Palomar Corp.

National Labor Relations Board - Board Decisions

Aug 11, 1971

192 N.L.R.B. 592 (N.L.R.B. 1971)

592 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Palomar Corporation and Public Service, Production &
Maintenance Employees' Local Union No. 1057
Gateway Service Co. and Public Service, Production &
Maintenance Employees' Local Union No. 1057.
Cases 23-CA-3781 and 23-CA-3780
August 11, 1971
DECISION AND ORDER
On March 29, 1971, trial Examiner John P. von
Rohr issued his Decision in the above-entitled
proceedings, finding that Respondents had engaged
in and were engaging in certain unfair labor practices
and recommending that they cease and desist there-
from and take certain affirmative action, as set forth
in the attached Trial Examiner's Decision. Thereafter,
Respondents and General Counsel filed exceptions to
the Trial Examiner's Decision and supporting briefs.
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 and briefs, and
the entire record in these cases, and hereby adopts the
findings, conclusions, and recommendations of the
Trial Examiner.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommend-
ed Order of the Trial Examiner and hereby orders that
Respondents, Palomar Corporation and Gateway
Service Co., their officers, agents, successors, and
assigns, shall take the action set forth in the Trial
Examiner's recommended Order.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
JOHN P. voN ROHR, Trial Examiner : Upon charges duly
filed, the General Counsel of the National Labor Relations
Board, by the Regional Director for 23 (Houston, Texas),
issued a consolidated complaint against Palomar Corpora-
tion and Gateway Service Co ., herein called the Respon-
dents or the Companys, alleging they had engaged in
certain unfair labor practices within the meaning of Section
8(aXI) and (5) of the National Labor Relations Act, as
amended, herein called the Act.' The Respondents filed
timely answers denying the allegations of unlawful conduct
as alleged in the complaints.
Pursuant to notice, a hearing was held before Trial
Examiner John P . von Rohr in Laredo, Texas , on January
1 The charge in Case 23-CA-3780 was filed October 14, 1970, and the
complaint in this case issued on November 19, 1970. The charge in Case
23-CA-3781 was filed on October 14, 1970, and the complaint in this case
13, 15, and 20; 1971. All parties were represented by counsel
and were afforded opportunity to adduce evidence, to
examine and cross-examine witnesses , and to file briefs.
The General Counsel, the Respondents, and the Charging
Party filed briefs on February 16, 1971, and they have been
carefully considered.
On the entire record in this case , and from my
observation of the witnesses, I hereby make the following:
FINDINGS OF FACT
I. RESPONDENT
Palomar is a Texas corporation having its principal office
and place of business in Corpus Christi, Texas, where, as a
service contractor operating under a National Defense
Work Contract, it conducts operations at various United
States military installations . The operation conducted by it
at Laredo Air Force Base, Texas, is the only operation
involved in this proceeding. During the period from
approximately April 1 to March 31, 1971, Palomar held a
motor pool and vehical maintenance contract with the Base
Procurement Office at Laredo Air Force Base, Texas,
valued in excess of $600,000. As of the date of the hearing
herein, Palomar received gross revenue from the United
States Air Force in excess of $50,000.
Gateway Service Co. is a California corporation having
an office and place of business in Corpus Christi, Texas,
where, as a service contractor operating under a National
Defense Work Contract , it conducts operations at various
United States military installations. Its operation at the
Laredo Air Force Base Texas is the only operation involved
in this proceeding. During the period from approximately
April 1 to March 31, 1971 Gateway held an aircraft
refueling contract with the Base Procurement office at the
Laredo Air Force Base, Texas, calling for goods and
services valued in excess of $160 ,000. From the period of
April 1, 1970, to the date of the hearing herein, Gateway
received from the Base Procurement Office gross revenue in
excess of $50,000.
I find that Respondents Palomar Corporation and
Gateway Services Co. are engaged in commerce within the
meaning of the Act.
U. THE LABOR ORGANIZATION INVOLVED
Public Service Production & Maintenance Employees'
Local Union No. 1057, is a labor organization within the
meaning of Section 2(5) of the Act.
A. Chronology of Background Events
Despite a rather contentious record, and except for the
rather minor exceptions herein noted, the principal facts in
this case are not in dispute.
The situs of the instant dispute is the U.S. Air Force Base
at Laredo, Texas, where six employers, including Respon-
dents Palomar and Gateway, have contracts with the U.S.
Air Force to perform various services at the Base. The
factors involved in the letting of the Air Force contracts are
issued on November 18, 1970. An order consolidating these cases issued on
November 20, 1970.
192 NLRB No. 98
PALOMAR CORPORATION
materially involved in Respondent's defense and are best
set forth at this-point. Thus, (and I borrow freely from
Respondent's brief in summing up these undisputed facts)
the contracts are for "management, labor and supervision
only"' (i.e., no material or equipment, these being furnished
by the government) and the prices are fixed unit prices per
man hour, of labor requested-and performed. Pursuant to
the Service Contract Act of 1965 and the regulations of the
Secretary of Labor, the Air Force contracting officer is
required by law to obtain from the Secretary of Labor, and
include in the contract bid document, a so-called Prevailing
Wage Determination setting forth the scale of wages and
fringe benefits found to be prevailing in the community for
nongovernment - work of 'a similar character where the
Government work is to be performed, and a contract clause
requiring that the Employer Contractor pay, his employees
not less than the Prevailing Wage Determination so
attached to the bid documents.2 Normally these contracts
are for 1 year and run from April 1 to March 31 of the
following year. The aforesaid Wage Determination is the
minimum rate the employer must pay; it does not restrict
him from paying a higher rate if he so chooses.
