Phil Rich Mfg. Co., Inc.

National Labor Relations Board - Board Decisions

May 21, 1968

171 N.L.R.B. 586 (N.L.R.B. 1968)

586 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Phil Rich Fan Mfg . Co., Inc.; Ventco , Inc.; H. C.
Williams Mfg. Co ., Inc. and Sheet Metal Workers'
International Association, Local Union No. 54,
AFL-CIO. Case 23-CA-2522
May 21, 1968
DECISION AND ORDER
BY CHAIRMAN MCCULLOCH AND MEMBERS BROWN
AND JENKINS
On January 12, 1968, Trial Examiner Harry H.
Kuskin issued his Decision in the above-entitled
proceeding , finding that Respondent had not en-
gaged in certain unfair labor practices alleged in
the complaint and recommending that the com-
plaint be dismissed , as set forth in the attached
Trial Examiner's Decision . Thereafter, the General
Counsel filed exceptions to the Trial Examiner's
Decision and a supporting brief. Respondent filed
an answering 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
powers in connection with this case to a three-
member panel.
The Board has reviewed the rulings of the Trial
Examiner made at the hearing , and finds that no
prejudicial error was committed. The rulings are
hereby affirmed. The Board has considered the
Trial Examiner's Decision , the exceptions, the
briefs, and the entire record in the case , and hereby
adopts the findings, conclusions , and recommenda-
tions of the Trial Examiner.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the Recom-
mended Order of the Trial Examiner, and hereby
orders that the complaint herein be, and it hereby
is, dismissed in its entirety.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
HARRY H. KUSKIN, Trial Examiner : This case was
heard at Houston, Texas, on August 15 and 16,
1967. A complaint issued herein on June 23, 1967,
as the result of a charge filed by Sheet Metal Work-
' The facts that the Regional Director for Region 23 refused to issue a
complaint on the basis of charges in Case 23-CA-2387 relating to the
above alleged unilateral wage increases of February and June and that such
action was sustained on appeal on the ground that " under all the circum-
stances it could not be said that these increases were violative of the
ers' International Association, Local Union No.
54, AFL-CIO, herein called the Union, alleging
that Phil Rich Fan Mfg. Co., Inc.; Ventco, Inc.; and
H. C. Williams Mfg. Co., Inc., herein called respec-
tively, Rich, Ventco, and Williams and, called col-
lectively, Respondent, have violated Section
8(a)(5) and (1) of the Act by refusing to bargain
collectively in good faith with the Union, the cer-
tified exclusive collective-bargaining representative
of Respondent's employees in an appropriate unit
of production and maintenance employees, by in-
sisting during bargaining on (1) reserving to itself
total discretion with respect to awarding merit wage
increases to unit employees; (2) excluding the
merit wage system from the arbitration process of
any resulting collective-bargaining agreement; and
(3) precluding the Union contractually from engag-
ing in a concerted work stoppage or strike respect-
ing the issue of Respondent's merit wage system;
and further refusing to bargain in good faith by
granting extensive merit wage increases during
February, June, and September, 1966 in order to
disparage the Union's majority in the appropriate
unit and to de?recate the Union as a collective-bar-
gaining agent. In addition, there is the question of
whether a strike of Respondent's employees which
began on May 4, 1966, was caused or prolonged by
the aforesaid conduct, thereby making it an unfair
labor practice strike. Respondent's answer denies
that it engaged in any of the unfair labor practices
alleged herein.
Upon the entire record, including my observation
of the witnesses, and after due consideration of the
briefs of the General Counsel and Respondent, I
make the following:
FINDINGS OF FACT
1. THE BUSINESS OF RESPONDENT
The complaint alleges, and Respondent admits,
that Rich, Ventco, and Williams are each Texas
corporations with their principal office, place of
business, and plant in Houston, Texas; that these
corporations are affiliated businesses with common
officers, owners, and directors, and constitute a sin-
gle business enterprise, engaged in manufacturing
circulators and related products and having a com-
mon labor policy; and that, during the past year,
which is representative of the operations at all
times material herein , goods and materials valued
in excess of $50,000 were purchased from outside
Texas and shipped to the Houston, Texas, plant.
I find, upon the foregoing, as Respondent, in ef-
fect, admits, that these three corporate entities
together constitute a single employer within the
meaning of the Act. I also find further, as Respon-
Act" does not, contrary to Respondent , require a finding that " this dismis-
sal is res Judicata of any claim t in the complaint herein based on new
charges ] that these increases were in violation of the Act." See McCloskey
and Company, lnc , 116 NLRB 1123,1124
171 NLRB No. 87
PHIL RICH FAN MFG. CO. 587
dent also admits , that Respondent is engaged in
commerce within the meaning of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Respondent admits , and I find, that Sheet Metal
Workers' International Association, Local Union
No. 54, AFL-CIO, is a labor organization within
the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Evidence
While the findings of fact hereinafter are based,
in part , on stipulations of the parties , they rest, in
the main , on the testimony of Kenneth Crump, the
only witness in this case . Crump was , at all material
times, the International organizer of the Union and
attended all the negotiation sessions between the
parties . I find that Crump was a reliable witness and
I credit him.
B. Background and Summary of Events
On December 28, 1965, the Union was certified
as the collective-bargaining representative of
Respondent's production and maintenance em-
ployees as the result of a Board election conducted
by the Regional Director for Region 23. On Janu-
ary 14, 1966, bargaining began between Respondent
and the Union and, in all, 14 bargaining sessions
were held.' The first 12 sessions were held by
March 3 1. The remaining two sessions occurred on
June 1 and September 29 in the presence of a
Federal mediator. Between the fifth and sixth bar-
gaining sessions, which took place on January 29
and February 14, respectively, Respondent granted
the first merit wage increase in issue to some of its
employees in the appropriate unit. On March 22,
between the 11th and 12th bargaining sessions
there was a union meeting at which, after the status
of negotiations was discussed, a strike vote was
taken and a strike authorized During April there
was handbilling of the plant and of company
customers by union adherents. On May 4, a strike
began at the plant, which was still in effect at the
time of the instant hearing. The second merit wage
increase in issue was granted on June 3. This was
shortly after the 13th bargaining session on June 1.
