental
death and dismemberment (AD&D), and for major medi
cal coverage Major medical data on the Company s
copy of the form was further broken down to indicate
the respective numbers of employees protected under
single and family coverage respectively The latter cate
gory referred to employees with two or more depend
ents The Respondent never was provided with such fur
ther information, later written in by union representa
tives on the copies of the monthly forms that they sent
to Phoenix Mutual, that showed the coverage amounts of
the various insurance categories provided, the rates, and
the premium costs The Company s monthly contribution
was calculated by multiplying the total number of eligi
ble unit employees, whether under single or family cov
erage, by the $10 25 per capita contractual rate The Re
spondent's contribution, thus derived, was paid directly
to Phoenix Mutual
This arrangement continued under the Phoenix Mutual
plan from the spring of 1975 until 1 August 1981, when
the Company's copy of the Group Insurance Monthly
Statement, as furnished by the Union, no longer showed
e,ven the numbers of employees added to or subtracted
from the unit, or the numbers of persons covered in the
different insurance categories, but merely noted without
explanation, the number of employees covered by the
Respondent s $10 25 per capital contribution, those cov
ered by the Union s contribution toward the balance due
above and beyond the Company s payment, and the total
that was due from the Respondent
The Company's payments to Phoenix Mutual under
the original premium levels were more than the cost of
the protection actually provided and a surplus fund had
aggregated from these overpayments that was held in
escrow by Phoenix Mutual, subject to the Union s direc
tion The parties stipulated that from October 1977
through 1 August 1981, the Respondents overpayments
totaled $17,430 15 The Respondent's chairman, Ehrlich
testified that the Company estimated there was an adds
tional $3000 in overpayments after August 1981, the end
of the period covered by the above stipulation The Re
spondent, however not having been provided with full
cost information did not learn of these overages until a
later time
The Union, however was fully aware of the escrow
account that had accumulated and as will be discussed
was able to use that money for its own advantage Early
in the contract term on 28 November 1977 Carlson had
written to Phoenix Mutual noting that there had been
overage payments for October and November of that
year, that they had been discussed with Terence S
McBrien the Phoenix Companies agent in New York
City and would be rectified shortly However, as noted
the overages in the Respondents contributions were not
corrected and continued to accumulate each month until
reaching, at least, the stipulated $17 430 15 aggregate in
August 1981 At no time did Carlson or any other union
representative advise the Respondent that its monthly
payments for major medical insurance were in excess of
the premiums actually required and that an escrow fund
had accumulated from the Company s excessive pay
ments 18
18 Carlson conceded that Phoenix Mutual repeatedly had reminded the
17 The Unions major medical plan which originally was employee Union of the aggregating overages in company contributions In the early
contributory when carried by New England Mutual became noncon stages he promised correction but had done nothing in that regard Al
tnbutory after it was underwritten by Phoenix Mutual and later again though as Union President Carlson was active in the administration of
became contributory as coverage expanded and premiums increased the major medical plan other union representatives also participated
GIBBS & COX, INC
Carlson testified concerning the premium overages
collected from the Respondent He related that the con-
tract had set forth the Respondents obligation to con
tribute $10 25 per employee each month to an insurance
company selected by the Union, but denied any concom
itant obligation on the part of the Union to furnish insur
ance that was fully valued at $10 25 per employee or else
to communicate the existence of such lesser coverage to
the Employer Carlson, however, could not indicate Ian
guage in the collective bargaining agreement that was
supportive of his interpretation, or that specified just
how much below the $10 25 insurance value the Union
validly could go in administering the plan
3 The 1979 major medical plan amendment
The surplus funds held in escrow by Phoenix Mutual
was first put to use in March 1979 to help pay the in
creased premium costs for certain improvements to the
major medical plan as described in the Union's newslet
ter for that month, distributed to employees These
changes had not been negotiated with or even mentioned
to the Company before implementation The newsletter
announced the following
MAJOR MEDICAL
Subject to final approval by Phoenix Mutual, the
Guild has been able to obtain additional medical
coverage without any additional expense to those
enrolled in major medical Additional coverage in
cludes
Maximum Deductible Increase from $250 000
to $1,000000
Waived for accidents
Medicare Benefit Provide same plan as
For under age 65 with
$10,000 maximum on
Private duty nursing
Survivor Benefit Two years of
Additional coverage
without further
Premium payment
Waiver of Premium If disabled prior to age 60
coverage continues for
employees and dependents
without further premium
payment
Psychiatrics Remove $10,000 in hospital
maximum
Maternity19 Pregnancy for the mother
One reason the Guild was able to obtain this ad
ditional coverage which by the way makes our
19 Although the statutory requirement that pregnancy or maternity
care must be added to the major medical policy contended by the Union
was litigated at the hearing only in terms of state law under which in
this instance such protection was optional such coverage is mandated
under the Federal Pregnancy Discrimination Act as described at 29 CFR
§ 1604 10(b) and (d) of which official notice is taken Under subsec (d)
any insurance program which is in effect on October 31 1978 which
763
total package one of the best available anywhere,
was due to the favorable claim experience of our
group As soon as this additional coverage becomes
effective, you will be notified
The above increases in benefits under the Union s
major medical plan that, for the first time , provided
pregnancy coverage, or maternity care, caused a month
ly rise in premiums of $3 72 per employee under single
coverage and $16 52 for each employee with dependents
Although Carlson initially testified that these higher
premiums had been paid from the Union's treasury on
behalf of unit employees, he changed his story after
being confronted by the relevant group insurance month
ly statements from 1 March 1979 through January 1980
that showed that the Union s monthly contributions had
not been recorded as a series of payment checks but,
rather, was memorialized by a series of notations on the
bottom of each monthly statement reading, "Debit or
credit Carlson conceded that these union made nota
tions had authorized Phoenix Mutual to draw on the
escrow fund accumulated from the Company s overpay
ments to the major medical plan to pay the Union s part
of the higher monthly premiums Accordingly, although
the Company s $10 25 per employee contributions contin
ued at the preexisting contractual level during that
period, it had not been necessary for the Union until 1
February 1980 to include its own check to pay the in
creased insurance costs for pregnancy coverage and
other benefit improvements announced in its March 1979
newsletter In February 1980, when the escrow fund fi
nally was depleted the Union applied the remaining
escrow fund balance of $396 88 toward its premium con
tnbution and added its own check in the amount of
$306 14 to complete the remainder due The Respond
ent s contributions, as noted had continued at the con
tractual level After February 1980 the escrow fund
having been completely exhausted the Union paid from
its own treasury all premium amounts that were due
above and beyond the Respondents contractually set
contributions 20
The foregoing amendments to the plan which became
effective 1 March 1979, were authorized by a 20 Febru
ary 1979 letter from Carlson to Phoenix Mutual
does not treat women affected by pregnancy childbirth the same as
other persons not so affected must be in compliance with Sec
tion 1604 10(b) by April 29 1979 Sec 1604 10(b) removes any dis
tinctions for job related purposes between disabilities caused or contnb
uted to by pregnancy or childbirth and other medical conditions under
any health or disability insurance The Union in fact noted in its No
vember 1979 letter to employees that the Guild Major Medical Plan cost
had been increased to include pregnancy in compliance with the Preg
nancy Discrimination Act
2° The March 1979 improvements to the major medical plan related
back to matters initially referred to in a letter dated 27 September 1978
to Carlson from Terence S McBnen group representative of the Phoe
nix Companies There the Union was advised that Phoenix Mutual had
agreed to increase the maximum in benefits that any one individual could
receive in a given year to $1 million with a deductible waived for acci
dents The previous maximum had been $250 000 The letter also reflect
ed improvements in medicare benefits and survivors benefits in the psy
chiatric benefit where the $10000 limitation on coverage was removed
and a waiver of premium in certain circumstances As noted these
changes were not put into effect until March 1979
764 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
4 The Union's administrative fee and other major
medical surcharges to nonmembers
