National Dairy Products Corp.

434 - DECISIONS OF NATIONAL LABOR RELATIONS BOARD National Dairy Products Corporation , Detroit Creamery Divi- sion and United Dairy Workers Local No. 83, AFL-CIO. Case No. 7-CA-f161. February 4, 1960 DECISION AND ORDER On September 25, 1959, Trial Examiner George A. Downing issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had not engaged in any unfair labor practices and recommending that the complaint be dismissed in its entirety, as set forth in the copy of the Intermediate Report attached hereto. There- after, the General Counsel filed exceptions to the Intermediate Report and a brief in support thereof. Pursuant to the provisions of Section 3(b) of the National Labor Relations 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 In- termediate Report, the General Counsel's exceptions and brief, and the entire record in this case, and hereby adopts the findings, con- clusions, and recommendations of the Trial Examiner, with the fol- lowing modifications. We agree with the Trial Examiner that the dispute, which gave rise to the Union's charge of a refusal to bargain by the Respondent, is solely one of contract interpretation. The dispute arose when the Respondent told the Union that, in the interest of economy, it intended to subcontract its milk hauling operations, which were being per- formed by employees covered by the current contract with the Union. The Union immediately filed a grievance asserting that this would constitute a violation of the contract. The Respondent took the posi- tion that the matter was not properly grievable under the terms of the contract in view of the facts that the contract contained no pro- vision pertaining to subcontracting; that the State court had held, in a proceeding instituted by the Union, that subcontracting was not arbitrable under the preceding contract between the parties, which was similar in all relevant respects to the current contract; and that the Union, subsequent to that decision, had attempted, unsuccessfully,, to obtain inclusion of a subcontracting provision in the current contract. The Union ,continued to maintain that the matter was grievable,, and submitted the dispute to the United States district court under Section 301 of the Act, alleging that the Respondent's refusal to arbi- trate the grievance was a violation of the contract. The Union like- 126 NLRB No. 62. NATIONAL DAIRY PRODUCTS CORPORATION, ETC. 435 wise instituted the instant proceeding on the basis that the Respondent breached the contract by refusing to process its grievance, and the case was tried on that basis. It is clear from all the facts that the dispute between the Union and the Respondent was concerned solely with the interpretation of their contract, and that the parties so viewed the dispute. There is no showing that the Respondent, in interpreting the contract as it did, was motivated by union animus or was acting in bad faith. Under all the circumstances, and in accord with the established policy that the Board is not the proper forum for parties seeking to remedy an alleged breach of contract, we find that the Respondent has not re- fused to bargain with the Union within the meaning of Section 8 (a) (5) and (1) of the Act.' We shall therefore dismiss the complaint. [The Board dismissed the complaint.] i United Telephone Company of the West, et al , 112 NLRB 779 See also Timken Roller Bearing Co. v N.L R B. 161 F 2d 949, 9,55 (C A 6), Nihere the court found a dispute between parties to a collective -bargaining agreement over whether subcontracting was properly a subject for grievance under the agreement to be a matter of contract interpretation. INTERMEDIATE REPORT STATEMENT OF THE CASE This proceeding, brought under Section 10(b) of the National Labor Relations Act as amended (61 Stat. 136), was heard at Detroit, Michigan, on June 22-23, 1959, pursuant to due notice and with all parties represented by counsel. The complaint, issued by the General Counsel of the National Labor Relations Board and based on charges duly filed and served, alleged in substance that Respondent had refused to bargain with the Union, in violation of Section 8(a)(5) and (1) of the Act, by refusing to process and arbitrate a grievance presented by the Union on May 9, 1959, concerning Respondent's subcontracting of a certain tank haul to and from Alma, Michigan, on which arbitration was required under the terms of a contract between the parties. By its answer filed May 25, 1959, Respondent admitted that it had refused to process the grievance, but averred that it did not concern any matter which was arbitrable under the contract, that the contract expressly recognized Respondent's right to discontinue the operation, and that Respondent had in fact bargained with the Union concerning the effect of its action upon employee tenure as provided in the contract. Respondent also averred that its position that the grievance did not present an arbitrable issue was upheld in a State court action (to be later more fully referred to) which involved a contract virtually identical with the one currently in effect between the