Vm Industries, Inc.

National Labor Relations Board - Board Decisions

Sep 27, 1988

291 N.L.R.B. 5 (N.L.R.B. 1988)

VM INDUSTRIES 5
VM Industries, Inc and Local 6, International Fed
eration of Health Professionals Case 22-CA-
14791
September 27 1988
DECISION AND ORDER
By CHAIRMAN STEPHENS AND MEMBERS
JOHANSEN AND CRACRAFT
On October 28, 1987 Administrative Law Judge
Harold B Lawrence issued the attached decision
The Charging Party filed exceptions and a support
ing brief and the Respondent filed exceptions
The National Labor Relations Board has delegat
ed its authority in this proceeding to a three
member panel
The Board has considered the decision and the
record in light of the exceptions and brief and has
decided to affirm the judge s rulings findings i and
conclusions and to adopt the recommended Order
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Respondent VM Indus
tries Inc Newark New Jersey its officers, agents,
successors and assigns shall take the action set
forth in the Order
i The judge declined to dismiss the representation petition in Case 22-
RC-9713 because that case was not before him (and there was no motion
to consolidate that case with this case) and because there was insufficient
evidence in the record to determine whether laboratory conditions for an
election have been affected In adopting the judge s decision and ration
ale we find it unnecessary to rely on the judge s characterization of
Union President Perry 5 testimony that the Respondent thought it could
get a better deal from Local 1I as only an expression of Perry s
opinion Although Perry s testimony is unclear he ultimately attributed
such a statement to representatives of the Respondent The judge ex
pressed doubt that the Respondent could have held the underlying belief
but viewing the testimony as Perry s opinion he did not credit or dis
credit it
In establishing a remedy the judge failed to state that it should be de
termined in accordance with Ogle Protection Service 183 NLRB 682
(1970) and Merryweather Optical Co 240 NLRB 1213 1216 In 7 (1979)
We correct that error
Inc the Respondent repudiated a collective bargaining
agreement that it had entered into with the Union and
thereby violated Section 8 (a)(1) and (5) and Section 8(d)
of the National Labor Relations Act (the Act) The Re
spondent s president Stephen A Bender interposed an
answer on its behalf and represented it at the hearing
The answer denied that Respondent had refused to abide
by the contract or that it had committed acts violative of
the Act that affected commerce within the meaning of
Section 2(6) and (7) of the Act The answer alleged of
firmatively that Respondents refusal to comply with the
contract was the result of the General Counsels refusal
to recognize the decision of an arbitrator
The parties were afforded full opportunity to be heard
to call examine and cross examine witnesses and to in
troduce relevant evidence Postheanng briefs were filed
on behalf of the General Counsel and the Charging
Party
On the entire record including my observation of the
demeanor of the witnesses and after consideration of the
briefs filed herein I make the following
FINDINGS OF FACT
I JURISDICTION
There is no jurisdictional issue the Respondent
having in its answer admitted all allegations pertaining
thereto Accordingly I find that at all pertinent times
herein Respondent was and is an employer engaged in
commerce within the meaning of Section 2(2) (6) and
(7) of the Act and the Union was and is a labor organiza
tion within the meaning of Section 2(5) of the Act
The Respondent is engaged in the manufacture and
nonretail sale of electronic components and related prod
ucts and is located in Newark New Jersey During the
calendar year 1986 it purchased and received at its fa
cilities products from outside the State of New Jersey
valued in excess of $50 000
II THE ALLEGED UNFAIR LABOR PRACTICES
A The Facts'
Since 1981 the Union has represented a unit within
the meaning of Section 9(b) of the Act described as fol
lows
Marguerite R Greenfield Esq for the General Counsel
Stephen A Bender of Newark New Jersey for the Re
spondent
Jonathan Walters Esq (Kirschner Walters & Willig) of
Philadelphia Pennsylvania for the Union
DECISION
STATEMENT OF THE CASE
HAROLD B LAWRENCE Administrative Law Judge
This case was heard by me at Newark New Jersey on
12 August 1987 The complaint issued on 17 June 1987
is based on a charge filed on 22 December 1986 by
Local 6 International Federation of Health Professionals
(the Union) In essence it alleges that VM Industries
291 NLRB No 2
All production and maintenance employees exclud
ing all office clerical employees professional em
ployees engineers shipping clerks guards and su
pervisors
The Respondent and the Union throughout this
