Sheet Metal Workers Local 20 (George Koch Sons)

National Labor Relations Board - Board Decisions

Mar 25, 1992

306 N.L.R.B. 834 (N.L.R.B. 1992)

834
306 NLRB No. 162
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The judge found that the Respondent violated Sec. 8(b)(3) of the
Act by bargaining to impasse over a Work Preservation clause and
by insisting on an Interest Arbitration clause as a condition of reach-
ing agreement on a new labor contract, but that the Respondent did
not violate Sec. 8(e) of the Act because the parties failed to ‘‘enter
into’’ a collective-bargaining agreement containing the Integrity,
Work Preservation, and Interest Arbitration Clauses. No exceptions
to these findings were filed.
The judge also found that the Respondent violated Sec. 8(b)(3) by
bargaining to impasse over the Integrity clause. The Respondent has
excepted to that finding.
2 The Respondent excepts to the requirements in the judge’s rec-
ommended Order that the Respondent mail a copy of the notice to
all employers and employer associations with whom the Respondent
has a collective-bargaining relationship. The Respondent argues that
such an order is inappropriate because the complaint did not allege
either that the Integrity Clause was included in any other labor
agreement to which the Respondent is signatory, or that the Re-
spondent sought to obtain the Integrity Clause in any of its other
labor agreements. We find merit to this exception. The stipulated
evidence shows that it was the policy of the Respondent’s Inter-
national to get this clause into all its locals’ contracts, and that the
Respondent had sought and obtained this clause in its collective-bar-
gaining agreement with Sheet Metal Contractors Association of
Evansville, Inc. The International, however, is not a party to this
proceeding. Further, there is no evidence that the Respondent adopt-
ed this policy by seeking to obtain the Integrity Clause in its collec-
tive-bargaining agreements with any other employer or employer as-
sociation. Accordingly, we shall modify the Order to provide that the
Respondent mail a copy of the notice to the Charging Party and to
the Sheet Metal Contractors Association of Evansville, Inc.
Sheet Metal Workers Local Union No. 20, a/w Sheet
Metal Workers’ International Association,
AFL–CIO and George Koch Sons, Inc. Cases
25–CB–6260 and 25–CE–36
March 25, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS OVIATT
AND RAUDABAUGH
On December 6, 1990, Administrative Law Judge
Arline Pacht issued the attached decision. The Re-
spondent filed exceptions and the General Counsel
filed a brief in answer to the Respondent’s exceptions.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions1 and brief and has de-
cided to affirm the judge’s rulings, findings, and con-
clusions and to adopt the recommended Order as
modified.2
The Respondent excepts to the judge’s finding a vio-
lation of Section 8(b)(3) of the Act in regard to the In-
tegrity Clause because the judge ‘‘failed to undertake
a severability analysis’’ of the Integrity Clause similar
to the analysis requested by the court of appeals in
Sheet Metal Workers Local 91 (Schebler Co.) v. NLRB,
905 F.2d 417 (D.C. Cir. 1990), enfg. in part and re-
manding in part 294 NLRB 766 (1989), which also in-
volved the Integrity Clause. The Respondent urges the
Board to consolidate this case with Schebler, and con-
duct a severability analysis. We find no merit in these
contentions.
We note that, after the Respondent filed its excep-
tions in the instant case, the Board issued its Supple-
mental Decision and Order in Schebler. See Sheet
Metal Workers Local 91 (Schebler Co.), 305 NLRB
1055 (1991). The Board reaffirmed its earlier finding
that the Integrity Clause, as a whole, was unlawful and
held that the clause would not be rendered valid if one
particular provision were removed. Thus, the Board re-
jected the unions’ severability argument. Accordingly,
nothing in the Board’s supplemental Schebler decision
supports the Respondent’s position here that a sever-
ability analysis is appropriate.
In addition, we note that determination of whether
a union violates Section 8(b)(3) by insisting to impasse
on contract language that constitutes an unlawful sub-
ject of bargaining requires that the Board examine the
language upon which the union actually insisted. In
this case, as the judge found, the Respondent insisted
to impasse upon the entire Integrity Clause. That
clause, as a whole, is unlawful. Therefore, a violation
of Section 8(b)(3) has been established. The issue of
whether the Respondent lawfully could have insisted to
impasse on different contract language is not before
the Board and there is no reason for us to express any
opinion on it.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge as
modified below and orders that the Respondent, Sheet
Metal Workers Local Union No. 20, a/w Sheet Metal
Workers’ International Association, AFL–CIO, Evans-
ville, Indiana, its officers, agents, and representatives,
shall take the action set forth in the Order as modified.
Substitute the following for paragraph 2(b).
‘‘(b) Sign and mail a copy of the notice to the
Charging Party, George Koch Sons, Inc., and to the
Sheet Metal Contractors Association of Evansville,
Inc.’’
Ann Rybolt, Esq., for the General Counsel.
William R. Groth, Esq. (Fillenwarth, Dennerline, Groth &
Baird), of Indianapolis, Indiana, for the Respondent.
Arthur D. Rutkowski, Esq. (Bowers, Harrison, Kent & Mil-
ler), of Evansville, Indiana, for the Charging Party.
