Ozark Steel Fabricators, Inc.

National Labor Relations Board - Board Decisions

Oct 19, 1972

199 N.L.R.B. 847 (N.L.R.B. 1972)

OZARK STEEL FABRICATORS
Ozark Steel Fabricators, Inc. and United Steelworkers
of America , AFL-CIO. Case 14-CA-6228
October 19, 1972
DECISION AND ORDER
On December 16, 1971, Trial Examiner Morton
D. Friedman issued the attached Decision in this pro-
ceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions and supporting briefs.
The Respondent filed an answering brief.
The Board has considered the record and the
Trial Examiner's Decision in light of the exceptions
and briefs and has decided to affirm the Trial
Examiner's rulings, findings,' and conclusions 2 as
herein modified, and to adopt his recommended Or-
der.
The Trial Examiner found and concluded that
the Respondent did not violate Section 8(a)(3) and (1)
of the Act by locking out its employees following a
bargaining impasse, and by thereafter continuing lim-
ited business operations with the use of management
personnel. While we agree with the Trial Examiner's
conclusions that the lockout and subsequent continu-
ation of operations with management personnel in the
circumstances here did not violate Section 8(a)(3) and
(1) of the Act, we do so only for the reasons fully
discussed in our recent decisions in Ottawa Silica
Company and Intercollegiate Press, et a1.3
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board hereby orders that the complaint herein
be, and it hereby is,, dismissed in its entirety.
MEMBERS FANNING AND JENKINS, dissenting:
Contrary to our colleagues, we would find in ac-
cord with our dissenting opinions in Ottawa Silica,
supra, and Intercollegiate Press, et al., 199 NLRB No.
35, that Respondent violated Section 8(a)(1) and (3)
of the Act by operating its plant with replacements for'
its locked-out employees from February to August
1971.
We would find in line with the court's reasoning
in Inland Trucking Co. v. N.L.R.B., 440 F.2d 562 (C.A.
7), to which Chairman Miller still apparently sub-
scribes, that Respondent's use of replacements for a
prolonged period was inherently destructive of the
rights of its locked-out employees and therefore viola-
tive of Section 8(a)(1) and (3) of the Act without re-
gard to any claim that such conduct was motivated by
business considerations.
However, even if the test of business justification
is applied, it is evident from the record that Respon-
847
dent has not succeeded in presenting evidence of legit-
imate and substantial business justification for its
continued operation during the lockout . Although
Respondent contends it had a reasonable apprehen-
sion of a strike by the Union , it is clear that, when
Respondent announced the lockout and its plan to
operate with replacements , it made no mention of any
concern about a possible strike . Nor did Respondent
at any time ask the Union for assurance that it would
not strike . Moreover , the Union had not even taken
a strike vote prior to the lockout.
As we believe that Respondent's conduct was
destructive of protected employee rights and that, in
the absence of any clear evidence of the Union's in-
tention to strike, Respondent did not have a legit-
imate and substantial business justification for its
conduct , we would find that Respondent violated the
Act.
i In the absence of exceptions thereto, we adopt pro forma the Trial
Examiner 's statement that David Laut , son of the Respondent's president
and coowner , William D Laut, is a member of the bargaining unit repre-
sented by the Union In addition to being its president , William D Laut is
one of Respondent's two stockholders and founders . See, e g, Foam Rubber
City #2 of Florida, Inc, 167 NLRB 623.
The names of William D. Laut and David Laut are incorrectly spelled
in the Trial Examiner 's Decision as William D. and David "Laud."
2 The Charging Party has excepted to certain credibility findings made by
the Trial Examiner It is the Board 's established policy not to overrule a Trial
Examiner's resolutions with respect to credibility unless the clear preponder-
ance of all the relevant evidence convinces us that the resolutions were
incorrect Standard Dry Wall Products, Inc, 91 NLRB 544, enfd . 188 F.2d
362 (C A. 3). We have carefully examined the record and find no basis for
reversing his findings.
