Hawaii Meat Co., Ltd.

966 DECISIONS OF NATIONAL LABOR RELATIONS BOARD affected by an agreement requiring membership in a labor organization as authorized by the National Labor Relations Act. O. N. JONAS Co., INC., Employer. Dated------------------- By------------------------------------------- (Representative) (Title) This notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Regional Office, 528 Peachtree-Seventh Building, 50 Seventh Street, NE., Atlanta 23, Georgia, Telephone Number, Trinity 6-3311, Extension 5357, if they have any question concerning this notice or compliance with its provisions. Hawaii Meat Company, Limited and Meat Cutters Union, Local 594 (AFL-CIO). Case No. 37-CA-3O2. November 15, 1962 DECISION AND ORDER On August 9, 1961, Trial Examiner Martin S. Bennett issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had engaged in unfair labor practices in violation of Section 8(a) (1), (3), and (5) of the Act, and recommending that it cease and desist therefrom and take certain affirmative action, as set forth in the attached Intermediate Report. Thereafter, the Respond- ent 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 McCulloch and Members Leedom and Fanning]. The Board has reviewed the Trial Examiner's rulings and finds no prejudicial error. The rulings are hereby affirmed. The Board has considered the Intermediate Report, the exceptions and brief, and the entire record in this case, and adopts the findings, conclusions, and recommendations of the Trial Examiner with the following modifications. Meat Cutters Union, Local 594 (AFL-CIO), referred to here as the Union, was certified in February 1960 as the exclusive bargaining representative for a unit of the Employer's employees, including its truckdrivers, helpers, and garage mechanics, referred to here as the delivery department. Bargaining for an agreement continued until July 1, 1960, when the Union struck for its economic demands. About a month before bargaining broke down, the Respondent, con- sidering that a strike was a possible eventuality, undertook negotia- tions with an independent trucking company to subcontract its de- 1 The Respondent's request for oral argument is hereby denied as the record , exceptions, and brief adequately present the issues and the positions of the parties 139 NLRB No. 75. HAWAII MEAT COMPANY, LIMITED 967 livery work in case a strike should occur. On the afternoon of July 1, a few hours after the strike began, Respondent entered into an agree- ment with Fukumoto, the trucking contractor, whereby the latter con- tracted to deliver the Employer's products with his own employees but with the Respondent's trucks which he leased at an agreed-upon rental. Later the same afternoon, Respondent mailed a letter to all the striking employees in which it advised them that it intended to reopen its plant and to hire replacements for those strikers who did not return. It also advised them that its delivery work had been sub- contracted out so that no positions as drivers or helpers were any longer available. This was the first notice either to the employees or to the Union that Respondent had any intention of contracting out its deliveries. On Monday, July 4, the Union called a meeting to consider the Re- spondent's letter. Although the Union first advised the strikers to return to work on July 5, the next working day, the strikers decided to continue their walkout when one of the delivery department em- ployees pointed out that he had no job to return to. On July 5, Fukumoto and the employees whom he had newly hired over the week- end commenced operations under his contract with the Respondent. On July 8, the Respondent unilaterally announced changes in wages, holidays, sick leave, and medical insurance benefits, to which the Union objected without avail. These changes were essentially those con- tained in the Respondent's last offer to the Union prior to the strike. A number of the strikers had returned to work by this time, and sub- sequently replacements were hired for those who failed to return. 1. The Trial Examiner found that Respondent had violated Section 8(a) (5) by failing to fulfill its obligation to bargain in good faith concerning the subcontracting of a portion of its operations, and that its decision to subcontract was carried out as a retaliatory measure against its employees for engaging in a strike. We agree with the Trial Examiner that Respondent was obligated to bargain with the Union about its decision to subcontract out its delivery work. Since the issuance of the Intermediate Report, a majority of the Board has held that an employer's decision to subcontract out part of its opera- tions which were previously performed by its own employees is a mandatory subject of bargaining even though the employer's deci- sion may have been motivated by economic considerations rather than by any opposition to the principles of collective bargaining? We consider it unnecessary, therefore, to decide whether, as the Trial Examiner found, the Respondent's action in subcontracting out its delivery operations immediately after the strike began was also mo- tivated by retaliatory considerations. The strike which began on 2 Town & Country Manufacturing Company, Inc., et as., 136 NLRB 1022; Adams Dairy, Inc, 137 NLRB 815 ; and Fibreboard Paper Products Corporation, 138 NLRB 550 968 DECISIONS OF NATIONAL LABOR RELATIONS BOARD July 1, 1960, was caused by an impasse between