Shell Oil Co.

National Labor Relations Board - Board Decisions

Oct 29, 1964

149 N.L.R.B. 298 (N.L.R.B. 1964)

298 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
result of strike experience and concessions in -the new contract j the Company is
able to function with far less employees than prior to the strike . Moreover,
although I have found a violation in the failure to negotiate with the Union before
letting certain contracts ( notably those of May 30, August 2, and October 26,
1962, and March 1, 1963 ), there is no reason to believe that any men are now out
of work because those contracts were let. Finally, although some men might
have been recalled if those contracts had not been let, the Company 's reasons for
contracting out that work are such as to render highly unlikely the possibility that
good-faith bargaining with the Union would have resulted in any change in the
Company's determination to let those contracts . Under all the circumstances , there-
fore, I do not believe it would be equitable or would effectuate the policies of the
Act to issue a reinstatement or backpay order.8
[Recommended Order omitted from publication.]
7 Permitting a relaxation of craft lines and permitting operating personnel to do routine
maintenance in the course of their operations
' In view of this disposition of the matter , I do not reach the Company ' s contention that
the strikers under Section 8(d) forfeited their employment status by the Union's failure
to notify the Federal and State mediation services before striking . General Counsel's view
on this issue is that timely notice of the dispute was given by the Employer . General
Counsel argues that the requirements of Section 8(d) are therefore met as the statutory
purpose of notifying the services is to afford them a chance to settle the dispute, and no
good purpose is served by dual notification . I would find merit in this argument if I were
otherwise disposed to recommend relief for the strikers As to the suggestion that the
Union's alleged failure to comply with Section 8 ( d) resulted in its violating Section
8(b) (3), the short answer is that any such violation particularly as it would be limited to
the period of the strike, would not be material in determining whether the Company's pre-
strike and poststrike conduct violated Section 8(a) (5)
The parties litigated the issue whether the strike was an unfair labor practice strike.
I find that one of the principal causes of the strike was the contracting of work without
prior negotiation with the Union Cf Sammons, Inc. v. N.L.R B , 315 F. 2d 143, 146
(C A. 1), and cases there cited . But this finding , which leads to the conclusion that the
strike was an unfair labor practice strike, leads to no remedial order under the circum-
stances of this case , for at most it would require "preferential hiring" which is meaning-
less to employees already listed as merely in layoff status.
Shell Chemical Company, a Division of Shell Oil Company and
Independent Oil and Chemical Workers Union of Louisiana.
Case No. 15-CA-3129. October 09, 1964
DECISION AND ORDER
On June 28, 1963, Trial Examiner Frederick U. Reel issued his
Intermediate Report in the above-entitled proceeding, finding that
the Respondent had engaged in and was engaging in certain unfair-
labor practices, and recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in the attached In-
termediate Report. He further found that the Respondent had not
engaged in certain other unfair labor practices alleged in the com-
plaint and recommended dismissal as to them. Thereafter, the Re-
spondent and the General Counsel filed exceptions to the Intermedi-
ate Report and supporting briefs.
1 The Respondent has requested oral argument This request is hereby denied because
the record , exceptions , and briefs adequately present the issues and the positions of the
parties.
149 NLRB No. 23.
SHELL CHEMICAL CO., A DIVISION OF SHELL OIL CO. - 299
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, the Board has delegated its powers in connection with
this case to a three-member panel [Chairman McCulloch and Mem-
bers Fanning and Brown].
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the en-
tire record, including the Intermediate Report, the exceptions, and
briefs, and adopts the Trial Examiner's findings, conclusions, and
recommendations only to the extent consistent herewith.
The issues in the present case are identical to those presented in
,Shell Oil Company, 149 NLRB 283, issued simultaneously herewith.
The amended complaint alleges that Respondent, on June 4, 1962,
.and thereafter, violated Section 8(a) (5) and (1) of the Act by fail-
ing to bargain in good faith concerning the subcontracting of work
.that could be performed by employees in the appropriate bargaining
,unit.
Shell Chemical Company, the Respondent herein, is engaged in the
manufacture of chemical products at its Norco, Louisiana, plant.