On 22 June 1979, the Union sent at two related types
of correspondence One was a letter jointly signed by
Carlson, as president, and David Nevitt, as secretary to
H Zaeh, then the Respondents personnel manager This
letter was as follows
Please be advised that as per past practice, a one
dollar ($100) administration fee payable to the
Marine Technicians Guild is to be deducted month
ly for bargaining unit members enrolled in the
Guilds Major Medical Plan who are non guild
members and pay no agency fee
The second correspondence was sent to nonmember
unit employees inviting them to become members and in
dicating certain benefits of membership Enclosed with
each copy was a payroll deduction authority card au
thonzing checkoff for union dues, a membership card to
be completed when the deduction authority card was
signed, and a payroll deduction authority card for major
medical authorizes payroll deductions for major medical
insurance The addressee employees were informed that
no payroll deductions were being made then, the Union
was receiving '10 25 monthly per enrolled member from
Gibbs & Cox, Inc, and that, therefore, it would not be
necessary to charge the bargaining unit personnel The
letter continued, in relevant part
This plan is administered by the Guild and there
by [sic] it will have to charge an administration fee
of $100 per month for this service to Non Guild
members (who pay no agency fee) in the Bargaining
Unit at Gibbs & Cox Inc
For Guild members only, the Guild will try to
absorb any increases in premiums in excess of the
company s contribution made according to the Bar
gaining Unit contract The Guild will not absorb
these increases for Non Guild members and they
will be charged the increase
In a followup 16 November 1979 letter to employees
jointly signed by Carlson and secretary Nevitt the
Union served the following notice
The Guild Major Medical Plan cost has been in
creased to include Pregnancy to comply with Preg
nancy Discrimination Act of (EEOC) This increase
brings the cost over the $10 25 per month the coin
pany contributes in accordance with the Collective
Bargaining Agreement of August 22, 1977
This additional cost will be passed along to all
bargaining unit people who are not Guild members
and do not pay an agency fee
Since the average cost charges from month to
month, we have averaged the cost which is in
excess of the company contribution, over a three
month period As of December, 1979 the total de
duction will be as follows
$1 00-administrative fee
$2 80-avg cost over company contribution
$3 80-total deduction per month
The Guild will review this additional cost every
three month period and will advise the company of
any changes I thank you
Carlson explained that by November 1979, the Re
spondent's contractual contributions no longer were suf
ficient to pay the total major medical premium and the
escrow fund had been largely exhausted He conceded
that the Union, as stated in its above letter, had decided
to pass along the costs increase solely to those bargaining
unit employees who were not members of the Union or
who did not pay an agency fee For those who were
union members or who did pay an agency fee, the Union
had opted to absorb the increases from its own treasury
According to Carlson, the Union had considered it unfair
to use its treasury funds to pay for those who were not
members or paying an agency fee in the right to work
State of Virginia The $1 fee was to be kept by the
Union, while the $2 80 contribution for each employee
was to be pooled and sent in monthly to Phoenix Mutual
with the Group Insurance Monthly Statement
Although Carlson testified that the Union began to
collect the $2 80 premium contribution and the $1 admin
istrative fee from nonmember employees in January
1980, and Ehrlich testified that those collections had
begun in November 1979, both the Company and the of
fected employees actually had refused to cooperate with
the Union and these money s, in fact, were not paid In
stead the Union s efforts to gather these sums discnmm
atonly from employees who had not joined the Union
formed part of the allegations in the subsequently settled
complaint in Cases 5-CB-3313 and 5-CB-3372 21 re
ferred to above The events concerning the Union s col
lection attempts its threat to drop from major medical
coverage those nonmember employees who did not pay,
the case settlement and the Union s reaction are best
told by the Union, itself as set forth in its newsletter,
distributed to employees in January 1982
3 Concerning Major Medical Insurance
The Major Medical plan payment was increased
over and above the company payment under our
agreement The Arlington and Newport News bar
gaining units were advised by the Guild they would
have to pay $2 80 plus our administrative fee
They refused and were advised they would be
dropped The Company put them under their
Major Medical Plan and brought charges at the Bal
timore N L R B against the Guild
The employees in question were no more than
ten or so These people were being subsidized by
our dues Under Virginia law there is no agency
21 This consolidated matter was settled with the Boards Baltimore
Maryland Regional Office in November 1981 The Union has misrepre
sented in its answer to the complaint in that proceeding that it had not
notified employees of the Respondent who were nonmembers of the
Union that they would be required to pay the $1 monthly administrative
fee and that it had not notified such employees that if they failed to pay
the monthly fee they no longer would be covered under the major medi
cal plan
GIBBS & COX INC
shop as a result they paid nothing and the Guild
would have been forced to pay for the Major Medi
cal increase from our treasury An atrocious case of
demanding our money and when not receiving
same charging the Guild with unfair labor prac
tices
The company was hoping the Guild would
appear in Baltimore at the Board and fight this case
We did not agree with the law Nevertheless, we
were in violation and unlike the company, we abide
by the law We setled [sic] the case
5 The 1981 major medical plan amendment and
related costs
On 30 March 1981 a Phoenix Mutual senior under
writer in a letter to Carlson advised the Union that be
cause of the increase in claims paid in the period from 1
March 1980 to 1 March 1981 effective 1 June the major
medical premiums for both single and family coverage
would be slightly more than doubled
The Union responded to this by sending a letter, dated
1 June 1981, and an enclosed ballot to each of its mem
bers The letter gave notice that Phoenix Mutual had
been forced by increased medical costs and inflationary
pressures to raise its major medical premiums, and asked
the employees to use the ballot to vote whether to keep
the existing plan unchanged at a monthly cost of $26 to
employees with dependent (family) coverage, or to
revise the existing plan by instituting a $200 deductible22
based on an employee contribution of $14 Employees
also were invited on the same ballot, to participate in a
survey by voting whether they were interested in a sep
arate Guild sponsored dental place for Guild members
only at an approximate monthly cost of $9 per member
(Emphasis added)
In a followup letter to members sent later that month,
the Union announced that, in accordance with the mem
bership s majority choice in response to the Union s
above 1 June 1981 letter the Phoenix Mutual major
medical plan deductible would be raised from $100 to
$200 and that a $14 monthly contribution would be re
quired from all employees maintaining family cover
age 23 The Union promised to search for a more cost
effective plan
Also, in response to the clearly evident interest in a
Guild sponsored dental plan the Union calling for vol
unteers to assist promised to pursue that matter further
and to report back should a suitable plan be devel
oped 24
On 1 June 1981 Carlson wrote to Phoenix Mutual au
thonzing the change in deductible and premiums
As was the case with its other activities concerning
the major medical plan, the Union did not advise the
Company that it was considering the 1981 changes in the
plan of the employee vote it had sponsored, of the re
suits or that the changes had been made effective 1 June
22 The then existing deductible was $100 At the time employees were
not contributing to the cost of their major medical insurance
23 Employee contributions were not imposed by the Union on those
who selected single coverage
24 The dental plan never was adopted
765
1981 No copy of the amended plan was furnished to the
Company
Carlson explained that the Union s 1 June letter invit
ing the employees to vote on the changes in family cov
erage had been sent only to union members and that the
purpose had been to reduce the memberships out of
pocket expenses Although the Respondent still was con
tnbuting $10 25 per employee each month the escrow
fund already had been used up to pay the Union s share
of the higher premiums that had resulted from the preg
nancy coverage and other improvements announced in
the Union s March 1979 newsletter Therefore, had the
$100 deductible been kept, the 1981 premium increase
then being effectuated by Phoenix Mutual would have
raised the cost of the major medical plan well above the
Company s contributions and would have made it too ex
pensive to the membership The Union, for this reason
had opted to give the membership a chance to select a
higher deductible at a lower premium as it could not
have afforded to pay the entire increase from its own
treasury 25 Collected from employees who were mem
bers, the 1981 amendment marked the first time that such
employees were called on to contribute to the cost of
major medical coverage since 1975
6 The Respondents efforts to learn the status of
