The Associated General Contractors of America, Inc.

THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 7 67 Whether Niebergall's demotion and transfer be considered violative of Section 8 (a) (3) and 8 (b) (2) of the Act or of Section 8 (a) (1) and 8 (b) (1) (A), it is believed that effectuation of the policy of the Act requires that he be restored to his position as crew chief and that he be made whole for any loss of pay suffered.ts Furthermore, it is believed that under the circumstances revealed by this record a recommendation that Respondents jointly and severally make whole Niebergall is warranted and appropriate. N. L. R. B. v Pinkerton's Nail Detective Agency, 202 F. 2d 230 (C. A. 9). As it would be inequitable to Respondent Union to permit the amount of its liability to increase despite the possibility of its willingness to cease past discrimination, Respondent Union may terminate its liability for further accrual of back pay by notifying Respondent Bell in writing that it has no objection to the employment of Niebergall as crew chief, and in that event Respondent Union shall not thereafter be liable for any back pay accruing after 5 days from the giving of such notice Absent such notification Respondent Union shall remain jointly and severally liable with Respondent Bell for all back pay that may accrue. [Recommendations omitted from publication.] is The loss of pay shall be computed in accordance with the customary formula of the National Labor Relations Board See N. L. R. B. v. Seven-Up Bottling Co., 73 S. Ct. 287; F. W Woolworth Company, 90 NLRB 289. CENTRAL CALIFORNIA CHAPTER, THE ASSOCIATED GEN- ERAL CONTRACTORS OF AMERICA, INC., ASSOCIATED HOME BUILDERS OF SAN FRANCISCO, CALIFORNIA, INC., PENINSULA GENERAL CONTRACTORS AND BUILDERS ASSOCIATION, INC., AND THE NORTHERN CALIFORNIA CONFERENCE OF THE PLUMBING AND HEATING INDUSTRY, INC., AND THEIR EMPLOYER MEMBERS and A. C. CAMPBELL, WILLIAM W. HAHNES, FRANK C. COOK, GEOFFREY J. HOOKER, LOUIS GENOVESE, WALTER KUNZ, JAMES P. MURPHY, BURRELL E. JACKSON, ROBERT E. HARGENS, JOE ARIBOS, ELIJAH SWAYZE, DOUGLAS JOBE, AND JOHN G. STANGUS CENTRAL CALIFORNIA CHAPTER, THE ASSOCIATED GEN- ERAL CONTRACTORS OF AMERICA, INC., ASSOCIATED HOME BUILDERS OF SAN FRANCISCO, CALIFORNIA, INC., PENINSULA GENERAL CONTRACTORS AND BUILDERS ASSOCIATION, INC., AND THE NORTHERN CALIFORNIA CONFERENCE OF THE PLUMBING AND HEATING INDUSTRY, INC., AND THEIR EMPLOYER MEMBERS and BUILDING AND CONSTRUCTION TRADES COUNCIL OF SAN MATEO COUNTY NORTHERN CALIFORNIA CHAPTER, THE ASSOCIATED GEN- ERAL CONTRACTORS OF AMERICA, INC., CENTRAL CALIFORNIA CHAPTER, THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC., AND THEIR EM- PLOYER MEMBERS: BOHANNON CONSTRUCTION CO,, McKENZIE & CRAWFORD, E. B. STANDISH & CO., STERN AND PRICE CONSTRUCTION CO. and BUILDING AND CON- STRUCTION TRADES COUNCIL OF SANTA CLARA AND SAN BENITO COUNTIES. Cases Nos. 20-CA-620, 20-CA- 621, and 20-CA-622. June 26, 1953 105 NLRB No 129 7 68 DECISIONS OF NATIONAL LABOR RELATIONS BOARD DECISION AND ORDER On October 28, 1952, Trial Examiner Martin S. Bennett issued his Intermediate Report in the above - entitled proceed- ing, finding that the Respondents had not engaged in and were not engaging in certain unfair labor practices alleged in the complaint and recommending that the complaint be dismissed in its entirety , as set forth in the copy of the Intermediate Report attached hereto. Thereafter , the General Counsel and each of the Trades Councils on behalf of the charging parties filed exceptions to the Intermediate Report and supporting briefs, and the Respondents filed a brief in support of the findings of the Trial Examiner. The Board has reviewed the rulings of the Trial Examiner made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Intermediate Report, the exceptions and briefs, and the entire record in the case , and hereby adopts the find- ings, conclusions , and recommendations of the Trial Exam- iner , as modified hereinbelow. We agree with the Trial Examiner's recommended dismissal of the complaint , which allege 's that the various Respondents engaged in an unlawful lockout of building and construction trades employees in violation of Section 8 (a) (1) and ( 3) of the Act. However , we rely only upon the factual grounds, described in the Intermediate Report, supporting the Respondents' de- fense of economic justification for their general suspension of construction operations from August 2 to 13, 1951 , after the plumbers' strike , beginning July 13, 1951, had affected certain of their projects .' Consequently , we find it unnecessary to pass upon the broad legal conclusions of the Trial Examiner on issues of whether the plumbers ' strike constituted an un- protected concerted activity and whether the nonstriking plumbers or the nonplumber craftsmen would, absent the Re- spondents ' valid economic defense , be entitled to the protection of the Act. We believe , like the Trial Examiner , that cognizance must be taken of the peculiar conditions which prevail in the building and construction industry , as reflected in the record, and in particular the close interdependence and the necessary opera- tional sequence of the different craft functions inherent in commercial construction . As we view the controversy, the struck and the nonstruck respondent general contractors within the three - county area were commonly affected by the plumbers' dispute and similarly situated by reason of their uniform conviction that to accept or to tolerate the Plumbers' contract demands would involve them in violations of the law and possible penalties resulting therefrom . Failure to accede to the Plumbers ' demands--and these contractors were re- 1See Betts Cadillac Olds, Inc., 96 NLRB 268; International Shoe Co., 93 NLRB 907; Duluth Bottling Association, 48 NLRB 1335. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC 769 solved not to accept -- unquestionably meant the loss of their working plumbers. Consequently, whether or not they were struck, the general contractors could, and we find that they did, reasonably appreciate and anticipate that without the key plumber craft , construction operations could not continue for long, if at all, on an economic basis. When finally the struck projects were physically ground to a halt, the general contrac- tors then proceeded to close down all their projects throughout the area encompassed by the Plumbers ' contract demands. It is significant that the general contractors in the affected area chose to wait over 2 weeks before shutting down, in the hope that the Plumbers ' dispute would be settled . During this period of waiting, general contractors continued operations on struck projects --as long and as best they could --by impro- vising, departing from established construction procedures, and generally adopting uneconomical practices . This experience of the struck general contractor provided too for those who were not struck a graphic demonstration of the operational difficul- ties they would encounter without the effective work of the plumbers. In these circumstances , we fail to perceive anything objectionable in the fact that the respondent general contrac- tors and employer associations organized themselves and acted in concert with respect to the Plumbers ' dispute, as indeed they reasonably would have done in resolving any seri- ous problem of the industry which commonly affected them. Accordingly, we shall order that the complaint be dismissed. [The Board dismissed the complaint.] Member, Murdock , concurring: Insofar as the findings in the majority opinion go, I am in agreement with them, to support the conclusion that the Re- spondents were justified in effecting a general shutdown of building and construction operations in three California coun- ties. Like my colleagues , I reach the decision that the com- plaint should be dismissed . But for this result I would rely additionally upon what plainly appears to me a vital contrib- uting element in the Respondents ' defense, not passed upon by the majority. The Plumbers ' contract was illegal . This the record clearly shows, and the Trial Examiner found. Indisputably , the closed- shop provision alone was sufficient to make it illegal under the Act. And, on my part, there is much doubt that the contract did not also violate Wage Stabilization Board regulations. In any case, I would certainly conclude from the facts that it was not unreasonable for the Respondents to believe the contract was illegal on Wage Stabilization Board grounds , among others. Thus we have a situation where such an illegal contract was sought to be imposed by the Plumbers on all construction projects in three counties . The projects of all the respondent general contractors were affected . Those which did not accept the contract were struck . True, many of the projects which 77 0 DECISIONS OF NATIONAL LABOR RELATIONS BOARD were shut down by the Respondents had not in fact been struck, because there were plumbing subcontractors who succumbed to the pressure of the Plumbers and agreedto the terms of the contract. However, on these projects, and on those which had been struck, the general contractors were united in a firm de- termination not to tolerate the existence of the illegal contract terms on their construction jobs. And reasonably so. This is amply evidenced in all their meetings and activities before they were finally moved to the point of closing down opera- tions. On this record, I am convinced that the concerted action of all the Respondents in effecting the shutdown was undertaken in good faith, and was justified as an affirmative measure deemed necessary by them to repulse and remove the Plumb- ers' illegal conditions from their midst. Chairman Herzog took no part in the consideration of the above Decision and Order. Intermediate Report and Recommended Order STATEMENT OF THE CASE This proceeding stems from various charges duly filed by certain individuals in Case No. 20-CA-620; by Building and Construction Trades Council of San Mateo County in Case No 20-CA-621, and by Building and Construction Trades Council of Santa Clara and San Benito Counties in Case No 20-CA-622, against Central California Chapter, The Associated General Contractors of America, Inc , Northern California Chapter, The Associated General Con- tractors of America, Inc ; Peninsula General Contractors and Builders Association, Inc Northern California Conference of the Plumbing and Heating Industry, Inc.; and against 49 named contractors whose names are listed in Appendix A of the complaint and also in Appendix A, attached hereto, this latter group includes David D. Bohannon Organization, herein called Bohannon The General Counsel of the National Labor Relations Board caused these cases to be consolidated and issued a consolidated complaint, dated April 11, 1952, against all Respondents The complaint alleged that they had engaged in unfair labor practices within the meaning of Section 8 (a) (1) and (3) and Section 21;6) and (7) of the National Labor Relations Act, 61 Stat 136, herein called the Act Copies of the charges, order consolidating cases, consolidated complaint, and notice of hearing thereon were duly served upon the parties Specifically, the complaint alleged that on or about August 1, 1951, Respondent Associations, acting in concert, had instructed and directed their employer members to shut down all construction jobs in San Mateo, Santa Clara, and San Benito Counties at noon on August 2, 1951, and that said jobs were shut down pursuant to said instructions, thereby locking out all employees then engaged in such construction work, during the period from August 2 to August 13, 1951, "because said employees, or some of them, were members and active in behalf of the Unions [ presumably the various labor organizations affiliated with the respec- tive Building Trades Councils], or because of their concerted activities or the concerted activities of other members of the Unions for the purpose of collective bargaining or other mutual aid or protection " The answer of all Respondents, inter alia, denied that 11 of the individual employers named belonged to Respondent Associations; rdenied that they had locked out their employees, and affirmatively alleged that Respondent Associations had recommended to their employer members that they suspend operations and that such recom- mendation was caused by illegal concerted activities violative of the Act, as well as other laws and regulations, by Local Unions 393 and 467 of the United Association of Journeymen to motion by the General Counsel to dismiss against 4 of the 11 was granted during the hearing. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 771 and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, herein called Locals 393 and 467. Pursuant to notice, a hearing was held from June 9 to August 8, 1952, at San Jose, Califor- nia, before the undersigned Trial Examiner, Martin S. Bennett, duly designated by the Associate Chief Trial Examiner. All parties were represented by counsel who were afforded full 'pportunity to be heard, to examine and cross -examine witnesses , and to introduce evidence bearing on the issues. At the close of the hearing, the undersigned reserved ruling on a motion by Respondent Bohannon to dismiss the complaint against it on the ground that Bohannon was not engaged in commerce; this is disposed of hereinafter. At the conclusion of the hearing, the parties were afforded an opportunity to present oral argument and to file briefs and/or proposed findings or conclusions with the undersigned. Oral argument was waived and thereafter, at the request of counsel for Respondents joined in by counsel for San Mateo Building Trades, Council, the time for filing briefs was extended. Briefs have been received from these two parties and the General Counsel, Upon the entire record in the case and from his observation of the witnesses, the under- signed makes the following: FINDINGS OF FACT I, THE BUSINESS OF THE RESPONDENTS Northern California Chapter, The Associated General Contractors of America, herein called Northern Chapter, AGC, is a trade association with offices in San Francisco which represents approximately 280 general contractors, including 7 industrial respondents, who are engaged in heavy engineering, bridge, and highway construction in the 46 northern counties of California. Central California Chapter, The Associated General Contractors of America, herein called Central Chapter, AGC, is a trade association with offices in San Francisco which represents general contractors in the same geographic area, including, as Respondents admit, 14 individual respondents, who are engaged primarily in building con- struction. Peninsula General Contractors and Builders Association, Inc., is a trade associa- tion with offices in San Mateo which represents approximately 170 general contractors, including 17 individual respondents, who are operative in the area directly south of the city of San Francisco which extends roughly from the Pacific Ocean to San Francisco Bay, and is known as "The Peninsula." To some extent at least, the last named Association partici- pates in joint contract negotiations with the two AGC chapters named above and several of its members also belong to those organizations. Associated Home Builders of San Francisco, California, Inc., is a trade association which maintains its offices at San Francisco and represents general contractors, including, as Respondents admit, 8 industrial respondents, who are primarily engaged in home construc- tion in and about the city of San Francisco, Northern California Conference of the Plumbing and Heating Industry, Inc., herein called the Northern California Conference, is a trade association which maintains its office at Sacramento, California, and which represents plumbing, heating, piping, and air-conditioning subcontractors active in Northern California, Its membership actually consists of approximately 15 plumbing and heating trade associa- tions, with the individual subcontractor maintaining membership in 1 of the 15 groups. All of these associations advise and represent their members in labor relations. There is no direct relationship between the Conference and the two AGC Chapters, although they have, commencing in 1950, negotiated jointly for their members with labor organizations in areas of mutual interest. The 49 individually named contractors are general contractors of varying size. Seven