period were parties to collective bargaining agreements
In January 1986 while a 3 year collective bargaining
agreement was in effect which was due to expire on 31
I The matters narrated in this decision without evidentiary comment
are those facts found by me on the basis of admissions in the answer data
contained in the exhibits stipulations between or concessions by counsel
undisputed or uncontradicted testimony and in instances where conflicts
in the testimony did not warrant discussion the testimony that I have
credited
6 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
January 1987 50 employees signed a petition that read as
follows
We the Employees of VM Industries and Mem
bers of Local 6 petition the Union and the Employ
er to immediately sit down with a committee of
Employees to renegotiate a new contract which
will guarantee an increase in pay better working
conditions and holidays
We further urge both parties to take immediate
steps not to delay this meeting
The first signature on the petition was that of the
union shop steward As a result of this pressure from the
employees the Union commenced negotiations though it
felt the time was not npe Respondent and the Union ne
gotiated through the spring and summer of 1986 and fi
nally agreed to arbitrate their differences
On 16 October 1986 the arbitrator held a hearing at
the offices of the Respondent at which Bender appeared
for the Company along with its treasurer and William
Perry the union president appeared for the Union along
with its business representative the shop steward and
several employees
The following stipulation was entered into
We agree that the term of the successor Agreement
to the current contract shall run from October 16
1986 until January 31 1990 All existing terms shall
remain the same and be incorporated into the suc
cessor Agreement except for those changes that are
specifically mandated by an arbitration award to be
issued by Arbitrator Marc J Weisenfeld within
thirty days of this date (October 16 1986)
The issues in dispute were stipulated to be as follows
What shall be the wages provided for in the Octo
ber 16 1986 through January 31 1990 collective
bargaining agreement) How many holidays shall be
provided for in that agreement9 What if any
changes in Employer payments to the Health and
Welfare Fund shall that Agreement provide for?
On 14 November 1986 the arbitrator issued an award
denying any increase in the number of paid holidays but
granting an increase in wages to all employees in the
amount of 20 cents an hour effective retroactively to 16
October 20 cents an hour effective 16 October 1987 and
20 cents an hour effective 1 February 1989 In addition
the Company was directed to contribute an additional
$10 a month for each employee to the Local 6 health
and welfare fund and the Union was directed to incorpo
rate in the health and welfare fund certain provisions
that were set out in full in the award
Thereafter Respondent received notice of a petition
filed on 17 November 1986 by Teamsters Local 11 seek
ing recognition as the employees exclusive bargaining
agent (Case 22-RC-9713) On 19 December 1986 the Re
gional Director for Region 22 issued a Decision and Di
rection of Election that defined the appropriate unit as
follows
All production and maintenance employees em
ployed by the Employer at its Newark New Jersey
location but excluding all office clerical employees
professional employees engineers shipping clerks
guards and supervisors as defined in the Act
Since the filing of the Teamsters petition the Re
spondent has refused to pay the wages retroactive
wages and fund contributions required by the award
though it has continued to recognize Local 6 as the em
ployees representative
B Analysis
Respondents conduct raises the question of when a
breach of a collective bargaining agreement amounts to a
violation of the Act Respondent justifies its failure to
make the payments required by the arbitrators award on
the basis of the Regional Directors determination that
the contract with Local 6 did not bar the Teamsters peti
tion and also on advice it received from the General
Counsel that the contract was subject to modification if
the Teamsters became the employees bargaining repre
sentative At the hearing Bender interpreted Respond
ent s affirmative defense that the General Counsel re
fused to recognize the arbitrators decision as meaning
that the General Counsel had told him that the 3 year
award might or might not be a reality and might
become ineffective unless the incumbent union won the
election He testified Since the whole award can t be
implemented we did not think it proper to implement a
part of it Accordingly Respondent did not implement
the parts of it that awarded retroactive wage increases
and required Respondent to augment its contributions to
