Adams Dairy, Inc.

ADAMS DAIRY, INC. 815 (c) Notify the said Regional Director, in writing, within 20 days from, ,the date of the'receipt of this Intermediate Reportwhat steps the,Respondent!'has taken to comply herewith 24 2' In the event that this Recommended Order be adopted by the Board , this provision shall be modified to read: "Notify said Regional Director, In writing, within 10 days from the date of this Order, what steps the Respondent has taken to comply herewith." APPENDIX NOTICE TO ALL MEMBERS OF TEAMSTERS , CHAUFFEURS, WAREHOUSEMEN AND HELPERS, LOCAL 901 INTERNATIONAL BROTHERHOOD OF TEAMSTERS , CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA , AND TO ALL'. EMPLOYEES .AND'INDI- VIDUALS EMPLOYED BY VALENCIA BAXT EXPRESS, INC. Pursuant to the recommendations of a Trial Examiner of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Relations Act, we hereby notify you that: WE WILL NOT engage in, or induce or encourage any individual employed by Valencia Baxt Express, Inc., or by any person engaged in commerce, to engage in , a strike or refusal to perform services, and we will not threaten, coerce, or restrain the said company, where an object thereof is to force or require the said company to recognize and bargain with Respondent, Team- sters Local 901 as the collective bargaining representative of the Company's employees, if and so long as Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District, P.R. Division, AFL-CIO, is certified as the representative of such employees under the provision of Section 9 of the National Labor Relations Act. TEAMSTERS , CHAUFFEURS, WAREHOUSEMEN AND,.HELPERS, LOCAL 901, INTERNATIONAL BROTHERHOOD OF' TEAM- STERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Labor Organization. Dated------------------- By------------------------------------------- (Representative ) ( Title) This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced , or covered by any other material. Employees may communicate directly with the Board 's Regional Office , Credito Building, P.O. Box 11007, 1506 Ponce de Leon Avenue , Fernandez Juncos Station, Santurce, Puerto Rico, Telephone Number 723-3200, if they have any. questions concerning this notice or compliance with its provisions. Adams Dairy, Inc.' and The Independent Wholesale Dairy Prod- ucts Salesmen's Association. Cases Nos. 14-CA-2268 and 14- CA-2268-2. June 25, 1962 DECISION AND ORDER On December 14, 1960, Trial Examiner Arnold Ordman issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had engaged in certain unfair labor practices and :recom- mending that it cease and desist therefrom and take certain affirmative action, as set forth in the Intermediate Report attached hereto. There- after, the Respondent and the General Counsel filed exceptions' and 1 Respondent's name appears as corrected by stipulation of the parties at the hearing. 2 The General Counsel excepted only to the failure of the Trial Examiner to include an essential element of the recommended Board order in the "Notice to All Employees." We find merit in the exception and have therefore revised the notice as requested. 137 NLRB No. 87. 816 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ;the Respondent filed a supporting brief. The Charging Party filed a brief in support of the Intermediate Report. 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 [Members Leedom, Fanning, and Brown]. 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 briefs, and the entire record in these cases, and hereby adopts the Trial Examiner's findings, con- clusions, and recommendations with the following modifications : 1. We find,' as did the Trial Examiner, that by engaging independ- ent distributors to take over the routes of its driver-salesmen, without -prior notice to, or consultation or bargaining with, the Union, the Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a) (5) and (1) of the Act.4 2. The Trial Examiner found that the termination of the employ- ment of the driver-salesmen was directly attributable to the Respond- ent's refusal to bargain in violation of Section 8(a) (5) of the Act. He further found that the inherent effect of the refusal to bargain was to discourage the employees in the exercise of their rights guaranteed in Section 7 of the Act. He therefore concluded that the termination ,of the employment of the driver-salesmen was violative of Section 8(a) (3) of the Act. Since our remedy for the violation of Sec- tion 8(a) (5) of the Act contains provisions for reinstatement and backpay, the customary remedies for a violation of Section 8(a) (3), we deem it unnecessary to pass upon the validity of this conclusion of the Trial Examiner.' 3. The Trial Examiner found that the Respondent also violated Section 8 (a) (5) of the Act by failing to comply with the termination and modification procedures prescribed by Section 8 (d) of the Act. Here, too, the additional finding would not change the scope of the Order and we shall therefore not pass upon such finding by the Trial Examiner. ORDER Upon the entire record in this case, and pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Adams Dairy, ' Member Leedom concurs with the Trial Examiner's finding that the Respondent vio- lated Section 3(a) (5) by its unilateral action in terminating its distribution operations without consulting the Union However, in accordance with his position in Town and Counts y Manufacturing Company, Inc, et at., 136 NLRB 1022, he bases his finding of a violation solely on the ground that the Respondent was under a statutory duty to bargain as to the benefits which the drivers would be entitled to receive, and not because it failed to bargain over the economic decision to subcontract 4 Town and Country Manufacturing Company, Inc., supra. 5 Ibid, at section IV. ADAMS DAIRY, INC. 817 Inc., St. Louis, Missouri, its officers, agents, successors, and assigns, shall : 1. Cease and desist from : (a) Failing and refusing to bargain collectively with The Inde- pendent Wholesale Dairy Products Salesmen 's Association as the exclusive representative of its wholesale driver-salesmen, including relief drivers and special drivers, but excluding inside dairy workers, office employees , supervisors, executives, and professionals as defined in the Act, with respect to the utilization of independent distributors to replace driver-salesmen. (b) In any like or related manner interfering with, restraining, or coercing employees in the exercise of the right to self-organization, to form labor organizations , to join or assist the above-named or any other labor organization , to bargain collectively through representa- tives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protec- tion, or to refrain from any or all such activities , except to the extent that such right may be affected by an agreement requiring member- ship in a labor organization as a condition of employment, as author- ized in Section 8(a) (3) of the Act, as modified by the Labor- Management Reporting and Disclosure Act of 1959. