Rochester Telephone Corp.

National Labor Relations Board - Board Decisions

Jan 19, 2001

333 N.L.R.B. 30 (N.L.R.B. 2001)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 30
Rochester Telephone Corp.1 and Local 1170 of the
Communications Workers of America. Case 3–
CA–20004–2
January 19, 2001
DECISION AND ORDER
BY CHAIRMAN TRUESDALE AND MEMBERS
LIEBMAN AND HURTGEN
On October 30, 1998, Administrative Law Judge
Robert T. Snyder issued the attached decision. The Gen-
eral Counsel and the Union have filed exceptions and
supporting briefs. The Respondent has filed cross-
exceptions and an answering brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and record in
light of the exceptions and briefs and has decided to af-
firm the judge’s rulings, findings,2 and conclusions3 and
to adopt the recommended Order.

1 We grant the Respondent’s motion to change the caption reference
from “Rochester Telephone Corporation” to “Rochester Telephone
Corp.”
2 The parties have excepted to some of the judge’s credibility find-
ings. The Board’s established policy is not to overrule an administra-
tive law judge’s credibility resolutions unless the clear preponderance
of all the relevant evidence convinces us that they are incorrect. Stan-
dard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d
Cir. 1951). We have carefully examined the record and find no basis
for reversing the findings.
3 Although we adopt the judge’s conclusion that the parties reached a
bargaining impasse, we disavow his suggestion that the “central in-
quiry” in determining the existence of an impasse is “whether the Un-
ion made sufficient progress in meeting the Company’s perceived
needs and goals” by its counterproposals and by other actions. It is
well settled that:
A genuine impasse . . . exists only where the parties have exhausted all
avenues for reaching agreement and there “is no realistic possibility
that continuation of discussion at that time would have been fruitful.”
There is no impasse where one of the parties makes concessions that
are not “trivial or meaningless . . .” for a concession by either party
“on a significant issue in dispute precludes a finding of impasse even
if a wide gap between the parties remains because under such circum-
stances there is reason to believe that further bargaining might produce
additional movement.” . . . The essential question is whether there has
been movement sufficient “to open a ray of hope with a real potential-
ity for agreement if explored in good faith in bargaining sessions.”
Hayward Dodge, 292 NLRB 434, 468 (1989), and authorities cited
therein (internal citations omitted). We adopt the judge’s conclusion
that the parties here had reached impasse because we agree that the
Union’s counterproposal of April 8, 1996, under all the circumstances,
did not create a “reason to believe that further bargaining might pro-
duce additional movement” by either party.
We agree with the administrative law judge that Serramonte
Oldsmobile, 318 NLRB 80 (1995), enf. denied in part 86 F.3d 227
(D.C. Cir. 1996), is distinguishable from this case. We do not rely on
the judge’s analysis and application of the circuit court’s decision in
Serramonte to the facts here. In addition, contrary to the judge, we do
not rely on the fact that the Union was engaged in a campaign to gener-
ate public support for its bargaining positions as evidence that the par-
ties were at impasse.
ORDER
The recommended Order of the administrative law
judge is adopted and the complaint is dismissed.

Doren G. Goldstone, Esq., for the General Counsel.
Jeremy P. Sherman, Esq. and Kenneth D. Schwartz, Esq. (Sey-
farth, Shaw, Fairweather & Geraldson, Esqs.), of Chicago,
Illinois, and Robert V. Heftka, Esq., of Rochester, New
York, for the Respondent.
David A., Mintz, Esq. (Weissman & Mintz, Esqs.), of New
York, New York, for the Charging Party.
DECISION
STATEMENT OF THE CASE
ROBERT T. SNYDER, Administrative Law Judge. This
case was tried before me in Henrietta and Rochester, New
York, on May 19 through 23, and June 16 through 18, 1997.
The complaint alleges that after commencing negotiations in
October 1995 for a successor collective-bargaining agreement
with Local 1170 of the Communications Workers of America
(Local 1170 or the Union), and the Charging Party herein, on
behalf of an appropriate unit, the Rochester Telephone
Corporation (RTC), the Company or Respondent, in April 1996
prematurely declared that its negotiations with the Union had
reached an impasse, and unilaterally implemented its last bar-
gaining proposal, and, as a consequence, Respondent has failed
and refused to bargain in violation of Section 8(a)(1) and (5) of
the Act. The alleged unilateral implementation included
changes in such subjects as wages, prepension leave benefits,
employee health care, pension benefits, and retire health care
for current employees upon retirement, each of which is alleged
as a term and condition of employment and a mandatory sub-
ject for the purpose of collective bargaining.
In its timely filed answer, Respondent denied having prema-
turely declared impasse or having unlawfully unilaterally im-
plemented its last bargaining proposal, or having committed
any unfair labor practices by its conduct, but admitted having
declared negotiations were at an impasse and that it then law-
fully and unilaterally implemented its final offer. In its answer
Respondent asserted three affirmative defenses. In the first, it
claimed that as a consequence of a bonafide impasse in bar-
gaining on April 8, 1996, its statutory duty to bargain was sus-
pended and it lawfully implemented its final offer on that date.
In the second, it claims that the Union’s bad-faith and surface
bargaining suspended its own statutory duty to bargain on the
date and permitted it to implement its final offer. In the third
defense, Respondent asserts that because of the Union’s unlaw-
ful insistence on a permissive subject of bargaining, its own
statutory duty to bargain was suspended and the implementa-
tion of its final offer was likewise lawful.

In Member Hurtgen’s view whether an impasse exists requires a
multifactor test which is highly fact and circumstance driven. He does
not agree that the selective criteria set forth in this footnote are neces-
sarily determinative of the issue. See his dissent in Grinnell Fire Pro-
tection Systems Co., 328 NLRB 585, 588–591 (1999).
333 NLRB No. 3
ROCHESTER TELEPHONE CORP. 31
Posttrial briefs were each filed by counsel for the General
Counsel, the Union, and Respondent and they have been care-
fully considered.
On the entire record, including my observation of the de-
meanor of the witnesses, I make the following
FINDINGS OF FACT
I. JURISDICTION AND LABOR ORGANIZATION
STATUS
At all material times, Respondent, a corporation, with an of-
fice and place of business in Rochester, New York (Respon-
dent’s facility), has been engaged in the furnishing of telephone
services. During the 12-month period ending November 30,
1996, Respondent, in conducting its business operations de-
scribed, derived gross revenues in excess of $100,000. During
the same period of time, Respondent, in conducting the busi-
ness operations, purchased and received at its Rochester, New
York facility goods and materials, valued in excess of $5000,
directly from points outside the State of New York. Respon-
dent admits, and I find that at all times, it has been an employer
engaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act. Respondent also admits, and I find that at
all material times the Union has been a labor organization
within the meaning of Section 2(5) of the Act.
II. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Bargaining History, Changes in Respondent’s Corpo-
rate Structure and Regulatory Setting, and the Parties Contrary
Understandings of Respondent’s Economic Health on the Eve
of Bargaining for a Successor Agreement
The Union has had over a 40-year bargaining relationship
with RTC, representing all nonsupervisory employees of the
plant service department and the plant engineering and con-
struction department of the Company.
The most recent collective-bargaining agreement between
the parties was effective from November 23, 1992, through
January 31, 1996.
As described by Union Vice President Linda McGrath, a
nonemployee, who participated in several prior bargaining
negotiations as well as the negotiations for a successor agree-
ment to the one expiring January 31, 1996, RTC supplies tele-
communication services to residents and businesses, with head-
quarters located at 180 South Clinton Street, Rochester, New
York, and maintains several satellite facilities and repair ser-
vices at 20 to 25 locations, which include garages to which
outside employees report for their daily assignments. When
bargaining commenced for a successor agreement the bargain-
ing unit comprised some 600 employees. The plant service
department employs telecommunication specialists, com-tech
communication technicians, PBX technicians, line technicians,
and repair service clerks. The engineering and construction
departments employ cable splicers, line technicians and clerical
employees.
As a public utility, RTC’s local telephone exchange services
and operations are regulated by the New York State Public
Service Commission (the PSC). Starting sometime in 1993,
RTC sought the Union’s assistance in obtaining permission
from the PSC for the formation of a new holding company,
Frontier Corporation (Frontier), of which RTC would become a
subsidiary continuing to operate and manage the telephone
services provided in the greater Rochester, New York area.
Under the Company’s petition, Frontier Corporation would
be free of regulatory controls in operations outside of the Roch-
ester market, and, indeed, later evidence establishes its opera-
tions in a number of other States and markets, a number of
which operations resulted from corporate mergers between
Frontier and other entities. Later testimony established that
Frontier owns approximately 29 other telephone companies.
The Union’s assistance came through the vehicle of a part-
nership for progress agreement which it entered with RTC.
Later testimony established that as a condition of PSC’s ap-
proval, thereby permitting Frontier to become the new holding
company free of considerable regulatory control, RTC was
compelled to surrender its monopoly over telephone service in
Rochester and such services were opened to competition. As
later explained on the record, technically, Frontier succeeded
Rochester Telephone Corporation as the holding Company,
which previously had telecommunication operations outside the
Rochester area, Rochester Telephone Corporation ceased to
exist and Rochester Telephone Corp. was formed as a wholly
owned subsidiary of Frontier to operate the local Rochester
telephone and related services business. It is Rochester Tele-
phone Corp., which is the Company that has retained the
collective-bargaining relationship with the Union.1

The provision for these changes is set forth in a document
described as the “Open Market Plan” (OMP), which was ap-
proved by the PSC and implemented on January 1, 1995. The
PSC regulates and establishes telephone rates charged to cus-
tomers as well as telephone service requirements. It also guar-
anteed RTC a rate of return on its investment. As a result of the
institution of the OPM, a regulatory price freeze was placed on
telephone services for a period of 7 years and other local rates
were reduced over the first 3 years of the OPM, costing RTC
$21 million, or almost 7 percent of RTC’s gross revenue. A
rate of return was apparently no longer guaranteed. RTC also
continued an obligation under the OMP as provider of last re-
sort, being required to provide local telephone service to all
customers. Its competitors had no such obligation. It was also
subject to seeing its most lucrative customers stolen away by its
newly enfranchised competitors. The Company saw a market
fraught with dangers as it entered unchartered waters, having
lost its monopoly position in providing telephone and accessory
services, making it necessary to become more competitive and
efficient in its operations and subject to competitive pressures
and attacks it had never faced before.
In spite of these changes, going into the start of negotiations
for a successor agreement, in late 1995, the Union had an un-
derstanding from company representatives and newspapers that
RTC was doing extremely well, having already recorded record
1 Nonetheless, and in the absence of any motion from Respondent
seeking to change the proper name of the Respondent, the caption will
retain the name of Rochester Telephone Corporation as the proper
name of the Respondent. However, should an order ultimately issue in
this proceeding against Respondent the record now reflects the exis-
tence of Rochester Telephone Corp. as successor to Rochester Tele-
phone Corporation.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 32
profits in 1995 of $95 or $96 million a substantial number of
unit employees were working a record number of overtime
hours, sufficient to earn double time, which was required after
49 hours in a week. At the same time, the Union’s understand-
ing was that beginning in 1995 the Company’s use of outside
contractors, which was permitted historically under the contract
with certain conditions attached, to be discussed, infra, was
increasing drastically. The union committee understood 250 to
300 contractors had been brought in from around the country to
do unit work, but apparently without any adverse affect on unit
employee regular worktime.
Another factor the union faced at the outset of bargaining
was that out of 600 employees in the unit, 350 to 400 were
pension eligible, with extensive seniority. Thus, pension issues
were of paramount importance to the Union.
Previous negotiations had invariably resulted in negotiated
settlements maintaining the status quo or containing some im-
provements in conditions and benefits. It was also the case in
the past, that when negotiations extended beyond the contract
deadline, the Company had agreed to extend the contract until
the differences were resolved.
B. The Bargaining Leading to Respondent’s Declaration of
Impasse and Unilateral Implementation of Its Last Best Offer
In entering bargaining, the union committee had as its goals,
some type of wage increase, putting some additional contrac-
tual restraint on contract work, improve the pension bands pro-
vided for in the current contract, and to maintain the terms of
retire health care, and of active employee health care.
With respect to wages, the current agreement, expiring Janu-
ary 31, 1996, contained wage progression tables for different
job classification with some of these tables combining a num-
ber of different classifications. Each table contained a present
rate, with 6-month variances between starting employment and
60 months, a first anniversary increase at January 1, 1994, and
a second anniversary increase at January 1, 1995. The majority
of unit employees were probably at the top of their tables.
The expiring contract recognized an existing “plan for Em-
ployees’ Pensions, Disability Benefits and Death Benefits” (the
Pension Plan), which would not suffer any reduction in its
benefits without the consent of the Union. Any claim of dis-
crimination could be submitted to binding arbitration under the
parties’ grievance arbitration article. The plan itself was a de-
fined benefit plan in effect for 40 years established by the
Company to which it alone made periodic contributions. A
letter of intent of the parties dated November 23, 1992, and
attached to the expiring contract, memorialized a negotiated
agreement to implement changes in the Pension Plan. Employ-
ees who retire after the agreement’s ratification, will have a
banding structure utilized in calculating an employee’s pension
benefit. Effective January 1, 1995, each pension band will be
increased by $1. The band represented a sum of money which
was to be assigned to the employee’s occupational classifica-
tion. The letter of intent notes that “this pension benefit will be
based on the employee’s length of service with the Company
and the pension band assigned . . . . The dollar amount for the
appropriate pension band, according to the time of retirement
during the contract period, is multiplied by the employee’s
years and month’s of service. When multiplied further by 12,
the calculated monthly total results in the annual pension bene-
fit amount.” Attached was a table showing the pension bands
for each job classification in the unit on November 23, 1992,
and then on January 1, 1995, with the $1 increase, ranging in
amount from $25.07 for level 1 clerk to a high of $46 for table
1.
Under the existing pension plan, an employee had to have 30
years of service regardless of age, or 55 years of age and 25
years of service to receive a full pension. There were reduced
pensions for employees with 20 years of service at age 50.
Since the institution of the concept of pension bands in the
1992 agreement, the Union had sought to increase the bands by
a percentage or absolute figure, as witness the $1 increase ef-
fective January 1, 1995, and such a demand was made a part of
its proposals for a successor agreement.
The parties’ practice for some years had also provided for
the payment of prepension leave, a sum of money representing
vacation credits which employees could receive once they had
informed the Company of their desire to retire in the near fu-
ture. Employees with 20 years of service received 2 months of
full paid leave. Between 25 and 40 years of service the pay
increased between 3 and 6 months. The 1987 plan agreement
was described in its introduction as a devise to ease the transi-
tion of eligible employees from active employment to retire-
ment by maintaining an employee’s income level for a period
of time while he adjusts to a nonworking status.
As to health insurance, the expiring agreement contained a
memorandum of agreement reciting an agreement effective
February 12, 1984, under which the Company will pay 100
percent of the present monthly single or family premiums for
basic Blue Cross/Blue Shield coverage regardless of the
amount of premium (not including any “rider package” thereto)
in the case of regular employees who hold such policies issued
by named providers through the Rochester Telephone Group.
The Employer would also pay the full cost of any increases in
premiums for such basic coverage for the life of the agreement.
Employees paid for their rider package only. The Employer
also paid for a major medical plan covering each employee.
The Union also maintained a vision and eye care plan which
also provided legal services under a trust fund covering the unit
employees and to which the Company contributed monthly and
which it administers jointly wit the union.
At the commencement of bargaining, the expiring 1992
agreement also provided that unit employees who retired during
its term would receive 100 percent of their basic Blue
Cross/Blue Shield coverage, major medical coverage paid for
by the Company, and reimbursement for the monthly premium
cost of medicare part B. In addition, they also received a yearly
medical reimbursement from the Company of $150 for out-of-
pocket medical expenses. In section 6 of article 23 of the
1992–1996 Agreement, the parties agreed that employees who
retire prior to July 1, 1996, will never have to pay a premium
for their basic health care coverage, where the Company pays
100 percent of the cost. The section notes the Company’s con-
tribution toward basic health care is not committed beyond June
30, 1996, for employees who have not retired.
ROCHESTER TELEPHONE CORP. 33
Current benefits under the expiring contract also included a
basic life insurance plan providing 1 year’s wages to the surviv-
ing spouse of a deceased employee, and a disability plan, which
provided, depending upon years of service, up to 1 full year’s
wages during a disability period as well as a pension triggered
by a permanent disability of an otherwise eligible employee.
In preparation of its bargaining demands, the Union, by and
large, did not seek to model its demands to those provisions
appearing in contracts negotiated by sister C.W.A. locals with
other communication companies located in the Eastern United
States, such as NYNEX and Bell Atlantic. Neither did the Un-
ion direct the Company’s attention to any particular contract
benefit, except in one instance, which will be described infra.
The Union was also aware in the period of bargaining, from
October 1995 to April 1996, that the Company was starting to
deal with competitors, including Time Warner, AT&T and
another company called MDF, who had entered the Rochester
telephone service market following adoption of the Open Mar-
ket Plan.
Early in the bargaining process, sometime between October
and December 1995, the Company presented the Union across
the bargaining table with a document described as a Frontier
Human Resources Bulletin dated October 1, 1995 (the Bulle-
tin). As testified to by McGrath, a member of the Union’s bar-
gaining committee, Daniel Farberman, the Company’s chief
spokesman for bargaining, explained that the Company felt that
the bargaining unit had to be aligned with the rest of the em-
ployees in the Frontier Corporation and the Bulletin set forth
the companywide benefits to which the Union would be ex-
pected to align and which benefits the employees would be
expected to embrace.
The union bargaining committee review of the Bulletin re-
vealed that the Company was seeking major concessions in pre-
existing terms and conditions, including elimination of the pen-
sion plan, reduction of both current employee medical benefits
as well as retiree health care benefits. At the table the Com-
pany Team explained that Frontier had been purchasing other
corporations across the nation and there was a need for all of
the employees of the Corporation to be aligned. A lot of the
newly purchased Companies did not have defined benefit pen-
sion plans, nor did they have medical coverage or coverage
comparable to RTC’s.
At no time during bargaining did the Company assert an in-
ability to pay based on financial hardship as requiring it to take
a certain position on a subject of bargaining.
For the first time in the history of their bargaining relation-
ship, the Company terminated the contract on its expiration at
the end of January 1996, and ceased enforcing the dues deduc-
tion and agency shop provision of the expired agreement.
Also, early in bargaining, at the end of October or early No-
vember 1995, the union committee obtained a copy of the
Company’s plan to counter a strike. It contained provisions to
hire many permanent replacements for striking workers, bring
in all of the subcontractors and drastically increase security. At
this stage of bargaining the Union had said nothing indicating
that it was planning to strike.
Part of the Company’s strike plan which was implemented
after the contract’s expiration, required the workers to return to
their work locations at the conclusion of the workday, and turn
in their company identification badges, keys to the company
trucks, company passes, and then return in the morning on a
daily basis to sign for their reissuance. Thus, employees as-
signed company trucks had to return them to company locations
each evening. Previously, employees were able to keep their
passes and keys and take their company trucks home with them.
In article 23 (sec. 6, par. 2) earlier described, of the existing
agreement, the Company had expressed an intention to estab-
lish a VEBA Trust for purposes of securing health care benefits
for employees who retire after July 1, 1996, the date beyond
which it had not committed itself to contribute toward retiree
health coverage in paragraph 1. Now, early in bargaining for a
successor agreement, the union committee learned from Robert
Grassi, the Company’s senior pension analyst, that it had not
established such a trust. This information caused a reexamina-
tion and change in the Union’s bargaining proposals which it
had been preparing.
Starting with bargaining held on October 3, 1995, by mutual
agreement, the parties held 50 sessions. During the full period
of bargaining a number of written proposals of both sides were
exchanged. The first set of management proposals were sub-
mitted to the union on December 14, 1995. Upon its receipt the
union committee realized that the Company was seeking many,
many concessions which would be major setbacks for their
membership and have long-term adverse affects on them.
Among concepts foreign to the Union’s experience was a pro-
posal to freeze the pension plan, i.e., freeze the benefits avail-
able to retirees, cease any further contributions to the plan and
any further accumulation of benefit arising from increased ser-
vice, and thus also make it impossible for currently ineligible
employees, even those with 19 years of service, to accumulate
sufficient years of service to make them eligible in the future
for any benefit under the plan. Another major change proposed
was the reduction in retiree health care.
Among other significant proposals, management proposed
the elimination of tier payments, meal money, and mileage
payments previously available for employees who reported for
work outside his reporting locality and in another tier or subur-
ban or geographic boundary, and were required to work for 2 or
more hours beyond the end of his tour or when authorized to
use his own vehicle on a work assignments. It also sought
elimination of prepension leave and the establishment of a sec-
ond tier wage and benefits schedule for all new employees
hired following the effective date of the agreement. A number
of the changes proposed were prefaced with language indicat-
ing a desire to unify and standardize employee benefits corpo-
rate wide (among all Frontier Corporation entities and loca-
tions). Thus, company proposal 9 headed Management Pro-
posal: Establish Standard Corporate Benefit and Retirement
Plan read “Management submits this proposal in order to mod-
ify the current provisions of the collective-bargaining agree-
ment to establish a corporate standard benefit and retirement
plan.”
The union committee realized that in evaluating these new
and foreign company proposals it would need a lot of informa-
tion to be supplied by the Company. It would also require the
assistance of the research facilities of the International Union.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 34
The Union’s bargaining team included, in addition to its local
president Robert Flavin and Vice President McGrath, local
members and delegates John Puslowski and Dennis Stratton,
and as its chief spokesman, David Palmer, area representative
for the International Union. Palmer would contact the Interna-
tional to seek information and to evaluate information re-
quested of and supplied by the Company.
Over the course of bargaining, there were a number of issues
and bargaining subjects on which the parties reached tentative
agreement. Up until early February 1996, these agreements
were reduced to writing by the Company, initialed by both
sides, and set aside pending final agreement. After early Feb-
ruary 1996, this practice ceased, and although it appears that at
least two agreements were reached on pending issues, they
were not memorialized. The parties’ explanations of the rea-
sons for this change and whether, indeed, any tentative agree-
ments were reached at all after February, will be discussed,
infra.
Over a period of time, there were also proposals withdrawn
by both parties.
Upon expiration of the old contract, the Union followed its
normal practice of submitting the Company’s last offer to its
membership. Any new agreement would be subject to ratifica-
tion by the membership. In this instance, the offer was soundly
rejected, which, itself, constituted an authorization for the local
Union to ask the International for it to conduct a strike note.
The Local Union never sought such authorization. Instead, it
sought International technical, administrative, and financial
support for a corporate campaign in which it endeavored to
mobilize public and sister union support to convince the Com-
pany to modify its last offer.
The Company’s final offer was submitted on February 29,
1996. In bargaining which took place after that date, the Union
made one counter offer on March 7 and another on April 8, the
last date of bargaining, following which the Company declared
impasse and implemented its final offer.
Under one subject comprising the Company’s final offer, re-
lated to prepension leave, unit employees were given until
April 14, 1996, to elect to retire and retain their prepension
leave under the expiring agreement. Furthermore, after prod-
ding, the Company informed the union negotiating team early
in December 1995, later incorporated in its final proposal of
February 29, 1996, that as to the Company’s commitment to
continue 100-percent payment of retiree’s basic health care
coverage, employees would have to be off the payroll as of
December 29, 1995, and have to use up all their prepension
leave prior to July 1, 1996, in order to be covered by the lan-
guage contained in section 6, paragraph 1 of article 23 of the
expiring agreement guaranteeing the paid medical coverage.
As a consequence of these two company decisions, a large mass
of employees retired December 29, 1995, and another group of
between 50 and 75, retired during the period of January 1,
1996, through the beginning of April 1996.
