Sterling Drug, Inc.

National Labor Relations Board - Board Decisions

Aug 27, 1970

185 N.L.R.B. 241 (N.L.R.B. 1970)

THE HILTON-DAVIS CHEMICAL COMPANY
The Hilton-Davis Chemical Company, Division of
Sterling Drug, Inc. and Local 342, International
Chemical Workers Union . Case 9-CA-4436
August 27, 1970
DECISION AND ORDER
BY CHAIRMAN MILLER AND MEMBERS
MCCULLOCH, BROWN , AND JENKINS
On July 23, 1968, Trial Examiner Owsley Vose
issued his Decision 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 Trial Examiner's Decision. Thereafter the
Respondent filed exceptions to the Trial Examiner's
Decision and a supporting brief.
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 here-
by affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions, the brief, and
the entire record in the case and finds merit in
the Respondent's exceptions. Accordingly, the Board
adopts the findings only to the extent they are consist-
ent with the following.
The Trial Examiner found that the Respondent
refused to bargain in violation of Section 8(a)(5)
and (1) of the Act by its action in unilaterally discon-
tinuing the grievance procedure (including arbitration)
of the expired collective-bargaining agreement, by
its action several days later in unilaterally reinstating
the former grievance procedure but omitting the arbi-
tration stage, and by its refusal thereafter to submit
to arbitration unresolved grievances which arose dur-
ing the hiatus when no agreement was in effect.
As the Trial Examiner found, the parties had a
collective-bargaining agreement which by its terms
expired on April 15, 1967.1 The agreement contained
a four-step grievance procedure with arbitration as
the final binding step. On Friday, April 14, the last
day under the agreement, the Union rejected the
Respondent's offer to extend the contract during nego-
tiations, subject to termination on 48 hours' notice.
Thereupon, the Respondent circulated to its superviso-
ry personnel a memorandum stating, in pertinent
part, that the grievance and arbitration procedures
of the expired contract would not be in force, and
' All dates refer to 1967, unless noted otherwise
241
that supervisors were to handle grievances on an
informal basis during the postcontract period.
The Union quickly received notice of the Respond-
ent's action from employees who saw the directive
on the desks of their supervisors , and on the following
Monday , April 17, the Union 's local representatives
contacted Thomas Boyle , a vice president of the Inter-
national and coordinator for the Sterling Drug Council
of the International . Boyle immediately telephoned
John Ward , Sterling Drug 's vice president in charge
of employee relations and Repondent ' s bargaining
representative , and informed him that the Respond-
ent's refusal to entertain "grievances" could precipitate
a strike . Ward replied that he would call Boyle back
after consulting with counsel.
Ward returned Boyle 's call on April 20. During
the intervening 3 days, Respondent had resolved to
adhere to the grievance procedure , but not to the
arbitration provisions , during the contractual hiatus.
The testimony of Ward and Boyle is conflicting with
respect to whether Boyle was explicitly informed of
Respondent 's decision to suspend arbitration. At the
very least, however , the record shows and the Trial
Examiner found that Boyle "made some response
to the effect that the [Respondent] would go ahead
and process grievances ." Later that same day, the
Respondent issued a revised memorandum to its super-
visory personnel stating that the first three steps
in the grievance procedure of the expired contract
would be utilized in resolving disputes , but that the
arbitration clause would not be in effect.
Negotiations between the parties continued and
on June 16 agreement was reached on a new contract
which was to take effect the following week.2 At
the very close of the last bargaining session on June
16 as the parties were preparing to adjourn, Boyle
asked Ward what action would be taken on postcon-
tract grievances . The Trial Examiner resolved conflict-
ing testimony by finding that Ward made a general
reply which gave Boyle the impression that the
Respondent would submit to arbitration unresolved
grievances arising in the no-contract period.
The record further reveals that during the 2 months
when no agreement was in effect a total of 28 griev-
ances were filed and processed by the parties. Twenty
were settled short of the third step of the grievance
procedure but the remaining eight were still unresolved
after the third step , and the Union requested that
each of those eight be submitted to arbitration. The
first such request was made on August 3 , after the
new contract was in effect . The Respondent , by reply
letter dated August 23, refused to submit this grievance
This agreement contained the same grievance procedure (including
arbitration) as the expired contract
185 NLRB No. 58
242 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to arbitration, stating that it would abide by its earlier
announced position that it was not required to process
through arbitration grievances that arose when no
agreement was in effect. On September 20, the Union
filed this charge.
The heart of the issue we face is this: may a
party required by our Act to bargain in good faith
with respect to the wages, hours, and other terms
and conditions of employment be held to have
breached that requirement by a refusal to adhere
to the arbitration procedure of an expired contract
in the absence of (a) consent by the other party
to termination of that procedure or (b) bargaining
to impasse on the issue? We conclude that the duty
to bargain in good faith does not extend so far,
and we reverse the Trial Examiner and dismiss this
complaint. Our conclusion rests upon elemental con-
siderations of the nature of the duty to bargain.
Section 8(d) of our statute is explicit: the duty
to bargain does not include the obligation to agree
to a proposal or make a concession. Congress has
left no doubt that each party to the bargaining relation-
ship is and must remain the final arbiter of its own
best interest. It is our delegated task to require the
parties to meet and confer, to seek agreement in
good faith and to commit their agreement to writing.
We enjoy substantial latitude in selecting the means
to those ends, but ultimately we are powerless to
compel agreement where none exists.
The mutual commitment of contract parties to
consider interstitial disputes through a grievance pro-
cedure and, failing agreement, to submit them to
binding arbitration is a voluntary surrender of the
right of final decision which Congress has reserved
to these parties. Indeed, each such agreement is a
vindication of Congress' judgment: the parties have
not only bargained to agreement, they have undertaken
to continue to "bargain" (in the sense of meeting
at reasonable times and seeking agreement in good
faith) about the application of their agreement to
the facts of their particular relationship. They have
further agreed, where arbitration has been accepted,
voluntarily and mutually to surrender the use of
their respective economic weapons in favor of third
party determination of unresolved issues . The conse-
quent reduction of industrial strife is widely celebrated
and has led to a declared national policy encouraging
arbitration, Section 203(d), Labor Management Rela-
tions Act, 29 U.S.C., Section 173(d); United Steelwork-
ers of America v. Warrior & Gulf Navigation Co.,
363 U.S. 574 (1960). But we must not be induced
by that policy or its benefits to overlook that arbitra-
tion is, at bottom, a consensual surrender of the
economic power which the parties are otherwise free
to utilize. Absent mutual consent, the parties revert
to the statutory scheme of "free" collective bargaining,
wherein each party must attempt in good faith to
reach agreement, but is under no statutory mandate
to reach agreement or to forfeit its right to utilize
its economic power if no agreement can be achieved.
