Urban N. Patman, Inc.

National Labor Relations Board - Board Decisions

Jun 30, 1972

197 N.L.R.B. 1222 (N.L.R.B. 1972)

1222 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Urban N . Patman, Inc. and Provision House Workers
Union Local No. 274, AFL-CIO. Case
21-CA-10108
June 30, 1972
DECISION AND ORDER
BY MEMBERS JENKINS, KENNEDY, AND
PENELLO
On February 7, 1972, Trial Examiner James R.
Hemingway issued the attached Decision in this
proceeding. Thereafter, Respondent filed exceptions
and a supporting brief, the General Counsel filed
cross-exceptions with supporting brief, and the
Respondent filed an answering brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the record and the Trial
Examiner's Decision in light of the exceptions and
briefs and has decided to affirm the Trial Examiner's
rulings, findings, and conclusions, only to the extent
consistent herein.
The Trial Examiner found that Respondent's
unilateral change of the wage rates and fringe
benefits of the employees in its precooked foods
department during the term of the collective-bargain-
ing agreement, without complying with the provi-
sions of Section 8(d) of the Act, violated Section
8(a)(5) and (1). In making this determination, he
concluded, for reasons set forth below, that the issue
involved herein could not be arbitrated within the
terms of the contract. We disagree.
The Union contends that the present sausage
industry agreement covers Respondent's precooked
foods department employees as well as the sausage
department employees and, therefore, on June 22,
1971, when Respondent recalled its laid-off pre-
cooked foods department employees at lower wages
and fringes than they were enjoying prior to layoff, it
violated Section 8(a)(5) and (1) of the Act. Respon-
dent, on the other hand, maintains that the pre-
cooked foods department employees are not covered
by the contract, so that after consulting with the
Union, which it did, it could lawfully change the
wages and fringe benefits it had been paying those
employees. The essence of the dispute, then, is
whether the present contract covers the precooked
foods department employees and, in our opinion, can
best be resolved by arbitration.
The grievance machinery provisions of the contract
state, in part:
I Collyer Insulated Wine, A Gulf and Western Systems Company, 192
NLRB No 150
2. No employee covered by this Agreement shall
be demoted, suspended, dismissed or otherwise
disciplined without just and sufficient cause.
Should any action by an Employer cause an
employee covered by this Agreement to become
aggrieved, such employee shall orally or in writing
make his complaint to the Union. . . .
4. In the event the parties are unable to resolve
any dispute through the grievance procedure set
forth in Section 2 hereof, either party may
demand that the dispute proceed to arbitra-
tion. . . .
5. The findings of the arbitrator shall be binding
upon both the Union and the Employer provid-
ing, however, that the arbitrator shall not have the
authority to change, alter or modify any of the
terms or provisions of this Agreement.
No controversy regarding hours or wages shall be
subject to arbitration hereunder and the provi-
sions of this Article shall not in any way interfere
with the right of any party to seek relief at law, in
equity, or before any administrative tribunal
where a controversy regarding hours or wages
exists.
The Trial Examiner concluded that the Board could
not defer to arbitration for three reasons: (1) section
2 of the grievance provisions requires that an
employee must file a grievance in order for the
dispute to proceed to arbitration, and no such
grievance was filed in this case; (2) the issue involved
herein is one of wages and section 5 indicates that the
parties contemplated no arbitration of such a
dispute; and (3) the contract clearly shows that
arbitration was not intended as an exclusive forum
for resolving contract disputes.
As to 1, the filing of a grievance is not a
prerequisite to deferral for, in the lead case of
Collyer, i no such grievance had been filed. As to 2,
we find merit in Respondent's contention that this
dispute is arguably one of whether the contract
covers the precooked food department employees,
and not one of wages. Moreover, arbitrability of such
disputes is properly determinable by an arbitrator.
As to 3, section 5 merely reserves to the parties access
to an administrative tribunal where a controversy
regarding hours or wages exists, but does not apply,
by its terms, to a contract coverage dispute as
involved herein.
We believe, therefore, that this dispute is properly
one for deferral within the meaning of Collyer and
warrants our requiring the parties to honor their
197 NLRB No. 150
URBAN N. PATMAN, INC.
contractual grievance and arbitration obligations.
We shall, accordingly, dismiss the complaint in the
present case but shall retain jurisdiction to entertain
an appropriate and timely motion for further
consideration upon a proper showing that either (a)
the dispute has not, within reasonable promptness
after the issuance of this Decision, either been
resolved by amicable settlement in the grievance
procedure or submitted promptly to arbitration, or
(b) the dispute has been duly found by the arbitrator
not to be arbitrable, or (c) the grievance or
arbitration procedures have not been fair and regular
or have reached a result which is repugnant to the
Act.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board orders that the complaint be, and it
hereby is, dismissed; provided, however, that:
Jurisdiction of this proceeding is hereby retained
for the limited purposes indicated in our Decision
herein.