of the group belong only to the Associated General Contractors of Santa Clara County, which is not a respondent herein. The last named Association is signatory to at least one of the general labor contracts negotiated by Central and Northern Chapters of AGC. During the calendar year ending December 31, 1950, the employer members of the above- named Associations, including the members of the nonrespondent Associated General Con- tractors of Santa Clara County, engaged in and sold construction worth in excess of $ 20,000,000 Of this, more than 5 percent represented construction by some of the employer members for customers located outside the State of California The undersigned finds that the Respondent Associations and the 49 individual employers named in Appendix A are engaged in com- merce within the meaning of the Act N. L. R, B. v Denver Building & Construction Trades 772 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Council, 341 U, S. 675, and Joliet Contractors Association v N. L. R. B., 193 F. 2d 833 (C. A. 7). _ II. THE LABOR ORGANIZATIONS INVOLVED Building and Construction Trades Council of San Mateo County; Building and Construction Trades Council of Santa Clara and San Benito Counties; and Local Unions 393 and 467, United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, are labor organizations admitting to membership employees of the individual Respondents. Ill. THE UNFAIR LABOR PRACTICES A, Introduction 1. Prefatory statement ; the issue After a lengthy hearing, with the issues vigorously presented by the General Counsel and ably defended on a number of grounds by Respondents, the issues involved boil down to one. Plumbers Local Unions 393 and 467 jointly sought to obtain the signatures of the plumbing subcontractors in three counties to a labor contract during June and July of 1951. In some instances they succeeded and in others they did not. They then struck, during mid-July 1951, a number of the plumbing subcontractors who had refused to sign. As a result, a number of the general contractors in the area, who were then employing the struck subcontractors, closed their operations on or about August 2, 1951; in addition some general contractors whose subcontractors had signed or agreed to comply with the Plumbers contract, also closed down their operations. All these construction projects resumed on or about August 13 after several mediation meetings conducted by a Federal conciliator. The position of the General Counsel is that Respondent Associations, acting in concert, instructed all their employer members to halt operations on August 2; that a number of the employer members did so and remained shut down until August 13; that this was a lockout and that this lockout, in the language of the complaint, was carried out "because said em- ployees, or some of them, were members and active in behalf of the Unions, or because of their concerted activities or the concerted activities of other members of the Unions for the purpose of collective bargaining or other mutual aid or protection." The employees affected were both employees working directly for the general contractors as well as employees working for the various subcontractors. It must be borne in mind, however, that the em- ployer Respondents herein are the general contractors for ti' se various construction projects and that the plumbing subcontractors involved have neither been named as re- spondents nor represented herein. • Respondents defended these allegations and advanced a number of defenses pursuant to which they claimed that the conduct by Plumbers was unlawful and unprotected and that as a result no unfair labor practices had been committed. To treat with all of these contentions in detail would result in an unnecessarily lengthy report. Moreover, inasmuch as the under- signed is convinced and hereinafter finds that, on a preponderance of the evidence, Respond- ents must prevail on several grounds, it is deemed unnecessary to go into all of the ramifi- cations of Respondents' various defenses. 2. Bargaining history In June 1947 some of the parties involved herein entered into two collective -bargaining agreements . The Northern California District Council of the United Association of Journey- men and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, herein called Plumbers Council, was then the bargaining representative of a group of 18 Plumbers Locals, including Locals 393 and 467. It entered into a contract with Re- spondents Central and Northern California chapters of the AGC covering industrial and 2In so finding, it may be noted that the undersigned entertains some doubts that the evidence presented in this record by the General Counsel is adequate to support a finding that all of the individual Respondents are engaged in commerce, whether by affiliation with a trade association or otherwise. See Jewish Bakery Association, 100 NLRB 1245 However, inasmuch as the substantive issues are hereinafter resolved in favor of the Respondents, it is deemed unnecessary to devote further treatment to this problem. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 773 utility pipe work in 46 counties of Northern California. A similar agreement was entered into by Plumbers Council in behalf of 15 Plumbers Locals, including Locals 393 and 467, with Respondent Northern California Conference; this agreement applied to plumbing, heating, air-conditioning, and utilities pipe work in the same geographical area as the agreement with the 2 AGC chapters. The two AGC chapters and the Conference decided to negotiate jointly with the Plumbers Council In 1950, upon the expiration of the previous agreement. On the completion of nego- tiations, the Conference and Plumbers Council executed an agreement dated July 28, 1950, and expiring June 30, 1951. However, the negotiated agreements, on the insistence of the Plumbers Council, contained language establishing a welfare plan and restricting the appli- cation of the agreement solely to those contractors "regularly engaged" in the field, and the AGC chapters refused to sign their agreement covering industrial pipe work on the ground that they were required to negotiate for all their members and could not exclude any of them from the coverage of the agreement. As a result, the AGC members regularly engaged in this type of construction associated themselves together as the "Northern Cali- fornia and Central California Negotiating Committee Representing Employers and Individual Employers Who Are Regularly Engaged in Industrial and Utilities Pipe Work in Northern California and Central California." This group signed the agreement on or about July 28, 1950. Sometime later, Plumbers Locals 393 and 467 of the cities of San Jose and San Mateo, respectively, the two locals involved directly herein, became dissatisfied with their repre- sentation by Plumbers Council and, early in 1951, canceled the authority of said organization to bargain for them. Almost concomitantly therewith, two local plumbers' associations, which had belonged to and had been represented by the Northern California Conference, withdrew the authority of the latter to represent them in collective bargaining. These organizations were the Associated Plumbing Contractors of San Mateo County, Inc., and the Associated Plumbing Contractors of Santa Clara County, Inc. Negotiations then commenced between the 2 Plumbers Locals and the 2 county plumbers associations, directed toward a single contract covering the area in which they were jointly Interested, namely, San Mateo, Santa Clara, and San Benito Counties.3 B, The 1951 contract 1. Its genesis and content The crux of this case is the contract which the aforementioned four groups entered into in 1951. It bears the date of July 1, 1951, and an expiration date of June 30, 1952, with provi- sions for year-to-year renewal, absent a 60-day notice prior to the annual renewal date; it is apparently still in effect. The agreement was actually entered into on a date somewhat earlier than the one it bears; this action took place apparently in the early part of June 1951, prior to June 22, with the intent that the contract take effect on July 1, 1951, upon the ex- piration of the 1950 contracts negotiated on the wider geographical basis between the re- spective trade and labor associations, described hereinabove. Article 3 of this contract provides as follows: UNION RECOGNITION A. That the INDIVIDUAL EMPLOYERS hereby recognize the UNION as the sole and exclusive collective bargaining representative of all employees of the INDIVIDUAL EMPLOYERS signatory hereto, over whom the UNION has jurisdiction. B. That during the terms [sicl-of this Agreement, and during the performance by the INDIVIDUAL EMPLOYERS of any work or contract to which this Agreement relates, all employees covered hereby shall be and remain members in good standing of their UNION on whose behalf this Agreement is executed. That this language imposes union-security requirements beyond those permitted by the Act and, in fact, constitutes a closed-shop provision is readily apparent and requires no 31t may be noted that the business manager of the Associated Plumbing Contractors of San Mateo County since 1948 has been one Albert Randall who previously thereto occupied the position of business manager with Local 467. The latter post has since 1948 been occupied by one Robert Wertz who, together with Randall, played a prominent role in these negotiations on the local level. The business manager for Local 393 in San Jose is Dan McDonald. 774 DECISIONS OF NATIONAL LABOR RELATIONS BOARD discussio,i. In fact the General Counsel conceded that "The contract admittedly did contain a provision which was violative of the Act...." 4 Each of the Locals also prepared, on its own letterhead, a form letter bearing the date June 22 and addressed to "Plumbing and Pipe Fitting Contractors of Santa Clara and San Benito and San Mateo Counties." 6 This form letter announced that a new contract had recently been negotiated covering the plumbing and pipefitting industry in the 3 counties ; that this contract provided for a wage increase of 1212 cents per hour (from $2.6212 to $2.75), effective July 1, 1951; and that this increase was permissible under the regulations in the Wage Stabilization Board . The letter also announced other changes in fringe benefits , including a new free zone of 10 miles effective July 1, as contrasted to the previously existing free zone of 25 miles beyond which travel charges were to be paid by the employer; 6 paid holidays; and establishment of an employer-supported welfare fund. Provision was made for deferment of the holiday and welfare fund provisions pending approval by the Wage Stabilization Board . It may be noted that the contract also contained language requiring all plumbing , heating, and piping foremen, as well as general foremen, to be members of the two Plumbers Locals. Although the matter was largely ignored at the hearing, Respondents advert to it in their brief and it is , of course, settled that such a demand, as well as a strike in support thereof, is violative of the Act. American Newspaper Publishers Association v. N. L. R. B., 193 F. 2d 782 (C. A. 7), and Graphic Arts League , 87 NLRB 1215 Another form letter was simultaneously prepared on the letterheads of the respective Locals and also bore the date of June 22. This letter, addressed to the two Locals jointly, was to be signed by the respective plumbing contractors in the area and stated: This will acknowledge receipt of the new contract relative to wages and working conditions negotiated for the Counties of Santa Clara, San Benito and San Mateo, to be effective July 1, 1951, as well as your letter pertaining thereto. This letter may be considered by you as acknowledgment of the receipt of the above mentioned documents and acceptance of the terms thereof. As will appear, these three documents were circularized and distributed together by both Locals as a joint venture during the period immediately following their preparation. The record does not disclose what took place in all cases where plumbing contractors were contacted. However there is more than substantial evidence of what took place in certain cases so as to reflect the objective of the two Plumbers Locals and this is set forth below. 2. Distribution of the contract and demands for its signature It is the contention of the General Counsel that , despite the patent illegality of the contract, Locals 393 and 467 did not strive to obtain the signatures of plumbing subcontractors to this agreement, or their written promises to abide thereby , but that they devoted themselves primarily to obtaining the consent of this group to pay the increased wage rate of $2.75. While it is correct that this was one of the conditions of employment establissied by the contract , to accept this contention would necessitate disregarding the preponderance of the evidence which supports Respondents' contrary contention that the two Plumbers Locals were primarily attempting to obtain adoption of their agreement , including the illegal closed shop and a higher wage rate, and that they were not striving solely or even primarily to obtain the higher wage rate. The undersigned so finds. Turning to the evidence relating to the distribution of this contract , the record discloses the following. According to Business Representative Dan McDonald of Local 393, copies of the contract, the explanatory letter of June 22, and the form dated June 22 on which the contractor was to signify his acceptance of the agreement , were mailed to all contractors doing business in the three counties. He later modified this by testifying that copies for members of the Associate Plumbers of Santa Clara County were not mailed but were left at the office of the secretary of the group. Business Representative Wertz of Local 467 testi- fied that copies of the three documents were mailed to all contractors doing business in his territory, namely, San Mateo County. The files of both organizations contain a large number of forms indicating acceptance of the contract by members as well as nonmembers of the 4His contention that certain concerted activity of the two Locals which took place was not directed to the obtaining of signatures to this contract is treated hereinafter. 