As to the third merit wage increase in issue, it oc-
curred in September in advance of the 14th and last
bargaining session of September 29.
It is apparent that Respondent has been granting
merit wage increases to employees prior to the
critical period herein. In this connection, Respon-
dent furnished the Union the following information
as to such increases commencing in 1964. In that
year, increases were granted in February, May,
June, and August to 5, 1, 9, and 11 individuals,
respectively. These increases were distributed as
follows: 2 employees received 5 cents an hour, 12
received 10 cents, 11 received 15 cents, and 1
received 20 cents. In 1965, increases were granted
in January, April, and October to 23, 3 1, and 20 in-
dividuals, respectively; these increases were dis-
tributed as follows. 13 employees received 5 cents
an hour, 35 received 10 cents, 22 received 15
cents, 2 received 20 cents, 1 received 25 cents, and
I received 35 cents. And in 1966, increases were
granted in February, June, and September to 24,
36, and 43 individuals, respectively; these increases
were distributed as follows: 18 employees received
5 cents an hour, 46 employees received 10 cents,
26 employees received 15 cents, 5 received 20
cents, 7 received 25 cents, and I received 35 cents.
The record furthur shows that during the calendar
year 1965,3 Respondent had in its employ in Janu-
ary, April, and October 72, 76, and 64 employees,
respectively, and that during the calendar year
1966, Respondent had in its employ in January,
February, March, April, May, June, and September
65, 72, 77, 89, 88, 96, and 102 employees, respec-
tively. It would thus appear that the 74 merit in-
creases granted by Respondent in 1965 and the 103
merit increases granted by Respondent in 1966 en-
compassed a very large majority of the employee
complement during each year.' It would also ap-
pear that approximately 82 percent of the em-
ployees affected during 1965 and 1966 received a
merit increase of 10 cents per hour or better, and
that Respondent's entire wage structure consisted
of such merit increases.
The events subsequent to the last negotiating ses-
sion between the parties on September 29 con-
sisted, in the main, of the filing by the Union on
October 3 of the charge herein ; the filing by
Respondent on February 10, 1967, of a representa-
tion petition with the Regional Director for Region
23 seeking an election among the employees in the
certified unit ; the dismissal of the petition by the
Regional Director on May 26, 1967; and the is-
suance of the complaint herein on June 23, 1967.
C. The Bargaining Sessions and the Accompanying
Events Preceding the Strike of May 4, 1966
The first negotiation session took place on
t All dates hereinafter are in 1966, unless otherwise indicated
' There is no such data in evidence for the calendar year 1964
' This is so, despite the fact that , in several instances , some employees
received more than one merit increase in a calendar year
' As heretofore indicated, Crump attended all the negotiation sessions in
behalf of the Union He was accompanied at all times by a union commit-
tee At three of these meetings , i e , on February 21 and 23 and March 31,
Donald Fisher, the attorney for the Union, was also present At the Feb-
ruary 21 meeting, one Beeler was also present on behalf of the Union
On those occasions when Fisher was present, he, rather than Crump,
acted as spokesman for the Union
The record also shows that , except for the January 28 meeting, Robert S
Bambace, Esq , an attorney associated with counsel herein for Respondent,
was the spokesman for Respondent in negotiations A Mr Duke of the
same firm substituted for Bambace on January 28 Also in attendance at
some of these meetings were Herschel Rich , president of Respondent,
and/or Mrs Rich, his wife And at the last meeting between the parties on
September 29, one Carl Vogt , Esq , also associated with counsel for
Respondent , was present
588 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
February 14.6 At that session, the Union submitted
a contract proposal which was incomplete in that
no economic proposals were included. At the next
bargaining session on January 17, the Union
completed its contract proposal by submitting its
economic demands. There was no mention in the
Union's proposal of merit wage increases.
The third bargaining session occurred on January
22. At this time, Respondent presented its written
counterproposal. Article XVIII, section 4, thereof
set forth a proposed system for granting merit in-
creases to employees, in the following language:
The Union agrees that the Company shall have
the right to review each employee at various
intervals in order to determine whether or not
the employee deserves to receive a merit wage
increase . If such wage increase is given to an
employee, such increase shall be added to the
employee's existing straight-time hourly wage
rate.
It appears that the counterproposal made no
reference to wage rates but that, during the bar-
gaining session , Respondent orally proposed a 2-
percent across-the-board wage increase and a start-
ing rate of $1.30 an hour . Discussion ensued as to
the various articles in Respondent 's proposed
agreement . With respect to the proposed system of
merit wage increases , Respondent advised the
Union that "it had been a past practice through the
years that Mr. Rich had" and that employees'
records were reviewed "from time to time" to
determine whether they qualified. It was also made
clear that the merit wage increase system would not
be subject to the grievance procedure as outlined in
Respondent 's counterproposal , but would , as in the
past, be at the discretion of Mr. Rich. The Union,
however, sought further clarification with respect
to how the system would work, such as, what em-
ployees would have to do to qualify. Bambace,
speaking for Respondent, said that he would seek
further information concerning the mechanics
thereof from Mr. Rich and would furnish this to the
Union.
At the fourth negotiation session on January 24,
as in all subsequent sessions , the parties discussed
all articles in the proposed agreement except those
tentatively agreed upon . During this discussion on
January 24 the Union was again told that Respon-
dent 's proposed merit wage increase system would
not be subject to the grievance procedure but
would , as in the past, be at the discretion of Mr.