MEMBER JENKINS, dissenting:
For the reasons ably expressed by the Trial
Examiner, and for the reasons Member Fanning and
I have expressed in prior dissents to the majority's
action of deferring statutory issues to arbitration, I
would not so defer but would determine the case on
the merits-as I conceive our duty under the Act
requires us to do.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
JAMES R. HEMINGWAY, Trial Examiner: This case was
tried at Los Angeles, California, from November 3 to 5,
1971.1 The charge was filed on June 28, and the complaint
was issued on August 3. Respondent filed an answer on
September 9. The principal issues are whether or not
Respondent and the Union had contracted concerning a
certain group of employees not specifically mentioned in
an existing collective-bargaining agreement and whether or
not a unilateral reduction in pay for such employees
constituted a violation of Section 8(a)(5) and (1) of the Act.
Briefs were filed by the Respondent and the General
Counsel. Each also filed a motion for corrections in the
transcript, and the General Counsel filed an opposition to
one correction requested by Respondent. Ruling on these
motions is contained in Appendix B [omitted from
publication ].
Upon the entire record, including my observation of the
demeanor of the witnesses, and upon due consideration of
the briefs filed by the General Counsel and the Respon-
dent, I make the following:
I Dates herein are all in 1971 unless otherwise stated
2 The findings in this section are based on admitted allegations of the
FINDINGS OF FACT
1. JURISDICTIONAL FACTS
1223
Respondent is a corporation with its principal place of
business in Los Angeles, California, where it is engaged in
the business of selling and supplying meat products to
restaurants and schools.2
During the calendar year 1970, Respondent, in the
normal course and conduct of its business operations, sold
and shipped goods, products, and services valued in excess
of $50,000 directly to customers located outside the State
of California.
Respondent concedes and, I find, the Board has
jurisdiction, and it will effectuate the policies of the Act to
assert jurisdiction in this case.
II. THE LABOR ORGANIZATION
The Union is, and has been at all times material herein, a
labor organization representing certain employees of
Respondent under two collective-bargaining agreements.
III. THE UNFAIR LABOR PRACTICES
A. The Refusal to Bargain
1. Background
Prior to 1968 Respondent's principal business had been
sausage manufacturing, with some fresh meat processing.
In the year 1968, Respondent started a precooked foods
department. The department was started on a small scale
(two employees) early in 1968 on a trial basis with
equipment limited to a single broiler. As the market for
such food products proved good, the department was
expanded a little at a time . Equipment was added in 1969
and thereafter, and the number of employees was steadily
increased. By the end of 1968, Respondent had 20
employees in this department. By 1971, Respondent's
sausage manufacturing and packing business, contrary to
the trend in the precooked foods department, had declined.
Respondent then had approximately 13 employees in what
had once been its main operation. On the other hand, the
precooked foods department had expanded to a point
where, at peak in 1971, Respondent employed approxi-
mately 44 employees there.
2. The appropriate unit
The complaint alleges and the answer admits that the
appropriate unit consists of all production employees,
including a long list not necessary to repeat in detail here.
The list was copied from a collective-bargaining agree-
ment. Respondent is a member of a multi-employer
bargaining association known as Associated Meat Jobbers
of Southern California, herein called Meat Jobbers. The
Union and Meat Jobbers have for many years negotiated
collective-bargaining agreements for employers and em-
ployees engaged in the fresh meat business of processing
complaint
1224 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
beef, lamb, and pork into uncooked steaks, hamburgers,
chops, and roasts for sale to such buyers as restaurants.3
In past years, Respondent's principal business was in the
processing of pork (and some beef ) into sausage , bacon,
ham, hot dogs, and corned beef. The Union also represent-
ed Respondent's employees engaged in this phase of the
business, but it did not negotiate an agreement covering it
with the Meat Jobbers or with the Respondent. Instead, it
negotiated an agreement covering workers engaged in this
phase of the business with a group of independent sausage
industr- employers described in the Union's agreement as
Indep, gent Sausage Kitchens, who had a bargaining
agent then than the Meat Jobbers-one who did not
represent the Respondent. Members of the Meat Jobbers
(including the Respondent) who have sausage operations
and who are not represented by the agent of the
Independent Sausage Kitchens have usually authorized
Meat Jobbers to adopt the Union's independent sausage
industry agreement on their behalf. The Independent
Sausage Kitchen contracts for the years 1967 to 1976 and
its succeeding one for 1970-73 covered employers classi-
fied under the following departments: sausage department,
pork processing department, lard department, and fresh
meat and shipping.' These contracts provided for a union
shop.
As stated, the Respondent in 1968 started what gradually
developed into a precooked foods department.5 Whereas
the Respondent started it on an experimental basis, it
enlarged and improved the machinery and capacity. In
1969, Respondent installed at a substantial cost a mechani-
cal system with increased capacity.
During 1969 and 1970, Respondent's sausage business
declined. As sausage department employees would be laid
off, the Respondent would, if there was room, offer them
jobs in the precooked foods department. By May 1971,
there were only 13 employees in the sausage department,
but at peak production there were 44 employees in the
precooked foods department. The record does not show
what proportion of these started in the sausage department
and what proportion was hired from outside.
