New Era Shirt Co.

National Labor Relations Board - Board Decisions

Apr 7, 1970

181 N.L.R.B. 975 (N.L.R.B. 1970)

NEW ERA SHIRT COMPANY
New Era Shirt Company and St. Louis Joint Board,
International Ladies ' Garment Workers ' Union,
AFL-CIO. Case 14-CA-4611
April 7, 1970
DECISION AND ORDER
BY CHAIRMAN MCCULLOCH AND MEMBERS
BROWN AND JENKINS
On November 25, 1969, Trial Examiner Paul
Bisgyer issued his Decision in the above-entitled
proceeding, finding that Respondent had not
engaged in the unfair labor practices alleged in the
complaint and recommending that the complaint be
dismissed, as set forth in the attached Trial
Examiner's Decision. Thereafter, the General
Counsel filed exceptions and a supporting brief, the
Charging Party filed exceptions and a supporting
brief, and the Respondent filed cross-exceptions 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
hereby affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions, the briefs, and
the entire record in this case, and hereby adopts the
Trial Examiner's findings, conclusions, and
recommendations.'
'In affirming the Trial Examiner ' s dismissal of the complaint, we find it
unnecessary to pass upon his reasoning that Respondent 's unilateral
contracting with non-ILGWU contractors , and its concealment of this fact
from the Union, did not violate 8(a)(5) because said conduct had no
impact upon terms and conditions of employment of Respondent's
employees For, even assuming such an impact , we are satisfied that said
conduct would be lawful Respondent changed its practice of dealing
exclusively with ILGWU shops only after it lawfully terminated all
manufacturing operations and had assumed the status of a jobber The
alleged change occurred both in the face of a threatened strike , and when,
despite Respondent 's good-faith efforts to reach agreement , the lack of
progress in negotiations made a strike highly probable Respondent's
business as a jobber depended upon the free now of products from the
various contractors with which it dealt, and thus, in the event of a strike
all goods in the hands of contractors would be the subject of lawful boycott
activities in accordance with the garment industry proviso of Section 8(e)
of the Act Respondent 's fear of the effectiveness of such a boycott was
frequently communicated to the Union during negotiations , and on this
record there can be no doubt that the change in practice was based solely
upon a genuine belief that a strike would occur, cutting off all shipments
from ILGWU shops Considering the nature of Respondent's business, and
the statutory exemption afforded a striking union in this industry, the
Respondent , in order to maintain continuity of its operations during a
strike, should one occur , had to act in anticipation thereof For these
reasons, and on the record as a whole , we find that whether or not
Respondent ' s practice of dealing exclusively with ILGWU shops is viewed
as a mandatory subject of collective bargaining, an issue we need not
reach, the unilateral action in this case " did not transcend the
reasonable measures an employer may take to maintain operations
[during a strike ] " See Shell Oil Company, 149 NLRB 283, 285, N L R B
v Mackay Radio & Telegraph Co, 304 U S 333
ORDER
975
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the
Recommended Order of the Trial Examiner, and
hereby orders that the complaint herein be, and it
hereby is, dismissed in its entirety.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
PAUL BISGYER, Trial Examiner This proceeding, with
all the parties represented, was heard on various days
from June 12 through June 20, 1969, at St Louis,
Missouri, on the complaint of the General Counsel issued
on April 21, 1969, as subsequently amended,' and the
answer of New Era Shirt Company, herein called the
Respondent or Company Presented for decision is the
question whether the Respondent, in violation of Section
8(a)(5) and (1) _oL the National Labor Relations Act, as
amended,' failed to bargain in good faith with St Louis
Joint Board, International Ladies' Garment Workers'
Union, AFL-CIO, herein called the ILGWU or Union, in
the following respects- (a) unilaterally abrogating an oral
agreement allegedly- made during contract negotiations to
use only contractors under contract with the ILGWU to
manufacture its garments; (b) concealing from the Union
the fact that it was having non-ILGWU shops perform
some of its work, and (c) unilaterally deciding to, and
merging with, Harrington Shirt Corp , herein called
Harrington, a nonunion contractor, without first notifying
and bargaining with the Union At the close of the
hearing, the parties waived oral\argument but thereafter
submitted briefs in support of their respective positions
Upon the entire record,' and, from my observation of
the demeanor of the witnesses, and with due consideration
being given to the arguments advanced by the parties, I
make the following
FINDINGS AND CONCLUSIONS
1. THE BUSINESS OF THE RESPONDENT
At various times material herein, the Respondent, a
Missouri corporation, with a place of business in St.
Louis, Missouri, was engaged in the manufacture, jobbing,
and sale of ladies' apparel Until their termination on
October 31, 1967, the manufacturing operations were
conducted at the Respondent's St. Louis facility and
plants in Arcadia and Piedmont, Missouri. During the
year ending March 22, 1968, a representative period, the
Respondent, in the course of its business, shipped products
'The complaint is based on original and amended charges filed on March
22 and 26, 1968, respectively, copies of which were duly served on the
Respondent by registered mail on or about the dates of filing
'Section 8(a)(5) of the Act makes it an unfair labor practice for an
employer " to refuse to bargain collectively with the representatives of his
employees" in an appropriate unit Section 8(a)(1) prohibits an employer
"to interfere with, restrain, or coerce employees in the exercise of the
rights guaranteed in section 7," which, among other things , includes the
right "to bargain collectively through representatives of their own
choosing "
'The Respondent' s unopposed motion to correct the official transcript of
testimony is hereby granted and the transcript is accordingly corrected in
the respects indicated in the motion
181 NLRB No 156
976 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
manufactured in its Missouri plants valued in excess of
$50,000 to points outside that State
It is admitted , and I find , that the Respondent is and
has been, at all material times, engaged in commerce
within the meaning of Section 2(6) and (7) of the Act.
Ii. THE LABOR ORGANIZATION INVOLVED
It is agreed, and I find, that the Union is a labor
organization within the meaning of Section 2(5) of the
Act
III THE ALLEGED UNFAIR LABOR PRACTICES
A. The Evidence
I Introduction; bargaining history
The Respondent is engaged in the garment industry
For some 15 years its employees' were represented by the
ILGWU pursuant to successive collective-bargaining
agreements The last contract, was for a term beginning
November 1, 1964, and expiring on October 31, 1967, and
contained provisions common in ILGWU contracts,
whose validity is beyond question,' requiring the
Respondent, when having work performed by outside
shops, to use shops under contract with a unit of the
International Ladies' Garment Workers' Union.' During
the term of this agreement, the Respondent conducted its
manufacturing operations at its two plants in Arcadia and
Piedmont and at its St Louis facility where it also
maintained an office and warehouse. Because of its
inability to operate its plants profitably and competitively,
as well as for other legitimate reasons, the Respondent
was considering discontinuing its manufacturing
operations upon the expiration of its bargaining agreement
but remaining in business as a jobber with its work being
produced by contractors According to the Respondent's
experience in dealing with contractors, it would cost it less
to produce garments in this way than in its own factories
By letter dated August 8, 1967,' the Union gave the
Respondent timely notice of its desire to negotiate a new
agreement to supersede the one expiring on October 31.
The Respondent, in turn, served a similar notice on the
Union on August 29, requesting a meeting for such
purposes
'The bargaining unit, as described in the parties ' last written contract,
consisted of
all manufacturing and non-manufacturing employees engaged in
the making and shipping of garments [excluding ] officers or
executives of the Employer, designers , superintendents, or other
supervisory employees including the chief porter, chief machinist and
head of the shipping department , foremen, forewomen, salesmen,
instructors , and office and plant clerical employees
'Were it not for the "apparel and clothing industry" exemption in
Section 8(e) of the Act, such provisions would violate that section
The contract was actually between the Respondent and the St Louis
Joint Board and Southern Missouri Arkansas District Council of the
International Ladies ' Garment Workers ' Union, AFL-CIO Article XVII,
paragraph 4, provided, among other things, that
all garments or parts thereof handled by the Employer during the
term of this agreement , whether finished or partly finished , shall be
manufactured exclusively either in its own shop or, as parts of an
integrated process of production under the jobber-contractor system of
production , in a shop under contract with a unit of the International
Ladies' Garment Workers' Union
In addition , the contract contained familiar union label provisions in article
XXV, requiring the Respondent to affix a union label to all garments
manufactured in its shop or in the shops of ILGWU contractors
2. Initial discussions
On September 6, the Respondent ' s attorney, Mark
Gale, telephoned Frederick R Siems, the Union's director
of the Central States Region and an International vice
president , to arrange for an early bargaining meeting
Gale informed Siems of the Respondent ' s intention to sell
its entire business or any part of it . Seems suggested that
it would be preferable if Gale met with Dan Robbins,
manager of the St. Louis Joint Board, and Jerry Perlstein,
manager of Southern Missouri -- Arkansas District
Council, who were more familiar with the Respondent's
situation than he was A few days later , Robbins called
Gale and a meeting was scheduled for September 18. In
the course of their conversation , Gale apprised Robbins of
the Company ' s plans to sell its business In a letter
directed to Robbins dated September 11, confirming his
conversations with Siems and Robbins , Gale solicited the
Union's assistance in locating persons who might be
interested in purchasing the Respondent ' s business or any
of its plants.
