Economy Stores, Inc.

Economy Stores, Incorporated and Teamsters, Chauffeurs, Ware- housemen & Helpers, Miscellaneous Brewery & Soft Drink Workers of America, Local Union No. 822 . Case No. 5-CA-1020. March 4, 1958 DECISION AND ORDER On June 15, 1956, Trial Examiner Eugene F. Frey issued his Inter- mediate Report in the above-entitled proceeding, finding that the Respondent had engaged in and was engaging in certain unfair labor practices, and recommending that it cease and desist therefrom and, take certain affirmative action, as set forth in the copy of the Inter- mediate Report attached hereto. The Trial Examiner also found that the Respondent had not engaged in certain other unfair labor practices alleged in the complaint and recommended dismissal of those allegations. Thereafter, the Respondent, the General Counsel,_ and the Charging Party filed exceptions to the Intermediate Report,, and supporting briefs. The Board has reviewed the rulings made by the Trial Examiner 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 findings, conclusions, and recom- mendations of the Trial Examiner but only to the extent that they are consistent with this Decision and Order. 1. The amended complaint alleged, inter alia, that the Respondent violated Section 8 (a) (5) and (1) of the Act by adamantly insisting upon an improper liability clause as i condition precedent to entering into a collective-bargaining agreement, and by continuing such con- duct after the commencement of a str ke on September 6, 1955, thereby prolonging the strike. The Trial Examiner found that union lia- bility is not a mandatory subject of collective bargaining but concluded that as the Union at all times treated the scope of the liability clause as a bargainable subject, the determination of the ultimate question of whether the Respondent bargained in good faith must be resolved by the application of the totality of conduct test. Applying that test, he found that the Respondent had not refused to bargain within the meaning of the Act, and recommended dismissal of this allegation of the complaint. The clause in question required the Union : To reimburse the Company for all damages suffered by it as a consequence of violation of the terms of this agreement by either, 120 NLRB No. 1. 483142-59-vol. 120-2 1 2 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the Union or its employees and to a penalty of $5.00 per day for each one of its members who participated in an illegal strike, walkout or slow down. At the first meeting between the parties on June 23, 1955, they discussed in detail the proposed contract which had been submitted by the Union. It contained no liability clause. The parties agreed to meet on June 28, at which time the Respondent was to present a counterproposal. Pursuant to instructions from the Respondent, Tug- man (its labor relations consultant) proposed the counterproposal at the June 28 meeting. The parties agreed on some of its provisions but the Union objected to the proposed liability clause (set forth above) and to the Respondent's proposals on wages. The Union objected to the liability clause on the grounds that (1) in Virgnia, a "right-to-work" State, employees cannot be com- pelled to join a union and it could not therefore be held responsible for conduct of employees over whom it had no control, and (2) the penalty provision was unacceptable in any form. Tugman agreed to drop the penalty provision but insisted on the need for the rest of the provi- sions as protection against "irresponsible people upsetting agreements that had been made in good faith." No agreement was reached on June 28, and the parties agreed to meet again on June 30 when the Union was to submit a counterproposal, including a provision to take care of the Respondent's demand for union responsibility under the contract. At the June 30 meeting, the Union submitted a substitute for the Respondent's liability clause which provided : SEC. 5. Employees shall not be charged for loss or damages unless clear proof of negligence is shown. SEC. 21. Employer has the right to discipline or transfer any employee or employees in the same classification, to instruct and direct the work, manage its terminals and docks and assign its equipment, and to make rules and regulations for the conduct of the business, not to conflict with the terms of this Agreement. Tugman, for the Respondent, rejected these clauses as not sufficiently binding on the Union. Also unresolved at the end of the June 30 meeting were the questions of wage increases, checkoff provision, and other relatively minor provisions. The parties agreed that the Re- spondent should prepare for the next meeting a new counterproposal incorporating provisions already agreed upon and the Respondent's ideas on matters still in issue. The parties met again on July 14 and considered the Respondent's second counterproposal. Mutual concessions settled all outstanding issues except wage increases for six employees, checkoff, effective date ECONOMY STORES, INCORPORATED 3 of-the contract, and the liability clause. With respect to the latter, the Respondent's counterproposal provided that the Union agree : 15b. To reimburse the Company for all damages suffered by it as a consequence of violation of the terms of this agreement by either the Union or the employees. Union Representative Greeley thereupon proposed as a substitute several forms of liability clauses which had been used in various Teamsters contracts, all of which provided that the Union have no financial liability for the acts of its members or agents which were unauthorized or which it could not control. Tugman rejected this proposal, stating that the Respondent was entitled to some statement of union responsibility under the contract to the same extent that the Respondent had assumed liability thereunder. Greeley agreed to confer with Teamsters officials in Washington in an endeavor to pre- pare a liability clause which would be satisfactory to both parties. On July 16, Greeley telephoned Tugman stating that his superiors had rejected the Respondent's liability clause and suggested that some other clause be worked out and adding that if the Respondent would drop its demand for a liability clause, agree to the checkoff, and grant a 5-cent-per-hour increase to 6 employees, the contract could be signed. Tugman presented this proposal to the Respondent's board of directors who took the position that he had already accepted too much. The Union thereupon called in the Federal Mediation Service. The next meeting between the parties, on August 10, was attended by a mediator. At that meeting, the Union indicated that it did not oppose the liability clause as such and would be willing to write in a "standard" clause such as those it had already proposed orally. De- spite various efforts to achieve agreement, none was reached. A few days later, the employees, after hearing a report on the negotiations, voted to strike. The strike began on September 6, 1955. The Board is unanimous in agreeing with the Trial Examiner in his ultimate conclusion that the Respondent did not by its conduct, either before or during the strike, refuse to bargain in good faith with the Union within the meaning of Section 8 (a) (5) and (1) of the Act. Members Rodgers and Jenkins arrive at this result without, however, deeming it necessary in this case to accept or reject the General Coun- sel's contention that the liability clause was not a proper subject of collective bargaining because it was unrelated to wages, hours, and other conditions of employment. They are of the opinion that on the record in this case it is clear that the parties at all times treated the question of the scope of the liability clause for breach of contract as a bargainable subject. After the Respondent introduced the sub- ject in its first proposal, both parties bargained on it both before and during the strike. The Union proposed various substitutes. The 4 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Union indicated that it did not oppose a liability clause in principle and, in fact, proposed substitutes and bargained with respect to the- scope and terms of the clause. Both parties discussed the subject fully, making concessions at times, but were unable to reach agree- ment on a specific clause. Under the circumstances, whether or not the proposed liability clause was a proper subject of collective bargain- ing, the parties treated it as such, and thereby by their conduct in the course of the collective-bargaining negotiations rendered this issue- moot. Therefore, in view of the findings of the Trial Examiner, based upon a thorough review and analysis of all the pertinent evidence, that the Respondent bargained with the Union in good faith concern- ing the inclusion of this clause in the contract, Members Rodgers and Jenkins conclude, as the Trial Examiner did, that the General Counsel, failed to prove by a preponderance of the credible evidence that the Respondent engaged in bad-faith bargaining, either before or during- the strike, by its insistence on the inclusion of the liability clause ii the contract. Accordingly, for the foregoing reasons, they adopt the finding that the Respondent did not violate Section 8 (a) (5) of the Act. Chairman Leedom and Member Bean specifically reject the General' Counsel's apparent position that it is a per se violation of the collec= tive-bargaining obligation for the Respondent to seek to secure unioir agreement to its proposed liability provision in the course of contract negotiations. In their opinion, no persuasive authority exists either in the statute or in court precedent for finding that good-faith advance- ment of such a proposal is unlawful. Section 8 (a) (5) states that it is an unfair labor practice for an employer "to refuse to bargain collectively with the representative of his employees, subject to the provisions of section 9 (a)." The term "to bargain collectively,"' according to the definition in Section 8 (d), means "the mutual obliga- tion of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment . . . but such obligation does not compel either party to agree to a proposal or require the making of a concession." The Supreme Court in Amer- ican National Insurance 1 made- it clear that no per se liability exists, but that "The duty to bargain collectively is to be enforced by appli- cation of the good faith bargaining standards of Section 8 (d) to the facts of each case. . . ." Accordingly, they find that the Respondent's request for a union-liability clause was a bargainable issue. Finding this a bargainable issue, they deem it significant that the Trial Examiner found from the factual testimony as to the totality of conduct that the proposal of the liability clause in question had its 1 N L. R. B v American Natlo,,al Insurance Co, 343 U. S 395. ECONOMY STORES, INCORPORATED 5 genesis in the seemingly ruthless attitude of the Union in its initial contacts with the Respondent. Thus, at its initial meeting with the Respondent wherein it demanded recognition and at the first bargain- ing session the Union stated threateningly to emphasize certain demands that it had "ways and means of getting things" it wanted. He found that the Respondent was led to believe by acts of sister locals in violation of contract that it needed such protection. Thus, Tugman represented employers at Roanoke and on a tunnel project wherein the Union took action in breach of contract. The Trial Examiner fur- ther found that the evidence showed that the Respondent never adopted an inflexible position by its deletion of the penalty provision from its first proposal by stating that it was not "wedded" to any form of clause, and by its desire to have the clause operate through the grievance machinery, avoiding resorts to the courts. Finally, he found that it was clear from the testimony that Tugman, a layman, was not aware of the legal implications of the clause. Under the cir- -cumstances, Chairman Leedom and Member Bean are satisfied from the record as a whole and the factual findings of the Trial Examiner which are supported by the record, that the Respondent did not refuse to bargain within the meaning of Section 8 (a) (5), and so find. - The Trial Examiner found that as the Respondent had bargained in good faith prior to the September 6 strike, the strike, was an economic strike. He found further that the strike was not converted into an unfair labor practice strike after it began as the Respondent was not unreasonable nor did it engage in bad-faith bargaining on the liability clause during the strike.: Thus, he found that the parties had reached a genuine impasse on the Union's new demand for rein- statement of all strikers as the Respondent was not required to reinstate economic strikers who had been replaced. The Board, is unanimous in finding, as the Trial Examiner did, that the Respond- ent's belief in the need for the liability clause was bolstered by the Union's effective boycott during the strike; the act of a sister local in threatening to shut down the tunnel project in violation of contract; and the Respondent's willingness to bargain as to changes in the clause by its proposal to limit liability only to acts of the Union or its members. As the Board is satisfied that the record does not support a finding of a violation of Section 8 (a) (5) and (1) of the Act during the- strike, it adopts the Trial Examiner's ultimate conclusion recom- mending a dismissal of these allegations of the complaint, basing our reasons, however, on the same considerations as more fully discussed above with respect to the Section 8 (a) (5) allegations dealing with the Respondent's conduct before this strike. Accordingly, it follows that the Respondent could legally replace the strikers, as economic strikers, and could properly warn each striker that it would exercise its right to replace him if he did not return to work on a special day. 6 DECISIONS OF NATIONAL LABOR RELATIONS BOARD We therefore also affirm the Trial Examiner's dismissal of the allega- tion of the complaint charging discrimination as a result of sending such letters.' 2. The day the strike began, Tuesday, September 6, 1953, the Re- spondent sent letters to 32 employees who failed to report for work that morning, advising each that unless he reported to work on Thursday, September 8, he would be permanently replaced. On September 8, the Respondent also sent letters to each of 18 striking employees who were covered by group insurance advising each that. as they were no longer employed by the Respondent, the policy had been canceled effective that date. As the Respondent replaced each striker during the strike it sent each a letter on the date of the re- placement advising him of that fact. On December 3, 1955, a group of 11 striking employees voluntarily abandoned the strike and met with management representatives, their spokesman stating that all of the 11 wished to return to their old jobs. The Respondent's manager distributed employment applica tions to them and told them to fill out the forms, which they did They were also told that the Respondent "didn't have any openings" but "if something turned up" he (the manager) would get in touch with them. Only two (Ampey and Dotson) have been recalled. On December 14, 1955, the strike, was called off. The next day, eight striking employees applied for reinstatement to their former jobs and were told that there were no openings but would be called when openings occurred. At the manager's request employment ap- plications were filled out. All these employees had been permanently replaced prior to their applications for reinstatement, and none has been recalled. The Trial Examiner found that the Respondent did not carry out its promise to recall the strikers who applied for work when jobs in their respective work categories were available, but filled such jobs with new men whose qualifications were not disclosed by the record. He further found that there was no proof that any of the new men had worked for the Respondent before or that the striker-applicants had been unsatisfactory, regarding the length of service of some of the latter as evidence to the contrary. He therefore concluded that the Respondent's failure to recall these strikers I was due solely to their union affiliation and protected concerted activity, and was therefore discriminatory within the meaning of Section 8 (a) (3) and (1) of the Act. We do not agree. The record shows that all of these strikers had been permanently replaced prior to the time 2 Robinson Freight Lines, 114 NLRB 1093, 1095. a William Smith , Otis Richardson , Calvin W. James, Chester H. Powell, John B. Wrenn, David Redding , Jr., James F. Ellis, Melvin H. Boone, George L. Brown, Vatelle D. Beckett, Willie B. Taylor, and Melvin E. Watford. ECONOMY STORES, INCORPORATED 7 they made application for reinstatement. The Trial Examiner found, however, that the Respondent had promised to rehire the strikers when job openings became available; that it violated this promise by hiring outside help; and that the violation of such promise was prima facie discriminatory within the meaning of the Act. That the 12 strikers in question were economic strikers follows from the finding by the Trial Examiner, with which we agree, that the strike was an economic strike, and, as economic strikers, as the General Counsel concedes, they could be permanently replaced. The Respon- dent was therefore within its rights in refusing them reinstatement as they had been permanently replaced before their applications for reinstatement had been made.' As economic strikers who have been permanently replaced they are, in effect, applicants for new employ ment, and have only the limited right not to be penalized or subjected to discrimination because of their union or concerted activities .5 Even if it is assumed that the Respondent promised to rehire these strikers when job openings became available, it does not necessarily follow that the General Counsel made out a prima facie case of discrimina- ation within the meaning of the Act by evidence that the Respondent failed to recall the strikers who applied for work when jobs in their work categories became available and filled such jobs with new men whose qualifications were not disclosed in the record. In Bartlett- Collins, supra, the Board stated : The Trial Examiner found that the Respondent's statement to the Union at the March 29 conference to the effect that the Respondent would take the strikers back when it could constituted an agreement to rehire which conferred upon the permanently replaced economic strikers a "preferential status in future hir- ings" over new employees and "waived whatever rights it [Respondent] had to consider the strikers only as new employees." Even assuming that Respondent's remarks constituted an agree- ment to rehire, we disagree with the Trial Examiner to the extent that he implies that the failure to comply with this agreement was, in effect, discriminatory as a matter of law. Permanently replaced economic strikers merely have the right not to be penal- ized for their concerted activity, and are not entitled to preferen- tial status in hiring. They are in the position of applicants for new employment as to whom the General Counsel must sustain his burden of proving discriminatory motivation on the part of the Respondent. [Emphasis supplied.] 4N. L. R B. v. Mackay Radio A Telegraph Co, 304 U. S. 333; Kansas Milling Com- pany v. N. L It. B., 185 F 2d 413 (C. A. 10) ; N. L. It. B. v. Bradley Washfountain Co., 192 F. 2d 144 (C. A. 7). 5 Bartlett-Collins Company, 110 NLRB 395, affd. sub noun ,lines ican Flint Glass Workers' Union v. N L. it. B., 230 F. 2d 212 (C. A., D. C ). S DECISIONS OF NATIONAL LABOR RELATIONS BOARD Significantly enough, in the instant case the Trial Examiner him- self, elsewhere in the Intermediate Report (footnote 29), found that the "Respondent has a background free of unfair labor practices and entirely lacking in evidence of antiunion animus or a desire to inter- fere with its employees' exercise of rights guaranteed by the Act. To the contrary, the record shows that Respondent cooperated fully in their resort to the Board's election processes which resulted in certifica- tion of the Union as aforesaid." We emphasize this finding because the Board in Bartlett-Collins distinguished Roure-Dupont Manufacturing, Inc., 199 F. 2d 631 (C. A. 2), and Wilson c' Company, 124 F. 2d 845 (C. A. 7), as follows : In all those cases, discriminatory motivation was either inde- pendently evidenced by other conduct or admitted. In the instant case, however, we do not believe that the evidence is sufficient to support a finding of discriminatory motivation on the part of the Respondent. We note that the Respondent has a background free of unfair labor practices, that the great majority of the strikers who applied for reemployment were rehired, and that there is no showing that any of the rehired strikers, who were also union members and had participated in the picketing, was discriminatorily treated upon return to work. It is clear that a crucial element-independent evidence of antiunion motivation-essential to finding a prima facie case of discrimination within the meaning of the Act, is lacking. Indeed, the Trial Exam- iner expressly found an absence of a desire on the part of the Respond- ent to interfere with the rights of employees guaranteed by the Act. The Trial Examiner overlooked, apparently, this vital consideration made clear by the Board in Bartlett-Collins' and approved by the District of Columbia Circuit Court of Appeals. He was therefore in error in finding that a prima facie case had been established thereby making it incumbent on the Respondent to adduce countervailing evidence. As we find that a prima facie case had not been established, and that the General Counsel therefore had not sustained his burden of proof, we shall dismiss the Section 8 (a) (3) and (1) allegations of the complaint. 