Pepsi-Cola Distributing Co.

National Labor Relations Board - Board Decisions

Apr 13, 1979

241 N.L.R.B. 869 (N.L.R.B. 1979)

PEPSI-COLA DISTRIBUTING COMPANY
Pepsi-Cola Distributing Company of Knoxville, Ten-
nessee, Inc. and Teamsters Local Union No. 519,
Knoxville and Vicinity, Tennessee. Case 10-CA-
13333
April 13, 1979
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND TRUESDALE
On September 25, 1978, Administrative Law Judge
Robert G. Romano issued the attached Decision in
this proceeding. Thereafter, the General Counsel filed
exceptions and a supporting 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 and brief
and has decided to affirm the rulings, findings, and
conclusions of the Administrative Law Judge only to
the extent consistent herewith.
The General Counsel alleged that Respondent vio-
lated Section 8(a)(5) and (1) by unilaterally, without
notification to or consultation with the Union, discon-
tinuing the predecessor's (Hartman Beverage Co.)
past practice of conferring upon its route salesmen a
yearend bonus.
The issue presented is whether the Union, in the
course of its negotiations with Hartman, and by the
resultant contract, waived its right to be consulted
about the elimination of the bonus. The Administra-
tive Law Judge, relying on Bancroft-Whitney Co.,
Inc.,' found that the Union herein clearly and unmis-
takably waived that right because of the parties' op-
portunity to negotiate mutually agreeable contract
terms, the specificity of the management-rights and
zipper clauses, and the completeness of the resulting
contract.2 He found that Hartman, under the Board's
holding in Bancroft-Whitney, would have been able to
' 214 NLRB 57 (1974), where the Board in determining the existence of a
waiver, stated that it "looks to a variety of factors, including the evidence of
contract negotiations, the precise wording of the relevant contractual provi-
sions, and the completeness of the bargaining agreement."
2The relevant portions of the contract provisions are set forth below:
Article XXI Management Rights
Section 2. The exclusive functions and rights of management include,
but are not restricted to the right ... to establish or continue policies,
practices and procedures ....
Article XXXI Miscellaneous
Section 2. The Employer and the Union agree that all matters desired
by either party have been presented, discussed and incorporated herein
or rejected. Accordingly, it is agreed that for the life of this Agreement
each party voluntarily and unqualifiedly waives the right and each
agrees that the other shall not be obligated to bargain collectively with
discontinue the practice without any prior negotia-
tion with the Union, and therefore the successor Re-
spondent, who had assumed the existing collective-
bargaining agreement, did not violate Section 8(a)(5)
and (1) when it told the route salesmen that it would
not pay the bonus because the bonus was not in the
contract.
We do not find Bancroft-Whitney determinative.3
There the Board found that the union had clearly
waived any right to bargain about the payment of an
annual wage dividend during the contract's duration.
In that case, bargaining was extensive and the con-
tract contained a clear and specific provision that "all
wages and other benefits to be received are contained
in this agreement."
The law is settled that the right to be consulted
concerning unilateral changes in terms of employ-
ment is a right given by statute and not one obtained
by contract and that, in order to establish a waiver of
a statutory right, there must be a showing of a clear
relinquishment of the right. Whether there has been a
clear relinquishment of the right is to be decided on
the facts and circumstances surrounding the making
of the contract.4 Having considered all the circum-
stances herein, we conclude that there has been no
showing that the Union relinquished its statutory
right to bargain over the yearend bonus.
Thus, for approximately 5 to 8 consecutive years
prior to 1977, Hartman Beverage had paid its route
salesmen a yearend bonus calculated at the rate of I
cent per case sold by individual route salesmen dur-
ing the previous year. The bonus was paid only to
route salesmen and was paid annually either in late
November or early December.
In November 1975, Hartman and the Union en-
tered into their first I-year collective-bargaining
agreement. At the time of the parties' negotiations
regarding rates of pay, salaries, and commissions to
be paid to route salesmen, there was no discussion by
anyone concerning the bonus that Hartman had pre-
viously paid to the route salesmen. Robert Barnes,
the Union's business agent, stated that he was un-
aware that a bonus had been paid to route salesmen
in previous years, and the contract made no provision
for payment of any bonus. In late 1975, however,
respect to any subject or matter, whether or not referred to in this
Agreement.
Section 6. This Agreement constitutes the complete understanding of
the parties with respect to all issues between them and supersedes all
written memoranda, agreement or benefits heretofore made or given by
the parties, or either of them.
3 Chairman Fanning agrees that Bancroft-Whitney is not determinative in
this case. However, this does not mean he agrees with the finding in Ban-
croft-Whitney in which he did not participate. Member Jenkins dissented in
Bancroft-Whitney, and would overrule that Decision.
4 McDonnell Douglas Corporation, 224 NLRB 881, 887 (1976).
241 NLRB No. 136
869
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Hartman again paid the route salesmen their tradi-
tional bonus.
During negotiations for the second contract, a
union committeeman raised the question as to
whether the bonus was being taken out of the salary
paid the route salesmen. Hartman's president, Baker,
stated that he would be glad to incorporate the I cent
per case into the drivers' salaries, but the bonus was
something that had been done over the years, and it
was nice to get at Christmastime to help buy presents
for the children. In light of Baker's statement, the
Union made no demand or request of Hartman that
the payment of the bonus be expressly provided for in
the agreement, and there was no mention of the bo-
nus in the second 1-year collective-bargaining agree-
ment, effective from November 27, 1976, to Novem-
ber 26, 1977. In late November 1976, Hartman again
paid the route salesmen the bonus as it had done in
previous years.
On February 1, 1977, Respondent purchased Hart-
man's assets but did not sign the 1976-77 collective-
bargaining agreement. Nonetheless, Respondent rec-
ognized the Union and considered itself party to and
honored the agreement. The Respondent, however,
had no knowledge of Hartman's previous payments
of the bonus.
Around the middle of February, officials of both
Companies held a meeting with the route salesmen.
One of the route salesmen asked if their pay would
change. The Respondent's president, Larry Smith,
told the employees that there would be no change in
pay structure. The Respondent's vice president and
general manager, James Moore, told the employees
that everything would be run just like it had been run.
Given the Respondent's assurances, no employee
raised a question at that time about bonus payments
being continued in the future.
In May, Moore became aware of the bonus pay-
ment and inquired about it by contacting Hartman's
former payroll official, Bernard Hartman. According
to Moore, Hartman told him that the bonus paid had
been based on an accrual, accumulated by employees
being paid I penny less than the contract rate.
In late 1977, Moore received inquiries from some
of the route salesmen as to when they were going to
receive their bonus. Moore subsequently called a
meeting of the route salesmen during the first week of
December. He told them that Respondent initially
had not known of any bonus, that Bernard Hartman
had said that the bonus was based on a penny ac-
crual, but that he could find no records to support
Hartman's assertions. Moore then stated that the bo-
nus was not in the contract, that it was unfair, and
that the Company was not going to pay the bonus.