At the appointed time on September 18, Gale and the
Respondent ' s labor consultant , Al Ahner, met with
Robbins and Perlstein The Respondent ' s representatives
reviewed the Company ' s inability to operate its plants
efficiently and profitably and repeated the Company's
desire to dispose of its entire business preferably as a
going enterprise, or any part of it. In addition , they stated
that , if no purchaser were found by the expiration date of
the contract on October 31, the Respondent intended to
terminate all its manufacturing operations at that time but
to continue in business only as a jobber or wholesaler until
a purchaser could be found . Perlstein voiced the Union's
disapproval of the Respondent ' s contemplated action
which evoked the Company ' s response that in such case it
would have to do the best it could without the Union.
Perlstein retorted that , if the Company attempted to
follow that course, the Union would call a strike and stop
all shipments of manufactured goods from contractors to
the Company . Before the meeting ended, the Union's
representatives proposed, and the Respondent's
representatives agreed, that a bargaining conference be
scheduled which committees of employees from the plants
could attend
The same day, Gale sent the Union ' s Regional Director
Siems a letter, summarizing the salient points discussed at
this meeting Among other things, Gale wrote that, in
operating as a jobber , "the company anticipated
contracting [for the production of merchandise ] only with
contractors under contract with" the ILGWU. Moreover,
he stated that it was pointed out at that meeting, that
in the eventuality that a purchaser of the business
or the country factories [Arcadia and Piedmont] could
not be obtained by October 31, 1967, that the company
wanted to arrange for an orderly termination of those
manufacturing operations and of the employees involved
in those operations In such case , the company
recognizes its obligation to bargain for a new
collective- bargaining agreement covering its warehouse
and shipping employees and those sewing and cutting
room employees who would continue to be employed
for the time being, at the St Louis facility
The next meeting was set for September 25. However,
at the Union ' s request , it was canceled . Apparently, the
Union at first saw no particular urgency to reschedule this
'All dates , unless otherwise indicated, relate to 1967
NEW ERA SHIRT COMPANY 977
meeting, although Gale, by telephone and letters,
reminded the Union's representatives that the contract's
expiration date and the contemplated discontinuance of
production operations were fast approaching. Gale also
expressed the Company's desire to bargain with respect to
the termination of its manufacturing facilities and the
need to inform employees affected by such action In a
letter Gale sent to District Council Manager Perlstein on
September 27, in which he confirmed their morning
telephone conversation, Gale wrote-
When I spoke with you, you told me that there was
plenty of time for meetings, and you declined to state
any date at which you were willing to meet. I pointed
out to you that the current contract expires in about 5
weeks, and that the company felt a meeting should be
held as soon as possible.
You stated that the union did not recognize the right
of the company to sell its business or cease its
manufacturing operations, and so you did not see any
reason for an announcement [to the employees].
Reiterating the Company's prior bargaining requests, the
letter continued*
In behalf of the company, I again state to you that
the company stands ready and willing to meet with you
and other appropriate union representatives for the
purpose of good faith collective bargaining with respect
to wages, hours and working conditions and every other
appropriate matter, including, but not limited to, the
company's plans to sell its business, to cease
manufacturing operations whether or not it sells its
business, and the impact and consequences of such a
sale and/or such a cessation on the company's
employees represented by the union
The October 2 meeting was held in Gale's office and
was attended by Glenn Clay, Assistant Regional Director
of the Central States Region, and Joint Board Manager
Robbins for the Union, and by Gale and Ahner for the
Respondent. Here, again, the parties discussed the
Respondent's intention to sell its business as a going
enterprise or to make other arrangements for the
disposition of its plants or capital stock. For such
purposes, the Respondent invited the Union's help to
secure prospective purchasers Gale also made it clear, as
he had done on other occasions, that, if the business or
plants were not sold by the time its current bargaining
agreement with the Union expired, it planned to terminate
its manufacturing operations anyway. Declaring their
inability to understand why the Arcadia and Piedmont
plants with their experienced labor force could not be
operated profitably, Clay and Robbins repeated the
Union's opposition to the Respondent's proposed action.
In addition, they voiced their concern about a newspaper
article which announced that the Company was planning
to close down the Arcadia and Piedmont plants because of
the high cost of operation. Gale denied that the
information came from the Company, adding that a press
release was being issued to correct the reported reason
This was subsequently done
Much the same discussions took place at the October 9
and 16 sessions between union and company negotiators8
concerning the Respondent's intention to sell its business
or separate plants and, in any event, to discontinue on
October 31 its manufacturing operations to become a
jobber whose garments would be produced by
contractors.' Despite the Respondent's asserted inability to
manufacture products profitably and competitively, the
Union stood steadfast in its refusal to consent to the
permanent closing of the Arcadia and Piedmont plants
and to the Respondent 's remaining in business as a jobber.
Clay testified that the Union was reluctant to negotiate
away jobs of its members Instead, at the October 9
meeting, the Union made proposals for a new 3-year
contract which would include wage increases and
improvements in terms and conditions of employment.
Although apparently amenable to negotiate a contract for
the relatively small number of employees continuing in its
employ after October 31, the Respondent voiced the view
that the Union ' s demands were "impossible.""
In the course of the discussion of the cessation of
manufacturing operations at the October 16 meeting," the
subject of the terminated employees ' entitlement to
severance pay from the Union's severance fund was
considered After checking with the Union's New York
office, advice was received that the Arcadia and Piedmont
plant employees would be eligible but not the St. Louis
production employees . Consequently , the Respondent
agreed to consider whether it would make any severance)
payments to the St . Louis production employees.
Gale, Ahner , Clay, and Robbins next conferred in
Gale's office on or about October 26 . Gale informed the
Union's representatives that, since no progress had been
made in their discussions with respect to the Company's
plans to close down its manufacturing facilities and to
operate strictly as a jobber, and since the contract had
only a few days to run , he wanted to consult with
International President Stulberg in New York City in the
hope that something could be worked out with him He
also informed the Union ' s representatives that the
Company was reluctant to place any more work with
ILGWU contractors after October 31 for fear that, if the
Union called a strike after that date , its goods would be
tied up He therefore asked Clay for some assurance that
the Union would not strike before November 15, during
which time he expected to confer with Stulberg It was
finally agreed that the Union would not interfere with any
goods sent to ILGWU contractors before November 15.1 1
'The Union's representatives on October 9 were Clay, Robbins, and
Perlstein and the Company's were Gale and Ahner Except for Perlstein,
the same individuals were present on October 16 Employee committees
from each shop attended the October 9 meeting , while Union Attorney
Levin appeared at the October 16 one
' it is not necessary to determine whether at the October 9 meeting, as
Clay testified, the Respondent proposed to use ILGWU contractors
exclusively since admittedly the Respondent subsequently made such
proposals
"According to Gale' s testimony , a suggestion was also made at the
October 9 meeting that it might be to the Respondent 's benefit to affiliate
for bargaining purposes with Associated Garment Industries of St Louis,
herein called the Association
"Clay thought this discussion was on October 9
"The above findings are based principally on Gale's testimony which I
find more plausible and convincing According to Clay, when Gale
expressed concern that the bargaining contract was about to expire and
that the Company had work in ILGWU contractors' shops, he (Clay)
assured Gale that, before the Union would strike the Company or cause
employees of ILGWU contractors to stop working on the Company's
goods, the Union would give it at least 20 days' advance notice , and Gale
accepted this assurance with the understanding that all of the Respondent's
work would be performed by ILGWU contractors Robbins corroborated
Clay's testimony regarding the 20 days' notice However, neither Clay's
nor Robbins ' pretrial affidavit given to a Board agent mentions such an
oral agreement Moreover , Robbins ' further testimony that Gale stated
that the Company would use ILGWU contractors exclusively is not clear
as to whether or not the testimony merely referred to Gale's conceded
contract proposals unrelated to the strike notice Gale denied that he made
978 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
3. Expiration of the contract; termination of
manufacturing operations
Having found no buyers for its Arcadia and Piedmont
plants, the Respondent closed them down and
discontinued its manufacturing operations on the
expiration of the parties' bargaining contract on October
31. It is not, nor can it be seriously, contended that this
action was taken for other than legitimate reasons or that
the Respondent thereby violated its bargaining obligations
4. Subsequent negotiations
On October 31, Gale arranged to meet with
International President Stulberg in New York City on
November 9. Confirming this appointment by letter, Gale
informed Stulberg of the Respondent's long bargaining
relationship with the Union, the expiration of its last