3 197 NLRB No. 53, and 199 NLRB No 35 The issue as to the "offensive"
or "defensive" nature of the lockout, which is dealt with extensively by the
Trial Examiner and which is treated at some length in the briefs submitted
to us by both General Counsel and Charging Party, is not, in our view,
controlling or even materially relevant to the issue of the legality of the
lockout Members Kennedy and Penello would also find it unnecessary to
resolve this issue in order to determine the legality of the use of temporary
replacements , since, as they have previously indicated , they would in any
event overrule Inland Trucking, 179 NLRB 350 On this latter issue, however,
Chairman Miller continues to be of the view that N.L RB v. Brown Food
Store, 380 U.S. 278, requires an examination of the several factors referred
to in the Court 's opinion in that case in order to determine whether the use
of replacements in any given case is violative of the Act He would , therefore,
concur in the Trial Examiner 's analysis with respect to the use of the replace-
ments, including affirming his finding that the defensive nature of the lockout
here is one of several relevant factors weighing in favor of the legitimacy of
the use of replacements in the particular circumstances of this case.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
MORTON D. FRIEDMAN, Trial Examiner: Upon a charge
filed on April 30, 1971, and an amended charge filed on
June 28, 1971, by United Steelworkers of America, AFL--
CIO, herein called the Union, the Regional Director for
Region 14 of the National Labor Relations Board, herein
called the Board, issued a complaint on July 21, 1971,
against Ozark Steel Fabricators, Inc., herein called the Re-
spondent or the Company, alleging violations of Section
199 NLRB No. 136
848 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
8(a)(1) and (3) of the National Labor Relations Act, as
amended (29 U.S.C. Sec. 151, et seq.), herein called the Act.
In its duly filed answer to the complaint, the Respondent,
while admitting certain allegations of the complaint, denied
the commission of any unfair labor practices.
Pursuant to notice the hearing in this case was held
before me at St. Louis, Missouri, on September 30 and
October 4, 1971. All parties were represented and were af-
forded full opportunity to be heard, to introduce relevant
evidence, to present oral argument, and to file briefs. Oral
argument was waived. Briefs were filed by all parties. Upon
consideration of the entire record, including the briefs of the
parties, and upon my personal observation of each of the
witnesses as they appeared before me, I make the following:
FINDINGS OF FACT
I THE BUSINESS OF THE RESPONDENT
During the year immediately preceding the issuance of
the complaint herein, the Respondent purchased and
caused to be transported and delivered to its place of busi-
ness in the State of Missouri steel and other goods and
materials valued in excess of $50,000, of which goods and
materials valued in excess of $50,000 were transported and
delivered to its place of business in Missouri directly from
points located outside the State of Missouri, or were trans-
ported and delivered to said place of business in Missouri,
and received from other enterprises located in the State of
Missouri, each of which other enterprises had received the
said goods and materials delivered to it directly from points
located outside the State of Missouri.'
It is concluded, and I find, that the Respondent is an
employer engaged in commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
11 THE LABOR ORGANIZATION INVOLVED
It is admitted, 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. Introduction and Issues
After the certification of the Union in October 1970,
the parties began bargaining negotiations in November
1970, which negotiations continued in an on-and-off fash-
ion until January 8, 1971. Thereafter on February 12, 1971,
the Employer locked out its employees when no contract
was reached and continued production in a limited fashion
with supervisory personnel.
The complaint alleges and the General Counsel and the
Union contend that the lockout was discriminatory and
therefore violative of Section 8(a)(3) and (1) of the Act.
Among other items which the General Counsel and the
Charging Party claim made the lockout unlawful was the
fact that the Respondent continued production after the
lockout by utilizing supervisory personnel and officers of
the Respondent. The Respondent, in its answer, denies the
commission of any unfair labor practices and contends that
the lockout was defensive and undertaken for purposes
which were entirely lawful.
Accordingly, the central issue presented by the plead-
ings and the contentions of the parties is whether Respon-
dent, by locking out its employees and thereafter continuing
production dung the lockout period by utilizing superviso-
ry personnel, discriminated against its employees in viola-
tion of Section 8(a)(3) and (1) of the Act.
B. Background
The Respondent is engaged in the fabrication and fur-
nishing of structural steel for warehouses, churches, schools,
and like structures. The Corporation was organized in 1963
with a capitalization of $10,000 furnished by its two stock-
holders, William D. Laud, its president, and Norman L.
Canon, its secretary-treasurer and shop superintendent.