The courts have repeatedly recognized this concept.
The Supreme Court in United Steelworkers ofAmerica
v. Warrior & Gulf Navigation Co., 363 U.S. 574,
582 (1960), said:
For arbitration is a matter of contract and
a party cannot be required to submit to arbitration
any dispute which he has not agreed to submit.
Similarly, the Court of Appeals for the Second
Circuit stated in Proctor & Gamble Independent Union
of Port Ivory, N. Y. v. Proctor & Gamble Manufacturing
Company, 312 F.2d 181, 184:
The duty to arbitrate is wholly contractual
and the courts have the obligation to determine
whether there is a contract imposing such a
duty.
And the Sixth Circuit, in Kingsport Publishing Corp.,
399 F.2d 660, 661, said:
While Congressional policy favors the settle-
ment of labor disputes by the arbitral process
rather than by economic warfare (See Section
203 (d) of the Labor Management Relations Act
); [Steelworkers v. American Mfg. Co., 363
U.S. 564 (1960); Steelworkers v. Warrior & Gulf
Co., 363 U.S. 574 (1960)] arbitration nevertheless
rests upon a contractual basis. John Wiley &
Sons, Inc. v. Livingston, 376 U.S. 543
(1964). . . .
Applying these principles to the hiatus which some-
times exists-and existed here-between the expiration
of one agreement and the reaching of a new one,
it follows that employers and unions must continue
to meet and confer and to seek agreement in good
faith, not only over the terms and conditions of
a proposed new agreement, but also over employee
grievances which may arise during such hiatus. But
it does not follow that during such period the law
requires the parties to submit to arbitration any griev-
ance which they are unable to resolve. Our previous
decisions in Bethlehem Steel Co.' and Kingsport Press'
do not, in our opinion, compel that result, and here
we disagree with the Trial Examiner. In Bethlehem
Steel the employer unilaterally attempted to impose
a new and different grievance procedure. It seems
clear to us that an employer may not unilaterally
' 133 NLRB 1347, supplemental decision 136 NLRB 1500 enforcement
denied and case remanded sub nom. Industrial Union of Marine and
Shipbuilding Workers of America, AFL-CIO v NL R B, 320 F 2d 615
(C A 3), cert denied 375 U S 984 , second supplemental decision 147
NLRB 977
' 165 NLRB 694, enforcement denied 399 F 2d 660 (C A 6)
THE HILTON-DAVIS CHEMICAL COMPANY
attempt to impose new channels for resolution of
disputes without undercutting the union's representa-
tive status. That was the basis of our holding there.
Kingsport did not involve a failure to arbitrate,
but rather a failure to follow established channels
for discussion (really bargaining) over employee griev-
ances. The Trial Examiner in that case was clearly
of the view that arbitration survived the expiration
of a collective agreement, but upon deliberation, we
are less confident of the rationale in Kingsport, insofar
as it applied Section 8(d) of the Act to the facts
there at issue. We would, however, reach the same
result upon another interpretation of the Act-i.e.,
that an employer cannot abandon established channels
for bargaining over employee grievances and thus
effectively avoid his bargaining obligation and under-
cut the union's status as exclusive representative. Such
a view is not inconsistent with our recognition of
the consensual nature of the arbitral process.
For the above reasons, we find no violation here
with regard to the Respondent's refusal to arbitrate.
The Trial Examiner also found that the Respondent
unilaterally abandoned and then unilaterally reinstated
the grievance procedure without proper notice to
the Union and without affording the latter an opportu-
nity to bargain over these changes. Contrary to the
Trial Examiner, we find insufficient evidence to sup-
port these charges. The record reveals that the
Respondent did effect the first of these changes on
April 14, without formal notice to the Union: Howev-
er, the Union quickly became aware of the Respond-
ent's abandonment of the grievance procedure,
promptly protested, and succeeded in having Respond-
ent agree to process grievances. Although the Trial
Examiner characterized as "considerable" the lapse
of time between the Respondent's initial action and
the Union's notice thereof, the record shows that
at most the Union was unaware of the abandonment
of the grievance procedure for a period of 2 days,
the weekend of April 15-16. Furthermore, we find
insufficient evidence to support the inference that
the Respondent reinstated the nonarbitration provi-
sions of the expired contract without notice to the
Union. There is nothing in the record to indicate
that the Union by its subsequent action was not
indeed fully cognizant of this latter change. The record
discloses no mention of the Respondent's failure to
notify the Union's local representatives of that which
admittedly had been communicated to its chief negoti-
ator, Boyle, on April 20. Finally, the record is barren
of any evidence that the Respondent refused to enter-
tain any grievances during the brief interval when
its alleged unilateral actions took place. On the contra-
ry, the parties stipulated that all 28 grievances which
243
arose during the no-contract period were processed
through the grievance procedure.
In view of the foregoing findings and conclusions
we shall dismiss the complaint in its entirety.
ORDER
It is hereby ordered that the complaint herein
be, and it hereby is, dismissed in its entirety.
MEMBER BROWN, concurring:
I have stated, time and again, my strong belief
in the desirability of arbitration in the field of labor
relations.' It is with some reluctance, therefore, that
I join in dismissing this proceeding, but I feel impelled
to this conclusion by consideration of the consensual
nature of arbitral undertakings under the Act.
The obligation of arbitration, while a mandatory
subject of bargaining, arises solely out of contract-
it is encouraged, but not required, by statutory policy.
The source and nature of this obligation thus differs,
for example, from the obligation to bargain concerning
grievances and wages; the Act itself requires that
grievances be negotiated and the obligation to pay
wages is a very predicate of an employment relation-
ship. The quid pro quo for an Employer's commitment
to arbitrate is a Union's agreement not to strike
over matters subject to contractual arbitration. Recent-
ly speaking of the "implications for the enforceability
of arbitration agreements and their accompanying
no-strike obligations," the Supreme Court reempha-
sized that "a no-strike obligation, express or implied,
is the quid pro quo for an undertaking by the employer
to submit grievance disputes to the process of arbitra-
tion." Boys Markets, Inc. v. Retail Clerks Union,
Local 770, 398 U.S. 235, 248.