the major medical plan
The Respondents relevant contractual agreement with
the Union related solely to major medical insurance for
unit employees, with no reference to the dependent life
insurance and AD&D provided under the Union Phoenix
Mutual policy When the major medical insurance had
been carried under the predecessor policy with New
England Mutual only major medical had been provided
and that was the only coverage for which payroll deduc
tions had been authorized under the language of the pay
roll deduction authorization cards for health insurance
that had been completed by employees under the New
England Mutual plan When Phoenix Mutual became the
carrier there was no change in the wording of the de
duction authorization cards although the different cover
ages were thereafter unilaterally added to the plan
Therefore deductions from compensation for these addi
tional purposes exceeded in scope what had been author
ized in writing by the employees
It also is undisputed that none of the above described
additional coverages changes in premium or the deduct
ible had been negotiated or even discussed with the Re
spondent Although Carlson testified that at some unre
called time in 1975 soon after the Phoenix Mutual policy
first was put into effect he had given a copy of the
policy as it then existed to H Zaeh, the Respondent s
personnel manager the Company does not acknowledge
that such a copy was received and I do not credit Carl
son s indeterminate statement In so concluding it is
noted that Carlson could not produce a cover letter indi
cating that the plan had been delivered to the Respond
26 In June 1981 when this second amendment to the plan became op
erative no collective bargaining agreement between the parties was in
effect the last contract having expired in August 1980
766 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ent, that Carlson admitted 'hat the Respondent was not
voluntarily given copies of the 1979 or 1981 amendments
to the plan, that Carlson and the Union had taken the
position that the details concerning the plan's operation
were not the Company's business and, consistent with
this, had withheld important information on the monthly
statements As will be discussed, the Union had strongly
resisted the Respondents efforts to learn of the plan s
status, even to the point of temporarily defying subpoe
nas Also, Carlson s testimony was so self contradictory
and described conduct so untrustworthy that it is impos
sible to credit him where his statements conflict with the
testimony of others As will be further shown, so deter
mined were Carlson and his associates to keep informa
tion concerning the union plan and their stewardship
from the Respondent that it would have been totally in
consistent with their pattern of conduct to have volun
tanly supplied the Company with a copy of the policy
The Respondent's first request for information came
on 25 June 1979, more than 4 years after the Phoenix
Mutual policy first was implemented, when Ehrlich, then
still company vice president, wrote to Carlson asking for
early delivery of a copy of the Union s major medical
policy, including the schedule of benefits, the total cost
of the plan, and the cost per enrolled individual This
data request was in response to the above 22 June 1979
correspondence from the Union concerning the imposi
tion of its $1 monthly administrative fee on nonmember
Virginia employees and on those who were not paying
the Union an agency fee As described on 22 June the
Union had sent a letter to the Respondent requesting that
the administrative fee be withheld from the pay of such
employees and, concurrently had written to nonmember
employees inviting membership, advising that if they did
not join the Union the fee and other charges would be
deducted from their pay
The Union in letters of reply dated 27 June and 6
July, refused to provide information concerning the
major medical plan In the 27 June letter Ehrlich was
reminded that the Union had written nine letters from 7
August 1978 to 17 May 1979 requesting information from
the Company and that such data had not been provided
The Union wrote that on receipt of what it was seeking
it then would consider Ehrlich s information request as
contained in his 25 June letter
The Union's 6 July correspondence was as follows
The Guild informs you that the lack of your co
operation in response for information as requested
in our letters dated June 27, 1979 is the basis for the
present union papers in reference to your letter of
June 25 1979
The Guild advises that Article XV of the Bar
gaining Unit Contract does not permit Gibbs & Cox
to arbitrate the matter of inspecting the Guild
Books "
Furthermore the guild [sic] advises you that gov
ernment agencies and GOD may inspect, however
since you are neither a government agency or GOD
you are not to inspect our books)
On 5 October, Ehrlich again attempted to obtain infor
mation concerning the Union s major medical program
through the following letter to Carlson
In accordance with Gibbs & Cox s fiduciary re
sponsibility, the Company respectfully requests con
firmation in writing from the Marine Technicians
Guild that the contribution for major medical is
used solely for major medical coverages This Gibbs
& Cox contribution is in accordance with Article
XVII 3 of the Collective Bargaining Agreement be
tween Gibbs & Cox, Inc and the Marine Techni
cians Guild, dated August 22 1977, and is $10 25
monthly per covered employee
Gibbs & Cox does not require any information
relative to the cost of other benefits provided by
the Marine Technicians Guild, such as life insur
anc,e , etc, which is solely the responsibility of the
Marine Technicians Guild
Please respond in writing on or before October
12, 1979
Carlson s 11 October response was as follows
In your reply to your letter of October 5 1979
we wish to remind you that the existing Major
Medical Plan was established in March 1975 The
procedure associated with this plan is to have a
Gibbs & Cox Inc, representative to review and
sign the attached form every month, and after so
doing the company pays $10 25 per covered em
ployee in accordance with Article XVII 3 of the
Collective Bargaining Agreement dated August 22,
1977-
XVII 3 The Employers contribution toward
the group Major Medical plan of the Guild shall
be a maximum amount of $10 25 monthly per
covered employee payable to an insurance com
pany designated by the Guild This provision is
not applicable to employees entitled to Medi
care such employees are covered under para
graph XVII 4 of this Agreement
The Guild believes the company payment of
$10 25 per covered employee together with accept
ance of the associated procedure is indicative of the
benefits covered by Major Medical plan of the Col
lective Bargaining Agreement
On 17 October Ehrlich wrote to Carlson, attaching a
group insurance monthly statement and requesting clan
fication and confirmation that the Company s contribu
tion was being used solely for major medical insurance
and not for life insurance and AD&D A response before
26 October was requested
The Union through Carlson and Nevitt sent the fol
lowing 24 October reply
In reference to your letter of October 17 1979
the questions you again raised have been answered
in our letter of October 11 1979 If you do not un
derstand our answer we suggest you reread the
letter Further correspondence on this subject
GIBBS & COX INC
would be viewed as "beating a dead horse' With
this letter we consider the subject closed
7 The Union s efforts to deny major medical
coverage to nonmember employees and later legal
developments
The parties stipulated that in response to the Union's
29 November 1979 request to deduct $3 80 monthly from
the paychecks of each of the Virginia employees who
were not union members or who did not pay an agency
fee moneys representing $2 80 toward the Phoenix
Mutual premium payment and a $1 administration fee to
the Union, the Company, by 13 December 1979 letter,
advised that it would not agree to withhold the request
ed amounts from pay The Respondent cited its belief
that such deductions would violate the Virginia right to
work statute and Section 302 of the Labor Management
Relations Act
The Union then advised the Company that if deduc
tions were not made, and if the employees did not pay
the fee directly to the Union, the effected employees
would be dropped from coverage under the Union ad
ministered major medical plan When the Company did
not make the requested deductions, the Guild dropped
the effected employees from coverage
Starting in February 1980, the Respondent placed the
dropped employees under its major medical plan for
management and clerical employees, underwritten by
Equitable, ensuring that they received continued major
medical coverage The Respondent further advised the
Union that its addition of these employees to coverage
under the company plan was temporary and would cease
as soon as the Union returned them to coverage under its
Phoenix Mutual plan
On 18 March 1980 the Union filed the charge in Case
5-CA-12021 with the Board s Baltimore Maryland Re
gional Office, alleging that the Respondent had violated
the Act in placing its Arlington and Newport News Vir
ginia employees under the Company s major medical
plan These employees, as noted had dropped from the
Guild administration plan The General Counsel thereaf
ter affirmed the Regional Directors decision not to issue
complaint
In November 1981 a settlement agreement was
reached in Baltimore in consolidated Cases 5-CB-3313
and 5-CB-3372, after issuance of complaint, which set
tlement contained a nonadmissions clause and among
other things, the Union s agreement to provide the Re
spondent with information concerning its major medical
plan