contract on October 31, and the termination of the
Company's manufacturing operations. He further stated
that the Company desired "to continue a contractual
relationship with ILGWU as a jobber or contract
manufacturer, having its merchandise made only in
ILGWU shops," and that the Union, with whom it had
engaged in a number of negotiating meetings, had been
advised of these plans since September 11. Finally, Gale
wrote that the Company would be in a position to borrow
money from a bank to pay off its delinquent welfare
contributions if the Company were "permitted to operate
as an ILGWU jobber so that there will be no interference
with production, all production being in ILGWU shops "
On November 9, Gale met with Stulberg and Regional
Director Stems at Stulberg's office in New York City
Gale reviewed the Company's economic difficulties, its
desire to be relieved of management responsibilities, the
termination of its production operations, its unsuccessful
efforts to secure a buyer of any part of its business, the
local Union's opposition to the discontinuance of the
Company's manufacturing operations, and the Company's
plan to become an ILGWU jobber. Concerned that the
Arcadia and Piedmont plant employees had no other
source of employment, Siems reaffirmed the Union's
determination to keep the plants in existence. In answer to
Stulberg's inquiry as to the Respondent's intentions if no
arrangement could be worked out with the Union, Gale
replied that it would have no alternative but to operate as
a jobber or wholesaler and have its goods made wherever
it could by union or nonunion contractors This prompted
Stulberg to threaten to call a strike if the Company did
that, warning that the Union had the money to support
the strike and put the Company out of business Gale's
suggestion to borrow some of this money to modernize the
plants was, however, not favorably received. He then
pointed out that since Assistant Regional Director Clay's
promise that the Union would not interfere with the
Company's goods in the hands of ILGWU contractors
was limited to goods sent there prior to November 15 it
was urgent that the parties reach a no-strike agreement by
that date or else the Respondent would be obliged to place
its goods in non-ILGWU shops in order to avoid such
any interim agreement to use only ILGWU contractors during the
negotiations although he conceded it was one of his proposals to be
included in a consummated agreement As discussed in the Concluding
Findings , infra, I also find the other evidence relied on by the General
Counsel and the Union insufficient to establish an oral commitment to use
ILGWU contractors exclusively , apart from the Company 's contract
proposals which never culminated in a final , executed agreement
contingency. When the subject of severance pay for the
terminated Arcadia and Piedmont employees was raised,
Gale took the position that they should be paid from the
Union's severance fund to which the Company for years
had made contributions and, besides, the Company was
financially unable to make such payment He, however,
stated that the Company was considering the matter of
severance pay for the terminated St. Louis production
employees. The meeting ended with Stulberg proposing
that Stems and Gale get together again to try to find a
solution. While leaving, Gale overheard Stulberg tell
Stems that he guessed that the only thing to be done was
to obtain from the Company as much severance pay as
possible.
About the middle of November, Gale conferred with
Siems and Robbins in Stems' office. Since the closure of
the Arcadia and Piedmont factories was an accomplished
fact, Gale sought a contract covering the remaining St
Louis warehouse and other employees. He also offered to
give the terminated employees $5,000 in severance pay.
This offer was acceptable to Stems provided that an
agreement be drafted which would not prejudice the
employees' unemployment compensation rights; that the
Respondent's asserted health and welfare fund delinquency
be liquidated; and that a new collective-bargaining
contract be executed These conditions were agreeable to
Gale. In addition, as part of the Company's proposals,
Gale repeated the Company's intention to operate as a
jobber, using only ILGWU contractors to produce its
goods." Also considered on this occasion was the question
whether piece rates should be included in the contract. At
some point, Gale made it clear that the Respondent was
still searching for a purchaser of its business or any part
and indicated that for this reason, provision had to be
made for "a way out" of the contract if a purchaser were
found and "a way out" became necessary.- Without
consulting the Respondent's president, Kaminer, who was
out of town, Gale stated that he would undertake to draft
a severance agreement and a collective-bargaining contract
for a term ending February 5, 1969," which would serve
as a basis for further negotiations
On November 24, Gale mailed to Stems a draft of the
Respondent's contract In the covering letter, Gale stated
that the draft was submitted before the wage schedule
could be prepared" so that the Union could start
reviewing it Concerning the $5,000 payment, Gale wrote
that, in accordance with his suggestion to Attorney Levin,
"The General Counsel and the Union rely on, among other things, the
discussions at this meeting as evidence of a binding oral agreement
whereby the Respondent agreed , as a jobber, to have all its garments made
by ILGWU contractors exclusively According to Stems' testimony, Gale
agreed at this meeting to be bound by a multiemployer contract between
Associated Garment Industries of St Louis and the St Louis Joint Board
and various ILGWU councils, which contained such a commitment Gale
denied agreeing to be bound by that contract and, in this, he was
corroborated by Robbins who testified that Gale only agreed to look into
that matter and that at the next meeting Gale advised him that, after
making inquiries of the Association , he concluded that the dues were too
high and that it was not worth joining but that the Company would
consider membership at some future date I credit Gale's denial
"Without such a clause, Gale testified , the Respondent ' s search for a
purchaser would be limited to companies under contract with the ILGWU
or which would be willing to enter into contractual relations with that
organization
"This date coincided with the expiration date of the Association contract
mentioned above
"Gale subsequently sent the Union a wage schedule embodying the
Union's wage proposals which Clay or Robbins or both made to Gale in
their discussions between November 24 and December 20
NEW ERA SHIRT COMPANY 979
he was preparing "an agreement or general release" which
would treat the payment as a settlement of claims asserted
under the expired contract and thereby avoid jeopardizing
the employees' rights to unemployment compensation or
supplementary unemployment compensation benefits
The Company's contract draft proposals recited the
Company's termination of manufacturing operations and
its new status as a jobber and made provision for
renegotiating the contract in the event manufacturing
operations were resumed. In general, the proposed,
contract followed substantially the expired agreement and
contained, among others, customary provisions requiring
the Company to have its work performed exclusively by
ILGWU contractors There were also clauses relative to
the use of ILGWU labels on garments and to
contributions to the various health and welfare funds.
At or about the same time that Gale sent Stems the
above contract proposals, he sent Attorney Levin a
proposed settlement agreement. After reciting the
Company's discontinuance of production operations, the
conversion of the Respondent's business to that of a
jobber, the settlement of claimed violations of the expired
collective-bargaining agreement, and the contemporaneous
execution of a new bargaining contract, the settlement
agreement provided for the payment of $5,000 by the
Respondent in settlement of the Union's claims. However,
although Levin's suggested changes 'were subsequently
incorporated into the settlement agreement, that
agreement was never signed because, as later discussed
below, no new collective-bargaining contract was ever
consummated
In a telephone conversation with Clay after November
24 and with Levin on December 14, Gale was informed, in
answer to his inquiries, that negotiations could not
proceed until the Union's New York office completed its
review of the Company's contract proposals. The next
day, Gale wrote Levin, confirming their telephone
conversations in which he asked that piece rates be
eliminated from the proposed new contract because the
Company did not intend to employ people on that basis
and that provision should be made in the event the
Company were liquidated or sold." The letter concluded
with the hope that "the matter [would be] finalized," and
their differences resolved as soon as possible
Thereafter, during the latter part of December, Gale
received the Union's December 20 counterproposals
These were discussed early in January 1968 at a meeting
attended by Gale, Clay, and Robbins Among the
provisions acceptable to the Respondent were the familiar
ones pertaining to the exclusive use of ILGWU
contractors and the union label. However, while there
were also quite a number of points of differences between
the parties, such as the Respondent's insistence on the
deletion of any reference to piece rates from the Union's
proposed contract, one of the significant "stumbling
blocks" was Gale's proposed inclusion of a cancellation
clause to take care of the contingency of the sale of the
Company's business or more than 50 percent of its capital
stock He explained, as he testified he had done before,
that, without such a clause, it would be virtually
impossible for the Company to dispose of its business or
shares of capital stock.
On February 12, 1968, Gale sent to Levin a
Memorandum As To Points To Be Settled This
document listed areas still in dispute" and contained
"Gale also stated that it was promptly putting into effect the proposed
additional holiday, the day before Christmas
specific language of a termination clause whereby either
party would have the option to cancel the contract in the
event of liquidation of the Company's business, sale of
substantially all of its operating assets, merger,
consolidation, or other reorganization as a result of which
persons not presently shareholders acquired 50 percent or
greater control of the Company or the surviving
corporation." The covering letter invited an early
response.