the Union s health and welfare fund despite written and
oral demands by the Union for compliance
Nothing in the General Counsels position warranted
Bender s interpretation of it as stated in Respondent s
answer The position of the General Counsel as set out
in the complaint and as elucidated by counsel for the
General Counsel at the hearing is in accord with well
settled and frequently enunciated principles
The gravamen of a violation of Section 8(a)(5) of the
Act is the repudiation by an employer of the obligations
imposed by Section 8(d) of the Act A deliberate refusal
to be bound by the terms and conditions of a collective
bargaining agreement that an employer has entered into
with a union that is the employees recognized bargain
ing representative may constitute unwarranted involve
ment in the process by which employees select their col
lective bargaining representative Examples are failure to
pay cost of living adjustments provided for in a collec
tive bargaining agreement Hiney Printing Co 262
NLRB 157 ( 1982) delinquent payments into union fringe
benefit funds Detroit Cabinet & Door Co 247 NLRB
1415 (1980) and repudiation of a contracts wage provi
sions Oak Cliff Golman Baking Co 202 NLRB 614 616
(1973) and 207 NLRB 1063 1064 ( 1973) See also Inland
Cities 241 NLRB 374 379 (1979) enfd 618 F 2d 117
(9th Cir 1980) American Needle & Novelty Co 206
NLRB 534 545 (1973) Light Boat Storage 153 NLRB
1209 fn 1 (1965) enfd 373 F 2d 762 (5th Cir 1967)
I
VM INDUSTRIES 7
In the view of the General Counsel a full collective
bargaining agreement existed by virtue of the arbitration
award and consequently Respondents deliberate refusal
to honor its provisions amounted to impairment of the
statutory rights of the bargaining representative and im
plicitly renunciation of the principles of collective bar
gaining That is precisely the rationale of the cases cited
above
Of course the fact that remedies exist in civil litigation
for such breaches of contract does not limit either the
Board s powers or its responsibilities Section 10 (a) of the
Act provides
The Board is empowered to prevent any
person from engaging in any unfair labor practice
affecting commerce This power shall not be
affected by any other means of adjustment or pre
vention that has been or may be established by
agreement law or otherwise
See also Smith v Evening News Assn 371 U S 195 197
(1962) NLRB v Strong Roofing & Insulating Co 393
U S 357 360-361 (1969) Nassau County Health Facilities
Assn 227 NLRB 1680 1683-1684 (1977)
The advice to Bender that the contract might have to
be renegotiated if the contract with Local 6 was deter
mined not to bar an election and the incumbent Union
was supplanted was a correct statement of the law The
fate of the contract depends on the outcome of the elec
lion See NLRB v Burns Security Services 406 U S 272
(1972) NLRB v Hershey Chocolate Corp 297 F 2d 286
(3d Cir 1961) City Markets 273 NLRB 469 (1984)
American Seating Co 106 NLRB 250 (1953) That does
not however confer on Respondent the prerogative to
select which provisions of its collective bargaining agree
ment it will honor or the option to renegotiate the con
tract
Perry testified without contradiction that the Re
spondent wavered and at one point promised to begin
compliance with the arbitration award in the next suc
ceeding payroll period Confronted in these proceedings
with the necessity to defend its failure to do so Re
sponden argues as though it had been confronted with a
situation in which serious doubt existed regarding the in
cumbent Union s continued majority status Such argu
ments amount to resort to a phantom situation The facts
of this case are altogether different
The present case does not involve questions of an em
ployer s responsibilities in the face of competing claims
of rival unions that do not already represent the bargain
ing unit nor does it involve a situation in which an in
cumbent union is in the process of negotiating an exten
sion or replacement of an expired collective bargaining
agreement As of 16 October 1986 the date to which the
award was retroactive there existed a binding collective
bargaining agreement between Respondent and the
Union of which the arbitration award formed an integral
part Its validity was not affected by the filing of the
Teamsters petition for an election Even a decertification
petition would have afforded Respondent no basis for re
pudiating the contract Dresser Industries 264 NLRB
1088 (1982)
In short an employer may not unilaterally modify or
cancel a collective bargaining agreement on the ground
that during its pendency the question of future employ
ee representation is about to be decided through the
medium of the machinery established by the Act to re
solve such questions Unless and until the incumbent