DECISION
STATEMENT OF THE CASE
ARLINE PACHT, Administrative Law Judge. Pursuant to
charges filed on November 25, 1988, a consolidated com-
plaint issued on August 25, 1988, as amended on May 16,
1989. The complaint alleges that the Respondent, Sheet
835SHEET METAL WORKERS LOCAL 20 (GEORGE KOCH SONS)
1 The Respondent and Charging Party entered into a settlement
agreement resolving allegations in the complaint concerning a suc-
cessor Paint Finishing Agreement, covering a separate unit of Koch
employees who were engaged in fabricating oven and paint finishing
systems.
2 Joint exhibits will he referred to as Jt. Exh. followed by the ap-
propriate exhibit number.
3 Hereinafter, all events took place in 1987, unless otherwise
noted.
4 Sec. 1. Integrity Clause
A ‘‘bad-faith employer’’ for purposes of this Agreement is an
Employer that itself, or through a person or persons subject to
an owner’s control, has ownership interests (other than a
noncontrolling interest in a corporation whose stock is publicly
traded) in any business entity that engages in work within the
scope of SFUA Article 1 hereinabove using employees whose
wage package, hours, and working conditions are inferior to
those prescribed in this Agreement, of, if such business entity
is located or operating in another area, inferior to those pre-
scribed in the agreement of the sister local union affiliated with
Sheet Metal Workers’ International Association, AFL–CIO in
that area.
An employer is also a ‘‘bad-faith employer’’ when it is owned
by another business entity as its direct subsidiary or as a sub-
sidiary of any other subsidiary within the corporate structure
thereof through a parent-subsidiary and/or holding company rela-
tionship, and any other business entity within such corporate
structure is engaging in work within the scope of SFUA Article
I hereinabove using employees whose wage package, hours and
working conditions are inferior to those prescribed in this Agree-
ment, or if such other business entity is located or operating in
another area, inferior to those prescribed in the Agreement of
the sister local union affiliated with Sheet Metal Workers’ Inter-
national Association, AFL–CIO in that area.
Sec. 2: Any Employer that signs this Agreement or is covered
thereby by virtue of being a member of a multi-employer bar-
gaining unit expressly represents to the union that it is not a
‘‘bad faith employer’’ as such term is defined in Section 1 here-
inabove, and further agrees to advise the union promptly if at
any time during the life of this Agreement said Employer
changes its mode of operation and becomes a ‘‘bad-faith em-
ployer.’’ Failure to give timely notice of being or becoming a
‘‘bad-faith employer’’ shall be viewed as fraudulent conduct on
the part of such Employer.
In the event any Employer signatory to or bound by this
Agreement shall be guilty of fraudulent conduct as defined
above, such Employer shall be liable to the Union for liquidated
damages at the rate of $500 per calendar day from the date of
the failure to notify the Union until the date on which the Em-
ployer gives notice to the Union.
Sec. 3: Whenever the Union becomes aware that an Employer
has been or is a ‘‘bad-faith employer,’’ it shall be entitled, not-
withstanding any other provision of this Agreement, to demand
that the Agreement between it and such ‘‘bad-faith employer’’
be rescinded. A claim for recision shall be processed by the
Union as a contract grievance. . . . [In Local 91’s proposal to
Koch, the three sections of the Integrity Clause were designated
a, b, and c.)
Metal Workers Local Union No. 20, a/w Sheet Metal Work-
ers’ International Association, AFL–CIO (the Local or Inter-
national Union, respectively) violated Section 8(e) and Sec-
tion 8(b)(3) of the National Labor Relations Act (the Act).
The Respondent filed a timely answer denying that it had
committed any unfair labor practices.
Waiving their right to a hearing on the contested allega-
tions of the complaint, the parties entered into a stipulation
of facts regarding negotiations between the Respondent and
the Charging Party for a successor labor contract, referred to
as the ‘‘Building Trades Agreement,’’ or ‘‘BTA.’’1 This
matter, originally assigned to Administrative Law Judge Nor-
man Zankel for decision, was transferred to me following his
untimely demise.
On the entire record, including the stipulation of facts,
joint exhibits,2 and poststipulation briefs submitted by coun-
sel for the General Counsel (General Counsel) and the Re-
spondent, I make the following
I. FINDINGS OF STIPULATED FACT
A. Jurisdictional Findings
At all times material, the Employer, an Indiana corpora-
tion, maintained its principal office and various places of
business in Evansville, Indiana, where it designed, manufac-
tured, and installed oven systems, finishing systems, auxiliary
components, conveyor systems, and various other products
for commercial and industrial customers.
During the past 12 months, the Employer, in the course
and conduct of its business operations, purchased and re-
ceived at its Evansville facility products, goods, and mate-
rials valued in excess of $50,000 and derived gross revenues
in excess of $500,000. The complaint alleges, and I find, that
the Employer is engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
The Respondent is now, and has been at all times material,
a labor organization within the meaning of Section 2(5) of
the Act.