On February 21, Gale, Clay, and Robbins met again to
consider the Union's proposed December 20 contract and
the Company's position set forth in its February 12
memorandum. Apart from contract language problems,
the meeting left unresolved four disputed items. One was
the Union's demand that purchasers or successors of the
Company be bound by the bargaining agreement, whereas
the Company insisted on the termination clause mentioned
above because it would afford it a greater opportunity to
interest nonunion firms to consider buying its business or
making other arrangements for its acquisition A second
point of disagreement was the inclusion of a piece rate
structure in the contract, to which the Respondent
objected. A third area of controversy related to the
Union's demand for higher wages retroactive to
November 1, 1967 The fourth item dealt with the method
of the payment of contributions to the Union's health and
welfare funds for contractors' employees
5 The breakdown in contract negotiations;
notification of the Respondent ' s merger discussions
Not long after the February 21 meeting, the Union
submitted to Gale a revised draft of its proposals and a
meeting on March 21 at 2 p m. was scheduled to consider
it. On the morning of the appointed day, Gale telephoned
Robbins for an hour postponement of the meeting.
Because of rescheduling problems, Robbins stated that it
could not be done, adding, however, that he saw no reason
for a meeting because the revised draft had to be signed
by the next day or else there would be a strike on the
following Monday, March 25.11 Indicating that the revised
contract was not acceptable to the Company and that it
should be discussed, Gale inquired whether the Union was
issuing an ultimatum Although Robbins answered in the
affirmative, Gale nevertheless suggested that they proceed
with their meeting as originally planned.
After the foregoing conversation, Gale reported
Robbins' strike threat to the Company's then president,
Kaminer, and Executive Secretary Bohm. In anticipation
that the Company's St. Louis facility would be
strikebound, Kaminer and Bohm began preparations to
ship out as much goods as they could and to divert
delivery of merchandise which were in the hands of
contractors to destinations other than the St. Louis
facility About 45 minutes to an hour later, Gale received
a telephone call from Robbins, protesting the shipping
"The memorandum also noted that there were differences in the wage
scales set forth in the Union' s December 20 counterproposals and those
previously given to the Respondent It appears that the latest wage
proposals were higher
"The memorandum suggested adding this provision to the Union's
proposed "Article 1, Mutual Obligation ," paragraph However, the
memorandum indicates - perhaps inconsistently - acceptance of article
XXXV which prohibited consolidation or merger "unless the new
enterprise assumes all accrued obligations to the workers or [sic) the
constituent concern "
"Robbins testified that on March 20 the employees had voted to strike
on March 25
980 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
preparations then in progress When Gale explained that
he had informed the Company of the threatened strike,
Robbins stated he would call him back after speaking to
Siems This he did and reported that the Union saw no
reason to defer the strike until Monday and that it was
going to call a strike at once or the following day. This
led to mutual accusations of bad-faith bargaining. At this
juncture, Gale declared that, if the Company's strike
preparations were an obstacle to the holding of the
scheduled meeting, he would advise the Company to stop
them. Robbins agreed with this suggestion and on Gale's
advice, the Company suspended the preparations.
In the afternoon, Gale and Robbins reviewed the
Union's revised draft of the contract Several language
changes were made but the discussions still left three
substantive matters unresolved. The proposed contract
retained a piecework structure to which the Respondent
objected, as it had previously done, because it did not
employ pieceworkers. Robbins commented that, although
it was not a real problem, he would resubmit this matter
to Siems. Another disputed issue was the wage rates,
which Gale claimed were higher than those the Union had
previously proposed and were acceptable to the Company.
In this connection, Robbins noted that the Company's
failure to put the disputed wage rates into effect left the
Union with no other alternative but to strike. At some
point, Gale stated that, although he lacked the authority
to commit the Company to those rates, he did not believe
that the Company would accept a strike over this matter.
Robbins indicated that he would also submit this question
to Siems Undoubtedly, the most important controversial
item was the Respondent's demand for a termination
clause in the event of sale, merger, or consolidation, which
the Union's proposed contract did not contain and to
which the Union refused to accede. Gale advised Robbins
that the Respondent was then involved in merger
negotiations with an unidentified nonunion firm located in
the East which had manufacturing facilities and a
warehouse; that he personally opposed the merger for
economic reasons; that there were financing problems in
raising cash to buy out the Company's minority
stockholders; and that without such financing the merger
could not proceed. Gale urged Robbins to defer strike
action because he feared that a strike would force
Kaminer and his group to go through with the merger,
even though in his (Gale's) opinion, it was not a good
deal. He also told Robbins that, if the merger were
effected, present plans called for the continued operation
of the St. Louis warehouse. Robbins expressed doubt that
the Union would go along with any arrangement, such ,as
that indicated by the pending merger, whereby the
Company would have a part union and a part nonunion
operation.
Robbins then brought up the subject of the Quality
Manufacturing Company, an ILGWU contractor which
performed some of the Respondent's work 21 He
commented that there was something "funny" going on in
that the Respondent registered Quality's union operation
but actually was dealing with Quality's nonunion shops.S2
Gale, thereupon, asked for similar treatment, posing the
question why the Union was willing to deal with Quality
which had both union and nonunion operations and yet
was not willing to deal with the Respondent on the same
basis, assuming the merger were consummated. After
explaining that he understood that the Union had
succeeded in organizing only some of Quality's employees
but not the others, Robbins stated that union policy no
longer permitted such a contractual relationship. Before
the meeting ended, Gale told Robbins that he 'would
report the Union's position to the Company and that he
could not guarantee what the Company would do about
shipping out its goods, although he thought it would try to
protect itself against the threatened strike and take that
action Gale also stated that he would call Robbins the
next day after Kaminer had consulted with his financial
advisors and would identify the firm with which the
Respondent was engaged in merger negotiations 21
On March 22, Gale had several telephone conversations
with Robbins in which he informed Robbins that
Harrington Shirt Corp. was the party with whom merger
was under consideration." He also told Robbins that
Kaminer had not yet consulted with his financial advisors
and that financing for the merger was not available in St
Louis, although Harrington had located a factor who was
willing to furnish the money but whose security conditions
probably would not be acceptable to the Kaminer group
In addition, Gale informed Robbins that, in view of the
strike threat, the Respondent was proceeding to ship out
its goods.26 Gale agreed to communicate with Robbins
Monday morning, March 25, unless he had something to
report before then. The same day the Union filed a charge
alleging bad-faith bargaining by the Respondent.
The next meeting between Gale and union
representatives took place Monday morning, March 25, at
the Union's office.26 At first Gale discussed with Robbins
alone the merger negotiations and the need for the
Company's proposed termination clause in case of merger
or sale and asked whether he had had a chance to speak
to Siems about that and other disputed matters considered
by them at their March 21 meeting At Robbins'
suggestion, they went to see Stems in the latter's office.
Also present were Assistant Regional Director Clay,
District Council Manager Perlstein, and Attorney Levin.
Robbins opened the discussions and shortly thereafter
Siems ordered Gale out of his office. Before leaving,
Levin informed Gale that the Union had filed a lawsuit
against the Respondent in the United States District
Court under Section 301 of the Act27 and that he would
"Robbins testified that he was informed by an employee on March 20,
1968, that the Respondent was dealing with contractors purporting to be
the Quality Manufacturing Company
"As will later be discussed, Robbins was obviously unaware at that time
that the nonunion shops which manufactured goods for the Respondent
under the Quality designation were actually not related to the Quality
Manufacturing Company in Bangor , Pennsylvania , which was under
contract with the ILGWU and which the Respondent had registered with
that organization Apparently, Gale was also unaware of this situation
"The above narration of the events on March 21 is based principally on
Gale's testimony, much of which was undisputed Gale impressed me as a
reliable witness with an excellent recollection of events , assisted at times by
documents prepared by him
"In view of the evidence pertaining to the merger negotiations , discussed
below, showing that merger negotiations were still in progress on March
22, 1 find, contrary to Robbins' testimony, that Gale did not advise him on
that date that a merger agreement had been made
"it appears that at or about this time the Respondent had already made
arrangements with Harrington to store its manufactured merchandise and
other goods in the Harrington warehouse in Dover, Delaware Accordingly,
when faced with a threatened strike, the Respondent on March 22, 1968,
began shipping its merchandise and goods to the Harrington warehouse
Pursuant to instructions , the Respondent 's contractors also shipped their
completed garments to the same warehouse
"The findings concerning this meeting are based on Gale's persuasive
testimony which was not controverted in significant respects
"This was a lawsuit instituted by the Union on M:rrch 22, 1968, to
recover payments due the Central States Health and Welfare Fund,
ILGWU, and other funds under the parties' collective- bargaining contract
NEW ERA SHIRT COMPANY 981
see him in court. Thereupon, Gale, Clay, and Robbins
returned to the latter's office On the way, Gale briefed
Clay on the discussions at the March 21 meeting In
Robbins' office, Gale stated that, if the merger were
consummated, the Company would still be willing to agree
to contract out work exclusively to ILGWU shops and
that only such manufactured goods would come to the St
Louis warehouse so that the employees there employed
would not be required to handle anything emanating from
non-ILGWU shops Gale also noted that the goods
produced at the Harrington factory would be handled in
the Harrington warehouse Disagreeing with a comment
from Clay or Robbins that the merger would make
Harrington a nonunion contractor, Gale asserted that
Harrington would actually be owned and operated by the
Respondent as its manufacturing facility Clay replied that
the Union would, nevertheless, refuse to sign an
agreement where part of the Company's operations was
union and the other part nonunion. Gale then referred to
Quality's union and nonunion plants, as Robbins had
previously related to him, but Clay responded that,
whatever was the situation there, the Union would not
follow it in the Respondent's case. Moreover, Clay
declared that there was going to be a strike which could
not be avoided and that, in these circumstances, if the
Company wanted to ship out goods to go ahead and do it.