parties. Upon the entire record in the case, and from my observation of the witnesses, I make the following: FINDINGS OF FACT 1. THE COMPANY'S BUSINESS; THE UNION AS A LABOR ORGANIZATION I find on facts admitted in the answer that Respondent is engaged in commerce within the meaning of the Act (i.e., annual extrastate sales or shipments in excess of $50,000), and that the Union is a labor organization within the meaning of Section 2(5) of the Act. II. THE UNFAIR LABOR PRACTICES A. The issue; the evidence The sole issue herein is whether arbitration was required under the terms of the contract.of the Union's grievance filed on May 9, 1958, protesting the discontinuance 436 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and subcontracting of a milk tank haul from Alma to Detroit, Respondent admitting its refusal to process the grievance, but pleading that it was not an arbitrable one under the contract. There is no issue as to the appropriate unit or as to the Union's representative status. As a matter of contract interpretation is involved, we start appropriately with the contract provisions.' The contract contained a detailed grievance procedure, with a provision for arbitration as the ultimate step, for any unsettled dispute, claim, or grievance arising out of or relating to the contract Though there was no management prerogative clause, there was also no clause which purported to limit the Company's right to manage or direct its operations. There was also no limitation on the Company's right to rearrange, discontinue, or abolish any operation or job, but there was ex- press provision that the Company would notify the grievance committee 72 hours before the abolition, discontinuance, or rearrangement of any job or operation. There were also specific provisions for "bumping" rights of employees who might be affected by such action. We turn now to the history of Respondent's operations as concerned country milk hauling and to the experience of the parties under the contract in relation to the abolition of those hauls. In past years much of the milk which Respondent processed at Detroit was re- ceived from the producers at country milk stations where it was cooled and stored preliminary to transportation to Detroit or elsewhere by Respondent's employees and equipment. In the 10 or 12 years prior to May 1958, Respondent had operated some 15 such receiving stations. Since January 1, 1955, or 1956, however, Re- spondent had discontinued all such stations, other than the one at Alma, from which the hauling was being done in part by some nine of the employees at Detroit, represented by Local 83, and in part by two former employees of Respondent's processing plant at Ovid, which had been discontinued on July 1, 1957, and with which the Alma station has previously operated as part of the same unit. The latter employees were represented by Local 86 of the Retail, Wholesale, and Department Stores Union. The country stations were discontinued in part because the problem of insuring an adequate milk supply had changed from one of shortage to one of surplus and in part because Respondent's transportation costs substantially exceeded those of its competitors, who had also closed their receiving stations. For example, Respond- ent's cost of transportation from Alma to Detroit was 30 cents a hundred weight, while its competitors were paying 19 cents a hundred to independent contractors for an equivalent distance (135 miles) as fixed by the Federal Milk Marketing Order. There were no negotiations between Respondent and the Union concerning the closing of the other stations, and the evidence does not indicate that the Union made any protests, sought to process any grievance, or sought arbitration. The affected drivers simply exercised their bumping rights under the contract. The Union did, however, protest the Company's action in 1956 of discontinuing its iceless refrigera- tion department in Detroit and the subcontracting of the work to independent con- tractors, and when the Company refused to entertain the grievance, on substantially the same grounds as here, the Union brought-and lost-a State court action in which it sought to compel arbitration under a prior contract which contained griev- ance and arbitrations provisions broader in scope to those here involved. United Dairy Workers Local No. 83 v. Detroit Creamery Company (Michigan Circuit Court, Wayne County), 38 LRRM 2303. The opinion in that case concluded: If the Union desires to make subcontracting an arbitrable issue, they will have to make it a part of their next contract. The Union made the attempt which the court suggested by including in the de- mands which it submitted in negotiation of the present contract a clause under which the Company would agree that "it will not sub-let, sub-contract, assign, lease or in any manner transfer any of its operations or processes performed within the bar- gaining umt during the term of this Agreement or its extension or extensions without the prior consent and approval, in writing, of the Union." Respondent rejected the proposal, on the ground that the restrictive clause which