Hempstead Lincoln Mercury Motors Corp.

National Labor Relations Board - Administrative Judge Opinions

Aug 9, 2007

29-CA-027601 (N.L.R.B. Aug. 9, 2007)

JD(NY)–38-07
Hempstead, NY
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
NEW YORK BRANCH OFFICE
HEMPSTEAD LINCOLN MERCURY MOTORS CORP.
and Case No. 29-CA-27601
LOCAL 917, INTERNATIONAL BROTHERHOOD OF TEAMSTERS
Sharon Chau, Esq., Counsel for the General Counsel.
Richard Milman, Esq., Marshall M. Miller Associates, Inc., Counsel for the Respondent.
Gene Szuflita, Esq., Belson & Szuflita, Counsel for the Charging Party.
DECISION
Statement of the Case
Joel P. Biblowitz, Administrative Law Judge: This case was heard by me on June 27,
2007 in Brooklyn, New York. The Complaint herein, which issued on September 28, 2006, and
was based upon an unfair labor practice charge that was filed on April 24, 2006 by Local 917,
International Brotherhood of Teamsters, herein called the Union, alleges that since in about
December 20051, Hempstead Lincoln Mercury Motors Corp., herein called the Respondent,
failed and refused to tender increased payments to the Local 917 Pension Fund, herein called
the Fund, in accordance with the request of the Fund, or to set aside the payment previously
made or to put the payments into an escrow or similar account, and did so without prior notice to
the Union and without affording the Union an opportunity to bargain about the subject. It is
alleged that by this activity, the Respondent violated Section 8(a)(1)(5) of the Act.
Findings of Fact
I. Jurisdiction
Respondent admits, and I find, that it has been an employer engaged in commerce
within the meaning of Section 2(2), (6) and (7) of the Act.
II. Labor Organization Status
Respondent admits, and I find, that the Union has been a labor organization within the
meaning of Section 2(5) of the Act.
III. The Facts
There is little dispute of the facts herein. The Union is the exclusive collective bargaining
representative for the Respondent’s service employees, including its used car department
employees. The last collective bargaining agreement between the parties was effective for the
period November 1, 1998 to October 31, 2001. At the expiration of this agreement the parties
executed a Memorandum of Agreement on October 30, 2001 extending the agreement to