The parties further stipulated that in May 1980, the
Respondents `white badge' employees at Newport
News resigned as a group from the Union, revoked their
checkoff authorizations, were dropped from the Phoenix
Mutual plan and became covered by the Company s
major medical policy 26 In August 1980, the Respondent
26 As noted although the U-non had represented the Respondents
Newport News technical employees and had applied the Phoenix Mutual
plan at that location unlike the Arlington employees they never had
been within the bargaining unit of the New York City and Arlington em
ployees
767
withdrew recognition from the Union as bargaining rep
resentative of its Arlington employees, an action chal
lenged as unlawful in the matter heard by Judge
Green 27
8 The Respondents discontinuation of premium
contributions and implementation of its own major
medical policy for New York employees
As a result of the settlement agreement in consolidated
Cases 5-CB-3313 and 5-CB-3372, the Respondent, on or
about 22 January 1982, received its first information con
cerning the Union s major medical plan These materials,
which included a copy of the policy, as amended in
March 1979, and the full completed group insurance
monthly statements, dated 1 October 1979, 5 March
1980, and 1 November 1980, had been supplied to the
Regional Office by the Union in partial compliance, and
forwarded from there to the Company The copy of the
major medical policy supplied was not current as it did
not reflect the 1981 amendments, but the three monthly
statements were filled in to show the Company, for the
first time, all information sent to Phoenix Mutual for
those months From these statements, the Respondent
learned both that the Union had been adding information
after the statements were signed by the Company's rep
resentative28 and that the Company had been paying
more than the actual cost of the major medical benefits
provided
Accordingly, at the February 1982 monthly meetings,
Stanley Rothman, by then the Respondents personnel
manager after agreeing with the Union on the number of
employees who were entitled to major medical coverage
for that month, as directed by Ehrlich, crossed out the
blank boxes or areas in the Cost" column of the group
insurance monthly statement form for life insurance,
AD&D, and weekly indemnity This was protested in
Carlson s 11 February letter, which accused Rothman of
having made a unilateral change in their agreed major
medical form for Phoenix Mutual Rothman was ad
vised that this was unacceptable and that any changes
would have to be negotiated with the Union
24 Another company filed charge in Case 2-CB-9250 alleging viola
tions of Sec 8(b)(1)(A) (2) (3) and (6) of the Act against this Union
brought in the New York Regional Office on 19 April 1982 was dis
missed in part by the Regional Director on 30 June 1982 On 19 August
1983 the Regional Director also refused to issue a complaint on the re
maining allegations The General Counsel on appeal affirmed these re
spective Regional Office determinations on 23 March and 9 October
1983 At the hearing of this matter the Respondent Employer nonethe
less attempted to litigate many of the allegations of that dismissed charge
which asserted that the Union had unlawfully engaged in a number of the
questionable activities described here Since the hearing in this matter
the Board has issued Hotel & Restaurant Employees Local 274 (Warwick
Caterers) 269 NLRB 482 (1984) which overruled Food Commercial
Workers Local 576 (R & F Grocers) 252 NLRB 1110 (1980) enf denied
675 F 2d 346 (D C Cir 1982) and related case on which I had relied in
not permitting the Respondent here to fully relitigate all the issues in the
dismissed charge Nonetheless in my judgment sufficient latitude was al
lowed the Respondent and in view of the conclusions reached in this
matter the relevant rulings were not prejudicial
28 The Respondent objected to the Union s postsignature additions to
the monthly statements because it implied that the Company had seen
such information
768 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
The next month, on 10 March, Rothman and Carlson
met again . They agreed on the number of New York
nonmanagement technical employees to be covered by
the Union' s major medical plan, but when Rothman once
more tried to cross out the blank boxes for the other
types of insurance on the form, Carlson prevented this
by removing the form from the table and by telling
Rothman that he could not unilaterally change an agreed
procedure. Rothman replied that the Respondent's only
agreement was to tender $10.25 per enrollee for major
medical benefits, that the Company would continue to
do so, but that if Carlson prevented him from completing
the form by crossing out the other inapplicable types of
coverage, the Company would send that month's contri-
bution to Phoenix Mutual with a letter explaining that
such moneys were intended solely for major medical
benefits for the covered employees. Carlson retorted that
he might have to file an unfair labor practices charge
with the NLRB.
Later that day, 10 March, Carlson sent the following
letter to Rothman:
Please be advised that all correspondence con-
cerning the Guild 's major medical insurance plan
associated with Phoenix Mutual Life Insurance Co.,
excepting the agreed upon amount and the check
for this amount covering the enrolled members of
the bargaining unit, is to be sent to me personally
and not to the Phoenix Mutual Life Insurance Co.
We consider the statement Mr. Rothman made at
our meeting this morning that he will write directly
to the Phoenix Mutual Life Insurance Co. as inter-
fering with our administration of the Guild's major
medical insurance plan. This is a continuation of the
Company's harassment and a violation of our rights
as a union in the performance of its fiduciary re-
sponsibilities on behalf of the members of the bar-
gaining unit.
On the next day, 11 March, Rothman forwarded the
Respondent's monthly major medical contribution check
to Phoenix Mutual for the 193 New York nonmanage-
ment technical employees enrolled that month with a
cover letter that concluded:
The Phoenix Mutual Group Insurance Monthly
Statement . . . has not been enclosed because Mr.
Carlson did not permit the undersigned to complete
the Gibbs & Cox portion.
It is to be known that the Gibbs & Cox, Inc. con-
tribution of $10.25 per enrollee is to be applied only
for Major Medical benefits.
On 23 March 1982, Ehrlich wrote to the Union re-
questing the following information from August 197729
to the request date:
1. The monthly premium cost for individual and
family coverage.
29 August 1977 was when the last collective-bargaining agreement
became effective.
2. The numbers of employees enrolled for indi-
vidual and family coverage respectively.
3. The deductible amounts in effect and any in-
creases in the deductible.
4. Who paid the premium balance if the Respond-
ent's $10.25 per employee monthly contributions
were insufficient to pay the entire major medical
premium costs for any month, and details for each
such month.
5. Details of any complaints and requests for
changes concerning major medical coverage from
New York unit employees, received by the union;
copies of Union responses, and applicable dates.
6. Details of Company overpayments for premi-
um contributions; communications between the
Union and Phoenix Mutual concerning such over-
payments and copies of some.
7. Copies of the completed Group Insurance
Monthly Statements since August 1977.
8. All documents relating to major medical cov-
erage, including notice premium increases, changes
in scope of coverage or deductible amounts.
9. Copies of documents submitted to federal, state
or local government agencies that relate to the
major medical plan, including documents required
by the Employee Retirement Income Security Act
(ERISA). a o
10. A copy of the Phoenix Mutual major medical
policy currently in force.st
The above letter advised the Union that the Company
needed the aforesaid information "to ascertain compli-
ance with federal laws and regulations with respect to
employee benefit plans and to determine what company
actions are necessary to provide employees with compre-
hensive major medical insurance."
In Carlson's 30 March 1982 reply, he protested the ac-
tions of the Respondent's counsel in visiting Phoenix
Mutual's offices and its use of a subpoena to obtain from
that Company copies of documents relating to the
Union's major medical plan that the Union termed "con-
fidential." Expressing the view that the Company had re-
ceived all the information to which it was entitled under
the settlement, no further information requested in the
Company's above-described 23 March letter would be
provided.
On 6 April, Ehrlich again wrote to Carlson, acknowl-
edging receipt of the materials conveyed in January
through the General Counsel, but repeating the Compa-
ny's request for the data originally sought in his 23
30 Around March 1979 , the Union had been advised in writing by
Phoenix Mutual that , as its benefits plan covered 100 or more employees
in the preceding 12-month period , it was required under ERISA to file
annual report form 5500 and its schedule A with the Internal Revenue
Service within 7 months of the plan year . In its correspondence , Phoenix
Mutual had provided the Union instructions concerning the filing and
distribution required under ERISA, and had furnished data necessary to
complete the necessary forms. Carlson conceded , however, that only one
ERISA -required report had been filed with the IRS , sometime before
1980.
31 As noted, the policy copy provided in January 1982 in compliance
with the settlement agreement in Cases 5-CB-3313 and 5-CB-3372 had
not been current as not containing the 1981 amendments.