The last effective contract antedating the events
under consideration in the present case did have
an arbitration clause and a no-strike clause. When
the contract approached its expiration date upon
notice of termination given by the Union, the Respond-
ent suggested to the Union that, while negotiating
a new contract they continue their expiring contract
obligations on a day-to-day basis. The Union refused,
as it had a right to do, but in doing so it expressly
' See, for example, my separate opinions in Cloverleaf Division of
Adams Dairy Co, 147 NLRB 1410, 1420-25, Raytheon Company, 140
NLRB 883, 888-891, Thor Power Tool Co, 148 NLRB 1379, 1381-
83, Eastern Illinois Gas & Securities Co, 175 NLRB No 108, LeRoy
Machine Co, 147 NLRB 1431, 1434-35, Univis, Inc, 169 NLRB No
18, Washington Hardware and Furniture Co, 168 NLRB No 72, Dresser
Industrial Valve Instrument Division , 178 NLRB No 51, Iron Workers,
Local 229 (Bethlehem Steel Corporation), 183 NLRB No 35, Consolidated
Foods Corporation, 183 NLRB No 78, Macy's California, 183 NLRB
No 47, Union Carbide Corp, 178 NLRB No 81, Sieves Sash & Door,
Inc, 178 NLRB No 27, Dayton Typographic Service, 176 NLRB No
48, McLean Trucking Co, 175 NLRB No 66
244 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
withheld from the Respondent the no-strike assurance
which was the Union's consideration for the Employ-
er's arbitration commitment under the expired con-
tract. Lacking the parties' consensual basis for renewed
or extended arbitration, I therefore disagree with my
dissenting colleague that the Act nevertheless autho-
rizes us to extend an obligation on the Respondent
to arbitrate grievances "arising after the expiration
of the agreement to arbitrate." Proctor & Gamble
Independent Union v. Proctor & Gamble Manufactur-
ing Company, 312 F.2d 181, 186 (C.A. 2), cert. denied
374 U.S. 830. Furthermore, if a contrary result were
reached, one would be unable to specify what the
arbitrator would decide without a contract to interpret,
or what there would be for a court to enforce if
no contractual obligation were shown to exist.6
This does not mean that parties may not agree
to arbitrate grievances arising during periods between
contracts. As parties make provision for arbitrating
grievances during normal contract terms, they can
also provide for grievances arising afterward. Or,
in negotiating a renewal or even an original agreement,
they may also agree to arbitrate preexisting disputes.
However, the parties themselves must make their
own contractual arrangements, for the Act, in my
judgment, does not authorize us to construct one
for them.
MEMBER MCCULLOCH, dissenting in part: When
there is a collective-bargaining representative of the
employees in an appropriate unit, an employer cannot
change "wages, hours and other terms and conditions
of employment"' for the employees in that unit with-
out negotiation with the bargaining representative.
It matters not whether the changed terms were origi-
nally established by collective bargaining with a union
or unilaterally by the employer in the absence of
a union . In either case, unilateral action by the employ-
er in altering established "wages, hours, and other
terms and conditions of employment" is violation
' It is to be noted that all of the quotations in the dissenting opinion
herein are from various opinions of the Supreme Court which in fact
refer to changes in or failure to follow arbitration provisions in existing
contracts in fact, the Court in Wiley v Livingston was, as my dissenting
colleague points out, discussing the arbitration of grievances which arose
during the life of a collective-bargaining contract , and in the portion
quoted in the dissenting opinion herein states, "This case cannot readily
be assimilated to the category of those in which there was no contract
whatsoever There was a contract, and Interscience, Wiley's predeces-
sor, was party to it " Although Kingsport Press was denied enforcement
on different grounds, the Court observed that arbitration "rests upon
a contractual basis" and that "the Board does not refute the Company's
contention that neither party to the contract could successfully have
brought suit under Section 301 of the Labor Management Relations
Act to compel arbitration "
' Sec 8(d) of the Act defines the duty to bargain as "the performance
of the mutual obligation of the employer and the representative of the
employees to meet at reasonable times and confer in good faith with
respect to wages, hours , and other terms and conditions of employment
of Section 8(a)(5) of the Act.' The Trial Examiner
found, and the majority members have not disturbed
this finding, that on the expiration of the 1965-
67 bargaining contract, Respondent determined, with-
out notification to the Union, that grievances which
were not resolved in the first three steps of the
grievance procedure would no longer be subject to
the fourth and final step of that procedure-arbitra-
tion. Respondent decided on the elimination of arbitra-
tion without affording the Union the opportunity
of bargaining about the change. The legality of
Respondent's conduct therefore turns on whether arbi-
tration in a grievance procedure is a "term and condi-
tion of employment" concerning which an employer
must bargain.
It is now settled that a grievance procedure is
within the phrase "wages, hours, and other terms
and conditions of employment" and hence is a manda-
tory bargaining subject of collective bargaining.' Is
the final step in the grievance procedure, arbitration,
excluded as a mandatory subject9 In the Kingsport
Publishing case ,10 the Board rejected such a contention
as illogical . In the words of the Trial Examiner in
that case: "It would, of course, seem totally inconsis-
tent to hold that a grievance procedure would survive
a contract but the arbitration clause, the final and
binding part of that procedure, would not.""
Grievance arbitration is generally considered part
and parcel of the grievance procedure. For example,
Professor Wellington has recently stated:"
Ninety-six percent of collective bargaining agree-
ments today provide for some form of grievance
arbitration. It is the usual method of resolving
most labor disputes during the term of the con-
tract that have not been settled by negotiation
in the grievance procedure. Arbitration is often
considered, and spoken of, as the final step in
the grievance procedure. Grievance arbitration
is to be distinguished from the arbitration that
sometimes is employed to write afresh one or
more of the terms and conditions of employment.
