Interstate Tool Co., Inc.

National Labor Relations Board - Board Decisions

Jun 30, 1969

177 N.L.R.B. 686 (N.L.R.B. 1969)

686 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Interstate Tool Co., Inc. and District No. 8,
International Association of Machinists and
Aerospace Workers, AFL-CIO. Case 13-CA-8515
June 30, 1969
DECISION AND ORDER
By CHAIRMAN MCCULLOCH AND MEMBERS
BROWN AND ZAGORIA
Upon charges filed by District No. 8,
International Association of Machinists and
Aerospace Workers, AFL-CIO, the General Counsel
of the National Labor Relations Board, by the
Regional Director for Region 13, issued a complaint
dated September 27, 1968, against Interstate Tool
Co., Inc., the Respondent, alleging that it had
engaged in and was engaging in unfair labor
practices affecting commerce within the meaning of
Sections 8(a)(5) and (1) and 2(6) and (7) of the
National Labor Relations Act, as amended. Copies
of the charge, complaint, and notice of hearing were
duly served on the Respondent and the Union.
With respect to the unfair labor practices, the
complaint alleges, in substance, that since on or
about May 28, 1968, and at all times thereafter, the
Respondent has refused to bargain collectively with
the Union about the effect on employees of closing
its plant and liquidating its business,
notwithstanding that the Union was and is now the
duly designated exclusive collective-bargaining
representative of the employees.
Respondent's answer admits in whole or in part
certain allegations of the complaint, but denies the
commission of unfair labor practices.
On November 25, 1968, the parties to this
proceeding entered into a stipulation of facts and a
motion to transfer proceeding to the Board. They
agreed that the charge, complaint, answer, and the
stipulation of facts constitute the entire record in
this case, and waived a hearing before a Trial
Examiner, the making of findings of fact and
conclusions of law by a Trial Examiner, and the
issuance of a Trial Examiner's Decision. The parties
agreed to submit the case for findings of fact,
conclusions of law, and order directly by the Board.
By order of the Board dated December 2, 1968,
the stipulation of the parties was approved, this
proceeding was transferred to the Board, and
permission was granted to the parties to file briefs.
Thereafter, the Respondent and the General Counsel
filed briefs.
Upon the basis of the stipulation, the briefs of the
parties and the entire record in this case, the Board
makes the following:
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
The Respondent is an Illinois corporation with its
principal office and place of business at Chicago,
Illinois , where it has operated a machine shop. In
the operation of its business, the Respondent
annually shipped finished products or rendered
services valued in excess of $100,000 from its plant
directly to customers located outside the State of
Illinois. The parties stipulated, and we find, that
the Respondent was, at all material times, engaged
in commerce within the meaning of Section 2(6) and
(7) of the Act, and we conclude that it will
effectuate the policies of the Act to assert
jurisdiction herein.
II. THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization as defined in
Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
The Respondent's machine shop normally
employs eight men, all covered by a
collective-bargaining agreement. The Respondent
had been operating on an extremely marginal basis
for some time. In April 1968, several employees
notified the Respondent that because of their
concern about crime and civil unrest in the area of
the plant, they would quit unless the plant were
moved. As a result, solely for economic reasons, the
Respondent decided to go out of business. In
mid-May, the Respondent notified the Union that it
would close the plant on or about June 30. On June
24, by letter dated that day, the Union requested the
Respondent to meet and bargain with it about the
effects of closing on the employees, specifically,
severance pay.
The collective-bargaining agreement is dated
January 1, 1967, and runs for 3 years. It contains no
provision regarding severance pay, nor was that
issue ever discussed during contract negotiations.
The Union, however, in connection with its demand
for bargaining on the effects of closing, proposed a
plan for severance pay to each employee based on
his number of years with the Company. The Union
threatened to picket the plant and prevent the sale
of machinery if severance pay were not forthcoming;
however, there was never any picketing.
The Respondent has refused to meet with the
Union and discuss the effect of closing on its
employees. It closed the entire operation of the
plant on June 30, 1968, permanently abolishing all
unit jobs, and subsequently has sold all its assets
and has gone into liquidation.