Union is supplanted by a rival union the existing con
tract governs the employers relations with its employ
ees
The foregoing principles are dispositive of the issues of
this case It is worth noting however that the result
would not be different even if some concession were
made to Respondents contention that somehow it was
placed in a quandary by the competing demands for rec
ognition It is equally well established that notwithstand
ing an employers right protected by the first amend
ment to the Constitution to express a preference for one
union over another it may not in the face of competing
demands abandon its neutrality by overt acts that favor
one union over another since that would amount to in
terference in violation of Section 8(a)(5) of the Act with
the employees statutorily protected right to choose their
own representative Southern Conference of Teamsters v
Red Ball Motor Freight 374 F 2d 932 938 (5th Cir
1967) Texaco Inc v NLRB 722 F 2d 1226 1231 (5th
Cir 1984) Employer neutrality is achieved by continued
bargaining with the incumbent union
In Len Martin Corp 282 NLRB 482 (1986) an em
ployer was held to have violated the Act by refusing to
continue bargaining with the incumbent union on a suc
cessor contract because another union had filed a repre
serration petition The Board explicitly reaffirmed its ad
herence to its reasoning in RCA Del Caribe 262 NLRB
963 (1982) in which the employer had entered into a
contract with an incumbent union with knowledge of a
pending petition filed by a rival union during the open
period The Board commented (262 NLRB at 965)
While the filing of a valid petition may raise a
doubt as to majority status the filing in and of
itself should not overcome the strong presumption
in favor of the continuing majority status of the in
cumbent and should not serve to strip it of the ad
vantages and authority it could otherwise legiti
mately claim
We have concluded that requiring an employer
to withdraw from bargaining after a petition has
been filed is not the best means of assuring employ
er neutrality thereby facilitating employee free
choice Unlike initial organizing situations an em
ployer in an existing collective bargaining relation
ship cannot observe strict neutrality In many situa
tions as here the incumbent challenged by an out
side union is in the process of-perhaps close to
completing-negotiation of a contract when the pe
tition is filed If an employer continues to bargain
employees may perceive a preference for the incum
bent union whether or not the employer holds that
preference On the other hand if an employer with
draws from the bargaining particularly when agree
ment is imminent this withdrawal may more em
phatically signal repudiation of the incumbent and
8 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
preference for the rival the ebb and flow of
economic conditions cannot be expected to subside
merely because a representation petition has been
filed Under the circumstances we believe
preservation of the status quo through an employ
er s continued bargaining with an incumbent is the
better way to approximate employer neutrality
For the foregoing reasons we have determined
that the mere filing of a representation petition by
an outside challenging union will no longer require
or permit an employer to withdraw from bargaining
or executing a contract with an incumbent union
It is to be noted further that failure of an employer to
abide by an agreement requiring submission of wage and
other issues to arbitration is deemed tantamount to repu
diation of collective bargaining and injurious to industrial
peace and stability Sea Bay Manor Home for Adults 253
NLRB 739 741 ( 1980) enfd 685 F 2d 425 (2d Cir 1982)
Certainly the same reasoning requires that an employ
er honor the interest award itself
CONCLUSIONS OF LAW
before me and no motion has been made to consolidate
the representation case with the instant proceedings The
question is not automatically resolved by my Order di
recting compliance with the contract There is insuffi
cient evidence in this record to determine whether the
requisite laboratory conditions for an election have been
affected
Respondent urges that I take into account the motiva
tion behind Respondents failure to implement the arbi
tration award in determining the remedy However evi
dence of Respondents motivation is scanty as was to be
expected in light of the manner in which the issues of the
instant proceeding are framed Perry testified that threats
to remove the plant to Tennessee were made repeatedly
Stephen Bender denied that such threats were made and
testified that statements involving Precision Tubular
Heating Corporation an affiliated company owned either
by Respondent or by Respondents principals and locat