Grievance arbitration is a very important institu-
NLRB v Katz, 369 U S 736, NLRB v United Nuclear Corp,
381 F 2d 972 (C A 10)
' Marine & Shipbuilding Workers v NLRB, 320 F 2d 615, 617-
622 (C A 3), cert denied 375 US 984 , affg in this respect Bethlehem
Steel Company (Shipbuilding Division), 136 NLRB 1500, 1502, 1503,
NLRB v United Nuclear Corp, 381 F 2d 972, 977-978 (C A 10),
NL R B v Celotex Corp, 364 F 2d 552 (C A 5), cert denied 385
U S 987, NLRB v Century Cement Mfg Co, Inc, 208 F 2d 84,
85-86 (C A 2)
10 Kingsport Publishing Corporation, 165 NLRB 694, enforcement
denied on other grounds 399 F 2d 660 (C.A 6)
" Id at 696
= Harry H Wellington , Labor and the Legal Process ( 1968), 94-
95
THE HILTON-DAVIS CHEMICAL COMPANY
tion in American labor-management
relations . . . .
In the Marine & Shipbuilding Workers case, supra,
the court -referred to the "'alteration in,the grievance
and arbitration procedure" as being unlawful. Similar-
ly, in the leading Warrior & Gulf Navigation case"
the Supreme Court without discussion assumed that
the arbitration clause was the culminating point of
the grievance procedure and used the two terms inter-
changeably. Some quotations from that opinion illus-
trating the point are:
We held in Textile Workers v. Lincoln Mills,
353 U.S. 448, that a -grievance arbitration provi-
sion in a collective agreement could be enforced
by reason of 301 (a) of the Labor Management
Relations Act."
A -major factor in achieving industrial peace is the
inclusion of a provision for arbitration of
grievances in the collective bargaining
agreement.15
But the grievance machinery under a collective
bargaining agreement is at the very heart of the
system of industrial self-government. Arbitration
is the means of solving the unforeseeable by
molding a system of private law for all the
problems which may arise and to provide for
their solution in a way which will generally
accord with the variant needs and desires of the
parties. The processing of the disputes through
the grievance machinery is actually a vehicle by
which meaning and content is given to t,he
collective bargaining agreement.
Apart from matters that the parties specifically
,exclude, all of the questions on which the parties
disagree must therefore come within the scope
of the grievance and arbitration provisions of'
the collective agreement. The grievance procedure
is, -in other words, a part of the continuous
collective bargaining process.16
The arbitral process "substitutes a regime of
peaceful settlement for the older regime of industrial
conflict."" It is so highly thought of as a means of
effectuating national labor policy that the Supreme
Court has said that doubts as to arbitrability under an
arbitration clause are to be resolved in favor of
245
arbitrability.18 In accordance with this philosophy,
the Supreme Court in the Wiley case19 held that
a union is entitled to arbitration of grievances which
arose during the life of a collective-bargaining contract
containing a ;grievance-arbitration procedure even
though the contracting employer had been merged
into the respondent employer which had not agreed
to be bound by the merged company's contract. The
-Court said (376'U.S.-at 550):
Central to the peculiar status and functions of
a collective bargaining agreement is the fact,
dictated both by circumstances, . . . and by
-the requirements of.the National Labor Relations
Act, that it is not in any real sense the simple
product of a consensual relationship. Therefore,
although the duty to arbitrate, as we have said
... must be founded on a contract, the impressive
policy considerations favoring arbitration are not
wholly overborne by the fact that Wiley did
not sign the contract being construed. This case
cannot readily be assimilated to the category
of those in which there is no contract whatever, or
,none which is reasonably related to the party
sought to be obligated. There was a contract, and
Interscience, Wiley's predecessor, was party to it.
We thus find Wiley's obligation to arbitrate this
dispute in the Interscience contract, construed in
the context of a national labor policy.
In light of the national labor policy^setforth above
favoring arbitration •as'the terminal point in grievance
procedure as a means of settling disputes by quasijudi-
cial means instead of strikes, the majority opinion
appears anachronistic. The extant collective-bargain-
?ingcontractcontains no-strike and grievance-arbitra-
tion clauses. The preceding contract contained similar
clauses. The Union is seeking to resolve the grievances
which arose during the hiatus period between the
two contracts by the past and present arbitration
procedure. The Respondent and the Board majority
say this cannot be done; if the Union is dissatisfied
with the outcome of the negotiations to settle these
grievances it must strike.'This hardly seems consistent
with the present bargaining agreement or with the
present national labor policy of substituting "a regime
of peaceful settlement for the older regime of industrial
,conflict." Nor -is it -consistent with the Warrior &
Gulf admonition that arbitrability is to be 'favored
where doubt exists. It is true, as the majority asserts,
that arbitration is a matter of contract.20 But it does
" United Steelworkers v Warrior & Guff Navigation Co, 363 US
574 1 ° I d at 583 , see also John W i l e y & Sons v Livingston, 376 U S
" Id at 577 543
/d.at 578 "John Wiley & Sonsv Livingston , 376 U S 543
Idat581 30 However , as the Wiley case establishes , in some cases an expired
Id at 585 .contract may support arbitrability
246 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
not follow that with the expiration of the term of a TRIAL EXAMINER'S DECISION
collective-bargaining agreement, either party is free
unilaterally to alter the established conditions and
practices dealing with "wages, hours, and other terms
and conditions of employment."21 This applies not
only to the grievance-arbitration procedure, but in
my opinion, also to the quid pro quo for the
arbitration clause, namely, the Union's no-strike
agreement, insofar as it applies to strikes over
grievances subject to the grievance-arbitration
procedure. We are here dealing not with contract
enforcement or "constructing" a contract-to use
Member Brown's phrase-for the parties, but with an
obligation imposed by statute requiring the employer
and the representative of his employees to confer in
good faith before making changes in "wages, hours,
and other terms and conditions of
employment . . . ."22 The problem posed by
Member Brown as to what would guide an arbitrator
on issues during the hiatus period is of course equally
applicable to the earlier steps of the grievance
procedure which he apparently recognizes as
continuing I suggest the answer would lie in the
established practices primarily reflected in the
expired contract until those have been modified by
agreement or unilaterally after notice, an opportunity
to discuss, and an impasse.
I am not saying that an employer cannot discontinue
an existing practice of grievance-arbitration after the
termination of a collective-bargaining agreement. I
would hold only that an employer cannot abandon
such practice, anymore than he can change the wages
or seniority of his employees after the expiration
of a bargaining contract, without first notifying the
representative of his employees and giving the latter
an opportunity to bargain about such change.