Rich . And in response to the Union 's question, as
formerly, as to how the system worked, Bambace
By that time , the Union had in its possession information furnished by
Respondent pursuant to its request
' The pay of regular employees at Rich ranged as follows : in the attic fan
department between $1 .45 and $ 1 85 per hour , with one employee receiv-
ing $2 25 per hour , in the electric fan department between $ 1 35 and
$1 90, in the wire department between $ 1.35 and $ 1 85; in the shipping de-
partment between $1 50 and $1. 80; in the repair department between
$1 40 and $1 90, in the press department between $1.75 and $1 95, and in
advised the union representatives that he would
have Mr. Rich explain to the Union how the merit
system had operated in the past. At this meeting,
Bambace made a package proposal on wages, con-
ditioned on full acceptance or it would be
withdrawn. It provided for a 5-year term, a starting
rate of $1.30 per hour for probationary employees,
a 2-1/2-percent across-the-board wage increase an-
nually,' 8 paid holidays, time and a half for work on
holidays, payment of the 1965 Christmas bonus
that had been withheld pending the Union's con-
tract proposal and a system of merit wage in-
creases.
The fifth negotiation session occurred on January
28. Mr. Duke attended in place of Bambace. Mrs.
Rich was also present. Either Duke or Mrs. Rich in-
formed Crump and the union committee that the
1965 Christmas bonus would be paid. There was no
discussion of Respondent's proposed system of
merit wage increases. In this connection, the Union
presented a "wage counterproposal" to the wage
proposal of Respondent made at the prior meeting,
adding that, if Respondent agreed to the proposal
as presented, Respondent could do whatever it
wished with its proposed merit wage increase
system . According to Crump, the employees would
then have had a "liberal wage." So far as appears,
under this counterproposal employees would
receive upon the execution of the contract a start-
ing rate of 30 cents more an hour, and would
receive each month thereafter 5 cents an hour addi-
tionally until the base rate was reached, and the
spread between starting rate and base rate at Rich
would vary from 25 cents to 50 cents per hour, de-
pending upon the classification or department in-
volved, while the spread at Ventco and Williams
between starting rate and base rate as to all em-
ployees would be 25 cents per hour.
On the following day, the parties met again in
their sixth bargaining session. However, there was
no progress made on what Crump called the "gut
issues," namely wages, dues checkoff, and merit
wage increases.
The seventh negotiation session took place on
February 14. Respondent revised its wage proposal
somewhat, offering a 5-year agreement and a merit
wage increase system as theretofore but with a
starting rate for probationary employees of $1.35
instead of $1.30 an hour and with an across-the-
board wage increase annually of 2.75 percent in-
stead of 2-1/2 percent.
About this time (Crump was not sure of the
date), Respondent inquired from the Union
the tool-and-die department between $2 .20 and $2.45. There was only
one employee in each of the following operations: maintenance , installa-
tion , and ,janitor , and they received $2.25, $1.65 , and $1.50 per hour,
respectively . It would appear that Ventco and Williams had about a half
dozen employees each and the hourly pay of the regular employees in
the case of Ventco ranged between $1 .35 and $1. 50, and in the case of
Williams between $1 35 and $1 80
PHIL RICH FAN MFG. CO.
whether, in the light of the current contract
negotiations , there would be any objection to its
granting merit wage increases to employees as it
had done in the past. The Union agreed to a con-
tinuation by Respondent during negotiations of any
past practice on the same basis as theretofore, and,
in this connection, asked for, and obtained from
Respondent, a list of the intended employee
recipients of merit wage increases . The Union
raised no objection to the grant to the listed em-
ployees and suggested the addition of some other
employees to the list. Respondent agreed to add
three of the suggested names to the list of em-
ployees and the awards were thereupon effectuated
to them as well as the others.
The next negotiation session , the eighth, took
place on February 21. Respondent again submitted
a revised wage proposal, offering a 5-year agree-
ment , a merit wage increase system, and a starting
rate for probationary employees of $1.35 an hour,
but with an across-the-board wage increase an-
nually of 3.2 percent. The meeting was interrupted
by a recess for dinner. Upon reconvening, Fisher,
acting as spokesman for the Union, indicated to
Respondent that if Respondent wanted the merit
wage increase system it would have to furnish the
Union with standards that could be understood and
grant those employees who were aggrived over not
receiving a merit wage increase the right to use the
grievance and arbitration machinery, in which
event, it would propose to the employees the ac-
ceptance of a 3-year agreement with across-the-
board increases of 10 cents, 12 cents, and 15 cents
per hour during the 1st, 2d, and 3d year, respec-
tively. Fisher indicated further that, in the alterna-
tive, the Union would accept across-the-board in-
creases of 12 cents, 13 cents, and 15 cents during
the 1st, 2d, and 3d year, respectively; and Respon-
dent could do what it pleased about merit wage in-
creases ." During this meeting , there was considera-
ble discussion about criteria for granting merit
wage increases.
The ninth negotiation session occurred 2 days
later on February 23. Respondent again submitted
a revised wage proposal, offering a merit wage in-
crease system and a 3.2-percent across-the-board
increase annually, as theretofore, but with the
guarantee of a 5 cents per hour minumum increase9
and on a 3-year basis, instead of a 5-year basis as
before. In respect to the merit wage increase
system, Respondent failed to submit any criteria or
guidelines for determining a merit wage increase
recipient, although Respondent had agreed at a
prior meeting to do so.
About 10 days later, on March 7, the 10th
negotiation session took place. Respondent orally
supplied the following guidelines as a basis for
' Each proposal by Fisher contemplated the retention by Respondent of
the existing Christmas bonus plan and the profit -sharing plan
9 It would appear that 3.2 percent of the hourly wage paid to some em-
ployees would have fallen short of equaling 5 cents
589
awarding merit wage increases: At the end of each
month, each supervisor would evaluate his super-
visees on 13 factors as either excellent, good,
average, poor, and unsatisfactory, with values of 4,
3, 2, 1, and 0, respectively. The 13 factors were
listed as (1) production quality, (2) production
quantity, (3) skill, (4) ability, (5) attitude, (6) ab-
senteeism, (7) tardiness, (8) initiative, (9) physical
fitness, (10) knowledge and experience, (11) self
improvement, (12) language ability, and (13) at-
tendance. Employees would then be reviewed every
90 days or 3 months to determine those who
qualified, provided that after receiving such an in-
crease an employee would not be considered for
another such increase until the next 12-month
period. No agreement was reached as to the
proposed guidelines or as to the right of an aggrived
party to use the grievance and arbitration
procedure, which the Union sought, but it was un-
derstood that Respondent was to furnish these
guidelines to the Union in writing.