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Bargain, upon request, with The Independent Wholesale Dairy Products Salesmen's Association concerning the utilization of inde- pendent distributors to replace driver-salesmen. (b) Offer all driver-salesmen named in Appendix A, attached hereto, who were replaced by independent distributors during the month of February 1960, immediate and full reinstatement to their former or substantially equivalent positions , without prejudice to seniority or other rights and privileges, and make each of them whole as provided in the section of the Intermediate Report entitled "The Remedy," for earnings lost as a result of their replacement by inde- pendent distributors. (c) Preserve and, upon request , make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports, and all other records in the Respondent 's possession necessary for computa- tion of lost earnings due hereunder. (d) Post at its plant in St. Louis, Missouri, copies of the notice at- tached hereto marked "Appendix A." 6 Copies of said notice, to be furnished by the Regional Director for the Fourteenth Region, shall, 6In the event that this Order is enforced by a decree of a United States Court of Appeals , there shall be substituted for the words "Pursuant to a Decision and Order" the words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order." 649856-63-vol. 137-53 818 DECISIONS OF NATIONAL LABOR RELATIONS BOARD after being duly signed by Respondent, be posted immediately upon receipt thereof, and be maintained by it for 60 consecutive days there- after, in conspicuous places, including all places where notices to em- ployees are customarily posted. Respondent shall take reasonable steps to insure that such notices are not altered , defaced, or covered by any other material. (e) Notify the said Regional Director for the Fourteenth Region, in writing, within 10 days from the date of this Order, what steps Respondent has taken to comply herewith. APPENDIX A NOTICE TO ALL EMPLOYEES Pursuant to a Decision and Order of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Relations Act, we hereby notify our employees that : WE WILL bargain collectively, upon request, with The Independ- ent Wholesale Dairy Products Salesmen's Association with re- spect to the utilization of independent distributors to replace driver-salesmen. WE WILL NOT interfere with, restrain , or coerce employees in the exercise of the right to self-organization, to form labor organi- zations, to join or assist the above -named or any other labor organizations , to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protec- tion, or to refrain from any or all such activities, except to the ex- tent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment, as authorized in Section 8 (a) (3) of the Act, as modified by the Labor-Management Reporting and Disclosure Act of 1959. WE WILL offer the below-named driver-salesmen immediate and full reinstatement to their former or substantially equivalent posi- tions, without prejudice to their seniority or other rights and privileges, and to make them whole for earnings lost as a result of the discrimination against them. Stanley Doe James Frye Walter Berry William Province Elgin D. Hartshorn George Powell George Lewis Henry Stahr Kenneth McFarland Arthur Wideman Gilbert Pounds Oscar Wideman Ollie Caddell Arthur Riley Rolla Dietz David Hockensmith ADAMS DAIRY, INC. 819 John H. Hartshorn Gilbert Schumacher Howard Deschamp Kevin Laughlin Clarence Schnieder Mikal Wallace Laurence Bridge John Luby ADAMS DAIRY, INC., Employer. Dated---------------- By------------------------------------- (Representative) (Title) This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Regional Office, 4459 Federal Building, 1520 Market Street, St. Louis, Missouri, Telephone Number, Main 1-8100, Extension 2142, if they have any question concerning this notice or compliance with its provisions. INTERMEDIATE REPORT STATEMENT OF THE CASE This proceeding was heard before Trial Examiner Arnold Ordman on May 30 and June 1, 1960, in St. Louis, Missouri, on a consolidated complaint issued by General Counsel and on answer of Adams Dairy, Inc.,' Respondent herein. The issues litigated were whether Respondent had violated Section 8(a)(1), (3), and (5) of the National Labor Relations Act, as amended. At the close of the hearing the parties waived oral argument and subsequently filed briefs which have been duly considered. Upon the entire record, and from my observation of the witnesses, I hereby make the following: FINDINGS AND CONCLUSIONS 1. THE BUSINESS OF THE RESPONDENT Respondent is a Missouri corporation with its principal office and place of busi- ness in St. Louis, Missouri , where it is engaged in the processing, sale, and distribu- tion at wholesale of milk and dairy products . During the 12-month period pre- ceding the issuance of the complaint, Respondent made interstate purchases of goods and materials , the value of which was in excess of $50,000. Accordingly, I find that Respondent is engaged in commerce within the meaning of Section 2(6) and (7 ) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Independent Wholesale Dairy Products Salesmen's Association, the Charging Party, herein called the Union, is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. Background and issues Respondent processes and sells milk and other dairy products at wholesale to retail outlets for ultimate resale to the customer. Respondent makes no retail sales or home deliveries. In fact, about 80 percent of its sales are to two retail chains, A & P and Kroger. Deliveries are made by truck operated by employees known as driver-salesmen. Over the years, Respondent has also made some of its sales to independent contractors, also known as independent distributors, at "dockside," i.e., at the loading platform of Respondent's plant. Generally speaking, the driver- salesmen made deliveries in the area of the city and county of St. Louis, Missouri, while the independent distributors handled outlying areas such as portions of Illinois adjacent to St. Louis and St. Louis County. In 1954 a number of Respondent's driver-salesmen, who then were members of, and represented by, Teamsters Local 603, formed an independent labor organiza- ' Respondent's name appears as corrected by stipulation of the parties at the hearing. 