Turning to some issues which were the subject of bargaining,
and which the Union deemed important, regarding sub-
contracting, the existing contract, in article 3, evidenced the
Company’s intent not to contract out work presently and regu-
larly done by employees for the sole purpose of decreasing
available work for unit employees. In a letter of intent attached
to the contract the Company agreed not to contract out work
presently and regularly done by RTC employees if the affected
departments are currently equipped to perform such work at a
reasonably competitive cost and within the allotted time. The
parties agreed to form a joint committee of equal representation
to review and analyze future decisions to contract work in the
plant department. Line technicians or cable splicers in con-
struction shall receive the opportunity of 10 hours of overtime
when work regularly and presently performed by them is being
contracted out. If, regarding the future, no practical alternative
is submitted, the Company will implement its decision to con-
tract out work in the interests of efficient customer service and
the Union may grieve and arbitrate contracting issues.
The Union felt it needed some protection for its membership.
In one instance in 1995 the Company had eliminated a job title
requiring the incumbents to be placed in other positions. The
Union was also concerned that contracting issues were not be-
ing submitted to the committee and vastly increased contracting
out posed a future threat to the unit jobs. It wanted to bring
back more work and restrict future contracting. In a proposal
submitted January 24, 1996, the Union sought to strengthen
restrictions on company contracting and require immediate
submission to arbitration of disputed company proposed sub-
contracting assignments in nonemergency situations. Work
previously not regularly performed by unit employees was
excluded and timely company use of permitted part-time and
temporary employees was not affected.
In management’s final proposal of February 29, 1996, it re-
jected the Union’s proposal and agreed to retain the current
provisions in the expired agreement.
The Union modified its initial proposal in this area on March
7, seeking less stringent restrictions in a new proposal to
change the letter of intent, prohibiting contracting out unless of
short-term duration (less than 1 month) and employees do not
have the necessary skills and cannot be timely trained and it
would require an extraordinary expense to purchase equipment
and train employees on it and there is an emergency situation
and unit employees working overtime cannot complete the
work in a reasonable time. In another provision the Union
sought to strengthen the joint contracting committee’s consid-
eration of contemplated contracting out matters.
By April 8, with the Company standing pat, the Union with-
draw its contracting proposal and agreed to return to the letter
of intent with some modifications, retaining some of the lan-
guage from its March 7 proposal. The Company implemented,
as part of its final offer, its final position retaining all of the
contracting out provisions of the expired agreement.
On layoffs, another issue the Union considered important,
while the Union proposed no layoffs for the life of the contract,
in its final proposal of February 29, the Company proposed a
jobs bank concept as part of a comprehensive goal to provide
employment security within an environment promoting opera-
tional effectiveness. The Company committed to no layoffs of
any employees at work, or on approved leave of one sort or
another on the effective date of the agreement (a so called se-
cured employment level or SEL). Any employee whose regular
job is eliminated as a result of any applicable provision of the
ROCHESTER TELEPHONE CORP. 35
then current agreement would be protected from layoff under
the jobs program. An employee in the program, could be as-
signed to temporary work inside or, on a voluntary basis, out-
side the unit, but at his last regular rate of pay.
In its March 7, 1996 counterproposal, the Union proposed
adding to the Company’s jobs bank proposal a provision giving
employees in the job bank first preference to fill any job open-
ings within the bargaining unit and prohibiting employee
placement in the jobs bank before that employee has done the
work of temporary employees or contractors so long as he is
qualified.
By April 8, 1996, the Union had agreed, in principle, to a
company counterproposal requiring that any employee in the
jobs bank would have first preference to fill any job openings
within the unit provided he is qualified to do the work. The
Union would have added language that the employee was quali-
fied or could be trained to be qualified within a reasonable pe-
riod of time.
Turning to the issue of the retirement income vehicle for
employees, the existing 401(k) plan, provided for voluntary
employee contributions, and for an increasing percentage match
by the Company, so that effective January 1, 1995, the Com-
pany was contributing a total of 30 percent of each employee’s
contribution up to 6 percent of the employee base compensa-
tion. Two types of investments options were listed for em-
ployee contributions, an interest income account containing an
annual guaranteed rate of return and the other, a specific in-
vestment such as Rochester Telephone common stock. Invest-
ments could be split between the two funds. Distribution by
way lump sum, installment payments or an annuity was avail-
able, without tax penalty, on retirement, death, disability or
other employment termination. This investment vehicle was
separate and apart form the Pension Plan previously described.
Apparently, during the term of the 1992–1996 agreement,
the Company chose as the sole investment vehicle for its own
matching contributions, its own RTC stock, and required this
match to be maintained for 5 years from the date of contribu-
tion.
The Union’s goal in bargaining was to increase company
contributions up to 60 percent of the employee’s contribution,
to increase employee base pay by adding in overtime pay, and
to eliminate the requirement of Company’s matching invest-
ments in its own stock.
In a tentative agreement initialed on February 5, 1996, the
parties agreed to modify the existing 401(k) plan by deleting an
age 21 and 1 year of service eligibility requirement, permitting
employee investments to be made into any one or more of six
investment accounts managed by the Putnam Fund, including a
company stock fund, and including overtime wages in base
compensation for purposes of computing percentage employee
contributions. The Union continued to insist on matching com-
pany investments greater than 30 percent and that it invest its
contributions in vehicles other than company stock. Indeed, the
company position now in bargaining for a successor agreement,
was that it would only guarantee to make an annual .5-percent
contribution of employee pay on behalf of each employee and,
further, to make a matching contribution of 3 percent of the
employees’ first 3 percent contribution of their own pay, but
only for 1996. For years beyond, the Company’s match would
be based on its profitability.
The Company also made an offer in lieu of any wage in-
crease and which was designed to replace article 33, section 1,
paragraphs 1 to 4 dealing with wage rate changes and cost of
living adjustments. The company proposal provided that all
employees covered by this Agreement will be eligible to re-
ceive a compensation bonus to be paid by March 1 of each year
of the agreement, beginning on March 1, 1997. The bonus
percentage, calculated on employees base wage rate, would
vary, between 3 percent for meeting a threshold production,
efficiency and consumer satisfaction goal, to 7.0 percent for
meeting a standard goal, and 12 percent for achieving a premier
goal. The criteria and calculations for achieving these goals
was to be set by the Company. Thus, the language, “This bo-
nus will be paid only if the Corporation meets the performance
measure objectives that it sets for itself each year.” In addition,
the Company offered a 1995 corporate performance bonus in
the amount of $1000 to be paid to employees within 30 days of
ratification. Needless to say, none of these bonuses, when paid
would increase base pay, for example for purpose of calculating
employee contributions to the 401(k) plan or for any other pur-
pose in which base pay may have played a role in determining
employee benefits.
Under the Company’s proposal, the form of the 401(k) plan
it proposed became the sole, continuing retirement investment
and saving vehicle for newly employed unit employee, and the
main such vehicle for employees who, of course, would con-
tinue to have frozen pension accounts maintained for them
under the Company’s plan so long as they had achieved the
minimum years of service required, which had been 20, but
which the Company proposed to lower to 17.
The Union had serious concerns about the Company’s pro-
posal. There were employers at the present time not contribut-
ing to the 401(k) and many who could not afford to do so.
Furthermore, the sole source of retirement funds for many em-
ployees at the Company, at least the portion contributed by the
Company, would be reliant on the value of Company stock
which was then going down. Thus, the employees would have
no guarantee of a retirement plan.
In the end, the Union in its counterproposal, sought to no
avail increasing company matches of 40, 50, and then 60 per-
cent of the employee’s first 6-percent contribution and getting
the Company to invest in vehicles other than company stock.
As noted by Union Vice President McGrath, the company’s
proposals on freezing the pension plan and changing retiree
health benefits were consistent with the Company’s human
resource bulletin presented to the Union in bargaining. The
October 1995 bulletin, at page 13, describes the decision Fron-
tier took to standardize on one system of employee retirement
and savings by choosing the 401(k) plan, the Frontier Group
Employees’ Retirement Savings Plan (ERSP) as the best ap-
proach for the kind of lean and competitive company it in-
tended to be. The article goes on to relate that as of December
31, 1996, defined benefit pension plans sponsored by Frontier
(or any predecessor company and/or operating subsidiaries) for
nonbargaining unit employees will be frozen. The article does
not note, but the elements of collective-bargaining law, permit a
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 36
Company such a Frontier to offer to freeze an existing defined
benefit pension plan and offer its ESRP during bargaining for
the employees in a bargaining unit, such as the RTC employ-
ees, and, in reliance on an alleged valid bargaining impasse, to
unilaterally introduce the ESRP as the sole retirement income
plan for its employees. Such was the course the Company fol-
lowed in the instant proceeding. Furthermore, the company
negotiators, as earlier noted, expressed to the union team, their
intent to introduce an ESRP into the bargaining unit.
It is also interesting to note in this regard that the bulletin
discusses amendments to existing defined benefit pension plans
designed to ease transition to a 401(k) plan as the sole retire-
ment vehicle, referring specifically, at page 14, to amendments
it made to the Rochester Telephone Corporation Management
Plan, retroactive to August 16, 1995, reducing current service
requirements of 30 years, to 27 years, reducing age and service
requirements from age 55 plus 20 years of service, to age 52
plus 17 years, among other changes, and increasing pension
benefit formulas by a factor of 20 percent for all participants
with 5 or more years of service on December 31, 1996. These
same amendments to the Pension Plan covering unit employees,
including like reductions in service and age requirements and a
20-percent increase in pension bands, were included in the
Company’s final offer and later unilaterally implemented on its
declaration of impasse on April 8, 1996.
As to the subject of retiree health care, the Union in its pro-
posal sought to extend the July 1, 1996 date appearing in the
existing contract as the last date for employees to retire and
receive the Company’s guaranteed basic health care coverage
(see art. 23, sec. 6, par. 1), to July 1, 1999. This was the only
change sought by the Union on this subject. The Company, in
its proposal, wanted the retiree health care based on the corpo-
rate plan which meant it would pay 1995 Blue Choice rates
only. Those rates equated to $225 a family, $100 a single per-
son, per month. Out of that sum the retiree would have pay
their own major medical and to pay for his or her spouses’
Medicare Part B. Previously, under the expired agreement the
Company paid for major medical and contributed $28.60 per
month for each member and spouses’ coverage under medicare
Part B, out of a total charge of $46 to $48 per month. The
Company’s offer also withdrew the $150 a month reimburse-
ment to retirees for such out of pocket expenses as eyewear and
prescriptions. And free phone service for retirees was also
withdrawn. The $225, the 1995 premium rate, was offered by
the Company for the life of the successor agreement. Blue
Choice is the less costly HMO plan offered by Blue Cross/Blue
Shield in the Rochester area. This proposal for retirees follows
the Frontier Bulletin, which at page 15, states that, effective
January 1, 1997, for future retirees, company contributions to
retiree health care will be capped at 1995 dollar levels. The
Company’s offer of Blue Choice is also consistent with page 3
of the Frontier Bulletin which discusses the development of Tel
Flex, a plan designed to standardize benefit plan offerings cor-
poratewide, and to be offered beginning January 1, 1996,
which, in the Rochester area, called for the use of the commu-
nity rated Blue Choice or Preferred Care HMO in 1996. Fi-
nally, in discussions at the bargaining table concerning retiree
health care the Company made reference to the Frontier Bulle-
tin.
Tel Flex is described as a cafeteria style plan permitting the
employee to select a personalized benefit package. Under it,
employees are provided with a certain number of benefit dol-
lars, to use as they go shopping for an individualized benefit
program. The dollar allowance, in 1996, would equal 70 per-
cent of the price of Medical Plan Option (Blue Choice in Roch-
ester), 70 percent of Dental Plan 1, 70 percent of the Vision
Plan plus the price of described life insurance, accidental death
and dismemberment insurance and long term disability insur-
ance.
In its final offer of February 29, 1996, the Company, which
had previously insisted on the Tel Flex (even rating) benefits
package for all employees, now offered either the Tel Flex to
all current and new employees, as presented, or to all current
employees the option to remain under the current medical bene-
fits as outlined in the expired agreement (even rating), previ-
ously described as including company payment of 100 percent
of the monthly single or family premiums for basic Blue Cross
and Blue Shield coverage, or to move permanently to the Tel
Flex benefits package as proposed. All new employees would
be offered only Tel Flex.
In discussions during bargaining, the union committee made
clear that retiree health care was a major issue for the Union
and that the Company’s offers in this area posed major ex-
penses for future unit retirees living on fixed incomes which
they would be ill equipped to afford. In essence, the Company
was taking the heart out of the retirees and future retirees.
As to retiree health care, on March 7, 1996, the Union made
a counter offer including a concession, changing from July 1,
1999, to January 1, 1997, the date by which employees could
retire and never have to pay a premium for basic health care
coverage. As to employees who retirees after December 31,
1996, the Company will pay 100 percent of present basic cov-
erage or 100 percent of HMO coverage, depending on coverage
on their date of retirement. The Union’s April 8, 1996 proposal
appears to repeat this offer. The Company rejected it and con-
tinued, without change, to assert its final offer, of paying 100
percent of the cost for basic coverage for those who retiree
prior to December 31, 1996. Beyond that date, the Company’s
contribution to basic health care would confirm with the bene-
fits offered through the RTC benefits package provided to man-
agement—capping company contributions at 1995 dollar levels
and applying the Tel Flex and Blue Choice medical plan option.
Company contributions beyond expiration of a successor
agreement, for employees who have not retired, was specifi-
cally not committed.
Another issue of importance to the Union involved the com-
pany use of temporary employees. The agreement, in section 2
of article 25, limited their use to 6 months in any calendar year,
except they may be utilized up to one to replace a regular em-
ployee on leave of absence or out on disability. The Union
sought to place a cap on utilization of temporary employees,
expressing the view that the Company had been abusing their
use, retaining some for up to 2 years, and going well beyond
their prior use as summer student replacements. Temporaries
ROCHESTER TELEPHONE CORP. 37
received no wage increases or contract benefits. The argument
permitted grievances but no arbitration on the issues.
Initially, the Union sought to restrict their use to 10 percent
of any title. The Company in January 1996, initially sought to
permit their use for up to 3 years. Later, on February 5, the
Company sought a limit of 1 year and 15 percent of a job clas-
sification on their use during October to April, and no restric-
tion May to September.
On March 7, the Union countered with a proposal limiting
their use to 32 percent of outside forces and 30 percent for all
other titles during May to September. On April 8, the Union
changed its proposal to limit temporaries to the percentages it
previously proposed only during May and September, and
placed no limits on their use in June, July, and August. The
Company’s final offer, which it later unilaterally implemented,
remained unchanged from its February 5 proposal.
The Company’s offer of no wage increase, and a nonguaran-
teed compensation bonus, and a 1995 performance bonus, was
a major disappointment for the Union. The union committee
explained to the company committee that its proposal of no
wage increase over a 3-year period was a very radical change
for the union membership to have to accept. The Union pro-
posed a trial program during the life of the agreement to gradu-
ally educate the members to change their thinking as it relates
to a bonus versus a general increase. The Union thus proposed
in its March 7 offer to reduce its proposed annual wage in-
creases to 4, 3-1/2, and 3 percent, which it described as the
same as NYNEX, with the COLA provisions remaining the
same. The Union added it was prepared to discuss an addi-
tional moderate compensation bonus based on the corporation’s
performance measures as a trial of the Company’s approach.
The Union was also willing to discuss a 1995 corporate per-
formance bonus to be paid within 30 days of ratification with
the amount requiring further negotiations. The Union prefaced
its March 7 counterproposal to the Company’s final proposal of
February 29, by noting it was making movement in 21 separate
areas which it specified and ending its preface with the com-
ment that it was also prepared to discuss modifications to these
and other proposals as part of a process of good-faith bargain-
ing.
The Company did not modify its final offer on wages, and on
April 8 the Union submitted a new proposal on wages as part of
a new comprehensive counterproposal, stating it was doing so
even though the Company did not fully respond to its compre-
hensive proposal submitted on March 7. The Union noted it
was requesting discussion and serious consideration of both its
March 7 and April 8, 1996 proposals. The Union retained the
same wage increase demand it had made on March 7. As to a
compensation bonus, whereas previously the Union was only
willing to discuss a moderate one, it now agreed to accept a
company bonus based upon the Company’s threshold, standard
and premier targets. It proposed amounts of $1000 for reaching
all three threshold targets, $1500 for reaching all three standard
targets, and $2000 for reaching all three premier targets. This
differed from the Company’s compensation bonus plan which
proposed paying percentages to be calculated on the employees
base wage rate, varying between 3 percent for meeting Thresh-
old objectives, to 7 percent for meeting standard objectives, and
12 percent for meeting premier objectives, such payments not
being guaranteed but to be paid only if the Corporation meets
the performance measure objectives that it set for itself each
year.
The Union also now proposed a definite $1000 Corporate
Performance Bonus to be paid within 30 days of ratification.
Previously it had only been willing to discuss a 1995 bonus,
with the amount subject to further negotiations. This last pro-
posal adopted the Company’s figure of $1000, but, of course,
overall, the Union still demanded annual wage increases and
COLA’s whereas the Company proposed no such increases.
Regarding prepension leave, which the Company sought to
eliminate, during bargaining, the Company had supplied the
Union with a list of some 300 odd employees who were eligible
for some type of prepension leave and the amounts they would
receive should they retire during the 3 years of a successor
contract, which included a prepension leave clause. The cost
factor provided was in the neighborhood of $4.8 million. Sub-
sequently, after the group of employees retired in December
1995, the figure dropped to $2 or $2.5 million.
As to the pension, the Company’s proposal to freeze the de-
fined benefit pension plan first made on January 22, 1996, not
only would cease the accrual of any additional years of covered
service for employees already vested, with at least 20 years of
service, but it also meant that for those employees, with as
many as 19 years but with fewer than 20 years, required for a
basic pension, their time already served would be lost. As a
result of freezing the pension plan, future monthly pension
benefits of eligible participants would be based on the partici-
pant’s accrued years-of-service and final average compensation
as of December 31, 1996. The Company also informed the
Union that the death benefit portion of the pension plan would
be discontinued. Previously the plan had paid 1 year’s pay to
the surviving spouse or other beneficiary on the death of retiree,
or the present wage on the death of a vested employee.
Also, the disability pension would no longer be in force
when the plan was frozen. Under the disability provision, an
employee out of work for up to a year who was unable to return
to work would be able to receive a pension equivalent to their
normal pension, provided he was otherwise eligible. The bene-
fit of this pension to an employee was that he would not have to
pay for survivors rights, which was paid automatically into the
plan until the employee reached age 65, at which time he could
elect to provide such benefits or not. The Company’s disability
proposal was part of the Tel Flex program it offered. Regard-
ing short-term disability the plan would provide income re-
placement equal to 67 percent of predisability base salary for
90 days. As to long-term disability, the Company would pro-
vide 50 percent up to age 65, or longer if disabled after age 60.
Employees could elect to receive 60 or 70 percent income re-
placement levels by paying an additional premium. I have
previously described the Company’s proposal to decrease eligi-
bility by 3 years, to also decrease age and service requirements
for both a full and an early retirement pension, and to increase
the bands by 20 percent under the frozen pension plan.
The Company also proposed that the amount of life insur-
ance covering each employee under the expiring agreement,
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 38
equal to annual base pay adjusted to the next higher $1000 be
reduced to $10,000.
The Union had early made and then modified certain propos-
als regarding the pension, which, following the Company’s
January 27, 1996 proposal to freeze the pension and to elimi-
nate prepension leave, were never adopted by the Company by
the time the Company made and later reaffirmed its final offer
incorporating, inter alia, the January 27 proposals cited. One
was to change the then requirement under the pension plan that
an employee be 50 years of age with at least 25 years of service
to be eligible for a survivor to receive early retirement benefits.
During the term of the expiring contract, two or three employ-
ees had died before reaching 50 years of age, but with at least
25 years of service, and their surviving spouses were denied
any pension benefits. Another was to change the concept of
feathering as applied to wages when an employee is demoted
because of a physical inability to perform a higher rated job.
The expiring agreement provided for a gradual reduction in
wages to the lower classified job under such circumstances.
The Union in bargaining sought to extend the time frame for
feathering, and the same gradual reduction in bands as applies
to wages for an employee seeking to retire with a pension.
On March 7, 1996, the Union modified its prior proposal on
physical demotions and pension feathering, effective February
1, 1996, now providing 36 months period before employees
with 15 years or more service received the full lower classified
salary on a physical demotion, and a full reduction in their pen-
sion band. By April 8, the Union had withdrawn its last pro-
posal and agreed to accept the current contract language, pro-
viding for a maximum 24-month period for wage feathering for
employees with 15 years of service (and 14 months for em-
ployees with less than 15 years), but was still seeking the
phrase “wages” to be modified to include “pension band.”
With respect to the pension plan, the Company had informed
the Union that the plan had roughly 105 million in assets and
that it had not contributed to the plan for 2 or 3 years because it
was over funded. Nonetheless, according to McGrath, the
Company expressed the view in bargaining that the Union
could not have a settlement unless it was willing to agree to a
freezing of the pension, that the corporation wanted to be
aligned with all of these other employees of the corporation
whether it was here in Rochester or in Minnesota or wherever.
McGrath testified that she didn’t believe it was ever expressed
at any time that it was a question of saving money. Their posi-
tion was that they needed the Union to align with the rest and
embrace this proposal. During these exchanges, as testified to
by McGrath, the Union felt very strongly and expressed the
view at the bargaining table that it had to keep some type of
defined benefit pension plan for its members. The company
proposal for the 401(k) plan certainly was not going to provide
the employees and members with any retirement security in the
future, especially with it being based on company stock. The
only guarantee was a half of percent that the Company was
guaranteeing employees.
In spite of these expression of views by the Union, the union
bargaining committee did consider alternatives to its initial
position insisting on maintenance of the defined benefit pension
plan. Although the committee members lacked the expertise to
evaluate the major change in retirement security the Company
was proposing, the Union had access to pension specialists on
the staff of the International Union and were guided by such
specialists in requesting information from the Company for
evaluation by the International.
By March 1996, on the advise of the International, a cash
balance account for each employee, derived from the value
each employee had in the pension plan, was being raised by the
Committee during bargaining. The Company had provided the
Union for analysis by International experts with a print out
showing the value each employee enjoyed in the pension plan,
without, and then with, the increase in the bands by 20 percent.
Under the union suggestion the pension plan would be con-
verted into a cash balance account for each employee and based
on actuarial figures and projected rates of return, a guaranteed
return of interest would be added to the accounts over the years.
In bargaining over the pension or retirement security issue, the
Union’s local bargaining committee looked to the International
Union for advise, guidelines, and, indeed, approval, since
clearly this issue had national ramifications as other employers
could seek to rely on the Union’s deal with the Company as
setting a precedent for future bargaining with the CWA and its
affiliates.
On March 7, the union counterproposal on pensions still
sought to retain the current pension plan, with a 10-percent
increase in bands effective February 1, 1996. As to the prepen-
sion leave, the Union agreed with its elimination as of Decem-
ber 31, 1996, but it sought to soften the loss with other propos-
als. Employees with 20 years or more of service on January 1,
1997, who retire with a service or early retirement service pen-
sion shall receive the dollar equivalent of present prepension
leave or additional pension benefit during the first year of re-
tirement. Employees with less than 20 years of service on
January 1, 1997, shall receive an additional ½-percent company
contributions into their 401(k). The Union also withdrew its
demand for survivor rights. Finally, the Union noted its will-
ingness to discuss transforming the pension plan into a defined
benefit cash balance account.
At the March 7 meeting Union Spokesperson David Palmer
explained the Union’s concept of converting the pension plan
into individual cash balance accounts. There was some discus-
sion at the table, but both sides agreed that the subject matter
should continue to be discussed between the actuaries and ex-
perts on both sides.
On March 7, the Company continued to assert that its final
offer of February 29 still stood without any modification.