the Union proposed would infringe upon the Company's prerogative to direct its operation in the best possible manner. We now reach the events which immediately concern the discontinuance of the Alma run. 1 The complaint specifically charged, and the answer specifically denied, that the grievance was one on which arbitration was required under the contract terms, and the General Counsel conceded at the hearing that that was the issue. In his brief, however, General Counsel argues that no question of contract interpretation Is involved. NATIONAL DAIRY PRODUCTS CORPORATION, ETC. 437 On or about May 7, the Company posted on the bulletin board a notice that "Ef- fective May 11, 1958, the Company Alma Milk runs will be discontinued." On May 9, Earl Ledford, chief steward, filed a formal grievance with the Company in the following language: This grievance is being filed in protest of the Company's notice to the Union that the tank haul runs to and from the Alma station will be discontinued, ef- fective Sunday, May 11th, 1958. The Union's position is that this work is still available and the Company is attempting to circumvent the contract. (Article V, Section 15, page 37.) On May 10, the Company delivered to Ledford a letter acknowledging receipt of the grievance and stating: This is to advise that the Company will not entertain such proposed complaint and grievance, since the matter of which you complain is not properly the sub- ject of a grievance under the collective bargaining agreement. The Company's right to determine the method and manner of conducting its operations is one of the exclusive rights of the Company, and the action taken by it is consonant with such rights and has been taken in good faith. On May 21, the Union filed a complaint in the United States district court under Section 301 of the Labor Management Relations Act, charging that Respondent had violated the contract by refusing to follow the grievance procedure, and it sought to compel Respondent to arbitrate its grievance. Respondent answered sub- stantially as here, denying that its discontinuance of the Alma run presented an arbitrable issue under the contract and averring that its action was a lawful exercise of a management prerogative which was in no wise restricted by the contract. The case is presently pending on the pretrial docket. On November 7 (6 months to the day from the Company's notice regarding Alma) the Union filed its charge in the present proceeding. The only conflicting testimony in the record concerns the extent to which the contemplated action concerning Alma was discussed between Company and Union prior to May 7, particularly in a meeting on April 25, at which the Company out- lined its plans concerning an overall reduction of operating costs for the Detroit division. Ledford admitted that the Company had discussed with him several times the hours on the Alma run, contending the hours were too high and that it wanted to get the hauling done at a cheaper rate, but he testified that those discussions were on an informal basis and were not during any meeting with the Union or the grievance committee. As to the April 25 meeting, Ledford testified that, having previously heard rumors concerning the abolition of the Alma run, he requested Donald Faller (assistant general manager of the Detroit milk district) to discuss the subject to see whether the run could be put on an efficient working basis, that Faller stated the Company did not want to discuss it and had already made other arrangements, and that there was no other reference to Alma during the meeting. Testimony to similar effect was given by Michael Sands, Everett Reed, and Archibald Smith, union committeemen, though their testimony varied substantially on details. Sands testified, for example, that Ledford's request was made at the end of the meeting, and Reed testified that it was made at the beginning. Reed did not recall that Sands was present, and both of them questioned Eichhorn's presence for the Com- pany. Smith testified that he thought he remembered a meeting on April 25, but could not state who was present, and testified to nothing except Ledford's reference to Alma and Faller's response. Faller testified that the meeting followed earlier meetings on April 21 at which David Falconer (general manager of the Detroit operation) had outlined the Company's plans to effect economies; that he read Falconer's statement of April 21 and told the union representatives that Eichhorn would elaborate on the changes to be made in the transportation department and Hoyt on the changes in the plant. Faller also announced that the Company was going out of the hauling business and that the Alma run would be discontinued somewhere between May 10 and June 1, though arrangements were not completed. Ledford asked whether the operation was being discontinued because of inefficiency or economy, and he answered, "Yes." The question was then put who was going to haul the milk, and Faller replied that the Company had not completed its arrangements, but had talked with Michigan Milk Producers' Association (which hauled for its competitors) and