Based on the foregoing, it can be reasonably in-
ferred that Hartman and the Union intended to con-
tinue the practice of paying the yearend bonus in
light of Hartman's payment of the bonus in 1975 and
1976, after the contracts had been negotiated, despite
the inclusion of the management-rights and "zipper"
clauses in each of the agreements on which Respon-
dent now relies. The Union raised the issue during
negotiations for the second contract, and Baker stated
that the bonuses were something that had been done
over the years and it was nice to get at Christmastime
to help buy presents for the children. In light of Ba-
ker's statement, it is understandable that the Union
did not request a specific contract provision regarding
the bonuses. In addition, nothing said during these
negotiations would put the Union on notice that its
failure to include such a provision would preclude it
from future bargaining on the subject. To the con-
trary, Baker's statement indicated that Hartman
would continue an established practice. Thus, in the
context of negotiations, Hartman and the Union fully
expected the continuation of the bonus payments and
there was no clear specific and unmistakable waiver
by the Union of this term and condition of employ-
ment.
We are not unaware that Respondent was a succes-
sor employer and had no knowledge of the bonus at
the time of the purchase of Hartman's assets or when
it made the February assurances to employees that
working conditions would remain the same. The Re-
spondent, however, learned of the bonus at least 6
months prior to the time that the employees were
scheduled to receive it and failed to consult with the
Union regarding the issues. Moreover, in November
the Respondent, once again, failed to consult the
Union regarding the issue and met directly with em-
ployees.
On the basis of the foregoing, we find that the
Union has not clearly and unmistakably waived its
right to be consulted with regard to any change in this
condition of employment. Inasmuch as a waiver is
not lightly inferred, we conclude that, in the circum-
stances herein, there was no waiver by the Union, and
Respondent should have bargained with the Union
prior to discontinuing its predecessor's established
practice of paying the yearend bonus to its route
salesmen.
CONCLUSIONS OF LAW
I. The Respondent is an employer engaged in
commerce within the meaning of Section 2(6) and (7)
of the Act.
2. The Union is a labor organization within the
meaning of Section 2(5) of the Act representing the
appropriate unit described below:
All route salesmen, warehousemen and highlift
operators employed by Respondent at its Knox-
870
PEPSI-COLA DISTRIBUTING COMPANY
ville, Tennessee, facility, excluding the vending
repair department, temporary summer employ-
ees, office clerical employees and supervisors as
defined in the Act.
3. The Respondent and the Union have been par-
ties to a collective-bargaining agreement covering the
employees in the unit described above.
4. By unilaterally, without notification to or con-
sultation with the Union, discontinuing its past prac-
tice of conferring upon its route salesmen in the
above unit a yearend bonus, Respondent has violated
Section 8(a)(5) and (1) of the Act.
5. The foregoing unfair labor practice affects com-
merce within the meaning of Section 2(6) and (7) of
the Act.
THE REMEDY
Having found that Respondent has engaged in an
unfair labor practice, within the meaning of Section
8(aX5) and (1), we shall order that it cease and desist
therefrom and that it take certain affirmative action
designed to effectuate the policies of the Act, and,
upon request, bargain collectively with the Union as
the exclusive representative of route salesmen in the
bargaining unit concerning the yearend bonus to said
employees.
The Respondent's unfair labor practice consisted of
its unilaterally withholding the 1977 yearend bonus
from the route salesmen. Inasmuch as the bonus con-
stituted wages, the failure to pay the bonus was a
detriment suffered by said employees. It is the
Board's customary policy to direct a respondent to
restore the status quo where a respondent has taken
unlawful unilateral action to the detriment of its em-
ployees. Accordingly, Respondent will make whole
the route salesmen represented by the Union by pay-
ing them the 1977 yearend bonus in accordance with
the long-existing formula applied by its predecessor.
Further, in accordance with the Board's normal prac-
tice, the bonus will be paid with interest, to be com-
puted in the manner set forth in Florida Steel Corpo-
ration, 231 NLRB 651 (1977).?
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,
Pepsi-Cola Distributing Company of Knoxville, Ten-
nessee, Inc., its officers, agents, successors, and as-
signs, shall:
1. Cease and desist from:
(a) Unilaterally, without notification to or consul-
tation with the Union, discontinuing its past practice
'Sec, senerally, Isi Phanbing & Heating Co., 138 NLRB 716 (1962).
of conferring upon its route salesmen a yearend bo-
nus.
(b) In any like or related manner interfering with,
restraining, or coercing its employees in the exercise
of the right to self-organization, to form, join, or assist
any labor organization, to bargain collectively
through representatives of their own choosing, and to
engage in concerted activities for the purpose of mu-
tual aid or protection, as guaranteed in Section 7 of
the Act, or to refrain from any and all such activities.
2. Take the following action which the Board finds
will effectuate the purposes of the Act:
(a) Bargain collectively in accordance with the
provisions of Section 8(d) with respect to any change
in the practice of paying the yearend bonus to the
route salesmen.
(b) Make the route salesmen whole by paying the
1977 yearend bonus in the manner set forth in the
section herein entitled "The Remedy."
(c) Post at its Knoxville, Tennessee, place of busi-
ness copies of the attached notice marked "Appen-
dix." 6 Copies of said notice, on forms provided by the
Regional Director for Region 10, after being duly
signed by Respondent's representative, shall be
posted by Respondent immediately upon receipt
thereof, and be maintained by it for 60 consecutive
days thereafter, in conspicuous places, including all
places where notices to employees are customarily
posted. Reasonable steps shall be taken by Respon-
dent to insure that said notices are not altered, de-
faced, or covered by any other material.
(d) Notify the Regional Director for Region 10, in
writing, within 20 days from the date of this Order,
what steps Respondent has taken to comply herewith.
* 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."
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 with Team-
sters Local Union No. 519, Knoxville and Vicin-
ity, Tennessee, by unilaterally, without notifica-
tion to or consultation with the Union,
discontinuing our past practice of conferring
upon route salesmen a year-end bonus.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce our employees
in the exercise of their right to self-organization,
871
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to form, join, or assist any labor organization, to
bargain collectively through representatives of
their own choosing, and to engage in concerted
activities for the purpose of mutual aid or protec-
tion, as guaranteed in Section 7 of the Act, or to
refrain from any and all such activities.
WE WILL, upon request, meet and bargain in
good faith with the above-named Union with re-
spect to the practice of paying the year-end bo-
nus to route salesmen.
WE WILL make the route salesmen whole by
paying the 1977 year-end bonus with interest.
PEPSI-COLA DISTRIBUTING COMPANY OF
KNOXVILLE, TENNESSEE
DECISION
STATEMENT OF THE CASE
ROBERT G. ROMANO, Administrative Law Judge: This
case was heard before me on June 28, 1978.' The charge
was filed by the Union2 on December 21, 1977 (amended
January 25). An original complaint issued on February 3,
alleging violation of Section 8(a)(5) and (I) of the Act by
Pepsi-Cola Distributing Company of Knoxville, Tennessee,
Inc. (Respondent). Timely answer was filed by Respondent
on February 13, denying the commission of any unfair la-
bor practice. An amended complaint issued on June 14,
adding the allegation that Respondent since on or about
February 1, 1977, was a successor employer to Hartman
Beverage Company; and otherwise continued the allegation
that on or about December 5, 1977, Respondent unilater-
ally, without notification to or consultation with the Union,
had discontinued its past practice of conferring a yearend
bonus upon its route salesmen, in violation of Section
8(a)(5) and (1) of the Act. On June 23, Respondent filed an
additional answer, denying the commission of any unfair
labor practice and praying that the complaint in this pro-
ceeding be dismissed.