The 11th negotiation session occurred on March
9, 2 days later. At this time, Respondent submitted
in writing its proposed guidelines for awarding
merit wage increases." These guidelines differed in
that they omitted the factors of initiative, self im-
provement, and physical fitness and omitted any
reference to the point system for evaluation of all
factors. According to Respondent, it omitted a
point system because such a system was unworka-
ble and it maintained that view throughout. In addi-
tion, provision was made for review of a determina-
tion concerning a merit wage increase if requested
by the Union and/or employee, in which event such
review would be by Respondent's president or his
duly designated representative, and also, if further
requested, the Union and/or the employee was to
be entitled to a written statement from Respon-
dent's president, and/or his duly designated
representative, in explanation of Respondent's deci-
sion on such review, specifying which factor or fac-
tors require improvement. In connection with the
foregoing, any action taken by Respondent was not
to be subject to article VIII (the grievance and ar-
bitration procedure) of Respondent's proposed
agreement and Respondent's decision was to be
final and binding on the Union and/or employee in-
volved.
As already indicated, on March 22, before the
12th negotiation session, which took place on
March 31, the Union held a meeting of Respon-
dent's employees. Developments in the various bar-
gaining sessions discussed above were presented to
the employees. During the course of the meeting, a
strike vote was taken and the employees present
voted unanimously to strike.
At the 12th bargaining session, there was no
change in Respondent's position as to the recourse
10 This was to be added as new section 3 to article X V III of Respondent's
contract proposal
590 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
available to an aggrieved employee or to the Union
under the merit wage increase system. Nor was
there any movement on wages and dues checkoff,
which together with the merit wage increase system
was the "gut issues" separating the parties." At this
meeting, Respondent did alter its prior position as
to barring employees from working for its competi-
tors for a certain length of time and an acceptable
compromise was reached by the parties. In addi-
tion, the issue relating to foremen working was set-
tled between the parties.
During the months of April and May, there were
no negotiation sessions between the parties. How-
ever, as heretofore noted, during April, the Union
engaged in handbilling of Respondent's premises
and of Respondent's customers, and thereafter, on
May 4, the strike, which was authorized by the
membership of the Union at its March 22 meeting,
began. The strike is still in effect.
D. The Bargaining Sessions and the Accompanying
Events during the Strike
By letter dated May 20, Respondent advised the
Union that "in view of the obvious impasse now ex-
isting in our negotiations and in line with [its] long
standing practice and consistent with [its] proposal
made to the Union regarding merit wage increases,
it is currently reviewing its employees and will
finish doing so by May 27 and is contemplating
granting some merit wage increases to certain
deserving employees, which would be reflected in
the pay checks issued on May 27." The letter in-
vited the Union to advise Respondent of "any
questions or any desire to discuss this matter." By
answering letter of May 23, the Union advised
Respondent that "any merit wage increases at this
time would be inconsistent with the proposal made
to the Union on merit wage increases ." This was
followed by a letter, in response, from Respondent
saying that it "faile[d] to see any inconsistency"
between Respondent's present review of employees
and the proposal to the Union contained in its
revised proposal of March 9. In this connection, the
letter quoted that part of this proposal which called
for "review at least every three month intervals" of
the records of employees eligible for consideration
for a merit wage increase.12 Respondent indicated it
was anxious to clear up, through discussions with
the Union, any misunderstanding the Union may
have in the matter, and that it was deferring action
on the merit wage increase until June 1, "in the
event any questions regarding this matter remain in
the minds of the union after receipt of this letter."
By letter dated May 27, the Union responded
thereto, pointing out that, with respect to Respon-
dent's proposal on merit wage increases, "there was
at the time a lengthy discussion on the proposal,
with many of the procedures for granting such in-
creases discussed," and that based on the proposal
and the discussions it would be inconsistent with
that proposal to grant any such increases now. The
letter added that Respondent's proposal was
"neither accepted objected or rejected as such" and
if Respondent grants these increases it will do so at
its peril.
On June 1, the parties met with a Federal media-
tor. This was the 13th meeting between the parties.
The three "gut" issues were still pending, namely,
wages, the merit wage increase system, and dues
checkoff. Respondent, in response to a query by
the mediator, indicated that there was no change in
its stand. The Union, however, proposed that all
strikers return pending settlement of these issues
and offered a modified contract proposal of a 3-
year agreement, with a 15-cent-per-hour across-
the-board wage increase during the first year and a
wage reopener clause during the second and third
years, and, if agreed to, Respondent could do what
it pleased about merit wage increases. Respondent
then inquired whether this would be "without the
right to strike in the second and third year if we
don't agree on the wages?" Whereupon, the Union
indicated that would be acceptable provided
Respondent would agree to arbitrate the wages in
the second and third years, absent agreement. This
Respondent refused and the discussion proved
abortive. During the meeting, Bambace advised the
mediator of the correspondence concerning
Respondent's plan to grant merit increases to
deserving employees. Whereupon, Crump said that,
while the Union was willing to negotiate on all un-
resolved issues, the Union opposed meeting only in
order to allow Respondent to change or modify its
stand so that it "could grant any type of increases
and so forth to the strike breakers" at work in the
plant. Thereafter, Respondent advised the Union
that it was withdrawing its March 9 offer on merit
wage increases and was reverting to its original
offer thereon and that it would put the merit wage
increase into effect.13 So far as appears nothing
further occurred at this meeting.