From the start of the precooked foods department,
although neither existing union contract specifically
mentioned employees in the precooked foods department,
Respondent paid the employees in the latter department at
a rate for each job most nearly equal in function to that
under the sausage industry agreement. Donald Patman,
Respondent's treasurer and manager of the precooked
foods department, testified that job functions and skills in
the precooked foods department were different from those
in the sausage department, but there was a similarity, and
many of the jobs in the precooked foods department could
be described with the same titles as those in the sausage
department. Under the Union's Independent Sausage
Kitchens contract, the wage rates were determined by
3 Respondent's relations with the Union began in 1932 Except for
background purposes , this agreement between the Union and the Meat
Jobbers, which was binding on the Respondent, is not relied on by the
parties in this case
4 Presumably the latter department was included for employers not
bargaining through the Meat Jobbers
5 Precooked foods concern the preparation of such cooked foods as
cooked hamburger patties, meatballs , chicken-fried steaks , and pork chops
assigning "bracket numbers" to each job and then listing
rates of pay for each bracket number. The wage rates for
employees in the precooked foods department were fixed
by the Respondent on the basis of comparablejobs found
in the sausage contract. For example, meat grinders in the
precooked foods department (although the job might entail
somewhat different functions) were paid at a bracket rate
such as meat grinders would receive in the sausage
department. For jobs in the precooked foods department
that had no equivalent in the sausage department, such as
quality control inspection and packing and boxing of
precooked foods, rates were unilaterally set by the
Respondent by assigning bracket numbers to those jobs
and paying the rate for such bracket as was listed in the
sausage contract.
In August, September, and October 1970, the Union and
Meat Jobbers engaged in negotiations for a new meatcut-
ters contract. Respondent's attorney, Kenneth Simon,
represented the Meat Jobbers. During this' period, having
some information that its competitors were able to
underbid it because they had lower wage rates, Respondent
requested Simon to discuss with the representatives of the
Union the need for negotiating a special set of rates and
fringe benefits for employees in the precooked foods
department during negotiations of the sausage contract,
which were also then in progress. When Simon mentioned
to union representatives the need for a consideration of
separate rates for the employees in the precooked foods
department, he was told that there could be no discussion
of that matter because there were more important items on
the bargaining table. I deduce that the Union did not wish
to consider a problem that affected only one of a large
number of sausage makers before negotiations were
completed on the general agreement.
The Union and the Independent Sausage Kitchens
reached agreement on a new contract in November 1970,
and the union membership, which included employees of
Respondent, ratified that agreement on November 28. The
exact schedule of events is not clear, but during November
1970 President Patman telephoned Robert Cook, executive
secretary of the Union, and told him he had a tremendous
problem and wished to discuss it with Cook. Cook told
Patman that he would get in touch with him. When Cook
did not do so, Patman attempted on five different
occasions to reach him but got no answer. Later he heard
that Cook was ill.
Respondent learned of the ratification of the sausage
industry agreement in early December 1970. Although
Respondent had not been involved in its negotiations and
although the Meat Jobbers had not yet signed that
agreement on behalf of Respondent, as it had been
accustomed to do, and although the agreement did not
contain rates for certain of the job titles in the precooked
foods department, the Respondent, nevertheless, in De-
These products Respondent sold to a new line of customers, such as school
cafeterias and company commissaries over a large portion of the country,
whereas Respondent 's other products were sold to more local customers,
such as restaurants The sales methods also differed Instead of dealing
directly with customers, the practice in precooked foods was to deal through
a broker who would submit bids to school districts or other prospective
buyers, who would let the contract to the low bidder Bids were taken once
or twice a year or sometimes three times a year
URBAN N. PATMAN, INC.
cember 1970, gave wage increases retroactively (as called
for by the sausage agreement) as well as other benefits
called for by that agreement not only to its employees in
the sausage department but also to those in its precooked
foods department. It deducted union dues, paid health and
welfare sums, contributed to retirement, pensions, dental
care plans, paid change of clothes time, etc., for precooked
foods employees as well as for sausage department
employees. President Urban Patman of the Respondent
testified that the reason he did this was to "have a
minimum amount of trouble [with the union] until we
could resolve [with the union] the problem in the
precooked foods department."6
3. Unilateral changes
During the early part of 1971, the Respondent ascer-
tained that it not only was losing bids but that it was
suffering operating losses. From the summer of 1970 on, it
was experiencing difficulty in bidding successfully on
contracts for precooked foods because its competitors were
underbidding the Respondent. The biggest precooked
foods processor competing with Respondent was Pronto
Foods, a Chicago company, which got a contract with Los
Angeles schools, underbidding the Respondent. Through
his connection with National Association of Processed
Food Manufacturers, Treasurer Patman learned that
Pronto's rates were in some instances less than half those
of Respondent, and gradually he learned that none of
Respondent's other competitors in the precooked foods
business paid higher rates than Pronto. As time passed, he
would gradually pick up such information on occasions
when the Respondent would lose bids.