the parties over the economic issues which then separated them. At the inception of the strike, the Respondent's intention to subcontract out its delivery work was not an issue, since that had never been mentioned by the Re- spondent and was not suspected by the Union. The decision to sub- contract was a mandatory subject of bargaining, since it related to the terms and conditions of employment of employees in the unit for which the Union had been certified. The Respondent contends, however, that it was not under a duty to bargain with the Union over measures it considered itself obligated to take in order to keep its plant operating, and that specifically, its right to replace these economic strikers permanently includes the right to replace through the utilization of a subcontractor and his employees. The Respond- ent relies on the Supreme Court case, N.L.R.B. v. Mackay Radio & Telegraph Co., 304 U.S. 333, and the Board's decision in Celanese Corporation of America, 95 NLRB 664, footnote 11. We do not be- lieve that the Mackay case is dispositive here, and to the extent that our decision in Celanese is inconsistent with this decision, it is hereby overruled. Mackay holds that an employer is justified, in attempting to keep his plant in operation, to hire new employees as replacements for economic strikers. But the right to replace economic strikers perma- nently is also affected by other prevailing principles of labor law. Thus, as the Respondent admits, an employer is obligated to continue bargaining with the representative of its employees even after they go out on strike. Any unilateral change in wages and terms or con- ditions of employment, which the employer makes while bargaining negotiations are in progress, is itself a wrongful refusal to bargain.3 Nor is the employer's obligation to bargain limited by the issues which may have precipitated the strike. N.L.R.B. v. United States Cold Storage Corporation, 203 F. 2d 924, 928-929 (C.A. 5), cert. denied 346 U.S. 818, and cases there cited. The open conflict between the parties manifested by the strike may itself bring other issues to the fore and bargaining about such issues may also be required 4 Thus, offering a higher wage to employees who return to work during a strike than had been offered to the Union, or offering them super- seniority, constitutes bad-faith bargaining even though the addi- tional benefits offered for their return to work may have been prompted by the employer's belief that he could not otherwise secure the replace- ments which he needs to keep the plant in operation at its prestrike 3 N.L.R.B. v. Benne Katz, etc., d/b/a Williamsburg Steel Products Co , 369 U.S. 736 4 N.L.R B. v. Pecheur Lozenge Co., Inc., 209 F. 2d 393, 403 ( C.A. 2) : "The incidence of a strike does not suspend the obligation on the part of the employer to bargain . . . . On the contrary, the need for carrying out that obligation when a strike is in progress 1s all the greater in order that a peaceful settlement of the dispute may be reached N.L.R.B v. J. H. Rutter-Rem Manufacturing Company, 245 F. 2d 594 (C.A. 5). HAWAII MEAT COMPANY, LIMITED 969 level of activity.' The elimination of unit jobs (and the consequent erosion of the bargaining representative's status) is, we are satisfied, a mandatory subject for bargaining, even though the employer may seek to justify his action in terms of the replacement of economic strikers. Our conclusion does not in any way infringe on the basic principle of the Mackay case, since the replacement of strikers by other em- ployees who remain within the unit does not impair the authority or status of the bargaining representative to continue bargaining for all the employees in the appropriate unit. In this case, individual strikers are not being replaced by other employees, but instead, the positions they held before the strike have been eliminated so that no replacement is being substituted for the striker. Our holding to the effect that the Respondent was obligated to ad- vise and consult with the Union about its decision to replace certain strikers through a subcontract does not, in our opinion, deprive the Respondent of a potent tactic which it may be entitled to use during a strike. We are not holding that before the strike ensues, an em- ployer must reveal his intention to replace strikers on an individual basis, nor do we imply that an employer must advise the union in advance of the strike of his plans to counteract the impact of the strike. All that we are holding in this case is that an employer fails to bargain and violates Section 8(a) (5) if, after a strike begins, he does not give the union an opportunity to bargain about his proposal to change the existing terms and conditions of employment among which, and not the least important, is the permanency of the job classi- fications which were held by employees when the strike began. After July 1, the date on which the strike began, the failure of the Respondent to bargain with the Union about its decision to subcon- tract out its delivery operations was clearly a factor in prolonging the strike, since thereafter the very existence of the certified unit was at stake. Accordingly, we find that the Employer's letter of July 1, which it mailed to its employees after the strike was under way, con- verted an economic strike into an unfair labor practice strike. 