was also con- sidering an independent contractor in the Alma-Ovid area as well as several others. Faller recalled no further request by Ledford to sit down and discuss the matter. ,On cross-examination by the Union, Faller emphatically affirmed the correctness of his testimony, claiming corroboration by minutes taken at the meeting by 438 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Respondent's secretary. On the Union's request, Faller produced a copy of the minutes, and they were received in evidence on the Union's offer, without objection from the General Counsel. They plainly corroborated Faller's testimony. There was further persuasive evidence corroborative of Faller. Thus Ledford admitted that his prior affidavit to the Board relating to the April 25 meeting con- tained the following statement: "We talked about the jobs in the garage, because of certain country milk hauls being eliminated they didn't need regular service, and they wouldn't have the amount of tractors and heavy equipment to maintain." Ledford admitted that Alma was the only country haul at the time. Faller's testimony is therefore credited as to the April 25 meeting. The facts concerning the subcontracting of the Alma haul should be briefly noted. After negotiations beginning around April 15, Respondent finally contracted around May 7 with Waldo Richards (a former truckdriver at Ovid-Alma) to take over the Alma hauling under a lease agreement of some of Respondent's equipment and under which Richards received a flat 19 cents per hundred, the rate established by the Federal Milk Marketing Order.2 Though General Counsel and Union endeavored at the hearing to develop evidence that Richards did not in fact become an independent contractor, they were unsuccessful; and since their briefs proceed on the theory that there was an actual subcontracting of the haul (as both com- plaint and charge allege), the evidence need not be summarized. Note should also be taken of the negotiations concerning the displaced drivers. The evidence is not in conflict that some time after May 11, Company and Union discussed and settled the question of their rights. Ledford admitted that the Union discussed with the Company how those drivers would work back into other jobs, and that in fact the entire transportation department was rearranged. It was agreed that the contract bumping procedure would be followed, and some of the men down the line were actually laid off as an end result. Ledford testified, however, that no grievance was filed by or on behalf of any employee, and that it was understood that the Union would file a single grievance, the one which he filed. B. Concluding findings The history of the bargaining relationship concerning the country milk hauls and the closing of the receiving stations showed that, until Alma was reached, the Union had apparently conceded Respondent's right to discontinue such operations, subject only to the 72-hour notice requirement and observance of the bumping provisions contained in the contract. There were then no indications of disputed interpreta- tions, the Union having acquiesced in Respondent's position that the abolition of the country milk hauls was within the prerogatives of management, circumscribed only by the notice and bumping provisions. And the evidence here plainly estab- lished that those provisions were complied with circumspectly in abolishing the Alma haul. Did Respondent's obligation to bargain extend further than that, to include in Alma's case the duty to process and to arbitrate the Union's grievance concerning the actual discontinuance of the run? As union counsel conceded in oral argument that the Company had a right to discontinue all the other country hauls, we inquire whether there were matters of crucial distinction between Alma (the last leaf) and the earlier cases. What is point- ed to and relied upon is the fact that Respondent did not actually shut down the Alma station and that it subcontracted the hauling to an independent contractor. Undoubtedly that would have made a great difference in the usual situation, for then the various cases upon which General Counsel and Union rely 3 would become 2 Respondent thus brought its hauling costs In line with those of its competitors. Though Respondent offered projected calculations which it had made of its anticipated savings 'tinder an independent contractor arrangement, as well as a calculation of its actual savings after 1 year of operation, the evidence is material only as to good faith and soundness of judgment 3 Such as , for example , Timken Roller Bearing Co , 70 NLRB 500 , enforcement denied 161 F. 2d 949 (C A. 6) ; Jacobs Manufacturing Company, 94 NLRB 1214, 1225 ; Shamrock Dairy, Inc., at al., 119 NLRB 998; Local 24, International Brotherhood of Teamsters, etc, AFL-CIO v. Oliver, at al., 358 U.S 283; W. L. Mead Inc., 113 NLRB 1040; International Union, United Mine Workers et al. (Boone County Coal Corporation, et al. ), 117 NLRB 1095; Westmoreland Coal Company, et al, 117 NLRB 1072. The last case, though cited in oral argument, was omitted from the General Counsel's brief, presumably