Respondent's competitors had collective-bargaining
agreements, in most instances, with labor organizations
unconnected with the Union or with the parent labor
organization with which the Union was affiliated. On
March 9, 1971, President Patman learned that Custom-
Redi Foods, a competitor, believed to be owned by a
company called Butcher Boy, was selling its precooked
foods operation in the Los Angeles area. Patman was
invited to that plant as a prospective purchaser. He went
there and learned that Custom-Redi was paying, under a
union contract, the same wage rates as Pronto and another
precooked food producer (Larry Sandwiches) in the Los
Angeles area. He also learned that Butcher Boy, at another
precooked foods operation, this one in Riverside, a city
about 50 miles east of Los Angeles, had a contract for the
same rates as in Los Angeles, and that the Riverside
contract was with the Amalgamated Meat Cutters and
Butcher Workmen, the parent organization of the Union.
He further inquired and learned that Pronto (in Chicago),
a major competitor, also had a contract with the Amalga-
mated Meat Cutters.
Later in March, when Jesus Munllo, a business agent for
the Union, was visiting Respondent's plant with Jim
Zahans, the Union's president and business agent, in
connection with a grievance, President Patman requested
that they come to his office. When they were there, Patman
6 Urban Patman testified that "ever since I have been in this Union, and
this has been over 35 years-I always talked to the head man," who in 1970
was Cook I interpret this statement to mean that Patman, in his business,
1225
told them what he had learned about the rates under
contracts which competitors had with various labor
organizations, including the two with the Amalgamated.
He told them that he had $500,000 in equipment for the
precooked foods operation that would have to stay idle
unless he could get a contract that was equal to that of his
competitors. Zaharis said that they understood the Re-
spondent's problem. He told Patmanthat the Union would
find it difficult to tell the workers that they would have to
take a cut in pay and fringe benefits but said that he would
take the problem to Cook, the executive secretary for the
Union, and ask him to schedule a meeting with Patman.
Cook arranged such a meeting in late April, and,
pursuant to such arrangement, Cook and Zaharis met with
President Patman . Patman told the Union representatives
that it was economically impossible to exist on a total
package of $5.05 (including fringe benefits), which he was
paying, as against $2.48 paid for the same thing by his
competitors. Cook said that he sympathized with Patman
but that he had no authority to change the existing
contract. However, he said that he would see the
International's representative and get in touch with
Patman later.
Following his meeting with Cook and Zaharis, Patman
telephoned his attorney, Simon, told him that the Union
appeared to be friendly, and asked him to see what he
could work out with the Union. Simon met with Cook,
Zaharis, and Murillo on May 12. Simon again related the
Respondent's situation and the unfairness of the Union's
International having contracts with competitors at much
lower rates. He requested the Union to get him copies of
such contracts. Cook testified that Simon at this meeting
had said that the Respondent's proposal would apply only
to new employees. Simon denied making such statement
and testified that he had only requested negotiations for
rates considering the jobs in the precooked foods depart-
ment as newjobs. In a subsequent meeting, a proposal was
made that, if an agreement were reached respecting lower
rates for the precooked foods jobs, such rates would apply
only to the newer employees and that the older ones (those
originally working in the sausage department) would be
given an opportunity to transfer back to the sausage or
fresh meat departments so as to retain the higher rates
provided under the sausage agreement . Simon testified that
there had been some discussion in one of the meetings
about the possibility of protection to be given to some of
the older employees so that the new rates would not apply
to them. I find a basis for a possible misunderstanding as
to the meaning of "old" and "new" employees. Cook told
Simon that he was going to talk with an International
representative of the Union named Osslo on May 14, and
he would see if he could get approval of the proposal for
lower rates. Cook did, on that date, meet with Osslo and
told him the problem. Osslo, as quoted by Cook, said they
could agree on lower rates for employees thereafter to be
hired. Cook told Osslo that was all that the Respondent
wanted.
On May 18, Simon telephoned Zahans about another
had had contractual relations with the Union for 35 years His attempt to
have a minimum amount of trouble with the Union, I find, referred to a
desire to remain on amicable terms with the Union
1226 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
meeting. Zaharis urged Simon to telephone Cook. Simon
did so, and another meeting was arranged for May 28. On
that date they met, and Cook gave Simon'copies of the
contracts that Simon had requested. Simon said that he
would like to study them to make a comparative analysis,
that he would meet with Patman the next day, and that it
was necessary that the matter be resolved quickly, because
the Respondent, by June 4, had to submit a bid on the Los
Angeles District School System contract. The Respondent
and the Union agreed to resume their meeting on June 2.
It is undisputed that the Respondent has an annual
layoff in June. Even earlier than June, production had
fallen off in the precooked foods department to a point
.where it was necessary to lay off the second and third shift
employees. The first shift employees were laid off at the
end of the day on Friday, May 28. Between that date and
June 2, the Union notified the laid-off employees of each
of the shifts, 44 in number, that there would be a meeting
on the night of June 2.
During the day of June 2, Simon met with union
representatives Zaharis and Murillo (Cook was out of town
until later in the day) and presented a proposed agreement
based on rates and fringe benefits contained in the
agreements of competitors. He gave the Union listed rates
for five classes of employees and indicated the fringe
benefits that he would propose. The Union again raised the
question of protection of rates for old employees. Simon
gave the names of five employees who had been in the
precooked foods department since 1968 and who were to
retain their rate of pay. Simon had discussed this subject
with Patman on May 29, and Patman had said that he
could not have employees working side by side with
separate wage rates, one being higher than the other, but
Patman had said that he could transfer the older employees
at the higher rates into other operations than precooked
foods so that they could maintain their high rates. Simon
conveyed this information to the Union's representatives,
Zaharis and Munllo, at their June 2 meeting. They said
that they would present it to the membership for vote that
night. On Cook's return to town on the afternoon of June
2, he learned of the Respondent's proposal and telephoned
Simon to ask why only five employees were to remain at
their old rate. Simon told him that was the Respondent's
proposal.