The issue presented in this case is whether under
the circumstances the Respondent had a duty to
bargain about the effects on employees of its
177 NLRB No. 107
INTERSTATE TOOL CO., INC.
decision to go out of business.'
We have held that an employer must nofity its
employees' collective-bargaining representative of a
decision to close part of its operation so the union
can bargain about the effects of the closing on
displaced employees. Royal Plating and Polishing
Co., Inc., 160 NLRB 990. So, too, where an
employer sold its entire business , eliminating
employees' jobs, we have, with court approval,
required notice and bargaining about the effects.
Transmarine Navigation Corporation, 170 NLRB
No. 412 See also New York Mirror, Division of the
Hearst Corporation, 151 NLRB 834, 838-839. In
New York Mirror, we held that the effects of a
termination of operations is a manadatory subject of
bargaining. Id. at 838, footnote 4. As indicated in
that case, the requirement to bargain turns not on
the means whereby, or the extent to which, the
employer terminates operations, but rather on the
fact that the elimination of unit jobs is within the
statutory phrase "other terms and conditions of
employment." See also Order of Railroad
Telegraphers v. Chicago & N. W. Ry. Co., 362
U.S. 330, 336; Fibreboard Paper Products
Corporation v. N.L.R.B., 379 U.S. 203, 210. And in
Transmarine, although the employer reinvested the
proceeds of the sale as a minority partner in another
business at a new location, the result of the sale of
the business was, as in the instant case, to terminate
the existing operations and the unit employees. In
our view, the present case is controlled by the
reasoning in Transmarine and New York Mirror.
As the Ninth Circuit said in Transmarine, once a
decision is made to close, the union must be given
the opportunity to bargain over the rights of
employees whose employment status will be altered.
"Such bargaining over `effects' of the decision on
the displaced employees may cover such subjects as
severance pay, vacation pay, seniority, and pensions,
among others, which are necessarily of particular
importance and relevance to the employees."
N.L.R. B. v. Transmarine Navigation Corporation,
supra, 939; Royal Plating and Polishing Co., 350
F.2d 191, 196 (C.A. 3).
A primary purpose of the National Labor
Relations Act is to promote the peaceful settlement
of industrial disputes by subjecting them to the
mediatory influence of negotiation. Fibreboard
Paper Products Corporation v. N.L.R. B., supra. We
note that beneficial discussion is especially likely
where, as here, there is considerable
collective-bargaining history. We hold that
Respondent was under a continuing duty to bargain
about the effects of its decision to close, and that it
violated Section 8(a)(5) of the Act by refusing to do
so, upon the Union's request. N.L.R.B. v.
Transmarine Navigation Corporation, supra.
'As the General Counsel makes no contention that the Respondent had
any duty to bargain about the decision itself, we find that it would be
inappropriate for us to discuss or pass on that issue here
'See N L. R B v. Transmarine Navigation Corporation, 380 F.2d 933
687
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE
The activities of the Respondent set forth in
section III, above, occurring in connection with its
operations described in section I above, have a
close, intimate, and substantial relation to trade,
traffic, and commerce among the several States and
tend to lead to labor disputes burdening and
obstructing commerce and the free flow of
commerce.
V. THE REMEDY
Having found that the Respondent has engaged in
unfair labor practices within the meaning of Section
8(a)(5) and (1) of the Act, we shall order that the
Respondent cease and desist therefrom, and take
certain affirmative action designed to effectuate the
policies of the Act.
As a result of the Respondent's unlawful failure
to bargain about the effects of its shutdown, the
displaced employees have been denied an
opportunity to bargain through their
collective-bargaining representative at a time when
the Respondent was still in need of their services,
and a measure of balanced bargaining power
existed. Meaningful bargaining cannot be assured
until some measure of economic strength is restored
to the Union. A bargaining order alone, therefore,
cannot serve as an adequate remedy for the unfair
labor practices committed.