1 Unless indicated otherwise, all dates referred to herein relate to the year 2005.
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October 31, 2004 with changes in three areas: wages and health and welfare, not relevant
herein, and pensions, providing that effective November 1, 2001 there would be a moratorium
on pension contributions; effective November 1, 2002, the Respondent would resume
contributions at the rate prior to the moratorium, $175 monthly for each unit employee, and
effective November 1, 2003 there would be a $50 monthly increase in the contribution rate.
Pursuant to these agreements, beginning in November 2002, the Respondent transmitted to the
Fund $175 for each unit employee, and beginning in November 2003, transmitted to the Fund
$225 for each unit employee. Although the parties were unable to agree on terms of a
successor agreement to replace the Memorandum of Agreement that expired on October 31,
2004, the Respondent continued to transmit to the Fund $225 for each of the unit employees
through November.
The Fund, by its Board of Trustees, sent a letter dated August 22 to all of its contributing
employers, including the Respondent, stating, inter alia:
As you are aware, due to the poor investment markets and low interest rates over the
past number of years, corporate, public and multi-employer pension plans throughout
the United States are facing significant funding difficulties. Unfortunately, Local 917
Pension Fund’s (“Fund”) assets have not been able to keep pace with the Funds benefit
liabilities.
The Fund needs a substantial contribution rate increase and future benefit accrual
reductions in order to avoid a minimum funding deficiency under ERISA. The Trustees
have taken the following action to avoid the funding deficiency…
The Fund requires a contribution rate increase of 20% from all contributing employers,
effective as of November 1, 2005 in order to avoid a funding deficiency…Any employer
who fails or refuses to pay this increase will be expelled from the Fund and be subject to
withdrawal liability.
We will keep you informed regarding future developments. If you have any question
about these changes, please contact the Fund office.
In November the Fund submitted its monthly health and pension report to the
Respondent stating that the amount of $225 was due to the Fund for each bargaining unit
employee for the month of October. For twenty covered employees the amount due was $4,500
and the Respondent paid this amount to the Fund on about November 4. On December 2, the
Fund submitted a remittance form for the month of November to the Respondent setting forth an
amount of $270 due to the Fund for each of the twenty unit employees. This represented the
20% increase referred to in the August 22 letter. On December 8, the Respondent sent a check
to the Fund in the amount of $4,500, i.e. $225 per covered employee, to cover its twenty
bargaining unit employees. By letter dated December 21, Joann Emmons, the Fund Manager,
wrote to the Respondent:
We recently received your November pension contribution. As you are aware, the Board
of Trustees directed an increase in the required contribution rate effective November 1,
2005, in order to improve funding of the plan.
You have failed to pay the increased rate. We are therefore returning your check to you.
If you fail to pay the new rate on or before January 4, 2006, effective November 1, 2005,
you will cease to be a contributing employer and you will be considered withdrawn from
the Fund and you will be assessed withdrawal liability. [Emphasis supplied]
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The Respondent never paid the increased amount requested, and by letter dated January 26,
2006, Emmons notified the Respondent that, effective October 31, it ceased participating in the
Fund and that it would be subject to withdrawal liability. On February 14, 2006, Emmons wrote
to the Respondent stating that its withdrawal liability to the Fund was $349,300, to be paid in
twenty quarterly installments of $19,312.50 and a final payment of $19,157.85. By letter dated
February 9, 2006, counsel for the Respondent wrote to counsel for the Union requesting certain
information regarding the Pension Fund. By letter dated February 17, 2006, Emmons provided
counsel with some of the requested information, and stated that he was not entitled to other of
the information requested.
Union President John Vacca and Respondent’s President, John Billard, each testified
about discussions that they had regarding the proposed increase in the Pension Fund
contributions. Vacca testified that in about September, Billard asked him about the increase,
and Vacca told him that the 20% increase was needed because of the Fund’s financial
difficulties. Billard asked him how much the increase would be, and Vacca said that he would
provide him with the numbers, and a few weeks later, he provided Billard with this information.
Vacca testified that at no time prior to December 1 did Billard, or any representative of the
Respondent, tell him that the Respondent would not pay the additional 20% increase to the
Fund, nor did any representative of the Respondent ask the Union to bargain over the effects of
not paying the 20% increase. He further testified that to his knowledge, the Respondent never
set aside any escrow or other account to cover these payments. Billard, whom I found to be a
credible and believable witness, testified that prior to the August 22 letter, the Union never
notified him of this increase in Pension Fund contributions, and that after receiving this letter he
had numerous conversations with Vacca about the increase. Vacca told him that the Fund was
under funded and that they had no choice. He told Vacca that the Respondent was not in a
position to pay any more money: “We have a contract; why should we pay more money?” Vacca
responded that it was a federal law and they had to pay. He also testified that during this post
August 22 period he told Vacca that they couldn’t afford the increase and asked if there was a
way to work around it. Vacca said that there wasn’t: “You’re in or you’re out.” Billard also asked
Vacca for concessions, but Vacca refused to give any. He never told Vacca during any of these
conversations that the Respondent would not pay the 20% increase to the Fund.
IV. Analysis
Counsel for the General Counsel stated that she is not alleging that the Respondent
violated the Act herein by failing to include the 20% increase in its Fund payment on December
8. Rather, the alleged violation herein is that the Respondent failed to tender the increased
payments to the Fund, or to set aside the amount due into an escrow or similar account, without
prior notice to the Union and without affording the Union an opportunity to bargain about the
subject.
The agreement that was effective from 1998 through 2001 provided for the precise
amount of contributions that the Respondent was to pay to the Fund for each unit employee.
The memorandum of agreement that was effective from 2001 through 2004 provided for a
moratorium on payments to the Fund from November 2001 through November 2002, and after
that the Respondent would resume making the contributions in effect prior to the moratorium,
and effective November 2003, the Respondent would contribute to the Fund the sum of $225 for
each unit employee. Neither the 1998 contract, nor the 2001 memorandum of agreement
contain a savings clause that permits the Union or the Fund to unilaterally raise the amount of
the employers’ contributions. The evidence establishes that throughout the period in question,
and up to and including December, the Respondent made the contributions to the Fund as
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provided for in the contract and the memorandum of agreement. It is difficult to understand
Counsel for the General Counsel’s theory of a violation herein that would require the
Respondent to give prior notice to, or bargain with the Union, prior to making its payment to the
Fund when the Respondent had made no change in the terms and conditions of employment of
its employees and was simply following the provisions of the 1998 collective bargaining
agreement and the 2001 memorandum of agreement. Further, the credited testimony of Billard
establishes that after the Union notified him about the increase in the Fund payments, he told
Vacca that the Respondent could not afford to pay the increase and asked the Union for
concessions and whether there was anything else that the Respondent could do in lieu of the
increased payments, thus establishing that the Respondent was attempting to bargain with the
Union about the increased Fund payments.
Although I can certainly understand the concerns of the Union that the Fund was under
funded, and while it may be that there is a proper venue for the Fund to recover the additional
payments from the Respondent, this is not the proper venue. I therefore find that Counsel for
the General Counsel has failed to establish that the Respondent violated Section 8(a)(1)(5) of
the Act herein, and recommend that the Complaint be dismissed.
Conclusions of Law
1. The Respondent has been an employer engaged in commerce within the meaning of
Section 2(2), (6) and (7) of the Act.
2. The Union has been a labor organization within the meaning of Section 2(5) of the
Act.
3. The Respondent did not violate Section 8(a)(1)(5) of the Act as alleged in the
Complaint.
On these findings of fact, conclusions of law and based upon the entire record, I hereby
issue the following recommended2
ORDER
It is recommended that the Complaint be dismissed in its entirety.
Dated, Washington, D.C., August 9, 2007.
__________________________________
Joel P. Biblowitz
Administrative Law Judge

2 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and
Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec.
102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed
waived for all purposes.