Midwest Manufacturing Co.

National Labor Relations Board - Board Decisions

Aug 25, 1970

185 N.L.R.B. 130 (N.L.R.B. 1970)

130 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Midwest Manufacturing Company and Lodge No.
2063, International Association of Machinists and
Aerospace Workers, AFL-CIO. Case 38-CA-576
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
August 25, 1970
DECISION AND ORDER
BY MEMBERS MCCULLOCH, BROWN , AND JENKINS
On January 9, 1970, Trial Examiner Henry L.
Jalette issued his Decision in the above-entitled pro-
ceeding, recommending that the National Labor Rela-
tions Board decline to render an interpretation of
the parties' contract in this case or, in the alternative,
find that General Counsel has not proven a violation
of Section 8(a)(5) and (1), for the reasons set forth
in the attached Trial Examiner's Decision. Thereafter,
the General Counsel and the Charging Party filed
exceptions to the Trial Examiner's Decision and sup-
porting briefs, and the Respondent filed limited excep-
tions and a supporting brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
powers in connection with this case to a three-member
panel.
The Board has reviewed the rulings of the Trial
Examiner made at the hearing and finds that no
prejudicial error was committed. The rulings are here-
by affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions and briefs, and
the entire record in the case, and hereby adopts
the findings, conclusions, and recommendations of
the Trial Examiner as modified herein.
Although Members McCulloch and Jenkins do not
adopt the Trial Examiner's recommendation that the
Board decline to interpret the parties' contract in
this case, they agree with his conclusion that the
General Counsel has failed to establish by a preponder-
ance of the evidence that the Respondent unilaterally
modified its collective-bargaining agreement in mid-
term. Accordingly, they agree with his conclusion
that the Respondent has not been shown to have
violated Section 8(a)(5) and (1) of the Act. Member
Brown would adopt the findings and recommendations
of the Trial Examiner. Accordingly, the complaint
will be dismissed in its entirety.
ORDER
It is hereby ordered that the complaint herein
be, and it hereby is, dismissed.
HENRY L. JALETTE, Trial Examiner The charge in
this proceeding was filed by the above-captioned Union
on November 12, 1968,1 and complaint was issued on
December 31 The complaint alleges that the above-cap-
tioned employer, herein called the Respondent, violated
Section 8(a)(5) and (1) of the Act by modifying the terms
of its agreement with the Union without the Union's consent
and by refusing to bargain with the Union concerning
the modification. A trial was held on February 26, 1969,
and at the end of General Counsel's case Respondent
made a motion to dismiss which I granted, stating on
the record my reasons for so doing. General Counsel filed
a timely request for review which the Board granted on
August 25, 1969. In its order granting review and remanding
the proceeding for further hearing the Board stated that
in its opinion "The issues herein are such that a full
and complete heanng on the facts and circumstances, as
well as findings, conclusions, and recommendations by the
Trial Examiner, are warranted." Pursuant to such order
further heanng was held on October 8 and 9, 1969.2
Upon the entire record, including my observation of
the witnesses, and after due consideration of the briefs
filed by General Counsel and the Respondent, I make
the following:'
FINDINGS OF FACT
1. THE BUSINESS OF RESPONDENT
Respondent is an Illinois corporation with an office and
place of business located at Galesburg, Illinois, where it
is engaged in the manufacture of home applicances. During
the 12 months preceding issuance of the complaint, Respond-
ent purchased and received at its Galesburg plant directly
from points outside the State of Illinois goods and materials
valued in excess of $50,000 and sold and shipped directly
from its Galesburg plant to points outside the State of
Unless otherwise indicated, all dates appearing herein refer to the
year 1968
More precisely, testimony was heard on October 9, 1969 WhenI
opened the hearing on October 8, Respondent renewed a motion
for a continuance which had previously been filed both with me and
with the Board and which had been denied After hearing argument,
I denied the motion and directed Respondent to proceed with his defense
Respondent declared himself unable to proceed and requested time to
appeal my ruling The hearing was recessed to 10 a in the following
morning with notice to Respondent that he would be expected to proceed
with his defense at that time unless my ruling was reversed by the
Board The following morning, notice having been received of the Board's
denial of Respondent's appeal, Respondent proceeded to put on its defense
under protest After putting on two witnesses and making an offer of
proof which showed that a third witness' testimony would have been
cumulative, Respondent renewed its request for a continuance because
of the unavailability of other witnesses This request was denied, and
as neither the Charging Party nor the General Counsel had further
evidence to offer the hearing was closed
Respondent renewed its motion to dismiss at the close of trial
and I reserved ruling The motion is disposed of in accordance with
the findings and conclusions herein
185 NLRB No. 19
MIDWEST MANUFACTURING COMPANY 131
Illinois finished products valued in excess of $50,000. I
find that Respondent is an employer engaged in commerce
within the meaning of Section 2(6) and (7) of the Act.