ed in Franklin Tennessee amounted merely to mention
of the company and the acknowledged fact that work
can be moved back and forth The ambiguity was appar
ent in his testimony
1 Respondent is an employer engaged in commerce
within the meaning of Section 2(2) (6) and (7) of the
Act
2 The Union is a labor organization within the mean
ing of Section 2(5) of the Act
3 Respondent violated Section 8(a)(5) and (1) and Sec
tion 8(d) of the Act by failing and refusing to abide by
the terms of the contract entered into with the Union on
16 October 1986
4 The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec
tion 2(6) and (7) of the Act
REMEDY
Having found that the Respondent has engaged in cer
tarn unfair labor practices I find it necessary to order it
to cease and desist and to take certain affirmative action
designed to effectuate the policies of the Act
Respondent having refused to abide by the arbitration
award that fixed the wage health and welfare and holi
day terms of the contract between Respondent and the
Union will be directed to make employees whole for
any loss of earnings and other benefits of which they
have been deprived by reason of Respondents conduct
with interest as computed in New Horizons for the Retard
ed 283 NLRB 1173 (1987) Respondent will also be di
rected to make appropriate payments with interest to
the health and welfare fund of Local 6 to provide to the
fund such moneys as it would have received had Re
spondent complied with the arbitration award
The Charging Party urges that further relief is needed
in the present case by way of an order dismissing the pe
tition in the representation case Case 22-RC-9713 It is
contended that Respondents refusal to implement the
award signaled the Respondents preference for the chal
lenging union and that its lack of neutrality prejudiced
Local 6
I decline to issue an order granting such relief for sev
eral reasons The petition in the representation case is not
And at various times the question has come up of
why do we have two plants Why do we manufac
ture in Newark and why we manufacture in Ten
nessee and it is a long and complicated answer and
we have always said that we have the ability to
move any of the operations we are doing between
the plants but it is a fact of life We do have the
two manufacturing facilities
The parties also disagreed whether Joseph Bender an
other principal was present when these allegedly threat
ening statements were made There appears to me to be
insufficient evidence of Respondents motivation in men
tioning the second plant Perry testified that Respond
ent s conduct was intended to and did assist Local 11 be
cause Respondent thought it could get a better deal from
Local 11 That testimony amounted only to an expres
sion of Perry s opinion which Bender did not respond to
in his own testimony Since the arbitration award had
been issued and was known to the members of the bar
gaining unit the assertion that a successful challenging
union would be expected by Respondent to begin its
career as the employees representative by agreeing to
reduce the wages and fund contributions set by the arbi
trator requires an imaginative leap which I am not pre
pared to take
There being insufficient evidence to determine that a
prejudicial indication of Respondents union preference
was made that affected the election conditions any issues
in the representation case should be determined on objec
tions to the election made in that proceeding By that
time pursuant to the Order to be made the award will
have been in effect for some time Prejudice to Local 6
if any arising from Respondents failure to pay the wage
increases and fund contributions by the time the election
is held may be shown to have been offset by the demon
stration through these proceedings of the ability of
Local 6 to compel compliance with the collective bar
gaining agreement it negotiated with Respondent
VM INDUSTRIES 9
Laboratory conditions for an election are not consid
ered to have been destroyed merely by reason of the
filing of a petition during a period in which a new con
tract is in the process of negotiation by an incumbent
union In RCA Del Caribe supra the Board made some
observations that are pertinent to the charging party s re
quest for remedial relief
This new approach affords maximum protection
to the complementary statutory policies of further
ing stability in industrial relations and of insuring
employee free choice It should be clear that our
new rule does not have the effect of insulating in
cumbent unions from a legitimate outside challenge
As before a timely filed petition will put an incum
bent to the test of demonstrating that it still is the
majority choice for exclusive bargaining representa
tive Unlike before however even though a valid
petition has been filed an incumbent will retain its