Upon the entire record, including my observation of the
demeanor of the witnesses, and after due consideration of
the brief filed by the General Counsel, on or about July 27,
I make the following:
FINDINGS OF FACT
The Company, a Tennessee corporation, is engaged in
the sale and distribution of carbonated beverages and
syrup. During the past calendar year, the Company pur-
chased and received goods and products valued in excess of
$50,000 directly from suppliers located outside the State of
Tennessee. I find that the Company is an employer engaged
in commerce within the meaning of Section 2(2), (6), and
(7) of the Act. I further find that the Union is a labor or-
ganization within the meaning of Section 2(5) of the Act.
'All dates herein refer to 1978, unless stated to the contrary.
2 The Union's name appears as corrected.
I. ALLEGED UNFAIR LABOR PRACTICES
A. Background
1. Predecessor's operation and payment of yearend or
Christmas bonus
The essential facts are not in dispute. Prior to February
1, 1977, Hartman Beverage Company (Hartman or prede-
cessor), operated the facility involved herein, located in
Knoxville, Tennessee, where it engaged in the sale of car-
bonated beverages and syrup. Joe A. Baker was president
of Hartman. For a significant number of years (5-8) prior to
selling his company to Respondent in February 1977, Baker
had paid his route salesmen (only) a yearend or Christmas
bonus calculated at the rate of I cent per case of product
sold by the individual route salesman during the previous
year.' There were some 65-70 route salesmen who regularly
received such bonus. Hartman also employed warehouse-
men and high lift operators at its Knoxville facility who did
not receive any bonus. The bonus was paid annually either
in late November or early December. If an employee quit
he was also paid the bonus on the base of his personal
accumulated sales between the time of the last bonus pay-
ment and the date of his resigning.
2. The certification of the Union; successive collective-
bargaining agreements; continued payment of the bonus
by predecessor Hartman
On August 1, 1975, an election by secret ballot was con-
ducted in an appropriate unit4 under the supervision of the
Regional Director for Region 10 of the Board. A majority
of the employees designated and selected the Union as their
representative for the purposes of collective-bargaining
with Hartman with respect to rates of pay, wages, hours of
employment, and other terms and conditions of employ-
ment. On August 11, 1975, the Regional Director for Re-
gion 10 of the Board certified the Union as the exclusive
collective-bargaining representative of all the employees in
the above unit. At hearing Respondent stipulated that for
purposes of this hearing the aforesaid unit was an appropri-
ate unit and that the Union is the collective-bargaining rep-
resentative of the employees in that unit. I so find.
On November 27, 1975, Hartman and the Union entered
their first l-year collective-bargaining agreement covering
the employees in the above bargaining unit. The contract
by its terms extended through November 26, 1976. Baker
negotiated this first (1975-76) contract with Robert Barnes,
then a newly appointed business representative with the
Union. Baker testified credibly that at the time of their dis-
cussions concerning the rates of pay, salaries, and commis-
sions to be paid the route salesmen, warehousemen, and
forklift operators, that there was no discussion by anybody
3 Baker estimated that he had paid the bonus for approximately 5 years
prior to his sale of the Company. Employee Gerald Haggard recalled that he
had received such bonus for approximately 8 years.
'Determined as an appropriate unit therein was:
All route salesmen, warehousemen and high lift operators employed by
Hartman Beverage Company at its Knoxville, Tennessee facility, ex-
cluding the vending repair department, temporary summer employees,
office clerical employees and supervisors as defined in the Act.
872
PEPSI-COLA DISTRIBUTING COMPANY
about the bonus that he had paid the route salesmen. Busi-
ness representative Barnes confirmed that at the time of the
negotiation of this first contract that the subject matter of
bonus was not mentioned and testified frankly that at that
time he had not even been aware that a bonus had been
paid the route salesmen in prior years. It is unquestioned
that the contract made no provision for payment of any
bonus. Nonetheless, in late 1975, Hartman again paid the
route salesmen (only) the bonus as it had in years past.
A second I-year collective-bargaining agreement be-
tween Hartman and the Union was subsequently negoti-
ated. The second contract was effective by its terms from
November 27, 1976 to November 26, 1977.' In late 1976
Hartman again paid the route salesmen (only) the bonus as
it had in years past. The 1976-77 contract also had made
no specific provision for the payment of any bonus to any
employee. However, unlike the negotiations which led to
the first contract, the Union was aware that a bonus had
been paid to route salesmen at the time of the negotiations
leading to the second agreement. Barnes recalled that there
was a question raised by a union committeeman about the
bonus in the negotiations; and that the question was raised
whether the bonus was being taken out of the salary paid
the route salesmen. According to Barnes, Baker at that time
said that the bonus was not taken out of the employees'
salary. Baker said that he would be glad to incorporate a
penny into their salary because it would make it a lot easier
on the bookwork. Baker added that the bonus was some-
thing that had been done over the years and that it was nice
to get at Christmastime to help buy toys and stuff for the
children. Barnes' testimony stands uncontradicted, and I
credit it.' It is observed that the Union made no demand or
request of Hartman at that time that the payment of the
bonus to the route salesmen should be expressly provided
for in the agreement, nor was there any discussion by the
5While President Baker unclearly recalled the second (1976-77) contract
was left with Respondent to negotiate, the contract in evidence shows the
contractual relationship was entered and thus initially existed between Hart-
man and the Union, since President Baker was signatory. I thus find that the
second contract was also negotiated by Baker and Barnes, as Barnes' testi-
mony otherwise indicated. (I note Smith testified to no prior discussion with
the Union about the purchase of Hartman in any fashion.)
' Respondent objected to this entire line of questioning about what was
orally discussed in negotiations about the subject matter of the bonus. The
objection was overruled. I continue to adhere to that ruling. This contract is
silent in haec verba as to bonus payment. Such evidence in that circumstance
is available to assist in ascertainment of the intendment of the parties who
negotiated the terms of the agreement under consideration. Particularly is
this so where a contractual claim of statutory waiver by the Union is raised
by Respondent. However, otherwise I would note that the significance of the
remark in negotiations is still a matter itself to be evaluated with all other
relevant and probative evidence, including, of course, other express terms
and provisions of the contract which may a!so bear upon that very subject
matter though not with optimum desired express or explicit reference. This
was otherwise an integrated agreement of the parties, one fully addressing
itself to a wide scope of wages, hours, and other terms and conditions of
employment to be applicable to the bargaining unit employees, as well as in
memorializing the reservation by Hartman of various management rights to
promote orderly, efficient, safe, and profitable operation of the business, pro-
vided it was done so in a manner that did not violate any express provision
of the agreement. Not alleviated is the need for an evaluation of the circum-
stances that Respondent-Successor, though assuming the contract, was not
party to that discussion. At this point I merely observe the additional possi-
bility of a further analysis requirement of reasonable effects of the circum-
stance that Respondent was not aware of any extra contract policy or prac-
tice on bonus payments at the time it took over the operation of predecessor
Hartman.
parties concerning a reason (if any) that the bonus payment
to route salesmen would not appear in the contract. In con-
trast I note that the contract does provide otherwise that
certain of its terms (lunch period, rest periods, overtime,
and call back provisions) are not applicable to route sales-
men who are paid on commission. The parties to the con-
tract thus evidenced the ability and willingness to reflect
certain benefits as applicable to certain employees and not
others when they desired to do so.
3. Respondent's acquisition and successorship to Hartman
On February 1, 1977, Respondent purchased the assets of
Hartman. Respondent stipulated at the hearing that for
purposes of this proceeding it has thereafter operated the
former Hartman facilities, has engaged in substantially the
same business, and has employed the same supervisors and
the majority of the employees formerly employed by Hart-
man. For purposes of this hearing Respondent has stipu-
lated that it is a successor employer to Hartman. I so find.