The following are examples of the employee calssifications
and rates of pay for the two classes:
A Group B Group
Ii. THE LABOR ORGANIZATION INVOLVED Over 9 Mos 6 to 9 Mos
hinistsf Ml A tI63
I III I III
ion o acssocianternationaLodge No. 20 ,
and Aerospace Workers, AFL-CIO, is a labor organization Assembler $ 1.81 1.71 1.78 1 68
within the meaning of Section 2(5) of the Act.
Leak Tester 1.86 1.76 1.82 1.72
IiI. THE ALLEGED REFUSAL TO BARGAIN
Paint Mixer 2.01 1.91 1.96 1 86
The Union has been the exclusive bargaining representa-
tive of Respondent's employees in a unit of production
and maintenance employees since the early 50's, and the
parties have been parties to a series of contracts from
that date to this.' The most recent contract, and the one
out of which litigation grew provided, inter aha, as follows:
ARTICLE XX
Wages
Section 1 The regular hourly base rates for all
classifications of work are set forth in Factory Labor
Rates attached herein as Annex "A" Page 47 An
increase of ten cents (10t) per hour will be granted,
effective 23rd November, 1966 An increase of ten
cents (l0Q) per hour will be effective November 1,
1967 and an increase of eleven cents (I le) per hour
will be granted November 1, 1968. Such increases
are not to be incorporated in the base rates for the
purpose of computing incentive earnings , but will be
handled as an adder for each year of the contract.
FACTORY LABOR RATES
Effective: November 23, 1966 to November 1, 1967
In addition to the base rates set forth below all
employees will receive an add-on of ten cents
(10^) per hour worked.
Effective. November 1, 1967 to November 1, 1968
In addition to the base rates set forth below all
employees will receive an add-on of twenty-cents
(20it) per hour worked
Effective: November 1, 1968 to November 1, 1969
In addition to the base rates set forth below all
employees will receive an add-on of thirty-one
cents (310) per hour worked.
The factory labor rates provided for two employee classes
as follows:
Class I-Employees who can do heavy work as
required and also skilled and efficient in the classifica-
tion they are qualified for.
Class III-Employees who cannot do heavy work
as required but are efficient in the classification they
are qualified for. All female employees.
There are 93 such classifications, each with employees
in classes I and III, divided into five groups , each group
reflecting a different period of service. The employees in
the foregoing classifications participate in incentive earnings;
in addition, there are employees in specified plant sections
and a department who do not participate in incentive
earnings . With certain exceptions not material to decision,
all classifications provided for both class I and class III
employees and the labor rate for class III employees in
all cases was 10 cents per hour less than that for class
I employees.
The contract had effective dates of January 13, 1967,
to November 1, 1969 While it was being negotiated, there
was pending before the U S. District Court a suit brought
by the Secretary of Labor alleging a violation by Respondent
of the "Equal Pay" provisions of the Fair Labor Standard
Act (29 U.S.C. §201 , et seq.).' On October 29, 1966, during
negotiations on a new contract , the parties entered into
a letter of understanding providing, in relevant part.