Accordingly, we deem it necessary, in order to
effectuate the purposes of the Act, to require the
Respondent to bargain with the Union concerning
the effects of the shutdown on its employees, and
shall accompany our order with a limited backpay
requirement' designed both to make whole the
employees for losses suffered as a result of the
violation and to recreate in some practicable manner
a situation in which the parties' bargaining position
is not entirely devoid of economic consequences for
the Respondent. We shall do so in this case by
requiring the Respondent to pay backpay to its
employees in a manner similar to that required in
Transmarine, supra. Thus the Respondent shall pay
employees backpay at the rate of their normal
wages when last in Respondent's employ from 5
days after the date of this Decision and Order until
the occurrence of the earliest of the following
conditions: (1) the date the Respondent bargains to
agreement with the Union on those subjects
pertaining to the effects of the plant shutdown on its
employees; (2) a bona fide impasse in bargaining;
(3) the failure of the Union to request bargaining
within 5 days of this Decision, or to commence
negotiations within 5 days of the Respondent's
(C A. 9) remanding 152 NLRB 998.
'We have indicated that backpay orders are appropriate means of
remedying 8(a)(5) violations of the type involved herein , even where such
688 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
notice of its desire to bargain with the Union; or (4)
the subsequent failure of the Union to bargain in
.good faith; but in no event shall the sum paid to any
of these employees exceed the amount he would
have earned as wages from June 30, 1968, the date
on which the Respondent terminated its operations,
to the time he secured equivalent employment
elsewhere, or the date on which the Respondent
shall have offered to bargain, whichever occurs
sooner; provided, however, that in no event shall this
sum be less than these employees would have earned
for a 2-week period at the rate of their normal
wages when last in the Respondent's employ.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent,
Interstate Tool Co., Inc., its officers, agents,
successors , and assigns , shall:
1. Cease and desist from refusing to bargain with
District No. 8, International Association of
Machinists and Aerospace Workers, AFL-CIO, with
respect to the effects on employees of its
termination of operations.
2. Take the following affirmative action which the
Board finds will effectuate the policies of the Act:
(a) Pay the terminated employees their normal
wages for the period set forth in this Decision.
(b) Upon request, bargain collectively with
District No. 8, International Association of
Machinists and Aerospace Workers, AFL-CIO, with
respect to the effects on its employees of its
termination of operations, and reduce to writing any
agreement• reached as a result of such bargaining.
(c) Preserve and, upon request, make available to
the National Labor Relations Board or its agents,
for examination and qopying, all payroll records,
social security payment records, timecards,
personnel records and reports, and all other records
necessary or useful in checking compliance with this
,Order.
violations are unaccompanied by a discriminatory shutdown of operations.
Cf. Royal Plating and Polishing Co., Inc., 148 NLRB 545, 548, and cases
cited therein.
'Transmarine Navigation Corporation , supra.
(d) Mail an exact copy of the attached notice
marked "Appendix," to District No. 8,
International Association of Machinists and
Aerospace Workers, AFL-CIO, and to all the
employees who were employed at its former place of
business on June 24, 1968. Copies of said notice on
forms provided by the Regional Director for Region
13, after being duly signed by Respondent's
authorized representative, shall be mailed
immediately upon receipt thereof, as hereinabove
directed.
(e) Notify the aforesaid Regional Director, in
writing, within 10 days from the date of this Order,
what steps have been taken to comply herewith.
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National
Labor Relations Board and in order to effectuate the
policies of the National Labor Relations Act, as amended,
we hereby notify our employees that:
WE WILL, upon request, bargain collectively with
District No. 8, International Association of Machinists
and Aerospace Workers, AFL-CIO, with respect to the
effects of closing our Chicago , Illinois , operation upon
the employees who were employed there, and reduce to
writing any agreement reached as a result of such
bargaining.
WE WILL pay the employees who were employed at
the Chicago plant their normal wages for a period
required by a Decision and Order of the National
Labor Relations Board.
INTERSTATE TOOL CO. INC.
(Employer)
Dated By
(Representative) (Title)
If employees have any question concerning this notice
or compliance with its provisions, they may communicate
directly with the Board's Regional Office, 881 U.S.
Courthouse and Federal Office Building , 219 South
Dearborn Street, Chicago, Illinois 60604, Telephone
312-353-7570.