On taking over on February 1, 1977, Respondent did not
sign the (then) current agreement, nor had it previously dis-
cussed such action with the Union. However, the record is
clear and Respondent admits that commencing with its pur-
chase of Hartman on February 1, 1977, it has considered
itself party to and has honored and given effect to all the
terms of that (1976-77) collective-bargaining contract be-
tween the Union and its predecessor. I so find. I find collat-
erally that commencing February 1, 1977, Respondent-Suc-
cessor in assuming and putting into effect the terms of the
existing labor agreement thereby effectively recognized the
Union on February 1, 1977, as the collective-bargaining
representative of its employees. Respondent also admits the
fact that it did not pay any yearend bonus to any employ-
ees. I further find that Respondent announced to its route
salesmen in approximately the first week of December 1977
that it was not going to pay a bonus, and that it did so
without any prior consultation with the Union.
Negotiations conducted thereafter by Respondent-Suc-
cessor and the Union have led to a current 1977-78 agree-
ment during which the parties fully discussed and have now
adjusted the issue of future bonus payment to their mutual
satisfaction. Resulting, it appears clearly of record, that the
sole issue presented for resolution in the instant proceeding
involves the question of the propriety of Respondent's ac-
tion, in view of its previously established and acknowledged
bargaining relationship with the union commencing Febru-
ary 1, 1977, in announcing to bargaining unit employees in
early December 1977, upon their inquiry, and without any
prior consultation with their representative, that Respon-
dent was not going to pay the yearend or Christmas bonus
to the route salesmen.
4. Pertinent provisions of the assumed collective-
bargaining agreement
The second contract (1976-77) specifically provides in ar-
ticle XII, "Rates of Pay and Classifications":
Section 1. Rates of pay and pay schedule "A" at-
tached hereto, shall remain in effect for the life of this
Agreement and shall constitute the basis for determi-
nation of wages for time worked.
873
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Schedule "A," indeed the entire contract as earlier noted, is
silent on bonus payments to route salesmen in haec verba;
that is, in the sense that there is no explicit expression of
party intendment on the subject of bonus payments to route
salesmen. However, Hartman contracted for a management
clause (art. XXI) by which it retained common law rights to
manage the business, with certain specified inclusions. In
pertinent part and notably as further described therein as a
discretionary and exclusive function and right of manage-
ment was the right "to establish or continue policies, prac-
tices and procedures." (Emphasis supplied.)
The contract makes provision for grievances covering dif-
ferences arising between the Employer and the Union and
for binding arbitration. The same are restricted in scope as
to the meaning, application, interpretation, or alleged viola-
tion of the agreement; and the arbitration board therein
provided for, is itself to be "controlled completely by the
terms of the agreement and it is bound to decide issues
properly before it on the authority given it under the agree-
ment ... ," which is generally also restricted to the language
of the agreement; and with further specific instruction that
"all matters deemed by the parties to be proper subjects for
bargaining and arbitration are set forth in the agreement."
(Emphasis supplied.)
As earlier noted this contract was effective November 26,
1976. In late 1976 Hartman again paid the Christmas bonus
to its route salesmen. In that regard the agreement also
provided on the one hand, with regard to action of Hart-
man on any matter within its reserved right of manage-
ment, that the same shall not be subject to arbitration un-
less it violates the provisions of the agreement, and on the
other hand, with regard to a failure of Hartman to exercise
a management right on one occasion, that the same "shall
not be a precedent or binding" in another instance; nor is
such action to "be the basis for any claimed grievance."
Finally noteworthy and provisions especially relied upon
by Respondent-Successor (discussed infra) are the provi-
sions of article XXXI miscellaneous, which in pertinent
part provide:
Section 2. The Employer and the Union agree that
all matters desired by either party have been presented,
discussed and incorporated herein or rejected. Accord-
ingly, it is agreed that for the life of this Agreement
each party voluntarily and unqualifiedly waives the
right and each agrees that the other shall not be obli-
gated to bargain collectively with respect to any sub-
ject or matter, whether or not referred to in this Agree-
ment.
* *
Section 6. This Agreement constitutes the complete
understanding of the parties with respect to all issues
between them and supersedes all written memoranda,
agreement or benefits heretofore made or given by the
parties, or either of them.
5. Other considerations
To properly evaluate the issue of bargaining-obligation
deviation, if any, in Respondent's recognition of the Union
and assumption of the above collective-bargaining agree-
ment, but subsequent nonpayment of bonus to the route
salesmen, it is helpful to develop briefly certain additional
facts explanatory of Respondent's purchase of Hartman,
employees continued employment conditions, and Respon-
dent's interim conduct bearing upon the latter.
Mr. Larry Smith has corporate overall responsibility over
some 14 facilities, including the facility of Respondent, as
its president. Smith (with substantial and supportive testi-
mony of Baker) testified that discussions, which eventually
led to Respondent's purchase of Hartman on February 1,
1977, had commenced some several months earlier, ap-
proximately in October or November 1977. Appropriate
profit and loss statements of Hartman were made available
to Smith as prospective purchaser. In due course, support-
ing records of Hartman were reviewed by Smith's account-
ants and lawyers and appropriate checks were made of the
profit and loss statements. A final 2-3 inch financial and
legal report evaluating the prospective purchase was pre-
pared by Smith's fiscal and legal agents and delivered to
Smith for his review. In the interim Smith had also been
presented by Baker with a copy of the (second) union con-
tract as containing the wages that were paid unit employ-
ees, as well as a statement of all wages/salaries that were
paid nonunit personnel. Smith testified, and I find credibly
so, that at the time he bought Hartman he simply was not
aware that any bonus payments had been made by prede-
cessor to its route salesmen.' Smith testified that when he
bought Hartman it was thus with a belief and with a reli-
ance that the union contract accurately portrayed the labor
costs of the employees involved, asserting he had no reason
at that time to believe that it did not. s Baker's testimony is
supportive of Smith's lack of awareness. Thus in Baker's
contract with Respondent, predecessor Hartman had guar-
anteed that all Hartman liabilities were reflected and ac-
crued on Hartman books; and further that they would be
shown as accrued at date of closing according to generally
accepted accounting principles. Baker testified that there
was in fact no accrual shown for any future bonus payment.
Baker explained that in his operation of the business he did
not accrue that expense over the year. Thus Baker had a
regular procedure of recording accumulated cases sold by
the individual salesmen for other business purposes. His
bonus payment procedure was that at the appointed time
he would then pay the bonus to the salesmen at the (for-
mula) rate of I cent per case then shown as sold by the
individual salesman in the past year. Baker testified that
with all the other matters that were being discussed and
covered in this sale that he had simply not thought of the
bonus matter. I find that at the time of Respondent's pur-
chase of Hartman, and at the time that Respondent's Smith
put into effect the wages, hours, and other terms and condi-
7 In this area Smith's testimony appears as wholly persuasive on the record
on review as it was convincingly presented by Smith when on the stand.
Thus Smith testified that the matter of bonus payments was never a subject
mentioned to him, or one that his accountants had discussed with him; and
that it also was not referenced in the evaluative report which he reviewed
prior to purchase, and which he double checked when this dispute arose.
' Although Smith conceded he has had limited (if any) prior experience
with union contracts, Smith testified that he reviewed this union contract
carefully before the purchase and had been impressed with its zipper clause,
particularly in view of several precise references in the contract to what he
considered were a recitement of very minor benefit matters.
