Liquid Carbonic Corp.

National Labor Relations Board - Board Decisions

Nov 26, 1985

277 N.L.R.B. 851 (N.L.R.B. 1985)

LIQUID CARBONIC CORP
Liquid Carbonic Corporation and Local 478, Inter-
national Brotherhood of Teamsters , Chauffeurs,
'Warehousemen and Helpers of America. Case
22-CA-11483
26 November 1985
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
DENNIS AND JOHANSEN
On 30 December 1983 Administrative Law
Judge Raymond P . Green issued the attached deci-
sion. The Charging Party filed exceptions and a
supporting brief, and the Respondent filed cross-ex-
ceptions , a supporting brief, and an answering brief
to the Charging Party's exceptions.
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, t and
conclusions as modified and to adopt the recom-
mended Order.
The Respondent and the Union were parties to a
contract covering drivers that ran from 11 April
1978 to 31 March 1982 . On 12 February 1982 the
Respondent 's attorney advised the Union that the
Respondent had decided to subcontract bargaining
unit trucking work to Chemical Leamon. The
Union filed for arbitration on 8 March 1982, charg-
ing that the subcontracting violated the collective-
bargaining agreement . On 12 October 1982 an arbi-
trator found that the Respondent 's subcontracting
violated section 1(I) of the contract , which provid-
ed:
Should the Employer intend to discontinue
using his trucks the Employer must arrange
for his Employees to be employed by whoever
does the pick-up or delivery of said merchan-
dise and the provisions of this entire contract
i The Charging Party has excepted to some of the judge's credibility
findings The Board's established policy is not to overrule an administra-
tive law judge's credibility resolutions unless the clear preponderance of
all the relevant evidence convinces us that they are incorrect. Standard
Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F2d 362 (3d Cir
1951). We have carefully examined the record and find no basis for re-
versing the findings
The judge inadvertently stated in sec II,(c), par. 7 that the Onion noti-
fied the Respondent that it would like to begin negotiations for a new
contract on 4 January 1984 rather than 4 January 1992
The parties had a meeting that the judge dated 2 March and, later, 3
March Although the record is unclear whether the meeting occurred 2
or 3 March, the meeting's date is not critical to the decision
We note that, after the judge's decision issued, the Board in Milwaukee
Spring Division, 268 NLRB 601 (1984), reversed Milwaukee Spring Doe-
sion, 265 NLRB 206 (1982), and overruled in pertinent part Los Angeles
Marine Hardware, 235 NLRB 720 (1978), enfd. 602 F.2d 1302 (9th Cir
1979)
851
must be agreed to by whoever takes over the
operation.
The judge, declining to defer to the arbitrator's
decision, found that section 1(I) was an unlawful
union signatory clause. The judge then found that
the Respondent bargained in good faith about the
subcontracting decision and dismissed the 8(a)(5)
allegation.
Contrary to the judge, we find that section 1(I)
is not on its face violative of Section 8(e) of the
Act, and "where the clause is not clearly unlawful
on its face, the Board will interpret it to require no
more than what is allowed by law." Teamsters
Local 982, 181 NLRB 515, 517 (1970). Nor do we
believe that the General Counsel showed that sec-
tion 1(I) as interpreted by the arbitrator is violative
of Section 8(e). Consequently, we believe that it is
appropriate to dismiss the complaint on the basis of
deferral to the arbitrator's award, which expressly
considered the issues underlying the complaint's al-
legations. 2
ORDER
The recommended Order of the administrative
law judge is adopted and the complaint is dis-
missed.
MEMBER DENNIS, concurring.
I concur. I would find, for the reasons the judge
stated, that section 1(I) of the parties' contract is an
unlawful union signatory clause. Consequently,
under Olin Corp., 268 NLRB 573 (1984), the judge
correctly declined to defer to the arbitrator's
award, as the arbitrator's decision was not suscepti-
ble to an interpretation consistent with the Act.
I agree with the judge's finding that the Re-
spondent bargained in good faith about the decision
to subcontract bargaining unit trucking work to
Chemical Leamon, and I therefore would find it
unnecessary to decide whether the subcontracting
decision was a mandatory bargaining subject.
2 See Olin Corp, 268 NLRB 573, 574 (1984)
Stanley R. Weilgus, Esq., for the General Counsel.
Bray, McAleese, McGoldrtch & Susanin by Robert J. Bray,
Esq., for the Respondent.
John A. Craner, Esq., for the Charging Party
DECISION
STATEMENT OF THE CASE
RAYMOND P. GREEN, Administrative Law Judge. This
case was heard by me in Newark, New Jersey, on
August 2 and 3, 1983. The charge in this proceeding was
filed by the Union on March 11, 1982, and a complaint
was issued by the Regional Director for Region 22 of
277 NLRB No. 91
852 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the National Labor Relations Board on March 15, 1983.
In substance, the complaint alleges that about March 31,
1982, the Respondent unilaterally subcontracted out cer-
tain work performed by bargaining unit employees (driv-
ers) who are represented by the Union. In this regard,
the General Counsel posits two alternative theories of
violation. First, he argues that the Respondent violated
Section 8(a)(1), (3), and (5) of the Act when it engaged
in subcontracting during the life of the contract without
having obtained the consent of the Union and notwith-
standing a provision in the collective-bargaining agree-
ment which reads.
1. (I) should employer intend to discontinue using
his trucks, the employer must arrange for his em-
ployees to be employed by whoever does the
pickup or delivery of said merchandise, and the
provisions of this entire contract must be ageed to
by whoever takes over the operation.
In this respect the General Counsel's theory relies, in
part, on the rationale of Milwaukee Spring Division, 265
NLRB 206 (1982). It is noted that the rationale of Mil-
waukee Spring has never been applied by the Board to a
subcontracting case, but rather arose from a situation
where a company relocated an operation.
Second, the General Counsel contends that even if his
first theory is without merit, the Respondent still violat-
ed Section 8(a)(1) and (5) of the Act because it failed to
give the Union adequate notice of its decision to subcon-
tract out bargaining unit work and failed to engage in
good-faith negotiations concerning that decision. In this
respect, the General Counsel relies on the rationale of Fi-
breboard Paper Products Corp. v. NLRB 379 U.S. 203
(1964).'
With respect to the Milwaukee Spring theory,the Re-
spondent contends that:
(1) Milwaukee Spring was wrongly decided and should
be overruled.
(2) The theory of Milwaukee Spring, even if sustained,
is not applicable to the present case because the Re-
spondent has not relocated its operations, but rather has
subcontracted truckdriving to a third party in an arm's-
length transaction.
(3) The provision of the contract relied on by the
General Counsel, (sec. 1(I)), is null and void pursuant to
the provisions of Section 8(e) of the Act because it is a
"union signatory clause."
As to the General Counsel's alternate Fibreboard
theory, it is argued that:
(1) The decision to subcontract the hauling of cryo-
genic gases was not made to save labor costs and was
one which contemplated the cessation of a part of its
business operation. As such, Respondent contends that
decision bargaining was not required under the rationale
of First National Maintenance Corp. v. NLRB, 425 U.S.
66 (1981).
(2) The Union waived its right to bargain over the de-
cision when it entered into a contract containing section
1(I). However, it is noted that this argument seems to be
i It is noted that the General Counsel does not allege that the Re-
spondent failed to bargain over the effects of the decision to subcontract
a bit disengenuous because the Company is also asserting
that the clause, or at least some portion of it, is null and
void under Section 8(e) of the Act.
(3) Even if the Company had a legal obligation to bar-
gain about the decision, it did give the Union sufficient
notice and offered to bargain about the decision. It is the
Respondent's contention that the Union never availed
itself of the offer to bargain and insisted instead, that the
Company could not subcontract out the work unless the
other Company agreed to recognize the Union and
assume all of the terms and conditions of the collective-
bargaining agreement.
Based on the entire record in this proceeding, includ-
ing my observation of the demeanor of the witnesses,
and after considering the briefs filed, I make the follow-
ing
FINDINGS OF FACT
1. JURISDICTION
The Respondent, which is a subsidiary of Houston
Natural Gas Corporation, it a Delaware corporation
having its principal office and place of business in Chica-
go, Illinois. It also has plants or places of business in var-
ious of the States including the State of New Jersey. Its
business consists of producing, selling, and distributing
various types of gases and related products. The parties
agreed that annually the Respondent manufactures and
ships products valued in excess of $50,000 from the State
of New Jersey directly to points located outside that
State. It therefore is concluded that the Company is en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
It is agreed and I find that Local 478, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America is a labor organization within
the meaning of Section 2(5) of the Act.
A. The Operative Facts
The business of the Company is the production of var-
ious gases. Ancillary to that, the Respondent, for many
years has owned or leased trucks and trailers and has
employed a work force of drivers and platform men who
deliver the gases, in cryogenic form, to the Company's
customers. In this regard the gases are cooled to a liquid
state and carried in special containers which essentially
are large thermos bottles.
Historically, Local 478 has represented the drivers and
platform employees in two separate bargaining units, one
for the employees in the Company's C02 division and
the other in Respondent's Industrial and` medical divi-
sion. The C02 division was not involved in this case and
there currently exists a collective-bargaining agreement
covering those employees.
The transactions involved the Company's industrial
and medical division. More specifically they affected the
delivery of cryogenic gases (such as oxygen, argon, and
nitrogen) by the Company's drivers. These employees in
this division have been represented by Local 478 and
LIQUID CARBONIC CORP
Local 107, International Brotherhood of Teamsters for
many years. The employees represented by Local 478,
numbering about 22, were employed in two locations,
Harrison and Tremely Point, New Jersey.2 The employ-
ees represented by Local 107, numbering about 7, were
located in Burlington, Pennsylvania Concerning the Tre-
meley Point facility, the space utilized by the Company
was rented at a cost of $1,500 per month. In the per-
formance of their work, the drivers at Tremeley Point
went to the Company' s Burlington plant to load their
trucks and proceeded north for delivery to the Compa-
ny's customers . The employees represented by Local 478
at Tremeley Point and Harrison were covered by a
single collective-bargaining agreement which ran for a
term from April 1, 1978, to march 31, 1982.