Since its inception, and because it is undercapitalized, the
Respondent has had difficulty in procuring the basic steel
required for its business. Thus, the Respondent has been
unable to establish lines of credit and has had to pay cash
on delivery for its steel. Only one supplier has extended a
30-day credit to Respondent and because the supplier is
located in Pennsylvania, the Respondent has had to pay a
5-percent freight premium for its products. Additionally,
the Respondent carries a large indebtedness in the form of
a loan from the Small Business Administration. The amorti-
zation of this loan, which is secured in part by Respondent's
inventory, must be paid in regular installments. Thus, from
its inception, the Respondent has never been in a good,
sound financial position.
As noted above, the Respondent is engaged in the con-
struction industry. According to Respondent's president,
William Laud, most of the orders the Respondent receives
are on contracts or subcontracts which include completion
dates for which there is some sort of penalty clause incorpo-
rated in the event that the work is not completed by the date
set forth in the agreement. Thus, it is essential, according to
Laud, that once a contract is made, the work not be inter-
rupted by strikes or other impediments to production be-
cause such events can cause delays which, in turn, will cost
the Respondent penalties for failure to complete on time.
In addition to the foregoing, the construction industry
in which the Respondent is engaged has its busiest season
during the good weather periods of the year, namely the
spring and summer months, at which time production in the
Respondent's plant is at its peak. Contracts are normally
bid in the winter months for completion with penalty claus-
es in the summer and other good weather periods. Thus, a
strike during the summer season when production is at its
peak could seriously effect the Respondent financially. The
Respondent would be thus strapped with its heaviest inven-
tory and its largest outlay of cash at a time when it was
under duress to fill the orders placed with it by completion
date. A strike would thus put it in,a bad financial situation
in view of the fact that most of its contracts contain penalty
clauses.2
1 This material is alleged in an amendment to the complaint dated Septem-
ber 22, 1971 2 All of the foregoing from the testimony of Laud and Carron which is
OZARK STEEL FABRICATORS
It is with this foregoing situation concerning the
Respondent's operations that the unionization and the ne-
gotiations for a union contract must be viewed. Insofar as
unionization of the Respondent's plant is concerned, during
1967, the Iron Workers Union, not to be confused with the
current negotiating union, was certified as the bargaining
representative of Respondent's employees. The Respondent
met with the Iron Workers a few times subsequent to certifi-
cation to negotiate a contract but when no agreement was
reached after a short period of time, the Iron Workers evi-
dently gave up and disappeared from the scene. In October
1970, the current union, the Steel Workers, was certified as
the bargaining representative of Respondent's employees
after a consent election. The Respondent in no way inter-
fered with the election and did not oppose the Union in any
way. Thereafter, on November 12, 1971, the parties held
their first negotiation meeting.
C. The Bargaining
At that session of November 12, 1970, the Respondent
presented a complete proposal to the Union in the form of
a written agreement. The proposed written agreement was
discussed item by item and portions of it were either accept-
ed or rejected by the union representatives who consisted of
a shop committee under the leadership of Robert McVay,
a business representative of the International Union. The
Respondent was represented by its two principals, William
Laud and Norman Carron, but most of the negotiating was
done by Raymond R. Roberts, counsel for the Respondent.
At that meeting McVay for the Union orally presented cer-
tain union demands.
The next meeting took place on November 17. Al-
though the Respondent's witnesses , Laud and Carron, in-
sisted that the Union had promised to submit at this
meeting, and at later meetings, a full written proposal, this
was denied by McVay, the Union's business representative.
In any event at the meeting of November 17, the Union did
submit a hand written proposal for wages which also con-
tained proposed classifications of the various employees in
the Respondent's shop. That there was discussion with re-
gard to wages and classifications at that and at later meet-
ings is verified by a letter from Roberts, Respondent's
counsel, to McVay dated December 11, 1970, concerning
the various employees and their classification.3 Again, at
this meeting of November 17 the various contract proposals
of the Respondent were gone over and some language was
changed to meet the approval of both of the parties. Howev-
er, no final agreement was reached.
The next meeting was held on November 19, 1970.
Again the various proposals were discussed and Laud testi-
fied that the parties went through Respondent's initial bar-
credited in this respect . Although there was some indication on cross-exam-
mation that probably less than the stated number of contracts were let with
penalty clauses , I find that for the most part the Respondent's officers'
testimony in this regard is reliable
3 The recollection of Respondent 's witness with regard to some of these
meetings is rather vague . For instance , Laud testified that there were meet-
ings proposed for both November 17 and 19 . However the record establishes
that only one meeting was held during that period of time and this was on
November 17 Also, Carron testified that this meeting was held on November
19.
