Papercraft Corp.

National Labor Relations Board - Board Decisions

Jun 28, 1974

212 N.L.R.B. 240 (N.L.R.B. 1974)

240 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Papercraft Corporation and United Papermakers In-
ternational Union , Local Union No . 446, AFL-CIO.
Case 6-CA-6625
June 28, 1974
DECISION AND ORDER
By CHAIRMAN MILLER AND MEMBERS FANNING
AND JENKINS
On December 19, 1973, Administrative Law Judge
Arnold Ordman issued the attached Decision in this
proceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions and briefs to the Ad-
ministrative Law Judge's Decision and the Respon-
dent filed cross-exceptions I and a brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions, cross-ex-
ceptions, and briefs and has decided to adopt the
rulings, findings, conclusions, and recommendations
of the Administrative Law Judge only to the extent
that they are consistent with the following.
We disagree with the Administrative Law Judge's
finding that Respondent was not obligated under Sec-
tion 8(a)(5) of the Act to implement or abide by the
wage provisions of its collective-bargaining agree-
ment for reasons set forth herein.
As more fully detailed in the Administrative Law
Judge's Decision, the Union has represented
Respondent's employees for approximately 25 years
under a series of collective-bargaining agreements.
The current collective-bargaining agreement is for a
2-year term beginning April 1, 1972, and ending
March 31, 1974. That agreement incorporates an ear-
lier memorandum of agreement executed March 30,
1972, which provided, inter alra, for a general increase
to all employees in the appropriate unit of 21 cents per
hour for each year of the 2-year agreement , and pro-
vided further that "the parties have agreed to submit
a joint request to the pay board for approval of the
amounts beyond the present guidelines." During the
first year of the collective-bargaining agreement, Re-
spondent put into effect a 17-cent increase based on
its assertion that that amount was all that was re-
quired under the terms of the agreement and pertinent
pay board declarations. General Counsel and the
i We have treated certain of the matters raised in Respondent ' s brief as
cross-exceptions because they are in substantial compliance with the require-
ments set forth for the filing of exceptions and cross -exceptions under Sec
102 46 of the Board Rules and Regulations, Series 8. as amended
Union disagree and urge that the 17-cent raise was
inadequate under the terms of the agreement and rele-
vant pay board directives and that Respondent's re-
fusal to pay a larger amount constituted a refusal to
implement or be bound by its collective-bargaining
agreement in violation of Section 8(a)(5) and (1) of the
Act.
The Administrative Law Judge found that the Re-
spondent did not violate the Act as alleged based on
his conclusion that, although pay board guidelines
enacted approximately 3 months subsequent to the
effective date of the parties' collective-bargaining
agreement permitted the Respondent to pay more
than the 17-cent-per-hour increase that it paid, its
obligation to pay the 21-cent-per-hour increase was
anchored to "present guidelines," i.e., those in exis-
tence at the time of the execution of the contract, and
that, as such, Respondent fulfilled its contractual
obligation when it paid the 17-cent-per-hour increase.
Immediately following execution of their collective-
bargaining agreement, the parties, acting pursuant to
the agreement, submitted a point request to the local
pay board in Pittsburgh for approval of the 21-cent-
per-hour increase. The local pay board granted a gen-
eral increase of 7 percent which in effect amounted to
a 17-cent-per-hour increase for all employees. The
Union was of the opinion that it was entitled to the
full 21-cent-per-hour increase and continued to pur-
sue its appeal rights to the highest administrative body
charged with deciding such matters, i.e., the National
Pay Board in Washington, D.C. The decision and
order from Washington, D.C., which issued Novem-
ber 24, 1972, affirmed the local pay board's ruling, but
also advised further that under a low-wage earner
regulatroln,2 employees earning less than $2.75 per
hour were entitled to an exception. This exception,
applicable to approximately one half of Respondent's
total work force, permitted Respondent to pay the
21-cent increase retroactively to July 15, 1972. For the
remaining employees, i.e., those earning more than
$2.75 per hour, pay board regulations allowed Re-
spondent to compute the permissible increase by us-
ing their average basic wage rate as a base for
purposes of applying the 7 percent increase that it had
granted in the collective-bargaining agreement. By so
doing, Respondent was thus permitted to pay approx-
imately the full 21-cent increase it agreed upon. How-
ever, Respondent contends that it was not obligated
to pay more than the general 7 percent increase, appli-
cable to all employees, which, as stated, amounted to
17 cents per hour because the low-wage earner excep-
tion which permitted payment of a larger amount was
2 The low-wage employee exception became effective July 15, 1972, and
is set forth under Sec 201 11 (a)(9) of the pay board regulations Prior to
enactment of this section , the low-wage employee exception was limited to
employees earning less than $1 90 per hour
212 NLRB No. 55
PAPERCRAFT' RPORATION 241
not in existence until some 3 months subsequent to'
the effective date of the collective-bargaining agree-'
ment. Consequently, Respondent asserts,' that it was
not obligated to abide' by pay board regulations sub-
sequently enacted when it-expressly conditioned pay-
ment of the 21-cent-per-hour increase upon pay board,
approval pursuant to present guidelines.
The Respondent's position in the foregoing respect
is based on an erroneous premise. We believe the
correct interpretation of the wage provision is that the
only condition attached to Respondent's obligation to
pay the 21-cent-per-hour increase was that of obtain-
ing pay' board approval. Once such approval was
granted, Respondent's obligation became fixed.
When the pay board, in its November 24, 1972, ruling,
approved and authorized a 7 percent increase for em-
ployees making more than $2.75 per hour and granted
an exception for the remaining employees, it did not
write a new contract, requiring acceptance before it
could be made binding on the Respondent. Nor did
it create a new obligation foreign to the preexisting
contract. All it did was to determine the level to which
the increases previously contracted for were allowa-
ble, and could unlawfully be paid, under wage stabili-
zation policies. In other words, the pay board ruling
simply lifted the restriction that had earlier been
placed by governmental regulation upon payment of
the increases to a level which the Respondent had
agreed to be bound under the 1972-74 contract. The
obligation to pay the increases to the extent no longer
restricted remained, however, a contractual one with
its roots still in the 1972-74 agreement. Nor are we of
the opinion that, when the parties entered into the
subject wage provision, they contemplated applica-
tion of the limited construction that the Respondent
now seeks to apply to it. An examination of the wage
provision reveals an outright grant of a 21-cent-per-
hour increase for each year of the 2-year agreement.
The first place any mention of what arguably may be
regarded as a condition appears is in the final sen-
tence of the wage provision which states essentially
that the parties agree to submit a joint request to the
pay board for approval of those economic items
which exceed present guidelines. We view that state-
ment as an indication that the parties would jointly
seek pay board approval and, once such approval is
granted, the provision is satisfied. To hold otherwise
would require that we accept the rather strained con-
struction that the Respondent's obligation to pay
must not be based on guidelines not in existence as of
the effective date of the contract. Were we to follow
this construction to its logical conclusion, we would
necessarily find that the guidelines in effect at the
inception of the contract also controlled
Respondent's obligation to pay the 21-cent-per-hour
increase for the second year, which of course is pat-
ently ridiculous. While payment of the increase for
the second year is not-in issue, in view of the dynamic
mature of the pay board guidelines, we are unable to
assume that the rtius "anchored" their agreement to
pay Or receive the `21-cent-per-hour increase to pay
board guidelines in force as of the effective date of
their agreement as found by, the Administrative Law
Judge. Consequently we find that Respondent violat-
ed Section 8(a)(5) and (1) of the Act by its failure to
pay the wage , increases , to the extent permissible by
the November 24, 1972, decision and order of the pay
board as had been agreed to in the collective -bargain-
ing agreement.3
THE REMEDY
Having found that Respondent has engaged in un-
fair labor practices within the meaning of Section
8(a)(5) and (1) of the Act, we shall order that it cease
and desist therefrom and take certain affirmative ac-
tion designed to effectuate the purposes of the Act.