In response, Gale warned that a strike would only make
the merger more probable and leave the Kammer group
no choice but to surrender to Harrington on their points
of differences.
Clay, nevertheless, insisted that the only way to prevent
a strike was for the Company to sign the contract as
presented by the Union Gale, however, pointed out that if
the Company signed the agreement, it would be obliged
either to abandon its merger negotiations with Harrington
or to deliver the Harrington employees to the Union,
despite the fact they had not designated the Union to
represent them. Because, in his opinion, the latter
alternative would violate the Act, Gale stated he would
not agree to it He further observed that a strike agianst
its St Louis facility would prevent the Company from
operating and thus force it to terminate that facility.
There was also some discussion about severance pay or
supplemental unemployment compensation for the St
Louis employees who might lose their jobs as a result of
the merger, should one be consummated 28 Gale stated
that the laid-off employees would be offered employment
at the Harrington facility in Delaware or severance pay of
about $500 if they should decline such employment,
although he added that this was not intended as a
commitment by the Company since he had not yet spoken
to the Company about it Gale also told Robbins that, if
the St Louis operation were discontinued as a result of
the strike, the Company was willing to bargain about
severance pay for all the St. Louis employees. Clay's
response was that the Union was not particularly
interested in the few employees who were employed at the
St. Louis operation but that it was concerned in protecting
the employees of ILGWU contractors and for that reason
the Union had to strike to avoid the appearance of going
along with the Company's plans. Clay also informed Gale
which expired on October 31, 1967 On April 5, 1968 , the complaint in
that action was amended to include a second cause of action for damages
sustained as a result of the Respondent 's violation of the subcontracting
provisions of the expired contract. By stipulation , this suit was dismissed
after the Respondent confessed judgment with respect to the first cause of
action and the claim in the second cause of action was submitted to
arbitration
that the Union was communicating with contractors to
stop work on the Respondent's goods. This was done
when the strike began.
6. The strike; subsequent requests for negotiations
Later in the afternoon, the St. Louis employees went
out on strike Upon receiving this information from the
Company, Gale, in a letter to Robbins, requested that the
strike be called off and that further negotiations be held
"particularly in respect of the contract, the merger or sale
now under consideration (about which no decision has as
yet been made), and about the effect of such a merger or
sale if it should occur." This was followed by another
letter from Gale to Robbins dated the same day (March
25, 1968), which was delivered by hand the next day.
After summarizing the discussions of the March 25
meeting,29 Gale reiterated his request for a resumption of
negotiations in the hope that "with or without the merger
or sale presently being considered, some accommodation
can be reached that will permit the termination of the
strike, and protect the legitimate interests of all parties
concerned."
On the morning of March 26, 1968, Gale arranged with
Attorney Levin for an afternoon meeting at Gale's office
which, in addition to themselves, Clay and Robbins
attended. Using his March 25 letter as a guide, Gale
opened up the discussions with a review of the meeting on
that day and then reported in detail on the status of the
merger negotiations. He stated that there were still
"substantial areas of difference between the parties," that
until and unless satisfactory financial arrangements were
made, further merger negotiations would be pointless; and
that the only available financing was through a factor
whose terms and conditions Gale believed would not be
acceptable to his principals. Concerning the nature of the
Respondent's operations should the merger be effected,
Gale stated that the Respondent contemplated continuing
the St. Louis warehouse facility; that the nonunion
Harrington facility, which would be absorbed by the
Respondent, could not produce more than 50 percent of
the Respondent's requirements; and that the rest of the
goods would be contracted out to ILGWU shops and
handled through the St. Louis facility. The question was
then raised by the Union's representatives whether it was
possible that the Harrington operation could ultimately be
expanded so as to handle all of the Respondent's
requirements and thereby leave no work for contractors.
Gale answered that it was a "possibility" and added, in
response to another question, that he was certain that the
Company would not agree to any limitation to be placed
on goods produced by the Harrington facility.30 Gale also
As the St Louis facility would serve as a warehouse only for goods
manufactured by ILGWU contractors, less e:.iployees might be needed if
Harrington produced goods which would otherwise be made by ILGWU
contractors
"By letter dated March 26, 1968 , Levin answered Gale's letter stating
that from what Robbins reported to him , Gale's communication contained
"many self-serving statements [which appeared to be) intended and
calculated to serve" as a defense to the unfair labor practice charge
previously filed by the Union Gale, however, denied at the hearing
knowledge of the filing of that charge at the time he wrote the letter It is
also noted that Clay stated in his pretrial affidavit that the letter "appears
to be accurate for the part in which I was involved "
"According to Levin 's testimony, he retorted that Gale's proposal would
in effect destroy the bargaining unit However , it is noted that by reason of
the earlier discontinuance of the Respondent's manufacturing operations,
the historical bargaining unit had already been substantially reduced in
size
982 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
thought that the Company would not agree to Levin's
suggestion that it use Harrington to perform its work only
if ILGWU shops were not available to do it. Another
solution was proposed by Clay which was also rejected 11
When Levin asked what was the purpose of their meeting,
Gale replied that it was to resolve the impasse which
caused the strike but that it appeared to him that they
were still deadlocked and that , unless they found a way to
settle the strike, the Company would be forced to
terminate the St Louis operation In that event, Gale
suggested , the Company was prepared to make some
arrangements for the terminated employees and repeated
his previous offer of employment at the Harrington
facility and severance pay of approximately $500. The
Union's representatives , however, were not inclined to
discuss that matter On this unsettled note, the meeting
broke up.
Then followed a series of fruitless requests by Gale for
the resumption of bargaining . On March 27, Gale wrote
Levin a letter , offering to resume negotiations "in the
hope of finding some solution to what [then appeared to
him] to be a completely hopeless deadlock ." In this letter
Gale described the deadlock as resulting from the parties'
inability to reach agreement with respect to "any
restriction or limitation of the quantity or type of
merchandise" to be manufactured at the Harrington
facility, if the proposed merger were effected, before the
Union would permit the St Louis warehouse to operate
with ILGWU employees and the Respondent to deal with
ILGWU contractors. Gale also alluded to the Union's
refusal to discuss its offer of employment to the St Louis
employees at the Harrington facility and severance pay or
supplementary unemployment compensation benefits for
them in the event the impasse was not broken and the
warehouse was closed down. Apparently, this letter went
unanswered.
On March 29, Gale sent another letter to Levin,
confirming their morning conversation in which he advised
Levin that he had been instructed to prepare appropriate
notices and other documents in connection with a
stockholders ' meeting to vote on the proposed merger with
Harrington. Continuing , the letter stated:
I told you that it was the view of the New Era
management that there seemed to be no basis for
resolving the strike so long as restrictions were going to
be placed on what could be manufactured at the
Harrington facilities and that under these
circumstances , the company had little choice but to
proceed with the proposal . I also told you that the
financing necessary for the merger to be consummated
has not yet been committed and that this phase of the
matter remains open
The letter then concluded with a repetition of the
Company's offer
. to continue negotiations for the purpose of trying
to find some solution acceptable to all parties which
would permit the continued operation of a warehouse
facility in St . Louis. Further, if no such acceptable
solution can be found, I again state to you, in behalf of
the Company , that we are ready and willing to continue
negotiations on all matters relating to the termination
of the St . Louis warehouse facility, offering
employment to St Louis warehouse employees who
"Clay was evidently mistaken in indicating in his testimony that this
discussion occurred at the March 25 meeting
desire to accept employment and to consider and
negotiate with respect to the possibility of some type of
severance compensation
On April 1, Gale conveyed to Robbins by letter much
the same information previously given to Levin regarding,
among other things, the scheduled stockholders' meeting,
its desire to find a solution to the strike, the
unacceptability of production restrictions at the
Harrington facilities in the event that the merger was
effected, and the Company's reluctant inclination to close
down the St Louis operation for economic reasons should
the strike persist. Accordingly, Gale repeated its offer to
resume negotiations at a mutually convenient time and
place "in the hope of finding a solution . . which will
permit the strike to be terminated, and a warehouse
operation to be conducted here in St. Louis." Should no
such solution be found, Gale proposed, as he had done
before, to continue negotiations concerning the
termination of this warehouse
including, but not limited to, offering
employment to St Louis warehouse employees who
desire to accept employment at whatever place the
Company will do warehousing, probably Harrington, if
the merger goes through, and to consider some type of
severance compensation or supplementary
unemployment compensation benefits
Having received no response to the March 29 or April
1 letters, Gale on April 5 again wrote Robbins repeating
the offers to negotiate made in the prior correspondence.