849
gaining proposals item by item.
The Respondent' s witnesses insisted that the next
meeting was scheduled for December 1, 1970. At that time
both the bargaining committee and the Respondent's repre-
sentatives appeared, but McVay did not. According to Mc-
Vay, the reason for his nonappearance was that Roberts
stated at the November 19 meeting that he would not be
able to meet on December 1, inasmuch as he had a court
engagement for that day. According to McVay, McVay did
not place in his appointment book the date of December 1
as a definite date for the meeting to occur. On the other
hand, Roberts testified that between November 19 and De-
cember 1 he was under the impression that the meeting date
was definite and, accordingly, adjourned his other matters
in order to meet on December 1. Whatever actually oc-
curred is unclear. However, it is apparent that McVay's
reason for not appearing that day was due largely to a
misunderstanding.
The parties did meet on December 3 but only for a
half-day session. This was due to the fact that McVay had
commitments elsewhere for the afternoon of that day.
Again the Respondent's witnesses testified that the session
was originally scheduled for a whole day and Roberts,
Respondent's counsel, claimed that McVay should have
scheduled the entire day because Roberts had canceled de-
positions scheduled for that afternoon. However, Roberts
admitted that he had mentioned at the prior meeting that
he had legal depositions scheduled for that afternoon. Mc-
Vay testified that he believed conflict existed and, because
he did not know of the fact that Roberts had cancelled the
depositions, made other plans for that day and time. How-
ever, in any event, whether McVay's absence on December
1 and his appearance for only half of the day on December
3 may have been excusable under the circumstances due to
the misunderstanding, it was reasonable for the Respondent
to believe that, under these circumstances, the Union was
engaging in dilatory practice and refusing to sit down to
bargain in earnest . Nevertheless, on December 3 negotia-
tions did take place and the Respondent presented what it
called its "final proposal." This was admitted by Canon in
his testimony. Moreover, it is apparent that during this half-
day session the entire proposals were once again discussed
with the parties going over the contract from beginning to
end.
Also at this December 3 meeting the parties discussed
the scheduling of future meetings, McVay indicating that he
had the dates of December I 1 and 12 open. However, Rob-
erts stated that he could not meet on that day and instead
suggested December 14, at which time McVay could not
meet . McVay then testified that he suggested later days in
December such as December 17 and 28. However, Roberts
indicated that he would not be available during that period
of time as he planned to go hunting. No alternate dates were
offered by the Respondent. That the foregoing is the se-
quence of events at the December 3 meeting with regard to
furture meetings is indicated by Roberts' letter to McVay
dated December 11 in which Roberts refers to the
Respondent's "final proposal" and sets forth the classifica-
tions of the various employees. In closing that letter, Rob-
erts wished McVay a Merry Christmas. This would indicate
that the parties had no intention of meeting for the balance
850 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of December. In any event, it is entirely believable that from
the succession of events as they occurred the Respondent
could have believed that the Union was not overanxious to
reach final agreement.
As a result of the Respondent's final proposal pre-
sented at the December 3 meeting, a meeting of the mem-
bership among the Respondent's employees of the Union
was held on December 27, 1970. McVay was present and
presented to the membership present the contract proposal
as it was given in final form by the Respondent. However,
no actual vote was taken on the contract. During that meet-
ing, and probably at other meetings, there was talk among
the Respondent's employees who were members of the Un-
ion about possibly going out on strike. At this suggestion,
according to David Laud, a member of the bargaining unit
but also the son of William Laud, Respondent's president,
McVay told the employees that "the winter was no time to
strike." According to McVay and Peterson, who was presi-
dent of the Local, what McVay stated was that this was no
time to strike because the Company needed a contract to
msure its sales. In any event, young Laud reported to his
father that McVay had stated that this was no time to strike.
It should be noted that young Laud further admitted on
cross-examination that no strike vote was ever taken nor did
McVay tell the assembled employees that a strike would
take place at some future date.
The next and final meeting between the parties took
place on January 8, 1971. At that meeting the parties again
went over the contract proposals and at the end of that
meeting it was clear that no agreement could be reached.