Since Respondent unlawfully refused to pay its em-
ployees certain increases due them under the contract,
we shall require Respondent to reimburse said em-
ployees for the contract amounts not paid but permis-
sible under the pay board's decision and order of
November 24, 1972, together with interest computed
in accordance with the formula, prescribed in Isis
Plumbing& Heating Co., 138 NLRB 716.
The Board, upon the basis of the foregoing findings
of fact and the entire record, makes the following:
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in com-
merce within the meaning of Section 2(6) and (7) of
the Act.
2. The unit set forth below constitutes an appropri-
ate unit for the purposes of collective bargaining with-
in the meaning of Section 9(b) of the' Act.
3 While we agree with our dissenting colleague that every breach of con-
tract is notper se an unfair labor practice under our Act, we do not subscribe
to his apparent conclusion that a breach of contract can never serve as the
basis for an unfair labor practice finding. Such a notion has long since been
rejected by both the Board and the courts. In C & S Industries, Inc., 158
NLRB 454 (1966), this Board expressed the view that conduct which is
proscribed under our Act can not be ruled out as an unfair labor practice
merely because this same conduct also happens to constitute a breach of
contract In our judgment, this view has been accepted and approved by the
United States Supreme Court See N L R B v. C & C Plywood Corporation,
385 U S. 421 (1967), and N.L R.B v. Strong Roofing and Insulating Co., 393
U S. 357 ( 1969) Clearly , then , Respondent 's refusal here to implement or be
bound by the wage provisions in the existing collective -bargaining agreement
has resulted in a midterm modification of the agreement in violation of Sec.
8(d) of the Act and warrants our finding that Respondent has engaged in
unfair labor practices within the meaning of Sec. 8(a)(5) and (1) of the Act
See Oak Cliff-Golman Baking Company, 207 NLRB No 138 (1973).
242 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
All production , maintenance employees and jan-
itors of the Respondent in Allegheny and West-
moreland Counties , Pennsylvania , excluding
office employees , watchmen and guards and su-
pervisors within the meaning of the Act.
3. The Union , United Papermakers International
Union , Local Union No. 446 , AFL-CIO, is a labor
organization within the meaning of Section 2(5) of the
Act and has been at all times material herein the
exclusive representative of all employees in the afore-
said appropriate unit for the purposes of collective
bargaining within the meaning of Section 9 (b) of the
Act.
4. Respondent has engaged in conduct violative of
Section 8 (a)(5) and (1) of the Act.
5. The aforesaid unfair labor practices are unfair
labor practices affecting commerce within the mean-
ing of Section 2(6) and (7) of the Act.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board hereby orders that the Respondent, Pa-
percraft Corporation, Blawnox, Pennsylvania, its
officers, agents, successors, and assigns, shall:
1. Cease and desist from refusing to bargain collec-
tively with the Union as the exclusive representative
of the employees in the appropriate unit by failing and
refusing to pay the wage increases which were to be-
come effective April 1, 1972, to the extent that such
increases were permissible under the pay board's deci-
sion and order issued to the parties on November 24,
1972.
2. Take the following affirmative action which the
Board finds will effectuate the policies of the Act:
(a) Bargain collectively with the Union as the ex-
clusive bargaining representative of Respondent's
employees in the appropriate unit with respect to rates
of pay, wages, hours, and other terms and conditions
of employment.
(b) Apply the terms of the collective-bargaining
agreement retroactively to the effective date of said
agreement and tender backpay to the employees em-
ployed in the appropriate unit in the manner set forth
in the section above entitled "The Remedy."
(c) Preserve and, upon request, make available to
the Board or its agents, for examination and copying,
all payroll records, social security payment records,
timecards, personnel records and reports, and all
other records necessary to analyze the amount of
backpay the amount of backpay due under the terms
of this Order.
(d) Post at its various places of business in and
around Blawnox, Pennsylvania, copies of the at-
tached notice marked "Appendix." 4 Copies of said
notice, on forms provided by the Regional Director
for Region 6, after being duly signed by Respondent's
authorized representative, shall be posted by it imme-
diately upon receipt thereof, and be maintained by it
for 60 consecutive days thereafter, in conspicuous
places, including all places where notices to employ-
ees are customarily posted. Reasonable steps shall be
taken by Respondent to insure that said notices are
not altered, defaced, or covered by any other material.
(e) Notify the Regional Director for Region 6, in
writing, within 20 days from the date of this Order,
what steps the Respondent has taken to comply here-
with.
CHAIRMAN MILLER, dissenting:
I agree with the Administrative Law Judge's, rather
than my colleagues', interpretation of the contract
and therefore would not reverse his conclusion that
the Respondent did not violate Section 8(a)(5) of the
Act.
But even if I were to agree with the interpretation
advanced by my colleagues, I am of the view that the
most that is established here is a contract violation.5
The Congress has rejected the notion that breaches of
contract ought to be unfair labor practices under our
Act, saying, "Once parties have made a collective-
bargaining contract, the enforcement of that contract
should be left to the usual process of law and not to
the NLRB." 6
I would therefore, dismiss the complaint herein.
In the event that this 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 read "Posted Pursuant to a Judgment
of the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board "
5 Contrary to the statement attributed to me by my colleagues , I do not
take the extreme position that conduct constituting a breach of contract may
never constitute a violation of this Act over which we ought to assertjurisdic-
tion Wheie the conduct involved has overtones beyond mere contract
breach and which go to areas where the policies of this Act are threatened,
of course we take jurisdiction We may, even then , defer in the first instance
to an available arbitral forum if we are satisfied that the parties ' own volun-
tary machinery may resolve the matter in a manner consistent with the
policies of this Act But where , as here , there is really nothing more at issue
than a run -of-the-mill dispute over proper contract interpretation and apply
cation, I am of the view that there is no genuine reason why the enforcement
of the contract ought not to be left to the usual process of the law, in
accordance with what I understand to be the intent of Congress
6 H R Cong Rep. No 310, 80th Congress, Ist Sess 42, i Leg Hist LRRA
546 (1947)
PAPERCRAFT CORPORATION
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT refuse to bargain collectively with
United Papermakers International Union, Local
Union No. 446, AFL-CIO, as the exclusive rep-
resentative of all our employees in the following
unit:
All production and maintenance employees
and janitors of the Respondent in Allegheny
and Westmoreland Counties, Pennsylvania,
excluding office employees, watchmen, and
guards and supervisors within the meaning of
the Act.