6San Benito County apparently has neither a Plumbers T.ocal nor a plumbers trade asso- ciation. All plumbing work therein is done pursuant to conditions existing in Santa Clara County and under the aegis of the Santa Clara organizations THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 775 two county plumbers associations. It is clear, and the undersigned finds, that the distribution of these documents, like the conduct of the negotiations leading up to the execution of the contract, was a joint venture by the two Plumbers Locals. There is also direct evidence of what took place between the two locals and certain of the plumbing subcontractors in the area. Thus, copies of the contract and the accompanying explanatory letter of June 22 were sent or brought to Paul Rauch, a heating and piping contractor doing business as E. J. Rauch in San Jose. Business Representative Dan McDonald of Local 393 visited Rauch, as the latter testified, just prior to July 1 and announced that Rauch "was the last job to sign up" and that "he would like to have me sign up." Rauch either then or shortly thereafter signed the form dated June 22 wherein he agreed to accept the terms of the contract. There is no question but that this conduct by McDonald was directed to obtaining a signatory to the entire contract and not just a promise to pay a higher wage rate. As a result, this firm was not subjected to a plumbers strike later that month as were others whose cases are discussed below. James A. Nelson Co. is a mechanical contractor engaged in plumbing subcontracting which is a member of a trade association, Heating, Piping, and Air Conditioning Contractors Association of Northern California, which in turn is a member of the Northern California Conference; the latter has traditionally represented the Nelson Company in collective bargaining. Several days prior to July 13, Emil Nattkemper, a partner of the firm, received a copy of the July 1 contract in the mail, together with the form explanatory letter. On July 13, Business Manager Wertz of Local 467 telephoned Nattkemper, referred to the agreement, and asked, as Nattkemper testified, "if I was going to sign the agreement and pay the wage scale and other incidentals mentioned in the agreement." After some discussion, in which Nattkemper pointed out that the contract had not been negotiated by the Northern California Conference, Wertz asked "if we were going to sign the agreement" and added that "unless the contract was signed we probably would not have any men on Monday morning (July 16]." Nattkemper persisted in his refusal and, true to Wertz' prediction, the plumbers did not appear on July 16 at a job in San Mateo County being subcontracted by Nelson Company for Respondent Howard J. White, a general contractor. Wertz testified that he had left the agreement at the Nelson Company, that Nattkemper had refused to go along with it, and that he, Wertz , had claimed that the wage rate was not unreasonable. He admitted that he had informed the Nelson Company plumbers at noon on a particular date, apparently July 16, that Nelson would not pay the increase in wages, and that the men forthwith walked off the job; he denied that he had instructed them to strike. The undersigned finds that Wertz attempted to force the Nelson Company to sign and comply with all provisions of this labor contract. Scott Company of San Francisco is a mechanical contractor which belongs to the Heating, Piping, and Air Conditioning Contractors Association of Northern California. This firm was employed as a subcontractor on a number of projects in San Mateo County, at the time material herein, for at least four of the individual Respondents, including Williams & Bur- rows, Inc.; Barrett & Hilp; Peter Sorenson; and Howard J. White, Inc. It was also subcon- tractor on two jobs for general contractors, not named as respondents herein, but who are members of Central AGC.6 All of its plumbers engaged in a work stoppage on their respec- tive projects on or about July 14. According to Wertz, he had two telephone talks with an official of this concern in mid-July and asked "why he had not paid the wages under the new agreement." The officer protested that he had not seen the agreement; Wertz forthwith mailed him a copy and telephoned him again 2 days later. He was informed that the company would not go along with the agreement. This was apparently just prior to July 14, for, as stated, the plumbers did not appear for work on that date. Here too, the undersigned finds that Wertz was attempting to obtain agreement to the entire contract and not solely its wage provisions. Harold Turner is manager of Anderson & Rowe, Inc., of San Francisco, which also is a member of Heating, Piping, and Air Conditioning Contractors Association of San Francisco, and has always been represented by the Northern California Conference as bargaining agent. This firm was subcontractor on projects for at least two of the individual Respondents herein, Stern & Price Construction Co. in Santa Clara County, and Peter Sorenson. Turner was a clear and forthright witness whose testimony has been credited in full. 6 The General Counsel contends that Respondent Associations are responsible for losses in- curred by all employees allegedly locked out pursuant to the direction of Respondent Associ- ations, irrespective of whether their respective employers , be they general contractors or subcontractors, have been named as respondents. 291555 0 - 54 - 50 776 DECISIONS OF NATIONAL LABOR RELATIONS BOARD According to Turner, he was visited at his office on July 11 by McDonald and Wertz of the two Plumbers Locals and they presented Turner, who had not seen them previously on this matter, with a copy of the contract, together with the covering explanatory letter dated June 22. McDonald asked Turner to sign the agreement and Turner protested that the agreement provided for benefits in excess of those permitted under the 10 percent formula of the Wage Stabilization Board. Wertz, according to Turner, "jumped up and told me that we would not have any men if we did not sign it." Turner testified that the union representatives wanted him to sign the entire contract and "they did not pick out any specific item." Turner pro- duced at the meeting a letter to his employees dated July 9, promising to pay any additional benefits provided in a negotiated contract in the area, when approved by the Wage Stabiliza- tion Board. This commitment did not satisfy the union representatives. During the course of the meeting, McDonald informed Turner that the payment, under the new 10-mile free zone provision of the agreement, would amount to approximately $2 per day for men on the Stern & Price job. The meeting ended on the understanding that Turner would discuss the matter with firm member Otto Anderson, who was then out of town. On the following day, Wertz telephoned Turner for an answer and Turner informed him that Anderson had not yet returned to the city. On Friday, July 13, all of the Anderson & Rowe plumbers left their respective jobs. That this was not an activity on the part of the men distinct from any union direction, as the General Counsel contends, is amply demonstrated by the credited and uncontroverted testi- mony of Oscar C. Holmes, chief engineer and assistant general manager for Peter Sorenson Company, on whose project, the Menlo-Atherton High School, Anderson was performing heating and ventilating work. Holmes testified that on July 13, at 1:30 p.m., Wertz "in my presence told the plumbers and steam fitters on the job to put their tools away and go home"; this group included plumbers from both Anderson & Rowe and from Scott Company, which was subcontracting the plumbing on the job. Wertz also stated at the time that Anderson & Rowe and the Scott Company "did not go along with the agreement that they wanted them to go along with." When one of the workmen asked if this was a strike, Wertz replied that "he didn't like to call it that, that these two companies just wouldn't go along with them, and that they were just stopping all work on their projects." The men forthwith left the job. That this was a union-inspired and -directed work stoppage , is too clear to require any further discussion. On or about July 16 or 17, Turner telephoned Wertz and asked why the Union had removed his plumbers from the job, in view of Turner's commitment to pay all benefits retroactively. Wertz replied that Anderson & Rowe "would have to put ...[themselves ] in the same position as the ... master plumbers in the county who had signed up with the local unions." On July 18 Turner telephoned McDonald and asked him why his plumbers had been removed from the job in Santa Clara County. McDonald replied that it was "because you have not signed the thing." In view of the refusal of the unions to accept Turner's agreement to pay all benefits retroactively, and more particularly in view of the direct evidence presented above, it is clear and the undersigned finds that the two Plumbers Locals were intent upon obtaining the signature of Anderson & Rowe to this contract and assent to all of its provi- sions. McDonald testified that he had only asked Turner to pay the negotiated wage increase; that Turner refused ; and that "I told him that unless the increase in wages was paid to those men that I would have difficulty holding those men on the job." He denied that he had insisted that Anderson & Rowe sign the contract. Wertz , however, testified that he had a number of conversations with Turner, both on the telephone and in person. The personal meeting, as he testified, was in conjunction with McDonald . At this meeting they allegedly asked Turner to pay the $2.75 wage rate and he refused. They then asked him, according to Wertz, "Why he did not want to sign it"; Turner allegedly claimed that the contract was illegal because it had been negotiated with the wrong employer group. Wertz admitted telephoning Turner on the following day and again on the second day, at which time Turner refused to pay the increase. He also admitted asking Turner why he did not want to sign, but added, in his testimony , that he did not care whether the agreement was signed or not and that he was interested solely in the payment of the wage increase. The undersigned does not credit this testimony by the union representatives . While it is obvious that they were interested in payment of the wage increase, it is also clear in this instance, as in other instances to be set forth , that the union representatives were following a consistent course of conduct and were unwilling to divorce the wage increase from outright acceptance of this illegal contract with the bargaining representative of their choice. And, as will also appear, this specific ground of illegality, the closed shop, was brought to their attention on other occasions. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 777 Broadway Plumbing Company is a plumbing contractor in San Francisco which is a mem- ber of the San Francisco Master Plumbing Association, which in turn belongs to the Northern California Conference; the latter organization has in the past represented Broadway Plumb- ing Company in the negotiation of labor agreements. At the time material herein, this concern, according to one of its partners, Lawrence Nurisso, was a plumbing subcontractor for two of the respondent general contractors named herein, Herman Christjanson and Henry Doelger Builders. According to Nurisso, the proposed contract was brought into the office during his absence, apparently by Wertz. On the morning of July 17, 1951, Wertz telephoned Nurisso and asked him, as the latter testified, "if he had seen the proposed agreement and if he had signed the agreement and I told him that I had not; and that I had no intention of doing so." To this Wertz replied that "he did not think that plumbers would care to work for us then under these conditions." On cross-examination, Nurisso insisted that there was no mention by Wertz in this discussion of the higher wage rate. According to Wertz, he delivered the agreement to the Broadway shop and thereafter telephoned Nurisso who informed him that the firm would not agree to the increased wage rate. Here, too, the fact that Wertz delivered the contract is significant. This was considerably more than an attempt to procure a wage increase for employees and was of a pattern with the mailing of the agreements to various subcontractors and the delivery of them to others. The undersigned credits Nurisso's version of this conversation with Wertz. The foregoing is buttressed by the circumstances surrounding the departure of the Broad- way employees from their jobs on July 17. As appears in the credited testimony of Harold Waters, foreman on the Doelger project and also a member of Local 467, Wertz appeared at the project at noon on July 17, this being shortly after his conversation with Nurisso, and informed Waters and 5 or 6 plumbers then working on the project "that the Broadway plumbing and ... some other shops ... did not go along with the agreement and that we should go home, because good union men don't work ... that we should take a fishing trip." On cross-examination Waters gave substantially the same version, namely, that Wertz "told us that the agreement had not been signed by our shop; that good union men would not stay on the job, that they would go home, that he was not forcing us off the job ... it would be a good idea to go fishing ..." The men, including Waters, forthwith left the job. None of the plumbers who were present and who were named by Waters in his testimony were called as witnesses herein. Wertz testified that he recalled visiting the men on the job but did not recall what he had told them. Nevertheless, he denied that he had instructed them to walk off the job or go on strike. His testimony is not accepted herein and it is further found that the employees of this plumbing subcontractor, as did the employees of other concerns, went on strike at the behest of their union representative in support of the contract demanded by their Union.? There was testimony by Wertz concerning several other concerns to which this contract had been submitted; representatives of these firms did not testify herein. Thus, Wertz informed a representative of the San Francisco Plumbing and Sheet Metal Company on an undisclosed date prior to August 11 that "I would not dispatch anyone to work for them until there was an agreement signed...." According to Wertz, he was concerned about the responsibility of the firm and wished "to have our people protected." Wertz also presented the contract late in June or early in July to one Nettles of the plumb- ing firm of Hassdorf & Nettles, and allegedly informed Nettles that he did not expect the firm to pay some items contained in the agreement until they had been approved by the Wage Stabilization Board, but that he did expect the firm to pay the wage increase forthwith; Nettles later refused to do so. Wertz also, early in July, presented the contract to one Henderson of the plumbing firm of O'Mara & Stewart, and allegedly told him that he did not expect payment of all benefits forthwith but that he did expect payment of the wage increase at that time. Significantly, in none of these three instances, with respect to which the record contains only the testimony of Wertz, did he state that Local 467 was not inter- ested in the union-security provisions of the contract, and of course the presentation of the 7For a strike need not have a direct strike call A signal understood by the initiated is sufficient. See Great Atlantic & Pacific Tea Co., 81 NLRB 1502, and Roane Anderson Co., 82 NLRB 696 Nor would it be of avail herein to the General Counsel if the record lacked direct evidence of a specific instruction to union members to cease work, in view of the statements made to the various employers of plumbers by the union representatives that the men would not work. Moreover, as the record demonstrates, the return of the plumbers to this very job on August 16 took place only after permission was granted by Wertz. See H. M. Newman Co., 85 NLRB 725, enfd 187 F. 2d 488 (C A 2) 778 DECISIONS OF NATIONAL LABOR RELATIONS BOARD agreement in its entirety would demonstrate the contrary. The undersigned accordingly finds that in these instances the two Locals were at the very least attempting to obtain sig- natures to, or agreement to abide by the provisions of, this agreement, subject to Wertz' oral explanation in aspects not material herein. Considerable evidence was presented concernmgtworemaining contractors, J. W. McClena- han Co., with offices in San Francisco and San Mateo, which was doing business in 1951 under the name of "Macnsons Contracting Engineers," and Bechtel Company; the latter is a general contractor which employed plumbers directly on certain operations and subcon- tracted others. Turning first to the McClenahan Co., its owner is one James W. McClenahan, who played a prominent role in the matters leading up to this proceeding; at this point, the undersigned will treat solely with the issues as they affected his own firm which belonged to the Master Plumbers Association of San Francisco, which was, in turn, a member of the Northern California Conference. The firm had traditionally been represented by the Con- ference in labor negotiations conducted on the wider geographical basis discussed above. It was at that time subcontracting a large number of jobs, including work for Respondents Henry Doelger Builders; Barrett & Hilp; and Carl N. Swenson Co., Inc., all of these projects apparently in San Mateo County. During the second or third week of June, McClenahan was visited in his office by Business Representative McDonald of Local 393 who presented him with 2 copies of the recently negotiated contract between the 2 Plumbers Locals and the 2 county plumbing associations which, as found above, contained unlawful union-security provisions. McDonald left the contract for McClenahan's perusal, stating merely that it was the agreement which had been negotiated for the 3-county area. On or about July 3, Business Agent Wertz of Local 467 called at McClenahan's office. He, too, presented McClenahan with a copy of the contract, together with a copy of the form indicating acceptance of the agreement which had been prepared for the contractors' signatures. Wertz asked McClenahan to sign the form and referred to some of the differences between this agreement and the recently expired agree- ment, whereupon McClenahan pointed out that the agreement was unlawful as it provided for a closed shop. He refused to sign the form