820 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tion, the Union herein. In August 1954 the National Labor Relations Board certi- fied the Union as the collective-bargaining representative of the "wholesale driver- salesmen, including relief drivers and special drivers, employed by the Respondent, but excluding inside dairy workers, office employees, supervisory employees, execu- tives, and professionals as defined in the Act." 2 Following the Board certification, Respondent and the Union entered into a succession of collective-bargaining agree- ments covering the employees in the bargaining unit. The first agreement was for a 2-year period ending September 1, 1956; the second was for a 3-year period ending September 1, 1959; and the third and final agreement was for a 3-year period which began on September 1, 1959, and was to expire on September 1, 1962. In Febru- ary 1960, however, while the third and final agreement was still in force, Respondent engaged an additional number of independent distributors to perform its delivery functions and terminated the employment of all 24 of its driver-salesmen. The issues in this case turn on whether these terminations were in derogation of Re- spondent's collective-bargaining obligation within the meaning of Section 8(a)(5) and (1) of the Act and whether they were discriminatory within the meaning of Section 8(a) (3) and (1) of the Act. B. The history of bargaining negotiations between the parties relating to the use of independent distributors Compensation to the driver-salesmen over the years has been based on a combined salary and commission basis, the commission being computed on the volume of sales each driver-salesman made on his assigned route. To the extent that "dockside" or independent distributor sales would be made to customers on assigned routes of driver-salesmen, the latter's compensation would be adversely affected unless they were paid the commission on such sales. In the negotiations leading to the three contracts already described, the Union sought to obtain guarantees protecting the driver-salesmen from prejudice in that regard. Respondent, on the other hand, resisted the inclusion of contractual provisions limiting its freedom to make sales through independent distributors or compelling it to pay commission on such sales to drivers whose income would thereby be affected. None of the three contracts contained any express language in that regard.3 In the negotiations leading to the third contract, that of 1959, the Union, as its president testified, asked for inclusion of a clause which would have precluded Respondent from utilizing independent distributors to make inroads on the routes serviced by its driver-salesmen. Respond- ent successfully resisted this demand and such a clause was not included in the contract. On the other hand, no language in the contract vested exclusive discretion in Respondent in that regard. At no time during the negotiations did Respondent suggest that it proposed or contemplated changing its method of distribution so as to replace all its drivers with independent distributors. Respondent did mention during the negotiations that Quality of O'Fallon, a small rival dairy, was using independent distributors. Its point of emphasis here, however, was that that concern had low delivery costs and that Respondent wanted to keep its own delivery costs in line. Respondent did not propose that it wished to release its driver-salesmen altogether and substitute independent distributors. The contract of 1959 was finally agreed upon on August 24, 1959, after the Union demonstrated that its wage demands were less than those obtained by Team- sters Local 603 in the latter's negotiations with rival dairies in the St. Louis area. Respondent thereupon made a counteroffer to the Union as to wages which the Union accepted. As already noted, the 1959 contract, a 3-year contract, was made effective as of September 1, 1959. The driver-salesmen continued to service their routes as before. In November 1959, however, Respondent initiated a new series of meetings with the Union, four meetings in all, which were held in November and December of that year. Respondent reopened the subject of delivery costs and complained that it was being hurt by competition .4 Respondent also informed the Union that in 2 Teamsters Local 603 still represents the inside dairy workers employed by Respondent S Accordingly, in 1956, Respondent and the Union submitted to arbitration the question whether Respondent owed commissions to a driver-salesman for dairy predicts sold "at dockside" to a cafe which was located in the driver-salesman's territory. The arbitration panel, taking the language of the 1954 contract as its sole guide, held that "there is nothing in the contract between these parties, which limits or in any other way prohibits Company from exercising its management prerogative in malting such dockside sales with- - out paying commission to driver salesmen " [Emphasis supplied J A This assertion must be viewed against the testimony of E C Adams, Jr, Respondent's vice president and general manager, that Respondent was doing 80 percent of its business with A & P and Kroger and that as to this portion of its business, Respondent was com- ADAMS DAIRY, INC. 821 conjunction with other dairies it was contemplating a merchandising plan which would increase its sales. Respondent divulged no details concerning this plan nor did it make any particularized requests of the Union. Apparently, it did make a generalized request for aid and advice from the Union respecting delivery costs; the Union during this period held a meeting of its own in which the members voted not to reopen the 1959 contract but to continue to operate under the terms of that contract. In any event, Respondent did not during the November or December negotiations tell the Union that it was contemplating a changeover from delivery of its products by its own driver-salesmen to delivery of its products by independent distributors. Respondent likewise did not during this period offer independent dis- tributorships to the individual driver-salesmen, nor did it make such an offer to the Union in their behalf. The November and December meetings ended inconclusively and no further meetings were held with the Union or the driver-salesmen until February 22, 1960. In sum, as Respondent's vice president and general manager, E. C. Adams, Jr., acknowledged at the hearing, at no time after Respondent entered into the 1959 contract was an opportunity given to the Union or to the driver- salesmen to accept or reject an individual distributorship arrangement. C. The changeover in February 1960 to independent distributorships and the termination of the driver-salesmen Until February 1960 Respondent conducted its operations as before with its own driver-salesmen servicing the areas of St. Louis and St. Louis County in Missouri and with a number of independent distributors servicing other areas. Back in 1955 Respondent, notwithstanding its then contract with the Union, had contacted its drivers individually and had asked each of them whether he would be interested in an individual distributorship. Upon receiving negative replies to this query, Re- spondent made no further effort in that regard and, as E. C. Adams, Jr., testified, there has been no substantial change since that time either in the routes or in the personnel 5 On February 9, 1960, however, with no advance notice whatever, Respondent assigned the route serviced by driver-salesman Stanley Doe to an independent dis- tributor. Stanley Doe was told that nothing personal was involved and that the change was made for economic reasons. He was not discharged but put on special duties which substantially reduced his earnings. On February 10, 1960, the day after his route was sold, the Union filed an unfair labor practice charge against Respond- ent. In reply to Respondent's inquiry concerning the charge, Doe explained that the Union felt this was the way to handle the situation. A