The Independent Oil and Chemical Workers Union of Louisiana, the
Charging Party herein, has been the statutory representative of Re-
spondent's hourly employees, including those engaged in maintenance
work, since the plant began operations in 1955. Since 1955 the Re-
spondent has maintained. a practice of subcontracting maintenance
work without normally consulting the Union, but it was not until
the fall of 1961 that the Union protested the contracting out of
maintenance projects.2 The various collective-bargaining agreements
in effect at the plant since 1955 contained the same article XIV in-
volved in the Shell Oil Company, supra, requiring payment of
contract wage rates to employees of subcontractors. No other con-
tractual provision had express reference to subcontracting. In the
contract negotiations of 1957 and 1960, the Union raised the issue but
was unsuccessful in limiting Respondent's subcontracting practices
-and it consequently executed contracts continuing article XIV in
-effect. -
In June 1962 the then current agreement between the Respondent
and Union expired, and the contracting out of unit work was again
one of the chief matters discussed in the ensuing negotiations. Dur-
ing the negotiations, the Respondent insisted that article XIV gave
2 This protest was in the form of several grievances which were based upon the Union's
assertion that the collective-bargaining agreement prohibited subcontracting ; the issue of
"prior consultation" was not raised by the Union until after the 1962-G3 negotiations bad
commenced. .
300 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
it the right to subcontract without consulting the Union and that this.
provision must be included in any new agreement; the Union sought
deletion of this clause.
As in the Shell Oil case, supra, the strike began on August 18,.
1962, and continued until February 17, 1963, when a new contract
was executed. The new contract did not include additional subcon-
tracting restrictions and article XIV was retained with minor re-
visions having no effect upon Respondent's interpretation of that
clause. There is no evidence that the Union, in agreeing to the ex-
tension of article XIV, expressly repudiated or reserved its right to
challenge future subcontracting. The Respondent continued its sub-
contracting practices throughout the negotiations, and at all times
thereafter.
In his Intermediate Report, the Trial Examiner pointed out that
his conclusions in Shell Oil Company were equally applicable to the
present proceedings. In accordance with-our decision in that case,
we adopt his findings that Respondent was under no duty to bargain
with respect to (1) subcontracts that did not involve unit work, and
(2) temporary subcontracts limited in duration to the economic
strike.
However, the record in the present case shows that various con-
tracts involving unit work were let without consulting the Union
both during the hiatus period between expiration of the old contract
(June 4, 1962) and the strike (August 18, 1962), and after the new
contract was executed on February 17, 1963. It also appears that
temporary subcontracts, let under similar conditions during the
strike, were allowed to continue beyond termination, of the strike.
Consistent with his findings in Shell Oil, the Trial Examiner in
effect found that Respondent violated Section 8 (a) (5) and (1) by
failing to consult the Union before awarding these subcontracts.
The record in the instant case presents facts which, in every ma-
terial sense, are sufficiently identical to those considered in Shell Oil
as to make that case controlling. Thus here, as in the Shell Oil case,
the terms of and presence of article XIV in all labor contracts from
the inception of collective bargaining at the chemical plant, the his-
tory of unilateral maintenance subcontracting under that provision,
the Union's failure to raise the "prior consultation issue" until the
1962-63 negotiations, the position of the parties. in said negotiations,
the strike on that issue, and the retention of article XIV in the en-
suing agreement, support our conclusions that (1) there was implicit
in article XIV the contractual intent that Respondent had the right
to subcontract occasional maintenance projects without prior notice
to or consultation with the Union; (2) Respondent had the right to
maintain its established practices with respect to subcontracting dur-
ing the period between contracts; and (3) the Union as a result of
SHELL CHEMICAL CO., A DIVISION OF SHELL OIL CO. 301
negotiations leading to the 1963 agreement in effect reaffirmed the
understanding as to the absence of any right on its part to partici-
pate in management decisions on contracting out maintenance work.
Accordingly, and for the reasons fully expressed in Shell Oil Com-
pany, we find, contrary to the Trial Examiner, that Respondent did
not violate Section 8(a) (5) and (1) of the Act by failing to notify
and consult with the Union before subcontracting unit work in the
period preceding and during the strike, or after execution of the new
bargaining agreement. We wish to make it clear, however, that our
holding in this case, no less than in Shell Oil, is limited to the par-
ticular facts involved, and that we have no intention of passing upon
the bargaining responsibility of Respondent should it attempt to ex-
pand its subcontracting practices beyond the occasional maintenance
projects covered by this proceeding.