On April 6, this letter was answered by Levin who
characterized Gale's "whole series of letters [as]
containing so many self-serving statements [designed] to
exculpate [his] clients from their unfair labor practices"
Asserting that he and Robbins were too preoccupied with
supplying evidence to the National Labor Relations Board
in support of its charges and in determining damages
resulting from the Company's contract violations, he
expressed the view that further negotiations would be
futile He also noted that the Company's bad faith was
revealed, in part, in Gale's letters because
[t]hough the Union remains the certified bargaining
agent for all production, maintenance and shipping
employees, you write about negotiating for a remnant
of warehouse workers that you may retain for your
convenience in St. Louis, as though that fully discharges
your statutory obligations.
Levin's letter elicited Gale's written response on April 8
that his prior correspondence reflected a truthful
statement of his dealings with union representatives Gale
also wrote that, although the Union had not complied
with its repeated requests for negotiating meetings, the
Company was
. . . ready and willing to meet at any mutually
convenient time and place to negotiate fully, and in
good faith as to all problems and matters incident to
the termination of the St. Louis warehousing operations
which the Union has now forced on the Company by its
demands, and the continuation of the present strike in
support of its demands
On April 16, Gale wrote Levin, advising him that the
financing necessary for the consummation of the merger
had been obtained; that all the other problems which
stood in the way of the merger seemed to be resolved; and
that the shareholders were scheduled to take final action.
matter Gale also reiterated the Company's offer to
meet with the Union for the purpose of "negotiating on
all matters which remain open between the parties "
NEW ERA SHIRT COMPANY 983
Further efforts by Gale on May 2 and 3 to arrange a
meeting with the Union also proved to be futile The
merger was finally consummated and, on May 2, Levin
was informed by Gale that the Secretary of the State of
Missouri had issued the day before a certificate of merger
of the Respondent and Harrington with the Respondent
being the surviving corporation
7. History of merger negotiations
As discussed above, even before contract negotiations
were initiated, the Union was put on notice that the
Respondent intended to sell its business or any part of its
operations Indeed, at one point the Union produced a
prospective purchaser of the Company's Arcadia and
Piedmont plants but nothing came of this effort The
Respondent's other attempts to secure a buyer proved to
be equally fruitless. However, one prospect, Harrington, a
Delaware corporation with manufacturing facilities in that
State, appeared to be interested. Pursuant to an
exploratory conversation, the parties met in New York
City on or about January 25, 1968, to consider the sale or
other disposition of the Respondent. After a day of
negotiations, it became clear that Harrington was
interested only in a merger arrangement. However,
discussions broke off because of differences over three or
four major matters, including the net worth of the
respective parties At Harrington's instance, merger
negotiations were revived in the latter part of February
1968 but as of March 21 the parties had still not reached
agreement over the comparative net worth of the
companies, Harrington's demand for 50 percent control
over the merged company and the consequent stock
arrangement to be made. Also unsettled were, financing
problems, Harrington's demand to move the St Louis
operation to New York, and the Respondent's contention
that the Doyle, Tennessee, operation, which was
separately owned by Robert Roggen, Harrington's
president, and one or two other persons, should be
included in the merger After the required financing was
obtained in April, the Respondent's stockholders voted to
merge and on April 26, 1968, the Respondent and
Harrington signed Articles of Merger with the Respondent
remaining as the surviving corporation Thus,
Harrington's manufacturing and other facilities and offices
became an integral part of the Respondent On the latter
date, Roggen became the president of the Respondent and
Kammer, the executive vice president. Kaminer resigned
on October 31, 1968, and severed all connection with the
Respondent
out work to Quality Manufacturing Company of Bangor,
Pennsylvania, an ILGWU contractor whom the
Respondent had registered with the ILGWU as recently
as January 31, 1968. It is undisputed that neither
Harrington nor Flyer was related to that company As for
the other non-ILGWU companies, the Respondent openly
dealt with them in their true names. It is quite evident
that the Union was unaware that the Respondent was
having some of its garments produced by non-ILGWU
firms until March 20, 1968, when a shipping employee
handed Joint Board Manager Robbins labels designating
points of origin taken from cartons in which Harrington
and Flyer shipped their garments."
B Concluding Findings
It is the General Counsel's position that the
Respondent , in violation of Section 8(a)(5) and ( 1) of the
Act, failed to perform its bargaining obligation by
unilaterally abrogating an oral agreement with the Union
made during contract negotiations whereby the
Respondent committed itself to have its garments
produced only by contractors under contract with the
ILGWU," by deceptively concealing from the Union its
breach of obligation under that agreement by having
non-ILGWU contractors with whom it was dealing ship
merchandise under the name of Quality Manufacturing
Company, an ILGWU contractor which it had registered
with the Union on January 31, 1968; and by unilaterally
deciding to merge and then merging with Harrington,
without notifying or bargaining with the Union concerning
its decision and the actual merger In addition to making
the same argument regarding the repudiation of the oral
agreement, the Union urges that the "totality" of the
Respondent ' s conduct during contract negotiations
establishes that it was not bargaining in good faith. The
Respondent, on the other hand , denies that it either
entered into the alleged oral agreement or that its
employment of non -ILGWU contractors or the
concealment of such dealings constituted an unlawful
refusal to bargain With respect to the merger, the
Respondent maintains that it was under no duty to discuss
it with the Union and that, in any event , it did notify the
Union and bargain with it concerning the contemplated
merger and its effects Finally, it argues that it was the
Union which bargained in bad faith without any intention
of reaching an agreement . For the reasons considered
below, I find that the Respondent did not fail to fulfill its
bargaining obligation in the indicated respects.
I The alleged oral agreement and its abrogation
8 Subcontracting practices
As indicated earlier in this Decision, the Respondent,
upon the expiration of its collective-bargaining contract on
October 31, 1967, discontinued its manufacturing
operations and became a jobber using contractors to
produce its garments. It appears that the Respondent
employed only ILGWU contractors until January 1968,
when it also began to utilize the services of non-ILGWU
contractors Two of such contractors were Harrington,
with whom the Respondent ultimately merged, and Flyer
Garment Company of Fort Smith, Arkansas. For some
reason not adequately explained, these companies shipped
merchandise to the Respondent in the name of Quality
Manufacturing Company with the letter H added for
Harrington and F for Flyer At this time and for some
time prior thereto the Respondent had been contracting
As shown earlier in this Decision, I have credited the
denial of Attorney Gale, the Respondent's chief
negotiator, that he had expressly made any oral agreement
during contract negotiations to use exclusively ILGWU
contractors to produce the Respondent's garments On
October 26, 1967, when such an agreement was supposed
to have been made, the Union adamantly refused to
permit the Respondent to shut down its factories or to
"It appears that the shipping employees would be aware of the
Respondent 's dealing with non-ILGWU contractors because of the absence
of union labels on their garments
"The amended complaint also alleges a similar unlawful refusal to
bargain during the term of its written contract by contracting out its work
to non-ILGWU contractors in violation of the provisions of that contract
However, no evidence was adduced to substantiate that allegation , nor is it
contended that such a finding should be made
984 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
convert its business to an ILGWU jobbing operation.
However, concerned that the Respondent's goods in the
hands of ILGWU contractors might be tied up in the
event the Union called a strike against it upon the
expiration of the parties' written contract, Gale succeeded
in securing assurance from the Union not to interfere with
work sent to ILGWU contractors before November 15
while he discussed the Company's problems and intentions
with the Union's International president, Stulberg, in New
York City. Manifestly, such assurance does not warrant a
finding that the Respondent thereby assumed a firm
contractual obligation of indefinite duration to employ
ILGWU contractors exclusively
Notwithstanding the absence of an express agreement,
the General Counsel and the Union urge that a binding
agreement to restrict contracting to ILGWU shops should
be inferred from the Respondent's contract proposals, its
conduct during the negotiations, the Union's well-known
policy and practices, and the background of the parties'
bargaining relations. From a careful appraisal of the
record, I am not persuaded that the evidence supports this
contention.