few days later on February 13, Sam Scott, Respondent's sales manager, privately imparted to driver-salesman George Powell that E. C. Adams, Jr., had postponed for a week putting independent dis- tributors on all routes. This changeover did take place on February 23, 1960. The previous afternoon E. C. Adams, Jr., and Superintendent Deschamp held a meeting, arranged by Adams, with Union President Bridge and Union Treasurer Hartshorn. After some general conversation Adams asked Bridge to notify all the driver-salesmen to check with Supervisors Scott and Collins the following morning before going out on their routes to see if there were any changes in their routes. Bridge asked for an ex- planation and Adams said he had people who were interested in buying Respond- ent's products and reselling them. Bridge then asked who these individuals were and whether they were the present distributors. Adams replied that it could be anybody. Bridge inquired further whether any of the driver-salesmen would be petitive with the large dairies and was not being undersold by them. It also appears that on occasion, such as on weekend specials and the like, Respondent would sometimes under- sell its competitors 5 Two incidents merit note in this connection On one occasion a few years before 1960 Respondent unilaterally allocated part of a route serviced by one of its driver-salesmen to an independent distributor. The allocated part of the route involved an area in Illinois, a territory which fell outside the area normally serviced by the driver-salesmen The particular driver-salesman, though not consulted by Respondent, was satisfied with the change and the Union, after consultation with the driver-salesman, decided not to press the matter The second incident occurred in 1958 Powell, .i driver-salesman, had had a heart attack and his doctor told him lie could go back to work if he had a helper. E. C. Adams, Jr , denied Powell's request for helper on the ground that this would set a precedent, but offered Powell an independent distributorship so that the latter could have his own helper. When Powell indicated that as an independent distributor he would not undersell the driver-salesmen , nothing came of the offer and Powell eventually returned to his old route as a driver-salesman '822 DECISIONS OF NATIONAL LABOR RELATIONS BOARD laid off and Adams said "no." Adams also added later in the conversation that no complete route would be taken off. Bridge, nevertheless, stated that, as president of the Union, he disapproved of the proposed action on the ground that Respondent was taking work from the men which they had bargained for under the 1959 contract.6 E. C. Adams, Jr., did not disclose at this meeting that he had already engaged four independent distributors the previous day. Moreover, immediately after the meeting with Bridge and Hartshorn, Adams returned to the plant and, pursuant to interviews with prospects whose presence had previously been arranged, engaged six more independent distributors. The equipment used by these independent dis- tributors was purchased for the most part from Respondent and was the equipment previously used by its driver-salesmen.? On the following morning, February 23, the driver-salesman reported to work and found that all their routes were being serviced by independent distributors. The driver-salesmen held a meeting among themselves to discuss the new situation and on the morning of February 24 notified Respondent that they wanted to meet with Respondent. Such a meeting was held early on the afternoon of that day. The men asked why Respondent had taken the action it did and whether they were fired. Respondent replied that it had changed its method of delivery and that their em- ployment was terminated. Included in this termination was Stanley Doe whose route had been sold to an independent distributor on February 9 and who had been per- forming special duties in the interim .8 D. Analysis and concluding findings The issue in this case is whether Respondent by engaging independent distributors to take over the routes of its driver-salesmen and by terminating the employment of its driver-salesmen engaged in unfair labor practices proscribed by the Act. General Counsel and the Charging Party contend that Respondent took this action without prior notice to, or consultation with, the Union, thereby violating Section 8(a)(5) and (1) of the Act. Additionally, they contend that this action constituted a ter- mination or modification of a labor agreement without the prior steps required by Section 8(d) of the Act. Finally, they contend that Respondent's action amounted to a discrimination within the meaning of Section 8(a)(3) and (1) of the Act. Respondent denies that it engaged in unfair labor practices. A discussion of these questions follows. 1. The violation of Section 8(a)(5) and (1) of the Act It is undisputed that the Union was the exclusive bargaining representative of Respondent's driver-salesmen. It follows that any unilateral change by Respondent in the terms and conditions of employment of the driver-salesmen made without prior notice to and consultation with the Union would constitute a refusal to bargain within the meaning of Section 8(a)(5) and (1) of the Act. The first question to be resolved, therefore, is whether Respondent's action, i.e., the subcontracting of de- livery services to independent distributors and the consequent termination of the "The findings as to the February 22 meeting are based on the credited testimony of Bridge E C Adams, Jr., testified that the meeting was "substantially like Mr. Bridge described It" 7 Respondent did not finance the purchase of this equipment or arrange for such financ- ing. The areas serviced by the independent distributors do not correspond to the areas formerly serviced by the driver-salesmen. Nor does Respondent make deductions for social security or withholding purposes so far as the independent distributors are con- cerned. Although Respondent, in order to insure that its business not be prejudiced, re- quires the independent distributors to maintain certain standards of efficiency and sanita- tion, the distributors have complete latitude in such critical matters as the price they charge their customers, the use of helpers, the selection of drivers, and the selection of parking places for their vehicles In view of the foregoing and other undisputed facts of record, the Trial Examiner rejects as without merit the contention made by the Charging Party, but not by General Counsel, that the independent distributors were "employees" within the meaning of the Act, and not independent contractors 8 The driver-salesmen thus terminated were as follows: Stanley Doe, Walter Berry, Elgin D. Hartshorn, George Lewis, Kenneth McFarland, Gilbert Pounds, Ollie Caddell, Rolla Dietz, James Frye, William Province, George Powell, Henry Stahr, Arthur Wideman, Oscar Wideman, Arthur Riley, David Hockensmith, John H. Hartshorn, Howard Deschamp, Clarence Schnieder, Laurence Bridge, Gilbert Schumacher, Kevin Laughlin, Mikal Wallace, and John Luby. ADAMS DAIRY, INC. 823 driver-salesmen constituted a change