By letter dated June 2, Respondent wrote to the
Union concerning Respondent's proposed merit
wage increase, saying, in relevant part, that since
the Union indicated no real desire to discuss the
question of merit increases when it was again raised
by the company negotiation committee, such merit
increases as were to be granted "would be reflected
in the paychecks of Friday, June 3." The letter
again offered to discuss any questions concerning
these merit wage increases or any other of Respon-
dent's contract proposals. The answering letter of
the Union was dated June 6. Therein, the Union re-
" Crump testified with respect to other issues still dividing the parties
that "we always felt they could possibly be resolved or would be resolved "
" As already found , such increases had been granted to employees the
previous February
" Merit wage increases were thereafter granted by Respondent on June
3 See, in this connection , the discussion infra of Bambace's letter to
Crump, dated June 2
PHIL RICH FAN MFG. CO. 591
called the March 9 proposal of Respondent on
merit wage increases and of Respondent 's agree-
ment to draft and present to the Union factors and
procedures for such a system, that Respondent
made only a verbal response which was short of
compliance , and that the writing which it did
present was a new section 3 to article XVIII of its
contract proposal. It pointed out further that this
proposal would give Respondent the right to "uni-
laterally bargain with each employee, without the
bargaining agent knowing or being informed on
what factors or procedure" were operative respect-
ing such increases , and additionally that , as of May
4, the day the employees went on strike , these fac-
tors or procedures had not been furnished." The
Union offered to negotiate on all issues but refused
to negotiate just on merit wage increases ; i.e., "the
right for the company to negotiate with and give
strike breakers better wage increases than were of-
fered to their regular employees before the strike
commenced ." The last letter in this series was
dated June 7 and purported to be the answer of
Respondent to the Union's previous letter. Therein,
Respondent called the Union 's attention to the list-
ing in its March 9 proposal on merit wage increases
of factors which Respondent proposed to consider
in granting such increases and added that the Union
was advised contemporaneously and thereafter of
Respondent 's feeling that any grading system or
point system on determining eligibles for such in-
creases was totally unworkable and unacceptable.
Additionally, Respondent took issue with the
Union 's charge that at the June I session Respon-
dent negotiated only on one item , that of merit
wage increases ; that , instead , it negotiated on all
items in dispute, whereas the Union displayed its
disinterest in conducting fruitful negotiations by in-
creasing its prior contract proposal on June 1. The
letter also took issue with the Union's assertion that
Respondent granted to employees on June 3 better
wage increases than were offered to the strikers be-
fore the strike began, insisting that the increases
"were granted on the same basis and are in the same
spirit as has been done in the past." The letter then
suggested that , instead of writing any more letters,
the parties meet at any time that the Union "feels it
has anything constructive to add to the negotiations
between the parties."
The next and final meeting between the parties
was again preceded , as in the case of the prior
meeting , by correspondence relating to a contem-
plated merit wage increase to some of Respondent's
employees . By letter dated September 14 Respon-
dent wrote to the Union that it was confirming a
prior telephone discussion on September 12 relat-
ing to Respondent 's desire to grant merit wage in-
creases to certain of its employees , during which
discussion the Union indicated that it would not ob-
ject thereto, provided that, if the Union had any
questions concerning such increases, the parties
"would discuss the same at a later date." The letter
then advised the Union that, "in view of our un-
derstanding," certain employees would receive
merit wage increases effective during the payroll
period ending September 14. By answering letter of
September 27 the Union requested a meeting to
discuss the merit wage increases and the conditions
for granting same by Respondent; it denied indicat-
ing to Respondent that it had no objections to the
granting of merit wage increases, and added that,
upon being advised that Respondent was going to
grant the increases, the Union's response was that it
would not prevent such action, but that it did want
to meet and discuss the matter if increases were
granted. After an intervening telephone conversa-
tion, Respondent arranged for a conference room
at the local office of the Federal Mediation and
Conciliation Service for the purpose of discussing
the merit wage increases granted earlier that
month. Respondent confirmed this by letter dated
September 28 to the Union and, by way of answer
to the Union's letter dated September 27, rejected
as completely without foundation the Union's posi-
tion that the Union did not indicate to Respondent
that it had no objections to Respondent's granting
the September merit wage increases.
The aforementioned final meeting , the 14th
between the parties, occurred on September 29 in
the presence of a Federal mediator. At this meet-
ing, the Union inquired as to the names of the em-
ployees who had received the merit wage increases,
the amount received, the date of their prior merit
wage increase, and the date of their hire in relation
to May 4 the date the strike began. In addition, the
Union requested information as to all merit wage
increases granted by Respondent since 1964. In
response to a question from the Union at the meet-
ing as to the contemplated frequency of merit in-
creases, Bambace replied that such increases could
be granted at any time Mr. Rich saw fit. There is
also evidence that the Union pointed out that the
national minimum wage was going to be changed to
possibly $1.40 per hour and asked whether Respon-
dent's current wage offer of $1.35, which was 10
cents above the existing minimum wage, would cor-
respondingly become $1.50. Although Bambace
agreed to check this with Mr. Rich and supply the
information, nothing has come forth thereon. There
have been no further meetings between the parties.
The information promised by Respondent at the
September 29 meeting was received by the Union
on October 19. The correspondence in this connec-
tion reveals that Respondent was still insisting that
the Union had agreed with it that it could grant
merit increases to its employees in September while
the Union was disavowing any such agreement as to
any merit wage increases at any time. It also reveals
expressions by both Respondent and the Union of a
" As I have heretofore found , the new section to article XVIII did list 10
factors and a grievance procedure
592 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
willingness to meet at any reasonable time concern-
ing merit wage increases and other unresolved is-
sues between the parties.