It is undisputed that throughout the negotiations the
Respondent repeated its desire to operate as an ILGWU
jobber, employing only ILGWU contractors to do its
work, and submitted contract proposals to that effect 31
However, it is perfectly plain that these proposals were
intended to be ultimately embodied in a written contract
to be executed by the parties covering all the terms and
conditions of employment of the Company's remaining St
Louis employees There is nothing in the record to
indicate that these proposals were designed to create an
immediate commitment While the parties' history of
bargaining relations, the Union's policy and practices, and
the Respondent's contractual objectives might have
understandably induced the Union to take for granted that
the Respondent would operate exclusively as an ILGWU
jobber during contract negotiations, as it did in fact until
January 1968, 1 am unable to infer that the Respondent
bound itself by agreement to do so. Undoubtedly, it would
have been unwise for the Respondent to operate
differently during contract negotiations, although in
January 1968 it began to send work to non-ILGWU
shops At that time, however, there still were serious
unresolved issues preventing the parties from reaching a
final agreement and, probably in an apparent effort to
avoid being placed in a precarious situation where all its
work could be tied up if the Union called a strike to
enforce its contract demands," the Respondent decided to
use some nonunion contractors who would not be subject
to the Union's pressures."
I.These proposals , which also included the use of the union label, were
substantially similar to those contained in the parties ' expired contract
pursuant to which the Respondent had previously operated both as a
manufacturer and jobber.
"Indeed , when Robbins in January 1968 requested Gale to furnish the
Union with the names of ILGWU contractors, Gale inquired whether it
was for the purpose of stopping ILGWU contractors from working on the
Respondent 's goods It was only after Gale received Robbins' assurance
that the purpose was simply to make a check of health and welfare
payments that Gale told the Respondent's director of production, Turk, to
supply the information
"While it is true, as the General Counsel states, that an employer's
repudiation of proposals and agreements made during earlier negotiating
sessions may be evidence of bad-faith bargaining in certain circumstances
(Shannon Be Simpson Casket Company. 99 NLRB 430 , 435), such is not
the case here At no time during contract negotiations did the Respondent
withdraw its proposals to operate as an ILGWU Jobber
As further evidence of an oral agreement by the
Respondent to have its production performed only by
ILGWU shops, the General Counsel and the Union rely
on the Respondent's concealment of its dealings with two
nonunion contractors, Harrington and Flyer, whose
shipments to the Respondent were made in the name of
Quality Manufacturing Company, an ILGWU contractor "
The General Counsel and the Union urge that such
deceptive practices would be unnecessary if there were no
binding commitment to use only ILGWU contractors
However, apart from the fact that there were other
nonunion contractors with whom the Respondent was
openly dealing in their true names, it does not
automatically follow that the concealment betrays the
existence of an agreement prohibiting contracting with
nonunion shops Certainly, as noted above, the Company's
conduct may be explained with equal plausibility as
precautionary measures to avoid prejudicing the contract
negotiations then in progress and at the same time to
avoid being caught in a situation where its goods in the
hands of ILGWU contractors could be tied up should the
Union call a strike as, indeed, it subsequently did. In these
circumstances, I find an insufficient basis in the
concealment for inferring a binding agreement to use only
ILGWU contractors.
Similarly unpersuasive as evidence that such an
agreement had been reached is the letter of Director of
Production Turk to the Union, upon which the General
Counsel and the Union also rely. This letter was sent on
January 31, 1968, in response to the Union's request for
the names of the ILGWU contractors the Respondent was
employing for the purpose of ascertaining whether health
and welfare fund payments had been made for the
contractors' employees In it, Turk stated he was
supplying the names "[iln accordance with our contract "
I do not believe, as the General Counsel and the Union
argue, that the reference to "our contract" by Turk, who
was not a participant in the negotiations, was an
admission of the existence of an oral agreement. In my
opinion, it is more likely than not that the reference was
simply to the expired written contract which set forth the
requirement for registering ILGWU contractors with the
Union.
Nor am I able to find, as the General Counsel and the
Union urge, compelling evidence of an oral agreement in
the payments the Respondent made during contract
negotiations to the Central States Health and Welfare
Fund, ILGWU, on work performed by ILGWU
contractors' employees. Significantly, the payments were
for the benefit of the employees of the contractors who
themselves were primarily responsible for such payments
under their bargaining contract with the ILGWU While
the Respondent followed past practices in making the
remittances, those sums actually represented part of the
price paid for having the work done by the contractors.
Had the Respondent not made the remittances, but left it
to the contractors to do, it appears that the contractors'
charges to the Respondent would have taken this into
account. All things being considered, I am unable to find
in its health and welfare fund contributions an admission
of an agreement by the Respondent to deal exclusively
with ILGWU contractors
"It appears that ILGWU employees at the Respondent's St Louis
warehouse were aware of the Company' s use of nonunion contractors
whose garments did not bear the union label However, they did not call it
to the Union' s attention until March 20, 1968, when the strike vote was
taken
NEW ERA SHIRT COMPANY 985
On the other hand, militating against a finding that the
Respondent orally agreed to contract out its work only to
ILGWU contractors is the fact that, although Assistant
Regional Director Clay and Joint Board Manager
Robbins testified to such an agreement, their pretrial
affidavits given to a Board agent make no mention of it
Moreover, in a lawsuit the Union instituted against the
Respondent on March 22, 1968, in the U. S District
Court to recover, among other things, damages sustained
as a result of the Respondent's violation of the
subcontracting provisions of the expired contract, the
court complaint, as amended, signally does not also seek
damages for the Respondent's alleged breach of the oral
contracting agreement in issue in the present Board
proceeding The Union's explanation for not asserting
such a cause of action in the lawsuit is that it alleged the
breach of the oral agreement as an unlawful refusal to
bargain in the unfair labor charges it had filed herein
However, the charges do not substantiate the Union's
explanation 11
In view of the foregoing, I find that the evidence does
not establish that the Respondent bound itself by oral
agreement to have its garments produced only by ILGWU
contractors. 1, therefore, conclude that the Respondent's
use of non-ILGWU contractors was not violative of
Section 8(a)(5) and (1) of the Act
Even were it assumed that the Respondent and the
Union had entered into such an oral agreement, I have
serious doubts that the Respondent's failure to observe the
alleged restriction on subcontracting to ILGWU
contractors would constitute an unlawful refusal to
bargain within the meaning of Section 8(a)(5) and (1) of
the Act There can be no question that an employer's
unilateral change of a term or condition of employment of
his employees embodied in a collective-bargaining
agreement violates his statutory bargaining obligation
owing to his employees and their representative 11
Certainly, the Board is not powerless to determine
whether an unfair labor practice was thereby committed
and to afford remedial relief simply because the unilateral
change happens also to be a breach of contract cognizable
in a court of law 10 On the other hand, it is not every
breach of contract that constitutes an unlawful refusal to
bargain 41 In those cases where an unfair labor practice
was found the employer's unilateral action had a
continuing and significant impact on the working
conditions of the employer's employees in the unit
represented by the union.
In the present case, the oral agreement allegedly
violated was not the usual collective-bargaining agreement
covering the terms and conditions of employment of the
Respondent's own employees These employees were not
'Both the original charge, which was filed on March 22, 1968 , and the
amended charge , which was filed 4 days later, allege, in relevant part, that
the Respondent did not bargain in good faith with the Union both before
and after November 1, 1967, in that it concealed the fact that it was
seeking either to close its plant or to contract out all the work performed
by employees in the bargaining unit and thereby failed and refused to
bargain with respect to the question of contracting out all its work or
selling or closing its plant or with respect to the effect such action had on
the wages , hours, and conditions of employment of its employees
"C & S Industries, Inc. 158 NLRB 454, 457-459, Kinard Trucking
Company, Inc, 152 NLRB 449, 450-451, C & C Plywood Corporation.
148 NLRB 414, 415, set aside 351 F 2d 224 (C A 9), reversed 385 U S
421.
'°Ibtd
"C & S Industries, supra. 458, American Vitrified Products Company.
127 NLRB 701, 702, in I
engaged in manufacturing operations;4' their jobs involved
warehouse and shipping work which was not directly
affected by the Respondent's use of non-ILGWU
contractors to manufacture its garments. The workers who
were actually adversely affected by the Respondent's
action were employees of ILGWU contractors belonging
to another bargaining unit which was represented by
another affiliated labor organization. It was these
employees who were deprived of employment
opportunities, not the Respondent's employees Indeed,
the General Counsel and the Union concede this and, as a
remedy for the alleged unfair labor practices, request the
Board to order the Respondent to reimburse the
employees of ILGWU contractors, whoever they might
be, for loss of pay they suffered by reason of the
Respondent's repudiation of the agreement in question In
addition, they request the Board to order the Respondent
to contribute to the various health and welfare funds so
that the contractors' employees may earn service credits
In sum, it appears to me that, since the terms and
conditions of employment of the Respondent's employees
were not significantly affected by the Respondent's alleged
unilateral repudiation of the oral agreement, no unlawful
refusal to bargain can be found .41 The General Counsel
and the Union, nevertheless, urge that, in view of the
integrated nature and the special problems of the garment
industry, which Congress recognized in enacting Section
8(e) of the Act, the Board should extend the Respondent's
bargaining obligation to cover the employees of
contractors under contract with another unit of the
ILGWU and subject the Respondent to the strictures of
Section 8(a)(5). However, Section 8(e )14 only exempts
unions from the so-called hot cargo and secondary boycott
prohibitions of that provision and Section 8(b)(4)(B)
There is absolutely nothing in Section 8(e) or its
legislative history to indicate that Congress also intended
to make it an unlawful refusal to bargain for an employer
in the garment industry to refuse to honor an agreement
to restrict contracting to specified union shops.