Respondent Palomar has recognized the Union as the
bargaining agent for its services, production, and mainte-
nance employees since approximately 1965 and has had
contracts with the Union for the greater part of this period.
The last contract was effective from June 1, 1969, to
September 30; 1970. It is noteworthy that at the time of the
contract execution on June 1, 1969, Palomar had two
contracts with the Air Force, these covering two categories
of operations, one being the maintenance of motor pool
vehicles and the ' otherfor aircraft refueling. The employees
engaged in both, of these operations were covered by the
aforesaid collective-bargaining agreement. Further, it is to
be noted that Palomafs foregoing Air Force contracts were
effective from April 1, 1969, to April 1, 1970. Thus, as is
manifest , the 16-month collective-bargaining agreement
overlapped the 12-month'government contracts by a period
of 4 months.
The record is clear that in negotiating for the above
collective-bargaining agreement, the Union did not wish to
have the employees bound to a 16-month contract
providing only for the prevailing minimum wage scales as
proscribed in the then existing Wage Determination. While
willing to agree to the said minimum rates for the first 10
months of the contract, Business Agent David L. Jacobs,
the Union's chief spokesman and negotiator throughout the
period material hereto, urged that Palomar give the
employees an approximately 30 cent an hour increase
beginning on April 1, 1970.3 Although Clyde W. Smith,
Vice-President, and a principal negotiator for Palomar,
indicated concern as to what effect his agreeing to this
demand would have in bidding for future Air Force
contracts, Jacobs indicated that he would take steps to see
that the 30=cent wage increase, if granted, would become
the, minimum rate -in the next Wage Determination.
2 This is similar in concept to the Davis-Bacon Act which applies
similar principles to the Public Work Contracts, i.e. government
construction contracts.
3 Although Palomar's contracts with the Air Force expired on April 1,
1970, it is clear that the parties at this time anticipated that Palomar would
593
Specifically, Jacobs testimony concerning this aspect of the
negotiations in June 1969 is as follows:
I explained to Mr. Smith that we needed an increase in
wages for 1970 because we were spacing any increases
every two years. We felt that in 1970 we would need an
increase of thirty cents .
Mr. Smith was concerned as to whether this would
appear in the wage determination or not. I told Mr.
Smith that I could not promise him that this would
appear in the wage determination. He told me the
reason - why he was concerned was because if he was
bound by this agreement he would have to bid higher
than others who would bid by the wage determination,
if this increase did not appear in the wage determina-
tion . ^ I told Mr. Smith- we thought it would appear,
because we had had protective rates once before, in
1968, the Labor Department had adopted this. So I told
Mr. Smith that if this didn't appear, then we would 'take
any non-legal means to enforce our contracts upon any
sucessor of any contractor and that we would so notify
any prospective bidders on these jobs.
Suffice it to note here that Respondent Palomar accepted
the Union's wage proposal and that the aforementioned 16
month collective-bargaining agreement adopted the rates of
the then existing Wage Determination, but further provided
that the unit employees would receive an approximately 30-
cent hourly wage increase effective as of April 1, 1970.
It is undisputed that the Union subsequently-submitted
the above collective-bargaining agreement to the Labor
Department and at the same time advised the Labor
Department that it felt the wage increase of April 1, 1970,
should be reflected in the next Prevailing W zge Determina-
tion which the Labor Department was bound to make
under the Service Contract Act. Such, however, did not
turn out to be the case. In December 1969 the Wage
Determination for bid documents to be utilized for the
1970-71 contracts was issued by the Labor Department. It
did not include the increased rate as the parties had
anticipated, but instead remained at the rate of the
preceding .year. This Wage Determination, accordingly,
was set forth in the contract bid document which the, Air
Force made available to prospective bidding contractors in
December 1969.4
In or about January 1970, Palomar submitted its bid for
the new Air Force contracts, covering both the motor pool
and refueling operations, which were to be effective from
April 1, 1970, to April 1, 1971. Smith testified without
contradiction that this bid was submitted on the basis of
wage costs computed at the higher scale for the first 6
months (i.e. this incorporating the 30-cent increase for the
last 6 months as provided in the collective-bargaining
agreements) and at the ,lower scale (i.e. the latest Prevailing
Wage Determination which did not include the 30-cent
increase) for the second 6 months. '
When the competitive bids for the new contracts were
opened, it was ascertained that Respondent Gateway was
the low bidder on the aircraft refueling operation.
have a good chance to be the successful bidder for the next yearly
contracts.
4, The customary annual Air Force practice is that competitive bids are
invited in December and received in January, contracts are awarded in
February, and contracts start on April 1.
594 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Accordingly, it was awarded the contract for performance
of this operation. With respect to the motor pool
maintenance operation, a company not identified by name
was the low bidder for this contract. However, this
company was disqualified by the Air Force and Respon-
dent Palomar, who was the second lowest bidder, was
awarded the contract to perform the motor pool operation.5
According to the credited and unrefuted testimony of
Jacobs, one Hank Schreiber came to his office on March
28, 1970, and stated that he represented Gateway.6
Although Schreiber indicated that Gateway was willing to
recognize the Union, he asked that the wage rates for
Gateway's employees be reduced-by "approximately 14
cents per hour from those covering the same group of
employees in the Palomar collective-bargaining agreement.