GIBBS & COX INC
March letter Ehrlich noted, however, that the monthly
statements from August 1977 through June 1981 listed in
paragraph 7 of his letter no longer were required 32
Ehrlich wrote that these monthly statements showed
that Employer contributions were far in excess of the
major medical premiums due that the Company never
had been advised of these overpayments and that an im
mediate explanation was due concerning the disposition
of those funds Ehrlich s letter concluded as follows
I ask that you provide the requested documents
and information to me no later than April 9, 1982
Please plan to meet with me on April 14 1982 at
2 00 p in I would like to discuss with you at that
time questions concerning the MTG s administra
tion of major medical insurance and any actions by
the company that may be necessary to assure ade
quate major medical coverage for the technical em
ployees
Carlson refused to meet with Ehrlich on 14 April for
any discussion concerning the major medical program
The Respondent countered with Ehrlich s 16 April 1982
letter to Carlson, quoted early in this decision, charging
the Union with serious mishandling of company con
tnbutions for major medical premiums in eight itemized
ways and serving notice that, effective 1 May 1982 the
Company was extending fully paid major medical cover
age under its own policy to New York technical employ
ees and also would cease payments to Phoenix Mutual as
of that date The Arlington technical employees as
noted, already were covered by that plan
It was not until 14 May 1982, after the Respondent
had discontinued its premium payments to the union
plan, that Carlson replied to the Respondents above
quoted 23 March request for detailed information, as fol
lows
Although believing the Company is amply in
formed by acquisition of 172 copies of Phoenix
Guild data and information on the major medical
plan I nevertheless attach copies of the July 1981
thru April 1982 monthly statements
Concerning the numbered paragraphs of your
letters
Par 1 & 2-The information you request may
be obtained from the monthly statements
Par 3-The deductible was increased from
$100 to $200 in June 1981
Par 4 & 6-Whenever the Company contribu
tion of $10 25 per employee each month is insuffi
cient to pay the premium the Guild supplements
the deficiency by use of funds from the member
ship or funds that Phoenix Mutual may have in
escrow or funds from an insurance plan bank ac
count that is used solely for contributing to insuf
ficiencies in plan cost Concerning overages of
the company contribution be advised that Phoe
32 These monthly statements had been obtained by the Respondents
counsel by subpoena during the visit to Phoenix Mutual s offices that was
protested in Carlson s 30 March letter
769
nix Mutual retains all money and that at no time
has there ever been any money returned to the
Guild from the Phoenix escrow account
Insufficiencies and overages are a function of a
number of variables such as, the changing month
ly ratio of single to dependent enrolled employ
ees the benefit demand and the constant rising
cost of medical services
Par 5-In the past I have discussed the plan
with employees who for one reason or another
did not understand the operation of the plan
Such matters have always been settled without
difficulty I can recall no complaint or request
toward changes in the plan
Par 7-You now have the information
Par 8-Your request involves internal union
business and I do not believe you are entitled to
this information at this time Premium increases
changes in benefits and deductible amounts are
provided to the bargaining unit as a whole
Par 9-I enclose the copies of Guild LM IA
federal reports filed by the Guild
Par 10-My letter of April 14, 1982 provided
the information you requested
The Union s above 14 May letter did not deter the Re
spondent from its announced course, effective 1 May, of
applying its own major medical insurance plan, under
written by Equitable to the New York technical em
ployees without the Union s agreement and discontinuing
its contributions to the Union s major medical plan car
ned by Phoenix Mutual
D Discussion and Findings
I The unilateral discontinuation of premium
contributions
Although it would be a violation of Section 8(a)(5)
and (1) of the Act for an employer to unilaterally change
employees insurance benefits and carriers without bar
gaining with the union representing its employees 33
under Section 302(c)(5)(B) of the LRMA where as
here, a plan for employees is not administered through a
statutorily qualified trust independent of the employer
and the union and that meets the other strict require
ments of that provision but is administered only by the
union employer contributions may not be compelled re
gardless of the terms of the collective bargaining agree
ment 34 Not only are contributions to such a union man
aged fund unlawful but under Section 302(d) willful
violators on conviction, are subject to criminal liability
Violators also may be restrained pursuant to Section
302(e) Under Bricklayers Local 15 v Stuart Plastering
Co, supra reference in the collective bargaining agree
ment to a payment schedule for or amounts due to the
insurance plan is not equitable to a qualifying Taft Hart
ley trust, and the employer is not estopped or otherwise
prevented from asserting the invalidity of the arrange
33 Arno Mocassin Co 274 NLRB 1515 (1985)
94 Bricklayers Local 15 v Stuart Plastering Co 512 F 2d 1017 1029 (5th
Cir 1975) cited in John F Boyle Co 222 NLRB 1309 1310 fn 2 (1976)
770 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ment because it has made prior contributions to such an
unlawfully constituted benefits plan. As the U.S. Court
of Appeals for the Fifth Circuit stated in that matter at
512 F.2d at 1029:
[W]e are not at liberty to bind an employer to make
payments that, if made voluntarily, would violate
Section 302.
Section 302 was described by Justice Stewart in
NLRB v. Amax Coal Co.:35
II.
Although § 302(a) of the Act generally prohibits
an employer from making payments to any repre-
sentative of his employees, § 302(c)(5) allows an
employer to contribute to an employee benefit trust
fund that satisfies certain statutory requirements. To
ensure that the funds in such a trust are not used as
a union "war chest," Arroyo v. United States, 359
U.S. 419, 426, the Act provides that the funds may
be used only for specified benefits for employees
and their dependents, and that the basis for these
payments be laid out in a detailed written agree-
ment between the union and the employer. The
fund must be subject to an annual audit, and the re-
sults of the audit must be made available to all inter-
ested persons. Furthermore, pension or annuity
funds must be kept in a trust separate from other
union welfare funds. Finally, § 302(c)(5)(B) requires
that "employees and employers [be] equally repre-
sented in the administration of such fund, together
with such neutral persons as the representatives of
the employers and the representatives of the em-
ployees may agree upon ...."
Congress directed that union welfare funds be es-
tablished as written formal trusts, and that the assets
of the funds be "held in trust," and be administered
"for the sole and exclusive benefit of the employees
... and their families and dependents ...." 29
U.S.C. § 186(c)(5).
Justice Stewart also noted at 332-333.
Whatever may have remained implicit in Con-
gress ' view of the employee benefit fund trustee
under the Act became explicit when Congress
passed the Employee Retirement Income Security
Act of 1974 (ERISA). 88 stat. 829. ERISA essen-
tially codified the strict fiduciary standards that a
§ 302 (c)(5) trustee must meet . . . . Section
404(a)(1) of ERISA requires a trustee to "discharge
his duties . . . solely in the interest of the partici-
3a 453 U.S. 322, 328-329 ( 1981). In NLRB v. Amex Coal CO., supra,
the Supreme Court found that employer -appointed trustees of employee
benefit trust funds established under Sec. 302 (c)(5) of the Act are not em-
ployer representatives for purposes of collective bargaining or adjustment
of grievances within the meaning of Sec. 8(b)(I)(B) of the Act, which
makes it unlawful for a union to restrain or coerce the employer in its
selection of representatives . This, in essence , was because the trustees of
such funds are fiduciaries serving the trust and the beneficiaries and not
the parties that appointed them , whether employer or union.
pants and beneficiaries. . .. 29 U.S.C.
§ 1104(a)(1).. . .
In sum, ERISA vests the "exclusive authority and
discretion to manage and control the assets of the
plan" in the trustees alone, and not the employer or
the union. 29 U.S.C. § 1103(a).
In Arroyo v. U.S.,38 the Supreme Court noted that the
strict standards of Section 302 were enacted out of con-
cern for "corruption of collective bargaining through
bribery of representatives by employers . . . extortion by
employee representatives, and with the possible abuse by
union officers of the powers which they might achieve if
welfare funds were left to their sole control." The specif-
ic standards were enacted to remove a "substantial
danger" that such funds might be employed to perpet-
uate control of union officers, for political purposes, or
even for personal gain."
Most recently, in BASF Wyandotte Corp.,37 the Board
reaffirmed that although it did not have authority to en-
force Section 302 of the Act,38 in determining whether
an unfair labor practice had occurred, not only is the
Board not barred from considering the applicability of
Section 302 as a possible defense to unfair labor practice
allegations, but that it is appropriate that it do so in
order to avoid conflict between Section 8(a)(5) or (b)(3)
and Section 302, and to prevent the "incongruous" result
of interpreting and applying Section 8 of the National
Labor Relations Act in isolation from Section 302 of the
Labor Management Relations Act, two provisions en-
compassed in the same statute.