Accordingly, I recommend dismissal of the allegations of
the amended complaint relating to the abrogation of the
oral agreement
2 Alleged concealment and deception in employing
non-ILGWU contractors
Having found that the Respondent did not unlawfully
refuse to bargain with the Union by dealing with
non-ILGWU contractors in contravention of an
agreement between the parties, it follows that its conduct
in concealing from the Union that it was having two
nonunion contractors, Harrington and Flyer, produce and
"It is noted that the Respondent had discontinued its manufacturing
operation for legitimate economic reasons upon expiration of its bargaining
contract on October 31, 1967 The amended complaint does not allege, nor
is it contended, that the Respondent failed to perform its bargaining
obligation in that respect
"For this reason , the principle of Fibreboard Paper Products Corp v
N L R B. 379 U S 203, cited by the General Counsel and the Union, is
inapplicable Similarly without merit is their contention that, regardless of
the agreement , the Respondent ' s unilateral change of established
subcontracting practices violated Section 8(a)(5) and (I) of the Act Cf
N L R B v Benne Katz , d/b/a Williamsburg Steel Products Co , 369
U S 736
"In relevant part, Section 8(e) exempts from its prohibitions and those
of Section 8(b)(4)(B ) "persons in the relation of a jobber , manufacturer,
contractor , or subcontractor working on the goods or premises of the
jobber or manufacturer or performing parts of an integrated process of
production in the apparel and clothing industry
986 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ship its garments under the name of Quality
Manufacturing Company, an ILGWU contractor, does
not amount to a violation of Section 8(a)(5) and (1) of the
Act, whatever might be the Union's recourse in a court of
law. I, therefore, recommend the dismissal of the relevant
allegations of the amended complaint
3. The merger
As indicated above, it is the General Counsel's
contention that the Respondent also violated its
bargaining obligation by reason of its unilateral action in
merging with Harrington, without giving the Union
advance notice and an opportunity to discuss its decision
and the effects of the merger on the employees I find no
factual support for this contention.
Without repeating the details previously recited in this
decision, it is quite clear that even before the expiration of
the parties' contract on October 31, 1967, the Respondent
notified the Union of its financial and other difficulties
and of its intention to dispose of its business, in whole or
in part, and to operate as an ILGWU jobber Despite its
efforts to secure a purchaser - and in this it had invited
the Union's assistance no sale or other business
arrangement could initially be effected. When the contract
expired, the Respondent therefore ceased its
manufacturing operations and undertook to act as an
ILGWU jobber No contention is made that the
Respondent's action was in breach of its bargaining
obligation.
It was not until about January 1968 that Harrington
expressed an interest in merging with the Respondent
Nothing came of their preliminary discussions. During the
latter part of February, the negotiations, however, were
resumed and by March 21 some progress had been made,
although there still remained several major areas of
differences which had to be resolved before a merger
could be agreed upon. On that date, during contract
negotiations with the Union, Attorney Gale apprised the
Union's representative, Robbins, of the merger
discussions, the problems therein involved, the differences
that had to be settled before a merger could be concluded,
and his disapproval of the merger terms proposed by
Harrington, whose name was withheld until the next day
Robbins expressed the Union's opposition to the merger
as it would result in the Respondent conducting both
nonunion manufacturing operations in the Harrington
plant and ILGWU jobbing operations in St. Louis Also
discussed was Gale's previously submitted proposal for a
clause whereby the parties would have the option to
terminate the contract in the event of sale, merger,
consolidation, or other disposition of the Respondent's
business This proposal was rejected by Robbins In the
course of the meeting, Gale implored Robbins to defer the
threatened strike lest the Respondent's principals be
forced to accept Harrington's merger terms.
In subsequent bargaining sessions both before and after
the inception of the strike on March 25, the then pending
merger negotiations were again considered Expressing its
unalterable opposition to the the merger if the surviving
corporation maintained union and nonunion operations,
the Union demanded that its proposed contract be signed
before it would call off the strike Since the terms of the
proposed contract would, in effect, prevent the merger,
Gale refused to accept it This lead to a discussion of
severance pay for the St. Louis employees who might be
terminated as a result of the merger, if it were
consummated, and their employment at the Harrington
plant. These meetings were followed by a series of
communications from the Respondent to the Union,
offering to continue discussions regarding all aspects of
the merger and the treatment of employees affected by it
and the strike. However, the Union rejected these offers.
From my analysis of the evidence, I am unable to agree
with the General Counsel and the Union that the
Respondent, rather than engaging in genuine negotiations
with the Union concerning its merger and its effects upon
employees, simply presented the Union with a fait
accompli On the contrary, I find that actually the
Respondent afforded the Union ample opportunity for
meaningful negotiations with respect to the contemplated
merger and the treatment to be accorded employees
affected by the merger should it eventuate °' Indeed, such
discussions did take place in which the Union voiced its
unalterable opposition to the Respondent's merger with a
nonunion firm and insisted upon acceptance of its position
on its own terms. The fact that the Respondent had
preliminary talks with Harrington before mentioning them
to the Union, in the hope that some business arrangement
could ultimately be worked out or that the Respondent
refused to yield to the Union's opposition or demands
does not establish that the Respondent defaulted in its
bargaining obligation
I, therefore, conclude, on the basis of all the facts and
circumstances herein shown, that the Respondent did not
violate Section 8(a)(5) and (1) of the Act by failing to
bargain with the Union concerning the contemplated
merger and its effects. The dismissal of the relevant
allegations of the amended complaint is accordingly also
recommended
4. Overall bad-faith bargaining
The Union urges that the totality of the Respondent's
conduct during contract negotiations discloses that the
Respondent really engaged in bad-faith bargaining without
an honest intention of reaching agreement with the Union.
However, the amended complaint does not allege such
overall conduct, as distinguished from the specific acts
therein alleged, as violative of Section 8(a)(5) and (1) of
the Act. Nor was the case tried on that theory In these
circumstances, I find that the issue is not properly before
me.°6 At any rate, the evidence recited above does not
substantiate the Union's contention.,' Accordingly, I
recommend dismissal of the amended complaint in its
entirety.
"I find no merit in the Respondent 's contention that, since the merger
involved the absorption of another company's operations, the merger was
not a bargainable matter It is true that there may be circumstances where
an employer' s rearrangement of his business might not be a matter of vital
concern to his employees or their bargaining representative and therefore
no bargainable obligation would attach Here, however, the record shows
that the merger could potentially result in a loss of jobs for the St Louis
warehouse employees if work, which normally would be contracted out and
handled by them, would be manufactured in the Harrington factory For
this reason, the Respondent was duty bound to discuss with the Union the
contemplated merger and its impact on the St Louis employees, as,
indeed, it did
"Ben Cutler v N L R B, 395 F 2d 287, 289 (C A 2), enfg sub nom
Associated Musicians of Greater New York, Local 802, AFM, 164 NLRB
23
471n view of this determination, it is unnecessary to consider the
Respondent 's countercharge that it was the Union 's bad faith that
precluded meaningful negotiations and agreement Cf Times Publishing
Company, 72 NLRB 676, 682-683, Artiste Permanent Wave Company,
172 NLRB No. 223, sec 11, E, fn 21
NEW ERA SHIRT COMPANY 987
Upon the basis of the foregoing findings of fact and
upon the entire record in the case, I make the following
3 The Respondent has not engaged in the unfair labor
practices alleged in the amended complaint
Conclusions
RECOMMENDED ORDER
Upon the basis of the foregoing findings and
conclusions, and upon the entire record in the case, and
1. The Respondent is engaged in commerce within the pursuant to Section 10(c) of the National Labor Relations
meaning of Section 2(6) and (7) of the Act Act, as amended,
2 St. Louis Joint Board, International Ladies' Garment IT Is ORDERED that the amended complaint issued
Workers' Union, AFL-CIO, is a labor organization within herein against Respondent New Era Shirt Company be,
the meaning of Section 2(5) of the Act and it hereby is, dismissed