2. The Trial Examiner found that Respondent had discharged its delivery department employees through its July 1 letter in which it informed them that the delivery work had been subcontracted and that they no longer had any jobs to return to. We find merit in the Re- spondent's exception to this finding. It does not seem to us that the July 1 letter served as a notice of discharge merely because it pre- ceded the actual employment of Fukomoto's employees on July 5. In accordance with our discussion in paragraph 1 above, we find that the 5 Erie Resistor Corporation, 132 NLRB 621 , enforcement denied 303 F 2d 359 ( CA. 3), cert granted October 8, 1962; Swan Rubber Company, 133 NLRB 375, enfd. 303 F. 2d 668 (C.A. 6). 970 DECISIONS OF NATIONAL LABOR RELATIONS BOARD delivery department employees became unfair labor practice strikers by the Employer's failure to bargain with the Union about its decision to subcontract. This conversion, however, did not transform into a discharge what was clearly intended merely as a notification that sub- contracting arrangements had been entered into.' The delivery de- partment employees and the other strikers were all in the same status after the Employer's announcement of its subcontract. As unfair labor practice strikers, they would be entitled to reinstatement upon their unconditional application to return, even though the Employer might thereby be required to discharge employees whom he hired after the strike had been converted. 3. The Trial Examiner-found that the strikers, other than the de- livery employees, were denied reinstatement no later than August 24, 1960, when the Respondent stated at a bargaining meeting that it would not reinstate any of them even though agreement on a contract was reached. After that date, the Trial Examiner found, any further application for reinstatement would have been futile. As of August 24, 1960, the strike was still in effect and the Union had made no un- conditional request for reinstatement. We do not agree with the Trial Examiner that an application for reinstatement would have been futile as of this date since it appears that the Union had not at that time abandoned the economic demands over which the strike was begun. The Board has on occasion made an exception to its general rule that an unconditional application for reinstatement is a pre- requisite for reinstatement and backpay during an unfair labor prac- tice strike, but only when the strike had already been abandoned and all the former strikers were immediately available for employment.' Some months later, and while the strike was still in progress, the Union sent the following letter to the Employer : DEAR SIR : In several of our negotiating sessions, we indicated to you that your last offer would be acceptable, providing you put the strikers back to work. At those times, you refused to take the strikers back. We are again offering to have all of these strikers return to work with or without a contract. In view of his finding that an application for reinstatement would have been futile after August 24, 1960, the Trial Examiner did not consider the effect of the above letter. The Respondent argues that it does not constitute an unconditional request for reinstatement be- cause the use of the phrase "we are again offering" implicitly char- acterizes it as equivalent to earlier offers to accept the Respondent's 9 Cf. Redwing Carriers, Inc. and Rockana Carriers, Inc., 137 NLRB 1545 7 Sea View Industries, Inc, 127 NLRB 1402 ; and Valley Die Cast Corp, 130 NLRB 508, enfd 303 F. 2d 64 (CA 6). HAWAII MEAT COMPANY, LIMITED 971 terms. We do not believe this interpretation is valid. On the con- trary, we construe the letter of March 14 as claiming that the Union had at some undisclosed time agreed to accept a contract containing the Employer's latest offer if the Employer would also reinstate the strikers.' This construction is based on the fact that, for the first time, the Union offered to have the strikers return to work even with- out a contract, that is, upon any terms which the Employer would unilaterally grant. In our opinion, this constitutes abandonment of all the Union's economic demands and is, in effect, an unconditional application for reinstatement. The fact that the strike continued thereafter is explainable by the Respondent's failure to grant reinstate- ment to the strikers. An unconditional request for reinstatement of strikers must carry with it, as the instant request does, an under- taking to abandon the strike, if the request is granted; it does not require that the employees forfeit their right to continue the strike, if the request is denied. All that is required is that the Union or the employees unconditionally offer to return to the status they oc- cupied before the strike began.' THE REMEDY We have found that the Respondent failed to fulfill its statutory bargaining obligation within the meaning of Section 8(a) (5) and (1) of the Act when it subcontracted its delivery work without prior notice to, or consultation with, the Union. We have also found that the Respondent unlawfully refused to reinstate its striking employees upon their unconditional application for reinstatement. If the status quo existing prior to its unlawful conduct is to be reestablished, and if its unfair practices are to be fully remedied, it is evident that the Re- spondent must be required to discontinue any arrangement involving the contracting out of its delivery operations and to reestablish this operation as it existed