Stone Boat Yard: Stone Boat Yard, Debtor In PossessionDownload PDFNational Labor Relations Board - Board DecisionsSep 30, 1985276 N.L.R.B. 1185 (N.L.R.B. 1985) Copy Citation STONE BOAT. YARD '1185 Stone Boat Yard: Stone Boat Yard , Debtor in - Pos- session ' and United Brotherhood - of Carpenters and Joiners of America , Local 1149 , AFL-CIO. Case 32-CA-3304 30 September 1985 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND JOHANSEN - On 14 June 1985 Administrative Law Judge Harold A. Kennedy issued the attached supplemen- tal decision. The Respondent filed exceptions and a supporting brief. The General Counsel filed a brief in answer to the Respondent's exceptions and in support of the decision. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three= member panel. The Board has considered the supplemental deci- sion and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recom- mended order.' ORDER - The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, Stone Boat Yard: Stone Boat Yard, Debtor In Possession, Ala- meda, California; its officers, agents, successors, and assigns, shall take the action set forth in the Order. i The caption is amended to comport with the Respondent 's status as debtor-in-possession 2 We note that the backpay -specification was amended , inter alia, to name Stone Boat Yard Stone Boat Yard, Debtor In Possession as the Re- spondent without objection Accordingly, our Order runs against Stone Boat Yard Stone Boat Yard, Debtor In Possession Veronica I. Clements, Esq., of Oakland, California, for the General Counsel. - - Herbert S. Matthews, Esq., of South San Francisco, Cali- fornia, for the Respondent. David A. Rosenfeld, Esq., of San Francisco, California, for the Union. SUPPLEMENTAL DECISION AND ORDER HAROLD A. KENNEDY , Administrative Law Judge. This is a backpay proceeding Initiated by a backpay specification (amended twice) and heard by me in Oak- land, California , on 12 December 1984. The National Labor Relations Board (Board) on 30 September 1982 found Stone Boat Yard (Stone) had been in violation of Section 8(a)(5) and (1) of the National Labor Relations Act (Act) "since July 1, 1980 , by ceas- ing to make contributions to the Union 's health and wel- 276 NLRB No. 130 fare and pension funds and by implementing the compa- ny-funded medical insurance plan." 264 NLRB 981 at 982:' The Board's decision was later enforced by the United States Court of Appeals for the Ninth Circuit. 715 F.2d 441 (1983). The United States Supreme Court thereafter denied certiorari 446 U.S. 937, on 16 April 1984 (G.C. Exh. 1(e)) The Board's decision in the underlying case indicates- that_"the initial charge" was filed on 5 January 1981, that the complaint issued on 23 February 1981, and that the trial took place on 9 September 1981. According to the decision, a "Master Agreement" had been negotiated between the Union and the major shipbuilding companies on the west coast for the period I July 1977 to 30 June 1980. Stone was one of eight independent boat yards within Local 1149's jurisdiction which were not mem- bers of the multiemployer group but which had "always" later become signatory to the Master Agreement. The International Union wrote to Stone on 15 April 1980 that it wished to negotiate a -new agreement. Stone responded on 21 May that it wanted "substantial changes" in a new contract effective 1 July 1980. The major shipbuilding companies and the International began negotiations in Olympia, Washington, on 29 May and continued thereaf- ter through June 1980. Respondent made several calls in June to the union business agent, but he was involved in the negotiations away from his office. In late June Stone told its employees that effective 1 July 1980 it "was im- plementing a company-funded medical insurance plan and that effective 1 January 1981, a company-funded program would be implemented." On 1 July, the day after Stone's contract with the Union had expired, Stone implemented its company-funded health plan-and ceased making payments to the Union's health and welfare and pension plans. A new Master Agreement was rejected by the rank-and-file in mid-July 1980, but a new Master Agreement was ratified in August 1980. The Union wrote Stone on 21 August concerning the terms of the new agreement, which had become effective on 1 July. Seven of the independents signed the new Master Agree- ment, but Stone, which held "several"- negotiation ses- sions with the Union, did not. The General Counsel's representative, the Regional Director for the Board's Region 32 in- Oakland, Califor- nia, issued the backpay specification herein on 31 July 1984 calling for payment of certain expenses plus interest to one David Shaw as well as substantial payments to the Marine Carpenters Health and