It is- undisputed that Jacobs and Schreiber met again on
March 31, 1970, and at this time reached an oral agreement
that (1) Palomar would recognize the Union and would
abide by the terms of the Palomar's collective-bargaining
agreement for the remaining 6 months thereof, except that
(2) the wage rates for Gateway's aircraft . refueling
employees would be reduced by 14 cents per hour, as
Schreiber had requested.? It is also undisputed that at this
time Respondent Gateway gave Palomar's Clyde W. Smith
full authority to act as its collective-bargaining representa-
tive in all its future dealings with the UniOn.s
B. The 1970 Collective-Bargaining Negotiations:
Respondent's Reduction of the Wage Rates
It is undisputed that in April 1970 Company Representa-
tive Smith bad a telephone conversation with Union
Representative Jacobs concerning Respondents' wage
obligations under the Palomar contract in light of `the latest
Wage Determination -9 Jacobs credibly testified that at this
time Smith told him that he was thinking about joining the
"bad guys" (referring to two other contractors at the
Laredo base), that he might not honor the wage provisions
in the contract but instead would pay the employees the
wage rates as specified in the latest Wage Determination.
Since this would result in an approximate 30 cent `hourly
wage cut, Jacobs told Smith that he had "enough problems
with the other contractors" and that he "would regret
having to sue" Palomar if it did not abide by the terms of
the contract. It is undisputed that Smith did not follow
through with this proposed action and that Respondent
Palomar in fact continued to abide by all the terms of the
S These facts are set forth in accordance with the uncontroverted
testimony of Smith. Smith testified that he did not know the reason for the
disqualification of the low bidding company.
6 The Articles of Incorporation of Gateway reflect that Schreiber was
treasurer and director of Gateway as late as May 31, 1966.
r Specifically, these wages were reduced from $3.05 per hour, as
provided in Palomar's contract, to $2.91 per hour. As Respondent's brief
points out, the Prevailing Wage Determination in effect at this time for this
classification was for a rate of $2.91 per hour.
8 This appears to be based on the fact that Gateway is headquartered in
California, whereas Palomar is a Texas corporation. Smith resides in
Corpus Christi, Texas, and of course has had considerable experience in
dealing with the Union as well as with officials of the Laredo Air Force
This is in reference to the Wage Determination issued in December
1969. Respondent's brief asserts that Smith discussed this matter with
Jacobs in about January 1970. H ,wever, there is no specific testimony to
contract, including its wage provisions, until the date of its
expiration. However, Jacobs credibly testified that during a
telephone conversation held about August 19, 1970, Smith
told him that Palomar's board of directors was; unhappy
with him because the Union was makinghim look foolish,
that Palomar was paying '.higher wages than other
contractors, and that they had decided to cut wages back ;to
the wage determination when the contract expired-110
On July 6 and 7, 1970, the Union served notice to
Palomar and Gateway, respectively, of its intent to
negotiate changes in wages, fringe benefits, and other terms
of employment.
The first collective-bargaining, meeting between the
parties took,place ,at La Quinta motel on September 3,
1970.11 Smith and Jacobs acted as principal spokesmen for
their respective sides, with other Company representatives
and the Union's bargaining . committee also present.
Preliminarily, it should be noted that at this meeting and
the ones that followed Smith concededly acted as
representative for both of the Respondents herein. Further,
the record is clear that in these meetings the Company and
Union proposals and counterproposals were'applicable to
both Palomar and Gateway. There, was no attempt by
either party to distinguish between the companies, it being
understood that-what went,for one also went for, the other.
Returning to, the September, 9 -meeting, Jacobs, credibly
testified that at the outset, of the meeting Smith stated that
Respondents would have to revert to the Wage Determina-
tion. He said that, when he questioned this proposal Smith
replied, "Well, were losing money. I don't mind telling you
that in refueling we're not doing bad. But we're losing
money" Jacobs testified, that he then told Smith that he
(Smith) had bid $75,000, over the 'last year's contract and
that he could not, see where Respondents would be" losing
money. When Smith thereupon stated that he would be
willing to show his books, the conversation proceeded in a
jocular vein as to_ whether this would be a second or third
set of books. However, according to Jacobs' credited
testimony, at this point he did tell Smith that if the
Respondents actually were losing money, the Union would
be willing to consider any proposal even if it meant a wage
cut. Jacobs then handed Smith a collective-bargaining
agreement which contained' the ' Union's entire contract
proposal, except that it did not include wage rates. Jacobs
told Smith that the Union ''was not asking for 'a - wage
increase, but that it did seek a 2-1/2 cent increase for health
and welfare'payments. The parties proceeded to go over the
this effect.
10 I have no doubt, as Smith testified,, that there also were other
occasions when he told Jacobs that Respondents would revert to the latest
Wage Determination when the contract expired.
11 Although Smith testified that this meeting was held on September 9, I
credit Jacobs' testimony that it was "held on September '3. From my
observation of the witnesses , my impression was that Jacobs gave far more
reliable testimony than did Smith. while U do not suggest that Smith was a
dishonest witness, he concededly could not recall details of certain relevant
events concerning which he was queried. Moreover, as a reading of the
record will amply demonstrate, much of his testimony was elicited by
unduly leading questions. Jacobs, on the other hand, impressed me as a
forthright witness and one who, on cross-examination as well as on direct,
displayed an accurate memory for relevant detail. As has been noted at the
outset of this Decision , however, the basic facts in this case are not in
dispute.