3. The complaint alleged that the Respondent violated the Act by requiring strikers seeking reinstatement to fill out applications for employment. The Board has held that permanently replaced eco- nomic strikers merely have the right not to be penalized for their con- certed activity, and are not entitled to preferential status in hiring; that they are in the position of applicants for new employment as to whom the General Counsel must sustain his burden of proving dis- criminatory motivation on the part of the Respondent.' Accordingly, 6 Bartlett-Collins Company, supra. ECONOMY STORES, INCORPORATED, 9 we affirm the Trial Examiner's dismissal of the allegations of dis- crimination predicated on the Respondent's requirement that striking employees fill out employment applications. I 4. We also affirm the Trial Examiner's dismissal of the allegations of violations of Section 8 (a) (5) and (1-) based on unilateral granting of wage increases during the strike. The evidence shows that : The Respondent and the Union had agreed prior to the strike upon wage rates for the job classifications here involved; this was communicated to the employees by the Union sometime prior thereto; and the dn- creases granted were either below or equal to the rates for the' job classifications agreed upon by the parties. The Board has held that an employer's unilateral grant of a wage increase equal in amount to that offered to the union during negotiations and which the- Union had rejected after submitting the proposal to its membership, does not demonstrate bad faith.' Accordingly, we dismiss the allegations of violations of Section 8 (a) (5) and (1) based on the grantings of unilateral wage increases during the strike. [The Board dismissed the complaint.] MEMBER JENKINS, dissenting in part : As indicated in the majority opinion, I agree with the dismissal of the complaint, except with respect to the denial of employment to the former strikers named in the Intermediate Report who applied for work as new employees after their replacement. There is no dispute that, under settled law, permanently, replaced economic strikers are not entitled to reinstatement to their former jobs. It is equally undisputed, however, that the Act guarantees these strikers the right not to be penalized for having engaged in pro- tected concerted activities, and the right to be considered for new employment without discrimination when they apply for such jobs. A careful examination of the evidence in this case persuades me, as it did the Trial Examiner, that at least a prima facie case of dis- crimination against the named strikers is-established by the record. Thus, as fully discussed in the Intermediate Report, the evidence discloses that : When the strikers applied for new employment, the Respondent promised to recall them when jobs became available; despite this promise and the fact that the strikers were experienced employees with satisfactory work records, the Respondent did not recall them; instead, the Respondent filled these jobs with'employees who, for all that appears in the record, had no experience or con- cerning whose ability the Respondent had no personal knowledge de- rived from prior employment with it; these strikers were the-ones who had previously disregarded the Respondent's warning that they 7 Exposition Cotton Mitts Company, 76 NLRB 1289. 10 DECISIONS OF NATIONAL LABOR RELATIONS BOARD would be permanently replaced if they did not abandon the strike and return to work; and only 2 out of some 14 striker-applicants were rehired. In these circumstances, it seems to me that sufficient evidence was produced by the General Counsel indicating that, in denying employ- ment to the replaced strikers, the Respondent was intent on penalizing them for ignoring, as the strikers were privileged to do, its earlier injunction to them to abandon their strike and report for work. Yet the Respondent, which obviously was in possession of all the facts, if they existed, necessary to rebut this reasonable inference, made no effort to explain its dubious conduct. Not having done so, I would find the allegations of unlawful discrimination proved! I believe that the majority is in error in treating this case simply as one for breach of an agreement to hire and in relying on the Bartlett-Collins case! As shown above and in the Intermediate Report, there is more to this case which contains facts plainly dis- tinguishable from those in Bartlett-Collins. Not only is there present here a reasonable basis for inferring discriminatory motivation, but the fact that in Bartlett-Collins "the great majority of the strikers who applied for reemployment were rehired" and the fact that the Respondent there gave a plausible explanation for not rehiring the replaced strikers were sufficient to rebut the inference of discrimina- tion. Indeed, the explanation given by the Respondent in the Bartlett- Collins case-something which the Respondent would not deign to offer in the instant case-shows the validity of the Board's conclusion there and its invalidity here. As the court there observed in agreeing with the Board that the General Counsel did not sustain his burden of proving discriminatory motivation (230 F. 2d at 215) : ... It appears that the personnel manager of the company was personally and solely in charge of the hiring of personnel. It was the testimony of the personnel manager, and this is un- contradicted, that when employees were needed by the company they were needed at once and that, if any applicants were physi- cally present in the personnel office when the need arose, they were usually hired on the spot. It was further testified that, due to the labor situation in Sapulpa, applicants for employment were generally not available for work after a week or two, as they had by that time ordinarily accepted other employment. It was also the testimony of the personnel manager that he had found it to be a waste of time to attempt to get in touch with applicants even a week after the applications were filed and that he ordi- narily made no attempt to get in touch with any applicant for 8 Cf. N. L. R. B. v. Route-Dupont Manufacturing, Inc., 199 F. 2d 631 (C. A. 2), enfg. as mod. 93 NLRB 1240. 9Bartiett-Collins Company, supra. ECONOMY STORES. INCORPORATED 1 1 employment more than four weeks from the time the application was filed. He further testified that he did not handle the peti- tioners' applications any differently from those of new applicants. It is of interest too that immediately after the strike the com- pany was overstaffed, with an average employment of 511 com- pared to 461 before the strike. The uncontradicted testimony of the personnel manager was obviously believed by the Board and we cannot say that it was not justified in so doing. Without belaboring the issue, it is obvious that the facts of the present case do not, in the least, approximate those in Bartlett-Collin. Accordingly, as the General Counsel had made out a prima facie case of a discriminatory denial of employment to the strikers named in the Intermediate Report, which the Respondent has seen fit not to rebut, I would find that the Respondent violated Section 8 (a) (3) and (1 ) of the Act. I would therefore order the usual remedy of reinstatement with back pay. MEMBER FANNING took no part in the consideration of the above Decision and Order. INTERMEDIATE REPORT STATEMENT OF THE CASE This proceeding is based on an amended complaint issued January 27, 1956, by the General Counsel of the National Labor Relations Board, through the Regional Director for the Fifth Region, pursuant to charges and amended charges duly filed by Teamsters, Chauffeurs, Warehousemen & Helpers, Miscellaneous Brewery & Soft Drink Workers of America, Local Union No. 822, AFL-CIO, hereinafter called the Union. The amended complaint alleged in substance that Economy Stores, Incorpo- rated, herein called Respondent, has (1) since June 23, 1955, refused to bargain col- lectively in good faith with the Union as the exclusive representative of Respondent's employees in a unit described below, in violation of Section 8 (a) (5) and (1) of the National Labor Relations Act, as amended, 61 Stat. 136, herein called the Act, and (2) discriminatorily refused to reinstate certain employees who went on strike as a result of the above unfair labor practices of Respondent, in violation of Section 8 (a) (3) and (1) of the Act. After due service of the charges, amended complaint, and notice of hearing thereon, Respondent filed an answer denying the commission of any unfair labor practices, and charging the Union with a failure to bargain in good faith in violation of Section 8 (b) (3) of the Act, and with conduct amounting to an illegal secondary boycott in violation of Sectin 8 (b) (4) (A) of the Act. Pursuant to notice a hearing was held at Norfolk, Virginia, before the duly designated Trial Examiner on February 20 through 29, 1956, at which General Counsel and Respondent were represented by counsel and the Union by several official representatives, and all parties were afforded full opportunity to be heard, to examine and cross-examine witnesses, to introduce evidence bearing on the issues, to present oral argument, and to file briefs and proposed findings of fact and conclu- sions of law. A motion of General Counsel at the outset to strike portions of Respondent's answer was denied in part; insofar as the motion was directed to charges of illegal secondary boycott activity by the Union, the Trial Examiner reserved decision, but during the course of Respondent's case he granted the motion to the extent that paragraph 10 of the answer alleged as a conclusion that the objectives of the Union's secondary activity were in effect illegal and violative of the Act.' At the outset the Trial Examiner denied a motion of Respondent to compel the Union I Respondent filed a charge with the-Board on January 5, 1956, alleging that the Union had violated Section 8 (b) (4) (A) of the Act by engaging in the same conduct set forth In its answer. The charge was under investigation by the Board at the time of the bearing. 12 DECISIONS OF 'NATIONAL LABOR RELATIONS BOARD to`file a formal reply to portions of Respondent 's answer which charged-the Union with -secondary conduct violative of the- Act.? Respondent's motion at the close of General Counsel's case-in-chief to ' dismiss the amended complaint on the merits was denied: At the close of the testimony, General, Counsel's motion to amend the complaint. further, to charge that, Respondent illegally discriminated against 21 named strikers by sending them- certain letters while they were on strike, was granted over objection. General Counsel's motion toi conform pleadings to proofs in matters of minor variance was granted without objection . Respondent's motion to dismiss the amended complaint insofar as it charged an illegal refusal to bargain was taken tinder advisement, and is now disposed of 'by the findings and conclusions 'in this report. At the close of the case, General Counsel and Respondent presented oral argument and have since filed briefs with the Trial Examiner. -Upon the entire record in the case, and from my observation of the witnesses, I make the following: FINDINGS -OF FACT I. 'THE , BUSINESS OF :RESPONDENT AND- THE' LABOR ORGANIZATION INVOLVED Respondent is a Virginia corporation engaged in the wholesaling of foodstuffs and sundry-items at its principal place of business in Norfolk, Virginia. In the course of this business, -Respondent annually buys materials and supplies valued in excess of $4,000,000, all of which are shipped to its Norfolk warehouse from points outside the Commonwealth of Virginia. Respondent admits, and I find on the above facts, that it is engaged in commerce within the meaning of the Act. The Union is a labor organization within the meaning of Section 2 (5) of the Act, which admits to membership employees of Respondent. IT. THE UNFAIR LABOR PRACTICES A. The alleged refusal to bargain Respondent admits, and I find, that in order that employees of Respondent may have the full benefits of their rights to self-organization and bargaining, and otherwise to effect the policies of the Act, all employees employed at Respondent's Norfolk, Virginia, warehouse, excluding all office clerical employees, guards, watchmen, professional employees, and supervisors as defined in the Act, constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9 (b) of the Act. In a secret-ballot election conducted by the Board in Case No. 5-RC-1706 on May 20, 1955, a majority of the employees in the above unit voted for the Union as their bargaining agent. On May 31, 1955, the Board certified the Union as such bargaining representative. I find that by virtue of Section 9 (a) of the Act, the Union has been at all times since May 20, 1955, and is now, the exclusive representative of all employees of Respondent in said unit for purposes of collective bargaining in respect to rates of pay, wages, hours of employment, and other con-' ditions of employment. On June 1, 1955, the Union sent Respondent a letter requesting a meeting to negotiate a collective-bargaining contract, and enclosed therein a proposed form of contract. After receipt of the letter, Marvin J. Moody, general manager of Respondent, on June 15, 1955, engaged the services of Edgar A. Tugman, a labor relations consultant, to represent Respondent in negotiations with the Union, and on June 8 sent the Union a letter advising that Tugman would represent Respondent and had scheduled a meeting with the Union on June 23, 1955. The parties first met for collective bargaining on June 23, 1955, and held four more bargaining sessions, on June 28, June 30, July 14, and August 10, before the strike which started September 6 and lasted until December 15 The partied continued to bargain during the strike, meeting on October 28 and November 10 and otherwise communicating with each other on matters in dispute Tugman was the main spokesman for Respondent at all meetings and in all other pertinent contacts with the Union. General Manager Moody attended all meetings except the first, and his assistant, Carlton L. Grissom, attended all but those of June 23 and 30; both officials consulted with Tugman during the sessions they-attended, but took little or no active part in the discussions with the Union. The Union was represented at all sessions by Lee R. Brown, its president, and J. F. Miller, a union organizer. L. P. Thomas, its secretary-treasurer, participated in all meetings 'On February 4, 1956, Respondent had filed, a similar motion with the Board at Washington, D, C, which was denied by order of February 8, 1956, signed by Trial Examiner George A. Downing, to whom the motion had been duly referred-for disposition. ECONOMY STORES, INCORPORATED - - _ - .L 13 but those of October 26 and November 10. At the meetings of July 14 and August 10, John J. Greeley, an official of the Eastern Conference of Teamsters, also, spoke for the Union ; the latter session was also attended by Charles W. Rich, another official of that Conference who has been made trustee of the affairs of the Union., '-The ' amended - complaint - charges -that Respondent refused to bargain' in- good faith only by "adamantly insisting upon --an' improper liability clause as a condition precedent to the execution of a collective bargaining contract." This is the main issue to be decided ; the determination thereof will resolve the secondary quest taons whether the strike was an unfair labor practice strike, caused or prolonged by, Respondent's illegal refusal to bargain, or an economic strike, and whether Re- spondent illegally discriminated against the , strikers by certain conduct discussed, below.3 General Counsel admits that, aside from Respondent 's insistence upon; the liability clause throughout the negotiations, the parties engaged in the normal, give and take of personal bargaining .sessions , with discussions of proposals and, counterproposals and concessions on both sides , which resulted in substantial agree- ment on all terms of a contract except for the liability clause. Respondent con- tends that before the strike , the parties reached a genuine impasse on wages as, well as the liability clause , and that in the negotiations during the strike the ,Union added a further demand for reinstatement of all strikers , which has never been, resolved, and that before the charges herein were filed the parties had, reached a genuine impasse on the reinstatement and union -liability issues. At the initial meeting of June 23 , 1955, the parties discussed the Union's first proposal paragraph by paragraph . The union representatives explained certain provisions, and Tugman stated Respondent's position on some clauses , and suggested, changes in others, but the parties reached no agreement except to conclude that the proposal was a hastily prepared document which contained errors and pro-. visions not applicable to Respondent 's business, and required rewriting . Tugman, in effect rejected the Union's demand for higher wages and a checkoff . The union, proposal contained no "union liability " clause, and there was no discussion on that subject. The parties agreed to meet again on June 28 at which time Tugman would present Respondent 's counterproposal . At the close of the meeting, Miller said the union agents had been listening to all the talk, and "now, goddammit, we have got to have an effective date" for the contract. Tugman replied that he would have to take that up with Respondent, that he could not then commit the Company en an effective date . Miller said , "it is just as simple as that, you can just give us a date right now and we can talk for 6 months." He also told Tugman, "We know you and we know John Grigsby, and we know that you can stall this thing for months and we are going to have to have an effective date." 4 Brown told Tugman that he had to give the Union a date, and "it is going to have to be right soon , or we are going to have to take some action." These findings ' are 'based on credited and mutually corroborative testimony of Tugman and Brown ;' testimony of Brown in conflict therewith is not credited . Miller did not testify, although he was present at the hearing . Thomas did not appear or testify at 'the hearing. Following the meeting, Tugman reported to Moody on the union demands and the course of the discussion , and after they discussed Respondent's position on the demands , Tugman prepared a counterproposal which he presented to the 'same union representatives at the meeting of June 28. 