earned right to demonstrate its effectiveness as a
representative at the bargaining table An outside
union and its employee supporters will now be re
quired to take their incumbent opponent as they
find it-as the previously elected majority repre
sentative Consequently in the ensuing election em
ployees will no longer be presented with a distorted
choice between an incumbent artificially deprived
of the attributes of its office and a rival union artifi
cially placed on an equal footing with the incum
bent (262 NLRB at 965 966 )
It would appear to be appropriate therefore for the
issues raised by the charging party to be taken under ad
visement in the representation proceeding if they are
properly raised by the charging party
The General Counsel applied for a visitatorial clause
authorizing for compliance purposes discovery from the
Respondent under the Federal Rules of Civil Procedure
subject to supervision of the United States Court of Ap
peals enforcing the Order Under the circumstances of
this case I find it unnecessary to include such a clause
On these findings of fact and conclusions of law and
on the entire record I issue the following recommend
ed2
ORDER
2 Take the following affirmative action necessary to
effectuate the policies of the Act
(a) Make its employees whole for any loss of earnings
and other benefits of which they have been deprived by
reason of failure of the Respondent to honor its contrac
tual obligations under the collective bargaining agree
ment between Respondent and the Union entered into on
16 October 1986
(b) Pay into the union health and welfare fund the dif
ference between any payments made by Respondent and
amounts required to be paid in accordance with the col
lective bargaining agreement entered into on 16 October
1986 and the arbitration award that forms a part thereof
(c) Preserve and on request make available to the
Board or its agents for examination and copying all pay
roll records social security payment records timecards
personnel records and reports and all other records nec
essary to analyze the amount of backpay and conditions
due under the terms of this Order
(d) Post at its facility at Newark New Jersey copies
of the attached notice marked Appendix 3 Copies of
the notice on forms provided by the Regional Director
for Region 22 after being signed by the Respondent s
authorized representative shall be posted by the Re
spondent immediately upon receipt and maintained for 60
consecutive days in conspicuous places including all
places where notices to employees are customarily
posted Reasonable steps shall be taken by the Respond
ent to ensure that the notices are not altered defaced or
covered by any other material
(e) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re
spondent has taken to comply
3 If this Order is enforced by a judgment of a United States court of
appeals the words in the notice reading Posted by Order of the Nation
al Labor Relations Board shall read Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The Respondent VM Industries Inc Newark New
Jersey its officers agents successors and assigns shall
1 Cease and desist from
(a) Refusing to administer until the date of its expira
tion or any earlier modification its collective bargaining
agreement with the Union including the terms of the ar
bitration award dated 14 November 1986
(b) In any like or related manner interfering with re
straining or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act
2 If no exceptions are filed as provided by Sec 102 46 of the Board s
Rules and Regulations the findings conclusions and recommended
Order shall as provided in Sec 102 48 of the Rules be adopted by the
Board and all objections to them shall be deemed waived for all pur
poses
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or
dered us to post and abide by this notice
Section 7 of the Act gives employees these rights
To organize
To form join or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec
tion
To choose not to engage in any of these protect
ed concerted activities
10 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
WE WILL NOT refuse to abide by the terms of our col
lective bargaining agreement with Local 6 International
Federation of Health Professionals including all the
terms of the arbitration award dated November 14 1986
WE WILL NOT in any like or related manner interfere
with restrain or coerce you in the exercise of the rights
guaranteed you by Section 7 of the Act
WE WILL make payment into the union health and
welfare fund of all payments required by the arbitration
award
WE WILL pay to our employees all retroactive wages
required by the arbitration award and WE WILL hence
forth pay wages to all employees at the rates prescnbed
in the award
VM INDUSTRIES INC