PALOMAR CORPORATION 595
Union's contract proposal, with Smith indicating disagree-
ment- over a number of the Union's proposed provisions.12
Jacobs finally stated that in view of the Company's wage
cut proposal, he would not pursue the 2-1/2 cent increase
for health and welfare. -The meeting ended on the note that
the Respondents would prepare a company proposal and
submit it toAbe Union. - -
On September 15, 1970, Respondents sent their,written
contract proposal to the Union. With respect to wages, it
included a proposal that the wages be set in accordance
with the latest Wage Determination rate.
On September 30, 1970, the parties held a second
bargaining meeting at the. Hamilton Hotel in Laredo. It is
undisputed that the parties went through the various
proposals and counterproposals with the result being that,
except to matters pertaining to wages and economic fringe
benefits, Smith agreed to all of the Union proposals.
However, Smith advised the Union that Respondents were
adhering to their position that the wages would have to be
cut back to the wage determination. Jacobs thereupon
pointed out that wage increases recently had been granted
to other civil service employees (so-called "blue collar"
employees) employed in similar capacities, at^ the Laredo
Air Force Base, and that, as he testified, "it was
unbelievable that they were asking us to give 30 cents an
hour of our wages, especially in the light of this increase,
and it was practically unheard of when you went to a
bargaining session for the Union to bargain downwards."
It is undisputed-that at this meeting Jacobs requested to
inspect the Respondents' books and that the request was
rejected by Smith. According to the credited testimony of
Jacobs, this came about when he finally advised Smith
"that if. they.were losing money we would consider it, and
certainly take on a wage cut if we determined by the records
that it was necessary because they were losing money out of
pocket." According -to, Jacobs, Smith "at this time changed
his position slightly" stating that "they were not making
profits- they were entitled to." Jacobs said that he thereupon
told Smith "that they had bid their job for twelve months,
not for six, and that according to our figures that they did
have the money to continue paying the wages contained in
our collective bargaining agreement for, the entire year, and
that we, were not-asking for any increases whatsoever, we
just wanted to continue with the same wages for another
year." Jacobs further testified that although Smith first
stated that his board of directors would not let the Union
inspect the books, he (Smith) later stated that he would take
the matter up with the board of directors, and would let him
know of their decision. With respect to all the foregoing
Smith testified that he; did not say anything to Jacobs about
operating at a profit or a loss. I credit Jacobs' testimony in
this regard, as set forth above. Conceding that at this
meeting he declined to produce Respondent's records,
Smith's testimony was as follows:
Q. (By the Trial Examiner)-Incidentally, when Mr.
Jacobs asked for your books and records, I take it you
declined to show them? `
A. Yes.
Q. Did you give him any reason for declining the
request?
A. I really didn't see what right he had at the time, I
couldn't-why should he look at our books without-I just
didn't understand why he should see our books.
(Underlining supplied)
Q. And that is about what you told him?
A. Right. Right.
While it is undisputed that the September 30 meeting
ended with no agreement -being reached as to wages, there
is one aspect of the testimony concerning this meeting
which is not of easy resolution. This concerns testimony by
Smith to the effect that he told Jacobs that he might be
willing to consider a wage reduction of somewhat less than
30 cents. Unfortunately, much of Smith's testimony
concerning this meeting (as well as other meetings and
other matters) was not given in orderly or narrative form as
to what was said and transpired. In any event, Smith's
testimony concerning this matter was as follows:
Q. [By Mir. Brown] Did you express any willingness
on your part to arrive at any in between position?
A. Yes, sir. Palomar and Gateway was open for-
Q. (By the Trial Examiner) What did you say?
A. We were open for wage increase or to talk about
any amount in between the two, what the Union had
asked for and what we had offered. And the Unions
position was that we will not accept anything lower than
is in our present contract. -
* * *
Q. (By the Trial Examiner) Did you ever propose
anything specifically with respect to wages other than
the wage determination?
A. Yes, sir. I threw it on the table, not in written
form, but I threw it on the table orally. But the-
Q. What did you put on the table in that respect?
A. Five, ten, fifteen cents=what do you want to
bargain for? You tell me, and we'll start bargaining,
Q. In what meetings did you say this?
A. This was in the September 30 meeting . This was
in the earlier meetings, too, the 9th or the 3rd-whenever
it was-but it was in both of these meetings , There seems
to be a discrepancy on the 3rd or the 9th.
Q., Now where is that wage scale here? [referring to
contract proposal]
A. The Union wage or what?
Q. The one that was used.
A. This is the Department of Labor wage.
Q. Let's take, for example, automotive mechanic
foremen, $3.60. Was that your proposal in the contract?
A. Yes. I mean, our proposal to the Union.
Q. What did the Union want?
A. $3.90
Q. Now, do I gather by your latest testimony that
you told the Union that you would be willing to
consider raising this from $3.60`by tenor fifteen cents?
In other words, that you would be willing to consider
raising it from $3.60 to $3.75 or $3.70? Is that what you
told the Union?
iz Although Jacobs testified in considerable detail as to Respondent's
position with respect to the various clauses, I do not deem it necessary to
set forth this testimony.
596 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
A. Yes, sir. And I think you'll find from the record
that I told them on the 9th or the 3rd meeting-whatever
date we agreed to.
-Q. And what was the Union's response?