According to John Konawitz, a company vice presi-
dent, he was advised by his superiors in the summer of
1981 to look into the possibility of contracting out the
driving work done at Tremeley Point and Burlington as
it was surmised that a trucking company might be able
to perform the work at less expense . He then contacted a
number of trucking companies and one, Chemical
Leamon, made a proposal. As part of Chemical Lea-
mon's proposal, it accepted a condition imposed by Re-
spondent that it offer employment to all of Respondent's
employees who would be affected by the subcontracting.
Also, it offered to employ Liquid Carbonic's drivers on
the condition that they would be given preference for
work on Liquid Carbonic account. Chemical Leamon's
offer incorporated certain rates pursuant to I C C. tariffs
which, when analysed by Respondent, resulted in an
annual cost savings of about $580,000.
It should be noted that Chemical Leamon is itself a
party to a multiemployer, collective-bargaining agree-
ment with the International Brotherhood of Teamsters
which is called the Eastern Area Tank Hauler Agree-
ment. The bargaining unit, needless to say, is substantial-
ly larger than the bargaining unit covered by Local 478's
contract with Liquid Carbonic. It was Chemical Lea-
rnon's intention to perform the work at its Croyden,
New Jersey facility where its employees were covered
by a supplemental contract with Local 312 IBT. As of
March 1982 there were about 100 drivers on Chemical
Leamon's Croyden seniority list but only about 50 were
actively employed. Had the employees of Liquid Car-
bonic accepted employment at Chemical Leamon's Croy-
den facility, it would have been more likely than not that
because they would have been integrated into that Com-
pany's existing operation, that they would have constitut-
ed an "accretion" to the existing bargaining unit which,
at Croyden, was represented by Local 312 IBT a
After receiving Chemical Leamon's proposal,
Konowitz was told by his superiors that a subcontracting
arrangement with Chemical Leamon might be a good
2 About January 1982 the, Company consolidated its operation by
moving some of its employees from Harrison to Linden, New Jersey,
where the employees were represented by Local 807 IBT When a dis-
pute arose, the Eastern Conference of Teamsters designated Local 807 as
the bargaining representative at Linden
3 Humble Oil Co, 153 NLRB 1351 (1965) See generally Great Atlantic
& Pacific Tea Co, 140 NLRB 1011, 1021 (1956), Borg Warner Corp, 117
NLRB 1613 (1956)
853
idea in view of the cost savings. As a result, Respondent
retained Robert J. Bray Jr. (who also represents Chemi-
cal Leamon), to represent it in connection with the labor
aspects of the proposal and to make contact with the
Unions affected.
In the meantime, Local 478, on January 4, 1984, sent
notice to the Company that it would soon like to com-
mence negotiations for a new contract to replace the
contract which was to expire on March 31, 1982.
On February 12, 1982, Bray wrote a letter to Local
478's secretary-treasurer, Seconish, which stated:
Because of the determination by LCC [Liquid
Carbonic Corporation] that it can no longer eco-
nomically or efficiently continue a bulk hauling op-
eration, LCC has concluded that it must go com-
pletely out of the bulk hauling business and close its
Tremly Point facility. LCC has made numerous in-
quiries of carriers with bulk hauling expertise as to
their willingness to take over these bulk operations
After evaluating the responses of these carriers,
LCC has determined to utilize the services of
Chemical Leaman Tank Lines, Inc. ("CLTL"). The
prime reason for this decision is that CLTL is the
only unionized carrier willing to offer employment
opportunity to the LCC employees who will be ef-
fected by this decision.
LCC representatives will be in touch with you
directly to discuss this decision and the implications
thereof on your members. Suffice it to say, howev-
er, that LCC intends to abide by its obligations
under the law and under the collective bargaining
agreement with your local union to the extent that
these collective bargaining obligations are legally
permissable under the circumstances. However, we
are informed that CLTL intends to carry on this
bulk hauling operation out of its terminal in Croy-
don, Pennsylvania This Croydon Terminal operates
under the Eastern Area Tank Haul Agreement and
the Teamsters Local 312 Supplement thereto.
While this letter should be considered the appro-
priate notice under Article 40, "'Change of Oper-
ations", I wish to reiterate that the Company repre-
sentatives will be willing to meet with you at your
earliest convenience to discuss the details of this
proposed closing
On February 17, 1982, Seconish responded as follows-
As you know, we represent the employees at
Tremly Point, New Jersey. On February 16, 1982,
Local 478 received a letter from an attorney,
Robert J. Bray, Jr., purporting to represent Liquid
Carbonic Corporation. The contents of his letter,
which advised us that Liquid Carbonic Corporation
had determined to close the Tremly Point facility
and sub-contract the transportation of bulk industri-
al-medical cryogenic gas through Chemical Leaman
Tank Lines operating out of Croydon, Pennsylva-
nia, came as quite a shock to us because in all the
conversations which had ensued over the partial
closing of Harrison and the consolidation of that
854 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
terminal, along with the New York Terminal into
the Linden Terminal, it had never been mentioned
that the Tremly Point operation was in jeopardy of
being closed or the work performed therein being
sub-contracted.
In point of fact, the Union does not believe that
the Company has acted in good faith in any sense of
the word by springing this news upon the Union
without any advanced notice and without any effort
to bargain over this action. Moreover, the Union
has serious doubts and reservations as to whether or
not this action is being taken in order for Liquid to
rid itself of Local 478 by taking advantage of a
much inferior collective bargaining arrangement
through Chemical Leamon Tank Lines. In short,
we have serious doubts as to whether or not the
reasons stated by Mr. Bray, namely, that Liquid can
no longer economically or effectively continue a
bulk haul operation is a truthful or valid reason.
Local 478 has no intention of allowing Liquid
Carbonic Corporation to sub-contract out Tremly
Point bargaining unit work and is prepared to take
whatever steps are necessary to prevent this act
from occurring, including submission of the issue to
arbitration. Moreover, we are convinced tha the
failure of the Company to bargain with the Union
over this decision is a violation of the National
Labor Relations Act. See, Fibreboard Paper Products
Corp. v. NLRB., 379 U.S. 203, 85 S.Ct. 398 (1964).
This notification coming but approximately 45 days
prior to the expiration of the current collective bar-
gaining agreement is further indication, in our opin-
ion, of the bad faith of Liquid. Finally, we are pre-
pared to file unfair labor practice charges to support
our view that the action of Liquid is motivated by
its desire to rid itself of the Local 478 Contract in
favor of a much cheaper collective bargaining ar-
rangement, evidenced by the Local 312 Supplement
to Eastern Area Tank Hauler Agreement and the
failure to, at any time, mention any economic dis-
tress connected with Tremly Point. If anything,
Liquid gave Local 478 the impression that Tremly
Point was a valid (profitable) operation.
Accordingly, we suggest that no action be taken
by Liquid and that you contact me to arrange for
suitable meetings to discuss this issue, as well as
other contract demands. If no sub-contracting
occurs during those negotiations, then, of course,
there is no need for us to take reciprocal action.
Finally, we would appreciate your advising us if
Mr. Bray represents Liquid Carbonic and is author-
ized to act on their behalf so that we may corre-
spond with him directly in the future. If he is not
counsel to Liquid Carbonic, we would appreciate
your so advising.
On February 19 the Respondent by its regional manag-
er, John M. Burtnick, replied to the Union's letter of
February 17 as follows:
This letter is to acknowledge receipt of your
letter of February 17, 1982 to Mr. Konowitz. First,
please be advised that Mr. Robert Bray does indeed
represent Liquid Carbonic Corporation in the
matter of the proposed closing of the Tremely Point
facility.
Second, as Mr. Bray's letter stated, the Company
attempted to contact you on Friday, February 12th
and again on Tuesday, February 16th for the pur-
pose of setting up a meeting to discuss this decision
with you and the implications on your members.
Please contact the writer or John Konowitz upon
receipt of this letter to set up a meeting for discus-
sions If you feel the need to discuss this matter
with Mr. Bray directly, he can be contacted at (215)
667-7080.
On February 23, a meeting was held in Newark, New
Jersey. The Union was notified that the Company was
contemplating subcontracting the driving work at Tre-
meley Point to Chemical Leamon. Although the Compa-
ny asserted that this would result in substantial cost sav-
ings, no specific figures were given at this time. The
Union was also told that its drivers would be offered em-
ployment by Chemical Leamon at the Company's Croy-
den facility and that insofar as the Liquid Carbonic
work, they would be given first preference. The Compa-
ny informed Local 478 that Chemical Leamon's employ-
ees were represented by Local 312 IBT and that if the
employees of Liquid Carbonic accepted such employ-
ment they would therefore be represented by Local 312.
Although being unaware of the terms and conditions of
the Local 312 contract, Local 478's representatives
claimed that Local 312's contract was inferior to their
own. They further expressed their opinion that in view
of section 1(I) of the contract, Respondent could not
subcontract the work. Toward the end of the meeting,
Seconish (Local 478's secretary-treasurer), suggested that
another meeting take place and that Local 107 be
brought in, in view of the fact that they, too, would be
affected by the Company's proposed course of action.
(As noted above, Local 107 represented about seven
drivers located at Respondent's terminal in Burlington,
Pennsylvania.) It is noted that although Local 478's at-
torney, Craner, expressed his opinion that the Company
presented the decision to subcontract as a fait accompli,
he acknowledged that those words were never expressed
by any company representative. Indeed the record does
not reveal that such words or similar words were used
by the Company.