That evening the three representatives of the Union met
with the 21 laid-off employees who had attended. Cook
told the employees that the Respondent, because of
competition, was desirous of operating at the rates which
had been submitted to the Union that day. He told them
that, if the Respondent could not meet the competition, it
would have to close that department. On being questioned
by an employee about whether or not they did not already
have a contract, Cook told them that they had.7 When the
matter was put to a vote, the employees voted against
accepting the Respondent's proposal. Later, Cook tele-
7 Cook apparently did not mention the fact that the Respondent's
representative had not yet signed the sausage agreement He gave evidence
of presuming that the contract came into existence as soon as the Union's
membership had ratified it, even though the Respondent was not a party to
negotiation of the sausage contract
8 Simon testified that Richman told him that he would recommend
phoned Simon and informed him of the vote. Simon's only
comment was, "We have a problem."
On June 3, Simon spoke with Lionel Richman, the
Union's attorney, and explained the Respondent's problem
and the employees' rejection of the Respondent's proposal.
On that day and thereafter for a couple of weeks, Simon
and Richman discussed various courses that the parties
might take to solve the Respondent's problem, without
which, it was believed, the Respondent could not reopen its
precooked foods operation.
A proposal by Simon for arbitration was, for a time,
taken under consideration but was ultimately rejected by
Richman.8 They discussed a possible RM petition. The
basis of such a filing was not revealed, but it could
presumably have been based on a possible claim of
representation by the Teamsters. This plan was abandoned
as too dangerous because the Teamsters might win the
election. In his talks with Richman, Simon had advanced
the argument that, as to the employees in the precooked
foods department, there was no contract, so Richman
suggested that, if Simon thought he could sustain his
theory that there was no contract, Richman would file a
charge of violation of Section 8(a)(5) of the Act and, if the
Regional Director should find that there was no contract in
existence and would refuse to issue a complaint, Richman
would accept his decision without appeal, and he could
then tell the Union that there was no contract .9 As appears,
the Union filed the charge in this case on June 24, 1971.
However, the Regional Director did not dismiss the charge.
Subsequently, on August 31, 1971, a complaint was issued.
Meanwhile, on June 20, after a conversation with
Patman in which Patman told Simon of the urgency of
planning a reopening if the Respondent was to reopen at
all, Simon advised him that article IV, section 12 of the
sausage agreement (which provided that "in the event that
there are new jobs or classifications or new machines they
shall be subject to immediate negotiations . . .") justified
his claim to a right to negotiate new rates. Simon
thereupon drafted a letter, dated June 22, and addressed it
to the precooked food employees last laid off, telling them
that the annual layoff, which began on May 31, would end
on June 25, but that, because the Respondent was losing
money in the operation, it could reopen only with
employee wages and benefits which did not cost more than
its competitors were paying. The letter continued by setting
out the wages and fringe benefits that precooked food
employees would receive after June 28. These were the
same as those which had been presented to the Union on
June 2 and had been rejected by the employees that night.
The letter also informed the employees that anyone who
had worked for Respondent before the annual closing
would receive the rate provided for employees who had
worked for 6 months regardless of the length of time the
addressees had actually worked, with only newly hired
employees beginning at the "start" rate. They were
informed that if they wished to work in the precooked
arbitration of the dispute to the Union, and that it was on this expectation
that he had authorized the Meat Jobbers (employer representative of
Respondent) to sign the sausage agreement The signing took place on June
17
9 The evidence does not fix the date of this conversation, but Richman
thought it was in mid-June
URBAN N. PATMAN, INC.
foods department, they should report for work at 7:30 a.m.
on June 28, 1971.
According to Simon, he saw Richman on June 21, 1971,
and told him that he had drafted the aforesaid letter and
was calling the employees back on the basis of that letter.
According to Simon, it was on this occasion that Richman
rejected arbitration as a solution to the Respondent's
problem.
On June 28, approximately 17 of the 19 employees
recalled returned to work. The remaining two vacancies
were filled by calling the next seniormost employees. The
wages, economic benefits, and other condition of employ-
ment outlined in the June 22 letter were instituted and were
continued thereafter. They were still in effect at the date of
the hearing. Virtually all of these wages and conditions are
less than those listed in the contract between the Union
and,the Independent Sausage Kitchens of Los Angeles
-less than 50 percent in some cases and close to 50
percent for others.
On an occasion after June 28 (the record was not clear
on the exact date), Simon asked Cook if there could be
some intermediate position between the rates Respondent
was instituting and the full contract rates. Cook said he
was going to speak to Osslo when he would be in San
Diego for a meeting and that he would ask Osslo about a
possible intermediate position. On October 5, 1971, Simon
encountered Cook again at a Federal Mediation Service
office during proceedings in a matter not concerning the
Respondent, and, at that time, Cook told Simon that Osslo
had said there could be no intermediate position. There is
no evidence of any other attempt to reach accord before
the hearing.