The parties acknowledge that the issues in the pending
lawsuit can be the subject matter for negotiations at
this time However, the parties agree to waive such
negotiations at this time and to abide by the final
adjudication of this matter.6
In February 1967, Respondent advised the Union that
it was going to undertake a study of its labor grades
I and III to make certain that it was in compliance with
the Equal Pay Act. Such a study was conducted and
on December 15, 1967, having first notified the Union,
Respondent posted the following:
NOTICE TO EMPLOYEES
Job Categories-Class I and Class III
A. Effective December 18, 1967, all jobs in all classifi-
cations have been defined as Class I or Class III
in accordance with the contract language as follows:
Class I-Employees who can do heavy work as
required and also skilled and efficient in the classifi-
cation they are qualified for.
'The complaint had been filed on December 7, 1965
' A separate and essentially identical letter of understanding was also
At the time of the hearing on remand , the parties were in negotiations entered into with regard to the charge before the Equal Opportunity
for a new contract Commission of which the district court complaint was an outgrowth
132 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Class III-Employees who cannot do heavy work
as required but are efficient in the classification
they are qualified for
B. The language "All female employees" previously
used in connection with the Class III category is
deleted.
C. The jobs have been placed into a Class I or
Class III category based on the following standards:
(a) Physical excertion or other conditions which,
over a full shift, are calculated to produce fatigue
substantially in excess of that normally experienced
by a person of ordinary strangth;
(b) Skill not otherwise compensated for by an
over-based rate of pay;
(c) Effort called for by careful attention on a
job of higher responsibility
New jobs and changes in existing ones will be defined
in accordance with the above standards
D. Employees now performing Class I jobs who
are receiving Class III rates shall be increased effective
on December 18, 1967. Employees now performing
Class III jobs who are qualified to perform Class
I work shall be assigned to Class I work as soon
as practicable. No employee shall suffer any loss of
pay by reason of reassignment.
E. Any employee may bid into a Class I job from
Class III, and vice-versa, in accordance with present
practice, and shall receive the rate applicable to the
job performed Temporary assignments into a Class
I job from Class III, and vice versa, shall be governed
by the present practice.
F. Disputes over the placement of jobs in Class
I or Class III category shall be handled under the
applicable grievance procedures of the labor agreement.
As a result of this action, certain positions were reclassified
from class III to class I, and about 100 female employees
were upgraded.'
On August 8, 1968, Respondent and the Deparment
of Labor entered into a settlement of the equal pay suit.
The settlement provided for payment of $165,000 in unpaid
minimum wages to Respondent's female production employ-
ees for the period from June 11, 1964, through May 31,
1968, and contained the following provision:
3. a The defendant represents to the Court that effective
June 1, 1968, the wage rates for all women factory
production employees were raised to the Class I factory
labor rates of their male counterparts.
On the basis of that provision, on June 1, all female
production employees received a 10-cent per hour increase.
However, the parties submitted the settlement to the court
with a covering letter containing the following relevant
paragraphs:
Defendant wishes to advise the Court that the collective
bargaining agreement currently in effect between
defendant and Midwest Lodge No. 2063, International
Association of Machinists and Aerospace Workers,
AFL-CIO, the collective bargaining representative of
' At the time, Respondent employed about 800 female employees
the defendant's employees, provides for an eleven cent
(I i c) per hour increase for all factory production
employees on November 1, 1968, and that defendant
intends that the ten cents (10i) an hour increase
in rates referred to in paragraph 3a of Stipulation
(III), shall , as to those employees receiving such
increase who on November 1, 1968 are classified as
Class III, be in lieu of, to the extent of ten cents
(10t) per hour, the November 1, 1968 increase called
for by said collective bargaining agreement.
The plaintiff's position is that no questions as to defend-
ant's obligations or intent under the collective bargain-
ing agreement are properly a part of this case and,
hence, that any representations as to what the defendant
may or may not do in the future pursuant to the
collective bargaining agreement have no place in the
settlement between the parties.
On August 15, the Respondent issued a notice to all
class III employees advising them of the settlement of
the equal pay suit. The notice included the following para-
graphs
I The Company has agreed to pay a total of $165,000
in back pay This money will be divided up (less
legal deductions for Social Security and Withholding
Taxes) among all female employees in the plant who
worked in Class III jobs for the Company from June
11, 1964, through May 31, 1968 The amount each
Class III employee will receive depends on the number
of hours the employees worked during that period.