On March 2, a meeting was held in Bordentown, New
Jersey, attended by representatives of Local 478, Local
107, and Respondent. Bray opened the meeting by stat-
ing that he wanted to discuss the transfer of work from
Liquid Carbonic to Chemical Leamon and that he
wanted to see if it could be accomplished without a legal
mess. He stated that the Company estimated that the sub-
contracting would save about $600,000 per year and set
forth some of the details as to how that cost savig would
be obtained. According to Craner, the Unions were told
that they would have to match the $600,000 in order for
the Company to reconsider its decision. However,
Konowitz asserts that he did not state that the Unions
LIQUID CARBONIC CORP.
had to match the $600,000 figure, but merely asked the
Unions to present some alternatives.
At the March 3 meeting Local 478's representatives
again expressed the opinion that Chemical Leamon's
labor contract was inferior, although the record shows
that they did not yet have a copy of that contract, and
were not at this time, familiar with it. The Company's
representatives countered with their opinion that the
Chemical Leamon's contract was comparable to Local
478's contract. Notwithstanding the claim by Local 478
that Chemical Leamon's contract was inferior, the testi-
mony of Seconich and Craner indicates that their objec-
lion to the subcontracting was not really related to any
differences in the terms of the collective-bargaining
agreements, but rather was based on their concern that
Local 478 would lose the right to represent the drivers
in question. Thus, their principal position, as expressed at
this meeting and at the hearing, was that their basic con-
cern was to continue to represent the drivers and that
accordingly Liquid Carbonic could not subcontract the
work to Chemical Leamon unless that Company recog-
nized Local 478 and assumed the contract between Local
478 and Liquid Carbonic. Towards the end of the meet-
ing, Local 478 handed its contract proposals (dated Feb-
ruary 26) to the Company. Among these proposals was
one, at item 13, which read, "No subcontracting out of
bargaining unit work."
On March 4, 1982, Bray wrote a letter to Seconish
stating:
The purpose of this letter is to confirm several
subject areas which were discussed during the joint
negotiations conducted by and between Local 478,
Local 107 and the Liquid Carbonic Corporation on
March 3, 1982.
During the course of these joint negotiations,
Liquid Carbonic made reference to certain date
which indicated that the company could potentially
realize an approximately $580,000 per year reduc-
tion in operating costs by utilizing a common carri-
er to provide such transportation services to Liquid
Carbonic.
The company reiterates is offer to Local Union
478 that it is willing to disclose, in confidence, the
underlying information from which the company
had made its cost reduction projections based on
the utilization of a common carrier.
In that time is of the essence, please advise us at
your earliest convenience if you wish to review this
data.
Since we also attempted to discuss the possible
alternative projections for an orderly transition of
this work to Croyden, we wish you would recon-
sider your refusal to discuss these issues. Unless the
unions can present meaningful alternatives to the
company's proposed use of Chemical Leaman, the
target date of March 15, 1982 yet remains.
Also, Liquid Carbonic must take issue with the
position that Local 478 took at the meeting on
March 3 when you and Mr. Craner advised the
company that the only subcontracting the local will
negotiate or allow is Liquid Carbonic's subcon-
855
stracting to a carrier that will recognize only Local
478
The company will make available for your mem-
bers' review on Monday March 8, 1982, copies of
the Eastern Area Tank Haul Agreement and any
other related documents at those depos affected by
this proposed change.
Liquid Carbonic will be agreeable to discuss fur-
ther with you the above subject areas at the earliest
possible time.
On March 10 Konowitz suggested to Seconish that the
contract be extended beyond the March 31 expiration
date. He also suggested that the Company's March 15
deadline for subcontracting also be extended. Seconish
agreed. However, in the afternoon, the Union presented
Konowitz with an extension agreement which Konowitz
found to be objectionable. In essence, the Union, fearing
the possible consequences of the no-strike clause in the
contract, proposed that it the contract was extended it
nevertheless could be immediately terminated when and
if the Company subcontracted out the work. According
to Konowitz, it was on this date and after the above-
noted meeting, that the Company finalized its decision to
subcontract the work to Chemical Leamon.
On March 11 Konowitz wrote to Seconish as follows-
Confirming our meeting of yesterday, it is appar-
ent that the Union has no viable alternative to our
proposed termination of bulk hauling and the trans-
fer of this work to Chemical Leaman at its Croydon
depot.
As you stated at the meeting yesterday, attended
by yourself, your attorney, Mr. Craner, Mr. Burt-
nick and myself, the Union cannot offer any eco-
nomic concessions which would even approach the
$50,000 a month savings that the Company antici-
pates obtaining by having Chemical Leamon haul
its bulk product.
You also took the position that unless the Com-
pany agreed to your demands for the extension of
our agreement, no extension would be allowed.
Since you have also offered no other viable alter-
natives and even further indicated that you had
none or agreed to extend the present agreement,
status quo, the Company cannot help but conclude
that pursuing Chemical Leaman for hauling its bulk
product it is the only economically feasible alterna-
tive.
We have, therefore, concluded that the date of
March 17 to transfer this work must be chosen We
have, therefore, posted at noon this day, the attach-
ments. As stated therein, those employees wishing
to transfer to the Croydon terminal should so indi-
cate it no later than Monday, at noon, March 15,
1982. Also, with this attachment, we have included
a summary of the Local 312 contract which we pre-
sented to you at yesterday's meeting
We would appreciate the opportunity to discuss
the circumstances of this transfer and any conse-
quences thereof'at your earliest convenience Please
856 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
contact me or John Burtnick so that the same may
be arranged
Also on March 11, the Company posted a notice for
its employees, which in pertinent part read as follows:
1. As you may have heard from your Local Union,
Liquid Carbonic has made the determination to dis-
continue its participation in the transportation por-
tion of the bulk industrial-medical cryogenic gas
hauling operation at the Tremley Point facility on
March 16, 1982.
2. Chemical Leaman Tank Lines, Inc., an interstate
common-carrier, has been selected by Liquid Car-
bonic to perform this bulk hauling service beginning
Wednesday, March 17, 1982. Chemical Leaman,
one of the largest tank haulers in the country, has
also agreed to offer employment opportunity to the
Liquid Carbonic employees who are affected by
this decision.
3. The work in question will be performed by
Chemical Leaman out of its Croydon, Pennsylvania,
terminal.
4. Chemical Leaman has agreed to continue for you
the terms and conditions of your present collective
bargaining agreement to the extent legally permissi-
ble until its expiration on March 31, 1982. Effective
April 1, 1982, all employees will be paid in accord-
ance with the terms and conditions of the collective
bargaining agreement covering the Croyden termi-
nal.
5. The employees at Chemical Leaman's Croydon
terminal, are represented for purposes of collective
bargaining by Teamsters Local 312. Chemical
Leaman and Local 312 are party to the Eastern
Area Tank Haul Agreement and Supplement there-
to. The Agreements are available for your review in
the office. Also available for review will be the
Health & Welfare and Pension Benefit Booklets out-
lining the plans under which you will be covered.
6. All employees wishing to avail themselves of em-
ployment opportunity with Chemical Leaman,
should indicate that preference by signing this
notice on the spaces below or returning the at-
tached signature sheet to a Company supervisor.
Failure to sign this notice or to turn in the attached
will indicate your non-interest in following this
work. Of course, you will be offered the opportuni-
ty to avail yourself for employment with Chemical
Leaman in accordance with your present Company
seniority at Liquid Carbonic for the purposes of
hauling Liquid Carbonic bulk products.
7 We have been advised that Chemical Leaman in-
tends to use those employees who avail themselves
of this opportunity to work for Chemical Leaman
on a "House Account" basis. That is, you will be
given the opportunity to work on this Liquid Car-
bonic work in accordance with your current Liquid
Carbonic Company seniority. You will, in addition,
be given credit by Chemical Leaman for your
Liquid Carbonic years of service for vacation bene-
fit purposes.
8. If you do not wish to avail yourself of the oppor-
tunity to work for Chemical Leaman, you may
remain on the seniority list with Liquid Carbonic
under the terms of your present collective bargain-
ing agreement.
9. This opportunity to work for Chemical Leaman
will be offered on a one-time basis. You will have
no other future claims on this work if you do not
indicate your intention to work for Chemical
Leaman prior to the removal of this notice.
10. This notice posted on Thursday, March 11,
1982, will remain available to employees for signa-
ture until noon on March 15, 1982, at that time, the
notice will be removed from the bulletin board.
11. All employees who have signed the notice will
be contacted by T. Raftery of Liquid Carbonic and
advised to call to appropriate representative at
Chemical Leaman. You will then be given instruc-
tions and full details as to the time and place of
work including all other pertinent information.
On March 16 a contract was executed between Chemi-
cal Leaman and Liquid Carbonic and on March 17,
Chemical Leaman began doing the work. On the Union's
instructions to its members, none of the employees repre-
sented by Local 478 applied for positions at Chemical
Leaman. However, the record shows that some or all of
Respondent's drivers at Burlington, represented by Local
107, did obtain jobs at Chemical Leaman. Thus, on
March 17, Chemical Leaman began doing the work, pur-
suant to the subcontracting arrangement, using the
former employees at Burlington and its own drivers. As
noted above, at this point, Chemical Leaman at its Croy-
den terminal had about 100 drivers on its seniority list
and about 50 drivers who were actively employed.
Regarding the subcontracting arrangement, the record
shows that Chemical Leaman used its own tractors, but
that the trailers used continued to be owned by Liquid
Carbonic.4 Other than the purchase of tires from Re-
spondent, Chemical Leaman did not purchase any other
assets from Liquid Carbonic. The record also shows that
subsequent to the subcontracting, Liquid Carbonic as-
signed three employees to Chemical Leaman's Croyden
facility as clerks and dispatchers. Their jobs were to re-
ceive phone calls from Respondent's customers and to
dispatch the trucks handling Respondent's accounts. As a
result of the subcontracting, the Tremeley Point facility
was closed However, Respondent's Harrison terminal
remained open and the employees there continue to be
represented by Local 478.