Accordingly, and as we adopt the Trial Examiner's findings that
Respondent did not violate the Act in any other respect,' we shall
order that the complaint be dismissed in its entirety.
[The Board dismissed the complaint.]
3 As there is no independent evidence of had faith on Respondent 's part, we agree with
the Trial Examiner ' s conclusion that Respondent did not violate Section 8 ( a) (5) and (1)
of the Act by conditioning execution of a new bargaining agreement upon the Union's
waiving whatever right of consultation it had with respect to subcontracting See Ameri-
can National Insurance Co., 343 U.S. 395 ; Peerless Distributing Company, 144 NLRB 1510.
INTERMEDIATE REPORT AND RECOMMENDED ORDER
STATEMENT OF THE CASE
This case was heard before Trial Examiner Frederick U. Reed in New Orleans,
Louisiana, on April 29 to May 1, 1963, pursuant to a charge filed July 24, 1962,
and a complaint issued December 7, 1962, is a companion case to Shell Oil Co.,
Case No. 15-CA-2143, which was heard immediately preceding the instant case,
and which is the subject of an Intermediate Report issued this date. ' Like Shell
Oil, this case presents issues arising out of Respondent 's practice of contracting out
occasional maintenance work without bargaining with the Charging Party, which is
the statutory representative of Respondent's hourly paid employees , including those
engaged in maintenance work. Upon consideration of the entire record,2 includ-
ing my observation of the witnesses , and after due consideration of the briefs filed
by the Company and by General Counsel,3 I make the following:
1 To avoid needless repetition I have made frequent references in this report to positions
taken and conclusions reached in the Shell Oil case. In the event these two cases are
not reviewed together ( i.e., if for any reason this case 'should be reviewed by the Board or
a court when Shell Oil is not simultaneously under review by the same body ), the attention
of the reviewing authority is respectfully directed to the Intermediate Report in Shell Oil,
which in that event should be viewed in effect as an explanatory appendix to this report.
2 By stipulation of the parties , the record in the instant case includes pages 145-195 of
the transcript in the Shell Oil case, and Company's Exhibits Nos. 2-23 from that case.
Those excerpts from that record are physically incorporated in the record in this case as
a joint exhibit which was tendered ( pursuant to agreement ) after the close of the hearing
and which is hereby received into evidence.
As requested by counsel for Respondent , I hereby correct the typographical error at
page 259, line 12, where the word "to" should read "no." The record is further corrected
to show that the questions at page 215 , lines 5, 9, 12 , and 15, were asked by General
Counsel , not by the Trial Examiner.
.3 General Counsel filed separate briefs in the two cases ; Shell Oil and Shell Chemical
:filed a single brief covering both cases.
302 . DECISIONS OF NATIONAL LABOR RELATIONS BOARD
FINDINGS OF FACT
I. THE BUSINESS OF THE RESPONDENT, AND THE LABOR ORGANIZATION INVOLVED
Respondent , herein called the Company , is a Delaware corporation , engaged im
producing various chemical products at a number of locations , including a plant at.
Norco, Louisiana , from which it annually ships in excess of $50,000 worth of
products outside the State . Respondent is admittedly engaged in activities affect-
ing commerce within the meaning of Section 2 ( 6) and (7) of the Act. The-
Charging Party, herein called the Union , is the exclusive bargaining representa-
tive of the employees at the Norco plant.
II. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background-the Company 's practice with respect to contracting out work
The Company opened its Norco plant in 1955, recruiting most of its hourly paid
employees from the neighboring refinery operated by Shell Oil Company. Em-
ployment at the chemical plant rose from 90 in 1955 , to a peak of over 350 in
1960, dropping to 316 at the end of 1961, and to 233 in August 1962, when the
employees went on strike . The Company has always employed a number of per-
sons in the usual building and construction trades to perform maintenance work at
the plant. Under the seniority system in effect at the plant, skilled craftsmen upon
being displaced would "bump " into the general laborer classification , and laborers,
in turn , would "bump" into operating jobs.