on July 1, 1960. We shall so order. We shall also order the Respondent, if it has not already done so, to offer the unfair labor practice strikers on whose behalf the Union made its un- conditional request for reinstatement, full reinstatement to their former or substantially equivalent positions, without prejudice to their seniority or other rights and privileges, dismissing, if necessary, employees hired to replace the strikers. We shall also order that Re- spondent make them whole for any loss of earnings suffered by reason of Respondent's discrimination with respect to them, by payment to each of them of a sum of money equal to the amount they would nor- 8 There is no evidence in the record that the Union had, in fact, prior to march 34, receded from all its economic demands. O Marathon-Clark Cooperative Dairy Association, 137 NLRB 882, where the Board ordered the reinstatement of strikers upon their unconditional request even though the strike continued upon the employer's refusal to reinstate them. 972 DECISIONS OF NATIONAL LABOR RELATIONS BOARD mally have earned as wages between the date Respondent received their unconditional applications for reinstatement and the date of its offer to reinstate the employees, less net earnings during that period. Such pay loss shall be computed with interest at the rate of 6 percent per annum in the manner set forth in F. W. Woolworth Company, 90 NLRB 289, and in Isis Plumbing d Heating Co., 138 NLRB 716. 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, Hawaii Meat Company, Limited, Honolulu, Hawaii, its officers, agents, successors, and assigns, shall : 1. Cease and desist from : (a) Failing and refusing to bargain collectively with Meat Cutters Union, Local 594 (AFL-CIO), as the exclusive representative of all its employees at its Middle Street plant, excluding office clerical and professional employees, guards and/or watchmen, and supervisors, as defined in the Act, with respect to wages, hours, and other terms and conditions of employment; and from unilaterally contracting out the delivery and allied operations formerly, performed by its own em- ployees without prior bargaining with the above-named Union or with any other union its employees may select as their exclusive bargaining representative. (b) Discouraging membership in the above-named Union, or any other labor organization, by refusing to reinstate any of its employees who are unfair labor practice strikers upon their unconditional re- quests for reinstatement, or by discriminating in any other manner in regard to their hire or tenure of employment or other terms and condi- tions of employment, except to the extent permitted by Section 8 (a) (3) of the Act, as modified by the Labor-Management Reporting and Disclosure Act of 1959. (c) In any other manner interfering with, restraining, or coercing its employees in the exercise of their right to self-organization, to form labor organizations, to join or assist Meat Cutters Union, Local 594 (AFL-CIO), or any other labor organization, to bargain col- lectively through representatives of their own choosing, and to en- gage in other concerted activities for the purpose of collective bargain- ing or other mutual aid or protection as guaranteed by Section 7 of the Act, or to refrain from any or all such activities, except to the extent 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. HAWAII MEAT COMPANY, LIMITED 973 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Terminate any arrangement for contracting out its delivery and allied operations and reestablish such operations as they existed on July 1, 1960. (b) Bargain, upon request, with Meat Cutters Union, Local 594 (AFL-CIO), as the exclusive representative of all employees in the aforementioned appropriate unit. (c) Offer to the employees who were on strike on March 14, 1961, reinstatement to their former or substantially equivalent positions, without prejudice to their seniority or other rights and privileges, and make them whole for any loss of pay they may have suffered in the manner set forth in the section of this Decision and Order en- titled "The Remedy." (d) 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 computation of lost earnings due hereunder. (e) Post at its plant in Honolulu, Hawaii, copies of the attached notice marked "Appendix." 10 Copies of said notice, to be furnished by the Regional Director for the Twentieth Region, shall, after being duly signed by Respondent, be posted immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Respondent shall take reasonable steps to insure that such notices are not altered, defaced, or covered by any other material. (f) Notify the said Regional Director for the Twentieth Region, in writing, within 10 days from the date of this Order, what steps Respondent has taken to comply herewith. MEMBER LEEDOM, concurring in part and dissenting in part : I concur insofar as my colleagues find an unlawful refusal to bar- gain and unlawful discrimination in the denial of reinstatement to the strikers, including the drivers, in March 1961. However, unlike my colleagues, I find, as did the Trial Examiner and for the reasons indicated in the Intermediate Report, that, in subcontracting the delivery operations on a permanent basis on or about July 1, 1960, the Respondent discharged its drivers in retaliation against their striking in violation of Section 8 (a) (3) ; and, it is in this context that I agree with my colleagues' finding that, by subcontracting its delivery operations without consulting the Union, the Respondent 10In 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." 