This impasse was brought about by several factors. During
the entire period of the negotiations, the Union had insisted
that the Respondent sign an agreement containing a 30-day
union security provision. The Respondent adamantly re-
fused to consider this stating that they would not sign a
contract agreeing to a "closed shop." In addition, the Un-
ion's money demands were always far too excessive in the
Respondent's estimation for the Respondent to agree to
them. At the January 7 or 8 meeting, the Union proposed
what it called an "economy package" which lowered the
percentage of the Union's monetary demands but included
the union-security clause. This the Respondent refused to
accept. However, it should be noted that on almost all other
items that parties were in agreement. But the refusal by
either of the parties to move from the point on union securi-
ty and on the money demand resulted in a breakup of the
meeting. Thus, an impasse was actually reached by the par-
ties on that day. Neither of the parties would move from
their final positions on union security and on the monetary
package.
According to Laud, whom I credit in this respect, at
this point in the meeting McVay appeared to be angry,
muttered something about closing the "sweat shop," and
stated that the parties were at an impasse and there was no
further purpose in their meeting. However, aside from this
one alleged remark about closing the "sweat shop," Laud
and Carron both admitted that McVay said nothing about
a strike nor did he make any overt threats of any other type.
According to McVay, Carron affirmed this testimony, on
January 8 when McVay left he stated there appeared to be
no point for the parties to stay there and get mad at each
other and he-thought that he might as well break it up and
wait until somebody changed his position before setting up
another meeting. I find and conclude that at that point
regardless of what McVay said, an impasse had been
reached.
No further meetings were held during the month of
January. On January 15, 1971, Roberts wrote McVay a
letter sent by ordinary first class mail, in which Roberts
reiterated the positions of the parties. In this letter he stated
that the principal unresolved issue remaining at the end of
the session was union shop and security; that the Union
insisted upon the inclusion of these provisions and the Com-
pany would not accept them. At that time McVay stated
that they apparently reached an impasse. However, Roberts
firmly stated also in that letter that the Company remained
willing to meet at any time. He reminded McVay that very
few meetings had actually occurred. Roberts went on to
state that McVay must have been aware that the Company
did work with mandatory delivery dates and penalty clauses
and that this condition of uncertainty of no contract and no
future meetings placed the Company in a very difficult posi-
tion in making commitments on future work. The letter
ended with a plea by Roberts to McVay for the Union to
give the Company specific dates for further meetings.
According to McVay, he never received this letter. The
Union in its brief implies that the letter was written at a later
date for the purposes of the hearing and was never actually
sent by Roberts. Under the circumstances, however, it does
not have to be resolved as to whether McVay ever received
this letter. I find, nevertheless, that the letter was written
and posted on the date it bore, January 15, 1971. The letter
clearly shows the Respondent's corporate state of mind as
of that date.4
D. The Lockout and Subsequent Events
On February 8, 1971, Roberts again wrote McVay a
letter. In this letter he stated that he had been instructed by
the management of the Respondent to advise McVay that
the plant "will be closed to further work by members of the
bargaining unit at the end of the shift on Friday, February
12, 1971, and until such time as the contract or other reso-
lution of the differences between the Company the Union
shall be achieved. An announcement to this effect will be
made to the hourly employees Thursday, February 11, 1971,
at the end of the shift." The letter goes on to state that the
Company regreted the necessity of the action and hoped in
the past that the differences would be resolved without re-
sort to strike or lockout. Roberts further wrote that a further
reason for the lockout was that the Company had heard
nothing from the Union in more than a month since the last
offers by the Company were made and that in light of the
° This irreconcilable difference in testimony between Roberts and McVay
is pointed by the Union as showing that Roberts "invented" the letter at a
later date The Union supports this allegation by the insinuation that Rob-
erts, in testifying at the hearing, breached the professional Canon of Ethics
in that he represented the Respondent at both the negotiations and at the
hearing herein and yet called upon himself to testify as to certain events
which occurred. It is not for the trier of fact in this instance to condemn
Roberts for testifying. Nor do I believe that Roberts is necessarily untruthful
merely because of the fact that he possibly violated the Canon of Ethics in
testifying
OZARK STEEL FABRICATORS 851
uncertainty left by the state of affairs between the parties
the Company could not continue to operate until the differ-
ences were resolved. The letter stated that this uncertainty
left the Company unable to guarantee delivery dates on
construction jobs soon to be bid and left the Company
unable to determine its costs so that it could not determine
if it could bid competitively. The letter further stated that
these elements were more critical in the operations of the
Respondent with its type of fabrication than the types of
firms presently represented by the Union. The letter ended
with assurances that the Company would try to maintain
itself in a position to resume production when the settlement
of the problems permitted. There is no contention that Mc-
Vay did not receive this letter.