in terms and conditions of employment con- cerning which Respondent was obliged to bargain. Termination of employment is manifestly a most drastic change in terms and conditions of employment. However, the termination here flowed from Respondent's action in subcontracting its delivery services to independent distributors. Respond- ent apparently takes the preliminary position that the determination by an employer to subcontract work done by its employees is a matter of "managerial prerogative" and is not subject to the collective-bargaining obligation at all. In support of this position, Respondent cites the decision of the arbitrators in the instant case (see footnote 3, supra), and also a decision by the Circuit Court of Wayne County, Michigan, United Dairy Workers v. Detroit Creamery Co., 38 LRRM 2303, decided April 18, 1956. But controlling law is to the contrary. See Local 24, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, et at. v. Oliver et al., 358 U.S. 283, 294-295, citing with approval The Timken Roller Bearing Company, 70 NLRB 500, 518, reversed on other grounds 161 F. 2d 949 (C.A. 6); Local 24, Teamsters v. Oliver, 80 S. Ct. 923, 924. "With- out attempting to delimit the subject matter properly included within the scope of collective bargaining [footnote omitted), it seems apparent that respondent's sys- tem of sub-contracting work may vitally affect its employees by progressively under- mining their tenure of employment in removing or withdrawing more and more work, and hence more and more jobs, from the unit." Timken, supra, at 518. Accordingly, the Board has uniformly held that where, as here, an employer proposes to subcontract work performed by employees in a bargaining unit, he is first re- quired to bargain collectively thereon with the bargaining representative of those employees. Smith's Van & Transport Company, Inc., et al., 126 NLRB 1059; Shamrock Dairy, Inc., et al., 119 NLRB 998, 1005-1006 idem., 124 NLRB 494, enfd. 280 F. 2d 665 (C.A.D.C.). As the cited cases also establish, this requirement obtains even if the proposal is motivated by purely economic considerations. Respondent argues, however, that even assuming an obligation on its part to bargain with the Union respecting the changeover from delivery by its own driver- salesmen to delivery by independent distributors, it had fulfilled that obligation, had bargained to an impasse on that subject, and hence was entitled thereafter to take unilateral action. An ancillary argument in this connection is that it had engaged independent distributors in the past, that the Union had not questioned its authority to do so, and that the Union thereby "waived" the right to object thereafter. So far as relevant here, these arguments raise only issues of fact. As already noted, Respondent had for some years utilized independent distributors as well as its own driver-salesmen to deliver its products. Generally speaking, the driver-salesmen made deliveries in the City of St. Louis, Missouri, and in the county of St. Louis, Missouri, and the independent distributors made deliveries in the outlying areas. The driver-salesmen were, of course, concerned that the independent distributors make no inroads in the areas which the driver-salesmen serviced. Accordingly, in the course of contract negotiations, the Union regularly sought the inclusion of con- tractual provisions guaranteeing that driver-salesmen would be paid commissions on all sales to customers within their assigned routes, whether such sales were made "dockside" or by independent distributors. Alternatively, the Union would seek, as it did in the negotiations for the current agreement, contractual provisions to insure that the driver-salesmen's routes not be altered for the duration of the agreement. Respondent successfully resisted these demands. At all times, however, the controversy here involved only the question whether Respondent would be free to utilize independent distributors to make inroads on the driver-salesmen's routes; never the question of replacing driver-salesmen altogether. Respondent did repeatedly raise the factor of its delivery costs in relation to its com- petitors and even after the 1959 contract was consummated sought to reopen that issue. But at no time did Respondent suggest, or did the parties discuss, the question whether Respondent should be given the authority to replace all its driver-salesmen and subcontract all its delivery operations.9 Indeed, as late as February 22, 1960, when Respondent had already engaged four independent distributors to replace its driver-salesmen and was on the verge of hiring six more, Respondent told the union representatives in reply to a direct inquiry that it would not discharge any of the driver-salesmen and that it would not completely eliminate any route serviced by 9 The only time such a suggestion was made albeit indirectly, was in 1955 when Re- spondent approached, not the Union, but the driver-salesmen individually to ask whether they would be interested in independent distributorships. As already noted, the driver- salesmen rebuffed Respondent's suggestion on that occasion. 824 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the latter. In the light of this unequivocal position, Respondent's claim that it bar- gained with the Union concerning the subcontracting of its delivery services and the elimination of its driver-salesmen is patently without merit. Nor can Respondent retroactively remedy its default by pointing out that in its meeting with the employees on February 24, 1960, when the subcontracting operation and the consequent dis- charge of the driver-salesmen was already a fait accompli, neither the Union nor the employees sought to discuss or bargain concerning that action. The significant fact is that Respondent did not give the Union notice of, or discuss, its proposed action with the Union prior to taking that action. I find that by taking this action without prior notice to and discussion with the Union, Respondent violated Section 8(a)(5) and (1) of the Act. Smith's Van & Transport Company, Inc., supra, Shamrock Dairy, Inc., et al., supra. The foregoing discussion serves also to rebut Respondent's "waiver" argument. Inasmuch as Respondent had never proposed to the Union the complete abolition of its driver-salesmen operation and the replacement of its driver-salesmen by independ- ent distributors, the Union cannot be found either to have agreed with that proposal or to have waived its objections in that regard. It is true that Respondent had for years and even before the Union appeared on the scene been utilizing independent distributors to make deliveries but the separate areas of operation of the independent distributors on the one hand and of the driver-salesmen on the other were for the most part clearly defined. There was no indication at any of the bargaining con- ferences between Respondent and the Union, and certainly the Union did not contem- plate, that Respondent could in effect unilaterally abrogate any contract between them by using independent distributorships to eliminate all driver-salesmen. It strains credulity