WE WILL NOT fail and refuse to pay our employ-
ees the wage increases negotiated between the
Union and ourselves on March 30, 1972, to the
extent that such increases are permissible under
the pay board's decision and order of November
24, 1972.
WE WILL bargain collectively with the above-
named Union as the exclusive bargaining repre-
sentative of our employees in the above unit with
respect to rates of pay, wages, hours, and other
terms and conditions of employment.
WE WILL apply the terms of our collective-bar-
gaining agreement with the above-named Union
to the employees in the appropriate unit retroac-
tively to the effective date thereof and we will
tender backpay to said employees, to the extent
permissible under the pay board decision and
order of November 24, 1972, for the amount of
wages withheld.
PAPERCRAFT CORPORATION
(Employer)
Dated By
(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 compli-
ance with its provisions may be directed to the
Board's Office, 1536 Federal Building, 1000 Liberty
Avenue, Pittsburgh, Pennsylvania 15222, Telephone
412-644-2977.
DECISION
STATEMENT OF THE CASE
243
ARNOLD ORDMAN, Administrative Law Judge: Upon a
charge filed by the Charging Party, herein called the Union,
on March 21, 1973, against Respondent, General Counsel
issued a complaint, dated September 21, 1973, alleging, in
substance, that Respondent violated Section 8(a)(5) and (1)
of the National Labor Relations Act, as amended, by refus-
ing to implement or be bound by the wage provisions of a
current collective-bargaining agreement between Respon-
dent and the Union. Respondent in its answer and amended
answers to the complaint admits certain factual allegations
of the complaint, denies the commission of unfair labor
practices. and urges several affirmative defenses. Hearing
on the controverted issues was conducted before me on
October :?4, 1973, in Pittsburgh, Pennsylvania, and the par-
ties thereafter submitted 'comprehensive briefs which have
been duly considered.
Upon the entire record I in this proceeding and upon my
observation of the witnesses , I make the following:
FINDINGS AND CONCLUSIONS
I JURISDICTION
Respondent, a corporation engaged in the manufacture
and sale of paper products, during the year preceding the
instant proceeding shipped products valued in excess of
$50,000 from its plants in Pennsylvania to destinations out-
side Pennsylvania. The complaint alleges, Respondent ad-
mits, and I find that Respondent is an employer engaged in
commerce within the meaning of Section 2(6) and (7) of the
Act. The complaint further alleges, Respondent admits, and
I find that the Union is a labor organization within the
meaning of Section 2(5) of the Act.
Jurisdiction is properly asserted herein.
11 THE MERITS
A Background and Statement of Issues
The instant dispute involves Respondent 's plant in Blaw-
nox, Pennsylvania , where, during the period relevant here,
Respondent had a work force numbering approximately
560 employees. For a period of about 25 years the Union
has represented Respondent 's employees under a series of
collective-bargaining agreements . The current collective-
bargaining agreement , executed in the middle of April 1972,
is for a 2-year period beginning April 1, 1972, and ending
1 Pursuant to agreement among the parties, a two-page statement setting
forth the wage rates and the number of employees on Respondent' s roster
as of March 31, 1972, submitted after the close of the hearing, is hereby
admitted into evidence as it Exh No 27 An unopposed motion by General
Counsel to correct certain errors in the transcript of testimony is granted To
insure fidelity of the transcript, that motion, herein identified as ALJ Exh
1. is also made part of the record herein
244 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
March 31, 1974. That agreement specifically incorporates
an earlier memorandum of agreement between the parties,
executed March 30, 1972, which provided, inter alia, for a
general wage increase to all employees in the appropriate
unit of 21 cents per hour for each year of the 2-year agree-
ment, and provided further that "the parties have agreed to
submit a point request to the pay board for approval of the
amounts beyond the present guidelines." Requests were ini-
tiated before the local Pay Board in Pittsburgh and before
the parent body in Washington, D.C. Details as to these
actions and as to meetings between Respondent and the
Union relevant thereto will be set forth hereunder.
The upshot of the matter, however, was that Respondent
during the first year of the collective-bargaining agreement
put into effect not the 21-cent increase enunciated in the
agreement, but a 17-cent increase on the basis of its asser-
tion that the latter amount was proper under the terms of
the agreement and the pertinent pay board declarations.2
General Counsel and the Union urge that the 17-cent raise
was inadequate under the terms of the agreement and rele-
vant pay board directives and that Respondent's refusal to
pay a larger amount constituted a refusal to implement or
be bound by its collective -bargaining agreement in violation
of Section 8(a)(5) and (1) of the Act.
The principal issue, therefore, is whether Respondent has
violated Section 8(a)(5) and (1) of the Act by refusing to
implement or be bound by the wage provisions of its collec-
tive-bargaining agreement.
Respondent presents several defenses. Thus, Respondent
argues that it has fully complied with the agreement in the
light of the pay board proceedings contemplated by that
agreement. Respondent argues further that assuming non-
compliance with the agreement, no more would be involved
than a breach of contract which is remediable at law and
also remediable arbitrally and that a breach of contract does
not constitute an unfair labor practice cognizable under the
Act. A corollary issue presented here is whether the Board,
pursuant to its declared policy, should defer proceeding in
the instant case pending resort by the parties to arbitration
procedures provided for in the collective-bargaining agree-
ment. Finally, Respondent argues that it was deprived of
due process by the refusal of General Counsel to provide it
with a copy of an advice memorandum relating to the in-
stant case furnished by the office of the General Counsel to
the Regional Office prior to the issuance of the complaint
herein.
The foregoing issues and Respondent's precise formula-
tions of its contentions will be considered hereunder follow-
ing a summary of the evidence.
B. The Evidence
The critical facts herein are largely undisputed. As indi-
cated, Respondent and the Union entered into a memoran-
dum of agreement on March 30, 1971, providing inter alia,
for a 21-cent-per-hour annual increase and forjoint submis-
sion of a request to the pay board for the approval of
amounts beyond the present guidelines. The comprehensive
2 No issue is presented as to the raise given during the second year of the
agreement It is undisputed that the increase given that year was 21 cents
labor agreement executed shortly thereafter incorporated
the memorandum of agreement. This is no suggestion that
Respondent failed to comply with any other provision of the
comprehensive agreement . The only default alleged relates
to the wage increase provisions.
Late in April and early in May 1972, the parties met with
Pittsburgh representatives of the Internal Revenue Service
(herein IRS) who administered the phase II guidelines in
effect at the time and who served as the local pay board
Pursuant to these discussions appropriate forms were pre-
pared and filed seeking approval of the 21-cent-per-hour
increase which translated to an increase of 8 3 percent. The
parties were advised that the local IRS could and would,
pursuant to a catch-up provision of controlling regulations
(Sec 201.11 (a)(3) ), allow an additional 1.5 percent increase
over the 5.5 percent allowable under phase II guidelines.
The total 7 percent increase thus allowable amounted to 17
cents per hour and on May 17, 1972, Respondent put a
17-cent increase in effect for its employees retroactive to
April 1, 1972.
The Union in the meantime had made it clear to both
Respondent and the local IRS that it wanted approval of the
entire 21-cent or 8.3 percent increase. The local IRS, in turn,
made it clear that as a local authority it could not approve
increases in excess of 7 percent and that only the parent
body, the pay board in Washington, could do so. On June
30, 1972, the local IRS formally notified Respondent and
the Union that a 7 percent increase could be implemented
but denied approval of an increase in excess of that amount.