because the Board recognized crucial distinctions (footnote 5, at p 1075) between it 'and United Telephone Company of the West, at al., supra, discussed infra. NATIONAL DAIRY PRODUCTS CORPORATION, ETC. 439 applicable and probably controlling. In the present case, however, the situation changed from one where the Union did not dispute Respondent's interpretation of the contract to one where it advanced a conflicting interpretation. But that fact, too, may not alone have rendered inapposite the cases cited above. What was finally of controlling significance was that the Union promptly brought, in a court of competent jurisdiction (see Section 301), an action which, seeking to compel arbitration, will resolve the question whether the Union's grievance embodies a matter which was arbitrable under the contract-the very issue which is present here .4 Certainly it is plain that Respondent's position was taken in all good faith. Indeed, its position had been directly upheld in the Union's first test in the State court action (not appealed by the Union), which involved essentially the same issue which the Union is litigating anew in the Federal court. But whether the Company is right or wrong, the history of the bargaining relationship and the litigation on the subject plainly showed that there was a sound arguable basis for Respondent's interpreta- tion. And, of course, the Board does not ordinarily exercise its jurisdiction to resolve conflicts regarding which party has correctly interpreted the contract. United Telephone Company, or al., supra, at 781. As the Board has held for many years, with the approval of the courts, it will not effectuate the statutory policy for the Board to assume the role of policing collective-bargaining contracts between employer and labor organizations by attempting to decide whether disputes as to the meaning and administration of such contracts constitute unfair labor practices under the Act. Id, Consolidated Aircraft Corporation, 47 NLRB 694, 706; Morton Salt Company, 1'19 NLRB 1402, 1403. Respondent's refusal to arbitrate the dispute did not, under the circumstances here, constitute a refusal to bargain within the meaning of the Act. The Union has brought its action seeking judicial enforcement of its construction of the contract, United Telephone Company of the West, et al, supra, at 782, and judgment there will definitely settle the issue whether the grievance was arbitrable. In any case, the Board does not hold that a failure to arbitrate a dispute is in itself a refusal to bargain in violation of the Act. Id., McDonnell Aircraft Corporation, 109 NLRB 930; Textron Puerto Rico (Tricot Division), 107 NLRB 583. Certainly the Board is not the proper forum for parties to obtain specific enforcement or to seek to remedy an alleged breach of contract. United Telephone Company of the West, et al., supra; and see Association of Westinghouse Salaried Employees v. Westing- house Electric Corp, 348 U.S. 437, footnote 2, where the Supreme Court pointed out that breach of contract is not an unfair labor practice, quoting from a conference report on the legislation, "Once parties have made a collective bargaining contract the enforcement of that contract should be left to the usual processes of the law and not to the National Labor Relations Board." United Telephone, cited at various points above, is plainly controlling here. There the conflicting interpretations concerned the Company's right to make changes in weekly working hours, a matter which more clearly qualified as a mandatory subject of bargaining (see Section 8(d)) than that here involved. There, as here, the union proposed arbitration. The company suggested instead a suit for declaratory judg- ment, and actually filed one (without the union's consent) which was pending at the time of the hearing. The Board's language fits as patly as if written for the present case: The complaint alleges no violation of the Act other than the one arising out of the parties conflicting contract interpretations. It is obvious from the con- flicting interpretations of the parties that the contract was not sufficiently clear to avoid a dispute over its terms. There is no showing that Respondents, in carrying out the contract as they did, were acting in bad faith. The Board concluded that the company's failure to arbitrate the dispute did not constitute a refusal to bargain, holding that, failing agreement with the company, the union should have sought judicial enforcement of its construction of the contract. 4 The Union's position on the finality of the judgment which it seeks in the arbitration action is anomalous Though union counsel conceded in oral argument that a judgment In its favor would dispose of the merits of the present proceeding, he would not concede the same as to an unfavorable ruling. At one point his brief explains that the Union filed its charge herein to protect its position in event the court should rule with the Company because, "A decision by the court adverse to the Union would not relieve the Company from Its violation of the Act." Elsewhere, however, the argument Is made that Respondent is guilty of a refusal to bargain whether it was right or wrong in Its contention that the dispute was not arbitrable under the contract. 