In the present matter, it was stipulated at the hearing
that the Phoenix Mutual major medical plan covering
the Respondent's technical employees was not a Section
302 trust agreement but was simple insurance policy ad-
ministered solely by the Union in conjunction with the
carrier. No administrators appointed by the Company
acted with the Union in managing of the plan.
In the absence of a jointly constituted qualified admin-
istering trust, a detailed written agreement governing
such a trust fund, and the other statutory requirements,
the Respondent's premium contributions to the union-
managed Phoenix Mutual medical plan were in direct
violation of Section 302(c)(5). This, as noted, was exem-
plified by the Union's ability to use the escrow fund to
reduce its financial burden. Such transactions amounted
to unlawful assistance in the form of monetary payments
made by the Company at the Union's direction, under
the Union's control, and for the Union's benefit.39
Therefore, I find no violation of Section 8(a)(5) and (1)
in the Respondent's discontinuation of payments to the
Union's major medical plan.
36 359 U.S. 419 at 419 (1959).
34 274 NLRB 978 (1985).
38 Authority to judge alleged criminal violations and to restrain pro-
scribed activities under Sec. 302(d) and (c), respectively, is vested in the
U.S. district courts.
39 There is no 8(a)(2) allegation in the present proceeding,
GIBBS & COX INC 771
2 The unilateral implementation of the Company's
major medical plan
The impropriety of contributing to an unlawfully es
tablished benefits' plan, however, is a separate consider
ation from the remaining issue, the Respondent's alleged
violation of its statutory bargaining obligation by unilat
erally substituting its own major medical plan, under
written by a different carrier, for the Union Phoenix
Mutual policy
Although the Respondent, in its 16 April 1982 letter,
elected to treat as a single transaction its discontinuation
of contributions to the Union's major medical plan for
New York technical employees and the simultaneous ap
plication of its own major medical policy to those em
ployees, having announced to the Union its intent to do
both in that same correspondence, these two actions ac
tually are not part of one gesture and must be separately
evaluated
The Respondent's unilateral substitution and imple
mentation of its own policy without bargaining with the
incumbent Union is quite different from its statutory obli
gation to cease making premium payments that are in ap
parent violation of civil and criminal law and that never
should have begun However, desirable as it may be that
unit employees should have uninterrupted major medical
protection, it does not follow in the cortext of a continu
ing bargaining relationship that because one insurance
plan for employees must be discontinued or reorganized
to meet the requirements of law, that the Employer may
disregard its bargaining obligation by unilaterally institut
ing its own substitute plan I find to be convincing the
Respondent's argument that it could not get the Union to
bargain concerning the major medical plan as there is no
evidence that the Respondent had sought to induce such
bargaining by advising the Union that the existing plan
had to be renegotiated as unlawful under Section 302 In
stead, the Company had sought discussions with the
Union only concerning questionable management prac-
tices Accordingly, it would be conjecture to contem
plate the Union s reaction concerning renegotiation to
obtain compliance with the law because that topic never
arose Moreover the Respondent long had assisted the
Union through monetary payments that not only facili
tated, but made possible the Union's conduct that it here
proclaims as so objectionable
Even apart from Section 302 or the Respondents con
tention that the Union had unilaterally changed the
scope of the major medical plan I am not persuaded by
the Respondent's explanations as to why it had contribut
ed to and, essentially, financed the Union s major medi
cal policy for so many years without questioning certain
changes in the plan of which it must have known Con
trary to the Respondents disclaimers, it did have long
term actual notice of changes in the policy from those
negotiated Although the contract and the plan itself
historically had provided only for straight major medical
benefits, the Company's copies of the Phoenix Mutual
group insurance monthly statements since 1975, and cer
tainly since 1977 under the most recent contract, clearly
showed that dependent life insurance and AD&D also
were being provided Only cost information and the
extent of coverage were withheld That these additional
coverages had not been negotiated with the Union as
stated by Company Chairman Ehrlich, gave no reason to
ignore them as the monthly statements showed that they
were in place and, quite possibly, were affecting the cost
of the entire plan In this context, it seems quite reasona
ble that the Respondent before mid 1979 would seek to
learn the details of a program for which it was spending
thousands of dollars, and that it would have tried to take
corrective action before 1982 This latter point is particu
larly valid because the Respondent had learned as early
as 1979 that its contributions no longer were enough to
pay for the entire, therefore noncontributory plan Addi
tionally, from the information concerning the applicabil
ity of life insurance and AD&D on the partially complet
ed monthly statements that were given by the Union, the
Respondent also had notice that the scope of the em
ployees' signed payroll checkoff authorizations for major
medical coverage was being exceeded and that moneys
were being withheld from the employees pay for pur
poses beyond what they had been authorized The Re
spondent s prolonged willingness to overlook these very
visible irregularities in the administration of the Union s
major medical plan constitutes at best a negligence so ex
treme, or gross, as to warrant the inference made here
that the Respondent had consented to the additional cov
erages arranged by the Union There is no unlimited
period during which this Employer, or any party, may
look without seeing , reading the announcements in the
Union s newsletter, which the Company placed in evi
deuce, and the coverages referred to in the monthly
statements , and still credibly plead ignorance or surprise
at what they have been financing Such a finding also is
inconsistent with the Respondents argument that there
could be no unilateral change because it never had
agreed to the union major medical plan as it was in 1982
In any event, lack of mutuality would be an argument
more germane to cessation of contributions to the
Union s plan, which action was lawful, than to the right
to unilaterally start the Company s own plan
Therefore, if the Union should continue as bargaining
representative of the Respondent's New York and/or
Arlington technical employees, the Respondent would
not have standing either by virtue of its own conduct or
because of negotiating impasse to have unilaterally sub
stituted its own major medical plan and insurance com
pany for that of the Union without bargaining This is
true although as found above the Respondent was law
fully correct in discontinuing payments Accordingly, I
find that in unilaterally implementing its own major med
ical plan for unit employees40 and changing the insur
ante carrier the Respondent violated Section 8(a)(5) and
(1) of the Act 41
3 Evidence of union misconduct and recourse
The remaining issue is whether the Union should con
tinue as bargaining agent or whether it has so failed in
its duty to fairly and lawfully represent bargaining unit
40 As the parties agree that the affected New York technical employ
ees are within the bargaining unit their unit placement is not in issue
41 Arno Mocastin Co supra
772 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
employees, and has otherwise so conducted itself, as to
warrant revocation of its 1946 certification and with-
drawal of its recognition as bargaining representative of
the Respondent's technical employees until such time as
the Union has been certified by the Board.42
In the often-cited case of Alto Plastics Mfg. Co.,43 the
Board, while holding that it must process representation
case petitions under Section 9 of the Act where the peti-
tioning union is a labor organization within the meaning
of Section 2(5) of the Act without: regard to the moral
character of effectiveness of the Union's officials, also
noted with respect to unions already certified as incum-
bent bargaining representatives (136 NLRB at 854):
[T]he Board has, on occasion, revoked the certifica-
tion of a union where it has been shown that the
union was not meeting its responsibilities under its
certificate as the exclusive bargaining representa-
tive. In such cases, the Board has proceeded on the
theory that, having issued a certification under Sec-
tion 9 of the Act, the Board has the power to police
and revoke the certification upon good cause
shown. Accordingly, in the event the Petitioner
should be certified as a result of this election in-
volving employees, and fails to fulfill its statutory
obligations as their exclusive bargaining representa-
tive, the Board could and would entertain a motion
to revoke the certificate.
In my view, the evidence adduced at the hearing of
this matter indicates that the Union has so functioned as
bargaining representative of the employees here as to
warrant that the Board consider revoking its certificate
of representative. Section 302 was enacted to help pre-
vent union corruption. Much of what that provision was
intended to avoid may have occurred here because of its
disregard.