acceptance, stating that the Conference was his bargaining representative and that he could not sign an individual agreement. It may be noted that McClenahan was at the time on the labor negotiating committee of the Conference, which had been desirous since the spring of 1951 of negotiating an agreement on a Con- ference-wide basis with the various plumbers locals, as had been done in previous years. On July 7 or 8, Wertz telephoned McClenahan and asked if he would sign the agreement. McClenahan reiterated his position that the Conference was his bargaining agent. On July 13, Wertz again visited McClenahan and demanded to know whether he "was going to go along with the contract." After McClenahan stated that this was a matter for the Conference, Wertz replied that he did not "give a damn" about the Conference, that there was a new contract in the area, and that he expected the plumbing subcontractors to live up to its terms. Wertz added that McClenahan's "refusal to go along with the Union's demands left them only one other alternative ... in view of the fact that I would not agree to the terms of the Union's demands he would be forced to remove the men from the job." McClenahan did not retreat from his position. On Monday, July 16, some of McClenahan's plumbers failed to report for work, although a number did work on July 16 and 17 during that workweek. Thereafter, the number of plumbers reporting for work gradually decreased, with those who did work re- porting for merely 1 or 2 days, although there was work for them. Five of the plumbers who customarily worked in the shop did report there on July 16, but refused to work, informing McClenahan that the Union would fire them if they did. Wertz testified that he brought the agreement to McClenahan early in July, probably July 3; presented it to him; and was informed by the latter that he could not sign it. Wertz al- legedly informed McClenahan that he was not asking him to sign it but was asking him solely to pay the new wage rate. McClenahan allegedly agreed to consider the proposal, but later refused to pay the wage increase, stating that it was not permitted under the regulations of the Wage Stabilization Board. McClenahan was a clear and impressive witness whose recollection was good. Not only did his testimony comport with that of other credited witnesses relative to their contacts, but the record elsewhere corroborates McClanahan. Thus, at a later meeting on July 31, to be discussed below, McClenahan again raised the illegal closed shop. Furthermore, much of Wertz' testimony lacked clarity and was devoted to generalities. Under all the circumstances, and in view of the foregoing considerations, the undersigned credits McClenahan herein. Bechtel Corporation is a member of the Northern Chapter, AGC, and was at the time material herein engaged in construction as a general contractor at two locations in Santa Clara County. One of these jobs was defense construction for the Food Machinery Corporation THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 779 in San Jose, on which the piping was subcontracted. The other job was in Santa Clara for the Fiberglass Company; the plumbing was subcontracted but Bechtel was doing the piping directly. John O'Connell is vice president and director of industrial relations for Bechtel. He is also a director and chairman of the labor committee of the Northern Chapter, AGC, as well as chairman of the industrial pipe committee which negotiated jointly for the two AGC chapters. Here, too, the discussion will be restricted at this stage of the report pri- marily to the situation as it confronted O'Connell as a Bechtel official Shortly after June 22, 1951, the new contract and the accompanying explanatory letter were received in the mail by O'Connell. Some days later, O'Connell was telephoned by Business Representative McDonald of Local 393 who informed him, as O'Connell testified, that "he had sent me a copy of a letter and an agreement , with some new wages in it, and that they hadn't been put into effect ." O'Connell replied that his firm was represented by the industrial piping committee and that he was willing to meet with McDonald; that when an agreement was negotiated it would be put into effect ; and that the proffered agreement had not been properly negotiated. O'Connell proposed a meeting of, in essence , the same parties who had negotiated the 1950 contracts. McDonald replied that the submitted agreement was the agreement in effect in the area "and we would sign it and pay the wages or we wouldn 't have any men." During this discus- sion, O'Connell pointed out "the dosed-shop clause in the agreement which ... was in violation of the Taft-Hartley Law and told him that we couldn't sign any agreement with a closed shop of that fashion in it." O'Connell also claimed that other provisions of the agreement were violative of other laws and regulations. Not long afterwards the plumbers working an the Santa Clara job, the Fiberglass Company project, left the job; these included men who worked for Bechtel directly %as well as those who were employed by the subcontractor, Peters. O'Connell telephoned McDonald on July 19 and questioned him concerning the removal of the plumbers and pipefitters. According to O'Connell, he informed McDonald that he could not sign the agreement , whereupon McDonald replied that "be was very sorry but unless we signed it we just wouldn't have any men." O'Connell again protested that the agreement was illegal inasmuch as it con- tained a closed shop. McDonald replied that this made no difference and that the "other contractors around here are signing it. That's the way it is. You will have to sign it or else." O'Connell demanded that McDonald negotiate with the two AGC chapters and the Conference, as in the past. and that he return the men to the job. McDonald refused. On July 30, O'Connell met with McDonald at the office of Food Machinery Company and certain discussions were held in an effort to settle the work stoppage and to prevent one on the Food Machinery job; this meeting is discussed in more detail hereinafter. The two men arrived at a tentative agreement to settle the work stoppage. However this agreement fell through, and on July 31, in a telephone conversation with O'Connell. McDonald informed him that "You will either have to sign the agreement and work under the conditions or we are not going to give you any men." The undersigned accordingly finds that McDonald insisted upon the signature of this agreement prior to the stoppage and persisted therein even after said stoppage.a 3. The strike It is apparent from the foregoing discussion, and the undersigned finds, that Plumbers Locals 393 and 467 were attempting to quickly obtain the signatures of unwilling plumbing contractors to this newly negotiated labor agreement. Representatives of the two Locals visited these contractors, presented them with copies of the agreement and demanded that they be signed. There were threats that failure to sign would result in the loss of their plumbers and pipefitters and the threats were quickly followed by the loss of these men during mid-July of 1951, from July 13 to 17. Accordingly, the undersigned finds that this was a strike by the employees of the plumbing contractors and that this strike was insti- gated, authorized, or ratified by the two locals. See H. M. Newman Co., supra. It is further found that this was a strike to procure signatures to a labor contract which included an illegal closed shop, that the strike was therefore a strike for an illegal objective, and that it was therefore not a protected concerted activity. See Mackay Radio and Telegraph Co., Inc., 96 NLRB 740. sThe foregoing findings are based upon the credited testimony of O'Connell, who, like McClenahan, was a clear, impressive, and forthright witness. McDonald's testimony that he never "insisted" that Bechtel Company sign the contract is not accepted. 780 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Nor would it be of any avail to the General Counsel that one of the objectives of the strike was the wage increase called for by the contract. The simple answer is that the two Locals, as found, jointly wanted the contract signed and applied and that a most significant aspect of the contract was unlawful See N. L. R. B. v. Wine, Liquor & Distillery Workers Union, Local 1, AFL, 178 F. 2d 584 (C. A. 2), and United Brotherhood of Carpenters and Joiners of America , et aL, 81 NLRB 802, enfd. 184 F. 2d 60 (C. A. 10).9 At this point , it may be noted that Respondents herein moved that the present case be cwisolidated with Case No. 20-CB-210 , wherein Plumbers Locals 393 and 467 were named as respondents in charges filed by the Northern California Conference on July 30, 1951; this motion was denied by the undersigned on the ground that the General Counsel had re- fused to issue a complaint in that proceeding, and that said decision was one committed solely to his discretion. See Section 3 (d) of the Act. That charge alleged, inter alia, that Plumbers Locals 393 and 467 , commencing on July 10, 1951 , had (1) refused to bargain collectively with the Northern California Conference , and (2) demanded by strike and threats of strike that individual contractors represented by the Conference sign an agreement con- taining illegal union -security provisions. A settlement agreement was executed by the two Plumbers Locals and the General Coun- sel on January 10, 1952, which stated that it did not constitute an admission that the Re- spondent named therein, Locals 393 and 467, had violated the Act. The settlement agree- ment provided for the posting of a notice to the members of Locals 393 and 467 by said Locals (1) that they would not threaten strike action, direct employees to strike, or ratify strike action to require the "Employer " to violate Section 8 (a) (3); (2) that they would not in any other manner cause the "Employer " to discriminate against employees in viola- tion of Section 8 (a) (3); and (3) that they would on request bargain collectively with the Northern California Conference. The charging party therein, the Northern California Conference, refused to consent to the settlement agreement and as a result it was executed solely by representatives of the General Counsel and Business Representatives McDonald and Wertz of the two Locals. Accordingly, on February 27, 1952, the Regional Director notified the Northern California Conference that he was refusing to issue a complaint in Case No . 20-CB-210, "pursuant to the settlement agreement executed by the Respondent Union"; the complaint in the instant proceeding issued thereafter on April 11 , 1952. This, in essence, is the factual history of the CB proceeding. it is further to be noted that, in arriving at the preceding conclusions in the instant case with respect to the nature and purpose of the strike by Plumbers Locals 393 and 467, the undersigned has in no way relied upon the history of the CB case or the settlement stipula- tion. That stipulation related solely to the CB proceeding, the independent merits of which are not before the undersigned. C. The shutdown on August 2 1. Contentions The complaint alleges that from August 2 to 13, 1951, Respondents, associations and contractors, locked out all employees of the contractors and subcontractors working on the construction projects of the Respondent Contractors, because said employees or some of them were members of and active in behalf of the two Building and Construction Trades Councils, or because of their concerted activities or the concerted activities of other mem- bers of the Building and Construction Trades Councils. It may be noted that the two Plumbers Locals did not set up picket lines at the projects from which men were withdrawn, that there was in fact no picketing, and that all other employees on these projects, whether working for the general contractors or subcontractors, continued to work after the start of the strike. Also present herein is the issue relating to certain general contractors who closed down operations on or about August 2, despite the fact that the Locals had not with- drawn their men from these projects. 9Significant herein, in the view of the undersigned, is the fact that the so-called union- shop proviso to Section 8 (a) (3) of the Act was amended in 1947 so as to outlaw union-security agreements making union membership a condition of employment at any time prior to the 30th day following the beginning of such employment. The Senate sponsors of this amendment de- clared that its purpose was to abolish hiring practices prevalent in the "Maritime industry and to a large extent in the construction industry " S. Rep No. 105, 80th Cong 1st Sess, page 6. See also 93 Cong. Rec. 3836. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 781 Respondents' contentions are numerous, including the claims that the general contractors had found it increasingly difficult, if not impossible, to operate without a key craft, namely, plumbers; that they found themselves in a financial squeeze; that there was fear of lia- bility being incurred by the general contractors if there were violations of Wage Stabili- zation Board regulations and the Taft-Hartley Act by their subcontractors; and that the general contractors were opposed on principle to continuing projects on which their sub- contractors were operating illegally. That there was a temporary shutdown on or about August 2 is clear and unquestioned and there is no doubt, as the General Counsel contends, that the trigger mechanism which led directly to the shutdown was a wire of August 1 from each of the Respondent Asso- ciations save the Northern California Conference to its members which read as follows: PLUMBERS LOCAL UNIONS NO. 393 AND 467 ARE CONTINUING STRIKE ACTION AGAINST HEATING, PLUMBING AND INDUSTRIAL PIPE WORK CONTRACTORS IN SAN MATEO SANTA CLARA AND SAN BENITO COUNTIES IN SUPPORT OF DEMANDS IN VIOLATION OF WAGE STABILIZATION ORDERS AND TAFT-HARTLEY ACT. COMPLIANCE WITH THESE ILLEGAL DEMANDS WILL SUBJECT ALL GENERAL CONTRACTORS AND BUILDERS OPERATING IN THESE COUNTIES TO POSSIBLE LOSSES AND HEAVY LEGAL PENALTIES„ THE BOARD OF DIRECTORS OF YOUR ASSOCIATION HAS DETERMINED THAT FOR THEIR OWN PROTECTION ALL ASSO- CIATION MEMBERS SHOULD SUSPEND ALL OPERATIONS IN SAN MATEO, SANTA CLARA AND SAN BENITO COUNTIES, EFFECTIVE NOON AUGUST 2, 1951 UNTIL THESE ILLEGAL CONDITIONS HAVE BEEN ELIMINATED. WE WILL KEEP YOU ADVISED OF FURTHER DEVELOPMENTS. Accordingly, the undersigned will at this point set forth the chronological events leading up to the sending of these wires by the four Respondent Associations. One of the key issues here- in is the motivation of these four Respondent Associations and their members in deciding to temporarily close down operations on August 2. This is obviously very much germane to the 8 (a) (3) allegations of the complaint, for, absent a discriminatory motivation . there can be no finding of an 8 (a) (3) violation under the facts present herein. This is, of course, in- dependent of the Section 8 (a) (1) allegations which are also treated hereinafter. The under- signed will set forth and consider the situation as it confronted the various Respondent general contractors, as well as their trade association advisers. The evidence does not demonstrate what took place at each project of each Respondent; there is, however, evidence to establish the picture at a substantial number of projects. 