Welfare Fund and to the Marine Carpenters Pension Fund. On 20 September 1984 Stone filed a, petition in bankruptcy On 31 October 1984 the General Counsel filed an amended backpay specification. On 9 November-1984 the General Counsel filed with the United States Bankruptcy Court for the Northern District of California a document entitled "Proof of Multiple Claims for Wages, Salaries or Com- missions ." A second amended backpay specification was filed just prior to-the trial of this matter in Oakland, Cali- fornia, on-13 December 1984.1 i The General Counsel stated at the hearing that the second amended backpay specification is identical to the amended backpay specification Continued 1186 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The payments claimed to be due the two funds are said to be based on hours worked by all employees after 1 July 1980 (at the rate of 83 cents for the health and welfare find and $1.08 for the pension plan). The amount claimed due Shaw is said to reflect the cost to Shaw for medical care which would otherwise have been covered under the health plan provided for in the most recently expired collective-bargaining agreement. Stone's principal contentions are: 1. Bargaining between it and the Union after 1 July 1980 relieved Stone of any obligation to make payments to the Union fringe benefit funds. 2. The interest, penalties, liquidated damages, or "any such remedy based on the rules of the trust funds involved are inappropriate to the facts of this case." 3. It is inappropriate for the General Counsel to attempt to collect payments. for the "Union Health & Welfare Plan for medical benefits for employees and to collect the actual benefits from Respondent for employees such as David Shaw." The General Counsel contends that Respondent has sought, inappropriately, to relitigate issues previously de- cided in the prior proceeding. According to the General Counsel, no bargaining between Stone and the Union could have reached impasse so as to toll Stone's liability as Stone never restored the status quo ante or even of- fered to reimburse the Union's trust funds. The parties entered into a number of stipulations at the hearing. Respondent stipulated that if it were to be found that Stone's liability had not 'been tolled as claimed by the General Counsel, Stone would concede that its liabil- ity would be in the amounts claimed in the General Counsel's (last) backpay specification. Respondent's counsel added: Basically we are stipulating to the accuracy of the hours worked, the-named employees and the arith- metic, that is to say, what General Counsel alleges was provided in the preceding 'contract is correct and that that's the proper formula to impose upon those records of the hours worked by the named employees and the arithmetic in adding all that up is accurate. except that the claim made for' Shaw's medical expenses had been re- duced from $3,261 25'to $2,974 20 The General Counsel's backpay specification' seeks payment of $54,142 11 (including $4,922 01 an liquidated damages) for contributions said to be due to the Union's health and welfare fund (based on 83 cents per hour worked by each unit employee) for the period I July' 1980 through 19 September 1984 and payment of $70,449.86 (including $6,404 53 in liquidated damages ) for contributions said to be due the Union 's pension fund (based on $1 08 per hour worked by each unit em- ployee) for the same period The General Counsel's specification also calls for additional payments to both funds (plus liquidated damages) for the period after 19 September 1984 calculated on the same basis, i e, 83 cents . per hour per unit employee for the health and welfare fund and $1.08 per hour per unit employee for the pension fund until the current payments to the funds are restored Attached to the specification are ap- pendices which list each employee and the hours worked - Respondent does not contest the computation (i e , the formula used or the arithmetic) of the amounts set forth in the backpay specification The General Counsel acknowledged in her brief (fn. 6) that by making such concession Stone did not waive "its two subsidiary arguments that (a) the assessment of 10 percent liquidated damages to the Fund amounts due is unjust and inappropriate and (b) that Respondent should not be required to both reimburse the Health and Wel- fare Fund and reimburse employees for expenses." - The parties stipulated into the record a number of doc- uments, including correspondence and other materials bearing dates between 6 February 1981 and 17 Septem- ber 1984 (G.C Exhs. 3-28). The parties also agreed that the contents of an affidavit (G.C Exh. 23) given by David Shaw concerning the expenditures for medical ex- penses should 'be read and