On March 17, Local 478 commenced a strike against
Respondent to protest the contracting out of the work to
Chemical Leaman and to protest the Company's breach
of the contract which, as noted above, requires Respond-
4 Prior to the subcontracting, Liquid Carbonic leased most of the trac-
tors it used The cost of leasing a tractor is about $2000 to 52500 per
month
LIQUID CARBONIC CORP 857
ent to secure from any company doing the pickup or de-
hLvery of Respondent's goods, not only to offer jobs to
the employees but also to assume all the terms of the col-
lective-bargaining agreement. -In response to the strike,
the Respondent obtained a restraining order from a U.S.
district court based on the assertion that the Union was
breaching the no-strike clause of the contract. However,
when the contract expired on March 31, the Union rec-
ommended its strike on April 1. Also, as noted below,
the Union filed for arbitration regarding the subcontract-
ing arrangement with Chemical Leaman.
Subsequently, the Company filed an unfair labor prac-
tice charge in Region 4 of the National Labor Relations
Board, alleging that Local 478, by seeking to enforce
section 1(I) of the contract, was violating Section 8(e) of
the Act.5 In essence, the Company asserted that section
1(I), as written and as sought to be applied by the Union,
was a "union signatory" clause rather than a "union
standards" or "work preservation" clause. However, by
letter dated May 11, the Regional Director for Region 4
(based on a General Counsel" Advice Memorandum dated
April 16, 1982) dismissed the Company's charge.6 In per-
tinent part, the dismissal letter read:
As a result of the investigation, I find that the
charge lacks merit. The clause alleged to violate
Section 8(e) of the Act reads as follows.
Should the Employee intend to discontinue using
his trucks the Employer must arrange for his Em-
ployees to be employed by whoever does the
pick-up or delivery of said merchandise and the
provisions of this entire contract must be agreed
to by whoever takes over the operation.
It was concluded that this clause protects the jobs
and contract conditions of the unit employees in the
event of a transfer of operations, and is therefore a
lawful, primary, work preservation type clause.
Harris Truck and Trailer Sales, Inc., 224 NLRB 100
(1976); Bader Warehouse Inc, 225 NLRB 609
(1976); Lone Star Steel Co., 231 NLRB 573, affirmed
on this point, 639 F.2d 545 (10th Cir. 1980); Amax
Coal Co., 238 NLRB 1583, affirmed on this point,
614 F.2d 872 (3rd Cir. 1980), affirmed in other re-
spects, 453 U.S. 322 (1981), 107 LRRM 2769 (1981).
If the clause operates as intended, the signatory will
subcontract to an employer who will hire the dis-
placed employees. That subcontractor would then
have a lawful collective bargaining relationship
Sec. 8(e) in pertinent part reads as follows
It shall be an unfair labor practice for any labor organization and
any employer to enter into any contract or agreement, express or im-
plied, whereby such employer ceases or refrains or agrees to cease
or refrain from handling, using, selling, transporting or otherwise
dealing in any of the products of any other employer, or to cease
doing business with any other person, and any contract or agreement
entered, into heretofore or hereafter containing such an agreement
shall be to such extent unenforceable and void
There' are two exceptions to See 8(e) relating to the garment and con-
struction industries These, however, are not relevant to the present case
6 In certain cases, particularly those involving complex or novel issues,
the Boaid's regional directors may seek advice from the General Coun-
sel In this respect, there is an Advice Section in the General Counsel's
office
with the Union The fact that the clause operates to
disqualify as a subcontractor an employer like
Chemical Leaman because that employer, as a prac-
tical matter, cannot fulfill the conditions of the
transfer does not render secondary an otherwise
lawful primary clause . Accordingly, I am refusing
to issue Complaint in this matter.
In connection with the 8(e) charge, because the Gener-
al Counsel had refused to issue a complaint on that
charge, I am precluded from issuing any type of order
against the Union as the General Counsel has exclusive
discretion in issuing unfair labor practice complaints.?
This does not mean, however, that I am bound to agree
with the General Counsel's interpretation after hearing
record testimony, particularly where the clause in dis-
pute is a basic element of the General Counsel's theory
of violation and where the Respondent asserts, by way
of defense, that the clause as applied is null and void.
The preclude the Respondent from asserting this defense
would be tantamount to allowing one party to the pro-
ceeding (the General Counsel) to unilaterally and with-
out affording the benefit of a hearing or judicial determi-
nation, to preclude the other party' s defense . Such a con-
clusion would, in my opinion, be an anomaly and would
be contrary to the principles of due process."
I should note here that notwithstanding the General
Counsel's conclusions (as set forth in the May 11 dismis-
sal letter), that sec. 1(I) "protects the jobs and contract
conditions of the unit employees . . and is therefore a
lawful primary, work preservation type clause," the testi-
mony of the Union's witnesses was that their principal
objective was to secure recognition from Chemical
Leaman in a separate unit of those employees of Liquid
Carbonic who would be transferred from Tremley Point
to Chemical Leaman's payroll. Although at various times
local 478's representatives asserted that Chemical Lea-
man's labor agreement was inferior to Local 478's, the
fact is that it was not until a much later date that Local
478 became aware of the terms and conditions of Local
312's contract. Moreover, the testimony of Craner con-
vinces me that Local 478 was not really concerned at all
with any purported differences between its contract and
Chemical Leaman's contract. Rathei, his testimony
makes it clear to me that the Union's sole concern was to
maintain its status as bargaining representative. Further,
it would be hard to argue that Local 478's intention in
enforcing section 1(I) was to preserve the jobs of the
Tremley Point employees in view of the fact that pursu-
ant to arrangement between Liquid Carbonic and Chemi=
cal Leaman, all of those were offered jobs by the latter
r Although the Board generally has exclusive jurisdiction over unfair
labor practice cases (and thereby preempting other forums), there are a
limited number of situations where courts have current jurisdiction Sec.
303 of the Act enables a company to file a suit for damages (but not for
injunctive relief), against unions for violations of Sec. 8(b)(4) of the Act
It therefore is possible for a company to bring a Sec 303 action contend-
ing that a union is illegally enforcing an 8(e ) agreement because Sec
8(b)(4)(A) of the Act prohibits unions from engaging in certain types of
conduct (including strikes), for an object of requiring a company to enter
into or reenter into an agreement prohibited by Sec 8(e) of the Act
8 Food & Commercial Workers Local 1063 (Heaniman Enterprises), 249
NLRB 372 (1980)
858 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
company with preference in assignment to the work on
Liquid Carbonic account. In view of the above, it is
plain to me tha the only objective that Local 478 had in
seeking to enforce section 1(I) was to obtain recognition
from Chemical Leaman and for that Company to assume
all of the terms and conditions of the Union's contract
with Liquid Carbonic. As such, it would seem to me that
Loal 478 complaince in an effort to preserve jobs or
union standards.
It is also noted that throughout the conversations,
meetings, and correspondence between Local 478 and
the Company, the Union never did offer any alternatives
to the subcontrating decision, despite being asked to do
so. To be fair, it also is true that the Company did not
suggest any specific areas where the Union might offer
concessions in orde rto retain the work. However, it is
clear that absent a showing that the Company was losing
money by virtue of its truckdriving operations, the
Union did not intend to make any contractual conces-
sions.
As noted above, at some point after March 17, the
Union filed' for arbitration regarding the fact that Liquid
Carbonic had subcontracted to Chemical Leaman.9
Hearings were held on June 9 and July 1, 1982, and Ar-
bitrator Morrison Handsaker issued his decision and
award on October 12, 1982. His award was as follows:
The Arbitrator finds that the Company violated
the agreement between the parties when its trans-
ferred the trucking work on March 17, 1982 from
Tremley Point to the Chemical Leaman Corpora-
tion. The employees who would, under the terms of
the agreement, have been employed at Tremley
Point from march 17, 1982 to March 31, 1982, had
it not been for the subcontracting which the Com-
pany did, shall receive back pay for the period from
the transfer until March 31, 1982, when the agree-
ment between the Company and the Union ex-
pired. 10
Subsequent to the award, the Company filed a suit in
the U.S. District Court of New Jersey, seeking to set
aside the award, one ground being that the clause en-
forced by the arbitrator was null and void under Section
8(e) of the Act.' i That matter is still pending.
B. Analysis
The present case essentially involves a situation where
the Respondent, during the midterm of its agreement
with Local 478, subcontracted out certain truckdriving
work to another company (Chemical Leaman), thereby
resulting in the close of its Tremley Point facility where
the employees were represented by the Union. The moti-
vation for this subcontracting was economic, inasmuch
as the prices offered by Chemical Leaman were simply
9 On April 30, 1982, the Regional Director held in abeyance the pro-
ceedings in the instant case pending arbitration This was done pursuant
to Collyer Insulated Wire, 192 NLRB 837 (1971).
io It is noted that the arbitrator explicitly refused to pass on the unfair
labor practice issues Therefore I shall not defer to his decision Surbur-
ban Motor Freight, 247 NLRB 146 (1979)
11 Also the Company sought damages pursuant to Sec. 303 of the Act
lower than the cost incurred by Liquid Carbonic in
doing the work itself. Although I do not believe that the
Respondent's intentions in subcontracting was to avoid
its collective-bargaining agreement with Local 478 per
se, the result was basically the same as it was essentially
the cost of labor which Respondent incurred in maintain-
ing the truckdriving operation. In any event, it cannot be
said that the General Counsel has proven that Respond-
ent has manifested any animus toward Local 478 or any
other labor organization . Indeed, after the Tremley Point
facility was closed, Local 478 and Respondent entered
into a new contract on behalf of the Harrison employees
who were, prior to March 31, 1982, part of the bargainin
unit with the Tremley Point employees.
The record also reveals that pursuant to the contract
between Liquid Carbonic and Chemical Leaman, the em-
ployees of Respondent who were affected by the subcon-
tracting were offered jobs with Chemical Leaman with
preference over the latter's own employees for work
done on Respondent's account. It was intended, howev-
er, that any employees of Liquid Carbonic who accepted
employment at Chemical Leaman would be integrated
into that Company's operations at Croyden and would
therefore be represented by Local 312 because that
Union was the existing collective-bargaining representa-
tive at Croyden.