From time to time, . ever since the chemical plant opened, the Company would let
contracts to private contractors to do various maintenance and construction
jobs. These contracts would usually be let without notice to , or bargaining with,
the Union . The various agreements between the Company and the Union effective
between 1955 to 1962, contained no reference to this practice , except for article
XIV of each contract , which provided in effect that any such contractor must pay
the crew on the chemical plant job at rates not less than those paid by the Company
for comparable work. In 1957, and again in 1960 , the Union unsuccessfully
sought to include in the contracts then being negotiated a provision prohibiting
the Company from contracting out "work which can be done by its regular
employees represented by [the Union ]," or which fell "into the scope of certification
of the Union."
B. The Union's protests over the Company's practices , the strike , and the
new contract
Beginning in the fall of 1961 , and continuing into the spring of 1962, the
Union presented a series of grievances arising out of the contracting out of
various jobs. The Company in each case responded that it did not regard the
contracting of work as violative of the agreement between the parties. The Union
expressed a desire to submit the question to arbitration , but the Company took the
view that the issue was not arbitrable . The Union then filed suit to compel arbitra-
tion , but shortly thereafter the existing contract between the parties terminated (see
infra ), and the suit was thereupon dismissed , pursuant to the Company' s motion,
which pointed out that no contract then existed under which arbitration could be
compelled.4
In June 1962 the then current contract between the Union and the Company
expired by its terms in view of the failure of the parties to reach agreement
pursuant to a wage reopener clause. The parties exchanged proposals for a new
contract the following month , and included among the union proposals was the
elimination of article XIV. The Union explained that in its view that article was
not needed , that it was a deterrent to a sound bargaining relationship , that it was
of no use to the Union, and that it hindered the resolution of grievances. The
latter reference was apparently to the Company's reliance on article XIV as sub-
stantiation for its position , noted above, that the contracting out of work did not
violate its agreement with the Union and gave rise to no . arbitrable question. Here,
as in the companion Shell Oil case, the Union at no time expressed agreement
with the Company's interpretation of article XIV.
4 See footnote 2 of the Shell Oil report . As there noted , the oil company (which was
named defendant) had grounded Its motion to dismiss on the alternative basis of (1) ex-
piration of the agreement and (2 ) arbitration tinder the agreement had been "permissive
and not mandatory ." The court in granting the motion to dismiss did not explicate its
grounds.
SHELL CHEMICAL CO., A DIVISION OF SHELL OIL CO. 303
The subsequent negotiations between the parties were identical in all significant
respects with those which occurred in the Shell Oil case. A strike was called at
the same time , and terminated at the same time with the execution of a new
contract which (like that in Shell Oil) continued article XIV without pertinent
modifications . The proposals and counterproposals relative to provisions govern-
ing the contracting of work were substantially the same as those in Shell Oil, and
the contentions and reasoning of the parties ( both at the bargaining table and in
the litigation before me ) are the same in both cases.
C. The contracts let by the Company
In the Intermediate Report in Shell Oil, issued this date , I have set forth briefly
the nature of the various contracts let by that company during the period in
controversy. I find it unnecessary to go into similar detail with respect to the
considerably greater number of contracts let by Shell Chemical during the period
involved in this case, for the record here leaves no room for doubt that a number of
the contracts in this case concerned work which could have been performed by
members of the bargaining unit. Thus with respect to certain brick work, Plant
Manager Caddy testified that sometimes the work was done by plant forces, but
that the contractor 's work was more satisfactory. With respect to a contract for
the removal of silt, Caddy testified that plant forces once did the work, but con-
tracting it out saved money and time. Similarly , large repainting and reinsulat-
ing projects were contracted out because of the savings involved. On one occa-
sion plant forces were engaged in repairing one column , while a contractor did
similar work on an adjacent column because no more plant employees with the
needed skills were available at that time . A welding job was contracted out
because all the Company's certified welders were busy. On the other hand, as in
the Shell Oil case, some of the contracts were for work of a type which could not
be done by plant forces, some installation work was done as an integral part of
the purchase of the articles in question , and the garbage disposal contract had
apparently been the subject of bargaining insofar as it extended into the poststrike
period.