874
PEPSI-COLA DISTRIBUTING COMPANY
tions of employment as set forth in the existing labor agree-
ment, that Smith was in fact not aware that any bonus had
been paid in the past by the predecessor.9 I thus conclude
that there is no convincing or persuasive evidence presented
in this record to warrant a conclusion that Respondent
(Smith) knew or reasonably should have known of the
predecessor's payment of bonus, at the time of Respon-
dent's purchase of Hartman or commencement of its own
operations, accomplished with the contemporaneous as-
sumption and application of the current collective-bargain-
ing agreement to its employees at that time.
Shortly after the purchase, around the middle of Febru-
ary, there was a meeting of the officials of both companies
with all the assembled route salesmen. At this meeting Pres-
ident Larry Smith, upon being asked by a route salesman if
the pay would change, told the employees that there would
be no change in pay structure. Moore. who was also pre-
sent, told the employees that everything would be run just
9 The General Counsel tned to show that if Respondent was not aware of
bonus payments, the circumstances were such that Respondent should he
held accountable for an awareness that there were such benefit payments in
the past. However, I find that the offered evidence in that area is wholly
unpersuasive. The principal contention of the General Counsel would ap-
pear to be that by virtue of the fact that all of the records were available and
eventually turned over to Respondent, it was thereby put on notice that such
a benefit had been paid in the past. Baker testified in support of Respondent
that none of the records that he had turned over would reasonably have put
a purchaser on notice. While I make no evaluation with regard to the matter
of compliance by Baker under the purchase contract which is not an issue
before me, I do note that in context of circumstances that no accrual was
shown on Baker's records. Baker's additional testimony that none of the
records he turned over to Respondent would reasonably have put Respon-
dent on notice of a bonus payment would appear to be seemingly an admis-
sion against his interest. In an) event, Baker's system of bookkeeping would
appear to be supportive of both Smith and Baker. Although I credit em-
ployee testimony that they had been paid the bonus by a separate check, the
record has also revealed that when employees received vacation pay it had
been combined with their regular weekly (commission) pay. I must thus
consider Baker's additional testimony that the bonus payment was made on
one week in either November or December and entered only on the payroll
for that week. His system of accounting otherwise provided that the weekly
payroll expenses were then accumulated for the month and transferred to
ledger accounts from which eventually the profit and loss statements were
prepared. Although Smith's accountants were free to make a check of books
and records, they did so to determine the accuracy of the given profit and
loss statements. The fact is, in any event, that Smith's testimony stands
uncontradicted that his accountants did not raise bonus payments as a dis-
cussion matter with him. nor report on it in their otherwise comprehensive
evaluative report. Then too, Smith testified that even a 30.000-S40.000 vari-
ance in monthly payroll expenses would not have been unstandard, when it
is borne in mind that employees were paid on commission, which fluctuates
with changes in sales. Respondent's annual sales increased substantially (25
percent) over its predecessor. The short of the matter is that with the above
as background I am simply not persuaded by at best a generalized conten-
tion of General Counsel that Smith was aware or that Respondent is to be
held accountable for an awareness of the bonus payment made prior to its
purchase of Hartman's operation. It necessarily would follow that at the
earliest time that it may he presumed that Respondent assumed and put into
effect the existing wages, hours, and terms and conditions of employment as
expressed in the collective-bargaining agreement between predecessor and
the Union, Smith knew nothing about predecessor's payment of a bonus.
General Counsel's other offerings to the contrary simply never got off the
ground. Thus Smith testified that his company had absolutely no prior inter-
est in Hartman; and James Moore, vice president and general manager of
Respondent and apparently the chief operating officer of Respondent since
commencement of Respondent's Knoxville operations. estified that he did
not become aware of a (predecessor) employee booklet (presumably contain-
ing reference to bonus payments) until December 1977 or January 1978 and.
in any event, not until after the material event of his announcement to the
employees that Respondent was not going to pay bonuses to route salesmen
because it was not in the assumed contract.
like it had been run.' No question was raised at that time
by any employee about bonus payments being continued in
the future.
In late 1977, Moore received inquiries from some of the
route salesmen as to when they were going to receive their
bonus. Moore subsequently called a meeting of the route
salesmen about the first week in December 1977. Moore
told them that Respondent had not initially known of any
bonus, that Bernard Hartman (employed by predecessor)
had told Moore that the bonus was based on a penny ac-
crual but that on investigation Moore could find no records
to support that, that the bonus was not in the contract, that
it was unfair, and that the Company was not going to pay
the bonus." Moore testified candidly that his first awareness
of the subject of bonus payment was considerably earlier,
about May 1977. At that time Moore made a limited in-
quiry of Bernard Hartman who was employed by Hartman
and who had handled Hartman's computer program and
payroll. Moore was informed at that time that the bonus
paid by Hartman had been based on an accrual, accumu-
lated by employees being paid one penny less than the con-
tract rate. In contrast Respondent has at all times paid its
employees the full rate as specified in the contract. On pur-
chase, all of Hartman's records had been sent to corporate
headquarters of Respondent. Moore had neither previously
reviewed them nor had he pursued an investigation beyond
the above inquiry of Hartman's payroll official. However, I
am wholly satisfied that Moore would have discussed the
subject with Smith at the time inasmuch as there is frequent
business communication between them. No action was
taken on the bonuses until December. When the issue arose
again, I find in early December 1977, Moore at that time
made a check of actual Hartman records. Moore then dis-
covered that there had not been an accrual based upon a
withholding by Hartman of one penny less than the con-
tract rate. Rather Hartman also had paid the contract rate
to its route salesmen. The bonus payment was thus extra
contract. In short Moore had been told one thing on the
occasion of his inquiry of the foremer Hartman payroll of-
ficial in May and discovered another thing was the actual
o These findings are based on credited and generally mutually consistent
testimony of employees Gerald Haggard and Daryl Livingston, and Respon-
dent's officials Smith and Moore. I would note that Moore, in essentially
confirming the above, testified that he had told the employees that the work-
ing conditions would remain the same and that he told the sales force at that
time that their wages were covered by the union contract and that it would
be honored. Under the total circumstances herein I do not view it as control-
ling of the issue whether the employees were told by Respondent's officials
that there would be no change in pay structure or that they would be paid in
accordance with the union contract which was to be honored.
1 This finding is based on essentially mutually corroborative and consis-
tent testimony of Moore and employees Haggard and Livingston. I have
considered employee Haggard's recollection that Moore had said it was not
company policy to give bonuses to anyone and that the employees would not
be receiving one. In this respect employee Haggard was not corroborated by
Livingston who only recalled that Moore had remarked it was not fair. In
this connection also there is uncontested evidence of record that in subse-
quent negotiation sessions held shortly thereafter the Company in fact of-
fered a penny across-the-board to all unit employees which could be used by
them either for a bonus or as part of their wage increase. I am thus satisfied
that any reference by Moore on this subject on an earlier occasion would
have been that it was not company policy to give bonuses to certain employ-
ees in the unit and not to others. In any event such a remark, in nature an
expression of Respondent's reason for its position, would not materially ef-
fect the outcome on the ultimate issue of Respondent's alleged unlawful
unilateral change of an existing benefit
875
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
case from his review of Hartman records much later in the
year when the issue arose at about the time of its prior
payment which approximately conincided with the expira-
tion of the contract. It is to be noted that Moore's subse-
quent discussions of the subject of bonus payments in nego-
tiations took place after the contract had expired and after
an announcement had been made by him to the route sales-
men that the bonus would not be paid, though prior to the
time when Moore then understood the predecessor would
have paid it.