Employees whose jobs have been reclassified from Class
III to Class I have already received an increase of
10d per hour so they will not participate in the back-
pay distribution as much as those who have continued
to hold Class III jobs. The Government has the respon-
sibility for determining how much each employee will
receive, but it will probably be some time before the
checks are actually mailed.
2. In addition to the back pay of $165,000, the
Company agreed to advance to June 1, 1968, the
rate increase which the Class III employees are entitled
to receive under the labor agreement on November
1,1968, to the extent of i O tper hour Thus, all employees
in the plant who, on June 1, 1968, were holding
Class III jobs will receive an immediate increase of
100 per hour The Company agreed to make this retroac-
tive to June 1, 1968, so that the employees entitled
to the increase will receive a check in the amount
of 100 multiplied by the number of hours they have
worked from June 1 to August 9, 1968. From August
9 on, their pay checks will reflect the rate increase
of 10 per hour.
3. As you know, the labor agreement calls for an
increase on November 1, 1968, to all employees of
i 10 per hour The Class I employees will get their
increase of 1 It per hour on November 1, 1968. The
Class III employees will get 10@ of their I I it as of
June 1, 1968, (retroactive), and the remaining I k per
hour on November 1, 1968. This early increase of
rates was put in at the insistance of the Department
of Labor. Its purpose, aside from the bonus it gives
MIDWEST MANUFACTURING COMPANY 133
the employees as part of the settlement , permits equality
of rates for a certain penod during which the Company
can examine all the jobs in the plant to make sure
that the existing division between Class I and Class
III jobs is based on real differences in skill , effort
and responsibility.
4 It should be understood that the increase of
Class III rates as of June 1 does not mean that the
Class I and Class III jobs are equal . As noted, the
June through November equality of rates was agreed
upon to increase the benefits the employees were to
receive from the settlement . If a Class III job is raised
to Class I, the employee holding that job will immediate-
ly receive the Class I rate.
Prior to the issuance of this notice, Respondent notified
the union president and union grievance committee. The
extent of the Union 's objection was a remark by the union
president that the notice was going to make a lot of people
in the plant unhappy and Respondent should not do it
On September 23, the Union sent a letter to Respondent
advising Respondent that it did not agree with the August
15 notice, that it did not agree with the job evaluation
performed by Respondent , that it did not agree Respondent
was in compliance with the provisions of the Equal Pay
Act, and reminding Respondent of the necessity for union
approval of any contract changes
On October 3, Respondent received a letter from a group
of employees protesting the Respondent 's plan, and on
October 10 , in reply, Respondent wrote a letter to the
Union , stating, inter aka:
As you know , last August Federal Judge Robert
T. Morgan approved a settlement reached by the Gov-
ernment and the Company in the equal pay lawsuit
As part of that settlement the Company agreed to
pay $165,000 in back pay (this will come through
shortly) and also agreed to raise the rates of girls
who were working in Class III jobs by 100 an hour.
This was with the understanding that after November
1, 1968, any difference in the rate between Class I
and Class III would have to depend on a difference
in skill , effort and responsibility of the jobs in the
two classifications . As you know , back in December
of 1967 , the Company spent a great deal of time
and money examining every production job in the
plant to determine whether a job was properly slotted
as Class I or Class III. As a result of that work,
the Company reclassified about 125 jobs from Class
III to Class I and raised the rates of the girls doing
those jobs accordingly . You will remember the notice
we posted on December 15, 1967 , which set forth
the standards underlying the differences in skill, effort
and responsibility between Class I and Class III jobs
In our settlement negotiations with the Government,
they insisted on raising Class III rates by 100 an hour
before November 1, 1968, because they wanted the
rates for men and women to be equal for at least
some period of time. We opposed this because it didn't
make sense to us to have rates equal for a few months
and, then , when the November increases were called
for, to have them unequal again . And, of course,
we couldn 't have Class I and Class III equal forever
because this would be unfair to the employees doing
the harder , or more skilled , or more responsible Class
I jobs. But we finally agreed on the understanding
that on November 1 only the Class I employees would
get the contract increase of 11 d The Class III employees
would get 100 of their increase in June and the remaining
1 in November.