considered as if he had given it in the form of testimony.2 - Three witnesses •testified-Pauline F. Kocourek, ad- ministrator of the Marine Carpenters Trust Funds; Arthur Johnson, director of labor relations for the Cali- fornia Metal Trades Association; and Theodore Knud- son, , the Union's financial secretary and. business repre- sentative. . Pauline Kocourek identified copies of the Union's health and welfare and pension trust agreements (G.C. Exhs. 24 and 25). She said she considered Stone to be a signatory to both funds and, although apparently execut- ed 10 years ago or more, the agreements are still in effect. Kocourek explained that contributing employers are to make monthly reports and payments as follows: The employers complete the form, calculate the total contribution, hours times the hourly rate and. send the form together with their remitttance to a lock box at _ Crocker Bank entitled Marine Carpen- ter. The money is deposited immediately and Crocker sends the employer report forms plus copies of the deposit to us and we verify the cor- rectness or the timeliness. - The contributions are due by the 15th day of the month following the month in which the hours are worked. January hours are due by February 15th. They are delinquent if they are not received by the 25th of the month. - Crocker Bank invests the money in certificates of depos- it, issued either by it or another bank. Over the last 5 years health and welfare earnings have averaged 12-1/2 percent Pension funds are handled by the Crocker In- vestment Management Corporation, and the average return for such funds over the past 5.years has been "slightly over 16 percent annually." Kocourek explained that both trust agreements call for payment of liquidated damages. She stated if an employ- er does not respond to a first delinquent notice, another letter is sent by the Funds' office informing the employer that 10-percent liquidated damages will be added. A col- 2 Shaw 's affidavit , dated 10 December 1984 , 'recites recollection and understanding as to his employment by Stone, medical insurance cover- ages for himself and his family , and certain medical expenses incurred (some of which have not been reimbursed). STONE BOAT YARD 1187 lection agency or an attorney may be engaged to effect* collection for the funds. .-: Kocourek explained that the Funds are administered by a board of trustees made up of three management-. trustees and three 'labor trustees.3 Kocourek serves as sec'r`etary to the board as well as the administrator' of the funds. On- cross-examination by- Respondent, Kocourek ex- plained that an employer's health and welfare contribu- tion is the same for each employee but that the amount of the contribution made for an employee's pension ac- count may vary as there are 'three different categories. She said she would be advised if an employer and the Union had ever reached an impasse during negotiations, but she had not been told by the Union That any had been reached with Stone. Kocourek testified that she had been an employee of the funds since October 1983, and she could recall no reports or contributions being made by Stone "during her employment. She stated that she was aware that a board of directors had waived liquidat- ed damages on one occasion. She said that the one occa- - sion involved the report of a delinquency based on a clerical. error. The employer had paid contributions for three employee participants, but the wrong fund had been credited. Arthur Johnson - represented Stone in negotiations be- tween the Company and the Union in 1981. He said he was the company spokesman and attended a number of meetings, including those held on 8, and 18 February, 7 April, 13 May, and 23 July 1981. 'He said no proposals were discussed at the first meeting, although the Union indicated it would want Stone to agree to sign a new master agreement. He, identified Respondent's Exhibit 4 as the Company's proposal which had been submitted to the Union (with a letter dated 3 April, G.C. Exh. 4) prior to the 7 April, meeting. According to Johnson, the parties had reached agreement on,everything except the amount of contributions the Company should pay to the two.funds and two "minor" -(cost-of-living) items as indi- cated in letters written by him to the Union on 22 April and 13 May (G.C. Exhs. 5 and 7). He identified and ac- knowledged the exchange of other correspondence dated 27 April, 27 May, and 14, 15, and 31 July (G.C Exhs. 6, 9, 10, and 11) between the parties. On cross-examination by the General Counsel, John- son agreed that the subject of past due contributions had been discussed on 13 May and that the Company had never offered to pay the funds for any past due contribu- tions. He explained that the. Company was concerned