Swift & Company

National Labor Relations Board - Board Decisions

Sep 28, 1982

264 N.L.R.B. 240 (N.L.R.B. 1982)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Swift & Company and United Food and Commercial
Workers International Union Local No. 71,
AFL-CIO. Case 18-CA-6775
September 28, 1982
DECISION AND ORDER
BY MEMBERS JENKINS, ZIMMERMAN, AND
HUNTER
On September 29, 1981, Administrative Law
Judge Russell M. King, Jr., issued the attached De-
cision in this proceeding. Thereafter, the Charging
Party filed exceptions and a supporting brief, and
the Respondent filed an answering brief to the
Charging Party's exceptions.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and
briefs and has decided to affirm the rulings, find-
ings, and conclusions' of the Administrative Law
Judge and to adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board adopts as its Order the recommended
Order of the Administrative Law Judge and
hereby orders that the complaint be, and it hereby
is, dismissed in its entirety.
X In adopting the Administrative Law Judge's dismissal of the com-
plaint, we note that the record indicates Respondent entirely shut down
its Sioux City facility, thereby effectively closing its entire operation
there. Accordingly, we find it unnecessary to reach, nor do we pass on,
the Administrative Law Judge's comments concerning the scope of an
employer's freedom to act regardless of the circumstances in other situa-
tions involving purely economic closures or changes in operations. In this
regard, Member Jenkins and Member Zimmerman note that the circum-
stances underlying the Respondent's partial closure herein are not akin to
an employer's contracting out of work to another employer, inasmuch as
there is no evidence that the Respondent had any intention of utilizing
the services of another business entity to perform the work of the em-
ployees displaced herein. Cf. Fibreboard Paper Products Corp. v. N. LR.B.,
379 U.S. 203 (1964)
DECISION
RUSSELL M. KING, JR., Administrative Law Judge:
This case was heard by me in Sioux City, Iowa, on May
29, 1981. The charge was filed by United Food and
Commercial Workers International Union, Local No. 71,
AFL-CIO (the Union or Local 71), on July 10, 1980,'
and a complaint was issued on September 18 by the Re-
gional Director of Region 18 of the National Labor Re-
lations Board (the Board), on behalf of the Board's Gen-
eral Counsel. The Union represented the production and
I All dates hereafter are in 1980, unless otherwise stated.
264 NLRB No. 36
maintenance employees at the Respondent's turkey proc-
essing plant in Sioux City. On May 22, without prior
notice to the Union but during contract negotiations, the
Respondent, Swift & Company 2 (the Company), an-
nounced the closing of the plant, effective June 22. The
plant was in fact closed and the complaint alleges that
the plant closing, without prior notice to the Union, was
in violation of Section 8(a)(1) and (5) of the Act.3 The
Company denies any violation of the Act, contends the
closure was for economic reasons only, and argues that it
thus had no duty to notify or bargain with the Union
over the closure. There is no dispute in this case that the
Company did (and does) have an obligation to bargain
with the Union over the "effects" of the plant closure,
and this matter is not in issue.
The complaint (issued September 18, 1980) set the case
for hearing May 29, 1981. On January 12, 1981, the U.S.
Supreme Court granted certiorari in First National Main-
tenance Corp. v. N.L.R.B. (decided June 22, 1981, 452
U.S. 666. The issue involved was whether the employer's
unilateral decision to terminate a portion of its business
operations solely for legitimate economic reasons was a
breach of its duty to bargain under Section 8(a)(5) of the
Act. On May 11, 1981, the Company filed a motion to
continue the case (set for hearing May 29, 1981) on the
ground that the Supreme Court's (then) pending decision
in First National Maintenance Corp. could well dispose of
the issues in this case. That motion was denied on May
14, 1981, by the Regional Director for Region 18 of the
Board. The case then went on to hearing before me on
May 29, 1981, 4 and prior to closing the record in the
case the date of July 31, 1981, was set for the filing of
briefs by counsel. The First National Maintenance Corp.
decision was issued on June 22, 1981, and on June 26.