B. Background
Since the mid-1950s, the Respondent, Local Union No. 20,
has represented a unit of Koch employees who perform sheet
metal work as described in article I of Joint Exhibit 1. The
Building Trades Agreement, or BTA (Jt. Exh. 1), the parties’
last labor contract, was effective from May 1, 1984, through
April 30, 1987.3
In fact, the Charging Party did not participate in bar-
gaining which produced the 1984–1987 BTA. Although not
a member of, nor represented by a multiemployer associa-
tion, Koch adopted the collective-bargaining agreement nego-
tiated between Local 20 and the Sheet Metal Contractors As-
sociation of Evansville, Inc. (SMCA), an organization of em-
ployers engaged, inter alia, in fabricating, installing, and/or
servicing ferrous products in the Evansville, Indiana area.
In 1982, the International adopted a policy (Resolution 78)
of granting discretionary wage and benefit concessions to
help signatory employers to better compete with nonunion
firms. Thereafter, in 1985, in an effort to thwart a perceived
threat from contractors who operated both unionized and
nonunionized shops (the so-called double breasted employer)
the International announced a new policy exhorting its local
unions to deny economic concessions to those contractors
who refused to incorporate an ‘‘Integrity Clause’’ in their
collective-bargaining agreements.
The text of the Integrity Clause is reproduced in pertinent
part.4 To briefly summarize, the Integrity Clause requires
that a signatory employer representing it is not a ‘‘bad-faith
employer’’; that is, one who either operates or is affiliated
with any nonunion business performing sheet metal work,
836 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Unless otherwise noted, all events are in 1987.
6 It reads:
d. Work Preservation Clause
The Employer agrees that no evasion of the terms, requirements
and provisions of this Agreement will take place by the setting
up of another business to do work covered by this agreement,
or in any other way attempt to or actually evade or nullify re-
sponsibility hereunder. If and when the Employer shall perform
any work of the type prohibited by Section 1(a) hereof, the
terms and conditions of this Agreement shall be applicable to all
such work.
In the event that the conditions set forth in the paragraph
above are met but the Agreement is not deemed applicable to
the non-signatory entity, then the Employer shall be liable to the
Union for all damages incurred.
whether within or beyond the jurisdiction of the local union,
where the wages, hours, and working conditions are inferior
to those provided in the labor agreement. Further, the em-
ployer must notify the union promptly should it become a
bad-faith employer. Failure to do so would constitute ‘‘fraud-
ulent conduct’’ subjecting the employer to liquidated dam-
ages at the rate of $500 per calendar day. Lastly, the union
is entitled to rescind the agreement on learning of an em-
ployer’s bad faith.
C. The Parties’ 1987 Negotiations
In the latter part of January 1987,5 Koch and the Respond-
ent each notified the other that they wished to reopen and
modify the terms of the BTA due to expire on April 30.
They subsequently agreed to postpone meeting until the Re-
spondent and the SMCA concluded negotiations for a suc-
cessor agreement. The SMCA and the Respondent reached
such agreement on June 24.
Representatives for Koch and Local 20 held their first bar-
gaining session on July 13. However, even before bargaining
commenced, the Respondent notified the National Joint Ad-
justment Board for the Sheet Metal Industry (the NJAB), that
the parties had failed to reach agreement on a successor
BTA. A principal purpose of the NJAB, a body composed
of an equal number of International Union and SMCA dele-
gates, was to resolve disputes between any signatory to the
BTA and the Unions.
In applying to the NJAB, the Respondent was invoking the
Interest Arbitration clause of the BTA which provided, in
pertinent part, that ‘‘any controversy or dispute arising out
of the failure of the parties to negotiate a renewal of this
Agreement’’ may be submitted for resolution to the NJAB.
(Jt. Exh. 1, art. X, § 8.) On learning that the parties had not
yet commenced bargaining, the NJAB ruled on June 24 that
the matter was not ripe for resolution.
Thereafter, between July 13 and October 21, the parties
met on 12 different occasions, exchanged proposals and
counterproposals, offers and counteroffers. Throughout this
period of time, as conditions precedent to consummating a
successor BTA, the Respondent insisted that the Employer
agree to three provisions: the Integrity Clause described
above; a fourth section added to the Integrity Clause but sep-
arately titled ‘‘Work Preservation Clause,’’ in which the em-
ployer pledges that it will not create a double-breasted busi-
ness, but if it does so, it will be subject to the same penalties
set forth in the Integrity Clause; and an Interest Arbitration
clause identical to the one which appeared in the predecessor
agreement, which provided that disputes arising out of the
parties’ failure to negotiate a renewal of their collective-bar-
gaining agreement shall be submitted to the NJAB for reso-
lution. The Work Preservation clause is set forth verbatim
below while the Interest Arbitration provision appears as Ap-
pendix A to this decision.6
Koch agreed to the three proposals, but with certain res-
ervations. Specifically, the Company agreed to accept the In-
tegrity and Work Preservation clauses only if they were
found legal and enforceable by the Board and the courts, it
also agreed to the Interest Arbitration clause, on condition
that both parties consent to submit the dispute to the NJAB.
The Union rejected the Employer’s positions.