A. The-,Union's response is that we will not accept
anything below what we're getting now. A Union
never-I hate to repeat-but a Union never lowers the
price.
Called on rebuttal, (Jacobs was asked by the General
Counsel if Smith had ever had occasion "to mention to you
the, subject matter of five, ten or fifteen cents." Jacobs
responded that he, recalled a conversation with Smith
during a subsequent strike (hereinafter noted) in which
Smith-suggested,that off-the-record they might get together.
Jacobs,testified the following' colloquy then ensued:
I -said,- "Wes, I' am sure there is a way we - can get
together. He said, "Well, what would it take for us to
"settle -this?" And I said, "What ... are you talking
about?" He'said, "Well, would you take a little money
on the wages,' a ' little increase on the wages?" I said,
"Well, what are you'talking about, how much are you
talking about?" He said, "Like ten cents." I' said, "I'm
afr'aid'not: We couldn't go along with ten cents."
'Other,'-than the `above, Jacobs testified that he did not
recall any conversations with Smith wherein Smith
proposed'to raise his wage offer by any specific amount.
Jacobs did not; however, specifically deny Smith's testimo-
ny that he (Smith) might be willing to arrive at some in
between position, or that he- would consider 5, 10 or 15
cents. Upon a consideration of all the testimony, I am
persuaded and find that at the September 30 meeting, and
probably also at the September 3 meeting, Smith no doubt
did make some remark to the effect that he would consider
a wage cut in a somewhat lesser, amount than the 30 cents
which he-proposed. However, this remark was not in` the
form of any firm counterproposal for.any specific amount
and it is clear that the parties did not treat it as such,i3
October 9,1-1970, was payday for the employees of
Respondent Palomar and their checks on this date reflected
a wage reduction of .approximately 30 cents per hour, such
reduction effective as of-October 1,' 1970?Y Later on the
same-day Jacobs telephoned Smith and advised him that a
Union meeting would be held on October 11 and that a
strike vote :would be taken at; that time unless the wages
were restored.
Pursuant to arrangements made by the Federal Media-
tion and Conciliation Service, a further' meeting between
the Union and-the Respondents was held at the Hamilton
Hotel on October 11, 1970. In addition to ' a Federal
Mediator and the, same,representatives of the parties as
aforenoted, also present at this meeting were Respondent
13 As Respondent, with reference to the September 30 meeting, states in
its brief: "Smith was insistent on cutting back to the Wage Determination
unless a modest increase above that level ' were agreed 'to, but Jacobs was
adamant, saying Unions never reduce,wages."
14 A - few days ,later Respondent Gateway instituted a similar cut,
effective as of October 1. Jacobs testified that although Respondent
announced' at the September 30 meeting that it would revert to the Wage
Determination , he did not learn of the actual ' cut until the employees
complained to him after receipt of their paychecks. Smith testified that
Jacobs was advised of the prospective cut at the September 30 meeting and
at that time stated that the Union would notify the employees that the
reduction would be forthcoming. However, whatever the case as to the
attorney , William A., Brown and Union attorney Marvin
Menaker. Att this- ;meeting Brown reviewed , Respondents,'
position in some detail and stated that Respondents would
be willing to pay the Union 's wage demands , if the Air
Force would agree .to pay Respondents:the difference for
the added costs . On behalf , of Respondents Brown further
offered to put the difference (i.e. the'approximate30,cents
per hour , wage reduction),- in escrow, pending litigation
which would ultimately result in - determination of the
matter . The Union rejected this proposal . Menaker -asked to
see Respondents' books, stating-that the Union would be
willing to consider any proposal upon inspection of the
books . Brown refused this- request, stating that, Respon-
dents were under no obligation to show the Union, their
books 15 The -meeting ended without any agreement -being
reached. -
Shortly after the conclusion of the October I 1 collective-
bargaining -meeting, the Union held , a ,meeting with, the
employees and the, employees voted to go on strike. It is
undisputed that on the following -day, October 12, the
employees of Respondent Palomar went out on strike. The
strike terminated , on, or about October 20, 1970, at which
time all the employees. were reinstated to ,their former, jobs
without any loss to their former rights and privileges.ts
C. Conclusions
It is elemental, of course, that an employer may
unilaterally alter existing -'wages or other terms - or condi-
tions of -employment in situations where , after having
bargained with the, collective-bargaining agent in good
faith, an impasse has been reached. The unilateral change
becomes- unlawful only if instituted prior to the time a bona
fide impasse has been reached. The basic issue in this case,
then , is whether the parties reached a bona fide impasse at
the time when Respondents reduced the-employees 'wages
by approximately 30 cents without ' having reached an
agreement with the Union over the flatter. In my view, a
resolution `of this issue turns on the question' as to whether
Respondents were-lawfully justified, under all the circum-
stances of this case, in refusing the `Union's request, to
produce its books and'records.17-It is Respondents' position
that their refusal was not predicated on any inability' to pay
or that they were operating•at a loss and that hence, under
their interpretation of the decision in N.,L.RB. v. Truitt.
Manufacturing Co. 351 U.S. 149, they were not required to
produce their records. However, even if it be'assumed that
Respondent did not here plead an inability to pay, Truitt
does not hold that the absence of such a plea in itself 'will
justify a refusal to show its books where their 'is a request
Union's first knowledge of the actual cut in the paychecks, this would have
no effect on my ultimate decision herein.
''Credited and unrefuted testimony of Jacobs.