E. The Allegations of the Complaint Herein and
Conclusions Thereon
1. The appropriate unit
The complaint alleges, and Respondent admits,
and I find that all production and maintenance em-
ployees at its Houston , Texas, plant , including
truckdrivers , shipping and receiving clerks,
dispatcher (J. P. Parten), plant clericals (Lewis
Atlas and Michael Gonzalez), and janitors, and ex-
cluding all office clerical employees, professional
employees , guards, watchmen , and supervisors as
defined in the Act, constitute a unit appropriate for
the purposes of collective bargaining within the
meaning of Section 9(b) of the Act.
2. The majority status
Respondent admits that the Union was certified
by the Regional Director for Region 23 on
December 28, 1965, after a secret ballot election,
as the exclusive bargaining representative of all the
employees in the above appropriate unit. As the
events herein occurred during the certification year
and as the presumption of continuance of majority
during the certification year is irrebuttable in the
absence of unusual circumstances , not shown
here,'s I find that , at all times material herein, the
Union represented a majority of the employees in
the aforesaid unit.
3. The alleged refusal to bargain in bad faith
The General Counsel concedes that , under the
authority of N.L.R.B. v. American National In-
surance Company, 343 U. S. 395, an employer's in-
sistence on a management rights provision is not
per se an unfair labor practice , although mandatory
subjects of bargaining are involved , and the test is
whether the employer observed the good -faith bar-
gaining principles of the Act in bargaining concern-
ing such subjects . He contends, in effect, that
Respondent failed to bargain in good faith in that it
not only insisted , to what it mechanistically called
an impasse , on the unilateral right to award merit
wage increases that would set the prevailing wage
pattern in the plant because of the relatively small
across-the -board wage increases offered to the
Union , but also denied the Union any effective role
in the matter of merit wages by rejecting the
Union 's request to make the disputes arising out of
the operation of the merit wage increase system
subject to the grievance procedure which included
arbitration, or in the alternative that the Union
have the right to strike. Stated more generally, the
General Counsel contends that Respondent acted
inconsistently with the good-faith bargaining princi-
ples of the Act by "approach[ing] the bargaining
table with a predetermined resolve not to budge
from its initial position of determining merit wage
increases unilaterally ." Respondent , in turn , denies
that it failed to bargain in good faith concerning
merit wage increases. It admits, in effect, that
throughout the bargaining it maintained the right to
grant merit wage increases . However, it points out,
in justification thereof, that it has been observing a
practice of granting such increases to employees for
many years and further that it was willing to afford
an employee or the Union the right to grieve but
not to go to arbitration, that it was not required
under the Act and applicable law to submit to ar-
bitration in such matters, and further that its in-
sistence on forteiture of the right to strike as to
merit wage increases while refusing an arbitration
clause is not under the cases violative of Section
8(a)(5) of the Act. And it contends still further
that it did bargain in good faith concerning all mat-
ters , making concessions , and changing positions on
merit wage increases and on wages.
The bargaining obligation which Section 8(d) of
the Act imposes mutually upon employers and em-
ployee representatives is that they "meet at
reasonable times and confer in good faith with
respect to wages, hours, and other terms and condi-
tions of employment, or the negotiation of an
agreement. . . ." It is true, as Respondent contends,
that the section further provides that the obligation
to bargain "does not compel either party to agree
to a proposal or require the making of a conces-
sion." However, this does not excuse any party
from the requirement therein to bargain in good
faith. Good faith or the want of it is concerned es-
sentially with a state of mind; i.e., did the parties
meet with a serious intent to adjust their differences
and reach acceptable ground? And a determination
thereof must be based on reasonable inference
drawn from the circumstances of the case as to mo-
tive or state of mind of the party involved.
It is clear from the bargaining developments, set
forth in detail in section III, C, and III, D, above,
that, at the end of the March 31 negotiations, the
12th meeting between the parties during a period of
about 10 weeks, the parties were in disagreement as
to wages , merit wage increases , and checkoff,
referred to in the record as the "gut" issues. Re-
gardless of other concessions, neither party would
retreat from his prior position on these issues. On
the subject of wages, Respondent was offering a
general wage increase of 3.2 percent or a minimum
of 5 cents an hour, annually during a 3-year con-
tract and insisting on reserving to itself the uni-
lateral right to grant merit wage increases ; agreeing,
however, to be governed by 10 factors, such as
production quality, production quantity, etc., in
11 See Rau Brw)ASv NLRB ,348US 96
PHIL RICH FAN MFG. CO.
making such grants and to limit an employee to one
merit wage increase a year and to allow employees
to grieve about merit wage increases , but without
the right of employees to resort to arbitration or, in
the alternative , to strike concerning the matter.
In regard to Respondent 's position on wages, the
General Counsel contends that the general wage in-
crease proposed by Respondent was a token in-
crease , while its companion proposal of a merit
wage increase system was to constitute the actual
wage structure of the plant. I note, in this connec-
tion, that the 3.2-percent annual general wage in-
crease which Respondent was then proposing con-
formed to the wage guideposts of the President's
Council of Economic Advisers. Furthermore, it
would be sheer speculation to assume that by con-
tinuing to reserve the right to extend merit wage in-
creases the ensuing wage level would be based
primarily on merit wage increases , dwarfing into in-
significance the across-the-board 3.2-percent
general wage increase . Accordingly, I am not per-
suaded on this record that the general wage in-
crease proposed by Respondent at the time was a
token increase . Nor can I draw any inference ad-
verse to Respondent because the general wage in-
crease which Respondent offered would have
netted employees less than what they had received
via merit wage increases in the past, when Respon-
dent 's entire wage system was based on merit wage
increases . For, so far as appears , Respondent did
bargain about wages during most of the 12 bargain-
ing sessions which spanned a 10-week period, mak-
ing several proposals ranging from a 2-percent to a
3.2-percent across-the -board wage increase , albeit
it was unable to reach agreement with the Union
which was seeking a much larger increase than
Respondent was willing to pay. And the fact that
they failed to reach common ground on the general
increases is, in itself , not controlling on this issue,
so long as Respondent was seeking to do so in good
faith . In this connection , the Board has held that
since "the Act does not require formal agreement
or the grant of concessions the parties may reach
an impasse which does not reflect on the good faith
of the bargaining ."'" "Not capitulation but bona
National Maritime Union of America, 78 NLRB 971, 981
NLRB v Maver, 196 F 2d 286 , 290 (C A 5)