to believe that if this had been the case, no mention of this critical fact would have been made at any of the bargaining conferences. On the con- trary, the only issue raised in this regard arose out of the Unions effort to preclude even partial inroads on the routes serviced by the driver-salesmen. In the single instance where a situation of this kind occurred, it appeared that Respondent had allocated a portion of a route serviced by a driver- salesman to an independent dis- tributor. Because the allocated portion fell outside the area normally serviced by the driver-salesmen and because the affected driver-salesman was satisfied with the change, the Union after due consideration filed no objection. This special situation affords no warrant for any conclusion that the Union thereby waived objection to elimination of all driver-salesmen operations in areas consistently serviced by these employees or even to the elimination of one such area. In fact, on February 9, 1960, when Respondent allocated Stanley Doe's entire route to an independent distributor, the Union promptly filed an unfair labor practice charge, a copy of which was served forthwith upon Respondent. Hence Respondent could have been under no illusions of union acquiescence when, about 2 weeks later, it subcontracted all its delivery op- erations and terminated all its drivers. Accordingly, I conclude, as heretofore found, that Respondent was obligated to bargain as to such action and that it defaulted in this obligation.10 2. The refusal to bargain predicated on Respondent's failure to comply with the requirements of Section 8(d) The foregoing finding of an unlawful refusal to bargain militates against the neces- sity of finding whether Respondent further violated its bargaining obligation by fail- ing to comply with the requirements of Section 8(d). However, inasmuch as General Counsel alleged and Respondent denied such a violation, brief treatment of that issue seems appropriate. So far as here relevant, Section 8(d) provides that ". .. where there is in effect a collective bargaining contract covering employees . ., the duty to bargain collec- tively shall also mean that no party to such contract shall terminate or modify such contract, unless the party desiring such termination or modification" serves written 10 Speidel Corporation. 120 NLRB 733, upon which Respondent relies, is distinguishable There the employer had made it unmistakably clear during the course of bargaining nego- tiations that it wished payment of bonuses to be deemed a management prerogative The union by its conduct plainly indicated that it acquiesced in that view Accordingly, the Board, while emphasizing that it would not "readily infer a waiver of statutory bargain- ing rights," concluded that a finding of waiver was warranted In the instant case the Union, while unsuccessful in its efforts to get a specific contractual commitment from Respondent against piecemeal diminution of the driver-salesmen's routes never conceded that Respondent had unilateral power even in that regard A fortiori, the Union never conceded what had not been suggested, namely, a unilateral power on the part of Respond- ent to subcontract all driver-salesmen operations to independent distributors. ADAMS DAIRY, INC. 825 notices 60 days prior to the expiration date of the contract and continues in full force and effect, without resorting to strike or lockout, "the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, which ever occurs later. . . " In the instant case a collective-bargaining contract was in effect for a 3-year period beginning September 1, 1959, and ending Septem- ber 1, 1962. Respondent took the action here complained of, namely, the sub- contracting of its delivery services and the termination of its driver-salesmen, in February 1960. It did not serve the notices prescribed by Section 8(d). Moreover, in the instant case, unlike the situation in the Smith's Van and Shamrock cases already cited, Respondent did not subcontract its services to persons who formerly performed these services in their capacity as employees. Instead, it awarded those subcontracts to third parties and dismissed all its driver-salesmen. By thus eliminating both the work which was the subject matter of the collective-bargaining contract and the em- ployees who performed that work, Respondent in the most real sense terminated that contract since there was no area left in which it could be operative.ii Without more, therefore, it appears that Respondent's failure to follow the procedure pre- scribed by Section 8(d) as a precondition to such termination constitutes a violation of Section 8(a) (5). I so find. 3. The violation of Section 8(a)(3) and (1) of the Act The complaint alleges, and the answer denies, that Respondent by terminating the employment of its driver-salesmen violated Section 8(a)(3) and (1) of the Act. Section 8(a)(3) of the Act makes it an unfair labor practice for an employer to en- courage or discourage membership in a labor organization by discrimination in re- gard to hire or tenure of employment. In the instant case Respondent discharged all its driver-salesmen who were members of and/or represented by the Union and re- placed them with independent distributors whom the Union did not represent. None of the driver-salesmen were offered independent distributorships. General Counsel contends that this action on the part of Respondent constituted a discrimination in regard to hire or tenure of employment which discouraged membership in the Union within the meaning of Section 8(a) (3), and a corresponding interference with Section 7 rights proscribed by Section 8(a)(1). Respondent argues that the termination of the driver-salesmen was not motivated by any hostility to the Union or to unioniza- tion in general, that the terminations in question were economically motivated, and that it was innocent of any unlawful discrimination or unlawful interference with em- ployee rights. In this connection General Counsel in his brief argues that Respondent was hostile to the Union, and to unionization in general, from the very outset; that it dealt with the Union only to avoid having to deal with Teamsters Local 603 which theretofore represented its driver-salesmen; and that the summary dismissal of the drivers was "motivated, at least in part, by the Empolyer's desire to avoid dealing with the Union." I find that General Counsel overstates his case. During the period here relevant Respondent had collective-bargaining relationships with three different unions (including Teamsters Local 603) which respectively represented segments of its working force. It has had collective-bargaining relationships with unions for years. The record is devoid of antiunion statements or attitudes usually present where there is a strong opposition to unions by an employer. Nor is there any pattern of conduct which would support a finding that Respondent was hostile to labor organizations generally or to the Union in particular. Moreover, there is also evidence in support of Respondent's claim that the change- over from delivery by its own driver-salesmen to