16 The employees of Respondent Gateway did not-go out ' on strike.
Jacobs,'testified that this action was not taken because the Union'did not
wish , to impede the particular Air Force operations which would be
affected if the Gateway employees went on strike.
17 I reject Respondent's assertion that the Union's request for financial
data applied only to Respondent Palomar . As previously indicated, Smith
acted as the authorized bargaining agent for both Respondents: There, is
nothing in the testimony to indicate that Jacobs' request for the books and
records was limited to'Palomar. -
PALOMAR CORPORATION 597
that the plea be substantiated. Thus, the Supreme Court
held as follows:
'We think that in determining whether the obligation of
good-faith bargaining has been met the Board has a
right to consider the employer's refusal to give
information about its financial status.
However, it later added:
We -do not hold, however, that in every case in which
economic inability is raised as an argument against
increased wages it automatically follows that the
employees are entitled to substantiating evidence. Such
case must turn upon its particular facts. The inquiry
must always be'whether or not under the circumstances
of the particular case the statutory obligation to bargain
in good faith hasbeen met.
While the underlying principle remains the same, it seems
nonetheless well to bear in mind that here the refusal to
produce information did not come about under the context
of a union demand for a wage increase, but rather took
place under the circumstance of Respondents' insistence
that the existing wage rates be reduced and substantially so.
What, then, was Respondents' asserted reason for the
necessity- of a wage reduction? While this is somewhat
apparent from the facts hereinabove set forth, this is more
explicitly set forth in a letter dated October 10, 1970, which
Smith sent to the Union just prior to the last bargaining
meeting of "October" .11. In this' letter Smith stated as
follows:
To -clarify-our position, we propose that the rate to be
paid our employees conform to the prevailing rate of
pay as determined by the Department of Labor and
required to-be paid under the Service Contract Act and
the terms of our contract with the Government. Our
now expired agreement with you provided for a higher
rate to be effective from I April 1970 to September 30,
1970, which we agreed to anticipating that the Service
Contract Act Wage Determination for the Government
Contract starting April 1 would require such rates for all
contractors or bidders for contracts. This did not occur
and we have been penalized for six months by a higher
rate than competition would allow us to recover. Our
proposal, to the Government- in competition with
bidders bound only by the Service Contract Act
determination, and not bound by agreement with you
for a higher rate, was based on our absorbing the rate
discrepancy for six months, before reverting to
prevailing wage conditions. It is, as we explained to you,
necessary for us to adhere to this wage determination in
order for us to operate on a competitive basis, and we
cannot earn the profit to which we are entitled while
paying non-competitive wage rates.
Thus, as the letter -reflects, Respondents clain (1) that in
view of the wage determination it was being penalized for 6
months by a higher rate than competition would allow it to
recover, (2) that the wage reduction (i.e., adhering to the
wage determination) was necessary in order for it to operate
at a competitive basis, and (3) that absent the 30-cent
reduction in wages it could not earn the profit to which it
was entitled.
In view of the above-asserted basis for Respondents'
insistence that it could not continue to pay the wages then
in effect, I believe this case to be governed by the Board
and Court decision in Stanley Building Specialties Co., 166
NLRB 984; enfd. 401 F.2nd 434 (C.A.D.C.); cert. denied
395 U.S. 946, June 9, 1969. In that case, as -here, the
employer refused to supply financial - data requested by. the
union during contract negotiations on the ground that it
could not pay more than- it was offering and remain
competitive. Rejecting this defense, the Board found that
the employer's' refusal to furnish the information requested
contributed to the stalemate in negotiations and that the
employer thereby violated Section 8(a) (5) of the Act. In so
holding, the Board commented on the decision of the
Supreme Count in the Truitt case as follows:
While we need not decide whether Respondent's refusal
on -or about December -10 to supply the financial data
requested by the Union constituted a violation of the
Act, we do not ready the Supreme Court's holding in
NLRB. v. Truitt Mfg. Co., 351 U.S. 149, as precluding
an inquiry into Respondent's conduct before negotia-
tions have commenced or before the Union has laid its
complete economic proposals on the bargaining table,
where the question presented to us is whether Respon-
dent acted in good faith -in calling attention to its
financial plight in order to forestall the Union's request
for increased wages and other economic benefits but, at
the same time, refusing to furnish requested supporting
data.
The ordinary case, of course, is one where the Union
makes a demand for increased wages and the employer
resists the demand on the ground of its inability to pay,
but refuses the union's request to substantiate its claim.
However, we do not believe that the Court in Truitt
intended to restrict its holding to these simple facts; we
read that case rather as announcing principles that are
generally applicable to a wide variety of bargaining
situations in which good-faith obligations under the Act
require that a party to bargaining negotiations be
willing to substantiate on request aposi tion it has taken
during the course of the negotiations.
Further, in footnote 4 of the Stanley decision the Board
additionally stated "We find under the circumstances of
this case such a claim is, in effect, a plea of inability to pay."
Significantly, in upholding the Board on this point, the U.S.
Circuit Court of Appeals noted, with appropriate citations,
that "claims of the need to remain `competitive have been
equated to claims of inability to pay for the purpose of
creating an obligation to provide supporting economic
data."