For the above reasons I would find, in accord
with the Trial Examiner, and contrary to the majority,
that by unilaterally eliminating the arbitration feature
of the grievance-arbitration procedure, Respondent
violated Section 8(a)(5) and (1) of the Act.23
" The majority attempts to distinguish the square holding in the
Bethlehem Steel case, supra, that a unilateral change in grievance procedure
after the expiration of the bargaining agreement is a violation of Sec
8(a)(5), on the ground that in Bethlehem the employer sought "to impose
new channels for resolution of disputes" whereas here Respondent simply
discontinued arbitration This attempted distinction was specifically reject-
ed in the Kingsport Publishing case where the Trial Examiner characterized
the argument as a "distincton without a difference " Indeed it is illogical
to say that an employer acts lawfully if he unilaterally completely abolishes
a preexisting grievance procedure, but acts unlawfully if he only modifies
it
" For this reason Proctor & Gamble Independent Union of Port Ivory,
N Y v Proctor & Gamble Manufacturing Company, 312 F 2d 181 (C A
2), which was a suit in contract is not relevant to the present proceeding
Cf NL R B v C& C Plywood Corp, 385 U S 421, NL.R B y Acme
Industrial Co, 385 U S 432
" I concur with the majority 's finding that Respondent did not violate
Sec 8 (a)(5) by its abandonment and reinstatement of the grievance
procedure
STATEMENT OF THE CASE
OWSLEY VOSE, Trial Examiner: This case, heard at Cin-
cinnati, Ohio, on May 15, 1968, pursuant to a charge
filed September 20, 1967, and a complaint issued on Decem-
ber 11, 1967, presents the question whether the Respondent
(hereinafter called the Company) violated Section 8(a)(5)
and (1) of the National Labor Relations Act, as amended,
by making certain changes in its grievance procedure after
the expiration of the collective-bargaining contract in which
the grievance procedure was established, all without notice
to Local 342, International Chemical Workers Union, the
collective-bargaining representative of its employees.
Upon the entire record and my observation of the witness-
es, and after due consideration of the briefs filed by the
General Counsel and the Company, I make the following-
FINDINGS AND CONCLUSIONS
1. THE BUSINESS OF THE COMPANY
The Company, a Delaware corporation, operates among
others a plant at Cincinnati, Ohio, where it is engaged
in the manufacture and sale of pigments, dyes, and pharma-
ceutical intermediates. During the past calendar year the
Company shipped more than $50,000 worth of its products
from its plant at Cincinnati to out-of-state destinations.
Upon these facts I find, as the Company admits, that
it is engaged in "commerce" and operations "affecting
commerce" within the meaning of Section 2(6) and (7)
of the Act
11. THE LABOR ORGANIZATION INVOLVED
Local 342, International Chemical Workers Union (herein
called the Local) is a labor organization within the meaning
of Section 2(5) of the Act.
III THE UNFAIR LABOR PRACTICES
A. The Company's Violations of Section 8(a)(5)and (1) of the
Act
1. The collective-bargaining contracts between the
Company and the Local
On May 5, 1965, the parties entered into a 2-year collec-
tive-bargaining contract which was made effective commenc-
ing on April 15, 1965. This contract contained a four-
step gnevance procedure culminating in binding arbitration.
The Local gave the Company timely notice of its intention
to terminate the contract and the contract expired by
its terms on April 15, 1967.
Before the contract expired the Company offered to
extend it on a day-to-day basis with either party required to
give 48 hours' notice in writing of its intention to terminate,
but the Union refused to agree.
On June 16, 1967, the parties agreed on the terms of a
new collective-bargaining contract which was to become
THE HILTON-DAVIS CHEMICAL COMPANY
effective as of June 23 and was to run until April 15,
1970. This contract contained the same four-step grievance
procedure, with binding arbitration as Step 4.
2 The Company's unilateral action with respect to the
grievance procedure
On Friday, April 14, 1967, the day before the 1965-
67 contract expired, the Company's Industrial Relations
Manager J. W Smith distributed among Company's officers
and supervisors a memorandum, in pertinent part, as follows:
TO Division Superintendents April 14, 1967
Department Heads
Supervisors cc Company Officers
Subject: Operation Without a Union Contract
The contract between the Company and Local 342
will expire at 12:00 Midnight tonight. The following
conditions will apply and management personnel must
conduct themselves in accordance with these instruc-
tions.
a. All practices and, benefits of the previous con-
tract will be continued until further notice, except
that the grievance procedure and the dues check
off under the expired contract no longer are in
force.
In order to maintain a harmonious relationship,
management will discuss any problem with any
employee and if he chooses he may have someone
accompany him. Such action does not constitute
an acknowledgement that the grievance procedure
in the terminated contract is in effect nor does
it give any right to the employee or the union
to arbitrate any issue.
If questions arise concerning practices under the
expired contract, the Industrial Relations Depart-
ment should be called into the discussion.
While no notice was given the Union of the Company's
discontinuance of the grievance procedure, employees
promptly became aware of the Company's action through
seeing copies of the memorandum on their supervisors'
desks One of the copies of the memorandum was given
the Local President Landon Williams. The following Mon-
day, April 17, Williams told Robert Hawkins, a representa-
tive of the International, about the Company's action
respecting the grievance procedure and the dues checkoff.
Hawkins promptly communicated this information to Thom-
as Boyle, a vice president of the International and national
coordinator of the Sterling Drug Council of the Internation-
al, of which the Company is a part. Boyle called John
Ward, vice president in charge of employee relations of
Sterling Drug that same day, April 17, and expressed
the opinion that the Company was violating the Act by
refusing to entertain grievances from the Union and stated
that the Company's action might precipitate a strike. Ward
replied that he would consult counsel and call Boyle back.