delivery by independent distributors had an economic motivation. It is undisputed that during the entire course of ne- gotiations here relevant Respondent consistently complained of its delivery costs in relation to its competitors. General Counsel and the Charging Party question the legitimacy of this complaint, particularly in view of Respondent's admission that 80 percent of its business was with A & P and Kroger and that with respect to these customers it was not being undersold by its major competitors. But the issue here 1The instant case is therefore sharply distinguishable from Shamrock Dairy, Inc, et al , 124 NLRB 494. In that case the collective-bargaining contract covered not only the distributors, but also drivers who were not given distributorships and continued on in their regular jobs. The contract also covered nondriver employees who were not directly affected by the institution of the dristributorship system. Hence, the collective-bargaining contract remained operative. These were among the considerations upon which Chairman Leedom in the cited case based his separate opinion that the employer there did not modify or terminate the collective-bargaining contract and that there was no violation of Section 8(d). 124 NLRB at 497. 826 DECISIONS OF NATIONAL LABOR RELATIONS BOARD is not whether Respondent was financially hard-pressed. Respondent could properly seek to lower its delivery costs even if its objective were merely to increase its profits. On the other hand, I do not believe the foregoing considerations are dispositive of the question here posed. Economic motivation, or even economic hardship, does not in and of itself license an employer to violate the Act. See N.L.R.B. v. Gluck Brewing Company and Bach Transfer and Storage Company, 144 F. 2d 847, 853 (C.A. 8), and cases there cited; N L R.B. v. Harris, Morris, et al., d/b/a Union Manufacturing Company, 200 F. 2d 656, 659 (C A. 5). Likewise, the proscriptions of Section 8 ( a ) (3) and (1) of the Act extend far beyond situations in which the action complained of springs from antipathy to unions as such. The Radio Officers' Union of the Commercial Telegraphers Union, AFL (A. H. Bull Steamship Com- pany) v. N.L.R.B.' 347 U.S. 17, 45, teaches that "specific evidence of intent to en- courage or discourage is not an indispensable element of proof of violation of 8(a)(3)." Such proof is unnecessary "where employer conduct inherently en- courages or discourages membership." (Ibid.) Thus, as in Republic Aviation Cor- poration v. N L R.B., 324 U.S. 793, discussed by the Supreme Court in the Radio Officers case, discharges and suspensions of employees were held to be violative of Section 8(3) even though not "motivated by opposition to the particular union or, we deduce, to unionism." It was sufficient in the Republic Aviation case that the discharges sprang from the employer's application of invalid no-solicitation rules and that these rules interfered with the employees' right to organize. "Since the rules were no defense and the employers intended to discriminate solely on the ground of such protected union activity, it did not matter that they did not intend to discourage union membership, since such was the foreseeable result." The Radio Officers' Union, etc., supra, at 46. By parity of reasoning, the discharges in the instant case arose out of Respondent's denial to its employees of their statutory right to bargain collectively though a repre- sentative of their own choosing, a right of no less dignity under Section 7 of the Act than the right to organize involved in Republic Aviation. In 1955 the driver- salesmen, then likewise represented by the Union, rejected Respondent's suggestion, made to them individually and not through their bargaining representative, that they accept independent distributorships. In bargaining negotiations up to and including the negotiations for the current agreement, the Union resolutely opposed piecemeal invasion by independent distributors of areas serviced by the driver- salesmen. Re- spondent apparently anticipated that a total changeover to independent distributor- ship would likewise be opposed by the Union.12 Accordingly, it elected to ignore the collective-bargaining rights of the employees altogether and to take unilateral action. By such action Respondent discouraged union membership since a primary objective of such membership is to obtain the benefits of collective bargaining Accordingly, here, as in Republic Aviation, it did not matter that Respondent did not specifically intend to discourage union membership, "since such was the foresee- able result." I conclude, therefore, that the prerequisites for a finding of a Sec- tion 8 (a) (3 ) and (I) violation are satisfied. At first blush the result here reached might appear inconsistent with the result reached by the Board in Smith's Van & Transport Company, Inc., et al., 126 NLRB 1059. There, in a somewhat analogous situation, the Board held that the employer violated Section 8(a)(5) and (1) of the Act by failing to bargain collectively con- cerning a change in its method of operation. However, the Board held that the employer's execution of individual contracts to effectuate that change was not a violation of Section 8(a)(3) and (I) of the Act because the change in method of operation was motivated by economic considerations and not by any desire to undermine the Union. Here, too, as I have found, there was economic motivation for the change in method of operation. But at this point the analogy ends. The employer in Smith's Van executed the individual contracts with its incumbent drivers and even suggested that they remain members of the Union.13 In this frame of reference, the Board held that the em- ployer's motivation was solely economic and that there was no desire to undermine the union. Here, on the other hand, that situation does not obtain. In the instant case Respondent, before it entered into its individual contracts, afforded its drivers, 12 This would be purely conjecture since, as already noted, Respondent never made this proposal to the Union Assuming, however, that such a proposal would have been re- jected by the Union and that a good-faith impasse in bargaining resulted, Respondent could thereafter have taken unilateral action to implement its proposal without disparage- ment of the collective-bargaining principle. Compare N.L R.B. v. Crompton-Highland Mills, Inc , 337 U S 217 18 Compare also Shamrock Dairy, Inc, heretofore cited, where the change in method of operation was likewise made by offering individual contracts to the incumbent drivers. ADAMS DAIRY, INC. 827 either individually or through the Union, no opportunity to become independent distributors. Respondent may have concluded that such an effort would be futile. But conjecture, even well founded, confers no license to violate the guarantees of the Act. The short of the matter is that Respondent, when it did make the change to independent distributorships elected to bypass the Union and to bypass its ad- herents. Phrased otherwise, Respondent's driver-salesmen because they were union adherents, were denied an