In preparation for the next (and as it turned out, the last)
meeting scheduled for April 8, the union committee engaged in
consultations with International Union officials and had internal
discussions in a serious effort to make major movement, par-
ticularly in the areas of pension and prepension leave but in
some other areas as well. On April 8 the Union presented two
options. One was to keep the current pension plan in place with
a modest increase in pension bands and eliminate prepension
leave. In essence, it was a reiteration of the Union’s March 7
proposal. The other was to establish a new 401(k) plan, freeze
the pension plan, and eliminate prepension leave. Under the
first option, option A, pension bands would be increased by 10
ROCHESTER TELEPHONE CORP. 39
percent. It reiterates the March 7 offer to convert the elimi-
nated prepension leave into a dollar equivalent additional pen-
sion benefit upon retirement to these employees with 20 years
of service, and to add a 1/2-percent contribution into their
401(k) accounts for employees with less than 20 years.
Under option B, for the first time the Union agreed to freeze
the current pension plan, and also agreed to eliminate prepen-
sion leave. Pension bands shall increase by 20 percent effective
immediately upon ratification of a new agreement and all cur-
rent employees will have pension eligibility requirements re-
duced by 3 years. These two changes had already accompanied
the Company’s proposal to freeze the pension, but here they
were a part of more comprehensive union proposal. While the
Union agreed the pension plan would be frozen, it proposed
that vested employees have the option when they retire or leave
the Company of receiving the value of their pension in a lump
sum, and those employees who do not so opt, shall have their
frozen pension benefits adjusted upward annually based on
consumer price index (CPI)
In addition to the foregoing, the Union proposed under op-
tion B that the Company make a guaranteed cash contribution
of 6 percent of the annual income of each employee to a single
401(k) plan for each employee, and that this 1997 contribution
be guaranteed as the minimum annual contribution for each
future year of the employee’s service with the Company. Fu-
ture contributions shall be reviewed annually and shall be cal-
culated to generate an account balance if invested in an average
money market account that would be no less than an amount
sufficient to purchase an annuity substantially equal to the
benefit value of the current pension plan assuming a 10-percent
annual increase in the bands plus the annuity value of any em-
ployee’s currently accrued prepension leave.
Finally, under option B, the Union proposes that employees
may also contribute their own pretax dollars to the single
401(k) plan to which the Company shall contribute a 40-percent
match of company stock under the Putnam Plan up to the first 6
percent of the employee’s wages (including overtime). The
match shall increase to 50 percent in 1997 and 60 percent in
1998. This third component of option B appears to repeat a
separate proposal regarding the 401(k) plan (item 8) which the
Union made as part of its new comprehensive counterproposal
of April 8. In fact, they were duplicative.
McGrath noted that the 6-percent figure was added by hand
under the following circumstances. The International Union
was going to provide the Local Union with a number which it
felt was necessary for the Union to maintain an account for the
employees that would be equal to their pension plan. The un-
ion committee had typed up the proposal (option B) but by the
time they had left the union office to meet the company bar-
gaining team at the hotel to present the proposal the Interna-
tional Union had not contacted them. At the hotel, the commit-
tee was able to make contact by telephone and received the
figure which was then hand inserted into the proposal.
In the period following March 7 the union committee was
acting with a sense of real urgency in an attempt to come up
with an new counterproposal which would meet the Company’s
needs but also satisfy its members needs. The computations
and analysis regarding the retirement security proposal were
being conducted at International Union headquarters.
McGrath acknowledged that the formula proposed regarding
future company contributions to the 401(k) plan appeared to be
very complicated. At the bargaining table, the Union provided
the new comprehensive proposal, the company representatives
received it, look it over, said they had no questions and left the
room.
Concerning health care for employees, I have previously dis-
cussed the Company’s insistence, during bargaining, on pro-
moting consistency corporatewide by proposing a Tel Flex Plan
for employees, and I have explained and described the Com-
pany’s proposal in this area. The existing and expiring Agree-
ment provided, in a letter of intent, for the Company to contrib-
ute increasing amounts each contract year to a Union Health,
Welfare, and Pension Fund for each enrolled employee on the
payroll 31 days or more, starting at $37.50 per month, and in-
creasing by the third year to $41.67 per month.
The Union proposed on January 26, 1996, increasing the
Company’s contributions $2 as of February 1, 1996, and $3 as
of February 1, 1998. On December 14, 1996, the Company had
provided the union team with the Frontier Bulletin and pre-
sented the Tel Flex plan appearing at page 3. In addition, the
Company sought to move to “even rating” in determining com-
pany contributions toward basic Blue Cross and Blue Shield
premiums. In contrast to “community rating” on which present
premiums were based, and which is responsive to community
costs incurred for health care, established by the State Insur-
ance Department, “even rating” is a form of the premium per-
mitted to be set by the insurance carriers for the following year
and which is announced as early as August or September, in
contrast to community rating which is not established until mid-
December. Although even rating can be lower than community
rating, and the carrier will reduce the following year’s premium
to reflect the saving, it is only the employer who benefits since
the reduction, if any, comes off the basic premium, which the
Company paid, and not the rider premium, which was and is
borne by the employee.
By February 29, in its final proposal, the Company, as earlier
noted, offered all employees the option to remain under the
current medical benefits as outlined under the expired Agree-
ment (even rating) or to move permanently to the Tel Flex
benefits package as proposed, with all new employees offered
only Tel Flex. As noted, the even rating would adversely affect
employees who have the full cost of the rider package, and who
would not receive any benefit from a reduction in the premium
from one year to the next because the carrier, in this case Blue
Cross/Blue Shield, applied the reduction to the premium for
basic coverage paid for by the Company.
The Tel Flex plan, as earlier noted, required the employee
who opted for it, as well as all new employees, to pay for major
medical coverage, as well as for dental and vision care. The
Company’s contribution was limited to 70 percent of the Blue
Choice basic ($10,000) life insurance and very limited 90-day
short-term disability limited to 67 percent of base salary and
only 50-percent income replacement for long term, disability to
age 65. For greater disability benefits employees had to pay
out of pocket.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 40
In bargaining, the union committee informed the company
team that the company offers meant a diminution of benefits for
employees that they felt they had to retain. It was asking too
much for the employees to take no wage increase for the next 3
years, give up their pension plan, give up their prepension,
accept only a half of a percent guaranteed in the 401(k), and yet
come up out of pocket to pay for their medical and greater than
minimum life insurance and disability benefits. The Union
pointed out that at present, employees were paying $115 to
$120 per month for their rider package under Blue Cross.
On March 7, the Union sought to retain the existing medical
coverage, with the Company paying 100 percent of basic cov-
erage, and sought an option for new employees to select tradi-
tional coverage and pay the additional premium cost or receive
Blue Choice with extended benefits, with company payment of
100 percent of the monthly premium.
Employees with access to other coverage, may elect to waive
company coverage and receive reimbursement of 50 percent of
the monthly cost of single coverage of Blue Choice with ex-
tended benefits, and retain the right to return to company cov-
erage at their discretion. In adopting this proposal the Union
was aware that under the Company’s Tel Flex Plan, employees
who waived coverage’s and ended up with money left over
from the amount contributed by the Company, could take 50
percent of the individual coverage and have it invested in their
40l(k) plan. This was a cost saving to the Company. This un-
ion proposal provided another cost saving device to the Com-
pany.
By April 8, the Union had agreed to the company proposal to
increase its contributions toward traditional coverage to $43.67
and then $45.67 per month and noted that the parties had
reached a tentative agreement. It continued to seek mainte-
nance’s of current benefits and reiterated its March 7 proposals
regarding health care for present and new employees.
Another issue which ultimately divided the parties concerned
a management proposal for a second-tier wage and benefit
schedule which it retained to the end. The expiring agreement
contained no such schedule and, according to McGrath, the
Union had never faced such a demand before. On December
14, 1995, the Company, as part of its set of proposals, proposed
a second-tier wage and benefit schedule for all new employees
hired following the effective date of the new agreement. On
December 28, the Company provided a wage progression table
for second-tier employees and listed 14 separate second-tier
employee benefits, running from Tel Flex and Managed Health
Care through the 401(k) plan and a change in the holiday
schedule.
The wage schedules provided excluded craft titles, retained
the existing 60-month progression divided into 10 6-month
periods, but reduced the wages drastically. Typically, the
common top rate proposed for seven titles, running from C.O.
Installer to Telecom Specialist was $598.50 after 60 months,
down from $855. Later on January 26, 1996, the Company
proposed extending all current wage progression tables from 60
to 96 months (8 years) with no change in the current top craft
wage structure. The proposal also sought to change the existing
regular clerical workweek from 37-1/2 to 40 hours. This
change affected some 150 to 200 clerical titles. Some of these
titles, such as repair service clerks who take customer service
calls, work a great deal of overtime, which heretofore was
earned at time and a half after 37-1/2 hours per week. By Janu-
ary 28, 1996, the Company reduced the start rate for clerical
titles from $401 to $225, and reducing all subsequent rates
except the final rate, which remained at $559.50. In its Final
Proposal of February 29, 1996, this final rate was raised to
$562. The reductions totaled 25 percent. The previous top rate
was $749.50 a week. The Company also finally reduced the
wage table for crafts from 96 to 84 months. At no time under
the Company’s proposal, would the second-tier employees
achieve the same wage schedule as existing employees.
The union negotiators expressed concern at the bargaining
table that the reductions were too drastic, the Company would
not be able to hire qualified people at these wage rates and
there would be a large turnover within the bargaining unit, as
there was in the other existing unit with a lower wage scale.
There would also be real morale problems which would work
against the Company. In support of its second-tier proposal the
Company had noted that current wages were not competitive,
but provided examples of salaries in outside clerical jobs which
the Union discounted as not being comparable such as CVS
drugstore cashiers and clericals at a Baptist Home.
The change in holidays proposed by the Company for new
employees, was a reduction of the current 11 to 6. This pro-
posal conformed to the Frontier Corporation Paid Time Off
Program, or PTO, which Frontier announced it had elected to
adopt, corporate wide, effective January 1, 1996, at page 19 of
the bulletin. Under it, the Company recognized paid time off
for a core of six significant national holidays, New Year’s Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. All preexisting vacation, personal,
sick and/or “CTO” programs would be terminated, and em-
ployees, with differing ranges of services, would receive a sin-
gle “bucket” of days (including the six core holidays) that can
be used for whatever reason varying between 19 for employees
with less than 5 years of service, to 34 days for those with 25
years on January 1, 1996. New hires would began to accrue
PTO with the first full pay period, but could not take any
scheduled PTO time until completing 6 months of service.
The Union sought to counter these wage schedule proposals
for new hires on March 7 by offering to increase clerical tables
by 12 months and craft tables by 16 months. In doing so, the
Union was addressing the company concern for some overtime
wage relief.
Regarding equalization of assigned overtime, the expiring
agreement contained a commitment by the Company, insofar as
practicable, to decide overtime opportunities as equally as is
reasonably possible among the employees in the group in-
volved who are qualified to do the work. Over the term of the
agreement employees had complained to the Union about com-
pany failure to equalize overtime and that they were due
money. During bargaining, each side formed a subcommittee
to deal with the issue. Various addendums had been agreed to
over the term of the contract, and while the Union sought to
include them in the new agreement, the Company sought to
change certain elements of the overtime agreement. Some of
ROCHESTER TELEPHONE CORP. 41
these the union opposed. Among other issues outstanding, was
the amount of the Company’s liability.
In its final proposal of February 29, the Company submitted
a Memorandum of Understanding Overtime Administration.
Among other changes proposed, by this memo the Company
sought to eliminate the current requirement to equalize between
East/West Metro and East/West Suburban areas for Tel Com
Specs (Specialists), offered to pay $69,247.94 among affected
employees in full settlement of any and all past claims and
permitted equalization to a spread of hours of 50 in a location
and 75 between locations among construction line and colele
groups in metro and suburban locations. In another change
proposed under this memo, John Pulaskie, a member of the
union bargaining committee, would have his overtime hours
missed during 95/96 collective-bargaining negotiations as a
result of his participation excluded from the overtime equaliza-
tion process. This decision could be grieved but not arbitrated.
The Union never agreed to all of the terms itemized in the
memo and it was imposed when the Company implemented its
final offer.
On March 7, the Union offered changes in five of the nine
paragraphs comprising the Company’s memorandum, finding
acceptable four of them, but concluding that there was a sig-
nificant cost in terms of loss of overtime to groups of employ-
ees it represented and to one in particular, Pulaskie, who had
and was continuing to participate in the negotiations. The Un-
ion also proposed that an addendum be adopted to resolve a
series of issues involving equalization of overtime for employ-
ees in frame and switch classification in a number of different
locations. The Union spelled this out in a page 3 addendum to
its March 7 counterproposal. The Company apparently never
addressed this new addendum and failed to offer any counter-
proposals to the Union’s proposed resolution of the outstanding
overtime equalization issues. The Union deemed those over-
time issues very significant to its membership.
As to another issue, payment of doubletime, the current
agreement provided for doubletime payment to start after 49
hours worked in a week. The Company on January 26, pro-
posed its elimination, maintained that position in its final offer,
made no counter to the Union’s counter of March 7 to pay dou-
bletime pay after 50 hours, and ultimately implemented this
change. The Union had requested data from the Company, its
review of which led it to conclude that 60 percent of overtime
worked by unit employees reached double-time figures.
The Company also proposed to modify existing provisions of
the agreement to permit more flexible scheduling for telecom-
munication specialists. Previously none of them had regular
work schedules including Sunday. Such a voluntary work as-
signment was compensated at double-time pay under article 13.
The Company proposed establishing a Sunday to Thursday
work schedule with 24 employees scheduled on a rotating ba-
sis, each Sunday to Thursday schedule to be followed by a
Tuesday to Saturday one, and with Sunday work paid at time
and a half. On March 7 the Union accepted this proposal but
proposed the Sunday hours be counted toward the 49 needed to
achieve double-time pay and to divide such overtime opportu-
nity equally among employees in the group involved. No com-
pany counterproposal was received and the Company’s Sunday
through Thursday work schedule as it originally proposed was
unilaterally adopted on implementation.
Some other company proposals were ultimately adopted by
the Union by March 7, 1996, and thus, could be said to consti-
tute tentative agreements pending a final overall agreement,
even though they were not memorialized, initiated and set
aside. These included such subjects as separation allowances,
where the Union withdraw a proposal for a lump sum in addi-
tion to separation pay; meal allowances, where the Union with-
drew a proposal to add 50 cents and provide for employees
brought in early and finally agreed to such allowances to be
paid to employees after 4 hours beyond their duty tour, an in-
crease from the 2 hours the Agreement stipulated. A third such
subject involved a company proposal to establish a separate air
pressure work group. It would have its own separate vacation,
overtime and work schedule and be separated from the rest of
the telecommunications specialists. They would have better
vacation selections, better work schedule and be able to con-
tinue to work the overtime of the rest of the Telecom Special-
ists. This proposal and preliminary discussions had predated
negotiations. In making this proposal on February 29 in its
final offer the Company stated its understanding that agreement
had been reached. The Union had advised it was in agreement
on the concept but still had to deal with some member concerns
about separating out and favoring a work group which included
some junior employees. By March 7, the Union noted in its
counterproposal that it had accepted the company proposal.
As for discussions held at the bargaining table, during the
later stages of negotiations, at a meeting held on February 26,
Mickey Ash, an area director from the International Union,
substituted as main union spokesman for David Palmer, who
was absent. On this occasion, Ash presented a union proposal
entitled Union Package No. 1. He told the company team the
committee had met and felt it had to put packages together and
were going to present Package No. 1 to see if they could bring
things into settlement. Ash explained there were two more
packages the Union would be presenting after they got through
Package No.1. Ash also advised the Company that Robert
Patrician (the Union’s pension expert) needed the Company’s
figures on prepension leave as well as its subcontracting prac-
tices. It included a request for copies of existing subcontracts.
Package No. 1 referred to keeping the existing pension plan,
increasing pension bands by 10 percent, transforming the pre-
pension leave into a pension bonus, at an estimated cost of
$480,000 per year, and the need to protect those currently eligi-
ble. It also referred to physical reductions, i.e., transfers be-
cause of physical reasons to a job having a lower schedule, not
to be fully effective until 4 years had elapsed, and to survivor
rights which should be effective without age restrictions (the
reference here in all probability is to elimination of the age 50
requirement, previously discussed as a union goal in bargain-
ing).
In the one-page submission the Union also noted its agree-
ment to the Company’s air pressure group proposal, 40 hours
workweek for clericals and to new Sunday to Thursday work
schedule, but adding the Union’s condition that such Sunday
work hours count toward the 49 currently required to receive
double time pay.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 42
At the meeting Ash also asked for information about health
care, in particular the cost of Blue Cross and major medical for
the past 3 to 4 years, and Union President Flavin sought infor-
mation about contractors. In response to a question from Com-
pany Spokesman Farberman, Ash clarified that as to prepension
leave, the Union wanted the dollar value of prepension leave to
which employees were then entitled after 20 years of employ-
ment. The Union also sought information about company use
of temporary employees, which was required to be supplied
under the agreement, a topic also previously discussed herein.
In response to a question from Farberman as to how the Un-
ion’s proposed pension bonus would work, the union commit-
tee said the accrued prepension leave could be paid as a buy out
or it could be part of a cash balance account to which each in-
dividual employee’s interests in the pension plan could be con-
verted. Ash also confirmed that only employees with 20 years’
service would be eligible. On a further inquiry from Farber-
man, Ash explained that after the buyout, the prepension leave
would be terminated as an employee benefit. Flavin noted that
the savings to the Company from its elimination would total
$4.5 million. Robert Heftka on the company team disputed that
figure, noting that as a result of yearend retirements that figure
was now down to $2.5 million. And Farberman noted that
$480,000 was set aside each year by the Company to pay the
prepension expense. This accords with the figure used by the
Union as the one time cost of transforming prepension leave
into a pension bonus.
John Tassone of the Company’s bargaining team, asked how
the Union could agree to the elimination of prepension leave if
there was going to be a payout. The Union responded that un-
der its proposal such leave was being capped so that no one
would accrue future leave.
At this February 26 meeting, the Union referred to a letter to
the Company from David Palmer requesting information re-
garding the contractors the Company was using to perform unit
work. Farberman acknowledged having the letter at the ses-
sion, but suggested it referred to union interest in grieving con-
tract violations, while Ash responded the letter and information
it sought was related to union formulation of its contract work
proposal which was being prepared. Farberman agreed to pro-
vide the information, and later did so in a massive submission
to the Union on March 20, 1996.
McGrath explained in preparations for the February 26 meet-
ing, the union committee believed that the Company was sin-
cere in its desire to freeze the pension plan. Then, at a meeting
the union committee held with Ash a couple of days before
February 26, Ash advised that he had a conversation with Far-
berman at which he was informed that the pension issue was
going to go away and that they needed operational concessions
from the Union, such as the 40-hour workweek, the Sunday
work schedule, elimination of doubletime and the pension was
not going to be an issue in order to reach agreement. As a re-
sult, although there was some dissension among participants, a
consensus was reached that the Union’s strategy for the Febru-
ary 26 meeting would be to place the pension and prepension
issues at the top of one package, and if they could be resolved,
then to go on to those operational issues in which Farberman
had said the Company needed relief, some of the union conces-
sions regarding which would be placed at the bottom of the
same package.
After a company caucus, Farberman reported that Robert
Grassi, the Company’s senior pension analyst, was providing
information to Union Analyst Patrician related to the pension
issue. The Union also questioned the accuracy of information
the Company had supplied about the use of temporaries and
Farberman acknowledged it has been supplied hastily. As to
use of contractors, Flavin clarified that the Union was seeking
names, rates of pay, and job titles but when he asked if the in-
formation would be supplied, he was ignored. In this discus-
sion Flavin referred to the Company’s PR man referring to over
350 contractors doing work in anticipation of a strike and Far-
berman denied that the individual, Simonetti, spoke for him.
Regarding the pension issue, the Company indicated it could
add a couple of percentage points to its proposal to increase the
bands, by 20 percent but they still needed to get from the union
committee its position on the pension, whether it was receptive
to the Company’s proposal to freeze the pension or was it the
Union’s position there could be no settlement without the pen-
sion plan. Farberman here referred to a statement Patrician had
made to the company committee that the Union was never go-
ing to move on the pension plan. Patrician had come up from
Washington to Rochester on either February 22 or 23 at the
Union’s request to meet with the Company’s pension people, in
all likelihood including Grassi, to get data from them and have
discussions in regard to the pension plan, its cost factors and
related data. Later testimony established that he and Palmer
attended an informal luncheon with company representatives a
few days before February 26 when a scheduled bargaining ses-
sion was canceled by the Union. Flavin responded to Farber-
man’s comments by denying that the Union’s bargaining com-
mittee had ever made that statement. Ash said that he would
write the question down, that he felt the Company was asking
them a question, a seeming evasion.
According to McGrath, Farberman now noted that at the in-
formal luncheon attended by Patrician and Palmer, Palmer had
made an emphatic gesture of hitting the wall while stating that
the Union would never give up the pension. Farberman also
mentioned that at the informal meeting, Palmer had raised the
option of a cash balance account, previously described. Flavin
asked whether Palmer had taken it further in their discussions at
that private meeting. As of February 26, the Union had not
placed a cash balance proposal on the table.
McGrath confirmed that up to this point in bargaining—late
February 1996—it was the Union’s position to try and maintain
the defined benefit pension plan. As stated by McGrath, “We
just wanted a plan that would keep the members whole. If it
had to be the cash balance account with a guaranteed return on
it, to make the employees whole, so that they would have the
same value as the pension, we had the protection . . . . ” (Tr.
429–430.)
Also, at this February 26 meeting Farberman is quoted by
McGrath as stating that the pension issue was not an economic
issue for the Company, that they had to be focused and be
ROCHESTER TELEPHONE CORP. 43
aligned.2 Farberman also said that the Company would respond
to the Union’s February 26, 1996 single-page proposal either
the next day or on Wednesday (February 28), in writing.
The meeting ended without union packages 2 and 3 being
presented. They were later incorporated in the union counter-
proposal offered on March 7.
At the meeting of February 29, the Company presented
Management’s final proposal, stating that they were doing so as
they felt that there was no movement on the Union side. Far-
berman kept referring to the comments by Patrician and Palmer
that the Union would not move on pension, that there was no
way it would give up the freezing of the pension plan. The
union committee responded that it had never taken that position
and it was still looking at proposals and still making movement.
The Company also expressed dismay at the Union’s adver-
tisements which had started to run in the community. Flavin
responded that the Company’s bargaining committee was in its
present posture because Carr, CEO of RTC, was upset over the
Union’s ads, and the committee was just out to hardline them.
As soon as multiple copies of the Company’s final proposal
was handed over, the Union asked for a caucus. When the
Company asked if they were going to take it out of the room
Palmer said no, we would leave it there. The union committee,
now again led by Palmer, went to their caucus now to talk and
meet with Ash, who had remained there. According to
McGrath, the union committee was shocked, because Ash had
just told them that the night before Farberman had informed
him the Company would not make a final proposal at this meet-
ing.
Ash told them in the caucus room he was as shocked as they
were, to go get the proposal, review it and come back with it.
The committee returned to the bargaining room and discussed
the proposal across the table.
Palmer asked why the Union was getting this final proposal
when Farberman had told Ash they were going to get the
brother of the final proposal. Farberman responded that since
the Union was not embracing their issues, therefore they were
putting the final proposal on the table that the Union had to
accept or else. Farberman noted that they had never seen union
packages 2 or 3 and therefore the Union had not moved enough
to embrace their total package. The union committee informed
the Company that they were still looking at the Company’s
pension package, prepension package, their whole major issues,
and they were still trying to come to a settlement. Flavin, in
particular, denied that the union committee had ever said that
they would not bargain on pension. Flavin also suggested that
Patrician still needed to talk to Grassi and they needed to work
together on the cash (balance) fund.
As to the Company’s prior mention of adding some percent-
ages to the 20-percent increase in pension bands the final offer
proposed, Farberman explained its absence from their final
proposal by stating that they felt the Union was not moving on
their five major issues and, therefore, they just did not add any
more to the 20 percent. This reference to five major issues by

2 The transcript reference to “alarmed” appearing at p. 431, L. 12, is
ordered changed to “aligned” to accord with the actual language used
by McGrath in attributing the statement to Farberman.