In addition to the bargaining over the garbage contract , the record discloses
that on at least some occasions the Union learned of the Company's intention
to contract out work, and after discussions between the Company and the Union,.
the Company changed its view and had the work performed by plant forces.
D. Conflicting contentions and concluding findings
In essence the contentions of the parties are identical to those advanced in the
Shell Oil case, and the conclusions there reached are applicable here. One matter,
however, requires further development.
In the instant case , unlike the Shell Oil case, the Union in 1957 and in 1960
proposed clauses restricting the right to contract out work, and in 1962 negotia-
tions urged the elimination of article XIV. None of these proposals were adopted,
and article XIV has been continued without changes material here . The Company
urges that this bargaining history shows that article XIV is a waiver of the
Union's right to bargain over the letting of contracts.
So far as the 1957 and 1960 proposals are concerned , they represent a fruitless
effort by the Union to obtain contractual restrictions on the Company's right to
let contracts . The failure to adopt these proposals left the Company free of such
contractual restrictions . The Union's unsuccessful efforts to obtain new rights
does not, however , establish a waiver of existing rights. If, as I believe (see
Intermediate Report in Shell Oil ), the statute imposes a duty to bargain before
contracts are let, this duty is not affected by the Union's unsuccessful efforts to
obtain a clause which would have altogether prohibited the letting of any such
contracts.
The Union's 1962 proposal to eliminate article XIV appears at first blush
to lend support to the Company' s argument that the Union had acceded to the
Company's construction of that article and hence wished to eliminate it. Analysis
of the record however discloses that this is too sweeping a view. In 1957 and
1960, as we have seen , the Union unsuccessfully sought to prohibit the letting of
any contract for work which its people could perform (1957 proposal) or which
fell within "the scope of certification of the Union" ( 1960 proposal ). Its lack of
success in obtaining those restrictions , however, did not prevent it from continuing
to assert the position that work which had been performed in the past by plant
forces (as distinguished from work which could be performed by them ) could not
304 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
lawfully be contracted out. The Company rejected the contention that the bar-
gaining contract prohibited the letting of such maintenance contracts. It found
support for its position in article XIV which, however, is phrased in terms of work
"which could be performed by employees covered by this agreement." In urging
the elimination of article XIV, therefore, the Union was seeking to strengthen or
establish its position that no work of a type which had been performed, by plant
employees could be contracted out. The Company may well be correct insofar as
it suggests that article XIV refutes the Union's claim, and that the Union in
seeking its elimination acquiesced in that reading of article XIV. But this estab-
lishes only that article XIV is a waiver of the Union's claimed contractual right to
prohibit the letting of contracts, not that it is a waiver of the statutory right to
bargain over the letting of contracts. This distinction is further developed in the
Intermediate Report in the Shell Oil case, and is further expressed in the final
paragraph of Judge Hutcheson's opinion enforcing the Board's Order in Town &
Country Mfg. Co., Inc. v. N.L.R.B., 316 F. 2d 846 (C.A. 5), enfg. 136 NLRB 1022.
The correctness of the foregoing analysis is attested, I believe, by General
Counsel's Exhibit No. 12, a "private and confidential" memorandum dated April 6,
1962, to all department managers from A. N. Smith, the Company's personnel and
industrial relations manager, describing a recent regular meeting of the Company
and the Union's "Workmen's Committee." At this meeting the Union had protest-
ed the letting of various contracts and had stated "that the Company does not have
the right to contract work of the type which has been performed in the past by
plant forces." The memorandum sets forth the considerations which prompt the
Company to contract out work, and then states "The articles of agreement contain
certain provision [sic] concerning conditions relating to rates to be paid for
contract work; the agreement does not (and should not) limit in any way the
Company's right to have the work done in the manner which it determines to be
the most efficient." To this I need only add that the position of General Counsel,
which I here sustain, is in full accord with the Company's claim that article XIV
makes clear its right to contract out work if it determines such contracting to be
more efficient, but in determining whether such contracting is more efficient, the
Company must notify the Union of the intent to contract out work, and hear the
Union in good faith before finally deciding whether or not to contract out the
work.