opportunity either to dissuade Respondent from its pro- posed action or, alternatively, to accept individual distributorships. The injury to the driver-salesmen, specifically, the loss of their jobs, therefore, did not flow solely from Respondent's economic motivation. In part, at least, it flowed from Respondent's considered determination to bypass the Union and, derivatively, to deny the driver-salesmen their statutory bargaining rights. In sum, Respondent's action was discriminatory and discouraged membership in a labor organization. I conclude, therefore, that Respondent by terminating the employment of its driver-salesmen violated Section 8(a)(3) and (1) of the Act. IV. THE REMEDY Pursuant to Section 10(c) of the Act, I will recommend that Respondent cease and desist from engaging in the unfair labor practices found and from like or re- lated unfair labor practices. I do not believe, however, that the course of Respond- ent's conduct, as shown by the evidence, betrays any predisposition on its part to violate generally employees' rights guaranteed by Section 7. Accordingly, I will not recommend a broad cease-and-desist order. N.L.R.B. v. Express Publishing Company, 312 U.S. 426, 436-438. Affirmative relief is also required here in order to effectuate the policies of the Act. I have found that Respondent failed to fulfill its statutory bargaining obliga- tion within the meaning of Section 8(a)(5) and (1) of the Act when it replaced is driver-salesmen with independent distributors without prior notice to or consultation with the Union which represented the driver-salesmen. I will recommend, here- fore, that Respondent now take appropriate steps to remedy that failure by bargain- ing on that issue. I have also found that Respondent discriminatorily discharged its driver-salesmen in violaion of Section 8 (a) (3) and (1) of the Act. Accordingly, I will recommend that Respondent reinstate these driver-salesmen and make them whole for earnings lost as a result of the discrimination. It is important to note in this connection that an order reinstating the driver-salesmen and making them whole for lost earnings would be warranted on the basis of the Section 8(a)(5) violation alone and without regard to the Section 8(a)(3) violation. The termination of em- ployment of the driver-salesmen flowed directly from Respondent's unilateral action in replacing them with independent distributors. Unlike the situation in the Smith's Van & Transport and Shamrock Dairy cases, Respondent here did not award the independent distributorships to its former drivers but severed their connection with the company altogether. In the cited cases the unions involved could effectively represent the drivers in renewed bargaining negotiations since they were still either in an employment or independent contractor relationship with the respective com- panies. Here, on the other hand, the relationship of the drivers with Respondent having been completely severed, any future bargaining by the Union would be a largely futile and empty gesture. In order, therefore, to adapt the remedy to the situation which calls for redress (N.L.R.B. v. Mackay Radio & Telegraph Co., 304 U.S. 333, 348), and to give substance to the remedial order to bargain, it is necessary to restore the status quo ante without which effective bargaining in behalf of the drivers cannot be conducted. The broad remedial powers vested in the Board by the Act affords ample authority in the Board to give reinstatement and backpay where the deprivation of employment status is a consequence of a Section 8(a)(5) viola- tion. See West Boylston Manufacturing Company of Alabama, 87 NLRB 808, 812- 813. Compare Piasecki Aircraft Corporation v. N.L.R.B., 280 F. 2d 575, 591-592 (C.A. 3); Editorial "El Imparcial" Inc. v. N.L.R.B., 278 F. 2d 184, 187 (CA. 1). Lost earnings shall be computed on a quarterly basis in the manner set forth in F. W. Woolworth Company, 90 NLRB 289. To facilitate that computation I shall recommend that Respondent make available to the Board, upon request, payroll and other records necessary and appropriate for that purpose . I shall also recommend that an appropriate notice be posted. Upon the basis of the foregoing findings and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW .1. Respondent is engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the meaning of Section 2 (5) of the Act. 828 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 3. All wholesale driver-salesmen, including relief drivers and special drivers, ,employed by Respondent, but excluding inside dairy workers, office employees, supervisory employees , executives, and professionals as defined in the Act, constitute a unit appropriate for purposes of collective bargaining within the meaning of Section 9(b) of the Act. 4. At all times material herein, the Union has been the exclusive bargaining repre- sentative of the employees in the aforesaid unit within the meaning of Section 9,(a) of the Act. 5. By engaging independent distributors to take over the routes of its driver- salesmen and by terminating the employment of its driver-salesmen , all without prior notice to, or consultation or bargaining with, the Union, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a) (5) and (1 ) of the Act. 6. By taking the foregoing actions without complying with the requirements pre- scribed in Section 8 (d) of the Act, Respondent has further violated Section 8(a) (5) and (1 ) of the Act. 7. By discriminatorily terminating the employment of its driver-salesmen in the manner set forth above, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a)(3) and (1) of the Act. 8. Inasmuch as Respondent 's operations affect commerce , the aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. [Recommendations omitted from publication.] Local 5, United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, AFL-CIO and Arthur Venneri Company. Case No. 5-CC-124. June 26, 196. DECISION AND ORDER On November 30, 1960, Trial Examiner Louis Plost issued his Inter- mediate Report in the above-entitled proceeding, finding that the Respondent had engaged in certain unfair labor practices and recom- mending that it cease and desist therefrom and take certain affirmative action, as set forth in the Intermediate Report attached hereto. There- after, the General Counsel, the Respondent, and the Charging Party filed exceptions to the Intermediate Report and supporting briefs. 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 briefs, and the entire record in the case, and hereby adopts the findings, conclusions, and recommenda- tions of the Trial Examiner, with the following additions : The evidence establishes that Arthur Venneri Company (herein- after called Venneri) was awarded a contract by the U.S. Corps of -Engineers for the construction, inter alia, of two hangars at the Andrews Air Force Base in Maryland; that Venneri entered into a subcontract with Akron Mechanical Contractors, Inc. (hereinafter called Akron), for the inside plumbing work, and a subcontract with Nickles Bros., Inc. (hereinafter called Nickles), for the outside plumb- 137 NLRB No. 100..