Farberman is subsequently repeated orally, and in writing a
number of times and becomes a leitmotif of the major differ-
ences in bargaining position between the Company and the
Union which, the Company claimed, characterized their respec-
tive positions as the Company, more than a month later, de-
clares, an impasse in bargaining and unilaterally implements
the terms of its final offer. The five subject areas are pension,
including 401(k), prepension, employee wages, health care for
employees, and for retirees. While the Union agreed that these
issues were crucial from the Company’s viewpoint for resolu-
tion on its terms as a basis for its entering a successor collec-
tive-bargaining agreement, it also saw these issues as signifi-
cant but noted that there were others as well, such as subcon-
tracting, second tier wages and benefits and elimination of tier,
meal money, and mileage payments, and overtime pay and
equalization.
At this Thursday, February 29 session, Farberman also in-
formed the union committee that he had a letter to the Union in
which the Company was setting a deadline of Tuesday, March
5, to respond to its final proposal. When Palmer asked what if
the Union were to call a membership meeting for Thursday,
Farberman responded that if the Union needed to do that, they
would consider that.
The union committee spent the whole weekend following
February 29 working on the Company’s final proposal and
trying to come up with a counterproposal. On Monday, March
4, Flavin telephoned Farberman regarding questions the Union
had on the Company’s disability proposal. All union commit-
tee members and three company members, Farberman, Heftka,
and Gail Noyes, participated through a speakerphone. The
questions related to what benefits employees retained under the
Company’s proposal if they opted to retain current long-term
disability benefits. The Company got back to the union com-
mittee the same day, by speakerphone, with answers to some of
the questions, but could not respond on one item the Union
raised, as to what happened on the 91st day under the long-term
disability plan when employees had already received 67 percent
of base salary for 90 days under the proposed short-term dis-
ability program. Flavin also informed Farberman that the union
committee was spending the weekend at the union offices on
the final proposal, had gotten their lawyers involved, and were
waiting for a response from them on the legality of the com-
pany proposal to deduct workmen’s compensation benefits
from disability payments.
As noted earlier, the Union submitted a counterproposal in
response to the management’s final proposal on March 7. In a
preliminary paragraph the Union recites it was making move-
ment in over 29 discreet subject areas. Palmer read through the
proposals, there followed some discussion, and then the Com-
pany caucused for about 3 hours. It will be recalled that in the
face of the Company’s final proposal the union demands in-
cluded annual percentage wage increases and possible compen-
sation and performance bonuses, 100-percent company cover-
age of basic health care for retirees after December 31, 1996,
100-percent coverage of new employees’ Blue Choice monthly
premium, present employee retention of current medical cover-
age, company match up to the first 6 percent of an employee’s
base wage contributed to the 401(k) plan, retention of the cur-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 44
rent pension plan and adding the dollar equivalent of a discon-
tinued prepension leave to the pension for employees with at
least 20 years of service and 1/2 percent into their 401(k) for
employees with less service.
After the caucus, the Company responded to union questions
relating to company contributions to its single 401(k) plan as
explained at page 17 of its Frontier Bulletin. The Union sought
clarification as to statements at page 17 that indicated the Com-
pany would have the discretion to raise or lower matching con-
tributions to the plan beyond 1996.
A portion of company minutes of the March 7 session were
received in evidence and form the basis for what follows. Far-
berman responded that the company offer was not the benefit
book (otherwise described at the Frontier Bulletin of October
1995). Farberman recited the company offer on 401(k) as .5-
percent contribution to all employees and 100-percent match,
dollar for dollar on the first 3 percent of earnings for 1996, but
that match could slide up or down in future years depending on
the profitability of the corporation. When questioned by
Palmer about the Company’s desire to achieve parity and the
book’s reference to the reservation to senior management of the
right to change, Farberman again noted the 401(k) offer was
what it was, the Union was not being asked to sign the corpo-
rate benefit book and there was no proposal permitting officers
to change the 401(k). Farberman did acknowledge the Com-
pany wanted alignment and continued to seek it.
Farberman now stated the company team assumed the Union
was rejecting their February 29 proposal. Flavin responded that
you expected a counterproposal and we gave you one. When
Farberman’s statement that the February 29 proposal remained
their final offer, and they had no more movement on that issue
was met by Flavin’s inquiry whether he was refusing to bargain
any more, Farberman replied, in typical fashion, no, I will sit
here and discuss any proposal that will bring you closer to our
final offer so that you can embrace it. Farberman repeated that
this was their last and final proposal and Flavin asked to con-
tinue to bargain on Monday (March 11), so that the company
team could ask the union team questions on its proposal.
At this point, Farberman stated he wanted to give the Union
an opportunity to have a discussion in order to embrace the
Company’s proposal. He asked, have you rejected based on
clarifications or are you willing to accept our 401(k)? Flavin
replied, only in a total package. Later, during his cross-
examination, Farberman placed reliance on Flavin’s statements
made at the March 7 bargaining session as warranting his con-
clusion that the Union by the end of February was unwilling to
enter any further tentative agreements pending a final overall
agreement and justified the Company in not preparing any fur-
ther such agreements. It is evident that Farberman’s reliance is
misplaced and he cannot be credited on this conflict. Flavin’s
comments here were limited to only one bargaining subject, the
401(k) plan, and even as to that subject Flavin was not accept-
ing the proposal at this time but was willing to consider the
Company’s 401(k) proposal and perhaps agree to it so long as
all other terms and conditions of a successor agreement had
been resolved. The bargaining notes report of Flavin’s com-
ment is consistent with McGrath’s independent testimony, that
Flavin stated the 401(k) would be part of a total package when
the parties came to an agreement.
As to future meetings, McGrath testified that while the
Company continually stated they felt further meetings would be
fruitless, that the Union was not embracing their proposal, the
Union pointed out that it had just made a counterproposal
which had major, major moves, that it included for the first
time an indication of surrendering or giving up on the pension
plan. This reference was surely to the union proposal in para-
graph 20 expressing a willingness to discuss transforming the
pension plan into a defined benefit cash balance account. The
Union understood, but did not express in its proposal that the
adoption of a cash balance account would result in a freezing of
the pension plan. That, as a result, the Union was coming more
in line with the company proposals. Flavin also noted that the
Union was giving up prepension (but in an offer which, inter
alia, added the dollar equivalent of such leave to the pension
benefit for 20 years vested employees).
The Union said there was a membership meeting coming up
and they would call when ready to meet again. The Company
said it had no further questions, and Farberman urged the Union
that if it had any further movement to make to put it on the
table. Farberman noted that the Union had not addressed the
major issues that had been pointed out to it, and, therefore, it
should take the Company’s final offer and change the date to
March 7, 1996. The Union replied it had just provided a pro-
posal, that it would continue to look, and if it could make modi-
fications, they would be made. In particular as to the pension
plan, when Farberman again threw up Patrician’s and Palmer’s
earlier comments, Flavin again denied that the Union’s bargain-
ing committee had ever said it would never agree to a freezing
of the pension plan and added “never say never.”
After a caucus asked for by the Union, Palmer reported that
the union committee had a conference call scheduled for the
next day with Pierce and Bahr (Jan Pierce, vice president of
CWA and head of its District 1 for CWA, and Morton Bahr,
president of CWA, the International Union). When Farberman
asked where do we go from here, Palmer replied he wouldn’t
know the answer until the conference call the next day with the
higher-ups, that the committee needed direction from them, and
then they would get back to the Company.
Before concluding, Farberman asked if the Union would be
taking the Company’s final offer to its membership. Flavin
said this was the Union’s business and to stay out of it.
The Union held a ratification meeting of its membership on
March 13 at which there was almost a unanimous vote to reject
the Company’s final offer.
The next bargaining session was held on March 18 with the
same bargaining teams in attendance. The Union scheduled
this session to make sure the Company understood the members
had rejected its final offer and to see if the parties couldn’t
embrace each other’s proposals and achieve a settlement. Far-
berman said the company committee was there at the request of
the Union and it was the Company’s hope that the Union was
there to accept their final proposal. He was willing to entertain
any discussion that would help the Union embrace their pro-
posal. Farberman said the Company was not going to be modi-
fying anything. Flavin responded that the Union wanted to
ROCHESTER TELEPHONE CORP. 45
bargain. Farberman stated that he felt the parties were dead-
locked, and the meetings were fruitless unless the Union was
willing to move to the Company’s final proposal. Farberman
also used the term impasse to describe the parties’ positions.
The union side indicated they were still looking at the Com-
pany’s proposal and looking to see if there was any movement
left on their side. Flavin noted that the Union was still working
on another package and was looking to try and address the con-
cerns of the Company. When Farberman asked if that proposal
or package would embrace management’s final proposal, Fla-
vin replied we were still working on it and we didn’t know.
Farberman repeated his statements about the meetings now
being fruitless unless the Union moved to the Company’s posi-
tion, again referred to the national union representatives telling
him the Union would never give up the pension plan and there-
fore he did not think we were making any progress, and we
were deadlocked, and at impasse. If the Union did not accept
the Company’s final proposal, the Company would be looking
to impose conditions of employment on its members. Flavin
denied the parties were at impasse, he felt there was still
movement to be made and we should continue to meet.
Palmer noted the Company had not moved from day one on
the major issues and that the Union was trying to embrace their
proposal, and was preparing another proposal. With respect to
Palmer’s initial comments the record reflects that on February
28, March 27, and April 10, 1996, the Union filed four unfair
labor practice charges against the Company. The first, in Case
3–CA–19917 alleged that the Company violated Section 8(a)(1)
and (5) of the Act by ignoring the provisions of the expired
contract governing the contracting out of work for the purpose
of intimidating the Union to accept the Company’s concession-
ary demands at the bargaining table. The second, in Case 3–
CA–19972, alleged violation of Section 8(a)(1) and (5) of the
Act by the Company by failing to negotiate in good faith and
engaging in surface bargaining. The third, filed on April 10, in
Case 3–CA20004–1 alleges a violation of Section 8(a)(1) and
(5) of the Act by the Company by continually refusing to pro-
vide information necessary and relevant to collective bargain-
ing. The fourth, filed on April 10 in Case 3–CA–20004–2, on
the basis of which the instant complaint issued, alleges that
since April 8, 1996, the Company has violated Section 8(a)(1)
and (5) of the Act, by unlawfully declaring a bargaining im-
passe and implementing unilateral changes in the terms and
conditions of employment of RTC employees.
On June 28, Sandra Dunbar, the Acting Regional Director of
Region 3, issued a letter to David Mintz, counsel for the Union,
dismissing all four of the charges, except a portion of the
charge in Case 3–CA–20004–1, on which she determined to
issue complaint. Acting Director Dunbar found insufficient
evidence to support the allegations in the charges on which she
refused to issue complaint. In particular, in Case 3–CA–19972,
she found, inter alia, that, “while the employer stood firm on
several proposals, including prepension leave, retiree health-
care, wages, pension plan and employee health care, the inves-
tigation revealed that the Employer did not engage in bad faith
or surface bargaining, but, rather, in hard bargaining. Lucky 7
Limousine, 312 NLRB 770 (1993); Larsdale, Inc., 310 NLRB
1317 (1993).” On July 11, 1996, in a 55-page submission to
the office of the General Counsel, Union Attorney Mintz filed
an appeal seeking a reversal of the acting Regional Director and
a direction that complaints be issued on each of the dismissed
charges. By letter dated November 29, 1996, addressed to at-
torney Mintz, Fred Feinstein, General Counsel, by Yvonne T.
Dixon, drector of the Office of Appeals, ruled, sustaining the
appeal in part and denying it in part. He concluded that the
Employer’s April 8, 1996 declaration of impasse and imple-
mentation of its last offer raised 8(a)(1) and (5) issues warrant-
ing Board determination based on record testimony developed
during a hearing before an administrative law judge. However,
the allegations in the three other charges were denied substan-
tially for the reasons set forth in the acting Regional Director’s
letter of June 28. Thus, after engaging in an independent re-
view, the General Counsel affirmed the acting Regional Direc-
tor’s dismissal of the surface bargaining charge, among others.
With regard to that portion of the Union’s March 25, 1996 let-
ter requesting information about sales discussions regarding the
sale of RTC, the request which the Company had refused to
honor and which formed the basis for the Acting Director’s
initial determination to issue complaint, the General Counsel
noted that, as a result of the Employer having subsequently
advised the Union that no sales discussions had taken place,
this issue was rendered moot.
As a result of the foregoing determinations by the Office of
Appeals, counsel for the General Counsel has been foreclosed
from arguing in this proceeding, that the Company’s determina-
tion not to deviate from fixed positions taken during the course
of bargaining, among other conduct, could form a basis for
claiming an unlawful premature declaration of impasse. The
counsel for the General Counsel nonetheless argues that such
conduct may be examined in the course of weighing the bona
fides of the Company’s conduct alleged as violative of the Act.
This argument shall be reviewed infra.
Following a caucus called by the Union at the session on
March 18, Palmer reported a belief that the parties were not that
far apart on the Union’s proposal for contracting out work and
on the employment security language. On contracting out, the
Union continued to seek a minimum 60-day advance notice of
company intent to contract and that all such issues he brought
to the joint bargaining committee. Here, McGrath recalled
Farberman noting that both sides were close on the contracting
out work language, and as long as there was a word here or
there being changed without changing the content or intent they
were getting close, but if we’re that close, accept the Com-
pany’s proposal. On employment security and operational
effectiveness (the institution of a jobs bank program to avoid
layoffs), while Farberman noted the parties were close, he sug-
gested laying both proposals side by side, and if they were the
same, then the parties had agreement. When Flavin asked if the
Union had to accept the Company’s proposal verbatim, Far-
berman didn’t reply.
Farberman, while acknowledging that the union committee
were honest people and had worked hard, exclaimed there was
no further place to go, and the Union had to accept their final
offer.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 46
At this March 18 session, the Union made a further request
for information, comprising the cost savings to the Company if
the Union embraced its total final package.
Farberman again noted there was no flexibility on manage-
ment’s side. There was absolutely no movement from their
final proposal. He felt that the memberships’ vote reaffirmed
the Union’s rejection of the proposal. The Company was will-
ing to continue to bargain if the Union would embrace the
Company’s final proposal. The union side responded that they
were working on a counterproposal and wanted to meet again.
Farberman repeated that the Union’s counterproposal needed to
embrace all of the proposals in the Company’s final package.
Farberman asked if the Union’s counterproposal would include
the 20 percent increase in pension bands and a freeze in the
pension. The Union responded they were still working on their
proposal.
By letter dated March 19, Farberman provided to Palmer re-
sponses to questions asked of management, noting that the
submission completed the Union’s request for information
made at the meeting of March 18. In a 2-page attachment, the
Company responded to the inquiry as to savings from adoption
of its final package, listing with respect to each of the thirteen
economic proposals contained in its final package, the savings
to the Company from adoption of the package. In some in-
stances, the Company noted that it had already provided certain
information as to its costs through 1995, and provided it again,
but that savings for future years could not be readily deter-
mined as they were subject to the number of additional hirings,
how long employees remain on short term, and enter long-term
disability, and whether the Company met its economic objec-
tives.
By letter dated March 20, directed to John Tassone, RTC’s
director of human resources and operations, Flavin requested a
resumption of bargaining on March 25. He noted additional
modifications by the Union on Contracting of Work, Employ-
ment Security and Operational Effectiveness and the Sunday
and Thursday schedule which should lead to agreement. With
respect to the pension 401(k) proposals, in particular the Com-
pany’s comparative schedules and interest rate assumptions, the
Union posed a series of questions. Flavin asked the Company
to compute, separately, its costs of funding over 30 years its
401(k), and the pension plan, for new employees having certain
annual earnings and making a certain contribution at an interest
rate of 7 percent, and the dollars available for the hypothetical
employee on retirement under both investment vehicles.
Flavin went on to provide the Union’s own figures, showing
that even with the Company’s 12-percent interest rate assump-
tion, the hypothetical employee retiring after 30 years of ser-
vice would enjoy a significantly greater return on the moneys
invested retaining the current pension and 401(k) plan than
under the Company’s proposed 401(k) plan, and, thus, the new
investment vehicle (dependent on a voluntary contribution)
could not possibly compensate for what members presently
have, although the Union was still willing to listen.
Flavin goes on to question the Company’s public “take-it-or-
leave-it” attitude and continually threatening impasse and refers
to documents in his possession suggesting a company intent to
provoke a strike. In spite of the foregoing, Flavin states the
Union will continue to modify its proposals in an effort to reach
agreement. While it believed the Company’s conduct shows it
is engaging in surface bargaining, it hopes to make progress to
reach agreement.
The following day, March 21, Farberman replied to Flavin,
reiterating management’s position that negotiations are at im-
passe, and that the Union has made it clear in various ways,
which he recites (and previously recited at bargaining sessions)
that it is unwilling to accept management’s final offer. Farber-
man repeats, they have no intention of modifying that offer and
it is the best offer they are willing to make. Farberman makes
clear again that at the heart of their final offer are the Com-
pany’s proposals on the issues of pension, prepension, em-
ployee benefits, retiree health care, and compensation. The
Company views the Union’s shuffling of its positions on other
issues meaningless in the face of its continued rejection of the
Company’s final proposal, in particular, the Company’s de-
mands on these five key issues.
While Farberman agrees to meet on March 25, he states
nothing of significance will be accomplished if the Union is
unwilling to reconsider its position, and if the Union persists in
its rejection of their final offer, the Company is prepared to
implement terms and conditions consistent with that final offer
in accord with applicable law.
In the March 21 letter, Farberman reminds the Union that
under the Company’s final offer, employees who wish to take
advantage of prepension leave must take their last day of work
on or before April 13, 1996.
By letter on RTC letterhead dated March 22, addressed to
fellow employees, Anthony Cassara, RTC president, informs
them he is attaching a copy of the March 21 Farberman letter,
which clarifies its position on the current status of contract
negotiations and advising that those wishing a complete copy of
the Company’s final offer could call employee relations at a
telephone number listed.
In a one-page letter dated March 21, Flavin asks Tassone for
the total cost to the Company for a 3-year contract, calculated
upon the last company offer, the terms and conditions of the
recently expired contract, and the Union’s most recent set of
proposals, to be provided before Monday’s March 25 bargain-
ing session.
By letter dated March 22, to Flavin, Farberman responds to
the Union’s information request of March 20 with respect to the
Company’s pension 401(k) proposals, listing each of Flavin’s
questions in turn and answering them, with specific figures. He
also attaches a two-page document generated by Grassi which
provides the calculations for the answers submitted. Farberman
argues it is evident from these figures submitted that an em-
ployee would enjoy a 27.36-percent higher benefit under man-
agement’s proposed plan. He also urges that a 9-percent inter-
est rate is more accurate than the Union’s 7-percent assump-
tion.
By letter dated March 27, Farberman requests once again of
Palmer that all future requests for information be put through
his office, as chief spokesman, reciting the recent multiple re-
quests made by different union people and to different loca-
tions. By another letter of the same date, but addressed to Fla-
vin, Farberman now responds to the Union’s March 27 request
ROCHESTER TELEPHONE CORP. 47
made to John Tassone for three different total costs for a 3-
year contract based on company and union proposals and also
predicated on a status quo agreement, noting the three calcula-
tions are based on certain assumptions, employment levels and
attrition rates. The Company’s calculation based on the Un-
ion’s most recent proposal exceeds the cost of its own last offer
by between $16 and $17 million.
At the March 25 meeting, with the same committees present,
Palmer explained why he was seeking the information re-
quested in a March 25 letter he had written to Farberman. In
that letter Palmer stated that Union was prepared to consider as
an alternative to the pension plan either the employer’s current
profit sharing plan or an alternative one to be negotiated which
needed to be based upon an ascertainable measure of the em-
ployer’s profits, subject to verification and control. Palmer
then requested information related to the current profit sharing
plan, much of it for the last 5 years, to help the Union deter-
mine if amounts have been or will be generated for employees
by the plan and whether or not the Company overpays man-
agement or allocates the same money into profits.
Tassone asked what was the Union’s alternative profit-
sharing plan and Palmer, according to McGrath, instead criti-
cized the Company’s bonus plans, on which it set all the dates
and goals and regarding which the Union had no say but upon
which goals employees were expected to base future earnings.
A lengthy discussion of the Company’s 401(k) plan ensued,
followed by a caucus called by the Company. Afterward, when
the Company repeated the Union hadn’t embraced freezing the
pension plan, the union team responded it was in the process of
preparing another proposal and was looking at the cash balance
account and other options.
At this March 25 meeting, McGrath attributes to Farberman
a comment that prior to this he didn’t see where the Union was
moving closer to the Company and now he could see the Union
moving closer on one of the Company’s five proposals, without
identifying which one.
At some point at this March 25 meeting, the informal lunch-
eon meeting among Patrician, Palmer, and management was
discussed. McGrath was refreshed by reviewing company
minutes that Palmer stated that at that luncheon his position had
been that the Company’s proposal was unacceptable to the
Union at that time. Hopefully, the Union and Company would
move from their positions as bargaining continued, and agree-
ment could be reached.
Farberman asked the union committee to alert its members to
the date by which, under the Company’s final offer, prepension
leave would be eliminated. With that in mind the Union sought
an early April session.
By another letter also dated March 27, Farberman responded
to Palmer’s March 25 information request, referring also to a
March 26 telephone conversation during which they agreed to
modifications. In the remainder of the letter each question is
listed, with either the Company providing the information or
noting an agreement that the information is no longer needed,
or the Union agreed to a withdrawal of its request. In a number
of instances, Farberman notes that the information was not yet
provided but would be provided in a certain form, e.g., stock
prices for each month over the past 5 years, and the Putnam
Plan Trust Agreement and 401(k) Plan Document, and minutes
of the employee benefits committee where changes in the cur-
rent 401(k) plan were discussed, if any.
There is no evidence or claim by the Union that the followup
information was not timely provided.
Then, by letter dated March 29, and prepared on CWA Dis-
trict 1 letterhead, Palmer informs Tassone that after serious
discussion among the bargaining committee members and with
the National Union they have decided to submit a new compre-
hensive counterproposal to the Company, which will include
two pension alternatives, one which maintains the current pen-
sion framework, and one which incorporates the Company’s
basic 401(k) principles. Palmer describes the letter proposal as
freezing the pension plan, eliminating prepension leave and
relying solely upon a single 401(k) for retirement benefits.
Significantly, Palmer then notes, “While this new alternative
proposal will incorporate the Company’s 401(k) framework,
the union must be confident that it also guarantees sufficient
retirement benefits for our members.” Because of needed time
to prepare and meet with CWA’s pension experts, Palmer asks
to push back an April 1 meeting date, to April 8, to start at 9
a.m. and to block out the full day. Palmer also suggests engag-
ing a mediator to assist and asks for Tassone’s views.
Farberman responds to Palmer by letter of April 1, agreeing
to meet April 8 at 9 a.m., and noting no objection to Union
engaging a mediator from the Federal Mediation and Concilia-
tion Service. But Farberman asks that such a mediator be fully
briefed by the parties and review the bargaining history prior to
April 8 so that our time on that date “can be spent determining
if the Union is now prepared to accept our final offer.” Far-
berman goes on to emphasize that a changed union position on
pensions will not break the present impasse if it continues to
reject management’s position on the other key elements in their
final offer, noting that the five key elements are spelled out for
Palmer in his letter of March 21. Farberman warns that union
concessions on April 8 which fall short of agreement to the
Company’s key demands will not break the deadlock and will
force management to consider its other options under the law.