1981, the General Counsel requested "extension of time
in which briefs are to be filed" to August 3, 1981. 5 The
extension was granted and on August 3, 1981, the Gener-
al Counsel filed a motion to dismiss the complaint on the
grounds that there was no evidence in the record to sup-
port any violation of Section 8(a)(1) of the Act, and that
the decision in First National Maintenance Corp. was dis-
positive of the alleged violation of Section 8(a)(5) of the
Act (duty to bargain). 6 By a time schedule agreed upon
2 The name of the Respondent was amended during the hearing of the
case from "Swift & Company Dairy & Poultry Plant. a Division of Swift
& Co." to simply "Swift & Company."
3 The pertinent parts of the Act provide as follows:
Sec. 8. (a) It shall be an unfair labor practice for an employer-
(I) to interfere with, restrain, or coerce employees in the exercise of
the rights guaranteed in Section 7 .(5) to refuse to bargain collec-
tively with the representatives of his employees .
Sec. 7. Employees shall have the right to sclf-organization, to
form, join, or assist labor organizations, to bargain collectively
through representatives of their own choosing, and to engage in
other concerted activities for the purpose of collective bargaining or
other mutual aid or protection ...
4 The motion for a continuance was not rencAcd before me at the
hearing.
I This request was made "in view" of the Court's holding in i-rst Va-
rional Maintenance Corp.
6 The motion to dismiss cited, among oilher things. exhibits and testl-
mony in the record.
240
* . . e
SWIFT & COMPANY
by all counsel, replies to the General Counsel's motion
were subsequently and timely filed. These replies by
counsel for the Union and the Company were extensive,
the Union against dismissal and the Company in favor of
dismissal of the complaint. The Union urges that this
case is clearly distinguishable from First National Mainte-
nance Corp.
I now, and for the first time, address the General
Counsel's motion to dismiss the complaint, and I hereby
deny the same. I do so at this time not on the basis of
merit, but in my opinion the case is ripe for decision,
having been carried through the Board's formal hearing
process notwithstanding the pendency of First National
Maintenance Corp. Should this case be destined for Board
review in one form or another, the initial decisional
process will be behind it.7
Upon the entire record, including my observation of
the demeanor of the witnesses,8 and after due considera-
tion of the pleadings, motions, and replies filed herein, I
make the following:
FINDINGS OF FACT
I. JURISDICTION
The pleadings, evidence, and admissions herein estab-
lish the following jurisdictional facts. At all times materi-
al herein, the Company has been a Delaware corpora-
tion, and has maintained a place of business or plant in
Sioux City, Iowa, where it has been engaged in the proc-
essing and nonretail sale and distribution of poultry or
turkeys. During the calendar year ending December 31,
1979, the Company, in the course and conduct of its op-
erations described above, sold and shipped from said
plant products and goods valued in excess of $50,000 di-
rectly to points outside the State of Iowa. Thus, and as
admitted, I find and conclude that the Company is now,
and has been at all times material herein, an employer
engaged in commerce within the meaning of Section
2(2), (6), and (7) of the Act.
As also admitted, I find and conclude that the Union
is, and has been at all times material herein, a labor orga-
nization within the meaning of Section 2(5) of the Act.
I I realize that "briefs," in their formal sense, were not filed in this
case. The extension granted to the General Counsel to August 3, 1981,
was for this purpose. No such "briefs" were actually filed and no further
extensions were requested. Additionally, and in my opinion, little or
nothing more could be said or argued about the case other than that
which appears in the General Counsel's motion to dismiss and the re-
sponses to the same.
a The facts found herein are based on the record as a whole and upon
my observation of the witnesses. The credibility resolutions herein have
been derived from a review of the entire testimonial record and exhibits
with due regard for the logic of probability, the demeanor of the wit-
nesses, and the teaching of N.L.R.B. v. Walton Manufacturing Company.
et a., 369 U.S. 404, 408 (1962). As to those testifying in contradiction of
findings herein, their testimony has been discredited either as having been
in conflict with the testimony of credible witnesses or because it was in
and of itself incredible and unworthy of belief All testimony and evi-
dence, regardless of whether or not mentioned or alluded to herein, has
been reviewed and weighed in light of the entire record.