The June 30 letter also provided for an appeal to its own
appeals branch. Although such an appeal was, in effect,
pointless in view of the limitations on its authority acknowl-
edged by IRS, the Union did appeal under Section
201.11(d), the gross inequity and undue hardship regulation.
On July 17, 1972, IRS denied the appeal on the ground that
the requirements under that regulation had not been met by
a "preponderance of the evidence." The July 17 communi-
cation noted that an appeal from that ruling could be
made-this appeal to the pay board in Washington-that
such appeal "must be filed within 30 days and the appellant
must serve copies of such appeal and supporting documents
to the parties at interest."
On or about August 1, 1972, the Union filed its appeal
with the pay board in Washington, asking for the full
amount of the 21-cent increase negotiated in the agreement.
The Union made reference in its appeal to serious hardship
and gross inequity, and made reference also to a reported
regulation that where employees earned less than $2.75 an
hour-a number of Respondent's employees fell in that
category-their wages could be increased without obtaining
an exemption. The Union informed Respondent on several
occasions prior to the submission that it would submit the
appeal but did not serve a copy upon Respondent. Con-
versely, the Union was rebuffed on a few occasions by
Respondent when Respondent refused to furnish back-up
economic data in its possession to enable the Union to file
more complete supporting documentation for its request.
Article XVII of the collective-bargaining agreement provid-
ed for a point request to the pay board by the parties for
approval of economic items exceeding "the present guide-
lines."
PAPERCRAFT CORPORATION
On November 24, 1971 , the pay board wrote to Respon-
dent, with a copy to the Union , enclosing its decision and
order on the appeal . In sum, the pay board ruled that the
employee unit was entitled , for the first year of the agree-
ment, to a 7 percent increase under Section 201.11(a)(3) of
the pay board regulations (the catch-up provision); that the
evidence was insufficent to warrant the granting of an addi-
tional exception under Section 201.11(d) (the hardship and
inequity provision); and that an exception was warranted
for low-wage earners to the extent they qualify under Sec-
tion 201 . 11(a)(9) effective as of July 15 , 1972, the date the
low-wage earner regulation for employees earning less than
$2.75 per became operative . The decision and order further
provided that any "wage and salary increase not specifically
approved by this Decision and Order shall be implemented
only in accord with Pay Board regulations ." The letter en-
closing the decision and order allowed 14 days for any ag-
grieved party to request further review by the pay board,
such request to include the grounds for such review and the
relief sought.
The decision and order gave rise to a flurry of activity by
both the Union and Respondent . Immediately upon receipt
of the Decision and Order , Union Vice President Manning
sought clarification of the rulings from the local IRS offi-
cials. Within the next several days Manning had two confer-
ences with Edward Jewell , Respondent's director of
personnel, relaying his understanding that employees earn-
ing less than $2.75 per hour were to receive immediately the
4-cent hourly increase required to reach the 21-cent figure
negotiated in the collective -bargaining agreement; that Re-
spondent was then required to compute a new base compen-
sation rate calculated on the earnings of those employees
who were making $2.75 or more per hour ; and that pro-
jecting from the new base compensation rate Respondent
was to recompute and pay the amount required to meet the
allowable 7 percent increase to which the remaining em-
ployees would be entitled . Manning estimated that on the
basis of the recomputation he understood to be required, the
remaining employees would probably also get the 4-cent
differential . At the conclusion of the second conference,
Jewell informed Manning that he would have to consult
Respondent 's counsel . Manning in the meantime was keep-
ing Peter Krowchak, the Union's International representa-
tive, advised of his activities in this connection.
Respondent did consult with its counsel , Harold Pollock,
and on the latter's advice , communicated with the pay
board in Washington . On November 30, 1972, Respondent
wrote to the pay board stating Respondent 's understanding
that a wage increase in excess of 7 percent was not permit-
ted, asking for clarification whether the $2.75 figure includ-
ed or excluded ' fringe benefits, and, lastly , asking the
amount or amounts payable under the pay board's ruling.
The pay board replied on January 23, 1973 , that Respon-
dent "may pay seven percentplus qualified benefits as nego-
tiated," and that "the $2.75 per hour is exclusive of the cost
of fringe benefits."
In the meantime International President Krowchack was
having discussions with Respondent 's counsel , Pollock.
Krowchak asked Pollock to implement the collective-bar-
gaining agreement to the extent permitted by the decision
and order. Krowchak explained to Pollock the Union's un-
245
derstanding of the impact of the effect of the order. His
explanation which he had received from the local IRS was
the same as that given by Union Vice President Manning
to Jewell, Respondent's director of personnel.
According to Krowchak , Pollock stated that Respondent
would not implement the order for two reasons: (1) that the
low-wage earner exemption was not in effect when the par-
ties negotiated their collective-bargaining agreement and
the pay board had no business burdening Respondent with
that particular directive ; and (2) that to implement the order
would destroy the wage structure , i.e., the relationship of
wages in the agreement . Krowchak replied that the order
was clear on its face, that the recomputation of a new base
compensation rate , contemplated by the pay board regula-
tions, would generate a higher base rate which , in turn,
under the 7 percent formula would generate the 21 cents
called for by the agreement.
Krowchak testified further that in the course of his dis-
cussions with Pollock he mentioned that Pollock could, if he
disagreed , question the order under the appeals procedure
which the pay board provided but that Pollock remained
adamant that Respondent would not acknowledge or imple-
ment the order . According to Krowchak, a later request he
made of Pollock to arbitrate the disagreement elicited the
response that the matter was not arbitrable under the terms
of the collective -bargaining agreement . Krowchak testified
also that Pollock told him in a March 1973 conversation
that Pollock had been in communication with the pay board
and that in Respondent's view the pay board order was not
mandatory, but only permissive . Krowchak asked Pollock
for copies for his correspondence with the pay board.
I find Krowchak 's testimony credible . In substantial part,
Pollock who testified for Respondent , corroborated
Krowchak's testimony . Thus, Pollock confirmed that he
told Krowchak that the $2.75 low-wage exemption was not
in effect when the collective-bargaining agreement was ne-
gotiated ; that the agreement called only for a general in-
crease ; that he would not renegotiate the agreement; and
that to agree to increase the pay for low-wage earners would
disrupt a wage structure negotiated over a period of many
years. Pollock also confirmed that he did not appeal from
the pay board decision and order because , as he stated to
the Union, he saw no need to do so. Finally, Pollock testi-
fied that he did not refuse to arbitrate but that absent a
timely grievance, he would not arbitrate or waive any defen-
ses in that regard and that the Union, of course , could seek
a court order compelling arbitration if the Union saw fit.
Pollock suggested , alternatively , that the Union could also,
if it saw fit , institute an action at law for breach of contract.
There was a substantial conflict in one respect . As indi-
cated, Krowchak testified that he made a request , of Pollock
to implement the exception for low -wage earners and to
recompute the base compensation rate so as to increase the
raise given the higher paid employees . Pollock initially de-
nied knowing of such a request until the day of the hearing
herein . Later in his testimony he acknowledged that at a
March 10 meeting, or perhaps before then "passing men-
tion" was made of a Union request for additional payment
pursuant to the November 24 pay board , order involving
low-wage employees.