1 "'At that meeting the parties discussed both proposals in detail and reached agree- ment on some matters . The Union rejected Respondent's proposals on wages' and overtime and holiday payments because it felt that as to six employees the proposal was in fact a decrease in wages. Tugman offered to provide that Re- spondent would not reduce the present wages of the six, but - no agreement was reached on wage provisions . Section 12 of the company proposal , in its first §ix paragraphs, placed specific obligations on the Union to abide by the contract, not to strike, cause a walkout or slowdown , or otherwise disrupt the operation of the business , to settle all disputes with Respondent by arbitration , and to settle all 3 General Counsel also contends that, regardless of the nature of the strike and its pause, Respondent independently discriminated against strikers in violation of Section $'(a) (3) of the Act, by promising them employment when vacancies occurred, and'later filling such vacancies with new men without recalling the strikers , and byerequiting all strikers applying for reinstatement to fill out new applications for employment. - 4 John Grigsby is a lawyer from Richmond , Virginia , who represents employers ,- Includ- ing common carriers, in labor relations matters. Tugman has collaborated frequently with him in such matters 14 DECISIONS OF NATIONAL LABOR RELATIONS BOARD disputes with other unions and''employers without interference with Respondent's - business. Subsection G of that section obligated the Union: To reimburse the Company for all damages suffered by it as a consequence of violation of the terms of this agreement by either the Union or its employees and to a penalty of $5.00 per day for each one of its members who participate in an illegal strike, walkout or slowdown. The Union accepted the first six paragraphs of the section, but objected stren- uously to subsection G, claiming that under the Virginia "right-to-work" laws, employees could not be compelled to join the Union, and the Union could not be held responsible for acts of employees who did not join that organization and over whom it had no control; it also objected to any penalty provision. Tugman agreed to delete the penalty provision, but insisted that Respondent needed the remainder of the provision to protect it against the acts of "irresponsible people upsetting agree- ments that had been made in good faith," and that Respondent felt that both parties should be equally responsible for their violation of the contract. The union repre- sentatives insisted that they would not accept the clause even without the penalty provisions, stating that it was their full intention to live up to this contract and every other agreement they made, and that if the Union broke the contract, it could be held responsible in damages by the Company through action in court. Tugman still insisted on the provision, arguing that it was not conducive to good labor- management relations for management to be continually "running to courts," and that, in spite of the Union's stated intention of honoring any agreement, contracts were administered by local union officials, who were constantly being changed, and he wanted to eliminate violations of the agreement by "quick-tempered" officials. The Union still rejected the clause, and there was no agreement on that subject. At the close of the discussion, Miller asked about an effective contract date. Tug- man replied that the Company was willing to make the date on which the contract was accepted by both parties the effective date. Miller and Brown insisted that the parties would have to decide on an immediate effective date, otherwise "we will hit the bricks." At the end, the parties agreed to meet again on June 30, when the Union was to submit a counterproposal, which would include some provision to take care of Respondent's demands for union responsibility .5 At the June 30 meeting, the parties discussed the Union's counterproposal (Gen- eral Counsel's Exhibit No. 7) in detail, and reached agreement on certain clauses as written and on others with modifications. The Union offered sections 5 and 21 of its counterproposal as a substitute for Respondent's liability clause. Section 5 provided: Employees shall not be charged for loss 'or damage unless clear proof of negli- gence is shown. Section 21 provided: Employer has the right to discipline or transfer any employee or employees in the same classification , to instruct and direct the work , manage its terminals and docks and assign its equipment , and to make rules and regulations for the conduct of the business, not to conflict with the terms of this Agreement. Tugman rejected these clauses as not sufficiently binding on the Union , and still insisted upon his clause. In the -discussion, the parties repeated the arguments they had made pro -and con at the last meeting, but there was no agreement . The parties discussed but reached no agreement on the Union 's money demands in sections 16, 17, and 20 of its counterproposal, or= on 'the- checkoff in section 3. The Union also requested immediate agreement on June 15 as the effective date of the contract, but Respondent maintained its stand of the previous meeting, and there was no agree- ment on that. At the end of the meeting, the parties were also apart on the issues of a 40-hour week for drivers, payment of full vacation pay to employees terminated before vacation was taken , the question of what information must be furnished by one party to the other when serving notice of desire to make changes in the agree- ment, and a company initial proposal to bring higher union officials into the grievance procedure. At the end of the meeting, it was agreed that Tugman would prepare a new counterproposal incorporating provisions already agreed on, and Respondent's suggestions on matters still at issue, for consideration at the next meeting. 5 These findings are based on credited and mutually corroborative testimony of Tugmaa, Brown, Moody, and Grissom ; testimony of Brown in conflict therewith is not credited. ECONOMY STORES, INCORPORATED 15 At the meeting of Thursday, July 14, Tugman presented the Company's second counterproposal (General Counsel's Exhibit No. 2). The union representatives first discussed it privately, and then discussed with Tugman the issues left at the previous session. The parties made mutual concession which settled 3 of these issues, but they could not agree upon an effective contract date, the checkoff, or a union demand for a 10-cent-an-hour wage raise for 6 employees. Respondent's counter- proposal contained a new liability clause, section 15 G, which provided that the Union agreed G. To reimburse the Company for all damages suffered by it as a consequence of violation of the terms of this agreement by either the Union or the employees. In discussing this clause, the parties repeated their prior arguments for and against a liability clause. In answering the Union's argument that Respondent could always sue in the courts for any violation of the contract by the Union, Tugman added to his former argument the claim that section 15 G would permit all disputes, including the question of the Union's liability for breach of contract, to be handled and decided informally within the "framework of the agreement." As a substitute for section 15 G, Greeley offered for consideration several forms of liability clause which he said had been used in other Teamsters contracts. He quoted from memory portions of a sample clause which reads as follows: It is understood and agreed that the Union shall have no financial liability for acts of its members or agents which are unauthorized and which the Union cannot control. It is agreed, however, that in the event of any such unauthor- ized action, the Union shall, upon receiving notice thereof, urge its members to return to work, if there should be a work stoppage, and just as soon as practical address a letter to the Employer notifying the Employer that the action of the Union members or Agents is unauthorized. The Employer shall be privileged to discipline employees responsible for such unauthorized activities without violation of the terms of this Agreement, subject however, to the grievance and arbitration provisions of this Agreement.e Tugman rejected this clause because, as quoted by Greeley, it appeared to exempt the Union completely from any form of liability for breach of contract. He con- tinued to insist upon section 15 G, saying he was not insisting upon, or "wedded to," any particular wording in that clause, but felt that Respondent was entitled to some statement of union responsibility to the same extent that Respondent was assuming liability for its acts under the contract. In support of his position, Tugman referred to an incident in Roanoke, Virginia, about which he had learned 2 days before, where, as he claimed, a business agent of another local of the Teamsters Union had caused a work stoppage in the business of another employer, in violation of the union's contract with that employer, over a wage demand of $4.50 by 3 employees. He claimed that union had completely shut down the employer's operations over a trivial demand, and argued that section 15 G was necessary to protect Respondent against similar "irresponsible" action by "trigger-happy" local union officials. He remarked that if he had had section 15 G in the Roanoke contract, the work stoppage would not have occurred.? The union representatives replied, "But, Tug- man, you don't have 15 G in the Roanoke contract." When the parties could not agree, Greeley said that when he returned to Washington that night, he would discuss with associates in his Washington office the possibility of preparing a liability clause which would be satisfactory to both parties, and would advise Brown about it, and also asked Tugman to call him Saturday or Sunday at his Washington home to get Greeley's answer. Tugman agreed that, after talking with Greeley, he would take up with Respondent's board of directors the questions of the liability clause, the checkoff, the proposed effective date of June 15, and a wage increase for six employees, and would call Brown to give him their answers on those issues. On 9 Respondent's Exhibit No 1 Greeley's testimony indicates that he quoted the sub- stance of the second and third sentences of the clause to Tugman, and that he had copies of contracts containing the clause with him when lie attended the meetings of July 14 and August 10, but that he never offered the clause in written form to Tugman for inspection. Tugman testified that the initial sentence, as quoted by Greeley, appeared to constitute a complete "waiver" by the Union of any form of liability. I am satisfied from the testi- mony of both that Greeley was quoting from Respondent's Exhibit No. 1. 7Tugman had collaborated in negotiation of the Roanoke contract, and was familiar with its provisions, which included a "no-strike" clause similar to that contained in Respondent's second proposal here 16 DECISIONS' OF -NATIONAL LABOR RELATIONS BOARD July -16-- or' 18; Greeley told Tugman on the telephone that his superiors in the Eastern -Conference of Teamsters had rejected Respondent 's liability clause because they considered it far too strict , and-had suggested that some other form of clause should be worked out. Greeley again -proposed the clause he had outlined to Tugman at the last meeting . He told Tugman that he felt he could persuade the employees -to accept a 5-cent wage increase for 6 employees . He finally suggested that,- if Respondent would eliminate its liability clause, agree to the checkoff, and grant a 5-cent increase to the 6, a contract could be signed , and requested Tugman to recommend that proposition to Respondent's directors.8 Tugman had a conference, with Respondent's directors on July 19, at which he reviewed all contract proposals with them and presented Greeley's offer. The di- rectors took the position that Tugman had already offered too much in the way of wage increases, that they would not accept the checkoff because they felt that was part of the Union's business, and that they saw no reason why the Union should go "scot-free" for any violation of the contract, or why it should not accept the same degree of responsibility for living up to a contract that Respondent was willing to assume, and that they wanted some clause stating the Union's responsi- bility in this regard. The next day Tugman called Brown and discovered that he was out of town. 'However, Greeley called Tugman the same day, and Tugman relayed to him the directors' position as stated above. Greeley concluded from Tugman's report that Respondent had rejected his pro- posal and had no compromise to offer. The union representatives then called on the Federal Mediation and Conciliation Service to intervene in the negotiations. L. Newton Maxey of that Service arranged a meeting for August 10, 1955, which was attended by the initial 3 union representatives, plus Greeley and Charles W. Rich, trustee of the Union, the 3 company representatives, and Maxey. At the outset, the parties reviewed prior negotiations and agreed that the sole issues in dispute were the Union's demand for the checkoff and a 5-cent wage increase for 6 employees, and the company demand for a liability clause.9 Tugman reiterated Respondent's position on these issues as stated above, and said he had no objection to returning to Respondent's directors with any compromise offer or form of tentative agreement which he could present as a reasonable person, but that he would appear foolish if he went back to them with the same union offers on which they had already taken a position. When Tugman repeated that his directors had criticized the wage offers he had already made, Greeley said that he would be willing to drop the 5-cent wage demand if it was a "stumbling block," and if dropping it would be the means of bringing the parties to an agreement. With regard to section 15 G,- Greeley and Rich indicated that they were not opposed to a liability clause as such, and were willing to write in a "standard" liability clause, similar to those in other Teamster contracts, which would allow Respondent to take disciplinary action against employees who were members of the Union, if they violated the contract, ,but that the Union could not agree to section 15-G because, as worded, it would make the Union liable for -acts of employees who were not union members and over whom it had no control. To this, Tugman replied that he understood that the Union- was the certified bargaining agent for all employees of Respondent. He made no offer or attempt to change the wording of section 15 G in this respect. As a substitute, Rich offered and quoted from memory substantially the same clause as Greeley had quoted in the' previous meeting.io Tugman did not comment on this clause, but again referred to the Roanoke work stoppage and insisted that Respondent was entitled to a clause like 15 G to protect it and act as a deterrent against similar actions by "irresponsible individuals " The union representatives repeated the argument that Respondent always had recourse to litigation for breach of the contract, and Tugman repeated his claim that section 15 G would permit such disputes to be handled under the grievance and arbitration procedure of the contract. At this point, Maxey called a recess, during which he talked privately with the company representatives, and then reported to the union negotiators that the Company maintained its previous position. The Union then offered, through s The above findings are based on credited and- mutually corroborative testimony of Tugman, Greeley, Brown, Aloody, and Grissom, and documentary evidence; testimony of any of these, witnesses in conflict therewith is not credited. 91 find from credited testimony of Greeley and Grissom that the Union demand for an effective date in the contract had been dropped at some point after the July 14 meeting, and was not,an issue in the August 10 meeting or thereafter. 10 See footnote 6, above Rich had a copy of the clause in his car, but did not procure or submit it to Tugman. ECONOMY STORES, INCORPORATED 17 Maxey, to give up the checkoff in return for elimination of the liability clause, and to sign a contract that day on that basis. When Maxey took that offer to the company negotiators , Tugman told him it still left open the wage demand, that he had previously offered to make specific provision against any wage cut for the six employees involved, and that he could not go back to his directors, as a reasonable man, with the same wage demand, since they had criticized the offers he had already made. Maxey reported to the union representatives that he could do nothing with Respondent's agents. When the parties reconvened, the Union made the offer in open meeting to settle on a contract by withdrawing its checkoff demand if Re- spondent would withdraw the demand for the liability clause. Tugman said that he could not withdraw that clause, because the directors wanted "some responsibility" on the part of the Union, and that he could not accept its wage proposal, because "I have already gone too far," since the directors had criticized him for going as far as he had "on money." There was no specific offer by the Union to withdraw its wage demand, nor was there further discussion on that subject. As the con- ferees were leaving, Greeley accused Tugman of causing their failure to agree, saying that the liability clause was apparently his "brain -child," and that he did not want to reach an agreement. Tugman disagreed. A few days later Brown called Maxey regarding the possibility of another meeting and was advised by the latter that he had learned from Tugman that Respondent's final offer still stood. These findings are based on credible testimony of Tugman, Moody, Brown, Greeley, and Rich, which is mutually corroborative in substantial aspects. Testimony of any of these witnesses in confect with the findings is not credited. The testimony of the company and union representatives was in direct conflict on the question whether the Union made a firm offer at this meeting to withdraw its wage demand. My finding that it did not is based on credited testimony of Tugman and Moody, which is corroborated by Greeley's admission that, in rejecting the Union's last proposal at the close of the meeting, Tugman said he had "already gone too far," an expression which could only refer to the directors' criticism of his last offer on wages, and could only have been evoked from him by the fact that the Union was still pressing a demand for some wage increase . I do not credit contrary testimony of Rich, Greeley, and Brown on that point because their testimony was confused and in many respects self-contradictory as well as contradictory of each other. A few days later, Brown reported to the employees on the progress of the negotiations. As a result they voted to go on strike. The strike began September 6, 1955, when about 30 employees failed to report for work and began to picket the plant. During the strike, Respondent sent letters to the strikers and had conversa- tions with some of them regarding their jobs, which will be discussed hereafter. The strike ended on December 15, 1955, when the pickets were removed from the plant. On December 19, the Union advised Respondent by letter that the pickets had been removed as of the 15th, and that the employees had been instructed "to apply for the same jobs back that they had before the strike." The parties had no further discussions about the bargaining issues until October 17, 1955, when Brown called Tugman on the telephone and discussed with him the issues remaining unresolved at the close of the August 10 meeting They dis- agreed on what those issues were, Brown claiming that the Union had offered to trade off its wage demand and the checkoff for section 15 G, thus leaving only section 15 G at issue at the close, and Tugman insisting that the wage demand had never been withdrawn . Brown then told Tugman that the Union was willing to make the 2-for-I trade and sign a contract on that basis , and said that was the Union's present offer. The same day Brown wrote Tugman a letter confirming their conversation, and repeating the Union's offer to make the 2-for-1 trade and sign Respondent's last proposal on that basis. The parties then arranged another meeting which was held October 26, 1955, and was attended by the same company representatives , Brown and Miller for the Union, and Maxey. At the outset, Tugman mentioned the misunderstanding be- tween Brown and himself about the issues, and then read the Union's letter of October 17, and asked whether that was the Union's offer, and whether there were any other conditions which Respondent had to meet. Brown confirmed the offer, and said there were no other conditions. The parties then discussed the liability clause. During the discussion, Tugman commented to Brown that the Union had achieved a pretty effective shutdown of materials destined for Respondent,ii and referred to the fact that its contract with local carriers who handled Respondent's n Tugman was referring to the Union's visits to common carriers during the strike, which will be discussed below. 