The letter signed by the girls states that if the
Company does not raise the Class III rates on Novem-
ber 1, 1968, the Company would be breaking the
contract . We can 't agree with that The contract calls
for an increase of 11 It per hour on November 1, 1968
for everybody The Class III employees will have
received 10t of that amount as of June 1, 1968, and
will get another It per hour on November 1. So not
only will Class III employees get the I It called for
by the contract , but will have received 10^ of that
5 months earlier than the contract calls for
The other thing is that on October 29, 1966, and
again on March 29, 1967, the Company and the Union
agreed to abide by a final adjudication of this matter
in Court and, as I mentioned , Judge Morgan approved
the settlement which was submitted to him on August
6, 1968
I can understand why the girls would ask for another
increase in November but if we did so, it would mean
that the Class I and Class III employees would be
receiving the same rate of pay even though , as everyone
knows, there is a big difference between Class I and
Class III jobs We think this would be unfair to Class
I employees.
On October 21, the Union notified Respondent by letter
of its intention to file a grievance in the event the Respondent
did not increase all employees 11 cents an hour on November
1 in accordance with the contract.
On November 1, all class I employees received an 11-
cent-an-hour increase , but class III employees received an
increase of only 1 cent an hour.
On November 4, the Union filed a grievance . On Novem-
ber 6 , Respondent denied the grievance on the grounds
it did not present an arbitrable issue and that an adjudication
had been made and an order issued thereon by the court
and that the Union had agreed to be bound by such
adjudication.
On November 7, the Union requested the grievance be
submitted to an arbitrator to determine if there was an
arbitrable issue, and on November 8, Respondent denied
the request on the ground an arbitrator would have no
jurisdiction to decide any issue concerning the grievance
and its arbitrability.
ANALYSIS AND CONCLUSIONS
The facts are not in dispute and the principal issue
is simple: did Respondent modify the contract when it
granted class III employees a 1-cent -per-hour increase on
November 1, 1968, and not an 11-cent -per-hour increase.
General Counsel contends that it did: article XX, section
1, clearly and unambiguously provides for an 11-cent
increase for all employees effective November 1, 1968;
Respondent did not grant an 11-cent increase to all employ-
134 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ees on November 1, 1968; ergo, Respondent modified the
contract. As such modification was made without the con-
sent of the Union and without the notices required by
Section 8(d) of the Act, General Counsel contends Respond-
ent violated Section 8(a)(5) of the Act
Respondent contends that in view of the fact that on
June 1, 1968, it had granted a 10-cent increase to class
III employees, when it granted the same employees an
additional 1-cent increase on November 1, 1968, and to
all other employees an 11-cent increase, the result was
an i1-cent-per-hour increase to all as of November 1,
1968 Moreover, the result was a total increase of 31
cents per hour for all employees for the 3-year contract
term According to Respondent, this was all that the Union
had bargained for.'
There are two ways to resolve the refusal-to-bargain
allegation which has arisen out of the foregoing conflicting
contentions. One way is to interpret the contract in favor
of one party or the other; the second way is to decline
to assert the Board's jurisdiction on the ground that all
that is presented is a question of contract interpretation.
At the time of the initial hearing, when General Counsel
rested, I granted Respondent's motion to dismiss because
I was of the view that this was a dispute about contract
interpretation and the Board had long held that it was
not the proper forum for parties seeking an interpretation
of their collective-bargaining agreement. Vickers, Incorporat-
ed, 153 NLRB 561; United Telephone Company of the
West, 112 NLRB 779. I was aware of the fact that the
Board was empowered to interpret contracts where necessary
to adjudicate an unfair labor practice N.L.R.B. v. C &
C Plywood Corp., 385 U.S. 421. Nevertheless, I was of
the opinion that Vickers and United Telephone were still
correct statements of Board policy.