Finally, Moore testified that it was he who made the de-
cision not to pay the bonus; that it was corporate policy to
fully live up to the terms and conditions of the contract, but
inasmuch as the bonus was not in the contract, there was no
obligation for Respondent to pay it. President Smith con-
firmed that Respondent's position has been, is, and will
continue to be, to pay everything that is in the union con-
tract and within his control. Under the total circumstances
above it would appear to me that the latter is to be taken to
mean that which Respondent holds it was reasonably aware
of and had previously agreed to in assuming and putting
into effect the terms of the union contract when it com-
menced its operations, but nothing beyond that.
B. Contentions of the Parties
While conceding that the bonus was never covered by the
contract's express terms General Counsel essentially takes
the position that in view of the number and regularity of
years that employees had received the yearend bonus in the
past, and the definitive basis of calculating the amount in
relation to work performance of route salesmen and time of
year paid, that the payment of an annual yearend or Christ-
mas bonus to route salesmen had become an established
past practice existing outside the contract. General Counsel
thus contends that it became an obligation upon Respon-
dent as a successor to either continue to pay the bonus to
the route salesmen or to bargain with the Union about the
bonus before Respondent's discontinuance of that practice.
Respondent's position as stated at hearing appears to be
that at the time it purchased the Hartman facility it was
only aware of the labor costs as contained in the prede-
cessor's contract with the Union which also contained an
effective zipper clause; that it proceeded in its purchase of
predecessor in reliance thereon; that it, accordingly,
planned to and did put into effect the terms and conditions
of that union contract and has fully abided by the same. At
the hearing Respondent elicited some testimony from Baker
to the effect that prior bonus payments had been made on
Baker's own volition each year as Baker saw fit to do. It is
unclear whether Respondent thereby intends argument that
prior bonus payments were in nature gifts. In any event
General Counsel contracontends that such payments would
clearly constitute wages, and argues that the zipper clause is
itself not sufficiently broad to constitute a waiver of what
t2 As previously observed, Respondent has not filed a brief. I also note that
all the witnesses herein were called by the General Counsel and examined
either as General Counsel's own material witness or specifically under Rule
61 I(c). With testimony developed on direct and cross-examination of all the
principal witnesses when called by the General Counsel. Respondent took
the position that it had nothing further to present; and Respondent also
rested without presentment of any additional evidence or argument.
must be concluded was a longstanding practice then exist-
ing outside the contract. Respondent's basic position as ex-
pressed by Smith is that "its position has been, and is, and
will continue to be, to pay everything that is in the union
contract and within its control, but nothing beyond that."
No grievance has heretofore been filed on this matter. No
party has requested that the Board defer resolution of this
issue to arbitration. Consequently, deferral of the issue to
arbitration is not a matter before me. Bancroft-Whitney Co.,
Inc., 214 NLRB 57, 61 (1974).
In my view the issues presented in the above case may
fairly be framed at this juncture as being: () Whether the
Christmas or yearend bonuses under the circumstances of
the instant case are to be construed as constituting wages,
and the prior payment of same constitutes a past practice
existing outside the contract; (2) whether the contract on
the basis of its terms and other considerations warrants a
conclusion that the Union effectively waived its bargaining
rights concerning the bonus payments; and (3) whether,
even assuming that it be found that the instant Christmas or
yearend bonus payments to route salesmen are to be con-
cluded as having constituted wages paid in accordance with
a past practice existing outside the contract by predecessor
Hartman and not waived contractually by the Union, the
additional circumstance that the successor assumed the
contract without any prior awareness of such a past prac-
tice existing outside the contract, and without any fraud or
illusion being evidenced, is itself a factor to preclude any
violation being found herein.
C. Analysis, Conclusions, and Findings
General Counsel's position is readily seen to prevail on
the first question. The nature of the bonuses paid by prede-
cessor Hartman to route salesmen was such as to clearly
render bonus payments a collective-bargaining subject mat-
ter. Thus, on the basis of the number of years and regularity
with which the bonuses were paid, the remarkably explicit
formula with which calculated, and the clearly defined in-
centive relationship to sales work performed by the route
salesmen, I conclude and find that the yearend or Christ-
mas bonuses paid previously by predecessor Hartman to its
route salesmen was essentially part of their compensatory
wage structure and a term or condition of their employment
as distinguished from being in nature a gift or gratuity.
Mississippi Steel Corporation, 169 NLRB 647, 649 (1968),
enfd. in part sub nom. United Steelworkers of America, 405
F.2d 1373 (D.C. Cir. 1968); GulfStates Manufacturers, Inc.,
230 NLRB 558 (1977). Further, unless on the facts shown
above it is otherwise clearly warranted to be concluded that
the Union had previously waived its bargaining rights
thereon, equally clearly an employer committed to such an
established past practice is under a duty to negotiate with
the Union prior to effecting any proposed change thereof.
N.L.R.B. v. Benne Katz, dib/a Williamsburg Steel Products
Co., 369 U.S. 736 (1962); Leeds & Northrup Company v.
N.L.R.B., 391 F.2d 874, 877 (3d Cir. 1968). The bargaining
obligation thereon is one which is imposed prior to any
change; and the violation occurs when there is a unilateral
discontinuance, which is not cured by an employer's subse-
quently expressed willingness to bargain on the subject "af-
876
PEPSI-COLA DISTRIBUTING COMPANY
ter the fact." Stark Ceramics, Inc., 155 NLRB 1258, 1265
(1965), enfd. 375 F.2d 202 (6th Cir. 1967): Mississippi Steel
Corp., supra.
The second (waiver) issue presented is much more diffi-
cult to resolve as it involves required evaluation of a num-
ber of factors. For it to be concluded that a union has con-
tractually waived a right to bargain about a particular
bargainable matter which the statute (Section 8(d)) in-
dependently provides the union, the evidence must convinc-
ingly show the surrender of the statutory right. The test of
relinquishment has been variously stated over the years as
one which should appear in "clear and unmistakable" lan-
guage. The Timken Roller Bearing Co. v. N.L. R.B., 325 F.2d
746, 751 (6th Cir. 1963), cert. denied 376 U.S. 971 (1964);
N.L.R.B. v. Perkins Machine Company, 326 F.2d 488 (Ist
Cir. 1964); N.L.R.B. v. The Item Company, 220 F.2d 956,
958-959 (5th Cir. 1955), cert. denied 350 U.S. 836. Thus
even with a broad voluntary and unqualified contractual
waiver of right to bargain collectively essentially with re-
spect "to any subject or matter" the negotiations are to be
reviewed and evaluated for showing convincing ground for
an implied surrender or agreement, e.g., that the particular
matter was "fully discussed" or "consciously explored" and
the Union "consciously yielded," Rockwell-Standard Corpo-
ration, 166 NLRB 124, 132 (1967), enfd. 410 F.2d 953 (6th
Cir. 1969). This is not to say the Board would have ignored
equally clear evidence of what has taken place at the bar-
gaining table. To the contrary, the Board has indicated the
issue of waiver is to be determined on a broad objective
basis, e.g., with appropriate consideration and evaluation of
all relevant factors, including such factors as: "(a) the pre-
cise wording of, and emphasis placed upon, any zipper
clause agreed upon; (b) other proposals advanced and ac-
cepted or rejected during bargaining; (c) the completeness
of the bargaining agreement as an 'integration'-hence the
applicability or inapplicability of the parole evidence rule:
and (d) practices by the other parties under other collective-
bargaining agreements." Radioear Corporation, 199 NLRB
1161 (1972); Valley Ford Sales, Inc., d/bla Friendly Ford
211 NLRB 834, 835 (1974). Facts and circumstances sur-
rounding the making of the contract clearly may be consid-
ered. Leeds & Northrup Co. v. N.L.R.B., supra; Bancroft-
Whitney Co., Inc., supra. Nonetheless it remains clear that
in order to establish the waiver of a statutory right there
must be a showing from all the facts that there has been a
clear relinquishment of the statutory right N.L.R.B. v.