One of the theories offered by the General Counsel
and the Charging Party is that because the subcontract-
ing occurred during the life of the collective-bargaining
agreement and because that agreement contained section
1(I) (described above), Respondent could not engage in
the subcontracting unless, pursuant to that contract pro-
vision, it obtained Chemical Leamon's assent to be bound
by Local 478s contract or in the absence of that condi-
tion, on Local 478's consent. They argue that pursuant to
the rationale of Milwaukee Spring Division, 265 NLRB
206 (1982), the Respondent's action was, in effect, a uni-
lateral modification of the existing collective-bargaining
agreement . Thus, in their view, it is irrelevant whether
the Company offered to bargain about the decision to
subcontract because under Section 8(d) of the Act, nei-
ther party to an extant collective agreement is required
"to discuss or agree to any modification of the terms and
conditions contained in a contract for a fixed period, if
such modification is to become effective before such
terms and conditions can be reopened under the provi-
sions of the contract."
The Respondent for its part contends (1) that Milwau-
kee Spring should be overruled; (2) that its rationale is
applicable only to relocation cases and not to subcon-
tracting cases; and (3) that section 1(I) of the contract,
alleged to have been breached, is a "union signatory
clause" and is therefore null and void under Section 8(e)
of the Act. As to point (3), the Company asserts that by
making arrangements with Chemical Leamon for the em-
ployment of Respondent's employees with retained se-
niority on Respondent's account and with the contrac-
tual wages and benefits guaranteed until the expiration of
Local 478's contract, that it fulfilled its contractual obli-
gations to Local 478 to the extent permissible by law and
therefore did not unilaterally modify the contract. Al-
LIQUID CARBONIC CORP. 859
though it concedes that it breached section 1(I) to the
extent that it did not and could not obtain Chemical Lea-
mon's agreement to recognize Local 478, it argues that
this condition was unlawful.
In Los Angeles Marine Hardware Co., 235 NLRB 720
(1978), enfd. 602 F.2d 1302 (9th Cir. 1979), the company,
during the midterm of its collective-bargaining agree-
ment, relocated its unionized facility and thereafter re-
fused to recognize the union or apply the contract to the
new facility. The administrative law judge, in an opinion
adopted by the Board, concluded that the decision to re-
locate was not motivated by antiunion reasons and was
not intended "as a means of getting rid of the Union."
He did find, however, that coupled with the fact that the
company was encountering economic difficulties, the re-
location was motivated by a desire to escape from the
economic obligations imposed by the labor agreement. In
finding that the company violated the Act, the judge
stated:
Under Section 8(d) of the Act, no party to a col-
lective-bargaining agreement can be compelled to
discuss or agree to a midterm modification of a col-
lective-bargaining agreement, and, accordingly, a
proposed modification can be implemented only if
the other party's consent is first obtained. Nassau
County Health Facilities Association, Inc., et al., 277
NLRB 1680, 1683 (1977), and cases cited therein.
The fact that the parties have bargained to impasse
regarding the matter does not serve to change this
result. The Boeing Company, 230 NLRB 696, 700
(1977), and cases cited therein. This mandate is not
excused either by subjective good faith or by the
economic necessity of maintaining viability of an
employer's operation and preserving the jobs of the
employees in the bargaining unit. "Nowhere in the
statutory terms is any authority granted to us to
excuse the commission of the proscribed action be-
cause of a showing either that such action was com-
pelled by economic need or that it may have served
what may appear to us to be a desirable economic
objective." Oak Cliff-Golman Baking Company,
supra at 1064. Accord: Rego Park Nursing Home,
230 NLRB 725, 727 (1977). Consequently, notwith-
standing the persuasiveness and validity of an em-
ployer's economic straits, an employer is not free,
without union consent, to make midterm modifica-
tions in wage rates (Oak Cliff-Golman Baking,
supra; Rego Park Nursing Home, supra nor to
remove work from the bargaining unit (The Boeing
Company, supra), nor to replace all unit employees.
AAA Electric, Inc., and Simms Electric Co., 190
NLRB 247, 251 (1971), enforcement denied 472
F.2d 444 (C.A. 6, 1973). In the instant case, Re-
spondents did each of these things: Reduced the
rates of recreational sales employees, removed the
work to locations which it contends are beyond the
contractual jurisdiction, and hired employees to re-
place those who had worked on Beacon Street. In
doing so, they did, of course, relocate the recre-
ational sales facility. However, that fact alone does
not serve to change the result. See California Foot-
wear, supra at 769-770. For, to permit relocation
alone to vary this result would mean that employers
would be permitted to achieve by indirection that
which the above-listed employers were denied the
opportunity to achieve by direct means under Sec-
tion 8(d) of the Act.
Subsequent to Los Angeles Marine, the Board decided
two other cases involving similar situations, these being
Brown Co., 243 NLRB 769 (1979), and Milwaukee Spring,
supra. Like Los Angeles Marine, the facts of each showed
that the companies, for the purpose of escaping the wage
and other obligations of collective-bargaining agree-
ments, relocated work from unionized facilities to non-
union- facilities during the life of the respective collec-
tive-bargaining agreements. In both cases the Board
found 8(a)(l), (3), and (5) violations irrespective of the
absence of union animus and notwithstanding the fact
that the companies had bargained with the unions about
the decisions. Thus, in Milwaukee Spring the Board
opined:
[W]e find that Respondent, even though it bar-
gained with the Union about its decision to relocate
and is willing to bargain about the effects of its de-
cision, by deciding, without the consent of the
Union, to transfer its assembly operations and to lay
off unit employees at its Milwaukee facility during
the term of its collective-bargaining agreement in
order to obtain relief from the labor costs imposed
by the agreement, acted in derogation of its bargain-
ing obligation under Section 8(d), and hence violat-
ed Section 8(a)(1), (3), and (5) of the Act.
As I view the above cases, they essentially involve
breach of contract issues. It appears, however, that the
Board does not rely on the breach of any particular con-
tract clause (except perhaps for the recognition clause),
but rather views the company actions as, in effect, nega-
tions of the entire collective-bargaining agreement. None
of the cited cases relate to subcontracting situations and I
am not aware of any case where this doctrine has been
so applied. It also is noted that subsequent to its decision
in Milwaukee Spring, the Board reopened that case for
further argument and a decision in the case is currently
pending. (Oral argument was held on September 20,
1983.) [This case was reversed and dismissed. 268 NLRB
601 (1984).]
I ani of course bound to apply the law as it is current-
ly expressed by the Board . Therefore, for purposes of
this decision, I shall not pass on the Respondent's con-
tention that Milwaukee Spring should be overruled.
The Respondent does argue that even under the Mil-
waukee Spring rationale, no violation has occurred be-
cause that rationale has never been applied and should
not be applied to a situation where the work is subcon-
tracted in an arm's-length transaction to a third party. In
this respect, the Respondent argues that in a subcontract-
ing situtation the Board should evaluate the case under
its traditional rules regarding subcontracting , and decide
whether tfie company bargained in good faith before ef-
fectuating the decision. In this respect, I think that the
860 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Respondent makes persuasive argument that subcontract-
ing is fundamentally different from a situation where a
company relocates a facility in order to escape its con-
tractual obligations. In the subcontracting situation, the
company gives up control over the work in question to
another company which will operate in its own manner
and incur its own risks In a relocation situation, howev-
er, a company not only seeks to escape from its labor
agreements, but does so in a way where it still retains
total control over the work in question. Therefore, in a
sense, a decision to relocate from a unionized to a nonun-
ionized facility (intracompany) is analogous to someone
who wants to keep his cake while eating it. As pointed
out by the judge in Los Angeles Marine, supra, if a com-
pany, pursuant to Section 8(d) of the Act, cannot, with-
out union consent, modify the terms and conditions of an
existing contract, "to permit relocation alone to vary this
result would mean that employers would be permitted to
achieve by indirection that which . . . [they] were
denied . by direct action under Section 8(d) of the
Act."
It could be argued that a decision to subcontract lies
somewhere halfway between a decision to relocate (as in
Milwaukee Spring) and a decision to partially terminate a
portion of a company's business (as in First National
Maintenance Corp. v. NLRB, 425 U.S. 666 (1981)). In a
relocation case, the current law is that a company which
decides to relocate work (intracompany) during the term
of a labor agreement, for the purpose of avoiding the
cost obligations of that agreement, will violate the Act
absent the union's consent. However, in a partial closing
situation, the Supreme Court, in First National Mainte-
nance Corp., concluded that a company need not even
bargain about such a decision As stated above, if deci-
sions to subcontract lie somewhere between decisions to
relocate and decisions to terminate operations, a logical
compromise would be to apply the traditional standards
set forth in Fibreboard Paper Products Corp. v. NLRB,
379 U.S. 203 (1964), and to require companies to bargain
in good faith about subcontracting decisions while per-
mitting them to effectuate such decisions if good-faith
bargaining has not persuaded them to retain the work.
Assuming arguendo that Milwaukee Spring is either
overruled or construed as being inapplicable to subcon-
tracting decisions, the Charging Party could still argue
that because the Company has not complied with the lit-
eral language of section 1(I) of the collective-bargaining
agreement, it thereby has unilaterally modified a specific
provision of the existing contract, without the Union's
consent, and thereby acted contrary to Section 8(d) of
the Act. i a The Respondent's response is that, although
12 In this respect, the Union could argue that this contract breach
would be no different than a situation in which a company has failed and
refused to make pension or welfare payments as required by a collective-
bargaining agreement In the latter situation the Board has consistently
found 8(a)(5) violations even when bargaining was offered See, e g ,
Nestle Co, 251 NLRB 1023 in 3 (1979) See also Fuorco Glass Co., 250
NLRB 953, 955-956 (1979), where the company was held to have violat-
ed Sec 8(a)(5) and Sec 8(d) when it failed to comply with the contrac-
tual incentive pay program during the life of the collective-bargaining
agreement
this may be true, it nevertheless did not breach section
1(I) because it complied with its provisions to the extent
permissible by law. This therefore brings our consider-
ation to the Company's 8(e) defense.