483142-59-vol. 120-3 18 DECISIONS OF NATIONAL LABOR RELATIONS BOARD incoming merchandise had a "hot cargo" clause in it .12 Brown admitted that that contract had such a clause, but noted that the contract expired August 31, 1955, before the strike began, so that the "hot cargo" clause was not in effect at the time of the strike. Tugman agreed, but argued that notwithstanding, the Union had instituted an effective boycott of Respondent's goods. Brown replied that Respond- ent was still getting some freight delivered to its warehouse, and said that the Union had "ways and means of shutting that off." Tugman also mentioned the fact that certain suppliers of Respondent were on strike, and argued that, while Respondent might have no dispute with the Union, under the terms of a new Virginia Freight Council agreement,13 goods of those suppliers might be declared "unfair" by union officials designated in that agreement, with the result that delivery of such goods to Respondent might be prevented- by Local 822, a party to that agreement, upon their arrival in Norfolk,-through the operation of the "hot cargo" clause in that agree- ment. Tugman told Brown that, since Respondent's goods were still being shut off by action of the Union, he wanted some assurance from the Union that it would not take such action under the new agreement, and that if the Union would give him such assurance by some modification of section 15 G, he would take it back-to his directors for consideration. Brown replied that the new areawide agreement had nothing to do with their negotiations, that the Union intended to live up to its contract with Respondent, and that obligation appeared to be covered adequately by section 15 (F) of the Respondent's last proposal.14 During the discussion, the Union raised the question of putting the striking em- ployees back to work. Brown told Tugman that he understood that if an agree- ment was reached, all the strikers would be returned to their jobs. Tugman replied that most of the strikers had been replaced, but Respondent would agree to take back any who had not been replaced. Miller told Tugman that "we are not interested in bargaining for a bunch of wine-benders," 15 and that Tugman was "just a damned fool" if he thought the Union would ever agree to anything short of putting all strikers back to work. He also said that the Board would order reinstatement of all strikers merely upon a call from the Union to the Board's Fifth Regional Office. At some point in the discussion, Brown telephoned Greeley, who was in Charlotte, -North Carolina, and asked Tugman to talk with Greeley. The latter told Tugman that they could "settle the contract" or "settle the strike, put the people back to work," that the Union would withdraw its wage demand and' checkoff clause, if Respondent would withdraw section 15 G, for which Greeley _would substitute a penalty clause which, as he quoted it, was similar to those he had offered previously, and gave Respondent the absolute right to discharge any employee for any violation of the contract in the form of a strike or slowdown. Tugman indicated that he would consider this offer, but would submit to the Union a new form of section 15 G rather than the clause Greeley had mentioned. At the close of the meeting, Tugman told the union representatives that, since the Union had changed its position from that of August 10, he-would take up its present offer with Respondent's directors to find out whether they would authorize some modification of section 15 G, if that were the stumbling block, but that he could not agree to any change in it under existing circumstances, because he felt that the Union -was illegally preventing delivery of goods to Respondent, and the statements of the union representatives to him indicated that activity might continue. He told Brown he would notify the Union of the directors' answer.16 13 The "hot cargo" clause in effect provides that union members will not be requlied by their employers to cross a picket line , and will not be disciplined if they refuse to do so in the course of their employment 12 This was a new collective-bargaining contract executed September 19 1955 . by repre- sentatives of all Teamsters locals, including Local 822, operating in Viramia and the Carolinas , and representatives of all common carriers in Virginia It took the place of separate contracts previously existing between various locals and the carriers 1* Section 15 ( F) would obligate the Union "to settle all disputes with other Union, and/or Companys ( sic) without interference with this Company 's operations and without damage to him (sic) " 15 The exact meaning of "wine-benders " is not stated in the record , but the context of Millet's remaiks indicates he was probably referring to those employees who had replaced the striking union membeis. The findings as to this meeting are base(] on credited and mutually corroborative testimony of Tugman , Moody, Greeley , and Brown : testimony of any of them in conflict thei ewitli is not credited I have also considered Tugman's letter of October 27, 1955, to Brown (Respondent's Exhibit No 2) in which he summarized his version of the whole discussion , as some corroboration of the stories of both Tugman and Brown because it ECONOMY STORES, INCORPORATED 19 On November 8, Tugman presented the Union's last proposition to Respondent's directors. They told him that they were willing to take back any striker who had not been replaced, but that, since the business had suffered from what they con- sidered an illegal boycott by the Union, Tugman should try to obtain "some mutual degree, of compliance with the terms of the agreement by both parties," as they did not expect the Union to do any more than the Company was willing to do.17 The parties had a final meeting on November 10, at which Tugman reported the directors' position to the Union. The Union reverted to its former argument that, while it represented all employees in the unit for purposes of bargaining, all of them were not members of the Union, and it had no control over those who did not become members. Miller said that if Respondent would make all employees mem- bers of the Union, the Union would accept section 15 G in its present form. Tug- man replied that under Virginia law Respondent could not require any employee to become a member of a union. The union representatives rejoined, "How can we possibly agree to such a clause when you can't possibly agree that we will have all employees as members of the Union?" In arguing for a liability clause, Tugman mentioned a pending tunnel construction job on which a union business agent had threatened to shut down the entire project if one man were not removed from the job, and said that Respondent wanted a liability clause in order to "deter" that type of action.ia Tugman also told the union representatives that, if they were willing to accept the obligation to settle all disputes with other unions and employers without interference with or damage to Respondent's business, as required by section 15 (F), he could not understand why they still refused to acknowledge an obligation to reimburse Respondent for breach of contract under section 15 G. The record does not show the Union's reply to this. The parties reached no agreement on the clause, and at the end of the session Tugman agreed to prepare and send the Union a new clause, making section 15 G "work both ways, against the Company and the Union, for violation of the contract," and stated that it was not Respondent's intention to impose any more responsibility or liability on the Union than Respondent was willing to accept. The Union requested that, when the parties reached agreement, all the strikers be reinstated. The, company representatives replied that the Company would not take back any strikers who had been replaced, but would reinstate those who had not been replaced; as -to replaced strikers, they said that if there were any vacancies in the future, Respondent would give them the same consideration as new job applicants. By letter of November 22, 1955, Tugman sent the Union a new proposal, in which he proposed to delete section 15 (G) of the Company's last proposal, and substitute therefor a new section 16 reading as follows: SEC. 16 The Company and the Union mutually agree as follows: The company agrees to reimburse all employees represented by the union who are employees of the company for all damages suffered by them as a con- sequence of the company's violation of the terms of this agreement, and; The union agrees to reimburse the company for all damages suffered by them as a consequence of violation of the terms of this agreement by the union or its members, including without limitation violations of the terms of this agree- ment resulting from the "hot cargo" provisions of the union's September 19, 1955 City Pick-Up and Over-the-Road agreements Article XI and IX respectively. At the end of the letter, Tugman said, "The company will reinstate any employee who has not been replaced by a permanent replacement." The Union replied by letter of November 25, 1955, reading: jibes with-their testimony in many respects, and as it was prepared by Tugman at the meeting place immediately following the. meeting, it is likely that it contains a fairly accurate and reliable statement of his fresh memory of the conversations In addition, Brown's i•elily.of November 8 (General Counsel's Exhibit No. 33) does not take issue with Tugman's version, except on the point whether the Union had changed its position from that of the last meeting; that issue, of course, involves a factual and legal conclusion from the remarks of both parties found above 17These findings aie based on credited and uncontradicted testimony of Tugman and bloody. is Tugman was at that time engaged in negotiating a settlement of the dispute for the conti,actor, and had to leave the meeting for a few moments to' talk kith other union representatives about it. 20 DECISIONS OF NATIONAL LABOR RELATIONS BOARD In reply to your letter dated November 22, 1955, in our last meeting we offered you a Liability Clause and you refused to accept. We did not agree to anything at the Meeting or at the end of the Meeting either. This is to advise you that we can not agree to the proposed change you made for the same reasons we refused to accept the old request you made. There were no further meetings, or attempts to arrange meetings, by the parties.ta B. Concluding findings 1. The alleged refusal to bargain before the strike The first question in the case is whether or not Respondent's conduct in the five bargaining sessions before the strike amounted to an illegal refusal to bargain which caused the strike. I have found above, contrary to the contention of General Counsel, that at the close of the August 10 meeting the parties were still apart on the question of wages and the liability clause. General Counsel does not claim that their disagreement on wages was other than a genuine impasse arising after bona fide bargaining by both sides. However, he contends that, assuming a bona fide impasse on wages, Respondent still violated the Act by adamant insistence on the liability clause, which he claims was not a proper subject of collective bargaining, because it was entirely unrelated to wages, hours, and other conditions of employ- ment, the sole legitimate subjects of collective bargaining under the Act. He also claims that, even if the strike occurred because of the impasse over wages and the liability clause, it was nonetheless an unfair labor practice strike where it arose in part from an unfair labor practice of the employer.20 In support of his first proposition, General Counsel relies on cases which hold that the obligation of collective bargaining in good faith imposed on both union and employer by the Act encompasses bargaining only with respect to wages, hours, and conditions of employment, as enumerated in the Act, and that, while an employer may place proposals on other subjects on the bargaining table for discussion, it has no right to require a union to bargain with respect to matters dehors the enumerated subjects of collective bargaining, or matters which would involve a change or limita- tion of rights granted to employees or their statutory representatives by the Act; thus, while a union may agree to any of the following proposals, an employer cannot require a union to bargain with respect to, nor can it insist upon inclusion in an agreement of, proposals requiring posting of performance bonds, compliance with State licensing requirements, acceptance of oral or "members only" contracts, recog- nition of a union other than that certified by the Board as the sole party to a contract, or employee balloting on employer offers on disputed issues not covered by arbitration clauses as a condition precedent to a strike. Wooster Division of Borg-Warner Corporation, 113 NLRB 1288, and cases cited therein. In this case, the Board in effect held that employer insistence upon inclusion in an agreement of proposals on such matters was in itself a violation of the Act, irrespective of whether the employer insisted on such provisions in good faith. I am of the opinion that the Union's liability to Respondent for breach of the bargaining contract is a subject which does not directly fall within "wages, hours, or conditions of employment," and in this respect is analogous to the performance bond and other extraneous require- ments of the employers in Jasper Blackburn Products and other cases noted in the Borg-Warner decision. However, the situation before me differs from those in the cited cases in that here the parties at all times treated the question of the scope of union liability for breach of contract as a bargainable subject. The record shows that, after Respondent introduced the subject in its first proposal, both parties bar- gained on it before and during the strike. Respondent changed the form of its union- liability clause twice in the negotiations. Although the Union rejected the three forms offered by Respondent, it proposed substitutes at the June 30, July 14, and August 10 meetings, which Respondent rejected as insufficient in one respect or another. At the last two meetings, the Union indicated that it did not oppose a "liability" clause in principle; in fact, the substitutes it proposed had appeared in other Teamster contracts. It is clear that the Union never objected to a "liability" clause as such, but was willing to, and did, bargain on its scope and terms. Both parties discussed the subject fully, making concessions at times, but never reaching agreement on a specific clause. They reached an impasse on it before the strike, and The findings above are based on credited testimony of Tugman, Moody, Brown, and Greeley and documentary evidence ; testimony of any of these witnesses in conflict there- with is not credited. 20 Winter Garden Citrus Products Cooperative, 114 NLRB 1048. ECONOMY STORES, INCORPORATED 21 were unable to overcome their differences and reach a meeting of the minds during the strike. These facts preclude me from finding that Respondent violated the Act before the strike by its mere insistence upon inclusion of a "liability" clause as such in the contract, as General Counsel at one point contended. In this connection the gravamen of the amended complaint appears to be that Respondent unlawfully refused to bargain only by "adamantly insisting upon an improper liability clause as a condi- tion precedent to the execution of a collective bargaining contract." [Emphasis supplied.] In fact, General Counsel admitted in oral argument that Respondent had a right to propose a liability clause, and that the proposed clause itself would not be improper in a contract. General Counsel's main argument appears to be that Respondent was guilty of bad faith from the outset of the negotiations in its insistence upon the liability clause to the point of an impasse which brought on the strike, because other terms of the contract agreed to by the parties afforded Respondent all the protection it desired along that line, and that Respondent deliberately insisted upon its inclusion as a stumbling block which would create an impasse, knowing that it would be unpalatable to the Union and would bring on a strike, which would give Respondent an oppor- tunity to replace union employees with others and thus rid itself of union members, as it did during the strike. He also argues that "regardless of how the clause was understood by the parties, Respondent approached the bargaining table with a fixed determination that some extra security need be extracted from the Union because, being a union, it was not to be trusted to give respect to contracts, whereas [Respondent felt] it was inconceivable that employers would ever breach a con- tract," and that this attitude persisted throughout the negotiations and denoted bad faith bargaining. These arguments presuppose that Respondent was following throughout the negotiations a sinister and carefully prepared plan which was delib- erately designed to create an impasse and thus relieve Respondent of the responsi- bility of signing a contract with the Union. In view of this contention, and the fact that the parties actually bargained on the subject of union liability for breach of contract, I must determine whether or not Respondent's insistence on the clause in one or more of the forms proposed by it during the negotiations amounted to bad faith bargaining throughout, or at any time during those negotiations. This requires an examination of the terms of the clause, as changed by Respondent from time to time, in the light of other proposals of the parties, and a determination of Respondent's purpose in insisting on the clause in its various forms. The wording of the first and second forms of the clause proposed by Respondent (section 12 G in its first proposal, section 15 G in its second) and the testimony of Tugman, its author, indicates that before the strike Respondent wanted an express agreement by the Union to reimburse Respondent for damages to it resulting from violations of the contract by the Union or any employees of Respondent in the unit represented by the Union. The pertinent words in each form are "by either the Union or (its) (the) employees." That the "employees" included are all those represented by the Union is clear from (1) Tugman's testimony that he intended the phrase to cover all employees in the unit, (2) the second preamble sentence of section 15 which states that the agreement is intended to set forth the rights and obligations of the Company "and the Union and the employees it repre- sents . . .," and (3) the fact that Tugman never offered before the strike to change or delete reference to "employees" in the phrase on objection by the Union, taking the position that the Union should assume liability for all, because it was the certified bargaining agent for all, employees in the unit Thus, section 15 G would make the Union, as bargaining agent, ipso facto liable for acts of employees it represents, including those who were not union members. This is exactly what the Union strenuously objected to throughout the negotiations, arguing that it could not accept responsibility for acts of employees who were not union members and over whom it had no control. Tugman testified that section 15 G amounted to no more than an acknowledgment by the Union of the possible legal consequences to it for its breach of contract, as recognized in Section 301 of the Act.21 However, it is clear from the above facts that the provision in terms goes beyond the scope of 21 Section 301 opens the Federal courts to suits for breach of contract between em- ployers and unions operating in industries subject to the Act, and provides that any such labor organization (as well as employer) "shall be bound by the acts of its agents," that it may "sue or be sued as an entity and in behalf of the employees whom it represents in the courts of the United States," and that "Any money judgment against a labor organiza- tion in a district court of the United States shall be enforceable only against the organi- zation as an entity and against its assets , and shall not be enforceable against any individual member or his assets." 