during the negotiations with the "total cost." It would consider accepting the, Union's health and welfare plan but, if it did, lower wages would result. Also, payment of any back contributions -would mean there would be less to pay in wages. Johnson also agreed that the Com- pany's position did,not change thereafter, including at the time-of the last bargaining session held on 23 July 1981. According to Johnson, it never occurred to him than there would be any retroactive costs. Said Johnson: "If you don't get the dollars, you don't certify eligibil- ity." He agreed that he had taken the position, as indicat- ed in his letter of 31 August 1981 (G.C. Exh. 11), that any moneys that might be owed to the trust funds after July 1980 was something to be bargained over between the company and the Union. On cross-examination by the Charging Party, Johnson explained that with respect to pensions the Company's final proposal involved an offer to make-a $10,000 retro- active pension payment to cover the period 1 July 1980- 1 January 1981 plus payment of 50 cents per hour for each employee participant after 1 January 1981. Accord- ing to Johnson, if the Union had accepted such proposal the Company would have been "out of the [Union's] plan," and there would have been no further obligation in that regard. Johnson recalled that in the spring of 1981, when he was representing Stone in negotiations with the Union, the Company was not -contributing to the Union's pension fund and that Stone had previously implemented its own health and welfare plan. Johnson maintained that the Company had agreed on "every- thing" except payment of pension and health and welfare costs.4 Theodore L. Knudson was called to testify as a rebuttal witness for the General Counsel. He has been financial secretary and business representative' of Local 1149 since December 1958 and had represented the Union in negoti- ations with Stone over the past several years. Knudson recalled 'that there had been a number of bargaining ses- sions starting in February 1981. He was asked specifical- ly about the 13 May bargaining session. He recalled that Johnson did "most of the speaking" for Stone at that meeting, but that- Stone's owner, a Mr. Folker, stated that $1.10 would be the top paid by the Company for pensions and health and welfare. It was explained, Knud- son said, that the balance to pay for the "full fringes" under the Union's plan would have to come out of wages. Knudson stated that the Company's past liability to the Union's trust funds was mentioned and that John- son had indicated "that the past liability as well as the difference in future payments would have to come from the wages- of the employees." Knudson said that he pointed out that he had no authority to excuse liability to the trust funds. - At the 23 July bargaining session, according to Knud-, son, several options were discussed. Folker was present at the meeting, but again Johnson did most of the talk- ing. The Company was willing to pay the Union wage, but the Company "had already started a health and wel- fare plan of [its] own and an annuity instead of a pension fund." Knudson said the Union proposed certain changes from the new. Master Agreement, including reduction in the number of paid holidays and the amount of jury pay, trainees' pay, and tool allowances. According to Knud- son, Johnson indicated he did 'not expect the' Union to agree with the Company, but the Company could only pay $1.10 for fringes. Said Knudson: a Actually there are two boards of trustees (one for each fund), but the two boards are made up of the same six members The boards meet sepa- rately , and separate minutes are kept for each meeting * Johnson indicated that he knew wages had increased and that the multiemployer group had agreed to one or two additional holidays 1188 DECISIONS OF NATIONAL LABOR RELATIONS BOARD [Johnson] suggested that to get the contract, you have to go back and take $1.23 from the men's wages from July of 1980 to the present to get the Union contract with the Union fringes, and that the employees would be docked the difference in the $1.10 to the total package from their wages for the Union's health and welfare and pension. If the Union-if the members didn't want to dock it, then he was asking the Union to excuse those benefits or those payments-either excuse those payments, the past liability payments or they would have to come off from the men's wages. The biggest thing there was what the men had turned down all the proposals for all the time was that the past liabilities either had to be excused or taken from the men's wages, -and that was why the men always turned down the proposals. According to Knudson, the Company never indicated it would 'pay back the retroactive