2. Effect of the work stoppage upon the general contractors In this section the undersigned will set forth the picture as it existed among those general contractors whose plumbing subcontractors had been struck by the two Plumbers Locals. The situation on other jobs where the plumbing subcontractors had not been struck will be described in a later section. Respondent Stern & Price Construction Company is a general contractor which belongs to the Peninsula General Contractors and Builders Association Inc. It was actively engaged in large scale tract contraction at the time material herein, involving several hundred homes in Santa Clara County Its plumbing was subcontracted by Anderson and Rowe whose plumbers had struck, as hereinabove found, and had last worked on July 12. The testimony of its account- ant and office manager, Thomas Johansen, as well as that of partner Alfred J. Stern, which the undersigned credits in full, amply demonstrates that the loss of plumbers gradually stifled and rendered impossible the continuation of this firm's assembly line method of operations. It is clear that plumbers played a vitalpartinthe construction of these as well as all other housing Involved in this proceeding ; their services were vital to all stages of construction operations, commencing with the installation of the initial rough plumbing, including sewer and gas lines, and finally, at the conclusion of the construction operation, in the installation of the final trim including toilet and kitchen fixtures. By July 31 Stern & Price had reached the stage where it could not proceed for lack of plumbing, and It closed down all operations on August 2. The General Counsel apparently con- tends that Stem & Price, as well as the other general contractors involved, could have worked around the plumbing and then inserted it ata later date. Firstly, the record demonstrates that Stern & Price as well as the other general contractors did precisely this to the limited extent feasible after the walkout of their plumbers. Secondly, the undersigned does not believe that the Act requires an employer to operate his business in an uneconomic fashion in order to suit the convenience of his employees or their representatives, even were it feasible to do so. The 782 DECISIONS OF NATIONAL LABOR RELATIONS BOARD fact is, to take an example, that a bathroom fixture is installed before the tile is laid around it; under the view of the General Counsel, a general contractor would be required to lay his tile and then rip up portions of it at a later date in order to install his plumbing fixtures after the labor difficulties with plumbers were over. The logic of this the undersigned is unable to accept. Moreover, this begs the basic premise which is that an employer is not required to continue to sink his operating capital into a construction project when it is apparent that it may well be a long time, if ever, before he is able to extricate it. Accordingly, the undersigned finds no merit to this position of the General Counsel. It is further found that as of July 31 the opera- tions of this employer were at a stage where it was well-nigh impossible to continue on any basis, let alone a sound basis, and that, assuming that this employer was able to continue a portion of its operations on an expensive and impractical basis for a limited time, he was not in a position to do so because he still was unable to complete the homes without the services of plumbers. It may also be noted that, insofar as the record indicates, the various employees affected by this work stoppage and shutdown were all members of the various labor organizations affiliated with the two Building Trades Councils. Obviously, it would be in utter disregard of the practical realities of industrial life to claim, as did the General. Counsel, that these em- ployers could have attempted to obtain plumbers from other locals of the Plumbers Interna- tional; this would equally apply of course, although the claim was not expressly advanced by the General Counsel, to the possibility of introducing nonunion plumbers to the project. Respondent Peninsula Home Builders is a general contractor which belongs to the Peninsula General Contractors and Builders Association it, too, temporarily closed down operations on August 2, 1951. According to the uncontroverted and credited testimony of its secretary- treasurer , Halyard Nelson, four jobs were under construction in San Mateo County. The plumb- ing subcontractor on all these was J. W. McClenahan and Co. The undersigned has previously described how, commencing on July 16, at least some of the plumbers working for the latter firm went on strike; according to Nelson, all his jobs were affected by this work stoppage. Thus on 1 project which involved 7 homes, plumbers were needed to install underground plumbing; although this underground plumbing had already been installed on the other 5, plumbers were needed at a later date on other stages of the construction. Here too, the under- signed Is unable to accept the logic of the General Counsel that this contractor should be required to pour funds into a project which it would be unable to complete; other aspects of the financial picture including the ramifications and significance of construction financing by the contractors are treated hereinafter. .On another project involving 38 homes, 4 required installation of the rough plumbing and all required plumbers for later stages of plumbing. On a third project involving 34 homes, 18 foundations had been poured and the rough plumbing was in on only 3. On its fourth project involving 40 homes, 29 were complete, but of the remaining 11, 3 required underground plumbing and 8 were held up for lack of water and gas pipes. Nelson testified that his firm endeavored to work around the required plumbing, all at considerable expense, wherever possible, following the loss of its plumbers . And, of course, the foregoing factual picture amply demonstrates the problems that confronted this employer in terms of bogged-down construction Here too, as in the cases that follow, is an example of the individual respondent general contractor being effectively tied down by the loss of a key craft, to Alf Carstens is secretary-treasurer of San Mateo Investment Co., which, although not named as a respondent , is a member of the Peninsula General Contractors and Builders Association, Inc., which is a Respondent and to which the General Counsel attributes liability herein. This firm had 9 homes under construction in San Mateo County on which the plumbing was sub- contracted to J. W. McClenahan and Company; as a result, it lost its plumbers on July 16 and ultimately closed down on August 2. Of the 9 homes, 3 were complete prior to the shutdown of operations by this firm on August 2. On 4, the services of plumbers were required in order to install piping. According to Carstens, this firm as of August 2 was doing relatively little work, inasmuch as operations had been tied up by the lack of plumbers. Here too, although it appears that about 2 days of roofing work could have been performed on 2 of the houses after August 2, the general con- ii The interrelationship of the various crafts engaged in building construction, with one craft working with or immediately following another and yet carefully preserving jurisdictional lines, is too well known to require any discussion on the point. THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 783 tractor was in the same position as the other contractors described above, namely, with operations suspended and being unable to continue with any degree of certainty that they might be completed. Oscar Holmes is chief engineer and assistant general manager of Respondent Peter Sorenson Company, which belongs to the Northern California Chapter of AGC. It was engaged in con- struction of a large high school project involving 12 buildings as well as a sewage treatment plant, both located in San Mateo County; these operations were closed down on August 2. On the high school project, the plumbing was subcontracted to Scott Company, and the heating and ventilating was subcontracted to Anderson and Rowe. As heretofore found, Business Agent Wertz of Plumbers Local 467 effectively removed the members of his local who were working for these two subcontractors on July 13. Here too, save for one completed building, the others all required various amounts of plumbing work, in some cases of a major nature and in others in a lesser degree. This contractor encountered much operational difficulty after July 13 and became unable to proceed with certain aspects of the work. The testimony of Holmes demonstrates that it was impractical if not impossible for this employer to perform many aspects of the work until the plumbing work had first been done. On its other project, the plumbing was subcontracted by one A. J. Peters. This contractor had apparently signed up with the two Plumbers Locals and, accordingly, his phmibers did not go on strike. The position of this Respondent with respect to its shutdown of this job on August 2 involves other considerations which are hereinafter discussed. It may also be noted that a third project involved defense work at a naval air field; it appears that the plumbers were not affected there and that the job was not closed down by this general contractor, apparently in consideration of its being a defense project. As heretofore set forth, John O'Connell is director of industrial relations for Bechtel Company. This concern, in July 1951, was engaged in a construction project in Santa Clara County for Fiberglass Company. The plumbers engaged in industrial piping, who worked directly for Bechtel, struck the job, as did those engaged in industrial plumbing who worked for the plumbing subcontractor, Peters. According to O'Connell, there was, as of July 31, no work for the other crafts to perform on the project, progress having been held up by the loss of the plumbers. Respondent Henry Doelger Builders is a member of Respondent Associated Home Builders of San Francisco, Inc. This concern was engaged at the time material herein on a very large scale construction project involving a large apartment development and 150 single homes located just outside the city limits of San Francisco in San Mateo County. The plumbing subcontractor on the apartment development was J. W. McClenahan and Company; the plumbing subcontractor on the homes was the Broadway Plumbing Company. As heretofore set forth the plumbers working for these two concerns struck in mid-July; the entire project was thereafter closed down on August 3. The record demonstrates that after the disappear- ance of the plumbers the various crafts were shifted about and utilized in areas where plumb- ing work was not immediately or urgently required. There is also evidence that both this Respondent and the nonplumbing subcontractors were running out of work, although there is some evidence to show that two of the crafts engaged in work on the homes, namely brick and concrete masons, could have continued. Here too, there is present the same situation that confronted the other general contractors, namely, their inability to complete the project without the services of plumbers. And here too there was most impressive evidence of the importance of the completion of various stages of construction in order for the general contractor to receive progress payments under his construction loans. In sum, an almost identical situation confronted all the aforenamed general contractors. Their operations had been or were in the process of being ground to a halt by the loss of one of the key crafts. Each was suffering financial losses of different types due to this condition. It is also clear that to have continued operations wherever possible would have obligated these general contractors to make further payments to the other subcontractors engaged therein and that, despite these payments, the respective general contractors in turn would have been unable to receive payments on their construction loans due to construc- tion not having arrived at certain prescribed stages. It was against this background that the various general contractors and their trade associa- tions as well as the plumbing subcontractors met, obtained the advice of counsel, and evalu- ated their status The details of these meetings appear below 784 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 3. Activities of the Respondents after the Plumbers' strike On July 17, a number of the plumbing subcontractors who were members of one of the associations which belonged to the Northern California Conference met in San Francisco. This meeting was attended by some members of the AGC Chapters who, it appears, employed plumbers directly. They proceeded to evaluate the situation in which they found themselves and they asked Thomas E. Stanton, Jr., to explain the legal position of the members of the Conference.i^, Stanton informed the assemblage on this occasion that the 2 Plumbers Locals had the duty to negotiate with the historical bargaining representative and that portions of the agreement being circulated by these 2 labor organizations were illegal. It was decided at this meeting to bring the situation to the attention of various general contractors whose jobs would inevitably be affected by the loss of plumbers. On the morning of July 20, a meeting was held at the office of Respondent Association, Peninsula General Contractors and Building Association. This meeting was also attended by some general contractors who belonged to the two AGC Chapters and to the Associated Home Builders of San Francisco. The general problem was discussed, including specifically the difficulty in continuing operations without plumbers and the fact that the plumbing sub- contractors were being confronted with a demand for an illegal closed shop. That afternoon Northern California AGC met in San Francisco and Mr. Stanton reported to them on the illegality of the contract being circulated by the two Plumbers Locals. 12 On July 21, a meeting took place at the offices of the Central Chapter AGC in San Francisco. It was attended by members of the Northern Chapter AGC, Peninsula General Contractors and Builders Association, and the Associated Home Builders of San Francisco. Stanton was present and expressed the view that the proposed plumbing contract was violative of the regulations of the Wage Stabilization Board and concern was expressed over the possibility that the general contractors might be held responsible for these violations by their sub- contractors. Mention was made of the possibility of the general contractors being bound by these contracts in the event it was found necessary to take over certain portions of their jobs from plumbing subcontractors. The 4 Associations decided on this occasion that their members should be brought up to date on the problem confronting them and, as of that date, a memo was prepared and mailed to the entire membership of these 4 Associations. The text of the letter appears below and reflects the contents of the copies sent to the members of the Peninsula General Contractors and Builders Association located in San Mateo; the text of the others was substantially the same. July 21, 1951 IMPORTANT---NOTICE OF SPECIAL MEETING Plumbers Local Unions Nos. 393 and 467 have taken strike action against the Northern California Conference of the Plumbing and Heating Industry and plumbing contractors iiMr. Stanton is associated with Gardiner Johnson and this firm represents all Respondents herein As will appear, they were consulted for legal advice by various of the affected employers and associations. It would seem that a not insubstantial portion of their practice centers in the construction industry on behalf of management. 