B. Arguments and Conclusions
The General Counsel argues that the Union's 1967
sausage industry agreement covered the precooked foods
department employees when that department was initiated
in 1968, because the Respondent paid wage rates listed in
the contract and applied all other provisions of the sausage
industry agreement to the employees in that department;
because some employees were transferred from the sausage
department to the precooked foods department; and
because thejob duties were, if not the same, at least similar
to those of the sausage department employees. Although
the General Counsel does not expressly so state, his
argument seems to suggest that the precooked foods
department constituted either a growth of, or an accretion
to, the existing unit .10 The Respondent does not dispute
the description of the unit alleged in the complaint to be
appropriate and does not argue that there was no
accretion. On all the evidence, I conclude that the
precooked foods department, although preparing different
finished products and having slight variations in functions,
10 Although the employees in the fresh meat department were covered by
the Meat Jobbers contract while the sausage department employees were
covered by a separate contract between the Union and the Respondent, the
Respondent , by admitting the allegations of the complaint (which describes
the appropriate unit as composed of all employees listed in both the sausage
industry agreement and the Meat Jobbers agreement) admits that there was
a single unit The unit described in the complaint did not, however,
expressly include one or two positions in the precooked foods department
1227
must, nevertheless, under Board precedent be regarded as
an accretion to the existing unit. tt
The Respondent also argues that the Union's independ-
ent sausage employers' agreement was not signed by
Respondent or its agent until June 17, 1971, and that by
that time the Respondent and the Union had already
undertaken to try to work out a separate arrangement for
the precooked foods department, thus demonstrating that
that contract did not cover the precooked foods employees.
The General Counsel, on the other hand, argues that the
Respondent, although not having signed the agreement
formally, had tacitly adopted it when, in December 1970, it
implemented the provisions of the 1970-73 agreement by
giving a retroactive wage increase to not only its sausage
employees but also to its precooked foods employees and
also gave effect to all other terms of that agreement as to
both groups of employees. Many of the Respondent's
arguments made in an effort to maintain that it did not
refuse to bargain, such as that it did not withdraw
recognition but continued to deal with the Union, that it
never modified or terminated any "applicable" existing
contract, that an impasse was reached before it instituted
the new wage rates and other terms of employment for the
employees in the precooked foods department, all presup-
pose that Respondent was not bound, before signing, by
the independent sausage employers' agreement. However,
despite the fact that that agreement was not signed on
behalf of Respondent until June 17, 1971, the Respondent
readily admits that it was already bound by that agreement
from December 1970 as to all employees covered under it
except the precooked foods employees, thereby admitting
that the actual signing of the agreement was not a
prerequisite to a binding agreement.
Although the Respondent did, in the fall of 1970, notify
the Union that it desired to discuss the rates of pay of the
precooked foods department employees, it did not suggest
to the Union that those employees were not in the
collective-bargaining unit or would not be covered by the
independent sausage industry agreement or that it would
not go along with that agreement, when reached, until the
Union had reached agreement with the Respondent on
rates for the precooked foods department. Instead, as had
been its custom for many years, it considered itself bound
by the independent sausage industry agreement as soon as
it was informed that it had been ratified by the Union's
membership, regardless of any delay in signing the formal
agreement. I find, therefore, that the Respondent's delay in
signing the Union's sausage industry agreement did not
prevent that agreement from binding the parties thereto.i2
The Respondent argues that, although a contract between
the Respondent and the Union may have existed, it did not
yet exist for precooked foods employees because the
contract contained a provision (article IV, paragraph 12) of
(as for example, the quality control inspector) which are not specifically
mentioned in the sausage industry agreement
11 Borg-Warner Corp, 113 NLRB 152,231 F 2d 237 (C A 7), cert denied
352 U S 908, Hudson Pulp and Paper Corp, 117 NLRB 416.
12 Hutrlg Sash & Door Company, 151 NLRB 470.474: General Asbestos &
Rubber Division, Raybestos-Manhattan , Inc, 183 NLRB No 27: Conway's
Express, 87 N LR B 972, enf'd 195 F 2d 906 (C A 2)
1228 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the contract that had not yet been complied with by the
Union, to wit:
12. In the event that there are new jobs or classifica-
tions or new machines they shall be subject to
immediate negotiations ... .
If the Respondent could have invoked this clause for the
precooked foods department, it could have done so under
the 1967-70 agreement, which contained the same lan-
guage. But it did not seek to do so. Its delay in seeking
negotiations to fix such rates can be explained only on
other grounds. Most of the jobs in the precooked foods
department had the same titles as those in the sausage
department. The functions of these jobs, though not
identical, were similar enough to lead to the conclusion
that they were covered by the same rates. Only in the case
of one or two jobs was there a new category which the
contract rates might arguably be said not to cover. But a
failure or delay on the part of the Union to meet and agree
with the Respondent on the rates for those jobs would not
nullify the contract as to the precooked foods employees
generally.