Both Carron and Laud testified that because of the
precarious financial position of the Company and the ne-
cessity for having firm costs upon which to figure its bids
the necessity of taking the action became very apparent.
This was doubly true because of the Respondent's state of
mind that the Union would strike the Respondent at the
height of its production schedule at which time all of the
consequences of the type of work that the Respondent bid
on, with penalty clauses in most of its contracts, could lead
to a disastrous situation for the Respondent. Canon also
testified that a purpose of the lockout was to bring the
Union back to the bargaining table.
As announced, on February 12 the plant was closed
down to members of the bargaining unit. However, the
plant was not closed down completely. The Respondent
continued to perform some work , completing its present
contracts and accepting small jobs from various customers
through the utilization of supervisory personnel and man-
agement personnel. For these purposes, the foreman and the
officers of the Company performed production work. Thus,
the plant was never fully closed down during the entire
period of the lockout and as of the date of the hearing herein
the lockout continued. The work continued in the shop after
the lockout but at a drastically reduced level. From August
1970, through January 1971, invoices ranged from $210,779
in August to $92,693 in January. However, in February,
March and April of 1971 the total invoicing was only
$18,256, demonstrating that production was severely cur-
tailed. Thus the Respondent as well as the employees suf-
fered hardship. Moreover, during the same periods of time
from August 1970, through February 1971, before the lock-
out, the total average man hours of work per month was
3,953 whereas during February, March and April 1971, the
average man hours per month of production was only 160.
Finally, in April 1971, at the behest of the Union, a
bargaining session was held before a Federal mediator. Sev-
eral such sessions were held but no agreement was reached.
According to McVay, when he received Roberts' letter
of February 8 he called Roberts by telephone on February
10, and asked if there was not some way to settle the matter.
McVay testified that in that telephone conversation he told
Roberts that with as much experience as they had had to-
gether they ought to be able to avoid a lockout. He informed
Roberts that the lockout was an unjust act. McVay testified
further that Roberts answered he did not know what the
Respondent would do; that they did not have an agreement.
McVay testified additionally that Roberts did not ask Mc-
Vay for any assurances with regard to possible strikes. In
fact, during the entire conversation the word "strike" was
not mentioned. Roberts gave no explanation at that time as
to why the Company was going to lock out the employees.
Roberts testified with regard to this conversation stat-
ing emphatically that no such conversation ever took place.
Roberts further testified that on February 10 he was in court
on another case.
Upon my observation of the demeanor of both McVay
and Roberts and upon the fact that Roberts had specific
recall as to his whereabouts on the date in question, but
admitted being in his office at times during that day, I credit
Roberts' denial that he received a telephone call from Mc-
Vay. Had Roberts been inclined to bend the truth he could
have denied he was in his office at any time during February
10, 1971.
E. Discussion and Concluding Findings
As heretofore set forth , the General Counsel and the
Union charged that the Respondent , in locking out its em-
ployees and continuing its production activities by utiliza-
tion of management and supervisory personnel, has
demonstrated antiunion bias and that the objective of the
lockout was to destroy the Union as the representative of
the Respondent 's employees . They fault the Respondent's
failure to seek to obtain from the Union an interim agree-
ment not to engage in a strike, which agreement would have
protected the Respondent from the consequences of which
it contends it was fearful . They argue that the failure to seek
such agreement discloses the Respondent 's real purpose in
the lockout was to nd itself of an obligation to bargain with
the Union thus undermining union support among the
Respondent 's employees.
The Respondent , on the other hand , maintains that the
lockout was purely defensive . Respondent argues that, un-
der the peculiar circumstances of this case, the failure to ask
for an interim agreement not to strike is not fatal as claimed
by the General Counsel because the Union walked out of
the January 8 meeting, broke off negotiations , and declined
to communicate for over a month , during which time on
January 15, 1971, the Respondent wrote to the Union and
asked that further meeting dates be set. The Respondent
further maintains that even if the Union did not receive the
January 15 letter, as the Union claims, the Respondent did
not know this and was forced to act upon the situation as
it appeared to the Respondent at the time . Respondent's
only recourse , in view of the fact that the time of the year
had arrived when bidding on jobs for spring and summer
had arrived , was to lock out to protect itself from what it
had reason to believe was a threatened strike at the height
of its busy season when commitments in the form of con-
tracts with penalty clauses would be outstanding and when
Respondent's inventory would be at the high level of the
year.