II. ALLEGED UNFAIR L ABOR PRACTICES
A. Summary of the Testimony and Evidence9
Union President Wayne Huntsman had worked for the
Company for some 18 years and his present job was that
of grading pork bellies at another company plant also lo-
cated in Sioux City. That plant is also under contract
with the Union, and Huntsman was commencing his
third year as president of the Union. Regarding the
turkey plant, Huntsman testified that the operation at this
plant was seasonal, starting up in late May and ending in
late December. Approximately 175 employees worked at
the turkey plant. Huntsman testified that the 3-year col-
lective-bargaining agreement or union contract with the
turkey plant expired April I and that negotiations for a
new contract had commenced in January. These negotia-
tions ended May 20 and consisted of approximately 9 to
10 sessions. Huntsman was on the union bargaining com-
mittee with six or seven other employees, and the Com-
pany's bargaining committee included Plant Manager
John Juel, who was the principal spokesman for the
Company. Huntsman testified that a bargaining session
was held on May 9 at which time the Company tendered
its "final offer" and asked that it be put to a ratification
vote by the Union. May 19 was the date previously set
for the regular union meeting, but Huntsman indicated
that no ratification vote was conducted at this meeting
because the Union had recently learned of a May 20 bar-
gaining session set before a Federal mediator. According
to Huntsman, the Union did not request this session with
the Federal mediator, and at the May 19 union meeting a
further meeting for possible ratification was scheduled
for May 22. At the May 20 bargaining session before the
Federal mediator, Huntsman related that the proposals
on each side were exchanged through the mediator and
that at one point the Company's representatives excused
themselves to return to the plant to call the Company's
main office in Chicago. Huntsman related that upon their
return they indicated that there would be "no further
movement on any items at this time." Huntsman testified
that during the early morning hours of May 22 the
Union's bargaining committee met and decided to recom-
mend to the membership ratification of the proposals that
had been submitted as "final" proposals by the Company
on May 9. However, they also decided to contact Plant
Manager Juel before the meeting to try to "clarify" some
of the language prior to the meeting that evening. Hunts-
man indicated that there were still some "open issues."
Juel was reached by telephone at approximately 9 a.m.,
and Huntsman testified that he reminded Juel of the rati-
fication meeting that evening and indicated to Juel that
he wanted to try and get some clarification on certain
points prior to the meeting. According to Huntsman, at
that point Juel read from a letter, indicating that the
9 The following includes a summary of the testimony of the witnesses
appearing in the case. The testimony will appear normally in narrative
form, although on occasion some testimony will appear as actual quotes
from the transcript. The narrative only and merely represents a summary
of what the witnesses themselves stated or related. without credibility de-
terminations unless indicated, and does not reflect my ultimate findings
and conclusions in this case.
241
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
plant would be closed June 22 and that the Company
thus was withdrawing all previous offers. A letter an-
nouncing the plant closing for "economic consider-
ations" was distributed to all employees later that day.
Huntsman testified that at this point in time the plant had
not been reopened for production for the season, and
that later in the day he asked Plant Manager Juel if the
recent negotiations had any effect in the plant closure
decision, to which Juel replied, "No, it was a decision
that was made in Chicago." Juel also indicated to Hunts-
man at this time that he had only learned of the decision
to close the plant the prior day (May 21).
Gilbert Smith testified as the present director of busi-
ness operations for the poultry division of the Company.
In May 1980 he was group manager for poultry oper-
ations and his home office was in the Company's home
office in Chicago. Smith testified that the various poultry
plant managers reported directly to him. Smith related
that in January 1978 there was a change in the top man-
agement of the Company, with a marketing program
thrust to make turkey an item consumed year-round.
Smith related that marketing projections by the Compa-
ny for the years 1978, 1979, and 1980 reflected that the
then current plant capacity of the Company was not suf-
ficient. A study of the Company's 12 then existing turkey
plants was commenced and this study was completed in
July 1979. In this study, the 12 turkey plants were objec-
tively rated as to their potential for improved productiv-
ity, and the Sioux City turkey plant came in last (12th).