Palmer immediately responded to Farberman by letter dated
April 2, decrying its negative and provocative tone, warning
that any attempt to unilaterally implement its proposals on pre-
pension leave or any other subject would be treated as unlawful
by the Union, but notwithstanding the foregoing, announcing
the Union’s plan to outline a new comprehensive proposal for
the Company’s review. As to a mediator, Palmer suggested the
parties immediately seek the services of a named mediator with
the NYS Mediation Service as the quickest route to such assis-
tance. Palmer notes the Union could probably not meet with a
mediator before April 8, and, if the Company preferred such a
preliminary meeting, it would agree to move the April 8 session
to later in the week.
Apparently, Farberman and Palmer spoke on April 2, be-
cause Farberman, by letter of that date, confirmed his advise to
Palmer that Jack Canzoneri, of the Federal Mediation and Con-
ciliation Service, whom he noted is the designated FMCS me-
diator for the parties, had indicated his willingness and avail-
ability to serve as mediator as early as April 3.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 48
The next and last bargaining session was held on April 8,
with Canzoneri, the Federal mediator, present. This session
was the first at which any mediator was present.
The Union first met separately with the mediator at approxi-
mately 10 a.m., reviewing the bargaining history to date, and
went over its new counterproposal with him, noting all the
changes it had made. Starting at noon, the union team pre-
sented its proposal to the company team. Palmer read the seven
page document and attachment, which dealt with modifications
the Union was proposing to the existing contract work article
which it had now agreed to retain. New proposals included
those dealing with contracting of work, job security (the Com-
pany’s job bank concept), 401(k) plan, temporary employees,
wages, upgrades, physical demotions, pension feathering, pen-
sions, including prepension leave. Other unchanged March 7
proposals were also enumerated in this new comprehensive
counterproposal. On certain of the terms, most unchanged from
March 7, the document noted tentative agreement. These in-
cluded vehicle assignment; vacation; meal, mileage and tier
payments; tools; upgrades for two named employees as well as
time reporting clerks; telephone discount; MDF; life insurance;
Medicare B (on which the Union indicates it is withdrawing its
proposal and agreeing to retain current language); temporary
job classification transfers; grievance and arbitration; tuition;
safety; recovery of overpayments; perfect attendance; meal
money allowance; air pressure and clerical hours (on which the
Union announces acceptance of company proposal); job bid-
ding; apprenticeship program; and disability procedure.
Many of the differences between the parties that continued to
remain on April 8, even after the new proposals were made,
have been previously described.
In particular, in those five key areas where the Company’s
longstanding positions had remained firm and which the Com-
pany continued to insist that the Union embrace, significant
differences remained. They included retiree health care, wages,
pension and 401(k) plan, prepension leave, and employee
health care (described in the Union’s April 8 counterproposal as
standard corporate benefits). The differences in these areas
which existed between the parties as of April 8 have been pre-
viously detailed.
After reading the counterproposal, the company team asked
questions. The union team asked questions regarding contract
work and Sunday through Thursday work schedule and the
Company responded. A half hour caucus then ensued. On the
parties’ return to the table Farberman said that they had re-
ceived the Union’s proposal, and that the Company felt that
they were still far apart, and that there was no real movement
by the Union to embrace the Company’s proposal, and he felt
they were at impasse. He added he would get back to the Un-
ion with their next step. When asked by Flavin or Palmer if the
Company would be making a counterproposal to the Union’s
proposal, they were told, no.
When the Union side mentioned the movement they had
made on the pension issue, the Company said they had not
moved enough toward its proposal and didn’t particularly like
the Union’s proposal, and since there was no movement toward
the Company, there would be nothing forthcoming from them.
When Flavin said that the Union had come with a proposal to
give up the pension, and wasn’t that enough for the Company,
Farberman replied that they had not embraced his proposal and
the Union’s proposal was not enough. If you looked at the two
proposals, the Union had not embraced theirs. Someone from
the Union side commented that this was the first time its pro-
posal had embraced the Company’s concept of an actual bonus
and was that not enough for the Company. The answer given
was no, it was not.
Farberman stated that if one looked at the Union’s proposals
of March 7 and April 8, it had not matched the Company’s. He
also said there would be no further movement by the Company.
Palmer now expressed the Union’s feeling that they were not at
impasse, that the Union had made approximately 29 major
moves with its last two package proposals, and the parties were
not at impasse. There was still movement that could not be
made on both sides.
McGrath noted that at no point during the April 8 session,
did the Company ask for a clarification or engage in any dis-
cussion regarding the contents of the Union’s proposal. Nor
did the Company provide any calculations that they may have
made regarding the financial impact of the proposal that the
Union had made.
A recess was now called by the mediator at about 2:10 p.m.
during which he met separately with the Company. The union
committee waited to resume the session until about 4 p.m. but
there was no further face-to-face meeting. When the Union left
the Holiday Inn where the session had been held, the Commit-
tee’s conclusion was that another bargaining session would be
held within a day or two.
No further bargaining session was scheduled or held. In-
stead, by letter dated the same day, April 8, Farberman in-
formed Palmer that the parties were at impasse over the terms
and conditions for a new labor agreement and that the terms
and conditions of the expired contract would continue in effect
at this time with certain exceptions. In the last paragraph Far-
berman noted that it was discontinuing enforcing article 5, sec-
tion 1 (Agency Shop) and article 5, section 2 (Collection of
Union Dues). In the middle paragraph, Farberman advised that
effective immediately, the Company was implementing new
terms and conditions of employment consistent with the Com-
pany’s final offer dated February 29, 1996, and that a detailed
description of these new terms and conditions as contained in
the Company’s final offer would be forwarded to him under
separate cover.
In a letter dated April 9, addressed to its employees, new
RTC President Denise Gutstein forwarded a copy of its April 8
letter declaring impasse and noting it had implemented man-
agement’s best and final offer. Gutstein referred again to the
Company’s offer under the implemented terms providing em-
ployees until April 14 to take prepension leave if they leave
work by April 13, and granting a 20-percent increase in the
pension to employees retiring at this time or currently on pre-
pension leave.
By letter dated April 10, Palmer responded to Farberman’s
April 8 letter, disputing the parties were at impasse, noting the
Union had continued to bargain in good faith despite the ap-
pearance of bad-faith bargaining by RTC, and reporting that
ROCHESTER TELEPHONE CORP. 49
mediator Canzoneri, with whom he had spoken, would be con-
tacting Farberman to discuss additional bargaining dates.
On April 19, Farberman informed Flavin that consistent with
implementation of the final offer the employees would be re-
ceiving a 1995 Corporate Performance Bonus on May 9 pay-
day. Farberman went on to explain how currently disabled and
part-time employees would be treated under past practice. In a
further letter of April 22, Gutstein informed employees of the
pay for performance process which the Company had started
implementing, holding out the prospect of a 3- to 12- percent
potential bonus, and that the Company had begun the process to
add new full-time employees.
During her cross-examination by company counsel, McGrath
agreed that in her years of participation in bargaining, agree-
ments were reached typically after 10 to 15 sessions rather than
40 to 50. She also agreed that on the subject of wages, the
Union on March 7, 1996, sought parity with the wage package
negotiated by the Union at NYNEX. McGrath further agreed
that in her pretrial affidavit, a portion of which was read into
the record, she referred to the five key elements which were the
major issues in bargaining, as wages, prepension leave, the
defined benefit pension plan and 401(k) plan, retiree health care
and employee health plan. These were essentially the same
issues which the Company had called key. McGrath however
noted that other issues were also major to the Union’s concerns.
As to the five enumerated issues, McGrath affirmed as her tes-
timony the portion of her affidavit in which she related the
Company’s demands in these five areas to what it informed the
Union from day one were instructions by Frontier to make sure
that the Rochester Telephone benefits were in alignment with
the Frontier corporate package, and that there would not be a
contract without that alignment.
Company counsel sought to bring out in his cross-
examination of McGrath the movement the Company had made
on these five issues over the course of bargaining. That move-
ment had not been major. It included a modification of the
percentage offered in connection with the bonus proposal, a
limitation of the scope of the two-tier wage proposal to certain
classifications of employees (but as McGrath pointed out there
was no change in the Company’s offer of no wage increase), a
change in the health care proposal to provide a grandfathering
option to current employees of retaining present medical cover-
age, an increase in the pension bands to 20 percent, and an
extension of the provision for retiree health care from July 1 to
December 31, 1996.
McGrath also acknowledged that with respect to the Frontier
Benefit Book, in January or February 1996, in response to
questions, Farberman told the Union that an agreement did not
depend on adopting the Book. Palmer had also acknowledged
during bargaining that the union committee understood that the
Book was being used just as a guideline.
While McGrath noted that in its March and, particularly, its
April 1996 proposals on wages, the Union was sending a mes-
sage that it was prepared to accept a corporate bonus plan, she
had to agree that these accommodations were conditioned on
the Company also agreeing to provide a general wage increase.
McGrath did not know and could not provide the cost of
transforming the prepension leave benefit for those eligible into
a pension bonus. As to option A of the Union’s April 8 pension
and 401(k) proposal, McGrath agreed that it added a benefit—
an additional .05-percent contribution into the 401(k) for em-
ployees with less than 20 years of service—not demanded by
the Union on March 7. McGrath could not supply the cost of
this change. As to the lump sum pay out of the vested individ-
ual employee’s pension, or annual upward adjustment based on
the CPI, contained in option B, neither could McGrath advise
what these additional benefits added to the cost of its proposal.
As to the Union’s option B proposal in regards to the 401(k)
plan of a guaranteed cash contribution of 6 percent of employee
annual income plus a future contribution based on an amount
sufficient to provide an annuity equal to the benefit of the cur-
rent pension plan with an annual 10-percent increase in bands
plus the annuity value of the employee’s current accrued pre-
pension leave, McGrath did not know whether these proposals
were more or less expensive than the Union’s package No. 1 on
February 26. Neither did she ask for this information from the
national Union which had prepared these figures.
McGrath also agreed that as to the key area of health care or
employee health benefits, not only had the Company modified
its final proposal to provide current employees a choice of re-
maining in their current plans or of opting for the Tel Flex
package, the Union on April 8 opposed providing this option
and continued to demand maintenance of their current cover-
age.
During her cross-examination, McGrath was also compelled
to agree with her own notes taken at the meeting that at the
February 26, 1996 bargaining session at which Ash replaced
Palmer as union spokesperson and presented the Union’s Pack-
age No. 1, in reply to Farberman’s question, “Do you mean that
unless I agree to keep the existing pension plan, then I will
never see another proposal from you?” Ash replied, “Yes.
This is a major issue that we don’t feel we can ever get it rati-
fied.”
One of the Company’s defenses to the complaint is that in its
corporate campaign against the Company’s final proposal, the
Union was acting contrary to its stated position at the bargain-
ing table of seeking to accommodate and negotiate a successor
agreement and that its campaign rhetoric reflected its true posi-
tion.
In a flyer dated March 21, described as a fact sheet, and
signed by Flavin and McGrath as chief officers of the Union,
the public was invited to show its support and attend a rally set
for March 28 organized by the Union and supported by the
Rochester Vicinity Labor Council, AFL–CIO and Allied Build-
ing Trades, and advertised to Save our Community and Stop the
Attack on Working People, Wages and Benefits. On an at-
tachment consisting of a series of pages, some of the Com-
pany’s demands and the Union’s counterproposal were listed,
including their divergent positions on long-term disability,
pension plan, 401(k) plan, wage increase, and health insurance
for active workers and future retirees. In this document the
Union clearly emphasized those issues it deemed most impor-
tant and they substantially matched the Company’s.
McGrath described the rally that was held as a show of sup-
port for the Union in their bargaining process to give the em-
ployees a morale booster. The inference is warranted and
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 50
McGrath agreed that by means of the rally and its corporate
campaign generally, the Union was seeking to generate pres-
sure on the Company from the public and the organized labor
movement and its local constituents to modify the Company’s
final offer, as well as to buoy up the morale of the unit employ-
ees. In a tape recording McGrath made of a telephone message
for members calling into the Union on Friday, March 29, the
day following the rally, she estimated the attendance at the rally
as between 1200 and 1500 and informed members that the pur-
pose of the rally was to try to stop Rochester Tel from forcing a
contract down the throat of the Union. She also agreed that on
the tape recording she informed members who called the spe-
cial number that the Company’s contract proposal was so far
out it would hurt every member and their families and would
also hurt their community. By March 29, McGrath and the
union committee were well aware that the Company was pre-
pared to declare an impasse at the next bargaining session.
As late as April 1, 1996, Flavin was writing Pierce, the CWA
vice president, with copies for Bahr, Ash, Palmer, and
McGrath, seeking support and fast action for an additional
budget for the Union’s mobilization at RTC, and judging it of
the utmost importance that they continue to put pressure on
with their mobilization and media campaign. McGrath de-
scribed the requested moneys from the national union as going
for ads, rallies and in general, mobilization efforts. On the
same date, April 1, Pierce faxed the CWA president a memo
seeking a renewal of funds from the International Union for a
continued media effort supporting the Union’s contract talks
with Frontier/RTC. He described the public’s reaction to the
media campaign, including TV, radio, and print message, as
encouraging, including the approximately 1200 people in atten-
dance at the recent Rochester rally. Among other devices,
Pierce suggested creating new print messages geared towards
the upcoming Frontier shareholders meeting on April 24th in
Boston.
On April 4, in a bulletin addressed to and distributed to its
600 members, and described as “Bargaining Bulletin No. 4
Fairness to Families” and “Impasse,” the Union acknowledged
that the Company would very likely declare impasse and put in
place its alleged final offer of February 29, in which event the
Union would go to the National Labor Relations Board and to
Federal court. A second page of the bulletin describes the
Company’s conduct to date, in canceling the contract, planning
for a strike, taking the trucks and Company ID’s away, employ-
ing extra security, among other acts, and ends up telling Jerry
Carr, the company CEO, to go to hell. By letter of the same
date, April 4, on union letterhead, Flavin forwarded a copy of
the bulletin to all union’s asking that it be given to their mem-
bers and promising to battle the Company before the National
Labor Relations Board, and in the courts.
When pressed whether by April 8, the Union still found un-
acceptable the Company’s final proposal of February 29,
McGrath testified that the Company’s final offer was unaccept-
able, and that was why the Union made a counterproposal.
Similarly, although the Union continued to reject the Com-
pany’s position on the five key issues, it made its April 8 coun-
terproposal in order to move closer to the Company’s position.
During her direct examination by the General Counsel,
McGrath noted that the union committee did not have the cost
of its pension proposal on April 8 because the 6-percent figure
had just been received from Patrician by telephone immediately
prior to submitting it to the Company. Furthermore, usually, in
the past, during bargaining the Company came back to the table
and informed the Union what its proposals cost, but at no time
in the 1995–1996 bargaining sessions, did the Company do this.
With respect to the subcontracting issue, on which the Union
came much closer to the Company’s position by April 8, but
still sought additional protections against abuse not contained
in the expiring agreement’s letter of intent, McGrath testified
she could not possibly supply the cost of its proposal because
by April 8 the Company had still not provided the Union with
the precise number of outside contractors it had been using
starting in January 1996 and did not do so until the April or
May timeframe. However, during the presentation of its case-
in-chief, the Company produced and included in the record
documentation of its having provided the Union in March with
the numbers and associated cost of its utilization of contractors
for the period January 10 through March 9, 1996. In a covering
letter dated March 20 directed to Union Attorney Mintz, Heftka
first disputes the Union’s contentions that the Company’s use
of contractor’s violates the expired agreement, 3 and that the
Company’s bargaining committee did not produce requested
information regarding the issue of contractors raised by Ash on
February 26. Heftka then attaches (1), a computer printout,
providing activity, account code, work date and hours reported
by employees of the contracting firms during the specified pe-
riod and, (2), copies of invoices received from contracting firms
seeking payment for hours worked by their employees. The
series of pages comprising these materials appears to exceed
100.
During her re-cross examination, McGrath agreed that the
proposals the Union presented in March and April regarding
pension and prepension leave were formulated by the Interna-
tional. David Palmer the next General Counsel witness, basi-
cally corroborated McGrath regarding events and discussions at
the bargaining table and the antecedents of union proposals. He
testified that based on the fact that possibly half of the members
of the bargaining unit could possibly be eligible for early re-
tirement, in formulating bargaining proposals, the committee
deemed both the pension plan and retiree health care as of par-
ticular importance to the union membership. He agreed that the
Union’s bargaining goals included obtaining a pay increase,
strengthening the pension plan and protecting health and other
benefits. Such goals conformed with the CWA pattern, in par-
ticular, of avoiding regressive terms. But Palmer denied that
the terms or conditions provided by competitive employers
played any part in the formulation of the Union’s bargaining
goals.
He reiterated that going into bargaining, the Company em-
phasized that two factors were driving its demands, a concern
about local competition (as a consequence of the PSC adoption

3 As previously noted the Union’s unfair labor practice charge alleg-
ing failure to provide information as a refusal to bargain, was dismissed
and the dismissal was affirmed on appeal.
ROCHESTER TELEPHONE CORP. 51
of the Open Market Plan) and a desire to bring the contract at
RTC in alignment with the Frontier benefit plan. As a conse-
quence, the Company furnished early on the October 1995
Frontier Bulletin.
The Union concluded that as a result of how the Company
had positioned itself with subcontractors, a strike would not be
in the Union’s best interests. Instead, a corporate publicity
campaign, used by the CWA with other employers, was
adopted as a part of the overall bargaining strategy with RTC.
Palmer confirmed McGrath’s testimony that the Company’s
final proposal of February 29 was a wake up call, convincing
the union committee that the Company was serious about freez-
ing the pension plan (along with eliminating the prepension
leave). A day or two earlier, when Palmer learned that the
Company had been unwilling to make a movement on Package
1 at the session held on February 26 until they knew the con-
tents of Packages 2 and 3, it became obvious to him that the
Company was not willing to retain the current pension plan.
Palmer’s recognition by late February of the Company’s firm
position on refusing to retain a continuing deferred benefit pen-
sion plan, was not reached without some chagrin. Although
Palmer testified he anticipated an offer from the Company on
February 29 he did not believe it would be a final offer. And
after receiving it at the session, when Palmer learned from Ash
at the caucus the Union immediately called, that he believed he
had been lied to by Farberman in their private interchanges,
Palmer and the union committee felt they had been misled.
Nonetheless, they now realized the work they had to do in re-
sponding to the final offer.
In response to Farberman’s February 29 letter establishing a
March 5 deadline for the Union to respond, Palmer advised he
was prepared to submit a complete counterproposal on March
7.
During the course of the successive bargaining sessions,
when Farberman continued to assert that representatives of the
Union had made it clear that they would not agree to the Com-
pany’s proposals on both pension and other key areas, and they
were hopelessly deadlocked, Palmer responded to Farberman
that he didn’t have to hear that again and referred to the Com-
pany’s lack of movement from the first day of bargaining on
those five key issues. Palmer was not asked and did not di-
rectly respond to Farberman’s attribution of statements to Patri-
cian and himself that the Union would never agree to freeze the
pension. Palmer was asked about and did describe in general
and conclusionary terms only, a meeting held in Rochester
which he and Patrician attended, the purpose of which was for
Patrician to be able to sit down with Grassi, himself, and Far-
berman and, he believed, Heftka and Tassone, away from the
bargaining table, to discuss the cash balance scenario. This was
the informal luncheon meeting previously mentioned at which
Farberman described Palmer’s conduct4 in striking the wall and
announcing the Union would never give up the pension. The
Union told the Company the five key proposals were not ac-
ceptable. Privately, as Palmer commented, “Once we got to

4 While the parties differed about who struck the wall, I conclude it
was Patrician who did so, but that Palmer did not disavow Patrician’s
contemporaneous comments made at the meeting.
this point in time, it was obvious to us that we were going to
have to make some movement in some of these five key areas,
and that’s what we were striving to do at this point in time.”
(Tr. 814.)
Palmer noted that it was not until the evening of April 7, that
the Union’s comprehensive counterproposal of April 8 was
completed (except for the 6 percent figure added the following
day). With respect to drafting the Union’s pension proposal,
containing both options A and B, Palmer explained that the
problem was they were trying to put together a 401(k) plan
which replaced the pension plan and CWA had not done that
anywhere that they knew of. Paraphrasing Palmer here, flesh-
ing out the substance of such a proposal took time. And the
problem was compounded and added pressure arose from the
union committee’s knowledge that the Company believed the
parties were at impasse and was going to shortly impose its
final proposal. There were ongoing discussions with Interna-
tional pension expert Patrician, in Rochester prior to April 8,
and by telephone on April 8.
At the conclusion of the face-to-face session on April 8, the
Company announced they were at impasse and said bargaining
was over. The Federal Mediator Canzoneri, after speaking
separately with the Company, informed Palmer he would be in
touch as to a further session. Later that evening, at his area
office in Buffalo, Palmer received a fax of the company letter
declaring the impasse and implementation previously de-
scribed. Although Palmer referred to a contact with Canzoneri
regarding additional bargaining dates, following his April 10
letter to Farberman, no such meetings were arranged or held.
Palmer believed that having just given the Company at 1
p.m. a proposal that for the first time had movement in agreeing
to a single 401(k) plan as the pension plan for future employ-
ees, and then receiving a fax of a letter at 6 p.m. declaring im-
passe, the Company did not give the union proposal due con-
sideration.
Subsequently, bargaining did not resume for another 6
months.5
Palmer explained that the Union’s consideration of a cash
balance account, resulted from information it received that the
existing pension fund was over funded by approximately $3
million a year, generating these revenues in favor of the Com-
pany. In consultation with Patrician, the idea was explored of
determining the value of each employee’s share in the pension,
establishing individual accounts in these amounts and distribut-
ing the balance of the money in the plan (the excess balance)
and the money generated through investment to each such ac-
count for the future. According to Palmer, this concept of a
cash balance account and the use to which the excess funds in
the pension fund could be put on behalf of the employees, un-
derlay part of the Union’s April 8 pension proposal. Once the
pension plan was frozen, as it was overfunded, the plan would
not accrue any further liability. Any future revenues generated
from the fund would be excess and could legitimately be ap-
5 Based on a representation by Respondent counsel, after bargaining
resumed in the fall of 1996, and the membership rejected another com-
pany proposal following another resumption in bargaining, agreement
was finally reached on a successor contract in early May 1997.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 52
plied to the Company’s guaranteed contributions to the single
401(k) plan as proposed by the Union and/or offset the added
costs of retiree health care.
To assist the union committee in preparing its later proposals
of March 7 (where it expressed a willingness to discuss trans-
forming the pension plan into a defined cash balance account)
and April 8 (when it proposed lump sum distribution of the
value of then frozen pension benefit at the employee’s option
on retirement or separation), Patrician had prepared for Palmer
and reviewed with him in Rochester sometime after February
20, a 20-page document. Prepared with the assistance of an
actuary, the document contained columns of figures for each
unit employee and purported to compare lump sum distribu-
tions of the present value of the pension benefit, based on age,
years of service and pension band, at retirement, or age 65,
each such employee would receive, with and without the 3-year
reduction in age and service requirement proposed by the Com-
pany.
In spite of the foregoing explanation of the genesis of the
Union’s April 8, 401(k) proposal, Palmer admitted that the
union committee offered no explanation or justification to the
Company which might convince it to adopt the Union’s pro-
posal, other than what the Company could glean from the writ-
ten proposal itself. A close study of the proposal itself shows
no mention of an excess pension balance or of an application of
such future balances to funding of company contributions into
each employee’s 401(k). Rather, the preliminary presentation
in paragraph 21, before describing option A or B, makes clear
that the Union wants to avoid reliance on employee contribu-
tions for the basic retirement benefit because of their inability
to do so or because of the uncertainties of interest rates to guar-
antee the benefit. But the proposal does not describe how pre-
sent or future company excess pension balances can be used to
offset contributions the Union would impose on the Company
with the “goal of guaranteeing a retirement benefit equivalent
to the benefits that exist today” (GC Exh. 26, p. 4, Union Pro-
posal, No. 21).