On April 20, 1967, Ward called Boyle back and informed
him that the Company would issue a new notice and
that the Company would receive and process grievances
247
as before . This is Boyle's testimony . Ward testified that
he told Boyle in the April 20 conversation that while
the Company would process postcontract grievances up
to arbitration , it would not submit such unresolved griev-
ances to arbitration
In view of the Company's contention, discussed below,
that its decision not to arbitrate postcontract grievances
was not reached unilaterally, it is necessary to resolve
the inconsistencies between Boyle's and Ward's testimony
concerning the Company's asserted notification to the Local
that the Company would not submit grievances to arbitra-
tion Boyle's testimony as a whole leaves the impression
that he was unaware of the Company's decision not to
arbitrate until after the negotiations for a new contract
were completed in the last half of June 1967. Thus Boyle
testified that when he asked Ward at.a-bargaining meeting
on June 16, 1967, whether the Company would submit
pending unresolved grievances to arbitration Ward
answered, "Yes." Ward was not recalled and asked about
this conversation.
I have some difficulty in accepting this testimony at
its face value. I think it unlikely that Ward would have
flatly told Boyle that the Company would arbitrate postcon-
tract grievances when, as found below, the Company's
written policy promulgated on April 20 was exactly the
opposite. On the other hand, I am doubtful about Ward's
testimony that he specifically stated to Boyle on April
20, 1967, that the Company would not arbitrate postcontract
grievances. It should be borne in mind that both men
were testifying as to events which had occurred about a
year earlier. Neither witness impressed me as having an
accurate present recollection of the events as to which
they were testifying. I am convinced that Ward did not
flatly tell Boyle on April 20„ 1967; that the Company
would not arbitrate postcontract• grievances. Until a griev-
ance arose which could not be settled short of arbitration
there was no occasion for Ward to make such a sweeping
statement which was likely to exacerbate relations between
the parties and might possibly precipitate a strike. And
it might turn out that all postcontract grievances could
be disposed of short of arbitration
Considering all the testimony in the light of the probabili-
ties of the situation, I find that Ward in his April 20
conversation with Boyle made some-response to the effect
that the Company would go ahead and process grievances.
Regarding the conversation between Boyle and Ward at
the June 16 negotiating meeting, I do not credit Boyle's
testimony that Ward told him, in answer to Boyle's specific
question, that the Company would submit postcontract
grievances to arbitration. Rather I conclude that Ward
made some more general reply concerning following the
old procedure which left Boyle with the impression that
the Company still proposed to follow all of the provisions
of the old grievance procedure, including the arbitration
provision.
On April 20, 1968, the Company issued a new notice
to officers and supervisors, as Ward had told Boyle it
would. The notice is as follows
248 DECISIONS OF NATIONAL LABOR RELATIONS,BOARD
TO: Division Superintendents
Department Heads
Supervisors cc Company Officers
Subject Operation Without a Union Contract
A number of questions have arisen over-the method
of handling grievances now that. the Union Contract
has expired. Therefore, we wish to make it clear that
although the grievance procedure itself is not formally
in effect, we will. continue the handling of grievances
in the same manner as they have been in the past.
Since the contractual provisions of arbitration are no
longer in effect such grievances will only be processed
through Step 3.
[s] J.W. Smith
J.W. Smith
Industrial Relations Manager
The Local was not furnished with a' copy of this notice;
nor was it ever informed,as to its contents
A total of 28 grievances arose during the interim period
between two contracts, from April 15, 1967, to June 23,
1967. Of these 20 were disposed of by the parties at least
by Step 3 under the procedure set forth in the expired
1965-67 contract. As to the remaining eight undisposed
of grievances, the Company formally declined the Union's
requests that such eight grievances be submitted to arbitra-
tion.
B. Conclusions Concerning the Company's Unilateral Action
with Respect to the Grievance Procedure
The facts set forth hereinabove establish that the Company
on April 14, 1967, the eve of the expiration of the 1965
contract, decided to discontinue processing grievances under
the procedure provided in the 1965-67 contract and formally
notified its supervisors to follow this policy. This change
remained in effect until April 20. It was put into effect
without consultation with the Local.
After receiving a protest from the Local that its conduct
was unlawful, the Company on April' 20 issued revised
instructions to its supervisors that grievances would be
handled as in the past up through Step 3 of _the grievance
procedure of the expired contract but that any grievances
arising after the expiration of the 1965-67 contract which
remained unresolved after Step 3 processing would not
be submitted to arbitration. The Local, however, was not
notified at this time of the Company's decision, which
was reached without consultation, with the Local, the Com-
pany thereafter refused the Local's requests to, submit eight
postcontract grievances to arbitration.
The General Counsel's complaint in this case alleges
a two-pronged violation of Section 8(a)(5) and (1) of the
Act. Paragraph 6(a)^ of the, complaint alleges a violation
based upon the Company's action, from April 14 to 20,
1967, in refusing to process postcontract grievances. Para=
graph 6(b) complains of the Company's action on and
after April 20, 1967, in refusing the Local's requests for
submission to arbitration of certain postcontract grievances.
The Company in its brief does not seriously address
itself to the paragraph 6(a) allegation. The Company appar-
ently recognizes that an employer violates his bargaining
duty where he unilaterally alters or discontinues a previously
existing formal grievance procedure without giving the
employees' representative an opportunity to bargain about
the change-that is, a grievance procedure not including
a provision for arbitration. The Company's position is in
accord with settled law. Bethlehem Steel Company (Ship-
building Division). 136 NLRB 1500, 1502, 1503, affd in
this respect and remanded sub. nom. Industrial Union of
Marine and Shipbuilding Workers of America, AFL-CIO
v. NL.R.B., 320 F 2d 615, 6.17-622 (C.A. 3), cert. denied
375 U.S. 984; Celotex- Corp., 146 NLRB 48, 59-60, enfd.
364 F.2d 552, 553, 554 (C.A. 5), cert. denied 385 U.S.
987, Motoresearch Company and Kems, Corporation, 138
NLRB 1490, 1492; Kingsport Publishing Corporation, 165
NLRB No. 116, Granite City Steel Company, 167 NLRB
No 35. See also United Nuclear Corporation, 156 NLRB
961, 965, enfd: 381 F.2d 972, 977-978 (C.A. 10). According-
ly, I' find,, as alleged in paragraph 6(a) of the complaint,
that the Company by unilaterally discontinuing from April
15 to 20, 1967, its former procedure for adjusting grievances
has violated Section 8(a)(5) and (1) of the Act.