In July, both parties submitted additional proposals and
documentation to the NJAB which heard their dispute on
August 4. In an August 7 ruling, the NJAB again declined
to decide the merits of the dispute, but continued to retain
jurisdiction. The parties persisted in their bargaining efforts
into the fall, but by October 28, the date of their last negoti-
ating session, had failed to reach agreement on any term of
a successor BTA.
After considering the merits of the dispute at a hearing on
November 10 at which representatives for Koch and the
Union appeared, the NJAB issued a decision dated Novem-
ber 12 ordering that the parties execute a BTA with terms
identical to those contained in 1987–1991 master collective-
bargaining agreement between the Union and the SMCA.
Thus, pursuant to the NJAB’s ruling, Koch was ordered to
enter into a successor BTA which retained intact the Re-
spondent’s Integrity and Work Preservation clauses. The
Company also was ordered to accept article X, section 8,
which, in accordance with an addendum to the multiem-
ployer agreement, provided that submissions to the NJAB
would be by the parties’ mutual consent, as Koch initially
had proposed.
To date, the parties have not executed a collective-bar-
gaining agreement pursuant to the NJAB’s November 12 di-
rective. Instead, the Company filed unfair labor practice
charges on November 25 protesting, inter alia, the Union’s
bargaining to impasse on an illegal demand for the Work
Preservation and Integrity clauses and the nonmandatory In-
terest Arbitration provision. (Jt. Exh. 16(a).) The Company
has not hired any local members on a regular, full-time basis
since 1983. However, on those occasions when it has tempo-
rarily employed a unit member, Koch has followed the terms
of the 1987 BTA except for the Integrity and Work Preserva-
tion clauses.
D. The Issues
Allegations in the consolidated complaint and the stipu-
lated record pose the following issues:
(1) Whether the parties ‘‘entered into’’ a collective-bar-
gaining agreement containing the Integrity and Work Preser-
vation clauses.
(2) Whether the Integrity and Work Preservation clauses
require that a contractor signatory cease and refrain from
handling, using, selling, transporting, or otherwise dealing in
the product of, or cease doing business with any other em-
ployer within the meaning of Section 8(e) of the Act.
(3) Whether the Integrity, Work Preservation and Interest
Arbitration clauses are nonmandatory subjects of bargaining.
837SHEET METAL WORKERS LOCAL 20 (GEORGE KOCH SONS)
7 Conduct which aims at compelling an employer to enter into
such an agreement may violate Sec. 8(b)(4) but not Sec. 8(e).
8 Enfd. 175 F.2d 686 (2d Cir. 1949), cert. denied 338 U.S. 954
(1950).
(4) If so, whether the Respondent violated Section 8(b)(3)
of the Act by insisting as a condition to consummating a
BTA, that Koch agree to each of the three disputed clauses.
II. DISCUSSION AND CONCLUDING FINDINGS
A. The Parties did not enter into an Agreement
Section 8(e), commonly known as the ‘‘hot cargo’’ clause,
provides in pertinent part that:
It shall be an unfair labor practice for any labor or-
ganization and any employer to enter into any contract
or agreement, express or implied, whereby such em-
ployer ceases or refrains or agrees to cease or refrain
from handling, using, selling, transporting or otherwise
dealing in any of the products of any other employer,
or to cease doing business with any other person, and
any contract or agreement entered into heretofore or
hereafter containing such agreement shall be to such ex-
tent unenforceable and void.
Because Section 8(e) prohibits unions and employers from
‘‘entering into’’ hot cargo agreements, it is necessary to ask
whether the parties in this proceeding actually executed a
contract, before determining if it contains an unlawful clause.
Here, paragraph 47 of the stipulated facts provides a ready
answer to this threshold inquiry. It states ‘‘At no time since
November 12, 1987 have the Charging Party and the Re-
spondent executed an agreement to succeed Joint Exhibit 1.’’
Thus, it is beyond dispute that the Respondent and the
Charging Party have no contract and without that, there was
no ‘‘entering into.’’
Koch applied most terms of the BTA to unit members who
it hired on a temporary basis but refused to adopt the chal-
lenged Integrity and Work Preservation clauses. The Com-
pany’s partial compliance with the BTA cannot create an in-
ference that it impliedly entered into a constructive agree-
ment. To the contrary, its rejection of the contested provi-
sions and its filing unfair labor practice charges, ‘‘revealed
that it was not agreeing with the Respondent as to an 8(e)
arrangement.’’ Teamsters Local 754 (Glenora Farms), 210
NLRB 483, 490 (1974).
The General Counsel relies on a handful of cases to sup-
port the contention that Respondent’s submitting the dispute
to the NJAB and the NJAB’s decision directing the parties
to execute an agreement containing the contested provisions,
somehow constituted an ‘‘entering into.’’ See, e.g., Team-
sters Local 467 (Beaumont Concrete), 265 NLRB 1679,
1681 (1982); Teamsters Local 89, 254 NLRB 783, 785
(1981); Hotel & Restaurant Employees Local 531, 237
NLRB 1204, 1206 (1978); Boilermakers (Bigge Drayage
Co.), 197 NLRB 281, 287 (1972).