An analysis which Patrician provided to the union committee
on March 20, only served to confirm the Union’s view that on
retirement, employees would suffer a significant diminution in
their retirement annuity under the Company’s proposal. Patri-
cian compared a hypothetical employee with 30 years of ser-
vice receiving an annuity under the Company’s frozen pension
plan on the on hand, and receiving a monthly amount based on
a combination of 401(k) investment pay out, prepension leave,
annual pension under the present agreement on the other. The
difference exceeded $3000 annually. In preparing his figures
Patrician used an average rate of return of 7 percent rather than
the Company’s 12-percent figure. The parties’ differences in
interest rates are reflected in letters previously described and
exchanged between the parties in which the Union requests
information and the Company responds during the period
March 20 to 22. The same study also showed the adverse af-
fects on an employee denied the Union demanded annual per-
centage wage increases over the life of a 3-year agreement and
instead limited to receiving annual bonuses which do not add to
base pay.
Again, while the Union used this study in preparing its April
8 counterproposal on pension/401(k) plan and wages, it did not
inform the Company of its results, nor, as earlier noted, did it
provide any rationale for its proposals.
By March 7, when the union committee saw the company
counter its proposal of that date with its February 29 final offer,
Palmer understood the Company had no intention of moving
and the Union had to decide whether to move to the Company’s
position of a single 401(k) plan for retirement. Palmer talked
with both Patrician and CWA President Bahr who emphasized
the drastic step involved in moving, for the first time in any
CWA negotiated contract, away from a defined benefit plan to
a 401(k) plan and wanted members to understand that. As
noted earlier, after preparing the Union’s April 8 counterpro-
posal the committee left open the guaranteed percentage figure
for company contribution into the 401(k) plan, because Patri-
cian had not yet supplied it. When he did, on April 8, he told
Palmer this is about what you’re going to need because there’s
some bad risk money here in a 401(k) plan.
When asked whether the Union was locked into the 6-
percent figure Patrician supplied and the committee hand wrote
into its proposal, Palmer replied it was not but he did not indi-
cate any other figure the Union would accept. According to
Palmer, the important factor is the fact that the Union was of-
fering a 401(k) plan in place of the pension. Palmer also com-
mented the Union was not locked into its April 8 wage pro-
posal, which he noted was a half a percent less than its previous
one. Until the February 29 company final offer Palmer be-
lieved, against the view of other committee members, that it
was still possible to achieve an agreement on a general wage
increase. Palmer did not explain why, as late as April 8, the
union committee reasonably believed the Company would be
amenable to a 10-1/2-percent wage increase over 3 years with
COLAS coupled with a guaranteed compensation bonus over 2
years and a performance bonus payable after ratification, when
the Company’s final offer since February 29 had denied any
wage increase and made both compensation and performance
bonuses over the life of a 3-year contract conditional on achiev-
ing corporate performance and efficiency objectives.
Palmer did explain the Union’s opposition to the Company’s
contribution to the 401(k) plan being in its own stock, that a
sizable portion of the employees’ retirement portfolio—both
the automatic and the matching contributions—could be at risk
because of the volatility of the stock whose share price, in the
less than a year and a half since the hearing, was down substan-
tially.
During his cross-examination by the Company, Palmer ac-
knowledged that the positions arrived at by the Union at the
bargaining table in March and April on the subjects of pension,
prepension leave and retiree health care were formulated by the
CWA International in conjunction with Local 1170. With re-
spect to the amount of a guaranteed annual contribution by the
Company to a single 401(k) plan, Local 1170 was relying on
the International to supply that figure.
Palmer agreed that the Local Union had made it manifestly
clear through statements of the local bargaining committee,
representatives of the International Union and the membership
itself through its vote rejecting ratification, that it was unwilling
ROCHESTER TELEPHONE CORP. 53
to accept management’s final offer, as proposed. He also
agreed that when Farberman said in his March 21, 1996 letter
to Flavin that we have no intention to modify this final offer,
this is consistent with the position taken by the Company be-
ginning February 29 and in subsequent sessions. And he
agreed that Farberman’s statement in that letter that he had told
the Union repeatedly it is the best offer the Company is willing
to make, was also true. Nonetheless, Palmer expressed his
belief that there was room for movement in the Company’s
final position. He was let to this conclusion by the fact that the
Company continued to bargain after February 29, that the
Company agreed to come to the table and hear the Union’s
counterproposal. But nothing else he could point to, no other
action on the Company’s part, contributed to his belief that
company movement was possible. And Palmer agreed that
several times Farberman had informed the Union that if it
wasn’t prepared to accept the Company’s position on the five
key issues, it was really meaningless to engage in further dis-
cussions.
Palmer insisted that although on April 8, the Union did not
accept as written one or more of the Company’s positions on
the five issues, it moved toward acceptance of the 401(k) plan
and the bonus structure, albeit in conjunction with a base pay
raise. But Palmer was compelled to agree that when it contin-
ued to demand an across the board wage increase on April 8, as
well as a bonus, it was telling the Company that as long as it
gave a wage increase as specified in the Union’s offer, the Un-
ion would also accept a bonus program. Palmer also agreed
that even as of April 8 the Union did not communicate it was
prepared to consider accepting an offer without an across the
board wage increase, or only a bonus arrangement. Palmer also
conceded the Union’s wage proposal was more expensive than
the Company’s, and included a demand for guaranteed dollars
in the bonus, unlike the Company’s which guaranteed only a
corporate performance bonus of $1000 for 1995 and only pro-
vided for a compensation bonus each year starting in 1997 con-
ditioned on the Company meeting the performance objectives
that it set for itself each year commencing in 1996. Later, on
redirect examination, Palmer clarified that the Union’s April 8
counterproposal as to the compensation bonus did not seek a
guaranteed sum, but only specific dollar amounts conditioned
on the Company achieving the threshold, standard and premier
targets which the Company alone would set.
On retiree health care, a basic difference persisted between
the parties on April 8, the Company proposing to stop 100-
percent coverage of the premium for employees who retire after
December 31, 1996, and the Union proposing to continue such
coverage.
Turning to the differences as of April 8 on the pension and
401(k) plan issue, it was Palmer’s contention that the future
guaranteed company contributions the Union called for in its
paragraph 2, option B proposal would come from investment
income generated by the frozen pension plan and not from any
increased contributions by the Company. Similarly, those em-
ployees who did not opt for a lump sum distribution of their
frozen pension account on retirement but rather for an annual
upward adjustment in their annual pension pay out based on the
CPI, would have these increases generated solely by investment
income in the pension plan. Palmer noted here that when the
union committee inquired about the uses to which the Company
intended to put the excess moneys in a now frozen pension
plan, no answer was forthcoming. Palmer commented that
without any further build up in liability over time which would
have resulted from increased years of service, the excess mon-
eys in the pension plan would continue to grow from invest-
ment income.
Palmer could not provide a figure representing the added
costs to the Company arising from adoption of the Union’s
proposal under its option B permitting retirees to opt for a lump
sum payment of the value of their frozen pension benefit. As
for the 6-percent figure supplied by Patrician for insertion in
the Union’s option B proposal, representing the guaranteed
cash contribution to be paid by the Company to the employee’s
individual 401(k) plan, Palmer had been informed by Patrician
that this figure would allow an employee with 30-years of ser-
vice to have a pension (retirement income) that was equivalent
to the old pension plan. Palmer finally agreed that on April 8,
the Company’s final offer remained completely unacceptable to
the Union’s bargaining committee. But he maintained that the
Union’s counterproposal of that date had movement toward the
Company’s final offer such that the Union expected the Com-
pany would bargain and bring back a counterproposal.
Palmer also later clarified what appeared to be two separate
401(k) proposals set forth in the Union’s April 8 counterpro-
posal, at paragraph 8, and at subparagraph 3 of Option B of
paragraph 21. They are basically identical. In each paragraph
the Union seeks a company match of employee contributions,
of 40 percent; then 50 percent and then 60 percent up to the
first 6 percent of employees income, in each of the 3 years of
an agreement, and into the Putnam Plan, which specifies that
the company contribution shall be in company stock.
In its defense, Respondent called two witnesses. The first,
Robert Merrill, had been director of product development and
management for RTC from November 1994 through October
1996, before going on to other responsibilities, for strategic
planning for RTC, and, more recently as carrier services direc-
tor for Frontier. Previously, he had been director of regulatory
affairs for RTC dealing with the PSC among other regulatory
bodies. Before that, Merrill had been employed by AT&T
during the mid-80s as manager of marketing and market analy-
sis during the court ordered divestiture of its local exchange
companies. As product manager for RTC he was responsible
for all products and services, including product development,
pricing, costs, and profitability.
He described the Open Market Plan which opened the local
Rochester market to competitors for all local dial tone services.
As a consequence of the PSC adoption of this plan, the Com-
pany anticipated significant competition in local telephone and
related services, pressure on prices, and pressure on services. It
was expected that local competitors would seek to steal away
the Company’s most profitable customers. Among its new
competitors who entered the local market after January 1, 1995,
were Time-Warner, AT&T, MFS, and Citizen’s Telephone.
Prior to that date RTC had been a regulated local service pro-
vider with a franchise right to service the local telephone ser-
vice market. As a regulated utility, RTC was guaranteed a
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 54
return on its investment and further was guaranteed to recover
all its expenses through the rate hearing process conducted by
the PSC. Now, new competitors could compete either by re-
selling RTC’s network or by establishing their own network.
Furthermore, under the Open Market Plan, local exchange
rates for residential customers were to be frozen for 7 years. In
addition, over the first 3 years of the plan, local exchange rates
were to be reduced by $21 million, almost 7 percent of the
Company’s annual gross revenue in Rochester. Of equal or
even greater importance, the companies entering the field of
supplying local Rochester telephone service, would be estab-
lishing price levels and service levels, as bench marks which
Respondent would now have to attempt to meet. Effective
January 1, 1995, the Company immediately started losing cus-
tomers and access lines.
As a consequence of the foregoing changes in its status and
the influx of competition, the Company focused to a much
greater degree on cost controls, reducing expenses, and im-
proved, more efficient and more productive customer service.
Of particular significance, under the Open Market Plan, Re-
spondent remained the provider of last resort, requiring it to
service all customers in the area, including those it could not
possibly service profitably, while its competitors, without such
a requirement, could target, and attempt to skim off its highest
profit customers first. This happened immediately when, as a
direct result of American On Line switching to Time Warner as
a provider of telephone and related services, the Company lost
from its network almost $15 million minutes a month starting
in January 1995. This loss continued to grow as more and more
internet providers signed up for Time-Warner’s services. Other
Companies which left RTC and signed with competitors were
Time Warner itself, Harris Beech, a leading law firm in Roch-
ester, Genesse Hospital and the University of Rochester, all
major customers who were among the Respondent’s most prof-
itable.
Merrill saw starting to happen in Rochester what he had ex-
perienced when employed by AT&T in the 1980s, where, after
its breakup, over the course of the next 13 years, prices de-
clined by a third and AT&T’s market share in long-distance
service declined from the high 90’s percentile in 1984, to 60
percent today.
During his cross-examination Merrill testified he was aware
that in 1995 the Company’s profit margin was in the $75 to
$100 million range and for 1996 it was that much or even more
as a result of the Company’s emphasis on growth. Revenues in
1995 were over $275 million, and in 1996 over $296 million.
Merrill was further obliged to state that neither he nor anyone
under his direction participated in formulating any bargaining
strategy for the Company going into negotiations with CWA in
October 1995, nor did he or anyone else under his direction
prepare any analysis or documents for use in those negotiations.
Merrill explained that the competition in providing local ex-
change service in Rochester has taken two forms. In one form,
a Company could install its own switch and provide sufficient
facilities and thereby generate its own dial tone. To date, only
one provider, Time-Warner, has taken that route. It is costly to
install a switch and develop an infrastructure to support it. The
other form is to approach the Company and arrange to purchase
networks, at wholesale, and resell the Company’s services at
retail. All competitors to date, with the exception of Time
Warner, have chosen this latter route, which is less capital in-
tensive, is faster and has less risk. The Company thus has earn-
ings which represent the buying of services from it under tarrifs
regulated by the PSC which it did not have previously. To a
certain extent, these earnings have replaced, albeit at a dis-
counted rate, the earnings lost from retail customers. And the
Company’s competitors, by and large, have thereby become its
customers. Furthermore, Merrill himself is not familiar with
the activities of the marketing group whose focus has been to
regain customers who have left the Company’s network. Thus,
Merrill could not say whether or not the Company has suffered
a net loss of customers and access lines in the 2-1/2-year period
since the adoption of the Open Market Plan.
Daniel Farberman testified that since December 1994, he had
been the Company’s personnel director of employee relations,
his duties including administration for the two bargaining units
in Rochester. He had previously been director of personnel for
the City of Buffalo, responsible for collective bargaining, for
approximately 1 year. Before that, he had been employed by
General Motors Corporation for 12 to 13 years in operations
and labor relations, including duties involving collective bar-
gaining.
RTC, the wholly owned subsidiary now of Frontier Corpora-
tion since the changes brought about with the implementation
of the open market plan, has continued as the company party to
the collective-bargaining relationship with the Union, only its
name having changed from Rochester Telephone Corporation
to Rochester Telephone Corp. Frontier operates 29 other re-
gional telephone companies across the United States. CWA
represents two other bargaining units within the Frontier con-
glomerate, in Iowa and Minnesota, but Local 1170 of CWA
(the Union), represents only the Company’s unit employees in
Rochester.
As the Company’s chief spokesperson, in the 1995–1996
bargaining for a successor agreement, he and Mickey Ash dis-
cussed in early fall 1995 the advisability of beginning bargain-
ing early. Farberman recalled specifically only one occasion
when Ash attended the bargaining as union chief spokesperson,
on February 26, when he replaced Palmer. According to Far-
berman, when Ash provided the company team with the singe
page Union Package No. 1, describing it as the first of a series
of three package proposals the Union had to present, he also
stated that if the Company would not accept the Union’s first
package proposal in its entirety, the Union was not going to
present any further packages to the Company. Farberman now
asked, “Are you telling me that unless I agree specifically to
what is stated here, I will not get any futher proposals from the
Union?” Ash replied, that was absolutely correct. As will be
recalled, Union Package No. 1 demanded the retention of the
existing pension plan, with a band increase of 10 percent, and
the transformation of prepension leave for those eligible into a
pension bonus. As Ash was not called as a witness to rebut this
testimony I draw an adverse inference that if he had testified he
would not have disputed Farberman’s testimony. International
Automated Business Machines, Inc., 285 NLRB 1122, 1123
(1987); Greg Construction Co., 277 NLRB 1411, 1419 (1985).
ROCHESTER TELEPHONE CORP. 55
McGrath, although called later as a rebuttal witness was not
asked about these comments attributed to Ash at the meeting
she attended. I thus credit Farberman’s testimony. I note it is
also consistent with other testimony given by McGrath, who
described the Union’s strategy going into the February 26 ses-
sion, Ash’s avoidance of a direct answer to Farberman’s in-
quiry as to whether it was the Union’s position there could be
no settlement without the pension plan, and McGrath’s own
statement of the Union’s position in late February to seek to
maintain the pension plan or, if it could not, a plan that would
keep the members whole and provide the same protection as the
pension plan such as the cash balance account with a guaran-
teed return.
Farberman described the company decision to issue a final
offer 3 days later, at the next bargaining session, as dictated by
a series of factors, including Ash’s ultimatum as well as con-
duct away from the bargaining table, such as the Union’s and
International Union’s corporate campaign, all of which led the
Company to conclude it had no more movement to make and
that a final offer was appropriate to be issued.
Farberman denied that on or prior to February 26, 1996, he
had said anything to Ash to suggest that he wasn’t committed to
the Company’s position on the pension, i.e., to freezing it. As
to McGrath’s testimony that during a caucus at the next session
on February 26, Ash told the Union Committee Farberman
misinformed him that the Company was not going to make a
final offer at the session, Farberman now recounted an unex-
pected meeting with Ash in the lobby of the Holiday Inn, Air-
port in Rochester where sessions were held, after the meeting of
February 26 had broken up. Ash asked him where are we going
next. Farberman replied he wasn’t sure. Ash then asked
whether or not he thought the Company would be issuing a
final offer to the Union. Farberman said he did not know
whether they would be doing that or not. In words that con-
veyed they were very close to the end of their rope, Farberman
indicated he was going to have to confer with his superiors and
colleagues before deciding the Company’s next move. Based
upon Farberman’s presentation of this interchange, as well as
his denial of any ambiguity about the Company’s intention to
freeze the pension in any prior exchange with Ash, neither of
which Ash was called upon to dispute, see International Auto-
mated Machines cited supra, I credit Farberman as to each of
them, and further, conclude, that Ash’s purported reliance on
private information he received from Farberman warranting a
claim of surprise as to either the Company’s negative reaction
to his offer of Union Package No. 1 or to the Company’s sub-
mission of its final offer on February 29, is not supportable on
the evidence. Accordingly, I conclude that to the extent the
counsel for the General Counsel places any reliance on the
union misunderstanding of the Company’s true positions in
bargaining prior to and on February 29, 1996, its position is
unwarranted and lacking in merit.
Farberman, who participated in the formulation of the Com-
pany’s bargaining proposals (and then presented and defended
them in bargaining) asserted that the open market and competi-
tive realities of the open market plan were the significant driv-
ing force behind most of the economic proposals that the Com-
pany made. There was a changed competitive environment and
significant downward price pressures and reductions in its
revenue generating ability. The rate caps and freezing of rates
were added factors shaping the Company’s bargaining posture.
From the first meeting with the Union in October 1995 the
company team spoke of new competitive entrants into the mar-
ket, and factors shaping customer attitudes toward its role as
service provider. With choice available to customers, they had
to be convinced of the quality of service and fairness of the
pricing. The Company brought in a number of presenters to
inform the Union about the market factors facing the Company.
They included presentations on identifying competitors, and
their dual role as both customers and competitors, and their
impact on profitability; studies on customer levels of dissatis-
faction with the Company’s inability to meet service goals of
timeliness of repair and installation; the current performance
indicia of the Company; near and long terms forecasts for prof-
itability, revenue and income in both the prior regulated and
current less regulated environment; and current changes in
technology and their impacts on the Company and the industry.
During bargaining the Company presented wage and benefit
surveys of Rochester area employers and specific area employ-
ers in telecommunications, as well as material comparing the
Company’s labor costs nationwide with IBEW and CWA rep-
resented employers and with its principal competitor, Time-
Warner, which showed company pay significantly higher for
employees performing similar work, and some common labor
classifications among area employers showing similar results.
As earlier noted, the union committee strongly disputed that the
jobs cited were comparable. Farberman reported its nationwide
surveys showed only one employer, NYNEX, with higher
wages. Farberman also described to the Union, company fears
of competitors skimming off its most lucrative customers.
As a device to improve customer service, the Company tied
one of its compensation bonus proposals to a measurable in-
crease in customer satisfaction. Its two-tier wage proposal was
specifically designed to reduce its costs and improve customer
service by permitting the hire of additional front-line service
providers at permanently lower pay. The Company’s response
to union proposals to severely restrict subcontracting and re-
quire arbitration prior to contracting out, was to reaffirm its
historic practice, to continue in place the letter of intent, and to
offer its employment security proposal incorporating a jobs
bank guaranteeing jobs to all employees displaced or laid off
for other than disciplinary reasons.
Farberman claimed that the Union kept referring to contract
terms it had at other employers. Both at the table and away the
union committee insisted on following the negotiated pattern of
settlements by CWA and affiliates at other employers. The
committee members described the pattern as a pattern of nego-
tiated wage increases approximately 10 to 12 percent a year,
increased levels of pension benefits of approximately 10 per-
cent, and no reduction of either current employee health care
benefits or similar retiree benefits. When asked to provide a
specific example of this conduct, Farberman mentioned the
Union’s wage proposal on March 7 and April 8, described as
“the same as NYNEX”. He also recalled both prior to and after
Management’s final offer, in response to his own question as to
what the Union was looking for or what the Union needed to
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 56
reach a settlement, Flavin responded “follow the pattern.” He
also referred to statements in Union Attorney David Mintz’
letter of February 1996 to John O’Mara, chairman of the PSC,
critical of Frontier for creating a crisis in Rochester for em-
ployees and customers by demanding unprecedented economic
concessions as it pursues its goal of a “common denominator”
national corporate wage and benefit package. In the letter,
Mintz refers to the Union’s goal in the current negotiations as
seeking no more and no less than the pattern that has been ne-
gotiated and established by CWA and other unions in the re-
gion’s telecommunications industry.
Farberman also pointed to quotes attributed to Jeff Miller, a
CWA official, attributing the labor dispute in Rochester to the
Company’s insistence on bucking the pattern of negotiated
settlements reached elsewhere by the CWA.6 At a union rally
in front of his office on February 22, he heard International
Vice President Pierce say that the CWA would not stand for the
Company bucking the pattern of negotiated settlements and was
prepared to spend hundreds of thousands of dollars to teach this
Company a lesson and to have it stand as an example to future
companies who prepared to attempt to break the pattern of bar-
gaining.
Farberman also described another instance when union func-
tionaries including one who was not a bargaining representa-
tive, made statements showing an unwillingness on the Union’s
part to accept the Company’s proposal to freeze the pension
plan. These statements have previously been explored during
McGrath’s examination. Here, they are presented by a witness
present at their pronouncements. As Farberman described it, a
negotiation session had been scheduled for February 23 but was
canceled by the Union. Previously, Palmer had explained at
prior sessions that the issue of pensions was of major concern
to the Union, to the extent that CWA President Bahr had a per-
sonal interest because of the potential impact the elimination
for the future of a defined benefit pension plan would have on
the CWA and other telephone companies, nationally. As a
consequence, this issue in some respects was out of the hands
of the local committee and was going to be governed if not
entirely by the national CWA.
In preparation for the meeting on February 23 the Union had
requested a significant amount of information regarding the
administration and financial health of the pension plan and of
the 401(k) plan, as well as the actuarial data and actuarial as-
sumptions that were built into those plans. In order to facilitate
bargaining on the issue the Company provided Robert Patri-
cian, the Union’s expert on these matters, with access to not
only Robert Grassi, its in-house pension administrator (de-
scribed as senior pension analyst in its Bulletin) but also a John
Ponzini, an actuary and principal of Buck Associates, the Com-
pany’s actuarial consultant and administrator of its plans.
The meeting of February 23 was to address management’s
proposals dealing with the pension and also to explore options

6 Actually, Miller described as a spokesman for CWA, is quoted in
the Rochester Democrat and Chronicle of February 6 as referring to
Rochester Tel as going to challenge the Union on many issues in the
expired contract and “try to buck the contract framework that we have
throughout the rest of the industry . . . .”
the Union was going to propose, one being a cash balance ac-
count the Union had floated and was then exploring. The
Company was going to discuss again a 20-percent increase in
pension bands along within the freeze in the current defined
benefit pension plan. However, upon arrival at the Holiday Inn,
the company team, accompanied by Grassi, learned that the
union team was unprepared to bargain that day. A suggestion
was made to have lunch together, while Patrician was still in
town, and at least have some discussion to further bargaining
on this issue.
Present at lunch were Farberman, Tassone, Heftka, Grassi,
Palmer, and Patrician. Both Palmer and Patrician declared the
pension issue as very important to the Union, and the Com-
pany’s proposal, on the table at the time, was simply unaccept-
able to it. Patrician made a fist, placed it up against the restau-
rant wall and said, “This is where we are, right up against the
wall.” Patrician took this to mean the parties would not be able
to reach a negotiated settlement on management’s proposal.
Patrician told the assemblage that from the national union’s
point of view they were unwilling to deviate from the pattern
established by the CWA in other negotiated agreements with
regard to pension plans. Farberman could not specifically re-
call any comment on this subject by Palmer.