contributions to the trust funds. - The Board's enforced order requires Stone to: (c) Make employees in the aforesaid unit whole for any losses or expenses they may have suffered as a result of the unilateral discontinuance, as set forth in the section of this Decision and Order enti- tled "The Remedy."5 (d) Pay into the union health and welfare and pension plans those contributions it has failed to pay as a result of said unilateral change. The General Counsel asserts in her brief that the law is well settled that liability of a respondent for unilateral changes "continues to run unless and until tolled by (a)- restoration of the status quo ante, then (b) bargaining to impasse or. agreement over the terms of a new Con- tract.". Respondent concedes that there is "some author- ity to support" the General Counsel's argument that "no- amount of post violation good faith bargaining can stop the liability from continuing to accrue until the Company has first restored the status quo ante." NLRB v. Allied Products Corp., 548 F.2d 644 (6th Cir. 1977), which Stone cites, indicates which a respondent which unilaterally discontinues benefits must restore the status quo ante and continue their payment during negotiations.6 ® The remedy portion-of the decision states in part: We have found that Respondent since July 1, 1980, violated Section 8(a)(5) and (1) of the Act by ceasing to make contributions on behalf of its bargaining unit employees to the Union's health and welfare and pension plans e Quoting from the decision of the Board's majority in Allied Products Corp, 218 NLRB 1246 (1975) [I]n cases, like here, involving a violation of Section 8(a)(5) based on a respondent 's unilaterally altering existing benefits , it is the Board's established policy to order restoration of the status quo ante to the extent feasible, and in the absence of evidence showing that to do so would impose an undue or unfair burden upon the respondent i We find no basis here which justifies a departure from this policy Thus, contrary to the Administrative Law Judge, the fact that Respondent presented the Union with a fait accompli at the outset of negotiations must necessarily have obstructed meaningful bargaining 2 To hold that bargaining in such circumstances is an adequate substitute for re- -medial action would unwarrantedly relieve Respondent of its statuto- ry obligation to maintain existing benefits during negotiations and un- The case principally relied on by Stone, NLRB v. Cauthorne, 691 F.2d 1023 (D.C. Cir. 1982), enfg. in part the Board's Order in 256 NLRB 721 (1981), does give support to the notion that restoration of the status quo ante need not always precede a bargaining impasse.? Cauthorne is of no assistance to Stone here, however, for the record establishes that Stone could not have legally bargained to impasse. It is clear from the record that Stone could have only insisted to impasse on a nonman- datory subject-the matter of restoring the status quo ante-which is legally untenable. See Taft Broadcasting Co., 274 NLRB 260 (1985); Arlington Asphalt Co., 136 NLRB 742 (1962), enfd. 318 F.2d 550 (4th Cir. 1963); and Covington Furniture Mfg. Corp., 212 NLRB 214 (1974), enfd. 514 F.2d 995 (6th Cir. 1975). I agree with the General Counsel that the record does not support Stone's contention that it offered to restore the status quo ante but instead conditioned reaching agreement on the Union's willingness to waive its, right to that status.8 Thus, Stone's liability for the unilateral change was not tolled, and the Company's obligation for payment of past dues to the two trust funds continues. Stone contends that it should be relieved of restoring payments to the Union's pension and health and welfare plans on the grounds of "hardship." Such an argument is not a proper subject in a backpay proceeding, which is instituted only to determine the total amount owed by a respondent as a result of unfair labor practices. See H. S. Brooks Electric, 247 NLRB 619 (1980). The cases cited in Respondent's brief (p. 13) are not backpay cases. Stone's argument that the General Counsel is seeking "double payment" (i.e., payment of David Shaw's medi- cal expenses and payment to the Union's health and wel- fare plan) must also be rejected. It is clear that the Board's Order, enforced by the court, requires Stone to do both: to make contributions to the Union' s pension and health and welfare plans on behalf of employees after 1 July 1980 and also to make employees "whole for any loss or expenses that they may have suffered as a result of the unilateral discontinuance" of payments. The Board 's order in this case is not , as was the Order in Re- public Steel Corp. v. NLRB, 311 U.S. 7 (1940), penal or punitive but is well within the Board's statutory author- ity.9 justifiably ignore the rights of those employees who may have been adversely affected by Respondent 's breach of that duty. 1 See, "e.g., American Smelting and Refining Company, 167 NLRB 204 (1967); Southland Paper M,lls Inc., 161 NLRB 1077, 1078 (1966) 2 NL.R B v. Benne Katz, et al., d/b/a Williamsburg Steel Prod- ucts Co, 369 U S 736, 747 (1962) 7 Cauthorne has been cited in recent decisions of the Board See De- pendable Maintenance Co, 274 NLRB 216 (1985), Buck Brown Contracting Co, 272 NLRB 951 (1984); and Day's Metal Tab, 271 NLRB 1393 (1984). 