C & C Plywood Corporation, 385 U.S. 421, 423, 428, 430-
431 (1967); McDonnell Douglas Corporation, 224 NLRB
881, 887 (1976); Clevenger Logging, Inc., 220 NLRB 768,
780 (1975).
General Counsel concedes there is no mention of the bo-
nuses in the contract. Nonetheless, General Counsel argues
that the zipper clause in the contract is not sufficiently
broad to constitute a waiver by the Union of what was
otherwise a long standing practice of bonus payment exist-
ing prior to and outside the contract. None of General
Counsel's cited authority may be deemed to control the
waiver issue presented herein. As noted Respondent has
filed no brief. The Board's holding in Bancroft-Whitney Co.,
Inc., supra, would appear to be dispositive of the matter
before me.
In Bancroft-Whitney the bonus history was even more
longstanding than herein. There the facts were that for 11
years, prior to the advent of a union, the employer had paid
its employees a bonus (there called a wage dividend) in
December of each year. A union was certified and had ac-
quiesced during negotiations in the employer's expressed de-
sire to pay to all employees the bonus as it had in years
past. Thereafter, an otherwise complete contract was even-
tually negotiated by the parties. There was no reference in
that resulting contract to a payment of a wage dividend to
the unit employees. Subsequent to execution of the con-
tract, in the following November, the employer announced
to all employees that the usual wage dividend was to be
paid to all employees except those in the bargaining unit
represented by the Union "whose pay and benefits are pro-
vided for in the collective-bargaining agreement...."
There, as here, the employer explained to the unit employ-
ees that they were not to receive the bonus "because their
contract did not provide for it."
The contractual provisions in Bancroft-Whitney were
very much similar to those presented by the facts of this
case. Thus, in Bancroft-Whitney there was a management
rights clause with provided that the employer retained "any
and all rights" it enjoyed prior to execution of the contract
"except as specifically and expressly limited or modified,"
by the contract. Here similar general rights were not only
retained, there was notably an explicit recitement of a spe-
cific discretionary right being retained as the "exclusive
function and right of management . .. .to establish or con-
tinue policies, practices and procedures .... (Emphasis sup-
plied.) In Bancroft-Whitney there was a specific recitement
that "all wages and other benefits to be received are con-
tained in this agreement." Herein there is essentially the
same party committal as to wages in that it is provided the
pay schedule "A" is to remain in effect for the life of the
agreement, and it is explicitly agreed by the parties that it
"shall constitute the basis for determination of wages for
time worked." Present also herein (and apparently not pre-
sent in the Bancroft-Whitney case) was a confirming provi-
sion found in the grievance and arbitration section instruct-
ing the arbitration board provided for resolution of
differences of the parties that "all matters deemed by the
parties to be proper subjects of bargaining and arbitration are
set forth in the agreement." (Emphasis supplied.)
Additionally, in Bancroft-Whitney, as herein, the zipper
clause was essentially the same, viz, a clear statement that
the contract which the parties had arrived at was their full
bargain. Thus in Bancroft-Whitney it was expressed: "The
parties agree that they have fully bargained with respect to
wages, hours and other terms and conditions of employ-
ment and have settled these for the term of this agreement
in accordance with the terms hereof." If anything, the in-
stant miscellaneous clauses were (in combination) even
tighter. Thus not only was there an equally broad general
waiver of a further bargaining requirement on any subject
or matter, there was also an explicit recitement by the par-
ties that the Employer and the Union herein were in agree-
ment that all matters desired by either party had been pre-
sented, discussed, and incorporated herein or rejected; and it
was agreed by the same parties that each "voluntarily and
unqualifiedly" waived the right to bargain; and each agreed
the other was not obligated to bargain collectively "with
respect to any subject or matter, whether or not referred to
877
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
in the agreement." There was an even more explicit state-
ment by the parties herein that their agreement constituted
their "complete understanding" with seemingly a conscious
expression of extraneous benefit surrender in that it was
agreed that the contract superseded "all written memo-
randa, agreement or benefits heretofore made or given by the
parties, or either of them." (Emphasis supplied.)
I do not overlook the circumstances in this case that
predecessor Hartman, these contractual provisions notwith-
standing, twice paid a bonus outside a collective-bargaining
agreement, the latter occasion itself being within the effec-
tive life of this agreement. Nor do I overlook the circum-
stance that Hartman during its last negotiations had offered
the Union a penny in wages in lieu of bonus. The fact re-
mains that the penny offer was not accepted and a bonus
provision was not put in the contract. Rather the agreement
eventually reached by the parties provides for a number of
other benefits. It remains true that there is no specific refer-
ence in the contract at all to bonus payments; and that a
waiver of a statutory right in that respect, particularly on
an established past practice is a result not to be lightly in-
ferred from the contract or the Union's conduct. In that
regard, however, I do not believe I can ignore the meaning
of all the other explicit provisions in the contract agreed to
by the Union and the Employer therein; viz, that Employer
has bargained from the Union an agreed retention by Em-
ployer as an exclusive and unqualified management right, a
right not only to establish but to continue (necessarily
encompassing existing) practices, policies, and procedures.
Here the parties also had agreed explicitly that a failure on
management's part to exercise a management right on one
occasion was not to be considered as "precedent or bind-
ing" on another occasion. Nor may I ignore what appears
to me to be quite clear mutual expressions of agreement
that benefits granted are delimited to the contract, to wit:
the contract supercedes benefits given by either party; that
all desired matters have been presented, discussed, and are
either incorporated or rejected; and that all matters deemed
bargainable by the parties are in agreement. In the latter
regard, I note that in Bancroft- Whitney, as herein, there was
a discussion by the parties during negotiations in which the
annual dividend payment was brought directly to the
Union's attention. In Bancroft-Whitney, as herein, it was
noted that the Union never asked for bargaining over the
dividend or that any provision be made expressly for it in
the agreement. Instead the parties (as here) later agreed to a
complete contract otherwise which by its terms fully speci-
fied a wide range of wages, and other terms and conditions
of employment with described management right reten-
tions. Here (as there) there is recital of party agreement that
the parties had fully bargained with respect to all such mat-
ters and that the wages and bargainable matter are in the
contract.
The instant case in my view thus does not present the
usual situation where in circumstances of a silence in a con-
tract on a bargainable subject matter, and upon an evalu-
ation of all ramifications of the parties' contractual agree-
ment, and as appropriate, their conduct, it remains unclear
and unascertainable with necessary assuredness whether
the Union by its contractual agreement and/or conduct had
waived its statutory right to be consulted on the particular
unreferenced bargainable subject matter. To the contrary, it
appears difficult to me upon a careful review of all the party
agreed terms of this contract to envision any grounds (apart
from the sole absence of an actually expressed union aban-
donment of the extra-contract practice of bonus payments)
for a viable claim to be advanced by the Union that it did
not contractually waive its right to be consulted on the bo-
nus payment practice. This is seen to be the case by virtue
of its agreement that management would retain inter alia, a
discretionary and exclusive right to continue (any) existing
practice and policy, and the more so clearly shown in the
context of the other provisions of this otherwise complete
agreement. Thus, as noted, the present contract records a
rather explicit agreement of the parties that denotes very
clearly that Hartman had successfully bargained for a re-
tention, as its own discretionary and exclusive management
right and function, of the right to continue practices and
policies, which the existing bonus payments by Hartman
would appear necessarily to be regarded as one or the other.