In total context I am inclined to believe that Pollock was
246 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
in error or confused as to this matter. I am satisfied that
Krowchak did ask Powell to implement the November 24
order both with respect to the low-wage earners and with
respect to the other employees. Manning and Krowchak
had conferred as to this situation and both had solicited
advice from IRS. It is uncontradicted that Manning pre-
sented a like request to Jewell and that Jewell stated he
would have to get in touch with Pollock. Under the circum-
stances and also in the light of subsequent events, I am
satisfied that Krowchak did ask Pollock to implement pay
increases for all of Respondent's employees.
In any event, on February 2, 1973, the Union wrote to
Respondent stating that Respondent had written the pay
board for clarification of the pay board's decision and order
and had received an answer, that the Union had been ad-
vised by the Pittsburgh IRS office of the meaning of the
Decision and Order, but that Respondent has still not made
payment. Protesting improper and unjust delay, the Union
demanded immediate action. In response to this letter, Per-
sonnel Director Jewell asked the Union to furnish its inter-
pretation of the Decision and Order. The Union did so in
writing forthwith confirming, with examples, the interpreta-
tion it had previously given.
On March 10, 1973, Respondent and the Union and their
respective counsel and representatives met to discuss the
implementation of the pay board order. In effect, the parties
reiterated their respective positions as previously stated.
On March 14, 1973, Respondent wrote to the economic
stabilization program office in Pittsburgh, calling attention
to the fact that the pay board order read that an exception
for low-wage earners "should" be granted. The letter further
stated that Respondent wanted clarification from the pay
board to indicate that the quoted language made the grant
permissive, and not mandatory. The IRS replied under date
of March 20, 1973, stating that its reply was informational
and not a ruling. The IRS letter pointed out further that the
low-wage exception was self-executing, that it could have
been implemented without resort to the pay board, and that
it operated prospectively from July 15, 1972. The penulti-
mate sentence of the letter states:
This means that pay adjustments affecting low wage
employees can be paid on and after July 15, 1972-if
the particular wage agreement calls for such increases.
On March 22, 1973, the day after the IRS letter was sent,
the Union filed the unfair labor practice charge in the in-
stant case, having been informed by the local IRS officials
that the pay board had no enforcement machinery and
being satisfied from its negotiations with Respondent culmi-
nating in the March 10, 1973, meeting that Respondent
would not grant the requested increases under the Novem-
ber 24, 1972, decision and order of the pay board. On April
18, 1973, the Union filed a grievance against Respondent
complaining of Respondent's failure to comply with the pay
board order of November 24. The Union explained that the
grievance was filed at the suggestion of National Labor
Relations Board agents, made at the time the unfair labor
practice charges were filed. The Union further explained
that the grievance was not filed within 5 days of the asserted
offense because the Union was holding the matter in abey-
ance pending Respondent's efforts to seek clarification on
the basis of Respondent's assertion that it did not under-
stand the pay board's order.
On April 18, 1973, Respondent, without waiving any
other defenses, rejected the union grievance on the ground
that it was not timely filed.
C. Analysis and Concluding Findings
As indicated at the outset, the substantive issue in this
case is whether Respondent violated Section 8(a)(5) and (1)
of the Act, by refusing to implement or be bound by the
wage provisions of its collective-bargaining agreement with
the Union. As also indicated, Respondent's defense in re-
spect to this substantive issue is twofold: first, that it has
complied with the agreement and with the pay board rulings
which the agreement contemplated; and, second, that even
if it be in error in this regard, no more is involved than a
breach of contract and that a breach of contract is not
subject to the unfair labor practice proscriptions of the Act.
Preliminarily, however, it is appropriate to deal with cer-
tain procedural issues.
1. The issue of deferral to arbitration
The collective-bargaining agreement here under consid-
eration contains grievance-arbitration provisions which on
their face could have been utilized to resolve the dispute
giving use to the instant case, namely, the asserted failure
of Respondent to implement or be bound by the wage provi-
sions of the agreement. In Collyer Insulated Wire, 192
NLRB 837 (1971), the Board announced its policy of defer-
ral, i.e., holding an unfair labor practice proceeding in abey-
ance where the dispute in issue is susceptible to appropriate
resolution by resort to arbitral determination. The question
presented is whether such deferral is appropriate here.
Little discussion is required. As noted, the Union filed its
grievance on April 18, 1973, and on April 23, 1973, Respon-
dent, without waiving any other defenses available to it,
dismissed the grievance on the ground that it was not timely
filed under the terms of the collective-bargaining agree-
ment.3 At the opening of the hearing herein Respondent
reiterated its position that it would not waive its defense of
timeliness or any other defense in respect to arbitral pro-
ceedings.
General Counsel argues, inter aka, that inasmuch as Re-
spondent did not specifically allege in its answers to the
complaint that the instant proceeding should be deferred to
arbitration is not warranted here. See MacDonald Engineer-
ing Co., 202 NLRB 748 (1973); Nedco Construction Corp.,
206 NLRB No. 17 (1973). Because, however, the question
of deferral was raised at the opening of the hearing, further
discussion is appropriate.
True, Respondent in its brief to the Administrative Law
Judge does not specifically urge deferral as a defense. Rath-
3 The agreement provides that a grievance must be filed within 5 days of
the alleged offense Assuming the offense occurred on November 24, 1972,
as alleged in the grievance , almost 5 months had elapsed before the grievance
was filed The Union explains the delay on the ground of its awareness that
Respondent was seeking clarification of the November 24 pay board decision
and order and, further , that it filed the grievance when it did because that
was suggested by board agents upon the filing of the unfair labor practice
charge For reasons appearing in the text , these matters need not be explored
PAPERCRAFT CORPORATION
er, it argues that it did not violate Section 8(a)(5) and (1) of
the Act by refusing to waive timeliness or other procedural
defenses to arbitration (Br., 30-34). Respondent miscon-
ceives the issue. As Respondent candidly acknowledges
(Br., 33), the complaint does not urge that such a refusal is
violative of the Act. The policy of deferral espoused by the
Board is merely one of accommodation and is designed to
favor arbitral resolution of disputes where feasible and ap-
propriate rather than invoking unfair labor practice proce-
dures. The sole question therefore is whether in the light of
the facts of record deferral would be proper here.
The facts of record are that on a strict technical reading
of the contractual provisions, the Union's grievance was
belatedly filed. Whether such late filing would be or could
be arbitrally condoned is really not germane. The short of
the matter is that Respondent has consistently maintained
that the matter here in issue is not arbitrable under the terms
of the agreement, that absent a court order it will not arbi-
trate the matter, and that, in any event, it will not waive
timeliness or other procedural defenses as a bar to arbitral
resolution of the substantive issue. In these circumstances
the salutary objective of a quick and effective arbitral reso-
lution of the dispute, the objective underlying the Collyer
doctrine, is in the highest degree unlikely to be achieved.
Here, even more than in The Detroit Edison Company, 206
NLRB No. 116 (1973), deferral to arbitration would be
equivalent to handing the grievant "an empty shell."
I conclude and find that deferral to arbitration is not
warranted in the instant case.