The record shows that in addition to the longstanding
violations of Section 302, found above, and the corre-
sponding assistance within the meaning of Section 8(a)(2)
of the Act derived from the Employer's monetary con-
tributions,44 the Union overcharged the Respondent for
premium contributions in the stipulated amount of
$17,430.15 from October 1977 through 1 August 1981.
This surplus, held in an escrow account by Phoenix
Mutual subject to the Union's control, was used to
enable the Union to unilaterally expand the scope of the
policy, adding improvements to existing protections al-
though, at the same time, easing the Union's financial ob-
ligations by paying, for an extended period, the Union's
share of the resultant higher premiums. These expanded
42 Although , as noted, there is evidence of unlawful assistance to the
Union, there is no employer domination as would warrant consideration
of the Union 's disestablishment.
49 136 NLRB 850, 854 (1962). Also see Longshoremen ILA Local 1814
Y. NLRB, 735 F. 2d 1384 (D.C. Cir. 1984), enfg . 265 NLRB 1688 ( 1982).
44 Although there is no showing that moneys from the Company's pre-
mium contributions were used to personally enrich union officials or
were deposited directly into the Union 's treasury , these contributions are
not dispositive . The moneys paid by the Respondent were controlled by
the Union and, during nearly a year , the more than $17,400 in surplus
moneys accumulated from the Respondent 's overpayments was complete-
ly absorbed at the Union's discretion.
coverages, never negotiated with or approved by the
Company, further benefited the Union by enhancing the
advantages of membership, a point conspicuously adver-
tised by the Union in seeking new members. Although
the unauthorized use of company funds from the escrow
account unquestionably was an imposition on the Em-
ployer, it also burdened the unit employees as the surplus
would not have developed had the Union obtained major
medical coverage coextensive with the Company's
monthly contributions. In short, the surplus arose be-
cause the Union had purchased less major medical pro-
tection for unit employees than was being paid for by the
Company. In this way the employees, too, were adverse-
ly affected by the Union.
The Guild arguably has failed in its duty to fairly rep-
resent nonmember unit employees in Arlington, within
the right-to-work State of Virginia, by openly discrimi-
nating against them because they did not belong to the
Union. Accordingly, for 2 years from November 1979 to
November 1981, the Union unsuccessfully tried to obtain
the $2.80 monthly premium contributions plus the $1 ad-
ministrative fee only from nonmember employees to
cover the higher cost of the expanded insurance. Non-
member employees were not permitted to vote concern-
ing the proposed 1981 major medical amendments as to
the amount of the deductible and the employee contribu-
tions to the premium, and were given no voice as to
whether a dental plan "for members only" should be
added to the policy. This was done even though that
plan, too, had it been adopted, could have cost the non-
members additional moneys .45
Finally in this area of discrimination based on non-
membership, the Union in its correspondence to non-
member employees used the threat of imposing the $3.80
surcharge, or discontinuation of coverage. for nonpay-
ment of same, to induce such employees to join that
labor organization. In litigating to include such employ-
ees within the unit in the matter before Judge Green, al-
though at the same time discriminating against them as
described, the Union neither wished to fully or fairly
represent such employees nor to relinquish them from
the unit.
The Union also engaged in conduct of the type quite
possibly proscribed in U.S.C., Title 18, § 1001,46 by
knowingly filing with the Federal Government false
statements in paragraphs 5 and 6 of its answer to the
consolidated complaint in Cases 5-CB-3313 and 5-CB-
3372 denying that "it had notified employees who are
not members of Respondent that they would be required
to pay a monthly administration fee of $1," and that it
had "notified non-member employees of the employer
that if they failed to pay the monthly administration fee
4s The Union, as noted, was not successful in collecting these sur-
charges from the nonmember employees or from the Company and, as
part of the November 1981 pretrial settlement of Cases 5-CB-3313 and
5-CB-3372, agreed that it would not impose discriminatory fees or sur-
charges on nonmembers . It is relevant at this time to consider in a repre-
sentational context the Union 's presettlement conduct in administering
the major medical plan in view of the continuing plan-related unlawful
activities.
46 U.S.C., Title 18, § 1001, is set forth in relevant part in the appendix
to this decision.
GIBBS & COX INC
of $1, that they no longer would be covered by under
the Major Medical Plan The record strongly indicates
that when the Union made those representations in its 15
December 1980 answer, it was aware that they were
false Such statements were presented as more than the
mere routine denials contained in any answer Rather,
they were volunteered, written affirmative representa
tions that were misleading The Unions correspondence
of 22 June 1979 both to the Respondent and to employ
ees showed an earlier intent to collect the $1 monthly
administration fee only from nonmember employees and
the Guild s newsletter of 11 January 1982 plainly stated
that when the Arlington and Newport News bargaining
units refused the Union s demand that they pay the $3 80
in monthly major medical surcharges, they were advised
they would be dropped 47
Although, as indicated in Justice Stewart's above
quoted opinion in NLRB v Amax Coal Co, supra, the
administration of an employee benefits plan under Sec
tion 302 is entwined with ERISA requirements and the
Union was advised in writing in 1979 by Phoenix Mutual
that it must file annual ERISA mandated reports with
the Internal Revenue Service, the contents of which
were described in detail by that carrier'48 the Union
concededly filed only one such report before 1980
The Company and Union also exceeded the purposes
for which payroll deductions were approved by employ
ees in their checkoff authorization cards for major medi
cal insurance when it continued to use those cards to
withhold moneys used for dependent life insurance,
AD&D 49 Where sums are withheld from employee
compensation in the absence of a signed checkoff author
ization, or, analogously for purposes beyond the scope
of any existing authorization, the employer has been
found in violation of Section 8(a)(1) and (2) of the Act
and the union in violation of Section 8(b)(1)(A) of the
Act 50 As the complaint in this matter does not allege
violations of these provisions of the Act, it is sufficient to
note that the Union s conduct in seeking moneys for pur
poses beyond what had been specifically authorized by
the affected employees was of the type that is pro
scribed
In view of all that was occurring it is understandable
that the Union was reluctant as the record shows to pro
vide information concerning its operation and the status
of the major medical plan The Union s hesitancy in this
regard reached the point where the Respondents first
data from the Union was conveyed only in nominal coin
pliance with the settlement agreement in Cases 5-CB-
3313 and 5-CB-3372 where further information could be
obtained only by a union protested subpoena served on
Phoenix Mutual at the time, and on the Union in connec
tion with this hearing and where I was compelled to
41 See R Exhs 19 20 and 44
48 See R Exh 52
49 Although the increased premium costs for the dependent life insur
ance and AD&D was nominal and inclusion of those coverages as
argued by the Union may have enabled an initially more favorable rate
from Phoenix Mutual the Union still was not free to add these items um
laterally without bargaining and without obtaining revised signed check
off authorizations
so Terpening Trucking Co 271 NLRB 196 (1984) American Geriatric
Enterprises 235 NLRB 1532 (1978)
773
press the Union to comply with the Respondent's sub
poena duces tecum even when no timely petition to
revoke could still be filed The Union s many refusals to
provide the Company with requested details concerning
its administration of the major medical plan and its um
lateral changes to the plan would have been breaches of
its own bargaining obligation of the type prohibited by
Section 8(b)(3) of the Act even without regard to its fi
duciary accountability imposed by Section 302
It has been found above that if the Union remains as
bargaining representative of the Company s employees in
a unit to be determined by the Board in its ruling on the
appeal from Judge Green s decision, the Respondent, in
the present matter, would be in violation of Section
8(a)(5) and (1) of the Act for having unilaterally imple
mented its own major medical policy for New York
technical employees However, the Union has so failed
to meet its statutory obligation to fairly and nondiscri
minatonly represent all employees whom it contends are
within the bargaining unit, and its other obligations im
posed by law, that its activities no longer can be respon
sibly permitted Therefore, it will be recommended that
the Union s continued status as bargaining representative
be examined before the Board is placed in the position of
considering the merits of issuing bargaining orders on the
Union's behalf both here and in the pending appeal from
Judge Green's decision
4 Disposition
Noting that the evidence herein strongly indicates that
the Union has been assisted for years by company pay
ments to the major medical plan in violation of Section
302 and by payroll deductions for that program exceed
ing the scope of those authorized by employees in their
signed major medical checkoff cards, that the Union has
acted contrary to the interests of all unit employees by
obtaining less major medical coverage than was paid for
by the Company that the Union has variously discrimi
nated against nonmember unit employees and has failed
to fairly represent them that the Union, without authors
zation has used for its own account surplus company
funds accumulated from union promoted premium over
charges that the Union has apparently failed to meet its
own bargaining obligation by not negotiating interim
changes in the policy with the Company and by not fur
nishing requested relevant major medical information,
and further noting that the Union has not filed ERISA
mandated annual reports and that it had engaged in other
conduct quite possibly in violation of the law its bar
gaining obligations, and its responsibilities to employees,
I recommend the following
1 That the Board authorize the issuance to the Union
of an order to show cause, returnable before an adminis
trative law judge not involved in these findings, why the
Union's certificate of representative should not be re
yoked why it should not be required to cease acting as
the representative of the Company s technical employees
in New York and, if applicable, Arlington and why the
Employer should not be compelled to cease recognizing
the Union as the exclusive bargaining representative of
its employees until the Union has been certified by the
774 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Board . Such further hearing would be necessary to
afford the Union the due-process requirements of sepa-
rate notice and hearing on its future status as the present
matter had been brought to consider only the Company's
bargaining conduct. It was not within the scope or
nature of this proceeding to determine certification revo-
cation.