The General Counsel’s reliance on the above-cited cases is
misplaced. To be sure, these precedents clearly hold that a
demand for compliance with or the maintenance, enforce-
ment, or reaffirmation of a hot cargo clause may represent
an ‘‘entering into,’’ but only where a collective-bargaining
agreement already is in effect. A mere demand that an em-
ployer enter into a hot cargo agreement does not satisfy the
‘‘entering into’’ requirement.7
Where, as here, an employer and union have not entered
into a collective-bargaining agreement, there can be no viola-
tion of Section 8(e). Accordingly, this allegation in the com-
plaint must be dismissed.
B. The Respondent Violated Section 8(b)(3)
1. The integrity and work preservation clauses are
illegal bargaining subjects
Although an element critical to finding an 8(e) infraction
is missing here, this does not end the matter, for the com-
plaint also alleges that the Respondent violated Section
8(b)(3) by insisting to impasse on nonmandatory subjects of
bargaining; that is, the Integrity, Work Preservation, and In-
terest Arbitration clauses.
Section 8(b)(3) simply states that it shall be unlawful for
a labor organization ‘‘to refuse to bargain collectively with
an employer.’’ The Board and the courts have given content
to this bare language by categorizing bargaining subjects into
three areas—mandatory, permissive, and illegal. Generally
speaking, mandatory subjects are those which vitally affect
terms and conditions of employment of bargaining unit em-
ployees or have a substantial impact on the bargaining unit,
so that neither party is legally obligated to yield. NLRB v.
Borg Warner Corp., 356 U.S. 342, 349 (1958). As for per-
missive subjects, ‘‘each party is free to bargain or not to bar-
gain, and to agree or not to agree.’’ Id. In other words, if
either party refuses to bargain about a permissive subject,
there is no violation of Section 8(a)(5) or Section 8(b)(3).
Conversely, insistence to the point of impasse on including
a permissive subject as a prerequisite to entering into an
agreement constitutes a refusal to bargain. Ibid.
Of course, neither an employer nor union may insist on in-
cluding a clause in a collective-bargaining agreement which
would be illegal under the Act. Id. at 360 (J. Harlan, concur-
ring). Early on, in Maritime Union (Texas Co.), 78 NLRB
971 (1948),8 in finding that insistence on an illegal provision
constituted a refusal to bargain, the Board stated:
Compliance with the Act’s requirement of collective
bargaining cannot be made dependent upon the accept-
ance of provisions in the agreement which, by their
terms or in their effectuation, are repugnant to the Act’s
specific language or basic policy.
A clear example of an illegal bargaining demand is one
which insists on including in the agreement, a hot cargo
clause violative of Section 8(e). See, e.g., Operating Engi-
neers (York County Bridge), 216 NLRB 408–410 (1975),
enfd. 532 F.2d 9012 (3d Cir. 1976), cert. denied 429 U.S.
1072 (1977); Bricklayers Local 5 (General Contractors
Assn.), 152 NLRB 360, 366 (1965), enfd. as modified 378
F.2d 859 (6th Cir. 1967); Graphic Communications Workers,
130 NLRB 985, 991 (1961).
In light of the foregoing precedents, it is necessary to ex-
amine Respondent’s Integrity and Work Preservation propos-
838 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
9 While affirming the conclusion that the Integrity Clause as a
whole had a secondary objective violative of Sec. 8(e), the appellate
court remanded the matter so that the Board could consider whether
any illegality could have been cured by severing the recision remedy
in sec. 3 from secs. 1 and 2 of the clause. 905 F.2d 417.
10 Even if the Union insisted on the Employer’s accepting the In-
tegrity Clause in the good-faith but mistaken belief that its demand
was legal and a mandatory subject of bargaining, this would not be
a valid defense to a refusal-to-bargain allegation. See Associated
General Contractors v. NLRB, 465 F.2d 327 (7th Cir. 1972), cert.
denied 409 U.S. 1108 (1973).
11 In its brief, the Respondent did not claim that the the Integrity
and Work Preservation clauses were privileged under the construc-
tion industry provision of Sec. 8(e). Since the burden of establishing
such privilege rests on the party attempting to invoke it, I find that
the Respondent has waived any reliance on the proviso. See Car-
penters Chicago Council (Polk Bros.), 275 NLRB 294, 296 (1985).
However, even if the Respondent was entitled to claim the protec-
tions of that proviso, I would find such a defense without merit
based on the persuasive analysis in Sheet Metal Workers Local 91,
supra.
als to determine whether they are repugnant to the language
or underlying purpose of Section 8(e). In fact, the outcome
of such an examination is preordained for in a recent deci-
sion, Sheet Metal Workers Local 91 (Schebler Co.), 294
NLRB 766 (1989), enfd. in part and denied in part 905 F.2d
417 (D.C. Cir. 1990), the Board, with court approval, con-
cluded that the Integrity Clause had an unlawful purpose
within the intendment of Section 8(e).9
In Schebler Co., the Board, adopting the decision of the
administrative law judge (judge) ruled that Sheet Metal
Workers Local Union 91 unlawfully entered into a collec-
tive-bargaining agreement with one contractor, Winger,
which contained the same Integrity Clause at issue here. The
Board further held that the Sheet Metal Workers Inter-
national Unions coerced the Schebler Company in violation
of Section 8(b)(4)(ii)(A) by denying it economic relief grant-
ed to other employers who agreed to accept the Integrity
Clause.