In view of the fact that the rates of the precooked foods
employees appeared to be determined by the terms of the
1967-70 sausage agreement, the Union could assume that
there was no pressing need for setting a separate scale for
those employees when the 1970-73 sausage contract was
being negotiated. Respondent's voluntary act of adopting
the changes effected in the latter agreement, even as to
precooked foods employees, gives every indication of an
understanding that the independent sausage industry
agreement was applicable to such employees.
The evidence shows that the negotiating of lower rates
for the employees in the precooked foods department was
a matter of some concern to the Respondent before
December 1970, but this concern only began materially to
move the Respondent to serious action during the early
part of 1971 (long after it had adopted the independent
sausage industry contract) as the Respondent gradually
learned of the rates being paid by competitors in the
precooked foods business, and the Respondent's concern
expanded to a fervor when the Respondent learned not
only how much lower were the rates of competitors but
also learned that one of the unions contracting for such
lower rates was the parent organization of the Respondent.
This is what really spurred the Respondent to press the
Union to agree to special rates for its precooked foods
employees. In other words, the Respondent's conduct of
giving effect to the sausage industry agreement in 1970 and
its conduct starting in March 1971 gives rise to the
conclusion that the Respondent was seeking relief from an
existing agreement rather than negotiating one that had
not previously covered the precooked foods employees,
and the Respondent's attitude suggested that it thought the
Union owed it relief because of the better agreements
made by the Union's parent organization with competing
precooked foods employers. The sausage agreement did
not contain a so-called favored nations clause, so the lower
rates of competitors (even if such a favored nations clause
could have been invoked when lower rates are contained in
a competitor's contract , not with the Union itself, but with
the Union 's parent organization) was not a legal ground
for reopening the contract.
The Respondent also advances the argument that a
clause in the contract provided for arbitration and that the
Board should defer to arbitration as it did in Collyer
Insulated Wire. 13 In that case , the Board reviewed earlier
decisions and quoted with approval from Jos. Schhtz
Brewing Company, 14 where the Board said:
Thus, we believe that where , as here , the contract
clearly provides for grievance and arbitration machin-
ery, where the unilateral action taken is not designed to
undermine the Union and is not patently erroneous but
rather is based on a substantial claim of contractual
privilege , and it appears that the arbitral interpretation
of the contract will resolve both the unfair labor
practice issue and the contract interpretation issue in a
manner compatible with the purposes of the Act, then
the Board should defer to the arbitration clause
conceived by the parties.
The arbitration clause in the contract between the Union
and the Respondent is not so clearly invocable as it was in
the Collyer or Schltz cases. True , the agreement between
the Respondent and the Union contains a provision:
4. In the event the parties are unable to resolve any
dispute through the grievance procedure set forth in
Section 2 hereof , either party may demand that the
dispute proceed to arbitration ... .
Section 2 , referred to above , deals with employee griev-
ances and it contemplates that the aggrieved employee
shall initiate the grievance procedure . Until an employee
files a grievance , the dispute cannot proceed to arbitration.
In the instant case , there is no evidence that any employee
had filed a grievance with the Union as required by the
agreement . The agreement further expressly provides:
5. The findings of the arbitrator shall be binding upon
both the Union and the Employer providing , however,
that the arbitrator shall not have the authority to
change , alter or modify any of the terms or provisions
of this Agreement.
No controversy regarding hours or wages shall be
subject to arbitration hereunder and the provisions of
this Article shall not in any way interfere with the right
of any party to seek relief at law , in equity, or before
any administrative tribunal where a controversy re-
garding hours or wages exists.
The meaning of the clause prohibiting arbitration of a
controversy regarding hours or wages could be clearer as to
parties contemplated as having a controversy , but since
this provision would be contrary to the one for arbitration
in cases where an employee files a grievance (which could
certainly be over wages due), the above clause can be read
logically only as prohibiting arbitration of a dispute
between the employer and the Union as to hours or wages
which did not arise as a result of a grievance filed by an
employee.
Even if the contract did contain a provision for
arbitration , the Board would not be obliged to defer
13 192 NLRB No 150.
14 175 NLRB 141
URBAN N. PATMAN, INC.
thereto. It could exercise its discretion to decide the case
under the provisions of the Act.15 However , in the case at
hand , not only does it appear that the parties had
contemplated no arbitration of wages in a dispute raised by
the Respondent , the contract clearly shows that the parties
did not (as was the case in Collyer) contemplate arbitration
as an exclusive forum for resolving contract disputes. On
all the evidence , therefore , I find that the contract
provisions for arbitration do not require or even permit
arbitration of the dispute at hand. Hence, the Collyer
decision is inapplicable to the instant case in any event.
The Respondent also contends , in effect , that , if it be
found that there is in existence a contract which sets wage
rates for employees in the precooked foods department
when the Respondent's act of unilaterally fixing lower rates
was a breach of contract which, says the Respondent, the
"Board should not and will not adjudicate ." However, if
the Respondent 's conduct is of a kind condemned by the
Act, the Board is not ousted from jurisdiction simply
because the Respondent 's act also constitutes a breach of
contract . 16 The Respondent 's act of unilaterally changing
the 'wage rates and fringe benefits provided for by the
contract without concurrence of the Union is not only a
breach of contract but also a violation of Section 8(a)(5) of
the Act . Section 8 (d) of the Act expressly imposes on each
party to a contract an obligation to refrain from modifying
the contract without complying with the notice and waiting
requirements set forth in that Section . Although the
Respondent gave the Union notice of a proposed change,
the Respondent does not contend here that it complied in
full with Section 8(d) of the Act.