22 DECISIONS OF NATIONAL LABOR RELATIONS BOARD union liability envisaged by the statute, for it purports to impose on the Union an absolute liability for contract breaches by any employees in the unit, whether union members or not, and without regard to whether they were acting as its agents under the ordinary rules of agency. The responsibility thus imposed on the Union approaches that of a guarantor or insuror. In this respect, the clause places a greater limitation or burden on the Union as a statutory bargaining agent than does the Act itself, for it appears to eliminate any question of agency in determining the Union's liability for acts of employees, treating the Union and the employees as one legal entity. In Sunset Line and Twine Company, 79 NLRB 1487, 1507, 1508, the Board noted that the amended Act discards the common law concept of an unincorporated labor organization as a group of individuals having no separate entity apart from its members, but treated all labor organizations as "juridical entities." It held that the amended Act requires it to apply the "ordinary law of agency" in determining union liability for conduct of its agents, and that for this purpose it would treat labor organizations as legal entities, like corporations, which could act only through their duly appointed agents, as distinguished from their individual members. In this connection, the Board noted that during the Senate debates, proponents of the amended Act had disclaimed any contention that a member of a labor union became per se an agent of that union. If section 15 G was intended to impose absolute liability on the Union for acts of its members violating the contract, without regard to whether they acted as its agents, it would run counter to these principles, and insistence upon it to an impasse would be evidence of bad faith bargaining; and this conclusion would hold a fortiori if it required the Union to pay for acts of nonmember employees. Viewed in this light, Respondent's insistence on the clause appears to violate the Act under the principles set forth in the Borg-Warner case, supra. Recognizing this interpretation, Respondent answers that the legal import of the clause is not controlling or even important because, whatever the wording, Respond- ent was motivated throughout by a bona fide desire to protect itself only against irresponsible actions of the Union, acting through its local officers and agents, and not against acts of individual employees. There is substantial support in the record for this argument. Tugman was not a lawyer, and did not have the benefit of legal advice or assistance in preparing Respondent's proposals or during the negotiations. The proposals themselves are loosely drawn, poorly worded, and ambiguous in spots. with some repetitions, and are admittedly a conglomeration of provisions culled from other labor contracts. They bear no indicia of careful legal draftsmanship. The searching cross-examination of Tugman by opposing counsel and the Trial Examiner clearly shows that he was not aware of all the legal implications of section 15 G in its relation to other parts of his proposals. Hence, the precise wording of that pro- vision in its context is not as reliable a clue to Respondent's intentions as it would be if drafted and integrated into the proposals by a skilled lawyer. Consequently, Respondent's intentions, as expressed by Tugman at the meetings and at the hearing, are at least as important as the wording in assessing its motives and good faith. At one point in the record, Tugman described section 15 G as an "assurance by the individuals that they would live up to the contract." It is clear from his references during the early negotiations to other strike troubles, that the "individuals" he had in mind were the local officials and agents of the Union, such as Brown and Miller. At another point, Tugman called the clause an "expression of sincerity" by the Union. Furthermore, he repeatedly told the union officials, and Respondent's directors adopted the same position, that Respondent only wanted the Union to recognize the same responsibility under the contract that the Company was willing to assume. To sunoort this position. Tugman used as examples instances of actions by local union officials, who had called or threatened strike action as agents of their unions, and argued that section 15 G was designed to prevent such irresponsible actions by "quick-tempered" local union officials. Nowhere in the negotiations did he express any fear of such action by individual union members or nonunion employees as a basis for his position. Indeed, Respondent had already secured protection against actions of employees early in the negotiations when the Union accepted sections 14 E and 15 D of Respondent's second proposal, which recognized its right to disci- pline or discharge employees who broke the contract; and when the Union proposed substitute clauses which recognized that right, Tugman rejected them only because he considered them as not sufficiently binding on the Union. It is clear from these circumstances, as well as other testimony of Tugman which will be discussed below, that his sole aim in insisting on section 15 G was to place in the contract a clear, strong expression of the Union's financial liability for acts of its officials and agents. Furthermore, the argument that section 15 G improperly imposed a guarantor's liability on the Union is deprived of substance by the fact, established by the record, ECONOMY STORES, INCORPORATED 23 that Respondent intended, and so advised the Union on several occasions, that all claims for breach of contract arising under section 15 G would be handled in the first instance under the grievance procedure in section 9, and that in the course of arbitration thereunder, Respondent would have to prove before the arbitrator a breach of contract, the damages incurred, and the fact of the Union's responsibility therefor. Presumably Respondent would have this burden whether the breach was due to acts of union employees, nonunion employees, officials of the Union, or other individuals; in any case, the Union's responsibility would have to be established through application of the "ordinary law of agency." Thus, in its operation as in- tended and explained by Respondent, section 15 G would conform to the policy and principles enunciated in the Act, as amended, and would fall far short of an absolute obligation of insurance or guaranty. In this aspect, it cannot be said that Respond- ent's insistence upon it was unreasonable or evidential of bad faith bargaining. Fur- thermore, the record fails to show that the Union treated the clause as so unreason- able, arbitrary, or totally unacceptable as to indicate that Respondent intended it to create an impasse. The Union accepted the principle of union liability involved in it, and never totally rejected it in that respect. As a substitute, it was willing to let Respondent discharge or otherwise discipline individual employees who broke the contract (at first subject to arbitration, but finally without recourse by employee or union), but strove to limit its own financial liability to acts of specified agents, thus barring liability for acts of any other agents.22 At the hearing, Greeley indicated that the Union would now consider seriously a clause making it liable for contract violations by employees who were union members, as "it might open the door to an agreement." However, the Union never placed such a clause on the table for dis- cussion, and at the last rejected Respondent's final proposal, section 16, which limited liability to acts of the Union "or its members." In effect, the Union was attempting to limit its liability for acts of agents to something far less than the amended Act imposed on it. While I do not hold that this attitude was evidence of bad faith bar- gaining by the Union, I consider it clearly indicative of the extent to which the Union engaged in hard bargaining to eliminate section 15 G. I conclude that Respondent was entitled to strive by similar hard bargaining to include that clause in the contract. However, if section 15 G is considered only as an expression of union liability for acts of its agents, the clause appears to be mere surplusage which adds nothing to the contract, for it states only a legal consequence to the Union flowing from its breach of contract and recognized by the Act. If it was superfluous, was it bad faith for Respondent to insist upon an unimportant clause to the extent of causing a breakdown of negotiations? In this aspect, it appears to be analogous to the recognition clauses commonly appearing in collective-bargaining contracts with certified unions, in which the employer recognizes the union as the "sole" or "exclusive" bargaining agent. A similar provision appears here as section 1 of Respondent's second proposal, and was accepted by the Union. While such a clause appears superfluous, being a mere restatement of a statutory obligation of the employer toward a certified union, the Board has held that an employer's refusal during negotiations to include the words "sole" or "exclusive" in such clause is bad faith bargaining, as an attempt to deny to employees and their chosen agent the full measure of recognition required by the Act. L. G. Everist, Inc., 103 NLRB 308, 309. Applying the same rationale in converse, it would appear that an employer may properly insist upon inclusion of a clause recognizing an obligation of a union and a correlative right of the employer, both arising from their execution of a con- tract and recognized by the Act, and that it would be evidence of bad faith bargaining by the Union if it refused to accept such a clause or insisted upon one fixing its liability at something less than the law recognized. Hence, I do not consider that it was evidence of bad faith for Respondent to insist upon a seemingly unimportant "recognition of liability" clause to the extent of causing a breakdown of the nego- tiations. In this connection, it must be noted that the provision is part of a general section which specifies obligations of the Union, including a no-strike, no-slowdown, no-interference provision (15 A), to which the Union agreed before the strike Sec- tion 15 G is in part a mere declaration of the Union's liability for damages if it violated the preceding no-strike provision. As such an expression of union liability, it was not illegal per se, nor was Resnondent's insistence on it per se proof of bad faith. In N. L. R. B. v. Norfolk Shipbuilding & Drydock Corporation, 195 F. 2d 632, 636, the United States Court of Appeals for the Fourth Circuit considered the question whether an employer's insistence on a no-strike clause amounted to con- m See Respondent's Exhibit No 1, quoted by the Union, and sections 14 E and 15 D of Respondent's second proposal, which the Union accepted before the strike. 24 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tempt of its decree directing the employer to bargain in good faith. The clause in question, in its final form, also provided that the union "shall be liable for any violation of Section 2 of this Article [the no-strike provision] by any of its officers, agents, representatives or members." The court noted that the clause made the union financially liable not only for its own acts and those of its officers, agents, and representatives, but also for the acts of any union member whether or not the union authorized or ratified his misconduct. On this subject the court said (p. 636) : The law seems clear that No Strike clauses imposing some liability on the Union are in themselves neither illegal nor convincing proof of lack of good faith on the part of employers proposing them. Not quite so clear is just how far these clauses may properly go. [Citing Board and court decisions.] The court further held that such clauses "must be viewed in the light of their severity upon the Union against the broad bargaining background in each case." After reviewing the employer's business and past experience with strikes by the union, the court concluded (p. 637), "We cannot say (in the light of the whole background) that the No Strike clause demanded here by Respondent was convincing evidence that its demand for this clause was purely in terrorem and indicated bad faith " There are some facts and circumstances here which tend to support General Counsel's argument that the need for section 15 G was obviated by other contract clauses agreed on by the parties, and that Respondent's insistence on it did not stem from a bona fide need for it as protection against a union breach of the contract but from ulterior motives. Before the strike, the Union had accepted the first six provisions of section 15 of Respondent's second proposal which obligate the Union: A. Not to strike, walk out, slow down or otherwise disrupt or interfere with the Company's operations during the term of this agreement. B. To promote the safe and efficient operation of the business and the safe- guarding of the Company's merchandise and equipment. C. To comply, in good faith, with the language, spirit and intent of this agreement. D. To accept the right of the Company to fairly discipline offending employees. E. To submit to arbitration, as provided herein, all matters in dispute which the Company and the Union are unable to settle directly and to accept and comply with the findings and decision of the Board of Arbitration. F. To settle all disputes with other Unions and/or Companys without interference with this Company's operations and without damage to him. The parties had also agreed on section 9 of the same proposal, which obligated them to submit all disputes "as to the meaning of any of the provisions of this agreement, but excluding requests for general wage increases or general wage decreases," to adjustment in accordance with the grievance procedure set forth in that section; the last step in the process was submission of any unresolved dispute to a board of arbitrators whose decision would be final and binding upon both parties. Sec- tion 9 also prohibited strikes, lockouts, or cessations of normal work under any circumstances (except for failure or refusal of either party to process grievances thereunder, or to abide by the decision of the Board of Arbitration) and stated that such conduct "shall be a wilful violation of this agreement." I have found that Tugman considered section 15 G as stating no more than that "the individuals verbally assured me that they would live up to the contract," or an "expression of sincerity" by the Union. However, he also admitted, and I find, that section 15 C, quoted above, already states the same thing. He also testified that 15 G was intended to act as a "deterrent against breaches of the agreement," in that "the very fact that the agreement provided that the union would assume responsibility for damages would be part and parcel of the agreement and . . . have a stabilizing influence on the individuals from engaging in activities that, if they considered it a second time, they wouldn't have done in the beginning." It would appear from this that, as General Counsel put it, Respondent desired the clause mainly as a "moral dissuader," a statement by the Union that "we really mean to live up to the contract," which would "look important" to its officers and agents. In other words, it was designed to impress on the union officials the serious financial consequences to the Union if it broke the contract, so that they would act more cautiously, or "think twice," before taking precipitate action. Although he admitted that the contract already contained an "expression of sincerity" by the Union, Tugman testified that he explained to the union representatives that "the company, everyone knew, would live up to its obligations under the agreement, would abide by the decisions that were handed down, and that it was a foregone conclusion that it was the most ECONOMY STORES, INCORPORATED 25 remote thing that the company would lock out its employees; yet the union could by devious ways directly or indirectly breach the agreement and, once having breached the agreement, the company, without 15 G, would have to seek an injunction, would have to go into court, and that I was trying to devise a means whereby issues such as that could be handled within the framework of the agreement, between the parties." Tugman testified at one point that he felt section 9 by itself did not cover situations involving breach of contract by the Union, and that section 15 G was necessary to bring those problems within section 9. However, he gave the opinion that section 15 E, which required submission to arbitration of "all matters in dis- pute" between the parties, would accomplish that objective. At another point, he admitted that section 15 G merely expressed the Union's consequent obligation to pay any damages suffered by Respondent if the Union failed to carry out the obli- gation stated in section 15 F. All of this testimony indicates that section 15 G added nothing by way of rights, remedies, or legal protection to those already given to Respondent by other contract terms and the law, so that in effect Tugman wanted the clause included mainly for whatever "moral" effect it might have as a warning signal, or "stop" sign, in deterring union officials from committing rash or intem- perate acts in violation of the contract. Viewed in this light, it is questionable whether the clause was a matter of real substance which Respondent could reasonably insist upon to the point of impasse. But here again, it must be remembered that Respondent's proposals were drawn by a layman who apparently had not analyzed the various clauses in their relation to each other, and may not have realized that in fact or legal effect some provisions may have overlapped or amounted to repeti- tions of others. Furthermore, in assessing motive and good faith, the Board cannot, directly or indirectly, compel concessions or otherwise substitute its judgment for that of the parties as to the substantive terms of a collective-bargaining agreement.23 On his general attitude toward the Union, Tugman testified that section 15 G was necessary because it was "common knowledge" that unions often violated contracts, that "it had been well established that unions, while expressing a willing- ness to abide by the agreement, quite frequently breached their agreements," and that he was motivated by a doubt in his mind about the local union officials who would police the agreement, and who were often moved by temper or unsound reasoning in their actions. The fact that Tugman viewed the Union and its local officials as lacking in responsibility and integrity to an extent that dictated the need for some "added deterrent," or extra protection for his client, indicates that he did not consider the parties as equals at the bargaining table, but rather treated the Union as an organization not to be trusted (at least as respects its local manage- ment ), which would be prone to regard any signed agreement as a scrap of paper. To the extent that he did not come to the bargaining table with an open mind on this subject, his attitude may be taken as some indication of lack of good faith. The Board has held that "an employer is not privileged to deny collective bargain- ing to his employees merely because he views the union which represents them as irresponsible" (Inland Steel Company, 9 NLRB 783, 802, set aside on other grounds, 109 F. 2d 9 (C. A. 7)), and that an employer cannot make an inquiry into, or establishment of, the responsibility of the union a condition precedent to initiation of the bargaining process (Consolidated Frame Company, 91 NLRB 1295, 1298, footnote 9.) The Court of Appeals for the Second Circuit has held that an employer may not refuse to bargain with a union which offers to do so, merely "because of its past sins" (N. L. R. B v. Remington Rand, Inc., 94 F. 2d 862, 873). On the other hand, there is substantial support in the record for Respondent's contention that its desire and demand for a liability clause was bona fide and reasonable, as it was based on the Union's attitude before and during the negotia- tions, and that the clause was advanced by Tugman in a sincere desire to promote stable relations between Respondent and the Union. In the early part of May 1955, Brown, Miller, and Thomas visited General Manager Moody at his office, claimed to represent a majority of Respondent's employees, and demanded recogni- tion as their bargaining agent . Moody said he would not grant recognition until an election was held under the Act Thomas told him the Union had "ways and means of getting the things they wanted." On May 9, 1955, after the Union filed its petition in Case No. 5-RC-1706, Moody, who had never dealt with unions be- fore, visited the Fifth Regional Office of the Board where he secured information as to the course of the representation proceeding, the usual procedure in collective bargaining following an election, and the employer's duties in that regard. At the same time he executed a stipulation for a Board-conducted election and Board certification of the result. When Tugman reported to Moody after the June 23 23 N. L. R. B. v. American National Insurance Co., 343 U. S. 395, 402, 404. 26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD bargaining session, the latter asked him what he thought of the union representatives, _whetner Cugman considered them typical labor union agents , and what control could be exercised over them . He described to Tugman his first meeting with them, their insistence upon a quick execution of an agreement, and their statement that the Union had "ways and means" of compelling employers to accede to its demands, from which Moody got the impression that the union agents were men of quick tempers, and he felt that the Company should have some safeguard against ir- responsible acts of such individuals , that there should be some obligation by the Union as well as the Company to abide by any agreement . 