That such good-faith bargaining has real, and not just theoretical value, that
it contributes to industrial peace, and that it may result in economic advantage
to the Company as well as the Union, is attested not only by the court's holding in
Town & Country, supra, but more directly by the record in this case which estab-
lishes that there have been "occasions in which the Company after discussion with
the Union, has changed its view about contracting out work and assigned that
work to plant forces". To preserve the metaphor employed by the Ninth Circuit in
the Pacific Coast Association of Pulp and Paper Manufacturers case (304 F. 2d 760
at 766) with which I closed the corresponding section in the Shell Oil report, the
Company has dabbled its toes in collective bargaining on this issue; it should now
plunge into the waters it has already found "tolerable or even quite pleasant." 5
CONCLUSION OF LAW
By failing to bargain with the Union before contracts giving to outside
contractors and their employees maintenance work of a nature which could have
been assigned to members of the bargaining unit , the Company engaged in
unfair labor practices within the meaning of Section 8(a)(5) and (1) and Sec-
tion 2(6) and (7) of the Act.
THE REMEDY
The Recommended Order follows exactly the order recommended in the Shell Oil
case. It may be argued that the record in this case shows more contracts let in
violation of the bargaining obligation than is the case in Shell Oil, and that a
reinstatement order should issue here on behalf of the employees in layoff sta-
tus. The evidence establishes, however, that the number laid off is in large part
attributable to certain cutbacks and shutdowns of units entirely unconnected with
the letting of contracts. Also here, as in Shell Oil, the Company's experience
6 The Company argues that the matter be left to arbitration and not resolved by the
Board. In addition to the reasons set forth in Shell Oil report at footnote 2 for rejecting
that argument, I note that the Company in this case has already stated that this subject
"does not involve an arbitrable question" (General Counsel's Exhibit No. 7(5)).
SHELL OIL COMPANY 305
during the strike, and certain new provisions in the current contract permitting
relaxation of craft lines and permitting operating employees to do minor mainte-
nance work, account in considerable measure for the Company's ability to operate
with fewer employees. Finally, the completion of the contracts here challenged as
improperly let appears to moot any claim for reinstatement even if the record
established (as it does not) that particular employees were laid off or not called
back because such contracts were let. Similarly, in my judgment, any attempt to
determine which if any employees might be entitled to backpay based on recon-
structing the situation which would have prevailed had the contracts not been let,
would involve unreal speculations and imaginary conclusions, would only tend to
exacerbate feelings within the Union as well as between the Union and the Com-
pany, and, in short, would not effectuate the policies of the Act. As in Shell Oil,
therefore, I do not recommend a reinstatement or backpay order.
[Recommended Order omitted from publication.]
Shell Oil Company and Local 7-389, Oil, Chemical and Atomic
Workers ' International Union , AFL-CIO. Case No. 7-CA-4359.
October 29, 1964
DECISION AND ORDER
On April 14, 1964, Trial Examiner David London issued his De-
cision in the above-entitled proceeding, finding that Respondent had
engaged in and was engaging in certain unfair labor practices viola-
tive of Section 8(a) (5) and (1) of the Act and recommending that
it cease and desist therefrom and take certain affirmative action, as
set forth in the attached Decision. Thereafter, the General Counsel
and Respondent filed exceptions to the Trial Examiner's Decision
and supporting briefs.
Pursuant to Section 3(b) of the National Labor Relations Act, the
Board has delegated its powers in connection with this case to a
three-member panel [Chairman McCulloch and Members Fanning
and Brown].
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the
Trial Examiner's Decision and the entire record in this case, includ-
ing the exceptions and briefs, and hereby adopts the findings, con-
clusions, and recommendations of the Trial Examiner to the limited
extent consistent with this Decision.
From 1955 to 1963, Shell Oil Company, the Respondent herein, as
part of its operations in Michigan, delivered gasoline by truck from
its plant in Detroit to its service stations in Lansing. In mid-May
1963, Respondent's operations manager informed Charles Regent, the
Detroit plant manager, that a decision had been made to transfer the
Lansing accounts from Detroit to Grand Haven. This change was
149 NLRB No. 26.
770-076-65-vol . 149-21