2. The "advice memorandum" issue
In response to the complaint, Respondent pleads as an
affirmative defense the failure of General Counsel to fur-
nish Respondent with a copy of the advice memorandum
prepared and issued by the General Counsel in this case and
furnished to the Regional Director before complaint was
issued. Respondent pleads further that the complaint subse-
quently issued does not adequately inform Respondent of
the facts or legal theories upon which General Counsel re-
lies and that Respondent is entitled to the advice memoran-
dum under the Freedom of Information Act (5 U.S.C. §
552) and also as a requirement of due process in the instant
proceeding.
The Administrative Law Judge denied General Counsel's
motion to strike this defense from Respondent's pleadings.
Insofar as Respondent asserted that a purpose of the partic-
ular pleading was a request that the Administrative Law
Judge direct General Counsel to turn over a copy of the
advice memorandum to Respondent, that request was de-
nied. Respondent instituted no further action by way of
court proceedings.
Decisional law is presently in conflict as to whether ad-
vice memoranda issued by General Counsel are required to
be produced under the Freedom of Information Act. In
Seattle Building and Construction Trades Council v. Charles
M. Henderson, Reg. Dir., 82 LRRM 2362, the United States
District Court for the Western District of Washington ruled
that such papers were exempt from disclosure under Section
552(b)(5) of the Freedom of Information Act (Case
747-7202, decided January 22, 1973). An earlier decision by
247
the United States District Court for the District of Colum-
bia, decided August 19, 1972, and reported at 346 F. Supp.
751, Sears, Roebuck & Co. v. N.L.R.B., ruled to the contrary.
The latter ruling was recently affirmed by the U.S. Court of
Appeals for the District of Columbia in a brief per curiam
order. Sears Roebuck & Co. v. N.L.R.B., 480 F.2d 1195,
decided July 27, 1973, text of order reported at 83 LRRM
3045.
As appears in the instant proceeding, General Counsel
still resists production of advice memoranda, at least until
the particular case is completed either by non-issuance of a
complaint or, where complaint does issue, where litigation
is completed. See Sears, Roebuck and Co. v. N.L.R.B., 473'
F.2d 91, 92, and fn. 1, thereto^(C.A.D.C., 1972). Under these
circumstances it may fairly be assumed that there will be
further litigation in this area including the possibility of
Supreme Court review.
Assuming, arguendo, however, that Respondent was enti-
tled to the advice memorandum in the instant case under
the Freedom of Information Act, Respondent failed to pur-
sue the procedure provided under that Act for obtaining
that document. Jurisdiction to grant that request is vested
in the United States district courts under Section 552(a)(3)
of that Act which states:
... the district court of the United States in the
district in which the complainant resides, or has his
principal place of business, or in which the agency
records are situated, has jurisdiction to enjoin the agen-
cy from withholding agency records to order produc-
tion of any agency records improperly withheld from
the complainant. In such a case the court shall de-
termine the matter de novo and the burden is on the
agency to sustain its action.
Unlike the complainants in the Seattle Trades Council and
Sears Roebuck cases previously cited, Respondent elected
not to follow this prescribed course of action.
Thus, the sole question remaining for consideration in
this regard is the contention urged by Respondent that in
any event it was deprived of due process by the refusal of
General Counsel to turn over the advice memorandum in
the instant case in that it was hampered in the handling and
litigation of that proceeding. That contention was dealt with
by the Court of Appeals for the District of Columbia in the
Sears Roebuck case, supra, 473 F.2d 91. In that case the
district court had issued an order staying the Board's unfair
labor practice proceeding pending the production of certain
advice and appeals memoranda. The court of appeals ruled
that even assuming the complainant there was entitled to
the memoranda and, indeed, that the memoranda might be
"a convenience, indeed a significant help, in its litigating
stance" deferral of the proceeding was not warranted. The
court of appeals made these observations (at 493):
In the case at bar we do not have a cogent showing,
indeed we do not see a substantial showing, of how
Sears will be irreparably harmed in its participation in
the unfair labor practice charge without the Advice and
Appeals memoranda whose disclosure is still under ju-
dicial consideration.
248 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Should Sears ' claim to the memoranda be upheld on
appeal and should it appear that there was significant
adverse impact on Sears in the unfair labor practice
charge proceedings because it was denied timely disclo-
sure, an appropriate remedy can be fashioned to the
Board, or by the court of appeals with jurisdiction of
the petition for review or enforcement in the event the
Board issues an order.
True, in the cited case Sears was the party which filed the
unfair labor practice charge whereas in the instant case
Respondent is the target of the unfair labor practice charge.
Without gainsaying a more significant interest on the part
of a respondent than on the part of a charging party, the
Administrative Law Judge is satisfied that the criteria laid
down by the court of appeals are still applicable. In other
words, even assuming that Respondent was entitled to the
advice memorandum in the instant case , was it " irreparably
harmed" by its participation in the hearing without that
memorandum , and further, was there a "significant adverse
impact" upon Respondent in the unfair labor practice pro-
ceeding because it was denied timely disclosure?
The answer to these questions is in my view in the nega-
tive. Whatever the advice memorandum sought by Respon-
dent might or might not contain , the case herein was tried
on the allegation of the complaint that Respondent refused
to implement or be bound by the wage provisions of its
collective -bargaining agreement . Respondent in its answer
pleaded both factual and legal defenses to that allegation.
In an opening statement at the outset of the hearing General
Counsel stated in detail the evidence it would present, the
underlying legal theory and even the case authorities upon
which it relied. The hearing followed that course and all
matters were fully litigated and briefed. Respondent at no
point during the hearing claimed surprise or asked for a
continuance for that reason . Under such circumstances any
suggestion that Respondent has been denied due process by
the withholding of the advice memorandum is sheerly spe-
culative. The decision in the instant case is, and must be,
based on the facts of this record.
I find Respondent's claim of deprivation of due process
in this regard to be without merit.
3. The issue as to the implementation of the wage provi-
sions of the collective-bargaining agreement
As indicated at the outset there is virtually no dispute as
to the facts in this case. The complaint alleges, Respondent
admits, and I find that all production and maintenance
employees and janitors of the Respondent in Allegheny and
'Westmoreland Counties, Pennsylvania, excluding office
employees, watchmen and guards, and supervisors within
the meaning of the Act constitute an appropriate unit for
purposes of collective bargaining within the meaning of
Section 9(b) of the Act. The complaint further alleges, Re-
spondent Admits, and I find that at all time material herein
the Union has been the exclusive bargaining representative
of all the employees in said unit for purposes of collective
bargaining . Respondent also admits and I find that Respon-
dent and the Union have for many years been parties to
collective-bargaining agreements covering the described
employees and that the most recent agreement was entered
into on April 15, 1972, for a 2-year period beginning April
1, 1972, and ending March 31, 1974.
The critical issue is whether Respondent failed and re-
fused to implement or be bound by the wage provisions of
the 1972 agreement . If that failure or refusal is established,
we reach the second issue which Respondent poses, namely,
whether that failure or refusal constitutes an unfair labor
practice or merely a breach of contract.
a. Was there a failure or refusal to implement?