According to Smith, the Sioux City turkey facility was a
4-story building built in 1930 as a "creamery," and was
not designed to be a "turkey eviscerating plant on its
own." The facility was owned by the Company and
Smith indicated that the plant itself was put on the
market in June 1980. Smith testified that 6 factors were
used in the study of the 12 turkey plants, which were as
follows: (I) procurement cost; (2) grades of turkeys
available; (3) yield (from live weight to dress weight); (4)
wage rates; (5) productivity (man-hours and labor cost
versus pounds produced for man-hours); and (6) out-
bound freight costs (from Sioux City to various markets).
Smith testified that sometime after the results of the
study the Company determined that the new marketing
program had been too ambitious, and that production
had increased in some turkey plants because of industrial
engineering changes. Thus, Smith indicated that the
Company came to be in an "over-capacity situation," and
studies reflected that by closing the Sioux City turkey
plant, some $2 million a year could be saved commenc-
ing in 1980 and thereafter, which resulted in the decision
to close the plant. Smith testified that he learned of this
decision on May 21 and on that date he and Labor Rela-
tions Manager Charles Frederick called Plant Manager
Juel in Sioux City. Smith indicated that the Company's
policy in plants with seasonal operations was not to "re-
commence" operations unless and until there was a col-
lective-bargaining agreement in effect. Smith added that
two other turkey plants were also closed after the Sioux
City plant, and that in 1979 the Company's turkey plants
produced 360 million pounds as opposed to 368 million
pounds in 1980, without the production of the Sioux City
plants. According to Smith, the "operational earnings" in
1977 of the Company's turkey plants was $7 million but
that in 1980 the Company lost $30 million in its turkey
plant operations. Smith attributed this loss, in great part,
to excessive inventories during periods of reduced
demand, resulting in low sale prices.
John Juel testified as the Company's Sioux City turkey
plant manager in 1980. Juel took part in the negotiations
with the Union commencing in January, and related that
at a bargaining session which took place on April 22
union representative Stamoulis, on behalf of the Union,
asked for a "substantial" wage increase of $1 per hour. 0°
According to Juel, the April 22 demand was the first and
only demand made by the Union, although the Company
made several counteroffers, ending with their "final pro-
posal" of May 9.'" Juel testified that there were three
bargaining sessions with the Federal mediator and that
the last such session was conducted May 20, at which
time the mediator represented to him that the Company's
"final proposal" was unacceptable to the Union.
Charles D. Frederick testified as a labor consultant for
the Company. In 1980 he was the Company's manager of
labor relations. Frederick related that subsequent to plant
closure the Company received a "letter" from the Board
indicating that the Company would be liable for back
wages until such time as they sat down and negotiated
with the Union over the decision to close the plant.
After discussing the matter with a company attorney, on
October 20 Frederick wrote to Union President Hunts-
man offering to meet with the Union and "bargain col-
lectively regarding the Company's decision to discontin-
ue its Sioux City, Iowa Turkey Plant." 2 Frederick testi-
fied that on December 29 he received a phone call from
Huntsman, who stated that he would "get back to [him]
with dates" after he consulted with an attorney in Chica-
go. According to Frederick, he never heard from Hunts-
man again.
B. Evaluation of Evidence and Law and Initial
Conclusions
Prior to the Supreme Court's decision in First National
Maintenance Corp. v. N.L.R.B., 452 U.S. 666 (1981)
(hereinafter called National Maintenance), the Board had
long held that an employer's decision to close part of its
operations affects the "terms and conditions of employ-
ment" within the meaning of the Act, and was thus a
'° Union President Huntsman conceded in his testimony that the SI-
per-hour figure was once mentioned, but only in jest, and never was a
serious demand.