Section 8(e) of the Act was enacted in 1959 in order to
close certain loopholes in the existing law relating to sec-
ondary boycotts. Under the statute prior to 1959, it was
unlawful (under Sec. 8(b)(4)(A)) for a union to utilize
economic pressure or the threat thereof, to force or re-
quire an employer to cease doing business with another
employer with whom the union had a primary dispute.
However, it was not unlawful for a union and an em-
ployer, with whom the union had a contract, to enter
into an agreement whereby the contracting employer
agreed in advance not to do business with another em-
ployer with whom the union had a dispute. Carpenters
Local 1976 (Sand Door) v. NLRB, 357 U.S. 93 (1958)
This "loophole" was one of those which lead to certain
modifications of the secondary boycott provisions of the
Act (renumbered as 8(b)(4)(B), and to the enactment of
Sec 8(e)). Thus, Section 8(e) was designed, in effect,
simply to ban agreements to achieve secondary boycotts
in advance.
Despite a literal reading of Section 8(e), it still must be
ascertained whether an object of a clause, as applied to
the facts of a particular case, is "primary" or "second-
ary." Thus, Section 8(e) would, if read literally, prohibit
a union and a company from entering into any agree-
ment barring subcontracting, of bargaining unit work.
Such a result would obviously be an anomaly, as the
union would have a legitimate interest in contracting for
the preservation of bargaining unit jobs. In such a situa-
tion, if company A did subcontract out unit work to
company B it would be held that any cease-doing-busi-
ness object was merely ancillary to the unions primary
dispute with company A.
The test for determining whether a union's object is
primary or secondary has been set forth by the Supreme
Court in National Woodwork Mfrs. Assn., 386 U.S. 612,
644-645 (1967), as follows-.
Whether, under all the surrounding circumstances,
the Union's objective was preservation of work for
[the contracting employer's] employees, or whether
the agreements and boycott were tactically calculat-
ed to satisfy union objectives elsewhere. . . . The
touchstone is whether the agreement or its mainte-
nance is addressed to the labor relations,of the con-
tracting employer vis-a-vis his own employees
In Retail Clerks Local 1288 (Meads Market), 163
NLRB 817, 818-819 (1967), enfd 390 F.2d 858, 861
(D.C Cir. 1968), the Board summarized different types
of contract clauses as to whether they fell within the
permissible or unlawful categories. The Board stated:
It is well settled that contract clauses which restrict
the performance of unit work, or at least fairly
claimable unit work, to unit members in the employ
of the contracting employer are not violative of
Section 8(e). Such provisions "seek to protect the
wages and job opportunities of the employees cov-
LIQUID CARBONIC CORP 861
ered by the contract" and are "germane to the eco-
nomic integrity of the principal work unit." These
clauses are considered primary even though they
may have the incidental effect of causing the em-
ployer to cease doing business with other persons.
The same is true of clauses which allow the em-
ployer to subcontract unit work only to other em-
ployers who maintain minimum union standards. On
the other hand, contract provisions are secondary
and unlawful if they are to have as their principal
objective the regulation of the labor policies of
other employers and not the protection of the unit.
Typical of such proscribed provisions are those
which limit subcontracting to employers who rec-
ognize the union or who are signatory to a contract
with it.
Similarly, in Teamsters (California Dump Truck
Owners), 227 NLRB 269 (1976), the Board stated:
Section 8(e) of the Act makes it an unfair labor
practice for an employer and a union to enter into
an agreement, express or implied, whereby the em-
ployer agrees to cease dealing in the products of
any other employer or to cease doing business with
any other person. A literal construction of this sec-
tion suggests the illegality of any agreement which
results in preventing the employer from establishing
a business relationship with another employer, or
which causes him to break off a relationship already
established. The section, however, has not been
construed to outlaw all agreements which produce
such results.
Contract clauses which purport to limit subcon-
tracting to employers who are signatories to union
contracts , so-called union signatory clauses, and
contract clauses which purport to acquire for bar-
gaining unit employees work which has traditional-
ly been performed by employees of other employ-
ers, so-called work acquisition clauses, have been
held to violate the Act. Such clauses are viewed as
not being designed to protect the wages and job op-
portunities of unit employees covered by the con-
tract, but as directed at furthering general union ob-
jectives and undertaking to regulate the labor poli-
cies of other employers. Absent a direct relationship
to protection of the work of unit employees, such
clauses are considered as having an unlawful sec-
ondary effect and are proscribed by Section 8(b)(4)
and (e).
On the other hand, however, contract clauses
whose basic aims are to limit subcontracting so as
to preserve for unit employees work which has cus-
tomarily been performed by them, or in some in-
stances to recapture work regarded as fairly claim-
able, so-called unit protection clauses, and contract
clauses designed to limit subcontracting of unit
work to employers who maintain the same stand-
ards of employment , thus minimizing the economic
incentive to subcontract, so-called union standards
clauses, have been held to be lawful. The underly-
ing rationale for the lawful character of unit protec-
tion and union standard clauses is that the union has
a primary interest in preserving unit work for unit
employees and to insure that negotiated standards
will not be undermined.
There are occasions where it is not always obvious
whether a particular clause should be construed as a
union standards or preservation-of-work clause (therefore
legal) and or an unlawful union signatory clause. Thus, a
clause which precludes company A from subcontracting
to company B unless company B equals the economic
terms of company A's contract with the union could
conceivably be viewed either as a union standards clause
or a union signatory` clause In this respect the above-
noted decision is enlightening as it deals with this prob-
lem. In that case the Board concluded that if a subcon-
tracting clause merely required the subcontractor to pay
equivalent labor costs, then the clause would be primary
as it would reduce the financial incentive of company A
to subcontract. The Board also concluded, however, that
if the collective-bargaining agreement dictated the specif-
ic types of benefits payable to the subcontractor's em-
ployees, then the union would, in effect, be seeking to
regulate the labor policies of another employer and
therefore the clause would have a secondary objective
outlawed by Section 8(e) of the Act.
In view of the above-noted cases, and given the lan-
guage contained in section 1(I) of Local 478's contract, I
can only conclude that the clause is a union signatory
clause. This conclusion is amply supported by the testi-
mony of the Union's witnesses, who asserted that their
intention in enforcing the clause was to obtain recogni-
tion from Chemical Leamon and for that Company to
assume Local 478's contract, if the work was subcon-
tracted.
Notwithstanding the above, the Charging Party and
the General Counsel still assert that section 1(I) is not
violative of Section 8(e), relying on Harris Truck Sales,
224 NLRB 100 (1976); Bader Bros. Warehouse, 225
NLRB 609 (1976); Lone Star Steel Co, 231 NLRB 573
(1977), affd. in part 639 F.2d 545 (10th Cir. 1980); and
Amax Coal Co., 238 NLRB 1583 (1978), affd. in part 614
F.2d 872 (3d Cir. 1980). In my opinion the cited cases
are distinguishable from the facts in the instant case be-
cause none involve subcontracting situations. Rather
they involved successorship situations, where a company
having a contract with a union sells its business and/or
assets to another company.
In order to put the above-cited cases in context, it is
necessary to first review the Board's decision in National
Maritime Union (Commerce Tankers), 196 NLRB 1100
(1972), enfd. 486 F.2d 907 (2d Cir. 1973). In Commerce
Tankers there was a clause in the collective -bargaining
agreement which provided that if the employer sold a
ship to an American flag shipper not under contract with
the National Maritime Union, the ship would be sold
with a crew supplied by the union and the employer
would obtain from the purchaser a commitment to abide
by the labor agreement The Board concluded that this
clause violated Section 8(e) of the Act because it im-
posed restrictions on the sale of vessels that were unre-
lated to preserving the jobs of seamen permanently as-
862 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
signed to the vessels before the sale. In essence, the
Board viewed the clause as a union signatory clause and
noted that the sale and transfer of vessels was a fairly
common occurrence in the maritime industry.
In Harris Truck Sales, supra, the General Counsel con-
tended that the union violated Section 8(e) in connection
with a "Sale of Assets" clause in the labor agreement. In
essence, the contract provided that if the employer sold
or leased its business, it was required to condition the
sale or lease on the purchaser or leasee assuming all of
the obligations of the collective-bargaining agreement.
Although the General Counsel based his theory on Com-
merce Tankers, the Board disagreed. The Board stated:
Unlike the General Counsel, we do no view the
"Sale of Physical Assets" clause here in question as
an agreement to cease "doing business" within the
meaning of Section 8(e) of the Act, nor do we find
support for such a theory in Commerce Tankers,
supra, on which he relies.
In our recent Decision in Cascade Employers As-
sociation, we concluded, upon a careful examination
of the legislative history of Section 8(e) and its ac-
commodation with other relevant sections of the
Act, that the sale or transfer of an enterprise is gen-
erally to be viewed not as a business transaction,
but as a substitution of one entity for another while
the conduct of business continues without interrup-
tion. We found a material distinction betwen that
case, where an entire business entity may be trans-
ferred from one person to another, and Commerce
Tankers, wherein we held that the sale of vessels in
the maritime industry was not a novel situation but
a fairly common occurrence in the normal course of
"doing business." Thus, in Cascade, we found that
the disputed contract provisions did not amount to
an agreement to refuse to deal in "hot goods,"
"unfair materials," or "blacklisted" products, or an
agreement to withhold services from an "unfair"
employer, which was the primary concern of Con-
gress in legislating Section 8(e), whereas in Com-
merce Tankers we did indeed find that the contrac-
tual limitation placed on business transactions fell
within the scope of the 8(e) proscription.