To conclude otherwise would seem to me to deny natural
meaning to the very contract terms utilized by the parties
and thus render their contract provision unavailable for
specific application and thus meaningless to them. Waiver
appears the more so unmistakably shown when that ex-
pressed management right agreement is analyzed in its
combination with other contractual expressions (above
noted) evidencing as clearly an intent on the part of the
parties to arrive at a mutual agreement in delimitation of
employee benefits to those set forth in the contract. Other
contract provisions, while not individually controlling, are
nonetheless further supportive of a contractual waiver, thus
the effective zipper clause(s) fairly portray, by virtue of the
mutual agreement reached thereon, a mutual intention on
the part of the parties to consumate in this contract a full
and self-contained complete expression of the bargain
reached between them. The refined recitement of benefits
(minor or otherwise) is in wholly compatible juxtaposition
with the latter. Of similar connotation is the circumstance
that the contract still otherwise records particular (mutually
agreed upon) benefits as being applicable to certain unit
employees and not others. At the same time omitted is ref-
erence to the (appreciable) bonus payment practice thereto-
fore applicable to the route salesmen and not other unit
employees. Furthermore the latter is omitted under circum-
stances (discussion during negotiations) supporting a con-
clusion that the reference omission was consciously the act
of the parties. Given that circumstance it cannot be ignored
that the very same contract also contains an affirmative
provision portraying an equally clear party understanding
and agreement that their contract supercedes other benefits
given by either party theretofore. Again, the natural mean-
ing of the contractual language utilized by the parties them-
selves would appear to be such as to unmistakably encom-
pass the prior bonus payment (practice or policy)
theretofore paid by Hartman whether the same may be
separately viewed as a prior wage benefit, or other benefi-
cial term or condition of employment. Finally, although
there may have been an incomplete discussion by the par-
ties about bonuses during negotiations, and the contract
contains no explicit reference to bonus payments, there was
in any event a contractual waiver by the Union of its right
to be consulted on the matter of continuance of Hartman's
878
PEPSI-COLA DISTRIBUTING COMPANY
practices and policies which clearly and unmistakably was
known by the parties to include the specific practice or pol-
icy on bonus payments to route salesmen at the time that
particular agreement was struck.'3
The Board in Bancroft-Whitney noted that the discon-
tinuance of the bonus payment to the unit employees with-
out bargaining would be violative of Section 8(a)(5) unless
in the circumstances described therein (noted above), the
Union is deemed to have waived its right to require such
bargaining. The Board found on the facts of Bancroft-Whit-
ney that the Union had waived its right to bargain over the
annual dividend. I find the Bancroft-Whitney case so similar
in its essential facts and holdings as to be controlling and
binding upon me in the disposition of the issue presented in
this proceeding. Accordingly, all the above circumstances,
including the obvious full opportunity of the parties to ne-
gotiate mutually agreeable terms, the completeness of the
resulting contract, and the specificity of the particularly rel-
evant contractual provision noted and analyzed above, war-
rant the finding I now make that the Union clearly and
unmistakably waived its right to be consulted on the matter
of Hartman's continuance of its past practice and/or policy
of paying yearend or Christmas bonuses to its route sales-
men.
It follows logically that if predecessor Hartman by virtue
of the Board's holding in Bancroft-Whitney Co., Inc., supra,
could not be held bound to a continuance of its bonus pay-
ment practice or policy which existed outside the contract,
and would have been able to effect a discontinuance of
same without any prior negotiation with the Union, then
Respondent-Successor, which has assumed the same con-
tract, and which, indeed, was not even aware of any extra
contract policy or practice of bonus payment to begin with,
may not be deemed to have violated Section 8(a)(5) and (1)
of the Act when, later in December 1977 Respondent-Suc-
cessor told its route salesmen that it would not pay the
yearend or Christmas bonus to them because it was not in
the contract it had assumed. As I view the Board's holding
in Bancroft-Whitney as being wholly dispositive of the pre-
sent complaint allegations before me, I find it unnecessary
under those circumstances to address other troublesome
considerations bearing upon bargaining obligation effects, if
any, stemming from the special circumstances that this Re-
spondent was also a successor employer which at the time it
purchased predecessor's assets and elected to employ prede-
cessor's work force, had assumed only the known union
contract. Respondent had obviously hired the majority of
'Ador Corporation, 150 NLRB 1658, 1660 (1965); Consolidated Foods
the predecessor's employees on that basis (without evi-
denced fraud or illusion) and thus would appear logically to
have set as its initial terms and conditions those contained
in the contract." Consequently not addressed are seemingly
weighty issues of whether any statutory 8(d) proscription
consideration may be deemed to arise therefrom.' I have
also given careful consideration herein to the seemingly un-
disputed fact that employees, shortly after Respondent's
takeover, were told by Respondent's principals that their
pay and conditions would remain the same. However, at
that time, it is also convincingly evident on this record that
Respondent-successor was totally unaware of any extra-
contract bonus payment and thus also unaware that its new
employees might reasonably view its remarks as encom-
passing such. It would appear that such genuine misunder-
standings do not support a violation of the Act. Cf. South-
ern Beverage Company. Inc., 171 NLRB 926, 929 (1968).
Accordingly I shall recommend that the complaint herein
be dismissed in its entirety.
CONCLUSIONS OF LAW
1. Pepsi-Cola Distributing Company of Knoxville, Ten-
nessee, Inc., is an employer within the meaning of Section
2(6) and (7) of the Act; and is the successor of Hartman
Beverage Company.
2. Respondent-Successor in telling its employees in early
December 1977 that it would not pay a yearend or Christ-
mas bonus to its route salesmen without previously bargain-
ing with the Union about it did not thereby unilaterally
change existing wages, hours, and working terms or condi-
tions of employment in violation of Sections 8(a)(5) and (1)
of the Act.
[Recommended Order for dismissal omitted from publi-
cation.]
Corporation, 183 NLRB 832, 833 (1970); and International Shoe Company,
151 NLRB 693, 699 (1965).
14 For a learned discussion of the various practical considerations that a
potential successor faces and evaluates initially. compare Doppelt, "Succes-
sors Companies; the NLRB Limits the Options-and Raises Some Prob-
lems," 20 DePaul L. Rev. 176.
'5 Cf. N L R.B. v. Burns International Security Services, Inc., 406 U.S. 272,
285-287, 294-295 (1972); United Steelworkers of America, AFL CIO (H. K.
Porter) v. N.LR.B, 397 U.S. 99, 102, 108 (1970); compare Virginia Sports-
wear, Incorporated, 226 NLRB 1296, 1303 (1976), and MPE, Incorporated,
226 NLRB 519, 521 (1976). In the latter case on somewhat similar facts
connoting a successorship, but which facts in any event established that a
new ownership and new management took over an enterprise while not aware
that a new contract had been recently negotiated by the Union and pnor
management, the new management was held to be under no duty to sign or
assume the already negotiated agreement as to which it had neither assented
or had knowledge prior to its takeover.
879