12 It may at this point be noted that Mr. Stanton, who figured prominently in the legal advice given to the various Respondents, and who largely represented them herein, did not testify, although at one stage of the hearing he attempted to On that occasion, co-counsel Gardiner Johnson appeared at the hearing for the specific purpose of interrogating Stanton concerning his role in the matters involved herein. The General Counsel and the charging parties objected to such testimony by Stanton, under oath, on the ground that it would violate the Canons of Ethics of the American Bar Association After much argument and citation of authority the undersigned overruled the objection, citing Hotaling v. Hotalutg, 187 Cal. 695; People v. Hamburg, 24 F. 2d 298; French v. Hall 119 U. S. 152; and 58 American Juris- prudence 152. The hearing then recessed for the day At a later stage of the hearing, Stanton announced on the record that inasmuch as his legal ethics had been challenged he had decided not to take the stand herein and he did not do so; nor did any other counsel attempt to obtain his testimony. It is obvious that his testimony could have been quite pertinent on the vital issue of motiva- tion of the various Respondents and conceivably might have strengthened or weakened the position of the General Counsel herein. In any event, the findings herein are predicated upon other testimony as to the advice given by Stanton THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 785 represented by that Conference who operate in Santa Clara, San Mateo and San Benito counties. The Local Unions have signed an agreement with the Associated Plumbing Contractors of Santa Clara, Inc., and Associated Plumbing Contractors of San Mateo County, Inc., which provides for a 121 cents per hour wage increase, a 71 cents welfare plan, six paid holidays and a 10-mile free zone for travel allowance in place of the existing 25-mile free zone. The cost items of this agreement are far in excess of the ten per cent formula permitted under Wage Stabilization regulations and will create serious inflationary pressures upon all members of the construction industry in the Northern California area. The agreement has other vicious features since it contains provisions which violate the Taft-Hartley Act and the anti-trust laws. This illegal agreement was not negotiated through the normal and historically recog- nized processes of collective bargaining in the plumbing industry. For the past 5 years the plumbing contractors have been operating under an area agreement between the Northern California Conference of the Plumbing and Heating Industry and the Northern California District Council of the United Association. The Conference, as the historically recognized collective bargaining representative of the plumbing contractors, has notified Local Unions 393 and 467 that it is ready and willing to negotiate with them an agree- ment which will be in keeping with the Wage Stabilization requirements and other applicable statutes, but the Unions have refused to meet with the Conference. They have demanded that plumbing contractors in Santa Clara, San Mateo and San Benito Counties abide by the illegal agreement negotiated with the local associations and have refused to furnish men until their demands have been met. The strike action and illegal demands of the Plumbers Unions in these counties will vitally affect every general contractor and home builder operating in the area. Because of the responsibility which the general contractor and builder customarily assumes for the operations of his subcontractor, payments by the subcontractor in violation of Wage Stabilization regulations might involve the general contractor in losses due to the heavy penalties which can be imposed under these regulations. These penalties include the disallowance of wage payments in full for income tax purposes whenever any portion of such payments are in excess of the permissible limits and possible similar dis- allowances under contracts for Federal work. Your Board of Directors considers it of vital importance to the entire construction industry in Northern California that all general contractors and home builders whole- heartedly support the plumbing contractors in resisting the Unions' demands. Failure to give such support will involve the entire industry in violations of the Wage Stabiliza- tion program and . the Taft-Hartley Act and will create intolerable conditions for the performance of construction work. Penalties assessed administratively for violations of the Wage Stabilization program take effect months after the operations giving rise to the penalties have been concluded and ata time when the contractor is not in a position to protect himself against loss. Performance of plumbing work under a contract which is violative of the Taft-Hartley Act can involve the entire job in work stoppages and continual harassment. For these reasons immediate affirmative action should be taken by all members of the industry to eliminate these uncertainties and illegal conditions. You are urged to take every available step to support the plumbing contractors in their resistance to the excessive and illegal demands of the Unions, (sic) Because of the illegal provisions of the agreement which has been negotiated by the Unions with the Associated Plumbing Contractors of Santa Clara and San Mateo Counties, such contract should not be recognized and request by plumbing contractors for reimbursement for payments based on such contract should be carefully scrutinized. Your plumbing subcontractor should be cautioned against the illegal nature of these payments. Your own work should be scheduled in such as (sic) way as not to cover up or otherwise interfere with plumbing work which has been suspended as the result of strike action taken by the Unions and you should give careful consideration as to whether your entire operations can proceed in the face of these intolerable conditions. If any direct strike action is taken against you or your job, or if you have any question with regard to this matter, please get in touch with this office at once. The situation is so grave in view of many jobs shut down throughout Santa Clara and San Mateo Counties that your President deems it necessary to call a special meeting to be held at 8 o'clock Tuesday night, July 24, at our Association Building, 1950 El Camino Real, San Mateo. It is extremely important that you attend. On the evening of July 24, a meeting was held at the offices of the Peninsula group and was attended by plumbing subcontractors as well as general contractors affected by the 786 DECISIONS OF NATIONAL LABOR RELATIONS BOARD problem; these included members of the four associations which had sent out the memorandum. There is much testimony in the record concerning what took place at this meeting. The General Counsel stressed the fact that Business Agents Wertz and McDonald of the two Plumbers Locals appeared at the meeting but were denied admittance , the preponderance of the evidence demonstrates that the contractors deemed this to be a management meeting and not a bargaining session which was the fact. The undersigned deems it unnecessary to dwell upon this aspect of the case for it does not dispose of the issues herein one way or the other. Various of the contractors and subcontractors who were present expressed their views on the strike. There was discussion of the background of negotiations in previous years, as well as the economic squeeze on the general contractors whose jobs had been struck. Sig- nificantly , several of those present stressed the fact that the disputed contract provided for an illegal closed shop.19 It was ultimately decided to appoint a strategy committee of members of the Peninsula group which was to consult further with counsel concerning the legal aspects of the situation. Efforts to dispose of and treat with this crisis took a significant turn in another quarter on July 30. It will be recalled that John O 'Connell was director of industrial relations for Bechtel Company; chairman of the industrial pipe committee ; and chairman of the labor committee for the Northern Chapter, AGC. As described , the two AGC Chapters and the Northern California Conference had bargained jointly in 1950 with the Northern California District Council of Plumbers . At the time material herein, Bechtel was also general contractor on a large con- struction project for the Food Machinery and Chemical Corporation of San Jose in Santa Clara County. The plumbing subcontractor was one 0. C . McDonald Company of San Jose , which had promptly signed the unlawful contract circulated in the area by the 2 Plumbers Locals. This plumbing subcontractor had 5 contracts with Bechtel for construction on this Food Machinery project ; of these at least 2 were cost -plus contracts. At a meeting held late in July between E. V. McDonald of the O . C. McDonald Company and O'Connell, attended by several others, O'Connell ascertained that the McDonald Company had signed the new plumbers agreement. O'Connell then expressed the fear that , by allowing the subcontractor to continue on this project, Bechtel might incur liability for any violations of the law by this concern. McDonald replied thathe had no choice but to work under those conditions as the alternative was to be deprived of his men . The situation continued in this fashion until the morning of July 30 when a meeting was held at the suggestion of a representative of the Food Machinery Company, it appears that this firm was concerned that their construction program might be affected . Present was this representative, Beeson, Dan McDonald of Local 393, O'Connell , and one Virtue, a general organizer for the Plumbers International. O'Connell announced that the plumbing subcontractor had cost-plus contracts on the job; that Bechtel expected this subcontractor to live up to the provisions thereof; that Bechtel had advised this subcontractor that it did not recognize the new plumbers agreement ; that Bechtel wanted the Plumbers Union to negotiate with it; that if the plumbing subcontractor paid in excess of the established recognized rate he would not be reimbursed by Bechtel ; that the new plumbers agreement was illegal ; and that Bechtel would not permit any of its subcontractors to work under an illegal agreement. O'Conmell pointed out that he had authority to negotiate for all the industrial piping contractors. At this point O'Connell, McDonald , and Virtue adjourned to another room and, after some discussion, O'Connell agreed, in behalf of the industrial piping contractors who belonged to the two AGC Chapters , to pay the new wage rate of $ 2.75 "on the basis that we continue to nego- tiate the rest of the agreement." McDonald agreed to return the men to work on the following morning and then meet to negotiate the balance of the agreement; it was also agreed that McDonald would contact Business Agent Wertz of Local 467.14 i3Presumably both the General Counsel and Respondents are aware of the numerous unfair labor practice proceedings before the Board involving the imposition of closed-shop conditions in the building construction industry. 14 The foregoing findings are based upon the credited testimony of O'Connell who has been credited here as elsewhere. McDonald testified that he agreed on this occasion to meet with O'Connell and the contractors for discussion purposes but not to negotiate an agreement. Virtue, as a rebuttal witness for the General Counsel, did not recall all that took place; he testified that the 2 parties agreed to meet but that he, Virtue , stated that they would not meet to negotiate an agreement inasmuch as the 2 Plumbers Locals already had one O'Connell's testimony has been credited here as elsewhere; moreover , it is corroborated by events on July 31 and by certain telegrams sent on August 1 which appear below THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 787 It may be noted that the foregoing serves further to rebut the contention of the General Counsel that the two Plumbers Locals were not adamant in desiring to obtain signatures to their closed-shop contract; for although there was testimony that the two Plumbers Locals were interested solely in obtaining the new wage rate of $2.75, they still presented the fore- going testimony to the effect that even after O'Connell agreed to pay the $2.75 rate McDonald and Virtue insisted that they had a contract in effect and would negotiate no other. That afternoon a luncheon meeting was held in San Francisco which was attended by the boards of directors of the two AGC Chapters. Also present were Stanton and various other contractors as well as J. W. McClenahan of J. W. McClenahan Company, and Robert Diedrich, executive secretary of the Northern California Conference; Diedrich is the only full-time paid employee of the Conference and is not in a policy making capacity. McClenahan, who arrived late at the meeting, explained to the assemblage the history of the dispute; that the contract being circulated by the Plumbers Locals was illegal, according to legal advice; and that the plumbing subcontractors were being compelled to yield to these illegal demands. He stated that the Conference was seeking help from the two AGC chapters. A motion was passed that the two AGC chapters would assist the conference in its predicament , although it also appears that McClenahan did not ask for a shutdown of operations. At this point, McClenahan was called out of the meeting in order to receive a telephone call from O'Connell. The latter reported the results of his meeting that morning with McDonald and Virtue; that it had been agreed to return the men to work at the rate of $2.75; and that the negotiating committee would meet to negotiate the balance of the contract . McClenahan reported this conversation to the group and the meeting, it appears , ended on this temporarily happy note. McClenahan accordingly directed the men to report to work on the following morning, July 31, at the $2.75 wage rate; he also notified other contractors of the strike settlement. i+ McClenahan then telephoned Business Representative McDonald and asked him to assemble the negotiating committee pursuant to the advice he had received from O'Connell . He informed McDonald that other contractors had been notified of the settlement and that other jobs were resuming work. McDonald replied that he would very shortly appear at McClenahan's office and that Wertz would accompany him. At 10:30 that morning, the two business agents appeared at McClenahan's office. He promptly brought up the subject of the negotiations and Wertz stated that he, Wertz, had not made any "deal" of the type McClenahan described. McClenahan reminded McDonald of the latter's agreement with O'Connell; Wertz again spoke up, stating that he had not been a party to this arrangement and that he would not negotiate with the Northern California Conference. McClenahan asked McDonald to explain the situation and the latter replied that it "could have been but Bob [Wertz] didn't want to go along with it." McClenahan immediately placed a telephone call to O'Connell, who was in Los Angeles, and asked McDonald to speak with O'Connell. According to McClenahan, McDonald admitted to O'Connell over the telephone that McClenahan had "placed men back to work and other shops had placed men back to work, but Wertz wouldn't go along with the arrangement." As heretofore found, McDonald informed O'Connell in this telephone conversation that he and Wertz were in this arrangement together; that they would not negotiate with the employer groups; and that "You will either have to sign the agreement and work under the conditions or we are not going to get any men." Wertz then noticed that plumbers were working in the shop and was advised by McClenahan that they had returned to work pursuant to the understanding between O'Connell and McDonald. Wertz then stated that "There has been no agreement reached with me and those men have to come off the job." A long discussion of the contract provisions ensued. Among other things, McClenahan pointed out that it contained a closed shop, that it was illegal, and that the contract was therefore objectionable. McDonald replied, "Maybe it is and maybe it isn't." The meeting ended with Wertz announcing that he intended to remove the men. On the following day, August 1, the men reported for work but walked off their respective jobs at different times during the day.' On the same day, July 31, the strategy committee of the Peninsula group held a meeting and recommended that all members of the industry be notified that the contract being circulated by the two Plumbers Locals was illegal, and that the general contractors might be assessed with liability thereunder. is Inasmuch as McClenahan's plumbers had struck, it must be presumed that they contacted their business agent, Wertz, or the latter's associate, prior to returning to work. i6 The foregoing findings are based upon the credited testimony of McClenahan and, in part, on that of O'Connell As elsewhere, McClenahan's testimony was clear and impressive McDonald did not recall any meeting with Wertz and McClenahan in the latter's office on this occasion. Wertz recalled a portion of the incident and partly corroborated McClenahan's version; his recollection of the meeting was obviously not complete. 