Subsequent to Harris Trucking the Board applied its ra-
tionale in the other cited cases which involved the sale
of all or a portion of a company's business and assets to
another company. In effect, the Board concluded that a
traditional successor and assigns clause, often contained
in collective-bargaining agreements, was not prohibited
by Section 8(e) of the Act because that type of transac-
tion was not "doing business" within the meaning of Sec-
tion 8(e) 13
In Amax Coal Co. v. NLRB, 614 F.2d 872 (3d Cir.
1980), the court, in agreement with the Board, also dis-
tinguished between successorship clauses and subcon-
tracting clauses. With respect to a clause requiring the
company to condition any sale or conveyance of its op-
13 In Bader Bros, supra, the judge explicitly differentiated the clause
there from a subcontracting clause 225 NLRB at 614, 615
eration upon the successor's assumption of the labor
agreement, the court held that it was not violative of
Section 8(e) It stated:
The phrase "doing business" refers to a continuing
business relationship which is capable of being dis-
continued by one employer in order to accede to
union demands. . . .
Here it is clear that the sale by Amax of all or
part of its business operations would involve no
continuing relationship with the purchaser. There is
therefore no possibility of involving Amax in a
labor dispute between the purchaser and its employ-
ees.
However, when it came to discussing restrictive clauses
relating to subcontracting, the court in Amax reached an
entirely different conclusion. It stated:
This clause prohibits Amax from subcontracting to
a non-UMWA subcontractor even if he maintains
working conditions equivalent to Amax's. It only
serves the union's own interest in making sure the
subcontractor recognizes the Union, and does not
provide any benefit to Amax's employees.
Pursuant to the teaching of National Woodwork Mfrs.
Assn., supra, the evaluation of a contract clause for pur-
poses of Section 8(e) depends on, "whether, under all the
surrounding circumstances, the Union's objective was
preservation of work for the' [contracting employer's]
employees or whether the agreements . . . were tactical-
ly calculated to satisfy union objectives elsewhere." Part
of the surrounding circumstances in this case is the ar-
rangement between Liquid Carbonic and Chemical
Leamon which was not intended to involve and did not
involve the sale of even a portion of the former's busi-
ness or assets (aside from some tires) to the latter.
Rather, their arrangement was a subcontracting arrange-
ment which involved a continuing business relationship
between the two companies and which therefore consti-
tuted "doing business" within the meaning of Section
8(e). Pursuant to their arrangement, the truckdriving was
to be integrated into Chemical Leamon's Croyden facili-
ty operations where a much larger number of employees
were already represented by Local 312 IBT. Therefore,
there was no possibility that Chemical Leamon, even if it
hired all of the Respondent's displaced employees, would
have been a successor having a legal obligation to bar-
gain with Local 478. Moreover, the evidence herein
demonstrates that Local 478, in objecting to the subcon-
tracting arrangement, was not, in reality, concerned
about the alleged disparities between its own contract
and Local 312's contract. Nor could it have been legiti-
mately concerned about preserving the employees' jobs
because those jobs had been guaranteed by Chemical
Leamon. In fact, it is my opinion that Local 478's real
concern was to retain its collective-bargaining status by
requiring Chemical Leamon to recognize it as the bar-
gaining representative and to require Chemical Leamon
to assume the collective-bargaining agreement. In short,
I find that section 1(I) of the contract, as sought to be
LIQUID CARBONIC CORP 863
applied by the Union in the circumstances of this case,
was null and void under Section 8(e) of the Act. As
such, the Respondent cannot be charged, pursuant to
Section 8(d) of the Act, with unilaterally modifying a
contract clause which was unenforceable and void.
Despite my'conclusion that reliance on a Milwaukee
Spring theory is inappropriate to the circumstances of
this case, this does not end the inquiry. Thus, having de-
termined that the breach of contract theory has no merit,
the case must next be analyzed pursuant to the rationale
of Fibreboard Paper Products v. NLRB, supra. In this
regard the issue becomes whether the Company gave the
Union adequate notice of its subcontracting decision and
whether it offered to bargain and bargained in good faith
before implementing its decision to subcontract.
First, I would, at this point, like to dispose of two an-
cillary issues. First, the Respondent argues that the
Union specifically waived its right to bargain about sub-
contracting decisions when it agreed to section 1(I) of
the collective-bargaining agreement. This contention is,
in my opinion, somewhat specious as the Company also
argued, and I agree, that a significant portion of that
clause is null and void under Section 8(e) of the Act. I
therefore do not believe that the Union unequivocally
waived its right to bargain by entering into a clause
which subsequently is held to be invalid in substantial re-
spects. Put another way, the Union did not get the full
benefit of the bargain it thought it had made.
Second, the Company contends that its decision to
subcontract was not a mandatory subject of bargaining
pursuant to the rationale of First National Maintenance
Corp. v. NLRB, supra. I disagree. In First National Main-
tenance the Supreme Court distinguished between three
categories of managerial decisions in relation to the bar-
aining obligations imposed by Section 8(a)(5) of the Act.
In the first category of decisions, "such as, choice of ad-
vertising and promotion, product type and design, and fi-
nancing arrangements," the Court opined that these
types of decisions did not require bargaining as they
"have only an indirect and attenuated impact on the em-
ployment relationship." In the second category, includ-
ing order of succession of layoffs and recall, production
quotas, and work rules, the Court concluded that deci-
sions of this nature are "almost exclusively `an aspect of
the relationship' between employer and employee."
Thus, as to category two types of decisions, it is reasona-
ble to conclude that the Court would invariably require
decision bargaining absent union waiver. The Court also
set forth a third category of decisions which, although
involving "a change in the scope and direction of the en-
terprise," also are of "central and pressing concern to the
Union and its member employees." In its opinion, the
Court stated that concerning managerial decisions in cat-
egory three, decision bargaining would be required "only
if the subject proposed for discussion is amenable to res-
olution through the bargaining process " It also stated
that, "in view of an employer's need for unencumbered
decision-making, bargaining over management decisions
that have a substantial impact on the continued avalabi-
lity of employment should be required only if the benefit,
for labor management relations and the collective bar-
gaining process, outweighs the burden placed on the
conduct of the business "
In First National Maintenance, the managerial decision
involved was the company's determination to partically
terminate its operations The Supreme Court concluded
that the company was not required by the Act to first
bargain about that decision before implementation The
Court did not, however, purport to overrule its earlier
decision in Fibreboard (relating to subcontracting), 14 and
its decision was limited to the facts of the case. Thus, at
footnote 22, the Court stated, "In this opinion we of
course intimate no view as to other types of management
decisions, such as plant relocations, sales, other types of
subcontracting, automation, etc., which are to be consid-
ered on their particular facts."
Whether or not Liquid Carbonic's decision to subcon-
tract was motivated by a desire to save on labor costs, it
nevertheless seems to me that this decision was one
which substantially affected the bargaining unit employ-
ees and was amenable to the bargaining process. In fact,
this is made clear by the testimony of Respondent's own
witnesses who indicated that they sought alternative sug-
gestions from the Union (no doubt hoping for contract
concessions), and that had the Union made a reasonable
offer, Respondent would not have subcontracted the
work as it preferred to have it under its own control.
Further, subsequent to the Supreme Court's holding in
First National Maintenance, the Board, in Bob's Big Boy
Restaurants, 264 NLRB 1369 (1982), held that a compa-
ny violated Section 8(a)(5) of the Act when it subcon-
tracted its shrimp processing work without bargaining
about that decision, even though the subcontracting re-
sulted in a termination of its shrimp processing depart-
ment. The Board stated:
The distinction between subcontracting and par-
tial closing, however, is not always readily appar-
ent. Thus, it is incumbent on the Board to review
the particular facts presented in each case to deter-
mine whether the employer's action involves an
aspect of the employer/employee relationship that
is amenable to resolution through bargaining with
the union since it involves issues "particularly suita-
ble for resolution within the collective bargaining
framework." If so, Respondent will be required to
bargain over its decision. If, however, the employ-
er's action is one that is not suitable for resolution
through collective bargaining because it represents
"a significant change in operations, or a decision
lying at "the very core of enterpreneurial control,"
the decision will not fall within the scope of the em-
ployer's mandatory bargaining obligation A deter-
14 Subsequent to- Fibreboard, the Board in Westinghouse Electric Corp,
150 NLRB 1574 (1965), set forth various criteria to determine whether a
company violates Sec 8(a)(5) of the Act when it subcontracted without
bargaining These were (1) whether it was motivated solely by economic
considerations, (2) whether the subcontracting comported with the com-
pany's traditional means of conducting its business, (3) whether it varied
significantly in kind or degree from what had been customary under past
practice, (4) the extent of adverse impact on employees, and (5) whether
the union had had the opportunity to bargain about changes in existing
subcontracting practices at general negotiation meetings
864 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
mination of the suitability to collective bargaining,
of course, requires a case-by-case analysis of such
factors as the nature of the employer's business
before and after the action taken, the extent of cap-
ital expenditures, the bases for the action, and, in
general, the ability of the union to engage in mean-
ingful bargaining in view of the employer's situation
and objectives.
In summary, we find that Respondent's decision
to subcontract its shrimp processing operation did
not represent a substantial change in the nature or
direction of Respondent's business and did not oth-
erwise entail sufficient capital restructuring to
remove the decision from the scope of Respondent's
mandatory bargaining obligation. In addition, the
bases and objectives in Respondent's decision to
subcontract are particularly suitable to resolution
through the collective-bargaining process.
Concerning whether Liquid Carbonic's decision to
subcontract should be considered a mandatory subject of
bargaining, it seems to me that the facts are remarkably
similar to those in Bob's Big Boy Restaurants, supra. As
noted above, the truckdriving work involved was merely
an ancillary part of Respondent's business operation
(manufacturing gases), which did not change after the
driving work had been subcontracted. Thus, the decision
was not one which entailed a major change in the scope
or direction of Respondent's operations. Also, the
amount of capital involved was relatively negligible.