974 DECISIONS OF NATIONAL LABOR RELATIONS BOARD violated Section 8(a) (5), and with their remedial provision for the unlawful refusal to bargain. See Town & Country Manufacturing Company, 136 NLRB 1022, footnote 10; Adams Dairy, Inc., 137 NLRB 815, footnote 3. And, for the reasons stated in the dissenting opinion in Isis Plumbing, supra, unlike my colleagues, I would not grant interest on backpay to the discriminatees. In all other respects, I concur. APPENDIX NOTICE TO ALL EiIPLOYEES 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, as amended, we hereby notify our employees that : WE WILL terminate any arrangement for contracting out our delivery operations and reestablish such operations as they existed on July 1, 1960. WE WILL, upon request, bargain with Meat Cutters Union, Local 594 (AFL-CIO), as the exclusive bargaining representative of our plant and delivery employees in the appropriate unit. WE WILL offer all our employees who were on strike on March 14, 1961, immediate and full reinstatement to their former or sub- stantially equivalent positions and will make them whole for any loss of pay each of them may have suffered as a result of our dis- criminatory refusal to reinstate them on and after their uncon- ditional requests for reinstatement. WE WILL NOT unilaterally subcontract out our delivery and allied operations formerly performed by our own employees with- out first bargaining with the above-named Union or with any other union our employees may select as their exclusive bargain- ing representative. WE WILL NOT discourage membership in Meat Cutters Union, Local 594 (AFL-CIO), or any other labor organization, by re- fusing to reinstate any of our employees who are unfair labor practice strikers upon their unconditional request for reinstate- ment, or by discriminating in any other manner in regard to their hire or tenure of employment or other terms or conditions of em- ployment, except to the extent permitted under Section 8(a) (3) of the Act, as modified by the Labor-Management Reporting and Disclosure Act of 1959. WE WILL NOT in any other manner interfere with, restrain, or coerce our employees in the exercise of their right to self- organization, to form labor organizations, to join or assist Meat Cutters Union, Local 594 (AFL-CIO), or any other labor organ- ization, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the HAWAII MEAT COMPANY, LIMITED 975 purpose of collective bargaining or other mutual aid or protection as guaranteed in Section 7 of the Act, or to refrain from any or all such activities, except to the extent 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 NOT discriminate in regard to hire or tenure of em- ployment or any term or condition of employment against any employee because of membership in or activity on behalf of any such labor organization. All our employees are free to become or remain, or to refrain from becoming or remaining, members of Meat Cutters Union, Local 594 (AFL-CIO), or any other labor organization, 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 under Section 8 (a) (3) of the Act. HAWAII MEAT COMPANY, LIMITED, Employer. Dated---------------- By------------------------------------- (Representative ) (Title) NOTE.-We will notify any of the above-mentioned employees pres- ently serving in the Armed Forces of the United States of their right to full reinstatement upon application in accordance with the Selective Service Act after discharge from the Armed Forces. This notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Subregional Office, 680 Ala Moana Boulevard, Room 409, Honolulu, Hawaii, Tele- phone Number, 5-8831, Local 408, if they have any question concerning this notice or compliance with its provisions. INTERMEDIATE REPORT AND RECOMMENDED ORDER STATEMENT OF THE CASE This case was heard before Trial Examiner Martin S . Bennett at Honolulu, Hawaii, on April 3, 4, 9, 6, 7, 10, and 11 , 1961. The complaint, in essence , alleges that Respondent, Hawaii Meat Company, Limited, engaged in unfair labor practices within the meaning of Section 8(a)(1), (3 ), and (5 ) of the Act by bargaining in bad faith for a contract ; by replacing approximately 15 of its employees , a portion of a certified unit represented by Meat Cutters Union, Local 594 (AFL-CIO), herein called the Union, with an independent subcontractor ; by unilaterally chang- ing conditions of employment ; and by refusing to meet to negotiate a contract. Oral argument at the close of the hearing was waived; the period for submission of briefs was extended to June 7 and briefs have been submitted only by the Charging Party and by Respondent. Upon the entire record in the case, and from my observation of the witnesses, I make the following: 976 DECISIONS OF NATIONAL LABOR RELATIONS BOARD FINDINGS OF FACT I. THE BUSINESS OF RESPONDENT Hawaii Meat Company, Limited, is a Hawaii corporation engaged in the whole- sale processing of meat at Honolulu. In connection therewith, cattle are slaughtered, beef is sold, and meats are imported for resale. During the year 1960, Respondent purchased meat and other materials valued in excess of $50,000 which were shipped to Respondent from States of the United States other than the State of Hawaii. I find that the operations of Respondent