8 Stone cites G C. Exh 7 , a 13 May 1981 letter sent by its labor rela- tions representative Arthur Johnson to the Union as confirmation that Stone made an "unequivocal offer to resume participation in the union fringe benefits plan." The letter states that under Stone 's proposal em- ployees may remain "in the Jointly Trusteed programs" if they were willing to allow the costs therefor to be recovered from their hourly wage rates Such was hardly a realistic offer to restore the status quo ante a Counsel for the Charging Party pointed out at the hearing that the Board 's Order clearly requires "the trust fund be made whole separite Continued STONE BOAT YARD Stone asserts that there is no reason to require pay- ment of liquidated damages because the Funds' office knew Stone wanted to withdraw from the two union funds and the trustees could waive their payment. I am unpersuaded by such argument. The relevant trust agree- ments (G.C. Exhs. 24 and 25) provide for mandatory liq- uidated damages ($20 per delinquency or 10 percent of the amount of contributions, whichever is greater), and the Board has ordered payment of such when a collec- tive-bargaining agreement contains such explicit lan- guage . See F.M.L. Supply, 258 NLRB 604 (1981); also NLRB v. Strong, 393 U.S. 357 (1969).10 The General Counsel points out in her brief that the Fund's office has gone to "substantial" expense to at- tempt collection from delinquent employers and, more- over, that the moneys which were collected have earned a good return (over 12 percent in the case of the health and welfare fund and over 16 percent in the case of the pension fund). and apart" from the obligation to reimburse Shaw. He noted that Stone "put itself in this position by refusing to pay either Mr. Shaw or the trust fund." He agreed that an offset would be appropriate if Shaw were to be reimbursed, but the record does not indicate that Shaw has ever been paid for the medical expenses claimed. 10 Fn 6 in the Board 's original decision herein provides for "additional amounts" to satisfy the make-whole remedy. It reads in part: These additional amounts may be determined , depending upon the circumstances of each case, by reference to provisions in the docu- ments governing the funds at issue and , where there are no govern- ing provisions , to evidence of any loss directly attributable to the un- lawful withholding action, which might include the loss of return on investment of the portion of funds withheld , additional administra- tive costs, etc., but not collateral losses. Merryweather Optical Ca, 240 NLRB 1213 (1979). ORDER 1189 The Respondent, Stone Boat Yard, Alameda, Califor- nia, its officers, agents, successors , and assigns, shall 1. Reimburse David Show $2,974.12 with interest as prescribed in Florida Steel Corp., 231 NLRB 651 (1971), for medical expenses which would have been reimbursed by the Marine Carpenters Health and Welfare Fund. 2. Restore current payments to the Marine Carpenters Health and Welfare Fund at the rate of 83 cents per hour worked by each unit employee and make payment to the Fund of $49,220.10 representing contributions due for the period 1 July 1980 through 19 September 1984, and $4,922 .01 representing liquidated damages on those con- tributions. In addition, make payment to the fund of 83 cents per hour worked by each unit employee for the period after 19 September 1984, until current payments to the fund are restored, and liquidated damages of 10 percent of the amount of any such contribution paid in a delinquent manner. 3. Restore current payments to the Marine Carpenters Pension Fund at the rate of $1.08 per hour worked by each unit employee and make payment to the fund of $64,045.33 representing contributions for the period 1 July 1980 through 19 September 1984, and $6,404.53 rep- resenting liquidated damages on those contributions. In addition, make payment to the fund of $1.08 per hour worked by each unit employee for the period after 19 September 1984, until current payments to the fund are restored, and liquidated damages of 10 percent of the amount of any such contributions paid in a delinquent manner. Copy with citationCopy as parenthetical citation