It is not always an easy matter to distinguish between
those cases where the only issue is one of contract interpreta-
tion and those in which the issue of contract interpretation
is ancillary to the adjudication of the unfair labor practice.
Yet, it is important to do so, because the Supreme Court
has consistently adhered to the view that "the Board has
no plenary authority to administer and enforce collective-
bargaining contracts." N.L.R.B. v. Strong, 393 US 357.
As the court indicated in C & C Plywood, supra at 427,
428 "To have conferred upon the National Labor
Relations Board generalized power to determine the rights
of parties under all collective agreements would have been a
step toward governmental regulation of the terms of those
agreements We view Congress' decision not to give the
Board that broad power as a refusal to take this step.
[Footnote omitted.] But in this case the Board has not
construed a labor agreement to determine the extent of the
An additional defense is Respondent's contention that the Union
is estopped from asserting its claim because it failed to protest until
October 21 Respondent's plan to increase class III employees only I
cent on November 1, although the Union had known definitely of the
plan since about August 15, and had known since May that Respondent
was proposing such a plan to the Department of Labor The contention
is without merit The Union was fully justified to rely on its contract
and cannot be estopped because it chose not to act on an alleged
anticipatory breach of contract but instead waited to assert its contractual
rights immediately after the alleged modification of the contract
contractual rights which were given the union by the
employer "
In my view, that is precisely what General Counsel
is asking the Board to do in this case. "The substantive
controversy itself is unaggravated on either side and emerges
only if the Union's interpretation of the contract is fully
accepted." Jos. Schlitz Brewing Company, 175 NLRB No.
23. Here, the Respondent contends it has fulfilled its contrac-
tual obligations; in C & C Plywood, the employer concededly
acted unilaterally with respect to rates of pay of certain
employees, but defended on the ground that he had the
right to do so under a management rights clause In Standard
Oil Company (Ohio), 174 NLRB No. 33; the employer
claimed the right to act unilaterally because of an impasse
in negotiations; in St. Louis Cordage Mills, 170 NLRB
No. 7, and W P. Ihrie & Sons, 165 NLRB No. 2, the
employers admittedly repudiated a clear contractual obliga-
tion; in the Scam Instrument Corporation, 163 NLRB 284,
the employer concededly unilaterally modified insurance
provisions of the contract; in C & S. Industries, Inc.,
158 NLRB 454, the employer unilaterally imposed an incen-
tive wage plan; and in Huttig Sash and Door Company,
Incorporated, 154 NLRB 811, the employer unilaterally
reduced the wage rates of a group of employees. In none
of these cases, all of which are cited by General Counsel,
can it be said that there was any real dispute that the
contract provisions had been modified In this case, that
is the very issue, and, as I have once stated, the contract
has been modified only if you accept the Union's interpreta-
tion. Since the "employer has a sound arguable basis for
ascribing a particular meaning to his contract and his
action is in accordance with the terms of the contract
as he construes it, and there is'no showing that the employer
in interpreting the contract as he did was motivated by
union animus or was acting in bad faith"' (footnote omitted)
Vickers, Incorporated, supra at 570, I recommend that
the Board defer from interpreting the contract and that
the complaint be dismissed.
In making this recommendation, I also rely on Jos.
Schlitz Brewing Company, supra, where the Board stated:
Thus, we believe that where, as here, the contract
clearly provides for grievance and arbitration machin-
ery, where the unilateral action taken is not designed
to undermine the Union and is not patently erroneous
but rather is based on a substantial claim of contractual
privilege, and it appears that the arbitral interpretation
of the contract will resolve both the unfair labor practice
issue and the contract interpretation issue in a manner
compatible with the purposes of the Act, then the
Board should defer to the arbitration clause conceived
by the parties.