The Respondent 's argument that it did not refuse to
bargain about the change in rates because it did, in fact,
meet with the Union and discuss such change until an
impasse in bargaining was reached presupposes that the
Union had a duty to bargain about such change and a duty
to reach an agreement to modify the contract, but Section
8(d) of the Act also expressly provides that the duties
imposed by that section are not to be construed as
requiring either party to discuss or agree to any modifica-
tion of the terms and conditions contained in a contract of
fixed term "if such modification is to become effective
before such terms and conditions can be reopened under
the provisions of the contract ," here not earlier than 60
days before the expiration of the 1970-73 agreement.
Where there is no duty to bargain , and where there is no
right unilaterally to modify a contract during its term, an
impasse occasioned by a refusal of one party to modify an
agreement does not leave the proposer of modification free
to make the change unilaterally . 17 Were it otherwise, there
could be no binding force in any contract . Even if, to the
Respondent's proposed alteration , the Union countered
with an offer of a smaller change , such counteroffer would
be conditioned on acceptance and would. not , before
acceptance , extinguish the Respondent 's duty to maintain
the terms of the contract in force until the terminal date
15 Gateway Transportation Co, Inc, 193 NLRB No 1
16 N L R B v C & C Plywood Corp , 385 U S 421, Office & Professional
Employees International Union, Local 525 v N L.R B, 419 F 2d 314
(C A D C), Bastian Blessing Division of Golconda Corporation, 194 NLRB
1229
thereof . A contract can effectively be modified only by
mutual consent.
I conclude and find , therefore , that Respondent 's act of
unilaterally modifying its agreement with the Union with
respect to wage rates and fringe benefits of employees in
the precooked foods department constituted a refusal to
bargain within the meaning of Section 8(a)(5) and (1) of
the Act.
Upon the foregoing findings of fact and upon the entire
record in the case , I make the following:
CONCLUSIONS OF LAW
1. The Respondent is engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
2. The Union is a labor organization within the
meaning of Section 2(5) of the Act.
3. The Union is the exclusive collective-bargaining
representative of all the employees in the following
appropriate unit:
All employees in Respondent 's sausage and pre-
cooked foods departments , exclusive of Operating
Engineers , Teamsters , office and clerical workers,
nonworking foremen , and supervisors as defined in the
Act.
4. By unilaterally changing the wage rates and fringe
benefits established by a collective-bargaining agreement
between the Respondent and the Union effective October
1, 1970, for a three-year term , and by failing to comply
with the provisions of Section 8(d) of the Act, Respondent
has engaged in, and is engaging in, unfair labor practices
within the meaning of Section 8(a)(5) of the Act.
5. By the conduct described in section 4, above,
Respondent has interfered with, restrained, and coerced its
employees in the exercise of the rights guaranteed in
Section 7 of the Act in violation of Section 8(a)(1) of the
Act.
6. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of
Section 2(6) and (7) of the Act.
THE REMEDY
Having found that the Respondent has engaged in unfair
labor practices within the meaning of Section 8(a)(5) and
(1) of the Act, I shall recommend an order that it cease and
desist therefrom and take certain affirmative action
designed to effectuate the policies of the Act. I shall
recommend that Respondent cease and desist from making
any changes in the terms and conditions of any current
collective-bargaining agreement between the Respondent
and the Union without first reaching agreement with the
Union concerning such changes . With respect to the
affirmative action, I shall recommend an order that the
Respondent , on request, revoke its unilaterally instituted
wage and fringe benefit plan for the employees in its
precooked foods department and restore the original
contract rates of pay and fringe benefits. It will also be
No 95
17 C & S Industries , Inc, 158 NLRB 454. Kinard Trucking Company, Inc,
152 NLRB 449
1230 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
necessary that the Respondent restore the situation to that
which existed prior to the unilateral change . This will
necessitate that the Respondent make whole all affected
employees for any loss they have suffered by reason of the
unlawful unilateral reduction in wage rates and fringe
benefits from the date of the institution of such unilateral
change on June 28 , 1971, until the first of the following
events occurs : ( 1) Rescision by Respondent of its unilater-
ally instituted wage and fringe benefit plan and the
restoration of the original rates paid prior to the May 28,
1971, layoff ; (2) the expiration of the Union 's Independent
Sausage Kitchen Contract in 1973 ; or (3) the effective date
of any modification of that contract as to rates of pay and
fringe benefits which may be reached as a result of
negotiations between the Respondent and the Union. I
shall further recommend that the backpay be computed on
a quarterly basis in the manner set forth in F. W.
Woolworth Company, 90 NLRB 289, including interest on
the sums due computed in accordance with the Board's
decision in Isis Plumbing & Heating Co.,, 138 NLRB 716.
[Recommend Order omitted from publication.]