As already indicated, the 1972 collective-bargaining
agreement provided for an increase of 21 cents per hour and
for a joint request by the parties to the pay board for ap-
proval of the economic items in the contract "which exceed
the present guidelines ." Such a point request was submitted
and, pursuant to preliminary rulings by local pay board
representatives, Respondent increased wages 7 percent, or
17 cents per hour, retroactively to the beginning date of the
agreement. Involved here is the question whether Respon-
dent adhered to the agreement when it subsequently refused
to pay more than the 17-cent increase.
Without recapitulating what has already been set forth as
to intervening actions by the parties it appears that on No-
vember 24, 1972, the pay board in Washington, D.C., pur-
suant to an appeal , issued a Decision and Order, served
upon Respondent and the Union. The Decision and Order
affirmed the prior ruling that, under controlling regulations
an increase of only 7 percent (amounting in this case to 17
cents per hour) was permissible. As already noted, Respon-
dent had put the 17-cent increase into effect for all employ-
ees, retroactive to April 1, 1972. But the Decision and Order
further provided that under a regulation, promulgated in
August of 1972, but effective as of July 15, 1972, low-wage
earners, i e., workers earning less than $2.75 an hour, were
entitled to an exception About 300 of Respondent's em-
ployees, about half its work force, would qualify for a 21-
cent-per-hour increase under this regulation, if applied. Fi-
nally, the Decision and Order provided that "any wage and
salary increase not specifically approved by this Decision
and Order shall be implemented only in accord with Pay
Board regulations "
The gravamen of the complaint is that on and after No-
vember 24, 1972, the date of the pay board's Decision and
Order, Respondent failed and refused to implement the
wage provisions of the 1972 contract. The underlying ratio-
nale urged by General Counsel and by the Union is that
under controlling law, Respondent was legally obligated to
pay the 21-cent-an-hour increase provided for in the agree-
ment or, in any event, substantially more than the 17-cent-
an-hour increase it did pay.
It appears that under controlling regulations enunciated
by the pay board and testified to in the instant proceeding
by John Kocak, a specialist in the Economic Stabilization
Program, prior approval from the pay board is not required
for granting an increase to low-wage earners qualifying un-
der the relevant regulation; that, further, a new average base
earnings sate can be computed by averaging the wage rate
only of those employees making $2.75 or more an hour; and
PAPER-CRAFT CORPORATION
that the allowable increase under pay board rulings, in this
instance 7 percent, could be projected from th e recomputed
average base earnings rate. The Union urged upon Respon-
dent that on this basis all the employees were entitled to the
full 21-cent increase, the low-wage earners under the rele-
vant low-wage earner exception and those making $2.75 an
hour or more under the recomputed average rate .4
Respondent resisted the Union's demand on two princi-
pal grounds. The first ground was that the low-wage earner
exemption, pegged at $2.75 per hour, was not effective until
July 15, 1972, and was not promulgated until a month there-
after. In this respect Respondent argued that its contractual
commitment antedated that regulation by several months
and specifically provided that Respondent would pay 21
cents subject to a request for pay board approval of
amounts exceeding the present guidelines, specifically, the
guidelines in effect when the contract was executed.5 Inas-
much as Respondent concluded that it was not required to,
and would not, comply with the low-wage earner regulation
enunciated by the pay board, there was no basis for a re-
computation as to what increase might be due the remaining
employees.
The second ground urged by Respondent for not hon-
oring the low-wage earner regulation was that it would de-
stroy the wage structure and wage relationships among its
employees which Respondent had succeeded in establishing
after years of negotiations.
The latter ground needs little consideration. Assuming
that Respondent was bound, or elected, to comply with the
low-wage earner regulations would enable Respondent to
give an equivalent or almost equivalent increase to the re-
maining employees, and that is precisely what Respondent
had agreed to in the first instance, namely, a 21-cent in-
crease to all employees. For this reason, apart from any
other, I find Respondent's defense predicated on its disincli-
nation to destroy the existing wage structure or wage rela-
tionships without merit.
More troubling, however, is Respondent's claim that
when it granted the 7 percent increase pursuant to the pay
board's ruling, it did all it was required to do under the
agreement it entered into, that it had complied with the
"present" guidelines to which the parties had committed
themselves in the April agreement and that it was not bound
by new regulations changing those guidelines.
We may put aside the question whether Respondent
could or should, as a matter of business judgment or for
other reasons, have applied subsequently promulgated regu-
4 The Union acknowledged that the latter claim as to the higher wage
earners was somewhat speculative because its attempts to obtain the underly-
mg data from Respondent were rebuffed . However, the Union points out that
in any event a 7 percent increase projected on the recomputed base rate
would obviously be higher than the 17 cent figure arrived at by projecting
the 7 percent on the old base rate arrived at on the basis of averaging the
earnings of all the employees
5 Respondent also relies on the fact that in its view , payment under the
low-wage earner regulation is merely permissive , not mandatory , in that
Respondent received an informational letter from the local IRS office to the
effect that such payment could be made on or after July 15, 1972, "if the
particular wage agreement calls for such increases " This is merely a restate-
ment of the original ground inasmuch as the agreement does "call" for a
21 -cent increase unless it is established , as Respondent seeks to establish, that
payment was not required under "present guidelines."
249
lations to pay the 21-cent-an-hour increase which it had
agreed to provided it were permissible under the then ex-
isting regulations. That question lies outside the periphery
of this Agency's jurisdiction. The question is whether Re-
spondent was required to do so.
General Counsel and the charging party rely upon Wash-
ington Employers, Inc., 200 NLRB No. 117 (1972), as author-
ity for the proposition that Respondent was so required. In
that case, presented on a stipulated record, it appeared that
the employers had entered into an agreement providing for
a 12.5 percent increase. About a month or more after the
increase was to have become effective, the employers noti-
fied the Union, party to the agreement, that they would not
put the increase into effect until pay board action on the
increase. This was the first time the employers informed the
Union of their concern with pay board action. The employ-
ers put into effect, retroactively, a 5.5 percent increase per-
missible under pay board guidelines, and further informed
the Union that if the pay board's ultimate ruling on a pend-
ing request for approval of an amount in excess of 5.5
percent was granted, further "adjustments" would be made.
In Washington Employers, as here, General Counsel urged
that the employers' failure to pay the agreed-upon increase
of 12.5 percent violated Section 8(a)(5) and (1) of the Act
and that the regulations of the pay board did not affect the
employers' obligation in that regard. The employers argued
that it would be improper for the National Labor Relations
Board to require payment of that increase prior to pay
board action in the matter.
The National Labor Relations Board in the Washington
Employers case asked for a pay board opinion on the ques-
tion and was duly informed that under the contract of the
parties "applicable Pay Board rules allowed full implemen-
tation of the disputed increase . . . without prior Pay Board
approval or pre-notification." Accordingly, statutory viola-
tion of Section 8(a)(5) and (1) of the Act was found. The
accompanying opinion states in relevant part:
... it appears that nothing in the Pay Board' s rules
and regulations prevented Respondents from paying
the wage increases. . . . We find that when Respon-
dents agreed unconditionally to the 12.5, percent in-
crease, they were on notice that some kind of controls
would remain on the economy after the expiration of
the wage-price freeze. Moreover, Respondents in fact
knew specifically, when they signed the contracts on
November 29, 1971, that controls remained. It follows
that Respondents were willing to assume the risk of
being obliged to pay what might later be excused as an
increase in excess of the Pay Board's regulations. Re-
spondents thus cannot now complain of this Board's
requiring them to pay what they agreed upon, first
during the negotiations, and again after Phase II went
into effect. This should not be construed, however, as
a determination regarding the obligations of Respon-
dents, or indeed of other employers in future cases,
should the Pay Board rule that it is not in the interests
of the economic stabilization program to allow the con-
tinued payment of the full amount of the negotiated
increase.