In evaluating the lawfulness of the Integrity Clause, the
judge noted, at the outset, that the distinction between a law-
ful primary agreement and a prohibited one turns on ‘‘wheth-
er the agreement or its maintenance is addressed to the labor
relations of the contracting employer vis-a-vis his own em-
ployees’’ or is ‘‘tactically calculated to satisfy union objec-
tives elsewhere.’’ Schebler Co., supra, citing National Wood-
work Mfrs. Assn. v. NLRB, 386 U.S. 612, 644–645 (1967).
In analyzing the Integrity Clause in light of this standard, the
judge concluded that it was not limited to protecting bar-
gaining unit work. Rather, the clause was crafted to pressure
signatory contractors to cease doing business with nonunion
entities, or to use their influence to compel related firms to
adopt union scale wages and benefits under threat of contract
rescission. The judge held that using such methods for an un-
lawful purpose was clearly coercive and violative of Sec.
8(e).
In reaching this conclusion, the judge rejected Respond-
ent’s argument that the Integrity Clause simply required sig-
natories to supply information on which the union may base
its decision whether to enter into or continue to maintain a
collective-bargaining relationship. Instead, he found that the
information section, which standing alone, might not have a
secondary object, was ‘‘merely part of an overall effort to re-
quire the signatory employer to change the operations of its
related entities under penalty of contract recision.’’ Schebler
Co., supra. In other words, it was only when the first two
sections were read together with the third section that the un-
lawful object of the entire Integrity Clause became manifest.
The judge looked not only to the terms of the clause itself
as evidence of its unlawful intent. He also found that extrin-
sic evidence—the International’s declaration ‘‘that the pur-
pose of the Clause was to force contracting employers to be-
come either ‘100% union or 100% non-union’’’ dem-
onstrated its unlawful intent.
The second contractor in the Local 91 case, Schebler, re-
fused to adopt the Integrity Clause, choosing instead to file
an unfair labor practice charge. The judge reasoned that
granting economic relief to some employers while denying it
to Schebler unless it signed the Integrity Clause was a form
of coercion which had the proscribed object under Section
8(b)(4)(ii)(A) of ‘‘forcing or requiring an employer to enter
into an agreement which is prohibited by section 8(e).’’
Schebler Co., supra.
In the instant case, Koch, like the Schebler Company, re-
fused to enter into an agreement containing the Integrity and
Work Preservation clauses. Thus, as a technical matter, the
Respondent did not ‘‘enter into’’ a hot cargo contract. Never-
theless, the Schebler decision makes it clear that the Integrity
Clause which Local 20 proposed to Koch as the price of
reaching agreement, was repugnant to the basic purpose un-
derlying Section 8(e). Had the Employer agreed to enter into
such a contract, a violation of Section 8(e) certainly would
follow. Sheet Metal Workers Local 91, supra.10
Moreover, a letter from the International to its Locals,
identical to the one relied on in Schebler, explicitly stated the
Union’s avowed interest in compelling contractors to decide
whether they would be ‘‘100% union or 100% non-union.’’
As the judge found in Schebler, this letter buttresses the con-
clusion that Respondent had an unlawful secondary objective.
Section d, the Work Preservation Clause, was no less sec-
ondary in purpose than the preceding sections of the Integrity
Clause. It, too, was framed in terms so broad as to permit
interference with business relationships among employers
who were not necessarily created as alter egos. Moreover, by
its terms, clause d could have applied to such entities even
if they functioned outside the geographical jurisdiction of the
Respondent. Thus, despite its title, this provision was not
limited to preserving bargaining unit work. Further, the Work
Preservation Clause incorporated by reference the preceding
three portions of the Integrity Clause, including the remedial
section permitting contract recision. Thus, the Work Preser-
vation section, like the balance of the Integrity Clause, was
structured in a way as to impose illegal secondary pressure
on signatory employers to satisfy union objectives else-
where.11
Respondent contends in its brief that the Integrity Clause
does not offend Section 8(e) because it does not require that
contractors cease doing business with nonunionized establish-
ments, even though that could be an incidental effect. In re-
jecting Respondent’s contention, I rely on the court of ap-
peals opinion in Schebler, 905 F.2d 417 (D.C. Cir. 1990),
which made short shrift of this same argument:
By prohibiting certain secondary activity based on ‘‘ex-
press or implied’’ agreements, section 8(e) was in-
839SHEET METAL WORKERS LOCAL 20 (GEORGE KOCH SONS)
12 In Schebler, the judge rejected the contention that the Respond-
ent violated Sec. 8(b)(3). However, his reasons for doing so, based
on specific circumstances present in that case, distinguish the out-
come here from the result reached on that issue in Schebler. There,
the judge noted that it was the contractor who initiated the request
for economic relief during the term of an existing agreement, even
though there was no valid reopener clause. The judge reasoned that
since the Respondent had no duty to negotiate or to accede to
Schebler’s request for midterm modification of the contract, merely
proposing a clause violative of Sec. 8(e), did not constitute bar-
gaining to impasse. Schebler, supra. By contrast, in the present case,
the Union insisted that Koch had to accept the Integrity Clause as
the price of reaching a new agreement.