After the judge issues his decision in accordance with
Section 102 .45 of the Board 's Rules and Regulations, the
procedures set forth in Section 102.46 thereof should
become applicable.
2. That the Board defer ruling on the pending appeal
from Judge Green's decision in Gibbs & Cox, Inc., JD-9-
(NY)-82, and on any exceptions to my findings in the
present matter until a determination , after hearing, is
reached on the threshold issue of whether the Union's
certification should be revoked and recognition be with-
drawn as bargaining representative for the Respondent's
employees until the Union is certified by the Board.
Should the Board see fit to thereafter order revocation
of the Union's certificate of representative and that rec-
ognition be withdrawn from the Union until it has been
certified by the Board , then it would be recommended
that the complaints in the present matter and in the
pending appeal from Judge Green's decision , both be dis-
missed as the bargaining obligation would have been ren-
dered moot.
3. Alternatively, should the Board , after hearing, de-
termine that revocation of the Union's certification of
representative is unwarranted or, in the first instance,
find that no hearing should be held whether the Union
should continue as bargaining representative , then, of
course , there would be no basis for deferring determina-
tion on the merits of the pending appeal from Judge
Green's decision or on any exceptions to my findings
here.
4. The complaint allegations in the present matter that
the Respondent violated Section 8(a)(5) and (1) of the
Act by unilaterally discontinuing premium payments or
contributions to the Union' s major medical plan are not
sustainable in any event , and it is recommended that they
be dismissed.
CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in com-
merce within the meaning of Section 2(2), (6), and (7) of
the Act.
2. The Union is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. The Respondent , by unilaterally ceasing to make
premium contributions to the Union' s major medical plan
on behalf of its New York, New York bargaining unit
employees , did not violate Section 8 (a)(5) and (1) of the
Act.
4. The Respondent , by unilaterally implementing its
own separate major medical plan for its New York, New
York bargaining unit employees , violated Section 8(a)(5)
and (1) of the Act.
5. The Board 's consideration of remedial action in the
present matter should be deferred pending determination,
after hearing , of the Union 's continued bargaining agent
status pursuant to a Board -authorized order to show
cause why the Union 's certification of representative
should not be revoked and the Employer directed to
withhold recognition from the Union as bargaining rep-
resentative until it is certified by the Board.5 t
6. The appropriate bargaining unit herein previously
has been litigated by the parties for purposes of this pro-
ceeding in the pending appeal from Judge Green 's deci-
sion in Gibbs & Cox, Inc., JD-9-(NY)-82, dated 29 Janu-
ary 1982.
[Recommended Order omitted from publication.]
51 In recommending that Board decision concerning issuance of any
applicable bargaining orders on the Union 's behalf, here or in the appeal
from Judge Green 's decision , be made contingent on prior determination
of the Union's continued bargaining representative status, it is recognized
that certain otherwise unlawful company conduct ultimately might not be
remedied . Nevertheless , each case must be considered on its own facts. In
the present circumstances , the Board should have the opportunity to con-
sider whether the Act would better be served by revoking the Union's
certification of representative or by proceeding to a determination on the
merits.
APPENDIX
Section 302 of the Labor-Management Relations
Act of 1947, as amended , provides , in relevant part,
as follows: Restrictions on payments to employee
representatives
Sec. 302 .(a) It shall be unlawful for any employer
or association of employers or any person who acts
as a labor relations expert , adviser , or consultant to
an employer or who acts in the interest of an em-
ployer to pay, lend, or deliver, or agree to pay,
lend, or deliver, any money or other thing of
value-
(1) To any representative of any of his employees
who are employed in an industry affecting com-
merce; or
(2) To any labor organization , or any officer or
employee thereof, which represents , seeks to repre-
sent , or would admit to membership, any of the em-
ployees of such employer who are employed in an
industry affecting commerce;
(3) To any employee or group or committee of
employees of such employer employed in an indus-
try affecting commerce in excess of their normal
compensation for the purpose of causing such em-
ployee or group or committee directly or indirectly
to influence any other employees in the exercise of
the right to organize and bargain collectively
through representation of their own choosing; or
(b)(1) It shall be unlawful for any person to re-
quest, demand , receive, or accept , or agree to re-
ceive or accept, any payment , loan, or delivery of
any money or other thing of value prohibited by
subsection (a).
(c) The provisions of this section shall not be ap-
plicable . . . (5) with respect to money or other
thing of value paid to a trust fund established by
such representative, for the sole and exclusive bene-
GIBBS & COX INC 775
fit of the employees of such employer, and their
families and dependents (or of such employees, fam
flies, and dependents jointly with the employees of
other employers making similar payments, and their
families and dependents) provided, That (A) such
payments are held in trust for the purpose of
paying either from principal or income or both, for
the benefit of employees their families and depend
ents, for medical or hospital care pensions on re
tirement or death of employees, compensation for
injuries or illness resulting from occupational activi
ty or insurance to provide any of the foregoing or
unemployment benefits or life insurance, disability
and sickness insurance, or accident insurance, (B)
the detailed basis on which such payments are to be
made is specified in a written agreement with the
employer and employees and employers are equally
represented in the administration of such fund, to
gether with such neutral persons as the representa
tives of the employers and the representatives of
employees may agree upon and in the event the em
ployer and employee groups deadlock on the ad
ministration of such fund and there are no neutral
persons empowered to break such deadlock, such
agreement provides that the two groups shall agree
on an impartial umpire to decide such dispute, or in
event of their failure to agree within a reasonable
length of time, and impartial umpire to decide such
dispute shall, on petition of either group, be ap
pointed by the district court of the United States for
the district where the trust fund has its principal
office, and shall also contain provisions for an
annual audit of the trust fund , a statement of the re
sults of which shall be available for inspection by
interested persons at the principal office of the trust
fund and at such other places as may be designated
in such written agreement and (C ) such payments
as are intended to be used for the purpose of pro
viding pensions or annuities for employees are made
to a separate trust which provides that the funds
held therein cannot be used for any purpose other
than paying such pensions or annuities
(d) Any person who willfully violates any of the
provisions of this section shall upon conviction
thereof, be guilty of a misdemeanor and be subject
to a fine of not more than $10,000 or to imprison
ment for not more than one year , or both
(e) The district courts of the United States and
the United States courts of the Territories and pos
sessions shall have jurisdiction for cause shown
to restrain violations of this section
U S Code, Title 18 Section 1001 in relevant
part, provides
Whoever, in any matter within the jurisdiction
of any department or agency of the United States
knowingly and willfully makes any false tic
titious or fraudulent statements or representa
tions, or makes or uses any false writing or docu
ment knowing the same to contain any false ficti
tious or fraudulent statement or entry , shall be
fined not more than $10,000 or imprisoned not
more than five years , or both