I On April 25, G. R. Nelson, the Company's "complex manager"
wrote a letter to all employees stating that no "start-up date" for the
plant had been scheduled "due to the lack of agreement with the Union
on a contract." The letter added that the Company felt its proposal had
been fair but that the Union had demanded a wage and benefit package
"which would likely double our labor cost over a three year period." On
May 9, Nelson again wrote to the employees indicating that "additional
benefits have been added to the Company's proposal," and expressing
hope that "the Company's proposal" will be ratified and the plant re-
opened for processing.
i2 The record reflects that in introducing the letter as evidence, coun-
sel for the Company stated that its purpose was to "tole [sic] any back-
pay which might be involved in the event any violation is found [in this
case]." Huntsman wrote back to Frederick on October 24 expressing a
willingness to meet with the Company "subject [tol contacting our legal
counsel before setting a date."
242
SWIFT & COMPANY
mandatory subject for collective bargaining. Ozark Trail-
ers, Incorporated, 161 NLRB 615 (1966). In National
Maintenance the employer provided housekeeping and
maintenance services to commercial customers. One such
customer was a nursing home, and there came a time
when the employer began to lose money over its con-
tract with the home. After attempts to remedy the situa-
tion failed, the employer ceased servicing the home and
3 days later informed its employees that had been work-
ing at the home that they would be discharged. During
this period and prior to ceasing operations at the home,
the employees at National Maintenance had organized,
the Board had certified a union as their collective-bar-
gaining representative, and the union had requested bar-
gaining but had not received a response to the request.
The Board found the employer had violated Section
8(a)(1) and (5) of the Act by failing to satisfy its duty to
bargain concerning both the decision to terminate its
contract with the nursing home and the efforts of the de-
cision upon the employees involved. 242 NLRB 462
(1979).'3 The resulting Order of the Board was enforced
by the Second Circuit. 627 F.2d 596 (1980). In reversing
the Board and the Second Circuit, the Supreme Court
concluded and held as follows:
. . . that the harm likely to be done to an employ-
er's need to operate freely in deciding whether to
shut down part of its business purely for economic
reasons outweighs the incremental benefit that
might be gained through the union's participation in
making the decision, and we hold that the decision
itself is not part of... "[the] terms and conditions"
. . .over which Congress has mandated bargaining.
[452 U.S. at 686.]
In reaching the above holding, the Supreme Court deter-
mined that the decision (itself) to terminate operations
was part of the employer's "retained freedom[s] to
manage its affairs unrelated to employment." Id. at 677.
Significant remarks in the decisions leading up to its
holding are as follows:
. . .in establishing what issues must be submitted to
the process of bargaining, Congress had no expecta-
tion that the elected union representative would
become an equal partner in the running of the busi-
ness enterprise in which the union's members are
employed. [Id. at 676.]
The present case concerns a third type of manage-
ment decision, one that had a direct impact on em-
ployment, since jobs were inexorably eliminated by
the termination, but had its focus only on the eco-
nomic profitability of the contract . . . a concern
under these facts wholly apart from the employ-
ment relationship. This decision, involving the
scope and direction of the enterprise, is akin to the
decision whether to be in business at all .... [Id.
at 677.]
Management must be free from the constraints of
the bargaining process to the extent essential for the
t1 As indicated earrher, there is no dispute in this case regarding har-
gaining over the "effecls" of Ihe plant's closure
running of a profitable business. It also must have
some degree of certainty beforehand as to when it
may proceed to reach decisions without fear of later
evaluations labeling its conduct an unfair labor
practice. Congress did not explicitly state what
issues of mutual concern to union and management
it intended to exclude from mandatory bargaining.
Nonethelees, in view of an employer's need for un-
encumbered decisionmaking, bargaining over man-
agement decisions that have a substantial impact on
the continued availability of employment should be
required only if the benefit, for labor-management
relations and the collective-bargaining process,
outweighs the burden placed on the conduct of the
business. [Id. at 678-679.]
The Union argues in this case that in view of the long
bargaining and contractual history between the Union
and the Company, and in light of the then current and
ongoing contract negotiations, to have notified the Union
of the decision and bargained over the decision would
have imposed no burden on the Company in the conduct
of its business. This may or may not have been true, but
we are dealing here with what Congress deemed a man-
datory subject of bargaining, the decision to close or ter-
minate part of a business. The Court in National Mainte-
nance clearly found that such a management decision
was not what Congress intended a mandatory subject of
bargaining under the Act. In my opinion, the fact that
bargaining over such a decision may be expedient or ad-
vantageous to one or both parties, or may cause no
harm, imposes no legal duty on an employer to so bar-
gain, in light of the holding in .National Maintenance.