It is noteworthy that in this case the Union's request for
appropriate financial data was not made with the intent of
engaging in a fishing expedition . Thus, this request was not
made until after it had placed its economic demands on the
table and not until after the Respondents '',assertion that it
was, economically necessary for, them to reduce the
employees' hourly wages by 30 cents.18 Accordingly, and in
view of the precedent enunciated in the Stanley case, I find
that under the circumstances of this case Respondents `were
u Although the Union was aware of the latest wage, determination and involved in Respondent's bid in procuring their contracts with the Air
although it also appeared to have knowledge of the figures and factors Force, it is clear that there were other factors (such as operating expenses,
(Coruinuea)
598 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
legally obligated to-. furnish the Union the financial data
requested, , that.. its 4ailure to do so contributed to the
stalemate in negotiations that occured on October 1,1, 1,970,
and that-Respondent thereby failed to bargain in good faith
in violation of Section 8(a)(5) of the Act 19 Further, in view
of Respondents' unlawful refusal, I find, that a bona fide
impasse;did not- exist when the Respondents- unilaterally
instituted -the wage reductions and that by such conduct
Respondent further violated Section 8(ax5),and (1) of the
,Act.
The, complaint 'further alleges that the strike by the
Palomar , employees on October .12, 1970, was an unfair
,labor practice strike., Although this question appears moot
since at- the end of the, strike these employees, were
reinstated to their former positions without prejudice, to
their former rights and privileges, the record amply
demonstrates that the strike was caused by Respondents'
unlawful conduct in unilaterally reducing the wages and I
would, accordingly, hold,that.,the evidence, supports this
allegation of the, complaint.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE,
The activities of the Respondents set forth in Section III,
above,' occurring, in connection with their operations as
;described in' Section I, above,'have a close, intimate, and
substantial relation' to trade, traffic, and commerce among
the several States and tend to lead to labor" disputes
burdening and obstructing commerce and the free'` flow of
commerce.
V. THE REMEDY
Having found that the Respondents have engaged in
unfair labor practices, I shalt recommend that they cease
and desist therefrom and "take certain' affirmative action
designed' to effectuate 'the purposes of the Act.'A provision
has been included in the Recommended Order `which
revokes the wage decreases instituted on October 1,` 1970.
In accordance' with well-settled precedent,' I shall also
recommend that Respondents make whole their employees
for any losses they may have suffered by reason of their
unilateral action.21
Upon the basis-of the foregoing findings of fact and on
the entire -record in this case; I make the following:
CONCLUSIONS OF LAW -
L' Palomar-Corporation-'and Gateway Service Co. are
engaged in commerce within the meaning of Section 2(6)
and (7) of the Act. - -
2. Public- Service, Production and Maintenance Em-
administrative expenses, managerial salaries, and the like which were
beyond its knowledge., It is quite, possible that, these factors could play a
relevant part in the Union 's assessment of Respondents' wage offer.
29 Cf. General'Elect r-Company, 188 NLRB No. 107. At the hearing and
in its brief - the^Respondents have pointed to the,Trial Examiner's Decision
in Emerald Maintenance,, Inc., somehow claiming that the ultimate decision
therein will have a bearing on, the issue in this case . In the meantime, the
Board has issued its decision in the Emerald case at ' 188 NLRB No. 107.
While it is true that some facts in the Emerald case are also present here, I
think it clear that otherwise the cases are factually and legally inapposite.
ployees' Local' Union, No. 1057, is a labor organization as
defined in Section 2(5) of the Act. •t
3. The following unit of Respondent Palomar's employ-
ees is an appropriate unit for the purposes, of collective
bargaining within the meaning of Section 9(b) of the Act.
All of Palomar's employees- employed at, Laredo Air
Force Base, Laredo, Texas, engaged in the performance of
the, motor pool- operations contract and the, motor.. pool
vehicle maintenance contract,-excluding guards, watchmen
and supervisors as defined in,theAct.
4 The., following ; unit of Respondent .Gateway's em-
ployees is an appropriate. unit for the purposes, of collective
bargaining within the meaning of Section 9(b) of the Act:
A11 of Gateway's employees employed at the Laredo Air
Force Base, Laredo Texas, engaged in the performance of
the, aircraft refueling contract, excluding, guards, watchmen
and supervisors as defined in'theAct. ,
5. At, all times relevant hereto„ Public, Service, Pro-
duction & Maintenance, Employees Local Union No1057,
has been, and continues to, be, ' the ,exclusive bargaining
representative of all the employees in the above-mentioned
units for the"purposes of collective bargaining within the
meaning of Section 9(a) of the Act.
6. The Respondents, by unilaterally changing wage
rates. without consulting-with Public Service,_Production &
Maintenance Employees Local Union No.` ,1057'as''the
exclusive representative of their employees in the above
units, have violated Section 8(a)(5) and (1) of the Act.`
7. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the. meanmg'of Section
2(6) and (7) of the Act.
Upon the foregoing findings of fact, and -conclusions of
law the entire record, and pursuant to Section ' 10(c) of the
Act,.I;hereby issue the following recommended: 22
ORDER
Palomar ' Corporation and - Gateway' Service Co, the
Respondents herein, their officers; agents,-successors, and
assigns, shall:
1. Cease and"desist from:
(a) Unilaterally changing wage rates without consultation
with Public Service Production'& Maintenance Employees
Local' -Union No. 1057, as the':duly certified exclusive
representative of their employees in the following respective
appropriate units:
All Palomar's employees employed at the Laredo Air
Force Base, Laredo, Texas, engaged in the performance
of the-motor pool operations contract'and"the motor
pool vehicle maintenance contract, excluding guards,
watchmen and supervisors as defined in the Act.