Regarding the allegations of paragraph 6(b) of the com-
plaint the Company makes both a factual and legal argu-
ment. Concerning the former, the Company argues that
it did not in fact take unilateral action regarding its nonarbi-
tration position because it informed the Union of its position
and the Union did not seek to bargain about the matter
and did not raise any objections. As to the Company's
legal argument, the Company contends that its refusal
of the Union's requests to submit to arbitration certain
unresolved postcontract grievances did not constitute unilat-
eral action in violation of Section 8(a)(5) of the Act because
an arbitration procedure (1) does not concern "wages, hours,
and other terms and conditions of employment" within
the- meaning of Section 8(d) of the Act, and (2) exists
wholly outside of the employer-employee relationship by
virtue of the contract, as a means of resolving contractual
disputes.
Regarding the Company's factual argument, I have found,
contrary to. the Company's, contention,, that the, Company
did not in fact inform the Local concerning its nonarbitration
policy until a considerable period of time after it had
been put into effect Hence, I must reject the Company's
contention, that it afforded the Local an opportunity to
bargain about its change in policy.
As to the Company's legal argument, it is true that
arbitration procedures have their origin only in contracts.
However, it does not necessarily follow that such procedures,
when. included as the final step in comprehensive grievance
procedures, do not relate to "terms and conditions of
employment" with, respect to which employers are required
to bargain collectively with the exclusive, representative
of their employees. As I construe the Third Circuit's decision
in the Bethlehem case, that Court reached the opposite
conclusion; namely, that grievance and arbitration proce-
dures are within the phrase "wages,. hours, and other terms
and conditions of employment" (320 F.2d at 620). As
THE HILTON-DAVIS CHEMICAL COMPANY
stated by the Trial Examiner in Kingsport Publishing Corpo-
ration , 165 NLRB No. 116, "It would , of course, seem
totally inconsistent to hold that a grievance procedure would
survive a contract but that the arbitration clause, the final
and binding part of that procedure , would not " Reason
and logic in my opinion support the view that an arbitration
procedure should be regarded as being in the same category
as any other step in a contractually established grievance
procedure and can no more be unilaterally discontinued
by the employer after the expiration of the contract than
can any of the earlier steps in the grievance procedure
I cannot agree with the Company 's conclusion that the
Board in its Bethlehem decision (136 NLRB 1500) necessari-
ly directed its ruling only to the grievance procedure and
not to arbitration . While this conclusion is arguable, in
my opinion it can be argued with equal or even greater
force that the Board in Bethlehem, stating that "it is with
respect to the unilateral action taken in . . . altering
an existing grievance procedure that we now believe that
the Respondent violated Section 8(a)(5) of the Act," intend-
ed to refer to the entire existing grievance procedure which,
as here, included arbitration as the final step . This was
the conclusion of the Third Circuit upon reviewing the
Board 's Bethlehem decision Thus the Court, after reciting
the fact that there was no agreement in effect when Bethle-
hem's unilateral action occurred, stated (320 F .2d at 620):
Bethlehem was justified in discontinuing
enforcement of the union shop and checkoff because
these conditions are wholly dependent upon the
existence of an agreement conforming to the §8(a)(3)
proviso. The company's abrogation of seniority rights
and its alteration in the grievance and arbitration
procedure , however, finds no such protection in the
statute . The vice in this was not the refusal to comply
with the provisions of an agreement which had already
expired , but the unilateral elimination of accrued
seniority rights, and the substitution of a new
employer -devised grievance procedure in lieu of the
one which existed under the expired contract'
The Company's reliance on Proctor & Gamble Independ-
ent Union v. Proctor & Gamble, 312 F.2d 181 (C.A. 2),
and Local Union No. 998, UAW v. B. & T. Metals co.,
315 F 2d 432 (C A. 6), in my opinion, is misplaced Both
cases involved actions by unions to compel the employers
to arbitrate grievances under the terms of collective -bargain-
ing contracts
In the B. & T Metals Co. case the court held that
the grievance there involved was not of a kind which
was arbitrable under the contract in any event whether
the contract was still in effect or not . The court did not
deem it within its province to pass on the question whether
the contract was still in effect or not because , in its view,
this was an unresolved factual matter which it was up
' I cannot concur with the Company's conclusion that the Third
Circuit in Bethlehem was not concerned with the abandonment by the
Company of the grievance procedure set out in the agreement but rather
with the infringement on the Union's role as exclusive bargaining represent-
ative caused by such action As I read the Third Circuit's decision,
Bethlehem's abandonment of the grievance procedure was the crux of
this particular violation of Sec 8(a)(5)
249
to the District Court to pass on in the first instance.
The B. & T. Metals Co case is not relevant to the issues
in the instant case.
While there is dictum in the Proctor & Gamble case
which appears to lend support to the Company's position,
all that the court held in that case was that arbitration
of grievances arising under a contractually established griev-
ance procedure could not be compelled in an action based
on the contract, where the conduct giving rise to the
grievance occurred after the expiration of the contract
in which the grievance procedure was established. In arriving
at this conclusion the court rejected the contention that
the court could grant the relief requested by the Union,
not under the contract, but because the refusal to arbitrate
constituted in the circumstances of the case a unilateral
change in conditions of work in violation of Section 8(a)(5)
of the Act The "federal courts," the Second Circuit stated,
"are without competence to pass upon its claim of unfair
labor practices." Such claims, as the court held, are within
the "exclusive jurisdiction" of the Board (312 F.2d at
190).
It does not follow, as the Company appears to suggest,
that because the Company was free after the expiration
of the contract from contractual inhibitions against unilater-
ally discontinuing the arbitration procedure that the Board
cannot pass on the question whether such a unilateral
act constituted an unfair labor practice within the meaning
of Section 8(a)(5) of the Act Indeed, the portions of the
court's opinion above quoted indicate to the contrary.2
Accordingly, I conclude that the Company by discontinu-
ing the arbitration feature of its established grievance proce-
dure without notifying the Local of its intentions in this
regard and giving it an opportunity to bargain collectively
about the proposed change and by thereafter refusing the
Local's requests for arbitration of certain grievances arising
after the expiration of the 1965 contract has refused to
bargain collectively with the Union in violation of Section
8(a)(5) and (1) of the Act
CONCLUSIONS OF LAW
1. Local 342, International Chemical Workers Union
is the exclusive collective-bargaining representative of the
Company's production and maintenance employees
employed at its Cincinnati, Ohio, plant including receiving
clerks, traffic clerks, drivers, drum inspectors, order clerks,
raw material checkers, janitors and janitresses, and power
house laborers, but excluding all executives, superintendents,
division heads, chemical supervisors, foremen, laboratory
employees (general and departmental), co-op students, pro-
fessional employees, watchmen, licensed stationary engi-
neers, licensed firemen, office clerical employees and any
supervisory employees within the meaning of the National
Labor Relations Act, as amended.