Analysis of the Washington Employers case reveals that
the case is plainly distinguishable. The Board stressed in
250 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Washington Employers, that the employers there "agreed
unconditionally" to the 12.5 percent increase although they
were on notice that controls were in effect. Indeed, the
Board noted that it was not until almost 2 months after the
agreement was executed that the employers "for the first
time" notified the Union that the agreed-upon increase
would not be put into effect. Under these circumstances, the
Board concluded that the employers could properly be re-
quired to "assume the risk" to which they had willingly
agreed of a subsequent ruling by the pay board which might
not allow continued payment of the negotiated increase.
The instant case is quite different. Here the parties specif-
ically contemplated and put into their agreement that pay
board approval would be sought for the 21-cent increase
insofar as that increase exceeded present guidelines. Here
the agreed upon increase was not unconditional but ex-
pressly and explicitly conditioned on pay board approval.
That approval was for 7 percent or 17 cents which Respon-
dent immediately implemented. True , as a result of subse-
quent regulations relating to an exception for low-wage
earners making less than $2.75 per hour, it became possible
for Respondent to increase further the amount which could
be paid employees making less than $2 75, and to make a
larger increase also to employees making $2.75 or more per
hour. But that regulation was not effective until July 15,
1972, 3 months after the collective-bargaining agreement
was executed, and, as Respondent correctly asserts, that
agreement was anchored to "present guidelines." Under
these circumstances it would strain language to argue that
Respondent was legally bound by future guidelines. At best,
the new regulation was, under the language of the agree-
ment, permissive, not mandatory. Respondent could have
elected to follow the new regulations; it was not required to
do so. The Union in essence recognized its dilemma when
it asked Respondent to renegotiate the agreement. Respon-
dent, as was its right under Section 8(d) of the Act, refused
to do so.'
Apart from Washington Employers and Nedco, General
Counsel and the Union cite no cases, and the Administra-
tive Law Judge is aware of none, holding that an employer
is bound under the Act to implement a wage increase, which
is specifically and expressly conditioned in the very agree-
ment granting the increase on prior pay board approval,
where that pay board approval has not been obtained. Nor,
in the view of the Administrative Law Judge, does an em-
ployer who elects to be bound by "present guidelines" sub-
ject himself to the consequences of later-enacted guidelines.
For reasons already set forth, it seems apparent that the two
cited cases do not support the position urged in the com-
plaint.
6 General Counsel and the charging party also cite Nedco Construction
Corp, 206 NLRB , No 17 (1973), in support of their position In that case.
the parties agreed to certain increases in wages and fringe benefit contribu-
tions, to be effective also retroactively, but provided further that before being
implemented the increases had to be approved by the Construction Industry
Stabilization Committee Unlike the situation in the instant case, the Con-
struction Industry Stabilization Committee approved the increases provided
for in the agreement including the provision for retroactivity When the
employers refused to pay the retroactive wage benefits , despite the approval.
the Board held that the employer violated Section 8(a)(5) and (I) of the Act.
The Nedco case is plainly inapposite here
I conclude and'find than an unfair labor practice has not
been established.
b 'The breach of contract defense
In view of the foregoing finding, it would appear superflu-
ous to deal with Respondent's alternative contention that,
even assuming arguendo that it was obliged under the collec-
tive-bargaining agreement and pay board regulations to pay
the 21-cent increase denominated in the agreement, no
more was involved than a breach of contract and a breach
of contract does not constitute an unfair labor practice cog-
nizable under the Act. Nevertheless, recognizing that the
substantive finding made here is subject to Board and court
review, prudence dictates at least a brief analysis of the
alternative contention.7
It may be conceded, as Respondent argues, and legisla-
tive history of the Act certainly supports the proposition,
that a breach of contract is not per se an unfair labor prac-
tice proscribed by the Act. But like many generalizations,
this generalization, too, overstates the case. As the Board
said in C & S Industries, Inc., 158 NLRB 454 at 458 (1966):
"While it is true that a breach of contract is not ipso facto
an unfair labor practice, it does not follow from this that
where given conduct is of a kind otherwise condemned by
the Act, it must be ruled out as an unfair labor practice
because it happens also to be a breach of contract." And as
the Supreme Court emphasized 1 year later in N.L.R.B v.
C & C Plywood Corporation, 385 U.S. 421 at 428 (1967): "It
is said that the rejection by Congress of a bill which would
have given the Board jurisdiction over all breaches of collec-
tive-bargaining agreements shows that the Board is without
power to decide any case involving the interpretation of a
labor contract. We do not draw that inference from this
legislative history." 8
Left for consideration, therefore, is the single question
whether Respondent's action here, assuming arguendo that
there was a breach of contract, was the type of breach which
would fall, concurrently, under the Board's unfair labor
practice jurisdiction (supra, fn. 8). Under the hypothesis that
the contract was breached, more is involved than an isolated
act in violation of a contract. Assuming, again, that Respon-
dent was obligated to pay the full 21 cents provided in the
agreement, or as close to that amount as permitted, to all the
employees in the umt, the situation would be one where
Respondent unilaterally modified an important term and
condition of employment in a contract before the term of
the contract had run its course. Such conduct is plainly in
derogation of Section 8(d) of the Act which was designed
to stabilize agreed-upon conditions of employment during
r By parity of reasoning the finding of no unfair labor practice , if sustained,
would pretermit the necessity of considering the issue, previously discussed,
as to whether General Counsel was obligated to furnish the advice memoran-
dum in the instant case
B For instances where the Supreme Court has held that "the authority of
the Board and the law of the contract are overlapping, concurrent regimes,
neither preempting the other," see N L R B v Strong Roofing & Insulating
Co 393 U S 357, 360-361 (1969), and cases there cited In language almost
tailored to meet Respondent 's contentions in the instant case , the Court
added in the Strong case, supra, "Arbitrators and courts are still the principal
sources of contract interpretation, [fn omitted ] but the Board may still pros-
cribe conduct which is an unfair labor practice even though it is also a breach
of contract remediable as such by arbitration and in the courts"
PAPERCRAFT CORPORATION
a contract term and hence violates Section 8(a)(5) and (1)
of the Act. See C & S Industries, Inc., supra, and Washington
Refrigeration Service Co., 206 NLRB No. 130 (1973).
I conclude that, on the assumption that Respondent vio-
lated its agreement in the manner here alleged, its offense
would fall in the category of breaches of contract subject
also to the Board's unfair labor practice jurisdiction.
CONCLUSIONS OF LAW`
The General Counsel has not shown by a preponderance
of the evidence that Respondent has committed the unfair
labor practice alleged in the complaint.
251
Upon the foregoing findings of fact and conclusions of
law, upon the entire record, and pursuant to Section 10(c)
of the Act, I recommend the following:9-
ORDER
The complaint in this proceeding is dismissed in its entire-
ty.
9 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 all purposes.