Before discussing the impact of the continued produc-
tion during the lockout , the relative positions of the parties
and the true objective of the lockout must be determined.
That the Respondent had a basis for belief that the
Union was engaged in a dilatory maneuver is well within
the bounds of probability . Whether McVay 's failure to be
852 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
present at the December 1 meeting and his presence for only
one half day at the December 3 meeting was purposeful or
due to misunderstanding is not here important. The failure
to be present at two full-day sessions could well have given
the appearance that McVay was playing a cat-and-mouse
game. The failure to meet during the balance of December,
although partly the fault of Roberts, Respondent's counsel,
was equally attributable to McVay's inability to come forth
with other dates for meetings during the month. Then, when
the parties reached an impasse over union security on Janu-
ary 8, McVay made a statement to the effect that he would
close the "sweat shop." While, again, this might have been
uttered in frustration and not meant as a threat, to Respon-
dent it could have had only one meaning. In light of the fact
that a few weeks before this Respondent's president Laud's
son had reported to him that McVay had said that "winter
was not the time to strike," and even though such report
might not have been strictly accurate, the threat to close the
"sweat shop" could have had an impact upon the
Respondent's management that a strike was in prospect in
the spring. Then, following this final meeting came a period
of silence during which the Union failed to respond to Rob-
erts' letter of January 15 asking for further meeting dates.
In consequence of all the foregoing, the Respondent,
acting reasonably under the circumstances, could have
found itself in a situation of a seasonal business in which a
strike at any time from spring into summer would leave
Respondent unable to pay for inventory and unable to meet
completion dates under threat of operation of penalty claus-
es, all of which would alienate customers. The Respondent's
management could, therefore, reasonably have been appre-
hensive of a pending strike. In these circumstances, the
decision to lock out the Respondent's employees to protect
itself from such Union action was defensive in nature and
initially lawful.
In arriving at the foregoing conclusion, consideration
has been given to the argument offered by the General
Counsel and the Union that not once in Roberts' February
8 letter to McVay announcing the lockout, or in the an-
nouncement to the employees, did Respondent specifically
spell out its apprehension of a possible strike as the reason
for the lockout. But, the letter does mention the lockout
would be in effect "until such time as a contract or other
resolution of the differences" between the parties shall be
achieved. Certainly, such contract or resolution would elim-
inate the threat of a strike. The failure to spell out the exact
cause of the lockout does not eliminate from consideration
the Respondent's reasonable apprehension.
Also considered in arriving at the conclusion that
Respondent's initial action in effectuating the lockout was
defensive and lawful is the lack of an overt threat to strike
by the Union . But, as set forth above, no overt threat was
needed under the circumstances to create in the
Respondent's officials' minds concern over a possible un-
timely strike.
Additionally, the fact that the Union was new in
Respondent's plant has been considered. It is accepted, as
argued by the General Counsel and Union, that a newly
certified union is weak compared to an established union
with an extensive history of bargaining. But the fact that the
Union is seeking its first contract does not render any less
consequential a threat of a strike at a time of the Union's
choosing. The Respondent's shop crew is small, no more
than 15 to 18 employees being on the work force at any time.
Even if only some of the men walked out at the height of
Respondent's busy season, such walkout could have very
considerable consequence with regard to Respondent's en-
tire future as a going concern.
Furthermore, the General Counsel argues that Carron,
in testifying, stated that the objective of the lockout was to
get the Union back to the bargaining table. The General
Counsel contends that this is not consistent with a defensive
lockout posture nor is it consistent with the Respondent's
claim that the lockout was for the purpose of avoiding a
strike at the height of the Respondent's busy season. This
argument is without merit. If the Union could have been
gotten back to the bargaining table and the parties could
have resolved their differences, the apprehension of the
strike at the height of the Respondent's busy season would
have been dissipated.