' The suggestion in fn 10 of the court's opinion (312 F 2d at 190)
that the Board itself "does not require the employer to refrain from
abandoning arbitration without collective bargaining at the termination
of an agreement containing an arbitration clause," in my opinion, reads
more into the Board's decision in the Bethlehem case (136 NLRB 1500),
than the language of the decision warrants
250 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
2. The arbitration aspect of the grievance procedure
established in the 1965-67 collective-bargaining contract
between the Company and the Local comes within the
definition of "terms and conditions of employment" con-
tained in Section 8(d) of the Act and therefore is a mandatory
subject of collective bargaining.
3. The Company by its action which became effective
on April 15, 1967, in unilaterally discontinuing the grievance
procedure set forth in the expired 1965-67 contract, by
its action on April 20, 1967, in unilaterally reinstituting
its former grievance procedure but omitting the arbitration
stage thereof, and by its action thereafter in refusing the
Union's requests for arbitration of postcontract grievances
in accordance with the former procedure, has refused to
bargain collectively with the Local in violation of Section
8(a)(5) and (7) of the Act
4. The aforesaid unfair labor practices affect commerce
within the meaning of Section 2(6) and (7)of the Act.
THE REMEDY
Having found that the Company violated the Act by
taking unilateral action with respect to matters as to which
it was obligated to bargain collectively with the Union,
my Recommended Order will provide that the Company
cease and desist therefrom and from like and related conduct.
Since the Company's violations included its action in refus-
ing to process grievances through the arbitration stage
of the grievance procedure, my Recommended Order will
direct that the Company process through the arbitration
stage in accordance with Step 4 of the expired 1965-
67 contract such ones of the eight postcontract grievances
as to which the Union hereafter requests the Company
in writing to submit to arbitration. See Local 485, Interna-
tional Union of Electrical, Radio & Machine Workers, AFL-
CIO (Automotive Plating Corp.). 170 NLRB No. 121.
Upon the foregoing findings and conclusions and the
entire record and pursuant to Section 10(c) of the Act,
I hereby issue the following:
RECOMMENDED ORDER
The Respondent, The Hilton-Davis Chemical Co., Divi-
sion of Sterling Drug, Inc., Cincinnati, Ohio, its officers,
agents, successors, and assigns , shall:
1. Cease and desist from:
(a) Refusing to bargain collectively with Local 342, Inter-
national Chemical Workers Union, as the exclusive repre-
sentative of its employees in the appropriate unit stated
above by making unilateral changes in its grievance proce-
dure, including the arbitration provisions thereof, or any
other terms or conditions of employment of said employees,
without prior consultation and bargaining with Local 342,
International Chemical Workers Union.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of their rights
guaranteed by Section 7 of the Act
2. Take the following affirmative action which it is found
will effectuate the policies of the Act.
(a) Submit to arbitration in accordance with Step 4
of the grievance procedure of the expired 1965-67 contract
with Local 342, International Chemical Workers Union,
such of the eight postcontract grievances as said Local
hereafter requests, in writing, be submitted to arbitration.
(b) Post at its Cincinnati, Ohio, plant copies of the
attached notice marked "Appendix " Copies of said notice,
on forms provided by the Regional Director for Region
9, after being duly signed by Respondent's representative,
shall be posted by Respondent immediately upon receipt
thereof, and be maintained by it for 60 consecutive days
thereafter, in conspicuous places, including all places where
notices to employees are customarily posted. Reasonable
steps shall be taken by the Respondent to insure that
said notices are not altered, defaced, or covered by any
other material.'
(c) Notify the Regional Director for Region 9, in writing,
within 20 days from the receipt of this Decision, what
steps have been taken to comply herewith.'
' in the event that this Recommended Order is adopted by the Board,
the words "a Decision and Order" shall be substituted for the words
"the Recommended Order of a Trial Examiner" in the notice In the
further event that the Board's Order is enforced by a decree of a United
States Court of Appeals, the words "a Decree of the United States
Court of Appeals enforcing an Order" shall be substituted for the words
"a Decision and Order "
' in the event that this Recommended Order is adopted by the Board,
this provision shall be modified to read "Notify said Regional Director,
in writing, within 10 days from the date of this Order, what steps
Respondent has taken to comply herewith "
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to the Recommended Order of a Trial Examiner
of the National Labor Relations Board, and in order to
effectuate the policies of the National Labor Relations
Act, as amended, we, hereby notify our employees that:
After a trial in which both sides had the opportunity
to present their evidence, a Trial Examiner of the National
Labor Relations Board has found that we violated the
Act and has ordered us to post this notice and keep
our word about what we say in this notice.
A Trial Examiner of the Board has found that
we violated the Act when we changed our grievance
and arbitration procedure after the expiration of our
1965-67 collective-bargaining contract without bargain-
ing with Local 342, International Chemical Workers
Union about such changes
WE WILL NOT change our grievance and arbitration
procedure or any other term or condition of employ-
ment in the future without first bargaining with the
Union about such matters.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce our employees in the exercise
of the rights guaranteed in Section 7 of the Act.
THE HILTON-DAVIS CHEMICAL COMPANY
If requested by the Union to do so, WE WILL
submit to arbitration under Step 4 of the grievance
and arbitration procedure or our 1965-67 contract
the eight grievances which were filed after the contract
had expired on April 15, 1967, but which were not
settled in Step 3.
THE HILTON-DAVIS
CHEMICAL CO., DIVISION OF
STERLING DRUG. INC.
(Employer)
251
This notice must remain posted for 60 consecutive days
from the date of posting, and must not be altered, defaced,
or covered by any other material.
If employees have any question concerning this notice
or compliance with its provisions, they may communicate
directly with the Board's Regional Office, Room 2407,
Federal Office Building, 550 Main Street, Cincinnati, Ohio
45202, Telephone 684-3686.
Dated By
(Representative)
(Title)