24 Thereafter, Tugman inserted clause 12 G , quoted above , in his first contract proposal in order to evoke the same degree of respect for the contract from local officials of the Union that the Company was willing to give it He prepared the second draft , section 15 G, with the same thought in mind. He was also motivated by his own experience with a local tunnel construction project , where a local of another union had called a strike in disregard of a collective -bargaining contract signed by an affiliated local, and Tugman had succeeded in procuring recognition of the agreement by the first local only by appealing to officers of the parent international union . These find- ings are based on credited and uncontradicted testimony of Tugman and Moody and Board records in the representation case. I conclude therefrom that Re- spondent's liability clause had its genesis in Moody's first contact with the Union's representatives , and Tugman's own experience with unions as a labor relations consultant . The discussions at the July 14 and August 10 meetings found above, make it clear that his insistence upon section 15 G on those occasions was also motivated by what he had recently learned about the Roanoke strike, and the action of local Teamster officials in causing it , which he considered irresponsible con- duct in violation of an existing contract .25 It is of some significance that, when Tugman expressed the opinion on July 14 that the Roanoke strike would never have occurred if the contract there had contained section 15 G, the union repre- sentatives were quick to differentiate (and impliedly justify ) the union action there by pointing out that the Roanoke contract had no such clause. From these remarks Tugman could reasonably have gathered that the union agents themselves felt that section 15 G might have prevented the Roanoke strike, and he could reasonably have concluded that the provision would probably have a similar effect on them, hence it is a reasonable inference that their remarks might well have strengthened his determination to have that clause or a similar one in the contract . These cir- cumstances indicate strongly that Respondent's continued insistence on the clause before the strike had substantial justification , and cannot be called arbitrary or utterly unreasonable That conclusion is strengthened by the fact that the Union never refused to accept a union-liability clause in principle , but merely tried to persuade Respondent to accept substitute clauses which would grant Respondent a very limited remedy against it for breach of contract. Another indication of Respondent's good faith lies in the fact that it never adopted an inflexible attitude on the wording of the liability clause, but was willing to change its wording from time to time, which is demonstrated by Tugman 's ready elimination of the penalty provision at the first meeting, his statement on July 14 that he was not "wedded" to any particular phrasing , but wanted merely some expression of union responsibility equal to that imposed on Respondent by the contract , and his final offer of a new clause, expressing the principle of equal responsibility of both parties, on November 22, 1955. In this connection , General Counsel argues that Respond- ent's bad faith is evidenced by two circumstances: (1) Tugman made no attempt to change the wording of section 15 G from July 14, when he introduced it into the negotiations , until November 22, after the negotiations had broken down completely on that issue alone; and (2) although Tugman professed a desire as early as July 14 only for some statement of equal responsibility of both parties for breach of contract, he did not change section 15 G to state that desire until November 22. As to the first point, I think the answer to Tugman's inaction lies in the Union's attitude 24 Moody's first impression of the union officials was confirmed by their blunt demand at the first bargaining meeting for immediate agreement on an effective date before any further negotiations , under pain of "some action" by the Union , and their similar demand on Tune 30 coupled with the threat that otherwise they would "hit the bricks" ( obviously, call a strike). 25 The existence of the Roanoke strike is also proven by Greeley 's testimony as to his own investigation of it after Tugman brought it to his attention That his investigation disclosed that more money was eventually involved than Tugman stated , is immaterial to the issues here and does not detract from the sincerity, of Tugman's motives. ECONOMY STORES, INCORPORATED 27 toward the liability issue after section 15 G was introduced. In the first four meetings, the parties established a pattern of negotiating on written proposals and counterproposals. Each submitted two written proposals for discussion; the first from each was used in part as the basis for preparation of a counterproposal by the other; all the documents were considered and revised by the parties at the bargaining table. The efficacy of this procedure is demonstrated by the fact that, with written proposals before them, the parties were able to make mutually agreeable changes in wording in many provisions and to reach agreement on all but three substantive terms of a contract by August 10. The significant deviation from this procedure was the Union's failure to submit any written counterproposal bearing directly on the liability issue; its only gesture in this direction was a reference at the June 30 meeting to sections 5 and 21 of its second proposal which recognized Respondent's right to discipline individual employees for negligent work or failure to obey its rules and regulations for conduct of its business. As these clauses obviously had no reference to the Union's liability for breach of contract, it is inferrable that Tugman rejected them for that reason as a substitute for his own clause. The Union's only other offer was an oral recitation of provisions of a printed clause (Respondent's Exhibit No. 1) which sounded to Tugman like a complete exonera- tion of the Union from financial liability for breach of contract 26 The union representatives admitted that printed copies of this clause were available and could have been brought to the bargaining table, but that was never done.27 Thus, Tugman was never enabled to read the clause with care, or to compare it with his own creation with a view to preparing some compromise for further discussion, as he was able to do with other provisions on which final agreement was reached. He could hardly be expected to prepare an intelligent compromise merely from recollection of a clause recited by the Union. Furthermore, Tugman's statement on July 14 that he wanted some statement of union responsibility for its wrongful acts, while indicating he was not "wedded to" any particular wording, was sufficient indication of his willingness to compromise on the subject, and was the occasion for the Union to come back with a concrete substitute, as it had done on other subjects. Its failure to do so on this important issue convinces me that, while it was willing to talk about Respondent's clause and offer arguments against it, it never desired or intended to bargain on that subject with a sincere desire to reach agree- ment on terms, but rather wanted to avoid inclusion of any union liability clause in the contract. I think this negative approach relieved Respondent of any duty to submit new or changed liability clauses more often than it did.- The argument based on Respondent's belated submission of an "equal responsibility" clause is answered, first, by the Union's failure to bargain on this subject in the manner adopted by the parties as found above and, second, by the fact that the Union never objected to Respondent's clause in any of its forms on the ground of lack of mutuality, and, third, Tugman never indicated until November 22 that he was interested in a clause stating the same responsibility of both sides; his theme throughout was that Respondent could be expected to abide by its contract obligations, but he was apprehensive that the Union would not similarly respect its obligations, hence he wanted some statement to that effect only from the Union, which is indicated by his insertion of the controversial clause in section 15, where obligations of that organization alone were specified. One of the most cogent indications of Respondent's good faith, in my opinion, appears in Tugman's views, as outlined to the Union in the negotiations, regarding the place and operation of the liability clause in the machinery for administration -of the contract. I find from credited testimony of Tugman, Brown, and Greeley that: At the July 14 and August 10 meetings, in answering the Union's argument that section 15 G was unnecessary because Respondent could always resort to the courts zs Considering that this clause, which was apparently seen by Tugman for the first time at the hearing, consists of 19 typed lines, in 3 paragraphs , with legal phraseology, it is highly unlikely that Rich or Greeley recited it verbatim to Tugman ; and even if they did, it is most unlikely that he could retain every sentence in memory , and analyze it on the spot; it is much more likely that he would be able to remember only the initial sentence which , as his testimony indicated , sounded at first reading like a "complete waiver of liability " 271n view of my findings above as to the course of the negotiations and Tugman's flexibility on the wording of the liability clause , I do not credit vague testimony of Rich and Greeley to the effect that the Union "many times" oftered to prepare a substitute clause agreeable to both sides , but never did so and never submitted its "Unauthorized activity" clause, because it "never had the opportunity" due to Tugman's adamant in- sistence on section 15 G without change, and his refusal to consider any substitute. 28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD for breaches of the contract, Tugman replied that Respondent did not desire to resort to litigation continually, and that the clause would provide Respondent with a remedy "within the framework of the agreement" for quick strikes or work stoppages called by the Union without resort to the normal grievance procedures in the contract; he explained that Respondent would be required to submit the question whether such conduct was a breach of contract, and the Union's responsibility for it, for discussion, adjustment, and final arbitration, if necessary, under section 9; under that procedure Respondent would have to prove the breach of contract, that it was caused by the Union, and that Respondent suffered damages thereby. He told the Union that in his opinion this procedure would postpone the normal right of the Company to resort to litigation in the first instance, for he intended that section 15 G would make these questions a matter for arbitration, to which Respondent would have to submit before taking the matter to court, and that he felt that adjusment of all prob- lems, including breaches of contract, through the grievance procedure would be more conducive to harmonious relations between the Union and Respondent than immedi- ate resort to litigation. The union officials never objected to Tugman's desire to bring breach of contract problems under the grievance procedure; they understood that all provisions of the proposed contract would be subject to arbitration. I find from the above facts and testimony that both parties understood that questions arising under section 15 G would be subject in the first instance to the grievance procedure in section 9.28 To the extent that Respondent was thus waiving its normal right to sue the Union under Section 301 of the Act, until it had exhausted all remedies under section 9 of the contract, its offer and insistence on section 15 G appears to contain a concession voluntarily made in order to enhance peaceful settlement of dispute between the parties, and as such it was more consistent with good faith bargaining than indicative of the opposite. The bona fides, and possibly the naivete, of the con- cession is also pointed up by the comment of Respondent's counsel in oral argument that, in his opinion, Respondent would have had better protection by relying on its normal right to seek injunctive relief or damages for any breach of contract. Considering all of the facts and circumstances pro and con as outlined above, I am persuaded that those which support a conclusion that section 15 G was not an "improper" clause, and that Respondent insisted on it in good faith before the strike, at least balance, if they do not outweigh, those which support the conclusion that Respondent violated the Act. I find and conclude that General Counsel has failed to prove by a preponderance of the credible evidence on this point that Respondent engaged in bad-faith bargaining in violation of the Act by its insistence before the strike on the inclusion of section 15 G in the contract. It follows that the strike of September 6, 1955, was an economic strike caused by a genuine impasse over the wage and union-liability issues.29 2. The alleged refusal to bargain during the strike In the two sessions during the strike, the parties bargained over the liability clause and the Union's new demand for reinstatement of all strikers, but reached no agree- ment on either. The Union reiterated its previous arguments against section 15 G, offering the same limited-liability substitutes as before . In continuing to insist upon a clause like section 15 G, Respondent supported its position by referring to activity of the Union during the strike which Respondent claimed was an effective but illegal 21 In reaching this conclusion, I have given more weight to the above testimony and understanding of the parties than to the wording of the clauses themselves, for it is not clear from the phrasing of sections 9 and 15, without subsection 15 G, that breaches of contract, or damages therefor, would be subject to arbitration Thus, section 9 requires arbitration of disputes between the parties "as to the meaning.of any of the provisions of this agreement," but it is not clear that the quoted phrase would automatically include questions of contract violation ; Tugnian testified that he did not think he could test the Union's violation of the contract under that clause alone. Section 15 G does not mention arbitration, so that section 9 cannot be taken to include questions of contract violation, and damages therefor, unless clause 15 G is read in connection with the preceding clause 15 E which requires the Union to submit "all matters in dispute" between the parties to arbitration. 2e In reaching this conclusion I have also given consideration to the fact that Respond- ent has a background free of unfair labor practices and entirely lacking in evidence of antiunion animus or a desire to 'Interfere with its employees' exercise of rights guaranteed by the Act. To the contrary, the record shows that Respondent cooperated fully in their resort to the Board 's election processes which resulted in certification of the Union as aforesaid ECONOMY STORES, INCORPORATED 29 secondary boycott that was substantially curtailing the normal flow of merchandise into Respondent's plant. Tugman also mentioned the possible impact on Respondent of the new Virginia Freight Council agreement , expressing a fear that the Union might in the future shut off Respondent 's supply of goods through operation of the "hot cargo" clause therein, even though Respondent had no dispute with the Union. Tugman also referred to a pending labor dispute on a construction job where he was trying to settle the problem and stave off the threat of a strike . Tugman's remarks at the meetings, and his testimony, indicates that these were the types of situations which could directly affect Respondent 's business and which section 15 G was designed to deter or prevent. In referring to the Virginia Freight Council contract, Tugman asked that some assurance be written into section 15 G to protect Respondent against a similar boycott which could arise out of operation of the "hot cargo," clause of that agreement in several pending labor disputes involving suppliers of Respondent. The Union's answer was that the statewide agreement had nothing to do with its contract with Respondent, and that in any event Respondent already had that assurance in section 15 F which the Union had accepted. General Counsel argues that, when Respondent used a pending labor dispute, its boycott troubles, and the hypothetical operation of the new Freight Council agreement as reasons for section 15 G, and followed that by incorporating in its final section 16 a reference to the "hot cargo" clause of that agreement, it was thereby seeking to make the Union guarantee Respondent against speculative harmful effects from "far-flung" events, such as operation of an extraneous bargaining contract in labor disputes of suppliers of Respondent, and that it was unreasonable for Respondent to demand that the Union "underwrite" any incidental losses Respondent might conceivably incur through events not remotely connected with its business . I do not agree. I find from testimony of Tugman and Moody , and admissions of Brown, that shortly after the strike started Union Agents Brown and Miller visited and talked to common carriers who normally delivered merchandise to Respondent, and to their employees, following which several of the carriers ceased delivery of goods to Respondent during the strike. A few of them were not delivering to it even at the time of hearing. The information Tugman and Moody received on this subject from various carriers led them to believe that the Union was conducting both a primary and an illegal secondary boycott against Respondent, which was hurting its business .30 When the Respondent was thus being fought with various potent weapons in the Union's arsenal, and its chief negotiator was engaged in solution of another labor difficulty which involved a contract, its continued firm insistence upon a clause which it felt would deter this Union from similar activity against it in the future cannot reasonably be interpreted as evidence of bad faith on its part 31 When faced with this union activity, and with the provisions of the new Virginia Freight Council Agreement fresh in his mind, it was only natural for Tugman to question whether that agree- ment might be the source of future boycott activity against Respondent by the Union, and to seek some assurance from the Union on that score. Moreover, although faced with what he considered illegal activity by the Union , Tugman did not take an inflexible stand on section 15 G, for on October 26 he agreed to discuss with his directors the Union's renewed offer of a substitute clause, together with its demand for reinstatement of all strikers, while indicating that he would not take it on himself to alter the clause because of the Union's illegal boycott activity and its indication that it would continue. After receiving orders from his directors to try to get at least some "mutual degree of compliance-by both parties " in the face of union activity which was hurting their business , Tugman tried again at the last meeting to persuade the Union to accept section 15 G as it was . Failing in that, he offered to submit a new clause expressing the same liability of both parties for violation of contract. He submitted the new clause on November 22. For reasons stated above , I do not consider as evidence of bad faith his mention therein of "violations of the terms of this agreement resulting from the `hot cargo' provisions of the union 's September 19, 1955 City Pick-Up and Over-the-Road agreements Article XT and TX respectively " In at least one respect section 16 appeared to contain a further concession to the Union's views : the statement of the Union 's liability therein referred to violations of the terms of the agreement "by the union or its members"; substitution of "its members" for "the employees" seems to limit liability to acts of employees who are union members , which is closer to the type of clause which Greeley testified the Union would now consider seriously . Nevertheless, the Union rejected the new clause for the same reasons voiced against its predecessors . Thus it would appear that 100n the basis of this information, Respondent later filed a charge- with the Board alleging that the Union had violated Section 8 (b) (4) (A) of the Act. The charge was pending at the time of the hearing 8 Cf. N. L. R B. v. Hart Cotton Mills, Inc, 190 F 2d 964, 971, 972 (C A 4). 30 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the final impasse on this point was caused as much by the Union's stubbornness as by Respondent's attitude. In addition, as Tugman testified, section 16, like its predecessors, would bring all problems of union liability under the grievance and arbitration procedure in the first instance. Considering all these facts, I cannot conclude that Respondent was unreasonable or acted in bad faith in bargaining on the liability clause during the strike. I am convinced and find on all pertinent facts that the parties engaged in bona fide but hard bargaining and reached a genuine impasse on this subject during the strike. It follows that the economic strike was not converted into an unfair labor practice strike by Respondent's bargaining on this point during its course. I also find that the parties reached a genuine impasse on the Union's new demand for reinstatement of all strikers, as Respondent took the legally proper position that it was not required to reinstate economic strikers who had been replaced.32 C. Respondent's handling of striking employees On the day the strike began Respondent sent letters to 32 employees who failed to report for work that morning, advising each that "unless you report for work on Thursday, September 8, 1955, at your regular time, we will be forced to fill your job with a permanent replacement." 