440 DECISIONS OF NATIONAL LABOR RELATIONS BOARD That was precisely the action which the Union took here. "Inasmuch as the issue of construction of the contract is now pending before a court of [competent] juris- diction no valid reason exists for the Board to enter this controversy." Id., at 780. There has been no indication of impairment of United Telephone as a precedent. Indeed, the Board cited and relied upon it in Morton Salt Co., supra. And see Scott Lumber Company, Inc, 117 NLRB 1790, 1825. Furthermore, though the exact impact of the case is yet to be measured, it is plain that the holding in the Telephone case has been greatly strengthened by Textile Workers Union of America, AFL-CIO V. Lincoln Mills of Alabama, 353 U.S. 448, 456, where the Supreme Court held that in Section 301 actions the Federal courts are empowered to fashion a body of Federal law from the policy of the national labor laws and to decree specific performance of agreements to arbitrate grievance disputes. Though the above findings have disposed of the refusal to bargain issue, there remain certain arguments which should be noted. Basic to General Counsel's theory throughout is his contention that the grievance here "clearly related to the contract," and he asks that "the parties be required to pursue the channelized pro- cedure for settling disputes in respect to the grievance." But that, of course, begs the very question which is at issue-whether the "channelized procedure" was one which was applicable to the grievance. On that basic fallacy is the foundation of all of the General Counsel's argument, rendering inapposite the cases upon which he relies. Three examples will suffice. In International Union, United Mine Workers, et al. (Boone County Coal Corpo- ration et al.), supra., the Board found a no-strike commitment, despite absence of a no-strike clause, where the contract contained grievance and arbitration procedures under which disputes not settled by agreement were to be settled. The Board held that the contract excluded the right to strike over disputes which were cognizable under the grievance machinery. See 39 LRR analysis 97 (Vol. 39, No. 49). Pursuit of the same fallacy is apparent from the General Counsel's own summary of W. L. Mead Inc., supra., i.e., "The Board found a grievance and arbitration procedure tantamount to a no-strike clause. The Board found that a strike over a grievable matter without going through contractual grievance and arbitration proc- esses to be unprotected." [Emphasis supplied.] The same is true of his summary of Local No. 611, International Chemical Workers' Union, AFL-CIO, et al. (Purex Corporation Limited), 123 NLRB 1507, as follows: "The Board accepted the rationale of the Sixth Circuit in Knight Morley Corp., 251 F. 2d 753; and Timken Roller Bearing Co., 161 F. 2d 949, that if a matter is a grievance, it is to be settled by the grievance procedure, that the contract provides a framework within which collective bargaining is to be pursued." [Emphasis supplied.] Although the General Counsel also argues, correctly of course, that an employer may not decide unilaterally what is or is not a grievance, it is just as true that neither side can do so. Thus, the fact that the Union may advance a purported grievance in good faith or through suspicion or ignorance of an employer's motives will not lift the matter to grievable status if in fact it concerned something which was not cognizable under existing contract procedures. As the evidence showed that Company and Union conferred on and settled all questions of employee tenure resulting from the discontinuance of the Alma haul, the holding in such cases as Shamrock Dairy, Inc., et al., 119 NLRB 998, 1007, was met, i.e., "the Respondent was obligated to bargain with the Union with respect to the effect of the adoption of the independent distributorship system upon employee tenure." 5 [Emphasis supplied.] So far as the merits of the grievance went, Re- spondent's rejection letter fully explained to the Union its position on the matter. Jacobs Manufacturing Company, supra, at 1225. Though all parties argued the question whether the Union had in fact waived its right to bargain about subcontracting per se, that is a matter which bears directly upon the correctness of the respective interpretations of the contract, and need not, therefore, be determined under the issues as framed by the pleadings herein, though it may well be one which the Federal court will necessarily consider in determining whether the Union's grievance was an arbitrable one under the contract terms. It is concluded and found, for the foregoing reasons, that Respondent did not engage in unfair labor practices as charged in the complaint. [Recommendations omitted from publication.] 5 That statement presumably remains the majority holding of the Board , though the point is not free from doubt in view of the division among the members on the decision on remand (124 NLRB 494) from the court of appeals.