The Union in this case also argues that the Supreme
Court's earlier holding in Fibreboard Paper Products v.
A.L.R.B., 379 U.S. 203. 57 (1964). is controlling here. In
Fibreboard. a duty to bargain xwas imposed on an employ-
er that unilaterally subcontracted, for legitimate business
reasons, work that formally had been performed by
union members. In National Maintenance. the Court dis-
tinguished Fibreboard, pointing out that the termination
or closure decision had as its focus only economic profit-
ability involving the scope and direction of the enter-
prise, which was \wholly apart from the employment re-
lationship, or an aspect thereof.
The Union further notes in its agrumnent in this case
that the Company was guilty of bad faith in subverting
the bargaining process by forestalling agreement on a
new contract prior to the shutdown. I note that the com-
plaint in this case does not allege such "surface bargain-
ing" nor does the General Counsel argue the same. Fur-
ther, I find no union animus in this case, nor is such
urged by any party. The Court, in National NMaintenance,
placed no restrictions on when and how such a manage-
ment decision was to be announced.
The unrebutted evidence in this case reflects, and I so
find, that the closure decision by the Company was
based solely on economic and profitability grounds. I am
further convinced that this case falls squarely within the
holdings in National ,Maintetnance, and I shall thus recom-
mend that the complaint be dismissed. National Mainte-
nance was no doubt a blosw to organized labor, but its
-
243
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
mandate that employers have "unfettered decisionmak-
ing" in purely economic closures is clear. There are cer-
tain safeguards which are preserved, and which perhaps
serve to narrow the decision. But in my opinion it is now
absolutely clear that an employer's decision to close his
loosing business, or a part thereof, is his alone, if he so
chooses.
Upon the foregoing findings of fact, and upon the
entire record, I hereby make the following:
CONCI USIONS OF LAW
1. That the Respondent Employer is an employer en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
2. That the Charging Union is a labor organization
within the meaning of Section 2(5) of the Act.
3. That the following employees of the Respondent
constitute a unit appropriate for the purposes of collec-
tive bargaining within the meaning of Section 9(b) of the
Act:' 4
All production and maintenance employees and
truck drivers, excluding office and clerical employ-
ees, operating students, manager, assistant manager,
solicitors, plant foreman, buttermaking foreman, egg
room foreman, poultry grading foreman, poultry
and egg receiving foreman, route buyers and super-
visors with authority to hire, discharge, promote,
I" The unit was stipulated by all parties at the hearing of the case
demote, transfer, discipline or recommend such
changes.
4. That the Charging Union, at all times material
herein, and by virtue of Section 9(a) of the Act, is the
exclusive representative of the employees in the unit de-
scribed above, for the purpose of collective bargaining
with respect to rates of pay, wages, hours of employ-
ment, and other terms and conditions of employment."5
5. That the Respondent's unilateral decision in this
case to close its poultry or turkey plant in Sioux City,
Iowa, did not violate Section 8(a)(l) and (5) of the Act.
6. That the Respondent has not further or otherwise
violated the Act.
Upon the basis of the foregoing findings of fact, con-
clusions of law, and the entire record, and pursuant to
Section 10(c) of the Act, I hereby issue the following
recommended:
ORDER ' 6
It is ordered that the complaint herein be, and the
same is, hereby dismissed.
a1 The complaint in the case so alleges, and the Respondent's answer
so admits.
I6 In the event no exceptions are filed as provided by Sec. 102.46 of
the Rules and Regulations of the National Labor Relations Board, the
findings, conclusions, and recommended Order herein shall, as provided
in Sec. 102.48 of the Rules and Regulations, be adopted by the Board and
become its findings, conclusions, and Order, and all objections thereto
shall be deemed waived for all purposes.
244