33 On September 8, 1955, Respondent sent to each of 18 striking employees, who were covered by a group insurance policy, a letter advising that, since the employee was no longer employed by Respondent, the policy had been canceled effective that date, insofar as it covered him. As Respondent replaced striking employees during the strike, it sent each a letter on the date of replacement advising him of that fact. Some of these letters also noti- fied the striker of cancellation of the group insurance policy as to him. The letters were sent to the following strikers on the dates opposite their names: R. L. Branch______________ Sept. 16 James F. Ellis_____________ Sept. 16 Richard Miller_____________ Sept. 8 David Redding Jr---------- Sept. 16 C. L. Reeves______________ Sept. 8 Otis Richardson____________ Sept. 16 J. Sutton_________________ Sept. 8 Willie H. Smith____________ Sept. 16 Paul Silvester______________ Sept. 8 Donald Williams----------- Sept. 16 James W. Helms___________ Sept. 9 Walter Mooring____________ Sept. 20 Morris Strickland___________ Sept. 9 Joseph Eure_______________ Sept. 29 John Carr_________________ Sept. 13 John Lewis---------------- Sept. 29 Julian Case________________ Sept. 9 William Smith_____________ Sept. 29 Willie B. Taylor____________ Sept. 13 Leonard Webster___________ Oct. 10 Melvin H. Boone__________ Sept. 8 Joe Lewis----------------- Oct. 10 Charles D. McKay__________ Sept. 8 Chester H. Powell__________ Oct. 10 John Wrenn_______________ Sept. 8 Melvin E. Watford--------- Oct. 26 Vattelle Beckett____________ Sept. 16 Calvin James____________ 34 Sept. 29 George L. Brown___________ Sept. 16 General Counsel concedes that, if these employees were economic strikers as I have found above, they could be permanently replaced. It follows that Respondent had a right to warn them that it would exercise its right to replace them if they did not return by a fixed date.35 When they failed to return within the time specified, and Respondent thereafter filled their vacant jobs with permanent replacements, I do not consider it a violation of the Act to advise them of their replacement, nor 32 Although Brown testified that reinstatement of strikers was never a condition of sign- ing a contract, I do not credit that testimony, for he testified that it was his under- standing that in every strike involving the Union, an agreement always involved re- instatement of all strikers The union agents' remarks on this point show that they made it clear to Tugman that reinstatement of all strikers was part and parcel of any "package" settlement of the contract and the strike s3 The letters were sent to the employees at their last known addresses as noted on company records, but some of them, such as Chester T3 Powell, did not receive them, having moved prior to the strike without notifying Respondent of their change of address 34 Calvin James was on vacation when the strike started, and did not receive the warn- ing letter of September 6 because he had moved to a new address unknown to Respondent. He came to the plant on September 19, 1955, and after a talk with his supervisor, did not return to work and joined the strike. 36 Kansas Milling Company v N L R B , 185 F. 2d 413, 419, 420 (C A 10) ; The Texas Company. 93 NLRB 1358. 1359, set aside on other points, 198 F 2d 540 (C A 9) Robinson Freight Lines, 114 NLRB 1093. ECONOMY STORES, INCORPORATED 31 to tell them that Respondent was canceling an insurance benefit which existed solely as an incident of their actual work as employees.36 I conclude and find that Respondent did not violate the Act by sending the above warning, replacement, and insurance cancellation letters to the strikers. I shall recommend dismissal of para- graph 11 A of the amended complaint which charges that the sending of the letters constituted illegal discrimination against the last 21 employees named in the above hst 37 On December 3, 1955, a group of 11 striking employees 38 voluntarily abandoned the strike and had a conference with Moody and his assistant, Grissom, at the plant. Otis Richardson, their spokesman, said they all wanted to return to their old jobs. Moody passed out employment applications and told all to fill them out. A few strikers asked whether there was any need, or if it would do any good, to fill out the forms to get their jobs back, and Moody replied that if it were not necessary, he would not have had them fill them out. All the strikers filled out the forms except Richardson; he had filled one out on November 29, when he applied for reinstate- ment to Grissom, who directed him to fill it out and told him he would call him when there was an opening for him. Moody told the group, with the exception of Luther Ampey, that there were no openings at the time, but he would take their applications and, as soon as he had places for them, he would call them and give them jobs. None of the applicants, except Ampey and Dotson, have ever been re- called by Respondent. At the meeting, Moody told Ampey that he did not think the man doing his job would "work out," and that he (Moody) would recall Ampey if he did not. During the next week, Moody sent word to Ampey on the picket line to see him on Monday, December 12. Ampey reported for work that day, was rein- stated to his former job with all benefits and privileges formerly enjoyed, and worked for Respondent thereafter. When reinstated, his written application was returned to him, with the explanation that it was not necessary for him to complete that form 39 All of these employees, except Ampey, had been permanently replaced before December 3. At a meeting of striking employees on December 14, 1955, the union officials called off the strike, and instructed the employees to apply at the plant for their jobs the next day. On December 15, eight striking employees applied to Moody at the plant for reinstatement to their former lobs.40 Moody told them that the plant was filled up and he had no openings at the time, but would take their ap- plications and would call them when Respondent had any vacancies At his request, Beckett, Brown, Boone, and Ellis filled out new applications for employment; Richardson, Powell, and James did not do so, having filled them out on December 3; Willie B. Taylor was not given any application to fill out. On December 17, Melvin H. Watford made similar application to Moody who gave him the same answer as to the others, and had him fill out an application form. When making their application, Brown, Richardson, Ellis, James, Powell, Beckett, and Watford each handed Moody a typed paper, prepaied by the Union and signed by the ap- plicant, which stated that the undersigned applicant would like to return to his former job with Respondent "unconditionally." 41 The record shows that all of the above strikers had been permanently replaced before their applications for reinstatement I find that the striking employees named above made bona fide and unconditional applications for reinstatement on the dates found above, as to those who applied both on December 3 and 15, I find their initial application was on the earlier date.42 36 Kansas Mslling Company v N. L It. B , supra 37I e , from Julian Case to the bottom in the left -hand column , and all named in the right-hand column ^ Julian Case , Calvin W James, Charles D McKay, Chester H Powell, David Red- ding, Jr., John B Wrenn , Jesse Dotson , Luther Ainpey , Otis Richaidson , William Smith, and Willie H Smith 89 These findings are based on credited and mutually corroborative testimony of Moody, Wickers , and most of the strikers in the group , and company records. 40 Vattelle D. Beckett, George L. Brown, Melvin H Boone , James F. Ellis, Powell, James, and Richardson applied in one group Willie B. Taylor made application to Moody alone 41 Strikers Case and Wrenn mailed similar slips to Moody on December 16 and 31, re- spectively , and Willie H Smith handed one to Moody at the plant on December 27 42 Respondent argues that this finding is not Justified , and that paragraph X of the amended complaint is not supported by these facts, because the strikers did not make an "unconditional offer to 'return to work," but only a conditional -offer to return to their old 32 DECISIONS OF NATIONAL LABOR RELATIONS BOARD As all of them were economic strikers, I conclude that Respondent was within its rights in refusing them reinstatement, as all but one had been permanently replaced before their applications.43 General Counsel contends, however, that Respondent discriminated unlawfully against the strikers by (1) making them fill out new ap- plications for employment, thus treating them as new employees, and (2) telling them they would be called back when there were openings, and then failing to recall them but hiring new employees to fill jobs which they were competent to handle. There are cases which hold that treatment of economic strikers, who apply for reinstatement prior to their permanent replacement, as new employees is an illegal limitation on their rights as "employees" in violation of Section 8 (a) (3), and that a requirement of individual applications for employment, or submission to interviews as new employees, is evidence of such discrimination.44 However, the Board has recently held that economic strikers who have been permanently re- placed are in effect applicants for new employment, and have only the limited right not to be penalized or subjected to discrimination because of their union or con- certed activties. In Bartlett-Collins Company, 110 NLRB 395, affirmed sub nom. American Flint Glass Workers' Union v. N. L. R B., 230 F. 2d 212 (C. A., D. C.) the employer made a promise to recall some economic strikers, who had been permanently replaced, in terms similar to those at bar; it did not require them to file new written applications for employment because it had their original ones, but it placed their names on a separate list. and told them it would call them in the event of an opening. The Board held (110 NLRB at p. 397) : The Trial Examiner found that the Respondent's statement to the Union at the March 29 conference to the effect that the Respondent would take the strikers back when it could constituted an agreement to rehire which con- ferred upon the permanently replaced economic strikers a "preferential status in future hirings" over new employees and, "waived whatever rights it [Re- spondent] had to consider the strikers only as new employees " Even assum- ina that Respondent's remarks constituted an agreement to rehire, we disagree with the Trial Examiner to the extent that he implies that the failure to com- ply with this agreement was, in effect, discriminatory as a matter of law. Permanently replaced economic strikers merely have the right not to be penalized for their concerted activity, and are not entitled to preferential status in hiring. They are in the position of applicants for new employment as to whom the General Counsel must sustain his burden of proving dis- criminatory motivation on the part of the Respondent. After reviewing all pertinent facts, including the employer's hiring practices during and after the strike, the Board found insufficient evidence to support a conclusion that the employer had discriminatorily refused reemployment to those strikers not in fact rehired. In N. L. R. B. v. Roure-Dupont Mpg, Inc., 199 F. 2d 631, the United States Court of Appeals for the Second Circuit held (p. 633) : Respondent was under no obligation to rehire strikers who had been per- manently replaced or whose jobs had been abolished during the strike (citing jobs I consider this position without merit It is clear that the strikers sought their old jobs at the outset, and Moody rightfully refused them "reinstatement," for reasons which appear hereafter However, when they filled out new applications upon Moody's offer to recall them when openings were available, they accepted that offer and in effect made an unconditional offer to "return to work" on those terms In this connection, Beckett, Boone, and Ellis did not answer the question "What position can you fill?" on their application blanks, so their applications can be taken as requests for any job avail- able. Brown answered the question with "General," and Wrenn wrote in "Labor," so their applications are likewise general Watford, Willie H Smith, and McKay each wrote in two job titles, thus asking for any jobs in those categories. Whether the strikers' actions be called unconditional "applications for reinstatement" or "offers to return to work," the effect is the same, so far as their future rights and Respondent's obligations toward them are concerned. See Roure-Dupont Manufacturing, Inc, 93 NLRB 1240, 1242, 1243, enfd. as mod , 199 F. 2d 631 (C A. 2). 43 N L. R B v. Mackay Radio h Telegraph Co , supra; Kansas Milling Co v. N. L R B , supra; N L R B. v. Bradley Washfountain Co, 192 F. 2d 144, 153 (C. A. 7). Luther Ampey, the single striker whose job had not been filled, never received notice of replace- ment, and was reinstated to his old job on December 12. There is no allegation of discrimination against him 44 See, for example, St. Marys Sewer Pipe Company, 54 NLRB 1226; Robinson Freight L tines, 114 NLRB 1093 ECONOMY STORES, INCORPORATED 33 the Mackay Radio and Kansas Milling cases). But when an employer promises to rehire striking employees as soon as their positions again become available, he may not discriminatorily violate this undertaking. Wilson & Co. v. N. L. R. B., 7 Cir., 124 F. 2d 845; see also our decision in N. L. R. B. v. E. A. Laboratories, 2 Cir., 188 F. 2d 885, certiorari denied E. A. Laboratories v. N. L. R. B., 342 U. S. 871. The court held that the record supported the Board's finding that the employer had violated that promise and discriminated against the strikers by hiring outside help when it gradually replaced its depleted working force. See also Sax v. N. L. R. B., 171 F. 2d 769, 771 (C. A. 7). Under these decisions, Respondent's hiring practices during and after the strike must be analyzed to determine whether it discriminatorily violated its promise to the strikers named in the amended com- plaint. Although Richardson, an order picker of about 7 years' service, applied for that type of job on November 29, and was told he would be recalled when there was an opening, Respondent hired a new man, James McKee, as an order picker on No- vember 30, on his application dated the same day. Richardson had been a grocery order picker, and McKee was hired as a produce order picker, but there is no proof that a grocery order picker was not qualified to handle produce orders, or that the two jobs required different training. Respondent apparently made no distinction between grocery, produce, and frozen order pickers, for its bargaining proposals to the Union listed a single, general classification of "order picker," and offered one rate for all in that' classification. Since Richardson had been an order picker for his entire service with Respondent, it is inferrable, and I find, that he could have handled produce orders. Besides Richardson, the applicants named in the amended complaint contained 5 other order pickers (Beckett, Ellis, Boone, Wrenn, and Powell) with service varying from 10 months to 7 years. Yet Respondent hired 5 new order pickers in January 1956, and 3 in February 1956, a total of 8, without recalling the 6 experienced strikers. The December 3 group of applicants contained 3 truckdrivers , James (5 years of service), Redding (over a year ), and Jesse Dotson (experience not stated in the record); yet Respondent hired 3 new truckdrivers on December 7 and 22, 1955, and January 26, 1956. Grissom testified that Respondent made no distinction between grocery and produce drivers, and that they could be interchanged, as their common qualification was ability to drive a truck. Hence, it is clear that the strikers could have filled the new jobs. In fact, Respondent rehired Dotson as a driver on January 4, 1956; he is still working and is not named in the complaint. The striker-applicants included five laborers (Brown, William Smith, Willie B. Taylor, and Watford, who are named in the complaint, and Willie H. Smith, who is not). Although all had made application by December 15, Respondent hired 10 new laborers, 1 on December 19, 1955, 4 in January, and 5 in February 1956. I find from testimony of Wickers and Grissom that Respondent's laborers are unskilled workmen, requiring virtually no training. Hence it is clear that the striking laborers could have filled any of the new jobs created by Respondent.45 It is clear from the above facts that Respondent did not carry out its promise to recall the strikers who applied for work, when jobs in their respective work cate- gories were available, but filled such jobs with new men whose qualifications are not disclosed in the record. There is no proof that any of the new men had worked for Respondent previously. Nor is there any proof to indicate that any of the striker- applicants had been unsatisfactory employees; the length of service of some with Respondent is evidence to the contrary. It is a reasonable inference that if Respond- ent had not been guided by discriminatory motives, it would have preferred in the interests of efficiency to fill new jobs with experienced employees rather than new, untried outsiders. The fact that it took new men instead of old, experienced employees who had been on a strike, contrary to its clear promise to the latter, pre- sents a prima facie case supporting the conclusion that Respondent failed to recall the strikers solely because of their union affiliation and protected concerted activity, and thus discriminated against them in violation of Section 8 (a) (3) and (1) of the Act 46 The same conclusion is strengthened by the fact that 10 of the men who 45 The above findings are based on a stipulated chart of hirings shown in company records (General Counsel's Exhibit No. 30), and credited testimony of Grissom, Wickers, Wrenn, Taylor , Ellis, Redding, James, Powell , Richardson, Boone, and Watford. 'e Cf. Wilson A Co., Inc. v. N. L. R. B., supra; N. L. R. B. v. Roure-Dupont Manu- facturing, Inc., supra. 483142-59-vol. 120-4 34 DECISIONS OF NATIONAL LABOR RELATIONS BOARD replaced strikers during the strike do not appear on the payroll of the week ending February 22, 1956,47 which indicates that at some time before that week those specific jobs became vacant, notwithstanding which Respondent never recalled the expe- rienced strikers who originally held those jobs. Respondent presents several arguments against this conclusion . First, it claims the record fails to show the experience and qualifications , if any, of the new employees , the comparative merits of the new employees and the strikers, whether the new jobs were temporary or permanent , or that new men were deliberately preferred over strikers, and that without such proof a case of discriminatory motiva- tion is not made out. This argument assumes that General Counsel must adduce evidence on these points as part of his case. It is true that General Counsel has the ultimate burden of proving discriminatory motivation by the requisite preponderance of substantial evidence on the record considered as a whole, and that this burden never shifts; but when he has adduced facts tending to show a prima facie case of discrimination, the burden of going forward with evidence adequate to rebut that case lies on Respondent .48 Here, I think the facts found above, based on company records and other uncontradicted testimony, with all reasonable inferences there- from, are sufficient to establish a prima facie case, making it incumbent on Respond- ent to adduce countervailing evidence. Respondent has offered no substantial proof on the points noted in its argument nor on its normal practice in filling vacancies and new jobs in general, which would tend to rebut the prima facie case.49 It only points to the lack of evidence of prior unfair labor practices or animosity toward the Union, to the fact that it reinstated Ampey on his first application, and Dotson on January 4, 1956, and two unidentified strikers when they applied on the second day of the strike. While these facts and my findings as to the bargaining conduct of Respondent indicate that Respondent was operating within the law prior to the strike, and with respect to the 4 strikers in question during and after it, they do not solve the question whether Respondent was a first offender with regard to 14 other strikers named in the complaint .50 Respondent also claims the applications of the strikers cannot be considered continuing applications such as to require Respondent to take them back in accordance with its promises. I disagree, first, because Respond- ent's promise to call them would in itself make it unnecessary for them to do more than wait for a call from Respondent, for they had no way of knowing when jobs would be available ; only Respondent knew that , and it would have been no hardship on Respondent to send them letters of recall when jobs opened up, just as it sent them one or more letters during the strike as found above . Second, Respondent's promise had no time limitation on it, and there is no proof that Respondent con- sidered their applications as lapsed, or advised them they would have to make new applications, after any specified period ; in this connection , it is noteworthy that Respondent rehired Dotson on January 4, 1956, just a month after his original appli- cation. Finally, some strikers 51 made it clear to Respondent after their original' application that they still desired employment with Respondent, by repeated verbal applications to Moody for jobs in the months following their abandonment of the strike 52 Having offered no reasonable explanation for its failure to recall the strikers, whose concerted activities were known to it, nor for its hiring of new employees in the lieu of the strikers, and making no claim that the strikers were incompetent or otherwise unsatisfactory, Respondent's failure to keep its promises of recall, by hiring new, untried help in preference to the experienced strikers, can have no rational explanation other than that Respondent discriminatorily refused to recall 47 These replacements were Renaudette, A E Hardy, Robert Chetister, V L Southall, H C Gray James Highter B Berlin, R Woodard, Farnville, and Mayfield 49 E. B. Law and Son, 92 NLRB 826, 827. 