While the Respondent has here refused to apply the
arbitration machinery and the Board placed heavy reliance
in Schlitz Brewing on Respondent's willingness to use the
grievance-arbitration procedure, I do not believe that inter-
vention by the Board is therefore warranted. Despite
Respondent's refusal, this is not a situation such as was
presented in C & C Plywood, supra, where, absent Board
action, the end result would have been "economic warfare"
and not "the therapy of arbitartion." Carey v. Westinghouse
Corp., 375 U S. 261, 272. Under Textile Workers v. Lincoln
MIDWEST MANUFACTURING COMPANY
Mills 353 U S . 448, a grievance arbitration provision in
a collective-bargaining agreement can be enforced by a
suit under Section 301(a) of the Act Under Supreme Court
decisions , "whether or not the Company was bound to
arbitrate , as well as what issues it must arbitrate, is a
matter to be determined by the Court on the basis of
the contract entered into by the parties ." Atkinson v Sinclair
Refining Co., 370 U. S. 238. However , the rule is that
unless the parties expressly exclude a matter, the court
will conclude that they intended to submit it to arbitration.
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S.
574 In the instant case , th:, contract contains no exclusion-
ary clause and the arbitration clause is all-encompassing.
Thus article XI, section 1, provides that "should any com-
plaint regarding the meaning or application of any provision
of this Agreement apse between the Company and the
Union , or as to the compliance of either party with any
of its obligations hereunder , negotiations shall be carried
on in accordance with the following procedure." The con-
tract then outlines a three-step procedure followed by final
and binding arbitration . In light of these provisions, and
the state of the law relating to court enforcement of similar
provisions , it would appear that the Union can compel
arbitration of the dispute
The foregoing analysis is based on the premise that
Respondent has a sound arguable basis for its interpretation
of its obligations under article XX, section 1 of the contract.
I do not believe it is necessary to go further and to decide
which interpretation is correct , that of the Union or that
of Respondent Nevertheless , it appears that in similar
circumstances , the Board has not deferred to the arbitral
process, but instead has itself construed the contract. See
Cello-Foil Products, Inc., 178 NLRB No 103. In like man-
ner, I construe the contract and conclude that Respondent
did not modify the contract.
As Respondent points out , since the class III employees
had received a 10-cent increase on June 1, when November
1 arrived an additional I-cent increase resulted in their
having been granted the full 11 cents provided for in
the contract . Moreover, the parties had bargained for a
10-cent differential between class I and class III employees.
The parties were agreed that this differential was justified
because the work of Class III employees was not "heavy
work" did not include a "skilled " requirement and that
it was justified for "All female employees ." The last factor
was an unlawful basis for a wage differential ; however,
its elimination from the bargain of the parties by operation
of law did not eliminate the other differentiating factors
agreed to by them . In effect , the Respondent in this case
invoked and applied the other differentiating factors when
it conducted an engineering study of the class III jobs
and defined the differences as being based on (a) physical
exertion , (b) skill , and (c) effort .' Were the Board to accept
' For a complete description of the differences , see Respondent's
notice to employees dated December 15, 1967, Res Exh 5 Whether
or not Respondent was empowered to define class III work in these
terms is not in issue here The matter was the subject of a charge
filed by the Union on January 11, 1968 , in Case 38-CA-427, which
was dismissed by the Regional Director , whose action was sustained
by the General Counsel on appeal
135
the Union 's interpretation of the contract , the differential
agreed to by the Union would be eliminated.
The differential was eliminated on June 1, but only
as a result of settlement of the equal pay suit, not by
virtue of agreement of the parties, and at the time Respond-
ent agreed to the June 1 increase , it expressly reserved
the right and declared its intention to apply the 10 cents
of its November 1 contract obligation. Admittedly, it was
acting unilaterally on June 1, but that unilateral action
is not the gravamen of the instant complaint . The Union
was free to accept the benefits of the June 1 increase,
as it did , but in doing so it could only benefit in accordance
with the conditions of the grant; namely, that the benefit
was to last only until November 1.