788 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On August 1, telegrams of a somewhat parallel nature were exchanged , apparently by coincidence. President Sweeney of the Northern California Conference wired Plumbers Local 467 that "confirming the verbal agreement reached" the negotiating committee of the Northern California Conference would meet with the negotiating committee of the two Locals in San Francisco on August 2 for the purpose of negotiating an agreement ; a confirmation was requested. That afternoon a wire was sent by Business Representative McDonald of Local 393 to O'Connell stating that "as per our verbal agreement" representatives of the 2 Locals would meet with representatives of employers whose work was affected in the 2 counties "to discuss their problems," on August 2 in San Mateo. O'Connell and McClenahan jointly replied on August 2 to McDonald's wire as follows: RE YOUR TELEGRAM TO JOHN O'CONNELL OF AUGUST 1, 1951, YOUR LOCALS STRIKE ACTION AGAINST OUR MEMBERS AND FLAGRANT DISREGARD FOR YOUR PREVIOUS COMMITTMENTS CONCERNING NEGOTIATIONS WITH NORTHERN CALIFORNIA CONFERENCE OF PLUMBING AND HEATING INDUSTRY AND INDUS- TRIAL PIPEWORK CONTRACTORS HAS FORCED A GENERAL SUSPENSION OF CON- STRUCTION OPERATIONS IN SAN MATEO, SANTA CLARA AND SAN BENITO COUNTIES PENDING ELIMINATION OF ILLEGAL CONDITIONS WHICH LOCALS 467 AND 393 ARE ATTEMPTING TO FORCE ON THE ENTIRE CONSTRUCTION INDUSTRY AND THE CONSUMING PUBLIC. THE CONFERENCE AND THE INDUSTRIAL PIPEWORKCONTRAC- TORS ARE PREPARED TO MEET WITH REPRESENTATIVES OF LOCALS 467 AND 393 AT ANY TIME AT THE OFFICE OF THE FEDERAL CONCILIATOR TO NEGOTIATE A LEGAL AGREEMENT WITH THOSE LOCALS. MEANWHILE LOCALS 467 AND 393 WILL BE HELD RESPONSIBLE FOR ALL DAMAGES RESULTING FROM THEIR STRIKE ACTION AND ILLEGAL DEMANDS. It is found at this point that, as set forth above, O'Connell and McDonald actually did compose their differences on July 30 in the manner testified to by O'Connell. In view of the circum- stances set forth above, and on the entire record, the undersigned believes that Wertz refused to go along with this settlement arrangement and that, as a result, McDonald was constrained to follow Wertz' position. Thus, on August 1, negotiations had broken down and the two Plumbers Locals were adamant in their demand that the plumbing subcontractors and contractors employing plumbers sign their unlawful contract. On that dace, the office of Gardiner Johnson, Respondents' counsel herein, advised the secretaries of the four general contractors associations, which are Respondents herein, that, in order to protect themselves, they should follow a certain course of conduct. All adopted this advice which was to send the following wire on August 1 to all members of the 4 associations, namely, the 2 AGC chapters, the Associated Home Builders of San Francisco, and the Peninsula Builders Group: PLUMBERS LOCAL UNIONS NO. 393 AND 467 ARE CONTINUING STRIKE ACTION AGAINST HEATING; PLUMBING AND INDUSTRIAL PIPE WORK CONTRACTORS IN SAN MATEO SANTA CLARA AND SAN BENITO COUNTIES IN SUPPORT OF DEMANDS IN VIOLATION OF WAGE STABILIZATION ORDERS AND TAFT-HARTLEY ACT. COM- PLIANCE WITH THESE ILLEGAL DEMANDS WILL SUBJECT ALL GENERAL CON- TRACTORS AND BUILDERS OPERATING IN THESE COUNTIES TO POSSIBLE LOSSES AND HEAVY LEGAL PENALTIES. THE BOARD OF DIRECTORS OF YOUR ASSOCIATION HAS DETERMINED THAT FOR THEIR OWN PROTECTION ALL ASSOCIATION MEMBERS SHOULD SUSPEND ALL OPERATIONS IN SAN MATEO, SANTA CLARA AND SAN BENITO COUNTIES, EFFECTIVE NOON AUGUST 2, 1951 UNTIL THESE ILLEGAL CONDITIONS HAVE BEEN ELIMINATED. WE WILL KEEP YOU ADVISED OF FURTHER DEVELOP- MENTS As set forth, a number of the general contractors closed down operations and a great many did not. The shutdowns took place onAugust2 and 3 . Efforts were made to mediate the dispute by a Federal conciliator and three meetings were held , apparently on August 6, 7, and 9. It is deemed unnecessary to go into all the details of these meetings which, as will appear, ended on a note of uncertainty. One significant point is that McClenahan at the meeting of August 6 protested that the plumbers' contract had an illegal closed shop . At this point, and for the first time, Wertz produced an amendment to the contract, which was dated August 1. This replaced the unlawful union-security language with other language which is carefully worded and is apparently not THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 789 in conflict with the union-security requirements of the Act. The General Counsel sought to show that this change was negotiated on or about August 1, the date it bears. It must be borne in mind, however, that as of the afternoon of July 31, when McClenahan protested to McDonald and Wertz concerning the illegal closed-shop provisions, the amendment had not been made; it is reasonable to infer that Wertz or McDonald would have spoken up on that occasion had such an amendment been under contemplation. The testimony by the various witnesses for the General Counsel concerning this amendment was of a uniformly unimpressive nature. McDonald testified that the amendment was signed on August 1 or earlier; he did not recall whether all the contractors received copies of this modification. He later testified that the modification was not mailed to the various contractors. Wertz testified that the modification was made before August 1, but that it might have been done thereafter. He claimed that he delivered the modification to the various subcontractors shortly after August 1; elsewhere his testimony indicates that such personal delivery was not made. Significantly, the minutes of his Local for August 1, 1951, carry the notation "By motion negotiating committee was instructed to change union security clause in agreement." Wertz admitted that this was probably the first action by his union with respect to this modi- fication. Similarly Albert Randall, executive secretary of the San Mateo Plumbing Contractors group, testified that the change was made after Wertz had brought it to his attention by a telephone call and that a meeting was then held of the four groups interested in and signatory to the original agreement. In view of the foregoing, the undersigned does not believe that the modification to the agreement was made on August 1. It is further believed that the change was made several days later and was dated back to August 1. But in any event, and this the undersigned deems to be controlling herein, at no time prior to the conciliation meetings commencing on August 6 were the general contractors or the trade associations, or for that matter any of the Respond- ents, advised by the two Plumbers Locals or by anyone else that the closed-shop or other unlawful provisions of the contract had been abandoned. It is expressly found that on August 1, when the decision to close down operations was made by the Respondent Associations, and then, to some extent, carried out, the various Respondents had no knowledge that the contract demands in support of which the two Plumbers Locals had struck had in any way been modified or that any modification was contemplated. It is further found that no attempts were made to advise the various Respondents in this matter. While the Northern California Conference and AGC representatives again urged, at these conciliation meetings, that the union representatives negotiate an agreement with them, the latter refused to do so. The record does not permit an exact resolution of the facts surrounding settlement of the work stoppage. However, it does show that the conference members sent the two Locals letters that they would comply with the agreement reached between the union negotiation committee and the Northern California Conference, apparently somewhat of a euphemism, on August 9, to pay the new wage rate retroactively to July 2, 1951, and that no other fringe benefits would be paid until approved by the Wage Stabilization Board. The jobs then reopened and all crafts returned to work. D. Contentions, analysis, and conclusions (1) Turning first to the Section 8 (a) (1) allegation of the complaint, it is basic that if the charging parties are to achieve protection under the Act they can derive such protection solely from a protected concerted activity within the meaning of Section 7 of the Act. This presents squarely the fact that the concerted activity by the two Plumbers Locals was for a closed shop, an objective which the Board has expressly found to be illegal. Mackay Radio & Telegraph Co., 96 NLRB 740. In fact, the Board found in that proceeding that a strike which was only in part prosecuted for such an objective was unprotected, even though the employer in that case had failed to assert the illegality as a basis for denying reinstatement to strikers. The Board characterized those activities as acts which neither the employer nor the Board could condone because they were acts "which in themselves constituted from their inception a violation of the very Federal law under which relief was being sought." See also N. L. R B. v. Indiana Desk Co., 149 F. 2d 987 (C. A. 7), and Medford Building & Construction Trades Council, 96 NLRB 165.17 Moreover, the concerted activity by the two Plumbers Locals was for another unlawful objective in that the contract provided that "All plumbing, heating and piping foremen and 17 There is no issue of condonation in the present case, inasmuch as the illegal conduct was raised by the Respondents, prior to the shutdown, in their meetings with representatives of the Unions as well as in their charge in the CB case. 790 DECISIONS OF NATIONAL LABOR RELATIONS BOARD general foremen shall be members of the UNION having jurisdiction." See American News- paper Publishers Association v N. L. R. B., 193 F 2d 782 (C. A. 7), and Graphic Arts League, 87 NLRB 1215. Hence, the undersigned finds that the concerted activity by the two Plumbers Locals was an unlawful one and that members of these Locals, insofar as they may have lost employment because of the shutdowns, derive no protection from the Act. This poses the issue , stressed in its brief by the San Mateo Building Trades Council, of whether the lockout was unlawful insofar as it related to crafts other than plumbers. Still restricting the discussion at this point to the alleged Section 8 (a) (1) violation, the undersigned is at a loss to see just how these other crafts derive protection herein from Section 7. The only strike or concerted activity in the picture was the unlawful one by the plumbers. There were no picket Imes, and the other crafts continued to work, there being in fact no labor difficulty of any nature involving them. Considerable thought has been given to the problem, but the undersigned is unable to ascertain just how working men who are working at their customary positions free from any labor dispute of any nature involving their own positions and also taking no position with respect to any other dispute, are engaged in a concerted activity. The General Counsel has contended that a great many men who had no connection with the illegal activities of the plumbers were thrown out of work. But, as will appear in more detail in the discussion of the alleged Section 8 (a) (3) violation, a chain of events was set in action by this unlawful activity of the plumbers and therefore the responsibility, factual if not legal, would appear to rest squarely onthelattergroup rather than Respondents. These other crafts, insofar as the record demonstrates, were all unionized and the workmen on these jobs were members of the respective labor organizations affiliated with the two Building Trades Councils. They had bargained peacefully with the various Respondents and, as the General Counsel points out, there was no labor difficulty involving them. But on the other hand, it is this very fact which establishes that they were not engaged in a concerted activity at the time material herein; nor were they engaged in organizational or union activity of any other nature. There is also this further factor, namely, to what extent did the unlawful activity of the plumbers permeate the legal status of the other crafts. Stated otherwise, it would appear that if the other crafts are to derive protection from Section 8 (a) (1) of the Act they can derive such protection only from the concerted activities of the plumbers. And as those activities were unlawful, it would appear that there is simply no protection to be found under these circumstances. Accordingly, the undersigned finds that the various Respondents have not engaged in conduct violative of Section 8 (a) (1) of the Act and that, if a remedy does exist, this can be solely under Section 8 (a) (3). This is treated with hereinafter. (2) There are various matters to be considered under the Section 8 (a) (3) allegation of the complaint. Here, too, the undersigned is of the belief and finds that the General Counsel, on a preponderance of the evidence, cannot prevail either on factual or legal grounds. Much has been made by the General Counsel of the fact that the other crafts affiliated with the two Building Trades Councils were entirely divorced from this dispute. And such was the fact. The record demonstrates that these other crafts were thoroughly organized and it is clear that they and the Respondents had enjoyed amicable relationships for many years, largely unmarked by any labor strife. If the General Counsel is to prevail, it must be found that the activities of these Respond- ents were reasonably intended to discourage membership in the respective labor organizations, or, at the very least, that they would reasonably tend to have that effect. Under the facts present herein, the undersigned is of the belief that the conduct by the various Respondents could reasonably have had no effect on membership in the various labor organizations or on the union activities of their members. The plumbers' dispute with the various contractors in fact took the other crafts largely by surprise and that labor dispute was entirely divorced from any issues relating to the union membership or activity of the other crafts See N. L. R. B. v Webb Construction Co , 196 F 2d 702 (C. A. 8), and N. L, R. B. v J. L Case Co , 198 F 2d 919 (C. A. 8) Moreover, even assuming that this conduct by Respondents tended to discourage union activities , it follows necessarily that it tended to discourage only unlawful activities like those carried on by the two Plumbers Locals, as a result there could be no violation of the Act by Respondents, under this posture (3) Considering at this point the factual picture involving the Section 8 (a) (3) allegation, the undersigned is likewise of the belief that, on a preponderance of the credible evidence, the issue must be resolved adversely to the General Counsel. As stated by the Board, "Nothing in the Act ... requires that an employer continue to operate his plant despite the prospect of recurrent work stoppages which would make further operations uneconomic ... THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 791 And an employer may lawfully discontinue or reduce his operations for any reason whatso- ever ... provided only that the employer's action is not motivated by purpose to interfere with and defeat its employees' union activities. The record reveals an employer who has recognized and made contracts with the Union since 1942...." International Shoe Co., 93 NLRB 907. The foregoing makes it clear that motivation is very much the crux of the Section 8 (a) (3) allegation herein. In order to prevail, the General Counsel must establish on a preponderance of the evidence that the Respondents herein were motivated by a purpose to discourage the union activity of the employees who belonged to these various labor or- ganizations. The record will not support such a conclusion. (4) The General Counsel's case is predicated on the existence of an overall conspiracy with discriminatory motivation . But, in addition to the illegal union activities of the plumbers and the total lack of any union activities by the other crafts at the time material herein, there is the added item that many of the purported conspirators simply did not close down operations . Thus , testimony was presented concerning four firms named as Respondents herein, which is detailed below. As will appear, it is difficult to ascertain just how they in any manner violated the Act. Moreover, if some of the purported conspirators are innocent of wrongdoing, this detracts substantially, if not conclusively, from the inference with respect to motivation which the General Counsel would have the undersigned draw with respect to the others. Carrico & Gautier is a general contractor which in August 1951 was engaged in two construction projects. The plumbing on these jobs was subcontracted and had been completed prior to July. Although this firm apparently received the wire of August 1, it did not close down operations on August 2 or at any later date. George C. Renz Construction Company is a general contractor which at the time material herein was engaged in construction of a school and laundry. Although this firm received the wire of August 1, uncontroverted evidence shows that construction on the school was temporarily shut down for unrelated