49 The testimony of Grissom, assistant manager, and Wickers, warehouse superintendent who hires employees, dealt only with the manner in which Respondent chose replacements for the strikers during the strike. Neither of them testified that the practice on replace- ments was later followed in filling new jobs ; hence their testimony sheds no light on the question why Respondent hired untried men for jobs which the strikes-applicants were qualified to handle co The mere fact that an employer has not discriminated against a few strikers does not excuse him from the consequences of discrimination aga nit others Textile Machine Works, Inc, 96 NLRB 1333, 1359 (footnote). 61 Redding, James, Richardson, and McKay. 52 The above circumstances, plus Moody's clear promises of recall made to the strikers personally, distinguish this case from Sax v N L R B , 171 F 2d 769, and Office Towel Supply Company, Incorporated, 97 NLRB 449, cited by Respondent ECONOMY STORES, INCORPORATED 35 the strikers because of their union affiliation and concerted activities . I am con- strained to conclude and find that Respondent failed to rehire William Smith, Otis Richardson, Calvin W. James, Chester H. Powell, John B. Wrenn, David Redding, Jr., James F. Ellis, Melvin H. Boone, George L. Brown, Vatelle D. Beckett , Willie B. Taylor, and Melvin E. Watford, when jobs for which they were qualified became available, because of their union affiliation and concerted activity, thereby discrimi- nating in regard to their hire to discourage membership in the Union , in violation of Section 8 (a) (3) of the Act. By this conduct Respondent also interfered with, restrained, and coerced employees and, prospective employees in the exercise of rights guaranteed by Section 7 of the Act, in violation of Section 8 (a) (1) of the Act 53 I make no finding of similar discrimination against Julian Case and Charles D. McKay. Case, who applied for his old job with the December 3 group, had been 1 of Respondent's 2 tow motor operators before the strike; the other , Joseph Reid, did not go on strike. Tow motor operators are skilled workmen who run lift trucks which transfer bulk merchandise around the warehouse . In his written application of December 3, Case requested work only as a "high lift operator ," which is apparently another name for a tow motor operator . Case was permanently re- placed on September 9, 1955 , by Robert Webb, who was still on Respondent's payroll as a tow motor operator in the week ending February 22, 1956 . Company records and Wicker's testimony show that Respondent has hired no other tow motor operators since the strike. It is clear that Respondent has had no openings in that classification since the strike , hence there can be no finding that it discrimi- natorily refused to recall Case at any time after his application . I find that Re- spondent has not violated the Act with regard to Case, and shall recommend that the amended complaint be dismissed as to him. Charles D. McKay was employed in the tobacco and short -order room at the time of the strike. When hired by Respondent 3 years before, he started as a shipping clerk , and was later transferred to the tobacco room in the warehouse. At the strike , he was earning $1 .50 per hour, as against 85 cents to a dollar an hour paid to 3 stockboys who worked with him . On December 3, he asked Moody for reinstatement to his old job , and in his application of that date listed "shipping clerk" and "warehousing" in that order as the positions he could fill ; however, there 'is no proof that he ever worked as a laborer or stockman in the tobacco room or elsewhere in the warehouse. ' McKay was permanently replaced on September 8, 1955, by Ronald Felt, an employee who was apparently transferred to his job from other work at the plant . Fett was still listed on the payroll for the week ending February 22, 1956 , as "working foreman , tobacco room." Company records show that Respondent has hired no new employees in the shipping department or the tobacco room since December 3, 1955. Hence, assuming without deciding that McKay had not been a supervisor but at most a working foreman properly in- cludable in the appropriate bargaining unit, it is clear that there has been no opening in the job categories for which McKay was qualified and applied and for which Respondent could have recalled him , since his application . I conclude and find that Respondent has not discriminated against McKay as charged in the amended complaint, and shall recommend dismissal of the complaint as to him. I make no finding that Respondent independently discriminated against any striker-applicant by requiring him to fill out a new employment application form. The record shows that, prior to the strike, Respondent maintained no separate personnel files on employees and made no practice of procuring written applications from applicants for work. When the strike started, Respondent began at the sug- gestion of Tugman to make up and maintain personnel files on all employees, both new and old, which included written application forms containing personal history and qualifications of each employee. Company records show that during the strike, and since, both new and former employees, as well as the striker-applicants, were required to make out such forms. It is clear that the requirement of written appli- cation forms was merely part of Respondent's improvement or modernization of 51 The finding of discrimination as to Beckett and Brown is not affected by the fact that they applied on September 20, 1955, for any job available , rather than reinstatement to their old jobs , and that Respondent found openings for them and attempted to call them back by letter. According to Moody , Beckett never received the recall letter, and although Brown told Moody on December 15 that he had not wanted work when he came in on September 20, the fact remains that both made unconditional application for reinstate- ment on December 15, and received the same promises as the others , as found above. 36 DECISIONS OF NATIONAL LABOR RELATIONS BOARD its personnel record system, and that the striker-applicants were treated no differently in this respect from any other employees, old or new, or applicants for employment. The next question is whether Respondent's discrimination against the 12 strikers found above prolonged the economic strike and thereby converted it into an unfair labor practice strike. The Board has held that an employer's unfair labor practices during an economic strike do not automatically convert it into an unfair labor practice strike, and that such conversion will be found only where there is proof of a causal relationship between the unfair labor practices and the prolongation of the strike. Anchor Rome Mills, Inc., 86 NLRB 1120, 1122; Harcourt and Company, Inc., 98 NLRB 892, 909. At the two bargaining sessions during the strike, the Union demanded reinstatement of all strikers. Respondent rejected the demand, claiming that most of them had been replaced but offering to reinstate those who had not. The Union rejected the counterproposal, and the strike continued. How- ever, the Union never challenged the validity of Respondent's replacement of strikers, nor its counteroffer, except to make the vague threat on October 26 that the Board would order reinstatement of all strikers merely upon a call from the Union to its Regional Office. Obviously, this was only an in terrorem statement, based on the Union's view, which I have rejected herein, that Respondent was bargaining in bad faith, and it occurred long before any strikers applied for rein- statement. I have found that Respondent's letters to the strikers early in the strike did not violate the Act, and there is no proof of other unfair labor practices by Respondent prior to November 30, when it failed to recall Richardson for a new order picker's job. There is no proof that either the Union or any of the strikers learned of Respondent's hiring of new men in preference to strikers, or that the Union made any protest on that score either to Respondent or the Board, prior to the employees' abandonment of the strike. I find, contrary to the contention of General Counsel, that the parties' disagreement over the liability clause and rein- statement of all strikers during the strike, and not Respondent's discrimination against certain strikers toward the end of the strike, was responsible for its pro- longation. Hence, it remained an economic strike to its end. Nor can I find anything in the nature or circumstances of the discrimination aforesaid which would warrant a further finding that it was so related to Respondent's conduct in the negotiations with the Union as to make such prior conduct violative of the Act. C. Pay raise to employees during the strike The record shows that on various dates between September 14 and November 23, 1955, Respondent gave pay raises to 8 employees, 4 of whom had been employed before the strike (Joe Jenkins, Cornelius Johnson, Joseph Reid, and James Webster), and 4 of whom were hired as replacements for strikers (George Rivers, James Scott, Howard Tatem, and Robert Webb). The raises given to six of them brought their pay rate to a figure still below the last amount offered by Respondent for their respective job categories and accepted by the Union at the close of the negotiations. The raise to Jenkins, an order picker, brought his pay to $1 an hour, the same as Respondent's last offer. James Webster was employed as a general utility man, or "laborer," classifications not listed in any of the company or union proposals; the closest to it would appear to be the general classification of "warehouseman," and Webster's raise brought him to 95 cents an hour, the same as Respondent's last offer for that occupation. I find from Wicker's testimony that these raises were granted because of merit or as incentives to do better work. During this period, Respondent was rebuilding its work force with replacements, so that on November 23, 1955, it had at least 22 employees, which includes both nonstriking employees and replacements for strikers, and possibly up to 10 more, if one includes replace- ments of strikers who do not appear on the payroll for the week ending February 22, 1956. In the same period, of course, the Union was still the certified bargaining agent of all employees in the appropriate unit, but Respondent did not notify or consult with the Union about these increases. On all the facts, I am unable to conclude that Respondent's grant of unilateral increases on economic considerations to only eight employees, which left their pay rates the same as or lower than the last rates offered by Respondent and accepted by the Union, was made or intended to bypass the Union or to undermine its authority or status as the statutory bargaining agent. Indeed, as the Supreme Court said with respect to unilateral grants of wage raises by an employer after his proposals therefor made during collective bargaining had been left unaccepted or even rejected by a union, "such a grant might well carry no disparagement of the collective bargaining proceedings. Instead of being regarded as an unfair labor practice, it might be welcomed by the bargaining repre- ECONOMY STORES, INCORPORATED 37 sentative , without prejudice to the rest of the negotiations." 54 I conclude that such increases are not evidence of a refusal to bargain by Respondent. Pacific Gamble Robinson Company v. N. L. R. B., 186 F. 2d 106, 109, 110 (C. A. 6). III. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section II, above, occurring in connection with the operations of Respondent set forth in section I, above, have a close , intimate, and substantial relation to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. IV. THE REMEDY Having found that Respondent has engaged in unfair labor practices, I will recommend that it cease and desist therefrom and take certain affirmative action to effectuate the policies of the Act. Having found that Respondent has discriminated in regard to the hire of William Smith, Otis Richardson, Calvin W. James, Chester H. Powell, John B. Wrenn, David Redding, Jr., James F. Ellis, Melvin H. Boone, George L. Brown, Vatelle D. Beckett, Willie B. Taylor, and Melvin E. Watford, I shall recommend that Respondent offer to them immediate and full reinstatement to their former or substantially equivalent positions (including the various positions which they held from time to time and any for which they were qualified and applied as set forth above ), and that Respondent dismiss, if necessary , employees who were hired for such positions subsequent to the respective applications of the above -named persons. I shall also recommend that Respondent make whole each of the above-named persons for any loss of pay he may have suffered as a result of Respondent's discrimination against him, by payment to him of a sum of money equal to that which he would normally have earned as wages from the date of the discrimination against him 55 to the date of Respondent's offer of reinstatement, less his net earnings during that period. The loss of pay due to each shall be computed on a quarterly basis in accordance with the formula set forth in F. W. Woolworth Company, 90 NLRB 289. Respondent should also be required to make available to the Board or its agents such reports and records as the Board may require in accordance with the foregoing decision, for computation of back pay and reinstatement rights. In view of the nature of the unfair labor practices committed, the commission by Respondent of similar and other unfair labor practices may be anticipated . I shall therefore recommend that the order herein be coextensive with the threat, and that Respondent be ordered to cease and desist from infringing in any manner on the rights guaranteed by Section 7 of the Act. Upon the basis of the above findings of fact , and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. The Union is a labor organization within the meaning of Section 2 (5) of the Act. 2. By failing and refusing to reemploy the persons named in section IV, entitled "The Remedy," above, thereby discriminating against them in regard to their hire, and discouraging membership in the Union , Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8 (a) (3) of the Act. 64 N L R B . v. Crompton-Highland Mills, Inc., 337 U S 217, 224, 225 Neither the charges nor the original or amended complaint mentions the unilateral wage raises. The issue was first raised by General Counsel at the hearing , but fully litigated by both sides. se The record does not furnish an adequate basis for determining the exact dates or order in which said persons would have been recalled, absent discrimination by Respondent. As noted above, it is not clear that the rule of seniority in replacement of strikers applied by Respondent is also applied by it in other aspects of its personnel policy, although computa- tion of back pay and reinstatement of striker -applicants according to their seniority (i e., the order picker of longest service should receive first consideration , and back pay from November 30, 1955 , when the first new order picker was hired ; the order picker of next longest seniority should be placed next , or at the same time if jobs are available, and receive back pay from January 14, 1956, when the next new order picker was hired, and so on ) would seem to be the most equitable rule . Cf. N. L R B v. Roure-Dupont Manu- facturing, Inc , 199 F 2d 631 , at p. 634. However, these matters can be considered at the compliance stage of the proceeding. 38 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 3. By such conduct Respondent has also interfered with, restrained , and coerced employees and prospective employees in the exercise of rights guaranteed in Section 7 of the Act,, and has thus engaged in and is engaging in unfair labor practices within the meaning of Section 8 (a) (1) of the Act. 4. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2 ( 6) and (7) of the Act. 5. By its conduct found above, Respondent has not failed to bargain in good faith with the Union in violation of Section 8 (a) (5) of the Act, nor has it violated Section 8 (a) (3) or (1) of the Act by failing to reemploy Julian Case and Charles D. McKay, or by requiring written application for employment forms from striking employees named above, or by sending to striking employees letters warning them of replacement , notifying them of actual replacement , or notifying them of cancellation of insurance benefits after replacement. [Recommendations omitted from publication.] Boyce Wallace and Louise M. Wallace, t/a Investment Building Cafeteria and Joint Executive Board of the Hotel and Restau- rant Employees and Bartenders International Union, AFL- CIO. Case No. 5-CA-1182. March 5, 1958 DECISION AND ORDER On November 6, 1957, Trial Examiner Sidney Lindner issued his Intermediate Report in the above-entitled proceeding, finding that Respondents had engaged in and were engaging in certain unfair labor practices and recommending that they cease and desist there- from and take certain affirmative action, as set forth in the copy of the Intermediate Report attached hereto. Thereafter, Respondents filed exceptions to the Intermediate Report and a supporting brief. Pursuant to the provisions of Section 3 (b) of the Act, the Board has delegated its powers in connection with this case to a three-member panel [Chairman Leedom and Members Bean and Fanning]. 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 Inter- mediate Report, the exceptions and brief,2 and the entire record, and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner.' 1 We have considered the evidence proffered by Respondents concerning the sale of the Wallace Restaurant at the same time , approximately, as Investment Cafeteria was pur- chased, which the Trial Examiner refused to admit in evidence As such evidence, if adduced , would not warrant any departure trom our conclusion that Respondents are suc- cessor employers , we find that the Trial Examiner's exclusion of the evidence was not prejudicial. 2 Respondents' request to reopen that hearing, to permit the introduction of evidence concerning conduct of the night manager which they allegedly would have adduced in the certification proceedings if they had been parties , is denied for the reasons stated in the Intermediate Report for the exclusion of such evidence at the hearing See also Miller Lumber Company 90 NLRB 1361 , 1362 Respondents ' request for oral argument is denied as the record and brief adequately present the issues and positions of the parties. 3 As indicated by the findings of the Trial Examiner , but not expressly found, we find that Respondents purchased Investment Cafeteria with knowledge of the Board's certification 120 NLRB No. 2.