That is, Liquid Carbonic still retained ownership of the
trailers after subcontracting to Chemical Leamon and the
tractors, which it had previously leased, were turned
back to the leasors. To the extent that some of Respond-
ent's tractors were owned, they were transferred to
other operations of Respondent. Further, the property
used by Respondent for its terminals was also leased and
was, essentially, empty lots. As noted above, Respond-
ent's witnesses stated that they would have preferred to
keep the work under Respondent's control if Local 478
had offered a reasonable alternative to the subcontracting
decision This too shows that the decision to subcontract
was amenable to the bargaining process and I so find.
Having concluded that the decision to subcontract was
a mandatory subject of bargaining and that the Union
had not, by virtue of section 1(I) of its contract, waived
its rights to bargain, I will now address the next ques-
tion-whether the Company gave the Union adequate
notice and offered to bargain in good faith.
In cases such as this, the Company's obligation is to
give advance notice of the decision to the Union and to
offer to bargain about the decision before its implementa-
tion. On the other hand, a company is not required to
obtain the union's consent to the decision, provided it
bargains in good faith with an open mind. Thus, as a
general matter, the Supreme Court in NLRB v. American
National Insurance Co., 343 U S. 395 (1952), stated:
As amended in the Senate and passed as the Taft-
Hartley Act, the good faith test of bargaining was
retained and written into Section 8(d) of the Nation-
al Labor Relations Act. That Section contains the
express provision that the obligation to bargain col-
lectively does not compel either party to agree to a
proposal or require the making of a concession.
Thus it is now apparent from the statute itself
that the Act does not encourage a party to engage
in fruitless marathon discussions at the expense of
frank statement and support of his position. And it
is equally clear that the Board may not, either di-
rectly or indirectly, compel concessions or other-
wise sit in judgment upon the substantive terms of
collective bargaining agreements.
Of course, if the facts show that a company, while
purportedly offering to bargain, has made an irrevocable
or final decision and/or presents it to the union as a fait
accompli, this would be contrary to the good-faith re-
quirements of the Act. Central Virginia Electric Coopera-
tive, 254 NLRB 417, 424 (1981); Medicenter, Mid-South
Hospital, 221 NLRB 670, 679 (1975). Also, if no notice is
given prior to implementation of the decision this too
will be violative of the Act as it is obviously difficult to
bargain about a decision which has already been imple-
mented. NLRB v. Carbonex Coal Co., 679 F.2d 200 (10th
Cir. 1982); P. B. Mutrie Motor Transportation, 226 NLRB
1325 (1976); Blue Grass Provision Co., 238 NLRB 910
(1978). Additionally, if a subcontracting decision is moti-
vated by antiunion considerations, such action will not
only violate Section 8(a)(5) of the Act but also Section
8(a)(3) of the Act. NLRB v. Carbonex Coal Co., supra;
St. John's Construction Corp., 258 NLRB 471 (1981). On
the other hand, if after a managerial decision is made, the
union fails to seek bargaining, but merely objects to the
changes, it may be said that the union, by its inaction,
has waived its right to bargain. U.S. Lingeries Corp., 170
NLRb 750 (1968); Medicenter, Mid-South Hospital, 221
NLRB at 678-679; Clarkwood Corp., 233 NLRB 1172
(1977). Indeed the Board has gone so far as to conclude
that even in the absence of formal notice, if a union
learns of a managerial decision but fails to seek bargain-
ing, it will waive its bargaining rights. See Medicenter,
Mid-South Hospital, supra at 678-679.
In the present case the General Counsel and the
Charging Party contend that the Respondent neither
gave adequate notice of its subcontracting decision, nor
bargained in good faith. They assert that the Company
had made a "final" decision to subcontract and presented
it to the Union as a fait accompli. The problem with
these assertions is that (1) notice to the Union was given
at least 1 month before the decision was to be effectuated
and before any contract was signed between Respondent
and Chemical Leamon; (2) the Company expressly did
offer to bargain about its decision; (3) the Company did
meet with the Union on several occasions to explain its
decision and solicited an alternative from the Union; (4)
the Union did not offer any alternatives or concessions,
but rather insisted on compliance with section 1(I) of its
contract; and (5) the Company offered to extend the time
for implementing its decision if the Union agreed to
extend its existing collective-bargaining agreement. Fur-
ther, despite the Union's witnesses' characterization of
the Respondent's position as being a fait accompli, the
LIQUID CARBONIC CORP
evidence, to my mind, does not comport with that con-
clusion. Thus, although I believe that prior to notifica-
tion, the Respondent had made a decision to subcontract
the work to Chemical Leamon, I am not persuaded that
it has been shown that this decision was either final or
irrevocable. That is, based on the record as whole, I be-
lieve that the Company could have been persuaded to
retain the work had the Union offered concessions which
would have made it economically desirable for the Com-
pany to do so.
In Shell Oil Co., 149 NLRB 305 (1964), the company
was charged with violating Section 8(a)(5) of the Act
when it decided to transfer certain of its operations from
Detroit to Grand Haven. Notice of this decision was
given to the union only a few days in advance and there-
fore it was argued that the union was not afforded an
adequate opportunity to bargain. The Board held that
the company did not violate the Act notwithstanding the
timing of the notice, noting that the company did meet
with the union and did discuss the proposed transfer of
work. It was noted that after the transfer had been ac-
complished, the company continued to discuss the matter
with the union, and that as no employee had been dis-
charged, the change had a limited effect on the employ-
ees. The Board stated:
We agree with the Trial Examiner's general state-
ments of the principles enunciated in our earlier de-
cisions in Town & Country Manufacturing Co., Inc.,
136 NLRB 1002, enfd. 316 F 2d 846 (C.A. 5), and
Fibreboard Paper Products Corp., 138 NLRB 550,
enfd 322 F.2d 411 (C.A. D.C.), cert. granted 375
U.S. 963. In both those cases we held that a man-
agement decision to subcontract unit work, albeit
for economic reasons, is a mandatory subject for
bargaining and that an employer's failure to bargain
with respect to this matter is violative of Section
8(a)(5) and (1) of the Act. The principles of those
earlier cases, however, are not meant to be hard
and fast rules to be mechanically applied irrespec-
tive of the circumstances of the case. In applying
these principles, we are mindful that the permissibil-
ity of unilateral subcontracting will be determined
by a consideration of the setting of each case. Thus,
the amount of time and discussion required to satis-
fy the statutory obligation "to meet at reasonable
times and confer in good faith" may vary with the
character of the subcontracting, the impact on em-
ployees, and the exigencies of the particular busi-
ness situation involved. In short, the principles in
this area are not, nor are they intended to be, in-
flexibly rigid in application.
Pursuant to NLRB v. American Insurance Co., sups a,
Shell Oil Co., supra, and cases decided since,15 while a
15 In Salem College, 261 NLRB 327 (1981), the union was notified of
the company's decision to subcontiact unit work about 20 days before
the decision was implemented In Globe-Union, 222 NLRB 1081 (1976),
the union was notified of the company's intention to transfer work about
a week before the decision was effectuated On the other hand, in ABL-
Transnational Transport, 247 NLRB 240 (1978), the employer was held to
have violated the Act when it gave the union only a few days notice of
its decision to subcontract which it had made and did not give the union
865
company must afford a union adequate notice and a rea-
sonable period of time to bargain about managerial deci-
sions affecting employee terms and conditions of employ-
ment (to the extent that they are mandatory subjects of
bargaining as defined in First National Maintenance
Corp., supra), it is clear that a company need not engage
in unlimited or marathon bargaining.
In the present case, it is my opinion that the Respond-
ent met its bargaining obligation. The Respondent gave
formal notice of its decision to subcontract by letter
dated February 12, more than 1 month before its pro-
posed decision was to be effectuated, As this formal
notice was given before Respondent entered into any
contract with Chemical Leamon, it is therefore my opin-
ion that the Union was given adequate time to approach
the Company on this issue. It also is my opinion, as ex-
pressed above, that although the Company made a deci-
sion to subcontract before February 12, this decision was
not final or irrevocable. The facts establish that the Com-
pany did offer to bargain about its subcontracting deci-
sion and did meet with the Union on three separate occa-
sions before the decision was implemented. The evidence
shows that the Respondent explained the reasons for the
decision, offered to allow the Union to audit its books
and records, solicited an alternative from the Union, and
offered to extend implementation of the decision in con-
sideration for the Union agreeing to extend the collec-
tive-bargaining agreement. The Union for its part object-
ed to the subcontracting, offered no alternatives, and
simply insisted that if the Respondent subcontracted with
Chemical Leamon, the Respondent was obligated, pursu-
ant to section 1(I) of the contract, to obtain Chemical
Leamon's assumption of Local 478's collective-bargain-
ing agreement. The ultimate result of the parties' respec-
tive positions was that on March 16, the Company exe-
cuted a subcontracting agreement with Chemical
Leamon to be effective on March 17. Nothwithstanding
Respondent having obtained Chemical Leamon's agree-
ment to hire the drivers with seniority preference in rela-
tion to the delivery of Respondent's products, the Union
persuaded the drivers not to accept the proffered jobs
As a result of all the foregoing, the drivers lost their jobs
and, although this is a sad consequence, I cannot say that
it was the result of any unlawful action on the part of
the Company.
CONCLUSIONS OF LAW
1. The Respondent is engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
2. Local 478, International Brotherhood of Teamsters,
Chauffeurs, Warehousemen & Helpers of America is a
labor organization within the meaning of Section 2(5) of
the Act.
3. The Respondent has not engaged in the unfair labor
practices alleged in the complaint
an opportunity to bargain "during the critical time when such bargaining
perhaps could have been productive, that is, the period when the decision
was being considered and about to be made "
866 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommend-
edi6
ORDER
The complaint is dismissed in its entirety
's 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 he deemed ssaived for all pur-
poses