reasons. Plumbers were not working on the school at the time and, due to the failure to receive lumber for framing operations, school construction was closed down until August 24. The employees of this concern were, however, transferred to other operations. Allan McIntyre & Son is a general contractor which, at the time material herein, had two private residences under construction. On one, construction was at a halt on August 2 because the contractor was waiting for the painting subcontractor to appear and perform his job. On the other, the tilesetters worked for one-half day after receipt of the wire until they com- pleted their job. This house, too, was then ready for the same painting subcontractor to appear and commence painting. Construction was not terminated or suspended on either job. Conway & Culligan is a general contractor which at the time material herein was building 1 gasoline service station for its own use and 1 dwelling for an employee. It had shortly before completed a large housing development. Its plumbing was subcontracted by the San Francisco Plumbing Company, whose operations had been affected by the strike. Work on the service station was substantially tied up on August 1 due to a dispute with the plumbing subcontractor concerning improperly installed piping; the general contractor desired that certain piping be rearranged by the plumbing subcontractor. On the dwelling, at the end of July, the general contractor was waiting for plumbers to install the plumbing trim. This firm laid off its employees on receipt of the August 1 wire, but it is apparent that it was about to close down operations at that time in any event due to the plumbers, strike In view of the foregoing, the undersigned finds that these four cases are sui generis and of a different pattern than the other cases. It is further found that these four Respondents did not close down operations for the reason alleged by the complaint. (5) Turning to the situation that confronted those projects where the plumbers were on strike, it is obvious that Respondent Northern California Conference was placed in the position where its members, the plumbing subcontractors, were unable to complete their jobs. And had these plumbing subcontractors signed the agreement demanded by the two Plumbers Locals they would have violated the Act. Moreover, the plumbers' representatives refused to negotiate with the Conference for another agreement of a legal nature. That these matters were brought to the attention of the general contractors and their four trade associations appears to have been a most logical step under the circumstances. As stated, the inter- relationship of all the crafts engaged on construction is apparent and these jobs could not have been completed without performance of the plumbing work. Moreover, as found, the realities of industrial life rendered it impossible for this plumbing work to be performed by anyone other than members of these two Plumbers Locals. 291555 0 - 54 - 51 7 92 DECISIONS OF NATIONAL LABOR RELATIONS BOARD This then poses the problem that confronted the general contractors and their trade as - sociations . Although not required to continue their operations in an uneconomical if not impossible situation, they chose to do so. Nevertheless, the record demonstrates that these construction operations in almost every case were gradually brought to a halt at the end of July or at least to the point where they could not proceed further with any degree of prac- ticality. These contractors were also in the position of having to make regular payments to their subcontractors for services as rendered. But at the same time they were unable to obtain payments on their construction financing; the record demonstrates that these pay- ments are made only when certain prescribed stages of construction or completion of construction are reached . Clearly , construction cannot be completed before all the plumbing is in and in these instances it was not. The Board has stated that an employer is not required to continue operations if strike action has made efficient operations impossible. Betts Cadillac Olds, Inc., 96 NLRB 268. In the latter case it was stated that the employer has "the right to protect himself by rea- sonable measures from harmful economic or operative consequences of a strike." Such was precisely the case here. See also Henry I. Siegel Co., 52 NLRB 810; Duluth Bottling As- sociation, 48 NLRB 1335; American Creosoting Co., 46 NLRB 240; Hobbs Wall & Co., 30 NLRB 1027; and Link Belt Co., 26 NLRB 227. Against this background of their operations being ground to a halt, the trade associations to which these contractors belonged advised their members that the plumbers' strike was violative of the Act as well as Wage Stabilization Board regulations. The fear was expressed that to permit these conditions to prevail on their jobs might render the general contractors subject to legal penalties. They then adopted the advice of their trade associations to close down until the illegal aspects of the strike were removed. This preponderates, in the view of the undersigned, in favor of a finding that this group of Respondents closed down operations not because of antiunion considerations, but rather to avoid business disruption, to avoid tying up further money in bogged down construction projects, and to avoid legal penalties arising from the existence of illegal contracts on these projects. in so finding, weight must be given to the amicable relationship that existed between these various Respondents and all the labor organizations throughout the years. In fact, Respondents were desirous of continuing this relationship with all the unions involved. The undersigned so finds. See United Mine Workers (Consolidation Coal Co.), 100 NLRB 392. (6) There remains the problem relating to those construction jobs where the plumbers had not gone on strike and the plumbing subcontractors had signed or accepted the illegal Plumbers, contract. Here, too, a number of varying factors were present in the picture as it affected the respective general contractors. Some of these will be set forth below. The record demonstrates that the general contractors in the area were advised that the plumbing subcontractors who had signed the Plumbers, contract were operating under a contract which was violative of the Act and also violative of Wage Stabilization Board reg- ulations. This advice was clearly correct on at least two grounds insofar as it related to the Act. A probe into Wage Stabilization Board regulations at this point, as they affect various aspects of the contract, in order to evaluate the advice given the general contractors and their trade associations by their counsel, would in great measure lengthen an already long report. Suffice it to say that the question is a close one, it appearing that some aspects of the contract were not violative of control regulations and that other aspects thereof may well have been. For example, the contract required that travel time be paid for travel beyond a 10-mile zone, whereas under the former agreement payments commenced beyond the 25-mile zone. This is particularly significant inasmuch as the wage increase provided for in the contract exhausted the amount which could be paid under general wage regulation 6. The point is that the issue was definitely a close one and this serves to demonstrate that the legal advice given by counsel for Respondents was justified and entirely reasonable under the circumstances. Nor need one dwell on the liability under the law of agency and contracts of the general contractor for unlawful conditions created by his subcontractor. It is noteworthy, however, that on construction to which the Government is a contracting party, under the Davis-Bacon Act, the general contractor is in several instances responsible for the misfeasance or nonfeasance of the subcontractor. See 49 Stat. 1011, as amended 54 Stat. 399. A similar situation exists with respect to violations of the 8-hour law applicable to all public con- struction. See 27 Stat. 340, as amended 37 Stat. 726; 37 Stat, 137, as amended 54 Stat. 884, 37 Stat. 1192. There is in the picture the attitude of Bechtel Company which, as a matter of policy, would traditionally not permit any subcontractor in its employ to operate under an illegal THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC. 193 agreement. It accordingly refused to permit such conditions to continue on its Food Machinery job, which it closed down on August 3. In fact, all Bechtel contracts contained a clause that the subcontractor was to comply with all Federal laws and particularly those "relating to wages, hours, and working conditions...." Moreover, some of the Bechtel contracts with this subcontractor were cost-plus contracts, which meant that additional cost factors would be created for Bechtel by the creation of these new working conditions. A similar situation confronted Sorenson Co. on a sewage job which they were constructing for a local sanitary district. The plumbing subcontractor on this project had signed the unlawful Plumbers, agreement. Moreover, the contract between Sorenson and the sanitary district provided that subcontractors were not recognized as such and that their employees would be considered employees of the general contractor. Significantly, it was further provided that the general contractor was to indemnify the sanitary district for all claims arising out of law violations by his employees. There were a number of situations where, as in the prior cases, the general contractors were uniformly advised in bulletins from their respective trades associations, dated July 21, that the operations of the plumbing subcontractors were illegal. This was also stated at a meeting of general contractors held on July 24 at the office of the Peninsula group and was restated in the August 1 wire. The situation then confronting these general contractors was as follows: Their testimony was that they had received legal advice of penalties they would incur if their plumbing sub- contractors were permitted to continue to operate under their admittedly illegal contracts. Some of the general contractors were in sympathy with the principles of the Act and others favored support of the Wage Stabilization program. As stated. the advice received by them concerning stabilization policy was given on a close question; on this record, the undersigned believes and finds that it was given in good faith. The general contractors decided in good faith, pursuant to the recommendations of the August 1 wire from their trade associations, to suspend all operations pending the elimination of illegal conditions and this they did. Under these circumstances, having determined to halt illegal conditions on their plumbing work, it would appear to have been a most logical step to close all operations until matters cleared up. Significantly , operations were resumed after the conciliation meetings held from August 6 to 9 at which it was first learned that the unlawful closed-shop conditions had been removed. And, although the General Counsel contends that these shutdowns were carried out in an effort to compel the two locals to bargain with the traditional bargaining representatives, the Northern Conference and the two AGC Chapters. it is to be noted that work was resumed without any such agreement on the part of the two locals, despite the fact that a somewhat ambiguous letter was submitted to the locals by various plumbing subcontractors. At this point, it may be noted that the undersigned is uncertain just how the General Counsel purposes to assess liability on seven individual Respondents, Bridges Construction Co., Copple Construction Co., Kalshed & Co., Norman A. Lamb, Oscar W. Meyer, Neilson & Neilson, and J. C. Row, who belonged to the nonrespondent Associated General Contractors of Santa Clara County. The record does not show with any degree of clarity what led these firms to close operations. There was hearsay evidence that they were closed, but there was no direct evidence concerning the plumbing situation on those jobs or the status of construction. A similar situation exists with respect to still others of the individually named Respondents. In, any event, on all the foregoing considerations, the effect of the strike on struck jobs where plumbing subcontractors had not signed, the fact that some of the Respondents did not close down at all, and the genuine fear of legal liability by those general contractors whose plumbing subcontractors were operating under the illegal contract , with the entire situation permeated by the unlawful Plumbers, strike, the undersigned concludes that the General Counsel has failed to sustain the burden of proof that all of the Respondents shut down operatiois because their employees were members of or active in behalf of the various building trades councils or because of their concerted activities. The preponderance of the credible evidence will not support a finding of discriminatory motivation herein. In fact this record warrants the finding that the various Respondents exercised sound business judgment in closing down as they did. See N. L. R. B. v. Potlatch Forests, Inc., 189 F. 2d 82 (C. A. 9). The crux of this proceeding is that under the economic considerations present in the picture the various Respondents were warranted in taking the action they did and that this was done with the absence of the discriminatory motivation which is so vital to the case of the General Counsel. 794 DECISIONS OF NATIONAL LABOR RELATIONS BOARD In this respect it may be noted that the complaint refers solely to concerted and union activities on the part of the employees involved herein. However, the only concerted activity in the picture, as stated, was illegal and there is no evidence of any union activities on the part of the other affected crafts. However, on the assumption that the complaint does state a pertinent cause of action, the absence of discriminatory motivation and the existence of legitimate economic considerations, for closing down operations, are on a preponderance of the evidence dispositive of the issue. International Shoe Co., supra and Betts Cadillac Olds, Inc., supra. It is accordingly recommended that the complaint be dismissed in its entirety. Upon the basis of the foregoing findings of fact, and upon the entire record in the case, the undersigned makes the following: CONCLUSIONS OF LAW 1. The operations of all Respondents affect commerce within the meaning of Section 2 (6) and (7) of the Act. 2. Building and Construction Trades Council of San Mateo County ; Building and Construction Trades Council of Santa Clara and San Benito Counties; and Local Unions 393 and 467, United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, are labor organizations within the meaning of Section 2 (5) of the Act. 3. Respondents have not engaged in unfair labor practices within the meaning of Section 8 (a) (1) and (3) of the Act. [Recommendations omitted from publication.) APPENDIX A O. E. Anderson Glendale Village, Inc. Neilsen & Neilsen Arthur Brothers Gould Construction Company Wm. J. Nicholson Co. Guy F. Atkinson Company Max Hensen & Son Charles Pedersen Barrett & Hilp Harris & Fjeldheim, Inc. Peninsula Home Builders Batton & Company Hedahl-Martin Co. Wm. Radtke & Son Bechtel Corporation Lew Jones Construction Co. Morrison Reese David D. Bohannon Organization W. R. Kalshed &Co. George C. Renz Construction Co. Bridges Construction Co. Jorman A. Lamb J. C. Row California Construction Co. M & K Corporation Peter Sorensen Carrico & Gautier Robert McCarthy Co. E. B. Standish & Co. Herman Christjanson Allen McIntire & Son Stern & Price Const. Co. Conway & Culligan McKenzie & Crawford Stoneson Bros. Copple Construction Co. A. W. McKinney Carl N. Swenson Co., Inc. Frank G. Corker A. F. Mattock & Co. M. J. Terranova Richard DeLucchi & Co. Oscar W. Meyer Howard J. White, Inc. Henry Doelger Builders Moore & Roberts, Inc. Williams & Burrows, Inc. F. & O. Corp. VACUUM COOLING COMPANY and BOXMAKERS UNION LOCAL NO.. 2721, UNITED BROTHERHOOD OF CARPEN- TERS AND JOINERS OF AMERICA, AFL, and INTER- NATIONAL BROTHERHOOD OF TEAMSTERS, CHAUF- FEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL UNION NO. 898, AFL, Petitioner VACUUM COOLING COMPANY and UNITED FRESH FRUIT AND VEGETABLE WORKERS, LOCAL INDUSTRIAL UNION NO. 78, C. I. 0., Petitioner . Cases Nos. 21-RC-2939 and 21- RC-2969. June 26, 1953 105 NLRB No. 121.