As Farberman went on to discuss the March 7 meeting, he
testified that when he asked at some point after union presenta-
tion of its counterproposal, if the parties could clear peripheral
items from the table, Flavin responded it was a package which
rose or fell as one; no single item could be plucked out. Based
on receipt in evidence of limited company bargaining notes
from March 7, I have previously discredited Farberman’s attri-
bution of these comments to Flavin and found that the Union
had not taken the position that tentative agreements could not
be concluded pending final agreement. Yet, Farberman wished
the record to reflect the conclusion that even if the parties were
of a common mind on a proposal, e.g., one dealing with con-
tracting out of work, it was the union position that the parties
could not break this out and tentatively agree to it and put it off
to the side. Not only did Farberman mistake the import and
meaning of Flavin’s remarks (see GC Exh. 114, p. 6 of the
extract of bargaining notes and my comments at Tr. 1176) but
his view was contradicted by items 3, 12, 16, 33, and 34 of the
Union’s March 7 counterproposal (GC Exh. 25A) showing
tentative agreements reached on job security, upgrades for three
clerks and plan to upgrade others, separation allowance, air
pressure and clerical hours, and items 4, 14, 19, and 23 of the
Union’s April 8 counterproposal (GC Exh. 26) showing tenta-
tive agreements relating to overtime (with only five technical
changes possibly remaining open), CES proposal, Medicare B,
and Health and Welfare Fund.
Nonetheless, and in spite of the foregoing, the parties’ prac-
tice of memorializing and initialing tentative agreements ceased
after February 5. As explained by McGrath during rebuttal
testimony, the Company, which had traditionally taken the
responsibility for preparing and arranging their execution,
ceased taking the lead on these matters. Farberman later opined
that his interpretation of Flavin’s March 7 comment resulted in
the Company refraining from pulling out those issues which he
acknowledged had been resolved after mid February and which
ROCHESTER TELEPHONE CORP. 57
had narrowed the gap between them, and preparing tentative
agreements for initialing by the parties.
When he turned to the session held on April 8, Farberman
responded emphatically that the Union’s proposals in the areas
of compensation and pension absolutely did not bring the par-
ties closer to reaching an agreement. As he explained, first
regarding pensions, in option B, while the first three sen-
tences—offering to freeze pension, eliminate prepension leave,
increase bands 20 percent and reduce eligibility requirements
by 3 years—appeared to conform to the Company’s own final
offer, it was the subsequent related demands and conditions
which showed a wide and, ultimately, irreconcilable difference
which could not be narrowed or eliminated. The fourth sen-
tence, providing an option of lump sum payout for retirees in-
stead of the normal staggered annuity payments, significantly
increases the cost of the employer’s administration of the plan
creating a significant additional expense for the Company.
Farberman was already aware from prior discussions with the
Company’s actuaries and pension administrators in preparation
for bargaining that a lump sum option was cost prohibitive. In
the fifth sentence, by adding an upward annual adjustment in
the frozen pension benefit based on the CPI for these employ-
ees who do not opt for the lump sum payment, the Union’s
proposal unfroze the pension to the extent of measurable in-
creases annually in the cost of living, contrary to the Com-
pany’s proposal to eliminate all growth in the pension plan and
future costs associated with such growth.
Farberman denied the Union’s claim of overfunding of the
pension and the availability of excess monies sufficient to fund
these additional benefits. While the fund through investment
generated enough moneys to offset management’s yearly con-
tribution to the plan, it did not have sufficient monies beyond
its maximum liabilities to warrant being considered overfunded
under ERISA criteria. Furthermore, with the Company’s pro-
posed 20-percent increase in pension bands and 3-year reduc-
tion in eligibility requirements, there was not currently suffi-
cient moneys in the plan to sustain it into the foreseeable future
with no growth either through investment income or Company
contributions.
As to the 401(k) plan, the Union’s proposal, while it recog-
nized the dual income streams of matching contributions as
well as unmatched contributions, just as had the Company’s,
demanded significantly greater matching contributions of a
significantly greater annual employee contribution, now 6 per-
cent of annual income instead of 3 percent, as well as a signifi-
cantly greater contribution independent of employee contribu-
tion, now 6 percent instead of .5 percent of employee income,
which would be guaranteed by the Company for the length of
the employee’s service. In addition, contributions would be
required in future years to guarantee a return equal to a 10-
percent annual increase in bands as applied to the value of the
current pension plan plus the annuity value of any employee’s
currently accrued prepension leave. Farberman concluded after
having the proposal read and explained by Palmer, breaking,
reading it again, and discussing it with his committee, that this
proposal was regressive and added significant expenses to the
Company.
As to the Union’s compensation proposal, its demand for a
general wage increase of 10-1/2-percent spread over 3 years
remained unchanged from March 7, and, it sought, in addition,
the bonus program which the Company had sought to substitute
for a general wage increase. Also, the Union, contrary to the
Company, demanded set bonuses for 1997 and 1998 provided
the company targets were met. As characterized by Farberman,
the combination of wage increase and two forms of bonus, the
other being the $1000 performance bonus payable in 1996,
clearly created significant additional expenses for the Com-
pany.
As early as March 7, Farberman testified that after reviewing
the Union’s proposal of that date, he informed their committee
that they had failed to embrace the Company’s five key issues
and its final proposal in its entirely. The Company was at the
end of the process and had no more negotiation room to move.
By March 13, when the union membership overwhelmingly
rejected the Company’s final proposal, Farberman now con-
cluded that negotiations were at a state of impasse. As Farber-
man explained, he had been repeatedly told by the Union’s
bargaining committee, by representatives of the National Union
and now by an overwhelming vote of the local that the Com-
pany’s proposal was completely unacceptable to them and at no
time would they accept it. And, Farberman added, he believed
them.
Still, the Company agreed to meet to receive and review the
Union’s counterproposal it intended to submit. A scheduled
meeting for March 18 was not held. At a meeting held on
March 25 the Union asked for time to submit a proposal on
April 1 but that meeting was canceled by the Union and the
parties did not meet until April 8. In a series of letters to the
Union during this period, which have been previously de-
scribed, in particular, his letter of March 21, Farberman reiter-
ated the Company’s position that it did not intend to modify its
final offer and thus the parties were at impasse, and, further,
spelled out that continued rejection of the Company’s proposals
on the five issues at the heart of its final offer which he then
listed could lead to its implementation. In a letter of April 1,
Farberman informed Palmer that on April 8 “A changed Union
position on the issue of pensions will not break the present
impasse in negotiations if the Union continues to reject man-
agement’s position on the other key elements in our final of-
fer.” Farberman then referred to his spelling out those key
elements in his letter of March 21.
Apparently without the knowledge of the Union, a day or
two prior to April 8 the company committee met privately with
the Federal mediator. On April 8, after the Union’s presenta-
tion, there was a break and the parties caucused separately. The
company team reviewed the union counterproposal and with
particular attention to those proposals which deviated from its
own, among them the pension and compensation proposals just
discussed, attempted to affix the costs beyond management’s
final offer. The Company already had prepared spread sheet
tables showing what 1, 2, and 3 percent wage increases would
cost. As to the Union’s option B pension proposal, the Com-
pany had previously investigated the possibility of a lump sum
option in the pension plan and had asked actuaries Buck Asso-
ciates to provide a rough idea of related expenses. As a conse-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 58
quence, Farberman had a good estimate of such expenses even
without having in his possession the exact numbers. They to-
taled $5 to $7 million up front and an additional one half to
three quarters of a million dollars a year, every year. As to the
guaranteed 6 percent cash contribution to the 401(k), it was
easy to make a rough calculation based on payroll costs of ap-
proximately $28 million over the life of a 3-year contract. Far-
berman calculated the cost as $580,000. annually. The Union’s
matching proposal also added additional costs beyond the
Company’s own more limited matching grant. As to the Un-
ion’s option A, its prepension proposal added costs whereas the
Company’s had none.
Following the caucus, the Company returned to the main
meeting room with the mediator present. Farberman explained
they had reviewed the Union’s April 8 proposal and found we
were hopelessly deadlocked. We had issued our best offer, and
we are not prepared to move any further. Farberman said he
believed the negotiations were at impasse. He did not know
what their next steps would be, and he would advise the Union.
In response to Palmer’s inquiry, Farberman said the Company
did not intend to issue another proposal to the Union and that it
had issued its best and final offer. We were at the end of the
line, and negotiations were at impasse.
In justifying the conclusion of an impasse, Farberman
pointed to the wage issue, where the Union had never wavered
in it demands for a general wage increase; the two-tier wage
schedule, which the Union continued to oppose; the Union’s
continued opposition to Tel Flex for (new) employee health
care; its unwavering and conflicting demand for 100-percent
coverage of basic health care for retirees; the Union’s insistence
on qualified employees receiving either the equivalent of pre-
pension leave as an additional pension benefit under option A,
or having their 401(k) account reflect, in part, the annuity value
of the employee’s currently accrued prepension leave under
option B; and the Union’s April 8 attachment of unacceptable
conditions to an ostensibly frozen pension plan which were cost
prohibitive and contrary to the Company’s proposal and its
philosophy.
During his cross-examination by the counsel for the General
Counsel, Farberman described the pattern which the Union was
insisting on was a status quo or continuation of the current level
of employee wages and benefits and retirement benefits cur-
rently enjoyed by represented members at RTC or elsewhere
within the CWA, regardless of the level of benefits. While the
Union never presented any fact sheets summarizing the terms
and conditions of employment in the four categories of wages,
benefits, pension and retiree benefits in place under agreements
with other employers, they did identify employers who made
up part of the pattern as NYNEX, Bell Atlantic, and AT&T.
But the Union did not suggest these three companies had the
same or different levels of benefits in the four categories.
When the General Counsel asked how Farberman could deter-
mine the pattern from varying benefits for employees at each of
the three employers, Farberman answered he was told by the
Union that the pattern in this situation was no change in the
pension plan and a 10-percent increase in the bands.
Farberman knew NYNEX did not have a current contract,
and he had not reviewed labor contracts with the other two
employers. Yet he did not ask the Union for them.
As for the Union’s wage demand of March 7 and April 8,
characterized as “the same as NYNEX,” Farberman knew this
was a lesser demand then the Union’s initial demand of 5 per-
cent yearly. Thus, in its initial demand the Union was appar-
ently not seeking to maintain a pattern with the NYNEX
agreement. Also, by demanding bonuses on April 8, the Union
was clearly demanding more than the pattern. As a conse-
quence of these changes, Farberman wasn’t sure what the bot-
tom line was in terms of a pattern. But Farberman continued to
insist that as to wages the Union’s 10-1/2- to 12-percent de-
mand was in conformity with the CWA pattern of a 10 to 12
percent wage increase over the life of a 3-year contract.
To support his claim that the Union was seeking benefits
previously negotiated elsewhere, Farberman pointed to the
Union’s demand to retain without change the current retiree
health benefits, which appeared to track the CWA’s achieve-
ment at Bell Atlantic, where, as a consequence of a successful
corporate campaign the Union was able to change Bell’s posi-
tion and obtain an agreement for no change in retiree benefits.
However, Farberman was compelled to agree that by demand-
ing 100 percent of retiree present traditional Blue Cross cover-
age or 100 percent of HMO coverage paid for by the Company,
the Union was seeking a change from the prior coverage which
had been company payment of basic coverage and member
payment for a rider package at the member’s option. This
change was also, in Farberman’s view, a deviation from the so-
called industry pattern.
In spite of Farberman’s understanding of the Union’s reli-
ance on maintaining a pattern in its demands made on the
Company, he never sought from the Union a breakdown of the
components of the pattern to which the Union was referring and
he could not relate the Union’s demand for achieving the “pat-
tern” to any particular geographic location, in particular, with
respect to AT&T which, he knew, operated nationwide.
As to the Company’s declaration of impasse and decision to
unilaterally implement its last offer, Farberman explained that
following the close of the April 8 session, he and the Company
bargaining team consulted later that day by telephone and in
person with members of senior management and a collaborative
decision was reached that was unanimous. Quite a few prior
consultations had also been held after February 29 concerning
implementation of the final offer. It was agreed that if the Un-
ion failed to embrace the Company’s final offer it would im-
plement, but when was left open. It was also agreed that the
company team would update management at the conclusion of
each bargaining session.
As to the company decision not to extend the contract be-
yond January 31, 1996, Farberman explained that the Company
was attempting to achieve a fundamental change in the way it
had been operating its business. In such circumstances, sending
a signal to the Union that they were willing to continue the
status quo indefinitely would not have furthered the process of
change.
Farberman also saw no inconsistency in Patrician insisting at
the informal luncheon meeting on February 23 that the Union
ROCHESTER TELEPHONE CORP. 59
would never accept the Company’s proposal to eliminate the
pension plan, and also suggesting company consideration of a
cash balance account in place of the present retirement system.
Patrician’s and the Union’s objection was to the freezing of the
pension as it was proposed, and not including future employees
in the plan and relying solely on the 401(k) plan and with a
minimum company contribution for their retirement benefit.
One could thus conclude that Patrician’s goal in looking into a
cash balance account was to provide a uniform investment ve-
hicle for all present and future employees, such that the present
value in the pension account for each vested employee would
be retained and future employees would be able to achieve a
form of parity through a 401(k) plan. Looked at this way, the
Union’s April 8 pension and 401(k) proposal in option B seeks
to achieve these same objectives, by retaining the value present
employees had achieved and would be expected to continue to
achieve in the existing pension plan, but now achieved in the
form of a guaranteed company contribution to a single 401(k)
plan which would be required to generate the same values for
each employee as an ongoing defined benefit pension plan.
Under such a proposal, Patrician could readily approve the
freezing of the current pension plan. Whether this concept
exhibited sufficient movement in the Union’s position on April
8 such that the Company would be required to explore its rami-
fications and the Union’s willingness to move or concede fur-
ther is the central issue in this case.
In Farberman’s view, the Union’s April 8 counterproposal
sent him a signal that if the Union was going to go down the
employer’s road they would make it extremely expensive for
the Company. On April 8 Farberman did not believe that the
Union in offering its April 8 proposal was attempting to close
the gap between the parties in negotiations, even though he also
believed the Union was at the table for the purpose of reaching
a collective-bargaining agreement and, further, that the Union
believed on April 8 the parties were not at impasse.
As Farberman described them, the Company’s goals in enter-
ing bargaining were to effectuate a fundamental change in the
way it incented, compensated, and motivated its employees.
The Company was facing a radical change in its business envi-
ronment both with respect to new competitors and with respect
to price. Structural changes were needed in the way it con-
ducted its business. It needed to hire more employees, and to
align the goals and objectives of its employees so they focused
on providing superior customer service. A main focus was on
controlling expenses, increasing revenues and profitability in a
shrinking market which clearly had restrictions on prices.
As for the Company’s selection of a single 401(l) plan as the
sole form for future employees retirement protection, Farber-
man saw some economic advantage long term in moving from
a defined benefit to a defined contributions scheme, but its
primary objective was in giving employees some stake in the
future continued economic health of the Company. Under the
Company’s 401(k) proposal, besides the traditional corporate
match, employees received employer contributions made solely
in company stock and which would vary in the future depend-
ing on the growth and profitability of the business, thus having
the economic well being of the corporation and its staff of em-
ployees rise and fall together. The same objective was made
manifest in the Company’s compensation proposal, where the
size of future employee bonuses were made dependent on both
the corporation and the employees achieving set goals in the
areas of efficiency, productivity, and customer relations and
satisfaction with respect to one set of bonuses, and dependent
upon the Company’s profitability as to other.
When the counsel for the General Counsel sought to explore
the meaning of the use of the term “alignment” by Farberman,
he merely repeated the formula of seeking to align the goals
and objectives of all of their employees so they focus on the
common objective of providing superior customer service. In
doing so, he clearly avoided a direct answer to the question as
to whether alignment between terms or conditions for this bar-
gaining unit and other groups of employees was a bargaining
objective of the Company (Tr. 1348–1349). This, in spite of
the fact that, as this Decision has earlier noted, the Frontier
Bulletin repeatedly stresses the goal of aligning the compensa-
tion, benefits, retirement income and other terms and conditions
of employment of all Frontier employees.
Later, while undergoing cross-examination by union counsel,
Farberman was obliged to concede that at the bargaining ses-
sion held on February 26, he informed the Union in discussing
the pension plan and changes in proposals, “short term is a cost
to us. It is not an economic issue. We are doing it for align-
ment and focus. Potentially in the years ahead it may save.”
In describing the company team’s prior consultations about
lump sum payouts of pension benefits with Buck Associates,
Farberman noted that the consultant had advised that a single
cash sum payout as sought by the Union in paragraph l of its
option B pension proposal was the most expensive variant of
how a lump sum benefit could be structured.
When pressed, Farberman explained that had the Union em-
braced 95 percent of the Company’s final offer, they would
have had to take a close look at it. When questioned whether,
as a result of the retirement of 200 of the most senior employ-
ees, roughly a third of the unit, by April 1996, the Company
had reexamined its focus on the key issues of pension and re-
tiree health care, since the new retirees were now locked into
the Company’s newly implemented retiree benefits and no
longer part of the unit, Farberman said he didn’t believe there
had been. His multiple answers here show either an unwilling-
ness to reexamine bargaining positions in light of a significant
shift in unit demographics or to respond directly to the ques-
tion. (See Tr. 1355–1356.) In either case they support a judg-
ment that, with respect to the goals the Company was seeking
to achieve in bargaining, the goal of obtaining uniformity and
alignment of the Company’s employees with all Frontier em-
ployees’ key terms of employment, was probably the most
significant motivation for adopting the proposals the Company
offered in February 29 and to the end of bargaining, of even
greater weight in the Company’s thinking then its responses to
the new competitive pressures its witnesses described. As
noted earlier, while it would be unlawful to impose the benefits
described in the Bulletin on employees covered by a collective-
bargaining agreement, and the Bulletin precludes it from doing
so, once an agreement has expired, the Company could seek to
impose the uniform compensation, employee and post-
retirement benefits package contained in the Frontier Bulletin,
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 60
provided it had bargained to impasse over its demand to intro-
duce them, as it is seeking to do in this case.
Another way of analyzing the Company’s conduct here is to
look at the themes of alignment and responses to the new com-
petition as really forming a single goal or interrelated goals. In
adopting the Tel Flex benefits program, bonus compensation,
staffing principles, 401(k) plan and the like, Frontier itself,
which had recently doubled in size, through mergers and acqui-
sitions, within 6 months of the PSC’s adoption of the OMP, had
selected a benefit program designed for a competitive environ-
ment in which efficiency, seeking competitive advantages in
the market place, and cost savings resulting from uniformity,
were hallmarks, and was only seeking to integrate its wholly-
owned subsidiary, Rochester Telephone Corp., into this new
system. To the extent there were costs, deemed either exces-
sive or undetermined, which deviated from those contained in
Frontier’s benefit package, they would not be acceptable under
Frontier’s competition driven philosophy.
Under further Union cross-examination, Farberman agreed
that on March 7 he stated to the union team, that he had (previ-
ously) asked the question whether, under no circumstances,
under no scenario, would the Union agree to the Company’s
proposal, specifically pension, to freeze the pension, and the
answer he had received from Ash, Patrician, Flavin, and
Palmer, was no. When now asked whether the Union had not
on April 8 provided a proposal in which it did agree to freeze
the pension, Farberman replied that he viewed that proposal as
not a pension freezing. Implicit in Farberman’s answer, is his
earlier testimony that by providing for a lump sum pay out, or
an upward adjustment in periodic pay out based on CPI, not
part of the existing plan, the Union was adding significant costs
to the existing pension plan that were not comprehended in the
Company’s final offer, and by providing for a guaranteed 6
percent or greater contribution to the 401(k) plan, to be meas-
ured annually by the benefit value of the current pension plan,
the Union was seeking to provide employees with the equiva-
lent of the benefits they would have otherwise received but for
the freezing of the pension plan, well in excess of the costs
associated with that plan or the 401(k) plan which the Company
was willing to provide in its final offer.
Farberman also explained that RTC had petitioned the PSC
for approval of the Open Market Plan in order to free itself
from regulation of its out-of-state operations through the crea-
tion of the holding company structure, the establishment of
Frontier Corp. as that holding company, leaving the way clear
for Frontier’s growth through mergers and acquisitions. This
goal was achieved, but at the cost of the opening up of the local
Rochester telephone exchange market to competition.
In that market, to a certain extent, the Company has become
a wholesale company selling portions of its network to other
companies, thereby avoiding the creation by them of their own
networks, and assuring that it still maintains a certain monopoly
over telephone exchange network in the Rochester area. Fur-
thermore, once there was implementation of the open market
plan, there has been a growth in the Company’s access lines
primarily because of higher demand for such secondary ex-
change services as voice mail, fax, computer and related ser-
vices.
Farberman conceded that the Frontier Bulletin was used in
bargaining—contrary to Farberman I find the company pro-
vided it to the union team—and that it was the best description
of some of the terms that the Company was talking about and
the best source of information on some of the changes it was
proposing. However, Farberman argued it did not contain
company proposals. I am unpersuaded by Farberman’s denial.
It is evident that a number of significant company proposals,
among them, the five key issues, mirror Bulletin provisions,
including Tel Flex managed care,7 except for dental and vision
coverage, disability income benefits, fixed base pay and the
1995 bonus program, the phasing out (freezing) of the defined
benefit pension plan including the specific plan amendments
designed to ease transition, introduction of a single 401(k) plan
and a baseline company contribution of .5 percent as well as a
matching company contribution up to 3 percent of employee
contribution.
Also contrary to Farberman’s earlier denials, I find that he
spoke with the Union about the Company’s desire to achieve
alignment with the Frontier wide benefit program. Finally,
Farberman did concede that “we were seeking to commonize
employees’ compensation and benefits to enable all employees
to be focused on a common goal” (Tr. 1389). By “common-
ize,” Farberman meant to have all employees in the same or
similar Frontier programs and policies. (Tr. 1390.)
During his redirect examination by company counsel, Far-
berman was asked whether he believed there existed the possi-
bility of additional movement on the part of the Union, at the
point when, after reviewing its April 8 new counterproposal, he
told the Union the parties were at impasse. Farberman re-
sponded that he believed the Union may have had more move-
ment or shuffling of positions, but he also believed firmly be-
cause they had told him this many, many times, that they were
not going to make movement to embrace the Company’s posi-
tions on the five key issues. And movement surrounding or on
the periphery which had already been made or could still occur
would not have been satisfactory or meaningful so long as it did
not embrace the Company’s five key issues. Not only had the
Union not said anything between February 29 and April 8
which led him to believe they were prepared unconditionally to
accept the Company’s position on any of the five key issues, to
the contrary, they had told him they would never agree to it. As
further indicated by Farberman, there was no statement from
the Union on April 8 that led him to believe the Union’s coun-
terproposal was simply an interim proposal and another more
generous proposal was right on its heels.
Discussion and Analysis
The complaint alleges that on April 8, 1996, Respondent
prematurely declared its negotiations with the Union had
reached an impasse and unilaterally implemented its last bar-
gaining proposal, including changes in the areas of wages, pen-
sion and prepension leave benefits, employee and retiree health
care for current employees, in violation of its bargaining duty
under Section 8(a)(1) and (5) of the Act.

7 One deviation was the Company’s final offer to permit current
employees only to retain their current health care benefits.
ROCHESTER TELEPHONE CORP. 61
An employee who would otherwise be held to have violated
his duty to bargain by instituting changes in existing terms and
conditions of employment when negotiations are sought or are
in progress, NLRB v. Katz, 369 U.S. 736, 741–743 (1962), is
free to introduce such changes when the negotiations reach an
impasse, provided those changes have been previously offered
to the union during bargaining. Huck Mfg. Co. v. NLRB, 693
F.2d 1176, 1186 (5th Cir. 1982). Inasmuch as neither party is
required to “make concessions or to yield any position fairly
maintained “in collective bargaining, NLRB v. Blevins Popcorn,
659 F.2d 1173, 1187 (D.C. Cir. 1981), impasse is “a recurring
feature in the bargaining process,” Charles D. Bonanno Linen
Service v. NLRB, 454 U.S. 404, 412 (1982). Witness the appar-
ent fact that the impasse being disputed in this case was broken
and an agreement reached over a year later. That later event
cannot be introduced in the instant proceeding to shed light on
the nature of the impasse reached on April 8, 1996, or earlier.