13 Although the NJAB decided in the Company’s favor, that is,
that the Interest Arbitration provision would require submissions by
mutual consent, the Board’s ruling does not alter the fact that the
Respondent admittedly bargained to impasse regarding this non-
mandatory subject prior to the December 10 hearing.
14 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended 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 purposes.
tended to close a loop-hole . . . through which unions
used ‘‘hot cargo’’ clauses to ‘‘exert subtle pressures
upon employers to engage in ‘‘voluntary boycotts.’’ In
the instant case, the Board reasonably concluded that
the contract-recission mechanism of section three ex-
erted the requisite degree of pressure not to deal with
nonunionized contractors. [Citation omitted.]
As noted above, the court of appeals remanded the
Schebler case so that the Board could consider whether the
first two sections of the Integrity Clause would be lawful if
severed from the third section’s penalty of contract recision.
Sheet Metal Workers Local 91 v. NLRB, supra. The re-
manded matter is pending before the Board. However, the ul-
timate disposition of the severability issue would not alter
the result reached in the instant case since the stipulated
record here indicates that the Respondent demanded that
Koch adopt the entire Integrity Clause in an unsevered state.
It is automatic that a labor organization violates Section
8(b)(3) when it conditions its agreement to a new contract
on an employer’s acceptance of an unlawful subject of bar-
gaining. Consequently, the Schebler decision, taken together
with such precedents as York County Bridge, supra; Brick-
layers Local 5, supra; and Graphic Communications Work-
ers, supra, compel the conclusion that by insisting on includ-
ing the unlawful Integrity and Work Preservation clauses in
its contract with Kock, the Respondent violated Section
8(b)(3) of the Act.12
2. The interest arbitration clause is a permissive
bargaining subject
Article X, section 8, which provides that ‘‘any controversy
or dispute arising out of the failure of the parties to negotiate
a renewal of this Agreement,’’ is an Interest Arbitration pro-
vision. See Tampa Sheet Metal Co., 288 NLRB 322 (1988);
Sheet Metal Workers Local 59, 227 NLRB 520 (1976). As
such, it provides a mechanism for resolving disputes which
may arise as to the terms of future contracts. Since it does
not address employees’ terms and conditions of employment
but rather governs the relationship between the employer and
the union, it is a nonmandatory subject of bargaining. Sheet
Metal Workers Local 38 (Elmsford Sheet Metal Works), 231
NLRB 699, 700 (1977).
Of course, parties may agree voluntarily on an Interest Ar-
bitration clause. However, the Board, with court affirmance,
consistently has held that such a provision is a permissive
subject of bargaining. Sheet Metal Workers Local 59, 227
NLRB 520 (1976); Printing Pressman Local 329 (Greens-
boro News), 222 NLRB 893 (1976), enfd. 549 F.2d 308 (4th
Cir. 1977); Columbus Printing Pressman (R. W. Page
Corp.), 219 NLRB 268 (1975), enfd. 543 F.2d 1161 (5th Cir.
1976). Therefore, even though Koch bargained with respect
to an Interest Arbitration provision, it was not legally obliged
to accept the Union’s demand regarding the terms of that
clause. Consequently, Respondent’s insistence to impasse on
its own version of the Interest Arbitration clause constituted
a refusal to bargain within the meaning of Section 8(b)(3).13
Elmsford Sheet Metal Works, supra at 700–701; R. W. Page
Corp., supra at 281–282.
CONCLUSIONS OF LAW
1. By bargaining to impasse on a subject which has an il-
legal objective within the intendment of Section 8(e); that is,
the Integrity and Work Preservation clauses, the Respondent
violated Section 8(b)(3) of the Act.
2. The Respondent further violated Section 8(b)(3) by in-
sisting on a permissive subject of bargaining, i.e., an Interest
Arbitration clause, as a condition of reaching agreement on
a new labor contract.
3. The above unfair labor practices affect commerce within
the meaning of Section 2(6) and (7) of the Act.
4. As the parties failed to ‘‘enter into’’ a collective-bar-
gaining agreement containing an Integrity and Work Preser-
vation clause, the Respondent has not violated Section 8(e)
of the Act. Accordingly, this allegation shall be dismissed.
REMEDY
Having found that the Respondent has committed an unfair
labor practice, I shall recommend the issuance of an order
directing it to cease and desist therefrom and to take certain
affirmative action designed to effectuate the policies of the
Act.
Because the posting of a single notice may not adequately
inform employers that the Integrity and Work Preservation
clauses have an unlawful objective under Section 8(e), and
that the Respondent may not bargain to impasse with regard
to those clauses, I shall recommend that Respondent be or-
dered to mail a copy of the attached notice to all signatory
employers within its jurisdiction.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended14
ORDER
The Respondent, Sheet Metal Workers Local Union No.
20, a/w Sheet Metal Workers’ International Association,
AFL–CIO, Evansville, Indiana, its officers, agents, and rep-
resentatives, shall
1. Cease and desist from
840 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
15 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
(a) Insisting to impasse on the Integrity, Work Preserva-
tion, and Interest Arbitration clauses in violation of Section
8(b)(3) of the Act.