" See Taft Broadcasting Co , 163 NLRB 475. Prix for and Gamble Mfg
Co , 160 NLRB 334, Engineering & Mfg Co. 151 NLRB 1441 , 1446, 1447,
and Phillip Carei Manufacturing Co . 140 N LRB 1103. 1104-5
'" See J H Allison & Compans, 70 NLRB 377, enfd 165 F 2d 766 (C A
6), cert . denied 335 U S. 814, where the Board held that merit increases
are an integral part of the wage structure and, as such , are the proper sub-
ject of collective bargaining This position was thereafter endorsed by the
Supreme Court in Benne Katz, dlb/a Williamsburg Steel Products Company,
369 U S 736.
"' Respondent was insisting on having a no-strike , no-lockout clause in
the contract
i' See Atlantic Research Corporation, Desomatic Products Divnion, 144
NLRB 285, holding that . " Specifically , the [employer 's] insistence on
reserving to itself as a management prerogative the right to grant individual
merit increases was not in derogation of its bargaining obligation " There,
593
fide effort is the criterion ."" Nor is " hard bargain-
ing," as such , tantamount to a refusal to bargain."
Insofar as the bargaining concerning merit wage
increases is concerned, it is not here contended by
Respondent that merit wage increases are not a
bargainable issue .'9 And it is clear that bargaining
did take place on this subject . Thus, as already
pointed out , in the course of bargaining , Respon-
dent was prepared to agree on the factors to be util-
ized in determining recipients of such increases, in
the frequency with which they were to occur, and
on making available a grievance procedure to any
aggrieved employee and the Union. While Respon-
dent at first discussed and then refused to agree to
a grading or point system for determining
recipients , and also refused to agree to allow any
grievance respecting merit wage increases to be
taken to arbitration , or in the alternative to allow
resort to strike action thereon ,'" I perceive no ele-
ment of bad faith in its understandable and not un-
reasonable desire to be free to reward capable and
efficient employees over and above the general
wage increase offered the Union on an across-the-
board basis . 21 Significant , too, in appraising
Respondent's bargaining role is the fact that it was
bargaining on merit wage increases in the face of an
ambivalent position by the Union thereon. Thus,
the Union was demanding a much larger general
wage increase than Respondent would offer, and
was stating at the same time , in effect, that if
Respondent would agree to a large enough in-
crease , it would allow Respondent to do what it
pleased about merit wage increases ; otherwise, it
would insist upon limiting Respondent in granting
merit wage increases not only through the factors
proposed by Respondent for determining
recipients, but also through a point or grading
system , and a grievance procedure including ar-
bitration or, in the alternative , the right to strike. It
is patent that basic to the two alternatives proposed
by the Union on merit wage increases was the size
of the general wage increase. In consequence, it
would appear , and I find , that bargaining foundered
on the matter of wages primarily because the
parties could not agree on the size of a general
as here, the employer had offered an arbitration procedure covering other
subjects but refused to extend the arbitration provision to merit wage in-
creases While it is true that the employer there did offer to make an excep-
tion to its stand on such arbitration , in cases involving discrimination for
personal or union reasons , it would appear that the above quoted language
would also preclude a finding of bad faith based solely on the insistence by
an employer on the broadest ban on arbitration of merit wage increases,
and on precluding the right to strike thereon In any event, the employer's
above concessions on matters involving discrimination for union connected
reasons was minimal in nature, because such discrimination is banned by
operation of law And further , since Respondent was urging inclusion in the
contract of a no-strike , no-lockout clause and since the Act does not
preclude an employer from bargaining for such a clause (see N L R B v
American National Insurance Conipanv, supra), Respondent's unwillingness
to accept ment wage increases from the general ban on striking, does not,
under the circumstances (e g , its willingness to circumscribe the granting
of merit wage increases on the basis of prescribed factors, fixed frequency,
etc ), establish lack of good faith
594 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
wage increase . I find further that , as of March 31,
good-faith bargaining had not resolved the matter
of wages, including merit wage increases , and there
were no definite plans for further efforts to break
the deadlock , and hence an impasse existed on
these matters.22
To sum up all the foregoing, I find that (1)
Respondent 's position on a general wage increase,
apart from its position on merit wa*e increases, is
not indicative of bad faith bargaining; (2) the
Union took an ambivalent position in respect to
merit wage increases making basic to both its
proposals on merit wage increases the size of the
general wage increase, an issue as to which Respon-
dent did not bargain in bad faith; (3) Respondent's
insistence that it be free to reward capable and effi-
cient employees over and above the general wage
increase on an across-the -board basis , is not per se
unreasonable ; ( 4) Respondent did bargain about
merit wage increases making some concessions, and
to the extent that it opposed a point and grading
system , and refused to agree that grievances on
merit wage increases go to arbitration or, in the al-
ternative, that employees may strike concerning
this issue , Respondent 's bargaining position is not
under the circumstances vulnerable on bad-faith
grounds; and (5) it does not appear, nor is it con-
tended, that Respondent bargained in bad faith on
any other bargaining issues . In these circumstances,
and in the absence of any other findings of unfair
labor practices herein, I am unable to infer, and
find, that Respondent bargained to impasse in bad
faith on any aspect of the mandatory subject of
wages, including merit wage increases. At most,
Respondent's attitude on this issue was one of hard
bargaining , which the Act does not forbid. Were
this a case in which Respondent had refused to
grant any general increase or where the general in-
crease offered was a token increase , Respondent's
conduct might arguably have been vulnerable.23
Absent such a situation, I know of no authority in
Board or court law, and none has been called to my
attention, which would warrant finding Respon-
dent 's position on merit wage increases in the cir-
cumstances of this case vulnerable under Section
8(a)(5) of the Act.