Hayward Dodge, 292 NLRB 434, 470 (1989).
“Whether a bargaining impasse exists is a matter of judg-
ment. The bargaining history, the good faith of the parties in
negotiations, the length of the negotiations, the importance of
the issue or issues as to which there is a disagreement, the con-
temporaneous understanding of the parties as to the state of
negotiations are all relevant factors to be considered in deciding
whether an impasse in bargaining existed.” Taft Broadcasting
Co. 163 NLRB 475, 478 (1967), petition for review denied
Television Artists AFTRA v. NLRB, 395 F.2d 622 (D.C. Cir.
1968). The Board in Taft defined such an impasse as being
reached after good-faith negotiations have exhausted the pros-
pects of concluding an agreement. The reviewing and affirm-
ing court (Leventhal, C.J.) commented that the Board’s finding
of impasse reflects its conclusion that there was no realistic
possibility that continuation of discussion at that time would
have been fruitful, noting further that this is a sound standard of
deadlock, AFTRA v. NLRB, id. at 628 and fn. 17.
Preliminarily, each party seeks to impugn the good faith na-
ture of the negotiations engaged in by the other. In its affirma-
tive defense, the Respondent claims that in reciting the pattern
it wished the Company to adopt, in generally describing that
pattern, and by referring to its wage proposal as being the same
as NYNEX, the union negotiators and attorney were insisting to
impasse on a permissive subject of bargaining, thereby sus-
pending the Company’s duty to bargain. Unlike Borg Warner
Corp., 356 U.S. 342, 351 (1985), Chicago Tribune Co., 304
NLRB 259, 260 (1991), and Electrical Workers Local 135 (La
Crosse Electrical), 271 NLRB 250, 251 (1984), cited in support
by Respondent in its brief, none of the Union’s demands were
about permissive bargaining subjects. The multiple references
included a number made away from the bargaining table by
nonnegotiators, and even those made by negotiators could just
as easily be viewed as a way of informing the Company that the
Union wished to maintain traditional advances in benefits in the
telecommunications industry in general and with RTC in par-
ticular, as the sinister interpretation Respondent would place on
the use of those phrases. The inclusion of the NYNEX wage
settlement language in the March 7 and April 8 proposals can
also be reasonably viewed as descriptive of a wage package to
which a company competitor in a close geographic market
agreed, thereby reinforcing the demand as being reasonable for
this employee. Other than this single instance, the record con-
tains no evidence of any written union proposal referring to or
relying on particular terms or conditions in other units. To the
contrary, many of the Union’s bargaining demands, particularly
in the subject areas which it deemed important, were unique to
the RTC unit, and a number grew out of, or modified past con-
tract terms and addressed real concerns the Union voiced about
the needs of unit employees.
For its part, the Government argues in its brief that a shifting
rationale for its insistence in the five key areas, first a reliance
on alignment, but later one based on economic considerations,
as part of a predetermined course to impose its new corporate
vision, undermined the Company’s bargaining stance and bona
fide claim of achieving an impasse and evidenced a lack of
“good faith” in bargaining. The evidence fails to support such
an argument. Farberman testified and the union witnesses did
not dispute that at early bargaining sessions the Company
sought to impress upon the union team the significance of
changed market conditions in which the Company for the first
time faced serious competitive pressures on costs, services, and
earnings. Later, at times, especially with relation to the Com-
pany’s pension and 401(k) and retiree health care proposals,
Farberman admitted the Company’s interest in achieving
alignment with the Frontier employee benefit program set forth
in the Bulletin. His unwillingness to be open about this and
seeming lack of candor on this score during cross-examination
represents a company attempt to minimize the importance it
attached to one of its bargaining goals, perhaps because of the
adverse impact it felt this might have on its good faith in reach-
ing impasse. Yet, the Government does not argue that an insis-
tence on achieving alignment or unity with other Frontier enti-
ties on employee benefits is an illegal, or even, a permissive
bargaining posture (in AFTRA v. NLRB, supra at 626 the court
noted, without disapproval, that the Company was seeking
major changes to bring the contract in line with its contracts in
other parts of the country), only that the Union was unaware of
a change in goals, particularly at the April 8 session when it
received no feedback of the Company’s reliance on its rough
costing out of the Union’s counterproposal. I find that the
Company’s reliance on both alignment and the new competitive
environment was consistently exhibited throughout the bargain-
ing and, indeed, as I have earlier noted, represented a single, or,
at least, overlapping and integrated, goals.
The Union, in its brief, also seeks to impugn the Company’s
good faith in bargaining at pages 4, 24, 34, and 35 of its brief.
However, it is clear that the Union’s charge of surface bargain-
ing was dismissed by the Region following an investigation,
and that dismissal was affirmed after the Union’s attorney sub-
mitted a lengthy letter brief seeking to reverse the Region. In a
dismissal letter which I earlier quoted, affirmed on appeal, the
Acting Regional Director found insufficient grounds to con-
clude that the Company had engaged in surface bargaining after
having had an opportunity to review the facts regarding the
Company’s bargaining stance, including its goal of achieving
alignment and its fixed positions on the five key issues, from
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 62
which it deviated little, over the final 2 months of bargaining.8
Thus, any reliance which either the Government or Union seeks
to place on the Company’s alleged lack of good faith during the
course of bargaining is rejected.
I have previously found that Farberman’s reliance on com-
ments Flavin made at the March 7, 1996 bargaining session was
misguided and did not support his conclusion that the Union
was unwilling to enter into and set aside tentative agreements
on individual bargaining terms pending a final over all agree-
ment on a successor contract. In fact, as I pointed out, a num-
ber of agreements were made at, and following, that session
and Farberman acknowledged the Union’s willingness to with-
draw prior positions and thus resolve differences over specific
terms, with remaining differences over other terms being of a
minor or technical nature. However, Farberman’s misreading
of Flavin’s response to his question about the willingness of the
Union to embrace the Company’s 401(k) plan, did not, in my
judgment, undermine or compromise the Company’s positions
and its responses during subsequent discussions with the Union
on the pension 401(k) issues and, in particular its response to
the Union’s April 8 counterproposal on these issues.
In answering questions during his examination about the
Company’s understanding of and response to the union pension
and 401(k) counterproposal set forth at paragraph 21, contrary
to the counsel for the General Counsel’s conclusion at page 20
of his brief, Farberman did not admit that the Union’s pension
and prepension proposals represented movement towards Re-
spondent’s position. As I have earlier noted, after stating that
the first three sentences of the Union’s option B proposal did
bring the parties closer together, Farberman then went on to
explain in detail how the multiple conditions the Union had
placed on its agreement to freeze the pension and eliminate
prepension leave starting with the fourth sentence, and how the
subsequent two paragraphs of option B relating to the single
401(k) plan, all added significant costs not comprehended by
the Company’s final offer and were in fact, seriously regres-
sive. (Tr. 1183–1191.) Aside for these union demands which
separated the parties significantly, Farberman here also referred
to the Union’s Option A which added other costs related to the
prepension leave, as well as its compensation proposal which as
late as April 8, would have added a substantial wage increase to
the Company’s far more limited undertaking to provide bo-
nuses geared to profits and productivity, as widening a continu-
ing breach between the parties justifying its declaration of an
impasse in bargaining.
From the foregoing, it is evident I have concluded that the
Company did not engage in either “bad-faith” bargaining or
bargaining which either failed to take into account changes in
the Union’s bargaining positions or minimized the effort by the
Union to seek to arrive at tentative agreements on individual
issues where the changes in the parties’ positions warranted

8 In accordance with the conclusions of the Acting Regional Director
and Office of Appeals, I conclude that the Union’s attempt to show that
the Company’s failure to respond for a period of time to its request for
information about possible sale of the business, is not relevant to the
issues which led to the impasse and, in any event, was subsequently
rendered moot.
them. I have also concluded that for its part the Union did not
engage in “pattern” bargaining seeking to impose terms primar-
ily because they had been agreed to by other employers or in
other bargaining units.
Turning to other relevant factors considered in determining
whether a bargaining impasse occurred on April 8, by that date
the parties had met 50 times. It is also true that written propos-
als were not exchanged until December 14, 1995. Thereafter,
the parties met about 15 times in formal bargaining sessions
and at least once informally and engaged in an extensive ex-
change of correspondence, including submission of comprehen-
sive information from the Company to the Union. As early as
December 14, the Company was advising the Union of its in-
tent to eliminate the payment of prepension leave, establish a
standard corporate benefit and retirement plan with the Frontier
Bulletin serving at least as a guide for its contents, eliminate
tier, meal and mileage payments, and establish a second-tier
wage and benefit schedule. Accordingly, well before the expi-
ration of the agreement on January 31, 1996, the Union had
become aware of the Company’s intent to freeze the pension,
eliminate prepension and general wage increases, conform the
health benefits plan to the Frontier program by introducing Tel
Flex and limiting company contributions for health insurance,
particularly for rider coverage, and utilizing a single 401(k)
plan with limited company contributions as the sole retirement
income vehicle for all new employee and as a significant such
vehicle for all other pension eligible employees.
The counsel for the General Counsel argues that by virtue of
these series of company proposals, which constituted a drastic
change, in direction and, in the Union’s view, a severe reduc-
tion in, benefits injurious to employees, the 40-year history of
bargaining between the parties must be seriously discounted.
As the period of sustained bargaining, spanning the time frame
during which comprehensive bargaining proposals were ex-
changed and reviewed, covered only 15 odd sessions out of a
total of 50, the period of time during which the Union could be
expected to absorb, become informed about, and respond intel-
ligently to such drastic changes until the Company’s declared
impasse, was severely limited and consequently, legally unjus-
tified. The General Counsel further argues that to the extent the
Company failed to provide timely relevant information sought
by the Union during this time frame, the Union lacked the ca-
pacity to bargain and thus the Company’s declaration of im-
passe on April 8 was premature.
I am not persuaded by these arguments. As I have noted,
and reiterated, the Union was very early made acutely and con-
tinuously aware of the changed market conditions introduced
with approval of the OMP, and the competitive forces the
Company was already facing which it argued, required it to
limit costs, become more efficient and responsive to customer
needs for increased service and more competitive pricing. In-
deed, even before the onset of bargaining, the Union had pro-
vided written support for approval of the OMP and so was, or
should have been, generally aware of the consequence of the
changed local market conditions. Surely, upon its receipt early
in bargaining of copies of the Frontier Bulletin, which spelled
out the parameters of the new employee benefit plan to which
the Company intended to conform insofar as it was possible,
ROCHESTER TELEPHONE CORP. 63
the Union had received first hand knowledge of the direction
the company bargaining would take. Thus, there was sufficient
time over the 6-month bargaining timeframe, and even within
the almost 4 months from receipt of the Company’s first set of
written proposals, for the Union to seek to satisfy employer
goals. Surely, by the time the Company issued its final pro-
posal on February 29, 1996, the Union, which had already been
engaged in a major corporate campaign to seek reversal of the
Company’s bargaining plan, had sufficient time to modify its
own proposals to seek major accommodations with the Com-
pany’s final offer with respect, in particular, to the benefit
package. In this respect, I note here my rejection of the Gen-
eral Counsel’s claim that the Union was taken by surprise by
the Company’s final offer of February 29 and by its rejection of
the Union’s and Ash’s February 26 demand to continue the
pension plan, particularly in light of Farberman’s credited de-
scription of his chance encounter with Ash at the February 26
session.
I also do not agree with the General Counsel that the Union’s
information requests forestalled the declaration of impasse.
The counsel for the General Counsel does not point to any par-
ticular request which the Company did not answer or delayed
answering which adversely impacted upon the Union’s timely
preparation of counterproposals in the five key areas. I have
recounted, in detail, the Company’s positive responses to all
information requests. In particular, I have noted McGrath’s
facility recollection that the Company did not, by March 20,
provide the detailed information relating to company subcon-
tracts. Accordingly, the counsel for the General Counsel’s
reliance on Dependable Building Maintenance Co., 274 NLRB
216 (1985), which held a declaration of impasse to be prema-
ture where the Union had insufficient time to review requested
information relevant to the negotiation, is misplaced.
As to the subcontracting issue, the Acting Regional Direc-
tor’s dismissal of the union charge in Case 3–CA–19917 alleg-
ing the failure to abide by terms of the subcontracting agree-
ment in the expired contract as a refusal to bargain, was af-
firmed on appeal by the General Counsel, who held that dispute
to be one over contract interpretation. The Acting Regional
Director, in addition, found that the subcontracting did not have
an adverse impact upon the bargaining unit employees, and this
finding was not disturbed on appeal.
It is also evident from the occasions on which Farberman
was informed by Palmer, Ash, and Patrician, in so many words
or by the strongest implication that the Union would never
agree to freeze the pension for eligible employees thereby ex-
cluding future employees from the pension plan and relying
solely on the 401(k) for an inadequate retirement protection for
all employees, that the Union was well aware by February 23,
1996, a month and a half before the Company declared im-
passe, of the parameters of the Company’s pension and 401(k)
proposals and had reviewed voluminous information submitted
by the Company, and had studied in detail the adverse impact
these proposals would have on employee and retiree benefits.
While it is true that over the latter course of bargaining from
early January, to early February 1996 the parties had signed off
on 22 tentative agreements, and had resolved disputes over
several other bargaining subjects thereafter without signing off
on them, major differences remained over the issues which the
Company, and even the Union viewed as key issues to resolv-
ing their dispute and agreeing to a successor agreement. I have
no doubt that the Union also viewed the second-tier wages, sub-
contracting, and overtime, among other issues, as significant in
the continuing dispute. But the Union, by statements its repre-
sentatives made at the sessions from February 26 onward, and
by the counterproposals it made and sought to justify, clearly
saw, as did the Company, that unless the five key issues were
resolved there was no real chance of bridging the gap between
them.
The central inquiry thus becomes whether the Union made
sufficient progress in meeting the Company’s perceived needs
and goals by the counterproposals it made and by the signals its
conduct both at, and away from, the bargaining table conveyed
to the company team, particularly its spokesperson Farberman,
as time passed beyond the issuance of the Company’s final
proposal and as Farberman continued to goad and push the
Union to recognize the impasse which was looming.
My conclusion is that by April 8, 1996, the parties were
deadlocked on each of the five key issues and that even the
Union could not have reasonably believed that its counterpro-
posals of March 7, and particularly April 8, warranted the
Company in continuing to bargain at that time. I accord little
weight to contrary statements on the record and in correspon-
dence made by Palmer, and conclude, just as did the adminis-
trative law judge in Grand Auto, 320 NLRB 854, 858 (1996),
that the union negotiator’s understanding that the parties were
not at impasse, was colored by the fact that he simply did not
want impasse or implementation of the final offer. Just as in the
instant proceeding, the Union’s position in Paccar was driven,
in part, by the political repercussions of agreeing to reduce
employee rights or benefits. It is thus apparent that the Taft
factors I have reviewed and applied support finding an impasse
on April 8.
From mid to late February 1996, the Company’s position
was firm, and it continually informed the Union that it was not
prepared to move or reexamine its position in the face of con-
tinued union intransigence on wages, pension, employee and
retiree health benefits and prepension leave. The Union’s delay
in responding to the Company’s firm positions and, indeed
warnings that, without serious movement on these issues, it was
prepared to unilaterally implement its final offers, can only be
explained by the Union’s unwillingness to give up a sufficient
guaranteed minimum retirement income for present and future
employees, and maintained and improved salary levels, and its
fear that if it did so, it would not be serving the best interests of
its members, and the CWA would face serious repercussions in
bargaining nationwide in other units.
The Union’s response was firm and uniform, expressed on
the record most directly by McGrath but also by Patrician and
Palmer, in remarks attributed to them and repeated by Palmer
that the Union could not afford to give up for its members, the
value of the present pension plan and that only guaranteed con-
tributions of a certain fixed level in a savings and investment
vehicle, however described, would satisfy the perceived needs
of both the local union members and the international Union.
These bargaining goals, expressed in abstruse and complicated
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 64
language in the Union’s April 8 counterproposal was readily
understand by Farberman as a rejection of the Company’s final
proposals. In this respect the Union’s contemporaneous corpo-
rate campaign was viewed, not unreasonably by the Company,
as an effort to compel it to recognize the Union’s and employ-
ees needs as expressed in the proposals its team made at the
bargaining table. Under such circumstances, parties to negotia-
tions are not required to “to engage in fruitless marathon dis-
cussions at the expense of frank statement” during negotiations,
NLRB v. American National Insurance Co., 343 U.S. 395, 404
(1952).
When Farberman declared impasse and the Company deter-
mined to implement its last offer, neither at the table nor in his
letter response to Farberman, did Palmer indicate what subject
areas the Union was prepared to move on and to what extent it
was prepared to move. Neither did Palmer explain at the table
the source of monies which, in his testimony, he viewed as
sufficient to fund the lump sum payout in option A or the guar-
anteed 6-percent contribution to the 410(k) in option B, which
was disputed by Farberman at trial. The Union thus failed at a
crucial meeting at a time when impasse was imminent, to pro-
vide the Company with any signal that it was amenable to fur-
ther movement. I conclude that insofar as it appeared to accept
the principles of pension freezing, prepension leave discontinu-
ance and a single 40l(k) savings and investment plan, its accep-
tance was illusory. I have previously presented Farberman’s
view of the regressive nature of its offers and I agree with him.
Upon the facts appearing of record, I conclude that the Com-
pany did make approximate calculations in caucus, and rea-
sonably concluded that the costs generated by the Union’s
wage, pension and 401(k) proposals were prohibitive. I further
conclude that the Union was aware that the increased costs
implicit in its proposals would reasonably create a serious prob-
lem for the Company. Based on this conclusion, I reject the
General Counsel’s argument at page 20 of his brief that Re-
spondent’s failure to identify the economic nature of its objec-
tions to the Union’s option A and B pension/401(k) proposal
prevented the Union from showing additional flexibility.
Just as the Board notes in Taft Broadcasting Co., supra, in a
similar conflict, the radical changes the Company wanted in
certain terms of employment, when viewed by the Union,
meant serious loss to its members. Both parties took strong
positions. Even the acting regional director here has described
the Company as engaging in hard bargaining and I would agree.
In spite of the radical and fairly extreme nature of the Com-
pany’s economic proposals the Board has also stated that it will
not directly or indirectly compel concessions “or otherwise sit
in judgment upon the substantive terms of collective-bargaining
agreements,” Chevron Chemical Co., 261 NLRB 44, 46 (1982).
It is also true that the Union maintained what it perceived to be
a principled position to provide its members a sufficient retire-
ment income and salary while employed which would maintain
their current standard of living in the face of imponderables
created by the new competitive market, volatility in the price of
the Company’s stock and Frontier’s Corporation effort to align
all affiliates. But, just as the Board noted in Taft, on similar
facts, progress was imperceptible on the critical issues and each
side, truly were aware they were further apart on some of these
issues, particularly compensation, pension and the 40l(k) plan,
than when they had begun negotiations. In accord: Prentice
Hall, Inc., 306 NLRB 31, 37, 40 (1992), on the issue of im-
passe; Times Herald Printing Co., 223 NLRB 505 and fn. 5
(1976); Larsdale, Inc., 310 NLRB 1317, 1320 (1993); Hayward
Dodge, 292 NLRB 434, 468–470 (1989).
Inasmuch as the mediator was sought by each of the parties
for different reasons, the Company in order to convince the
Union to embrace its key issues, and the Union to persuade the
Company to change its fixed positions on wages, pension and
the like, and was only introduced into the process after posi-
tions had become hardened on each side and were unlikely to
be influenced by mediation, I am not persuaded that the very
limited involvement of the Federal mediator, his single pre-
session briefing by the Company and his participation at only
the last abbreviated bargaining session, warrants the conclusion
that his further participation in the bargaining process would
have foreclosed the declaration of impasse at the April 8th ses-
sion, or that further bargaining at this time, even with the me-
diator’s assistance, would not have been futile. See, e.g., Pow-
ell Electrical Mfg. Co., 287 NLRB 969 (1987).
The counsel for the General Counsel places great reliance on
the analysis and holding in Serramonte Oldsmobile, 318 NLRB
80 (1995), to support its argument that the Board has created a
very high standard for establishing futility in bargaining. In
Serramonte, the Board affirmed the administrative law judge
who had concluded that after a bargaining impasse had oc-
curred, so long as the Union had indicated, however ambigu-
ously and even insincerely, a willingness to take a further look
at the employer’s flat rate and 401(k) proposals, “negotiations
had not reached a point where there was no realistic possibly
that continued discussion would have fruitful.” Id. at 98. The
administrative law judge concluded that under these circum-
stances, the union lawyer’s comments so characterized, should
have caused the employer to contemplate what the Union was
reconsidering and to have tested and probed the announced
change in position. The short answer to this argument is that
unlike Serramonte, no bargaining impasse had taken place
when the Union presented its April 8 counterproposal. Fur-
thermore, neither by its counterproposal nor by any contempo-
raneous statements did Palmer or any one else on the union
committee, signal any positive movement. As I have earlier
concluded, by virtue of the multiple conditions which it at-
tached to its proposals, the Union’s claimed adoption of the
principles of a frozen pension plan, ending of prepension bene-
fits and a single 401(k) plan as contemplated by the Company’s
final offer, was illusory. If anything, the signal from the Union
in its presentation, was that it sought parity with the values and
benefits contained in the current pension plan and prepension
leave through the vehicle of the 401(k) plan. Its proposal was
clearly regressive and was so understood by the Company.
Thus, Serramonte is also inapposite for this reason.
There is another reason why I reject Serramonte as support-
ing the Government’s position. On judicial review before the
District of Columbia Circuit Court of Appeals (opinion by
Chief Judge Harry Edwards) the Board in Serramonte was re-
versed as to its conclusions with regard to employer Service
Plaza, and the Court took particular pains to reject the adminis-
ROCHESTER TELEPHONE CORP. 65
trative law judge’s reasoning on the facts of record on the very
point which the General Counsel urges before me. Thus, the
court noted the absence of any “substantial evidence” in the
record to support the conclusion that the impasse (which the
Board found and the court did not dispute) was subsequently
broken by the assertion of a union position which was hardly
free of ambiguity. The court further noted that the Board itself
has indicated that a party’s “bare assertions of flexibility on
open issues and its generalized promise of new proposals [do
not clearly establish] any change, much less a substantial
change” in that party’s negotiating position, citing Civic Motor
Inn, 300 NLRB 774, 776 (1990), for this proposition. The
court concluded that there must be substantial evidence in the
record that establishes changed circumstances sufficient to
suggest that future bargaining would be fruitful, Serramonte
Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232–233 (D.C. Cir.
1996), reversing Serramonte Oldsmobile, 318 NLRB 80
(1995). It thus appears that Civic Motor Inn more appropriately
represents the Board’s position as to the nature of the evidence
necessary to show that an impasse once established, has been
broken and that circumstances exist under which an employer
has an obligation to probe a union’s assertion of a change in
position. At the minimum, such a change must surely encom-
pass a new position or specific proposals responsive to the em-
ployer’s bargaining proposals. Such was not the case in Ser-
ramonte nor in the instant proceeding.
As a consequence of the foregoing statement of facts and le-
gal analysis I am persuaded, and conclude that Respondent has
established by a preponderance of evidence, see North Star
Steel Co., 305 NLRB 45 (1991), that the parties were at im-
passe on April 8, 1996, and, accordingly, Respondent was free
to unilaterally implement its final offer as of that date.
CONCLUSIONS OF LAW
l. The Respondent, Rochester Telephone Corporation, is,
and has been at all times material, an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of
the Act.
2. The Union, Local 1170 of the Communications Workers
of America, is, and has been at all times material, a labor or-
ganization within the meaning of Section 2(5) of the Act.
3. The General Counsel has not established by a preponder-
ance of the evidence that the Respondent has violated the Act in
any manner as alleged in the complaint.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended9
ORDER
The complaint is dismissed.

9 If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.