(b) In any like or related manner condition its acceptance
of a collective-bargaining agreement on illegal or permissive
bargaining subjects.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Post at its business office and meeting halls copies of
the attached notice marked ‘‘Appendix B.’’15 Copies of the
notice, on forms provided by the Regional Director for Re-
gion 25, after being signed by an authorized representative
of Respondent, shall be posted immediately upon receipt and
maintained for 60 consecutive days in conspicuous places in-
cluding all places where notices to members are customarily
posted. Reasonable steps shall be taken by Respondent to en-
sure that the notices are not altered, defaced, or covered by
any other material.
(b) Sign and mail a copy of the notice to all employers
or employer associations with whom it has a collective-bar-
gaining relationship.
(c) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
IT IS FURTHER RECOMMENDED that all allegations of unfair
labor practices in the complaint, except for the one found, be
dismissed.
APPENDIX A
ARTICLE X, SECTION 8
(Jt. Ex. 4(a), p. 15; Jt. Ex. 7(a), pp. 3–4;
Jt. Ex. 11(a), p. 6)
Section 8. In addition to the settlement of grievances aris-
ing out of interpretation or enforcement of this agreement as
set forth in the preceding section of this Article, any con-
troversy or dispute arising out of the failure of the parties to
negotiate a renewal of this Agreement shall be settled as
hereinafter provided: (See Addendum X. Section 8.)
(a). Should the negotiations for a renewal of this Agree-
ment become deadlocked in the opinion of the Union rep-
resentative(s) or of the employer(s) representative, or both,
notive to that effect shall be given to the National Joint Ad-
justment Board.
If the Co-Chairmen of the National Joint Adjustment
Board believe the dispute might be adjusted without going to
final hearing before the National Joint Adjustment Board,
each will then designate a panel representative who shall pro-
ceed to the locale where the dispute exists as soon as con-
venient, attempt to conciliate the differences between the par-
ties and bring about a mutually acceptable agreement. If such
panel representatives or either of them conclude that they
cannot resolve the dispute, the parties thereto and the Co-
Chairmen of the National Joint Adjustment Board shall be
promptly so notified without recommendation from the panel
representatives. Should the Co-Chairmen of the National
Joint Adjustment Board fail or decline to appoint a panel
member or should notice of failure of the panel representa-
tives to resolve the dispute be given, the parties shall
promptly be notified so that either party may submit the dis-
pute to the National Joint Adjustment Board.
In addition to the mediation procedure set forth above or
as an alternate thereto, the Co-Chairmen of the Board may
each designate a member to serve as a subcommittee and
hear the dispute in the local area. Such committees shall
function as arbitrators and are authorized to resolve all or
part of the issues. They are not, however, authorized to dead-
lock and the matter shall be heard by the National Joint Ad-
justment Board in the event a subcommittee is unable to di-
rect an entire resolution of the dispute.
The dispute shall be submitted to the National Joint Ad-
justment Board pursuant to the rules as established and modi-
fied from time to time by the National Joint Adjustment
Board. The unanimous decision of said Board shall be final
and binding upon the parties, reduced to writing, signed and
mailed to the parties as soon as possible after the decision
has been reached. There shall be no cessation of work by
strike or lockout unless and until said Board fails to reach
a unanimous decision and the parties have received written
notification of its failure.
(b). Any application to the National Joint Adjustment
Board shall be upon forms prepared for that purpose subject
to any changes which may be decided by the Board from
time to time. The representatives of the parties who appear
at the hearing will be given the opportunity to present oral
argument and to answer any questions raised by members of
the Board. Any briefs filed by either party including copies
of pertinent exhibits shall also be exchanged between the
parties and filed with the National Joint Adjustment Board
at least twenty-four (24) hours in advance of the hearing.
(c). The National Joint Adjustment Board shall have the
right to establish time limits which must be met with respect
to each and every step or procedure contained in this Sec-
tion. In addition, the Co-Chairmen of the National Joint Ad-
justment Board shall have the right to designate time limits
which will be applicable to any particular case and any step
therein which may be communicated to the parties by mail,
telegram or telephone notification.
(d). Unless a different date is agreed upon mutually be-
tween the parties or is directed by the unanimous decision
of the National Joint Adjustment Board, all effective dates in
the new agreement shall be retroactive to the date imme-
diately following the expiration date of the expiring agree-
ment.
All correspondence to the National Joint Adjustment
Board shall be sent to the following address: National Joint
Adjustment Board, P.O. Box 829, Merrifield, VA 22116-
2829.
See Addendum X.
841SHEET METAL WORKERS LOCAL 20 (GEORGE KOCH SONS)
APPENDIX B
NOTICE TO MEMBERS
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT insist to impasse on inclusion in a collec-
tive-bargaining agreement of an Integrity, Work Preservation,
or Interest Arbitration clause.
WE WILL NOT in any like or related manner condition our
agreement to a collective-bargaining contract on an employ-
er’s acceptance of illegal or mandatory subjects of bar-
gaining.
SHEET METAL WORKERS LOCAL UNION NO. 20