There remains for consideration whether
Respondent violated Section 8(a)(5) of the Act by
its unilateral action in June and September 1966,
during the strike , of granting individual merit wage
increases to a substantial number of employees.24
With respect to the June increase, the record shows
that Respondent notified the Union that it was con-
templating giving merit wage increases and was
See American Shipbuilding Ca v N L R B, 380 U S 300
See "M" Si stem, /ne , 129 NLRB 527, Duo Fitting, 130 NLRB 653
21 As already indicated , Respondent also granted merit wage increases to
employees in February At that time , Respondent discussed the matter with
the Union and the latter not only concurred in the grants to the employees
selected by Respondent, but also persuaded Respondent to grant such in-
creases to additional employees Since the Union concurred in the merit
wage increases which Respondent proposed and negotiated such increases
ready and willing to negotiate concerning them,
and that when the parties met with the Federal
mediator on June 1 the Union was unwilling to
discuss merit wage increases because of Respon-
dent 's statement at the meeting that it was adhering
to its prior position on all unsettled issues, including
the merit wage increase system. At that time, the
Union had made a new proposal of a general wage
increase which would have exceeded, during the
first year of a 3-year contract period, its general
wage increase proposal which was pending at the
time of the bargaining impasse. Whereupon,
Respondent, inter alia, advised the Union that it
would put the contemplated merit wage increases
into effect. Since the parties had theretofore bar-
gained to a bona fide impasse on wages , including
the merit wage increase system , since Respondent
had there proposed making such increases at 3-
month intervals and was not acting inconsistently
with its prior practice in contemplating granting
merit wage increases at this time ; and since the
Union refused to negotiate thereon , although
Respondent urged it to do so , I find that Respon-
dent has not, by such grants, refused to accord the
Union the bargaining status which the Act vests in
the majority representative.
With respect to the September merit wage in-
creases, the record shows that Respondent commu-
nicated by telephone with the Union on September
12 indicating that it was contemplating putting into
effect another merit wage increase for the payroll
period ending September 14 and that, at the meet-
ing with the Federal mediator on September 29, the
Union sought information as to the merit wage in-
crease action already taken. While Respondent in-
troduced into evidence a letter dated September 14
from Bambace, Respondent 's representative, to
Crump, the Union's representative, which refers to
this telephone conversation and asserts that Crump
then acquiesced in such unilateral action , subject
only to discussion thereafter , I am unable to find on
the basis of this self-serving document that Crump
did acquiesce, particularly because of Crump's an-
swering letter of September 27 denying such
acquiescence.25 However, because of the continu-
ing bargaining impasse on wages , including the
merit wage increase system; because Respondent
was not acting inconsistently with its past practice
or its proposal to the Union in contemplating other
merit wage increases within 3 months of the prior
increase , and also because the Union's un-
willingness to discuss the June merit wage increase
rendered futile any such overtures by Respondent
in connection with the September increase, I find,
for other employees , I find that the allegations of the complaint in this
respect have not been sustained
" I attach no significance adverse to the Union because of the fact that
there was almost a 2-week interval between Bambace's letter and Crump's
reply It would appear that an answer by return mail would not have altered
the situation, as the date of Bambace 's letter coincided with the close of the
payroll period during which Respondent contemplated making these in-
creases effective
PHIL RICH FAN MFG. CO. 595
here too , that Respondent did not , by such grants,
refuse to accord the Union the bargaining status
which the Act vests in the majority representative.
In sum , I conclude , and find , that Respondent did
not violate the good -faith bargaining requirements
of Section 8(a)(5) and ( 1) of the Act by granting
merit wage increases to employees during Febru-
ary, June , and September, 1966.
4. The nature of the strike
As I have found that Respondent did not refuse
to bargain in violation of the Act before the strike,
which was called on May 4, 1966 , because of the
failure to reach a collective -bargaining agreement, I
find that the strike was an economic strike at its in-
ception . And since the unilateral merit wage in-
crease action taken by Respondent in June and
September , during the course of the strike, also did
not, as found above, constitute an unfair labor
practice , such unilateral action did not effect a con-
version of the economic strike into an unfair labor
practice strike . 28 Accordingly , I find lacking in
merit the General Counsel 's contention that the
strike began and/or was prolonged by Respondent's
unfair labor practices and was therefore from its in-
ception , or thereafter , an unfair labor practice
strike.
Upon the basis of the entire record, I make the
following:
together constitute a single 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.
3. The following employees of Respondent at its
Houston , Texas, plant constitute a unit appropriate
for the purposes of collective bargaining within the
meaning of Section 9(b) of the Act:
All production and maintenance employees,
including truckdrivers , shipping and receiving
clerks, dispatcher (J. P. Parten), plant clericals
(Lewis, Atlas, and Michael Gonzalez), and
janitors and excluding all office clerical em-
ployees, professional employees, guards,
watchmen, and supervisors as defined in the
Act.
4. At all times since December 28, 1965, the
Union has been, and now is, the exclusive represen-
tative of all the employees in the unit described in
paragraph 3, above, for the purposes of collective
bargaining within the meaning of Section 9(a) of
the Act.
5. Respondent has not refused to bargain collec-
tively with the Union as the exclusive representa-
tive of the employees in the above-appropriate unit
in violation of Section 8(a)(5) and (1) of the Act.
RECOMMENDED ORDER
CONCLUSIONS OF LAW
1. Rich , Ventco, and Williams , herein together
called Respondent , are each employers, and
t° Although there is testimony by Crump that, during the June meeting,
he offered to return all the strikers to work, the matter was not fully
litigated herein and the ciaimed refusal of Respondent to offer the strikers
Upon the basis of the above findings of fact and
conclusions of law, and upon the entire record in
the case, it is recommended that the complaint
herein be dismissed.
reinstatement is not alleged to be violative of Section 8(a)(3) and (I) of
the Act
353-177 0 - 72 - 39