The foregoing demonstrates very clearly that the General
Counsel 's position is tenable only if the terms of article
XX, section 1 are interpreted to mean that regardless
of the intervening circumstances the Respondent had con-
tracted to and was bound to grant an 11-cent increase
on November 1, 1968. Undoubtedly at the time of the
execution of the contract the parties intended that on
November 1, 1968, all employees would receive an 11-
cent increase . But this intention must be presumed to
have been based on an assumption that conditions existing
at the time of the execution of the contract had not been
altered by unforeseen circumstances . But the June 1 increase
was an unforeseen circumstance in the sense that there
is no evidence that the parties contemplated what effects,
if any, the equal pay suit would have on the Respondent's
obligation to grant increases in wage rates. True, the parties
knew of the equal pay suit, but the Union expressly agreed
to waive any right to bargain about it and agreed to
abide by the final adjudication . What was intended by
this agreement was not established at the hearing According
to General Counsel , the waiver related only to the legality
of the existing work classifications of women . However,
there is no evidentiary support for such an interpretation
of the letter of understanding To the contrary, the letter
of understanding contains no limitations and appears to
sanction a resolution of the issues in the manner adopted
by Respondent . Certainly , nothing contained therein pre-
cluded Respondent from disposing of the equal pay suit
by a settlement which would constitute a "final adjudica-
tion" and in which it reserved the right to apply the
10-cent June 1 increase to its November 1, 11-cent obligation.
The fact that the Department of Labor did not agree
that Respondent had the right to do so under its contract
with the Union is immaterial, The Department of Labor
had no standing to agree or disagree with Respondent's
interpretation of its contract with the Union (which undoubt-
edly accounts for its disclaimer in the letter of August
8 to the court); it could only determine whether Respond-
ent's compliance with the equal pay act would be affected
by reestablishment of the 10-cent differential on November
1. Apparently the Labor Department was satisfied as no
further action has been taken against Respondent since
November 1.
In short, the language of article XX, section 1, must
be interpreted in the light of all the circumstances, and
in that light the General Counsel's contention that Respond-
136 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ent failed to grant an 11-cent increase to class III employees
on November 1, and thereby modified the contract is not
supported by the record . For this alternative reason , there-
fore, I recommend dismissal of the complaint.
There remains to be resolved the complaint allegation
that Respondent refused to bargain with the Union concern-
ing the modification. This allegation relates to Respondent's
reply to the grievance filed by the Union on November
4 that it did not present an arbitrable issue because an
adjudication had been made and the Union had agreed
to be bound by the adjudication , and to Respondent's
reply to the request for arbitration that no arbitrator had
jurisdiction.
General Counsel contends that the reply to the grievance
was a refusal to consider the grievance on the merits,
and that the refusal to go to arbitration was in manifest
bad faith because its purpose was to force the Union
to file a Section 301 suit which Respondent believed would
have been heard by the same Federal District Court judge
who approved the settlement of the equal pay suit.
The record does not support General Counsel 's contention
that Respondent refused to consider the grievance on its
merits . In denying the grievance on November 6, 1968,
Respondent did not merely state the matter was not arbitra-
ble, but rejected it on the further ground that the Union
had agreed to be bound by a final adjudication . This was
a consideration of the meets.
Nor, in my judgment, can it be said that Respondent's
refusal to arbitrate was violative of Section 8(a)(5) of the
Act There is no evidence or contention that Respondent's
position respecting this grievance related to any other griev-
ance, or that Respondent has repudiated the grievance
and arbitration provision of the contract generally. In these
circumstances , Respondent 's refusal to arbitrate this particu-
lar dispute is only a breach of contract , which is not,
in itself a refusal to bargain . Textron Puerto Rico, 107
NLRB 583; Central Rujmna, 161 NLRB 696, 700.
For all the foregoing reasons, I find that Respondent
has not violated the provisions of Section 8(a)(5) and (1)
of the Act as alleged in the complaint , and I will therefore
recommend that the complaint be dismissed in its entirety.
CONCLUSIONS OF LAW
Respondent has not engaged in unfair labor practices
within the meaning of Section 8(a)(5) and ( 1) of the Act
by the conduct alleged in the complaint
RECOMMENDED ORDER
Upon the basis of the foregoing findings of fact and
conclusions of law , I recommend that the complaint be
dismissed in its entirety.