Thus, I find and conclude that the initial lockout action
taken by the Respondent was for the purpose of defense and
that the lockout was therefore lawful under Board and court
precedent .5
We come now to the effect, if any, of the additional fact
that the Respondent kep its plant operating during the lock-
out period. Whether this fact alters the impact of the lockout
on the employees sufficiently to render what would other-
wise to be lawful action to action so destructive of employee
rights that it violates the Act remains for discussion. Other-
wise put, did the continuation of production change the
nature of the lockout to an offensive, unlawful one?
In N.L.R.B. v. Brown Food Store, 380 U.S. 278, the
Supreme Court found nonviolative the locking out of em-
ployees by several members of an employer association and
the continuation of business using temporary replacements.
However, that case involved a lockout by the association
members undertaken to meet the whipsaw-strike tactics of
the union representing their employees where the union
struck one of the association members who then continued
his business with temporary replacements. The Court held
that, under the circumstances, the lockout was reasonably
adapted to achieve legitimate business ends. But the cited
case cannot be precedent setting in the situation presented
in the case at bar. In the instant case there is no employer
association and no whipsaw-strike tactic by the Union. On
the other hand, in the case at bar the Employer did not hire
temporary replacements but continued operating, on a very
limited scale, with management and supervisory personnel.
Indeed, the Respondent here did not go out into the labor
market to seek temporary replacements but rather contin-
ued operations in such a manner as only to pay its fixed
overhead which consisted, in major part, of an outstanding
indebtedness in the form of a loan from the Small Business
Administration. Cf. Oshkosh Ready-Mix Co., 179 NLRB
350, enfd. 440 F.2d 562, where the Board held at page 358:
However, where the employer, as here , locks out his
employees with the purpose of forcing them to accede
to his terms and at the same time is able to demon-
5 See Darling and Company, 171 NLRB No. 95, affd 418 F 2d 1208
(CAD C ), October 14, 1969
OZARK STEEL FABRICATORS 853
strate, by continued operation through other employ-
ees, that resistance to the employer's terms, whatever
they might be, is unlikely of success, if not hopeless,
and reemployment can be obtained only by concession
to the employer's terms, the necessary, if not the almost
inevitable, tendency of the employer's conduct would
be capitulation. Thus if the employer not only may
decide if and when his employees shall be deprived of
work, but at the same time replace those employees and
continue in operation, making capitulation rather than
bargaining the option presented, such action might well
be said to have the tendency, which the Court found
lacking in American Ship, to "necessarily destroy the
unions' capacity for effective and responsible repre-
sentation" and be "demonstrably so destructive of col-
lective bargaining" (380 U.S. at 309) as to carry its own
indicia of illegal motivation in violation of the Act.
Indeed, the employer's capacity for achieving this re-
sult might well be limited only by the available labor
market.
Under all of the facts of the present case, and consider-
ing the situation presented, it is found that the employment
of the supervisory and management personnel to perform
production during the lockout was not so destructive of
collective bargaining as to carry its own indicia of illegal
motivation. As heretofore established, the initial objective
of the lockout, without considering, the use of the supervi-
sors and management personnel, was defensive only-to
prevent a strike at a time of the year when such strike would
be destructive not only of the Respondent but of the future
employment possibilities of the striking employees as well.
The continuation of production at a limited scale by using
supervisors to perform the work did not change this objec-
tive and did not demonstrate to the employees that capitula-
tion to the Respondent's terms would be necessary and
inevitable in order for the employees to return to work. Nor
did it render capitulation rather than bargaining the only
option open to the employees. Indeed, the Respondent de-
sired and looked to further bargaining. The fact that limited
production continued cannot be considered in a vacuum
separate and apart from all of the surrounding factors. Con-
sideration of all aspects of the Respondent's conduct does
not lead to the conclusion that a purpose of the lockout, by
reason of the continued production, was the destruction of
the Union as an effective bargaining representative.
The Supreme Court was held, "if Employer conduct,
has an inherently destructive effect on statutorily guaran-
teed employee rights and is not an enhancement of. a sub-
stantial employee interest, an unfair labor practice has been
committed." N.L.R.B. v. Erie Resistor Corp., 373 U.S. 221.
Here, on the facts presented, the Respondent's conduct
was an enhancement of a very substantial interest and was
not so inherently destructive of the employees' statutorily
guaranteed rights as to have constituted an unfair labor
practice. Accordingly, I shall recommend that the com-
plaint herein be dismissed.
RECOMMENDED ORDER
It is hereby ordered that the complaint herein be, and
the same hereby is, dismissed.