All of Gateway's employees employed at the -Laredo
Air Force Base` Laredo Texas ,=engaged in the perform-
20 N.L7LB. V. Katz, 369 U.S. 736. 1 , ,
21 Baltimore Luggage Company,,,,, 17 NLRB 1576, and cases cited
therein.
22 In the event no exceptions are filed as provided by Section 102.46 of
the Rules and Regulations of the National Labor Relations Board, the
findings; conclusions and recommended Order herein shall , `as provided in
Section 102.48 of the Rules and Regulations , be adopted by the Board and
become its findings, conclusions and Order , and all objections thereto shall
be deemed waived for alt,purposes.'
PALOMAR CORPORATION 599
ance of the aircraft refueling contract, excluding guards,
watchmen and supervisors as defined in the Act.
(b,-.In any like or related manner, interfering with,
restraining, or coercing employees in the exercise of rights
guaranteed them by Section 7 of the Act.
2. Take the following affirmative action which is found
to effectuate the policies of the Act:
(a) Revoke the unilateral wage rate reductions instituted
on October 1, 1970, and revert to the wage scale existing
immediately prior to October 1, 1970.
(b) Make whole the employees in the above appropriate
units for any loss of pay they may have suffered by reason
of the unilateral reductions in wage rates. Interest at the
rate of 6 percent per annum shall be added to the backpay
to be computed in the manner set forth in Isis Plumbing &
Heating Co., 138 NLRB 716
(c) Preserve and, upon request, make available to the
Board's agents for examining and copying, all records
necessary for the determination of the amount of backpay
due under this Order.
(d) Post at their respective offices and places of business
at the Laredo Air Force Base, and all other places where
notices to employees are customarily posted, copies of the
applicable notice attached hereto marked "Appendix." 23
Copies of said notice, on forms provided by Regional
Director for Region 23, shall be posted by the respective
Respondents after being signed by the respective Respon
dents' representatives immediately upon receipt thereof and
be maintained by them for 60 consecutive days thereafter in
conspicuous places including all places where notices to
employees are customarily posted. Reasonable steps shall
be taken by the Respondent to insure that said notices are
not altered, defaced, or covered by any other material.
(e) Notify the Regional Director for Region 23, in
writing, within 20 days from the date of the receipt of this
Decision, what steps the Respondents have taken to comply
herewith.24
23 In the event that the Board's Order is enforced by a Judgment of a
United States Court of Appeals, the words in the notice reading "Posted by
Order of the National Labor Relations Board" shall be changed to read
"Posted Pursuant to a Judgment of the United States Court of Appeals
Enforcing an Order of the National Labor Relations Board"
u In the event that this Recommended Order is adopted by the Board
after exceptions have been filed, this provision shall be modified to read:
"Notify the Regional Director for Region 23, in writing, within 20 days
from the date of this Order, what steps the Respondent has taken to
comply herewith."
APPENDIX A
NOTICE TO EMPLOYEES
POSTED BY ORDER OF TILE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT unilaterally change wage rates without
prior consultation with Public Service Production &
Maintenance Employees Local Union No. 1057 as the
exclusive bargaining representative of all our employees
in the following appropriate unit:
All of Palomar's employees employed at the
Laredo Air Force Base, Laredo, Texas, engaged in
the performance of the motor pool operations
contract and motor pool vehicle maintenance
contract held by us, excluding guards, watchmen
and supervisors as defined in the Act.
WE WILL revoke the' unilateral wage rate reduction
instituted on October 1, 1970, and revert to the wage
scale existing immediately prior to October' 1, 1970.
WE WILL make whole the employees in the above
appropriate unit for any loss of pay they may have
suffered by reason of the unilateral reduction in wage
rates.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce our employees in the exercise of
the rights guaranteed them by Section 7 of the Act.
Dated By
PALOMAR CORPORATION
(Employer)
(Representative) (Title)
This is an official notice and must not be defaced by
anyone.
This Notice must remain posted for 60 consecutive days
from the date of posting and must not be altered, defaced,
or covered by any other material.
Any questions concerning this Notice or compliance with
its provisions, may be directed to the Board's Office, 6617
Federal Office Building, 515 Rusk Avenue, Houston, Texas
77002, Telephone 713-226-4296.
APPENDIX B
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT unilaterally change wage rates without
prior consultation with Public Service Production &
Maintenance Employees Local Union No. 1057 as the
exclusive bargaining representative of all of our
employees in the following appropriate unit:
All of Gateway's employees employed at the
Laredo Air Force Base, Laredo, Texas, engaged in
the performance of the aircraft refueling contract,
held by us, excluding guards, watchmen and
supervisors as defined in the Act.
WE WILL revoke the unilateral wage rate reduction
instituted on October 1, 1970, and revert to the wage
scale existing immediately prior to October 1, 1970.
WE WILL make whole the employees in the above
appropriate unit for any loss of pay they may have
suffered by reason of the unilateral reduction in wage
rates.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce our employees in the exercise of
the rights guaranteed them by Section 7 of the Act.
GATEWAY SERVICE Co.
(Employer)
Dated By
(Representative) (Title)
600 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
This is an official notice and must not be defaced by Any questions concerning this Noticeor compliance with
anyone--- its provisions, may be directed to the Board's Office, 6617
This Notice must remain posted for 60 consecutive days federal Office Building, 515 Rusk Avenue, Houston, Texas
from the date of posting and must not be'altered, defaced, 77002, Telephone 713-226-4296.
or covered by any other material.