affect commerce and that it would effectuate the purposes of the Act to assert jurisdiction herein. II. THE LABOR ORGANIZATION INVOLVED Meat Cutters Union , Local 594 (AFL-CIO), is a labor organization admitting to membership the employees of Respondent. III. THE UNFAIR LABOR PRACTICES A. The issues; introduction The Union was certified on February 17, 1960, as the representative of Respond- ent's employees in a companywide unit excluding guards and/or watchmen, super- visors, professional employees, and office clericals. The unit comprised approxi- mately 73 employees in production and maintenance classifications. Included were seven drivers, eight driver-helpers, and one auto mechanic helper. The driver- helpers performed some laboring duties inside the plant in addition to assisting the drivers. Thereafter, approximately 11 collective-bargaining sessions were held be- tween May 20 and June 30, 1960. A strike commenced on July 1, but picketing as such was not carried on until July 5, as described below. The General Counsel variously contends that Respondent failed to bargain in good faith on and after June 7, 1960, the Section 10(b) cutoff date; that because of the strike Respondent unilaterally terminated the approximately 15 drivers and driver-helpers and contracted with an independent contractor to handle its deliveries; that the job of the auto mechanic helper was similarly abolished; that Respondent unilaterally changed working conditions because of the strike; and that on or about July 29, during the strike, Respondent refused to meet with the Union. The General Counsel in effect concedes that the independent contractor was in no way an alter ego of Respondent. B. Majority representation in the appropriate unit The complaint alleges, Respondent admits, and I find that all employees of Re- spondent at its Middle Street plant exclusive of office clerical employees, guards and/or watchmen, professional employees, and supervisors, constitute a unit ap- propriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act. The complaint alleges, Respondent admits, and I find that on February 17, 1960, and at all times material herein, the Union was and now is the exclusive representative of the employees in the above described appropriate unit for the purposes of collective bargaining within the meaning of Section 9(a) of the Act. As will be apparent, a key issue in the case is the fact that, despite the fore- going concession, Respondent challenges the Union's right to represent its delivery employees, viz, the drivers, driver-helpers, and the auto mechanic helper, who were ousted when Respondent contracted with an independent contractor to take over its delivery operations. C. Sequence of events Following the certification, the Union submitted a proposed contract to Respond- ent on May 2, 1960, and on May 24 Respondent submitted its counterproposal. Ten or eleven meetings were held between May 2 and June 30 with discussion of both proposals; as indicated, a strike commenced on July 1. The General Counsel and Respondent have adduced evidence with respect to the alleged failure of Respondent to approach the bargaining table in good faith in the sense that Respondent failed to yield or make concessions with respect to con- ditions of employment. In support thereof, the General Counsel has also adduced evidence of a number of communications from Respondent to its employees where- in they were kept posted, in part at least, as to the state of negotiations between their designated bargaining representative and Respondent. Inasmuch as primary emphasis was given to other facets of the case, which, as will appear, are dispositive of the case, and, moreover, as I am convinced that the HAWAII MEAT COMPANY, LIMITED 977 record will not support a finding of an unfair labor practice predicated upon the above-stated theory, at least during the prestrike period, I believe that it would greatly and unduly encumber this report to set forth the documentary and other evidence with respect thereto and this in large measure has not been done. The record discloses the following with respect to the sequence of events immedi- ately preceding the strike. A meeting held on June 27, 1960, was attended, inter alia, by Attorney David McClung in behalf of the Union and by Irving Baldwin, a staff member of the Hawaii Employers Council which represents Respondent in collective bargaining. Their respective versions differ slightly, McClung testifying that Baldwin came forward with a modified proposal and stated Respondent could offer no more, whereas Baldwin, as he testified, stated that there was little room for bargaining and McClung responded that further discussions were pointless. McClung did not recall the latter statement attributed to him but did not deny it. Both agree that McClung announced that he would refer management's latest proposal to the union membership and would recommend rejection thereof. On the evening of June 29, Business Agent Ivan Naiwi sent a wire to Vice Presi- dent James Greenwell of Respondent stating that "YOUR EMPLOYEES MEMBERS OF OUR UNION ATTENDING STOP WORK MEETING AT PIER 8 TO DIS- CUSS CONTRACT NEGOTIATIONS." This meeting was duly held for the pur- pose of taking up the latest employer proposal and it is also undisputed that the wire was not delivered to Respondent until approximately 11:30 a.m. on June 30. It is also clear, and I find, that a number of employees appeared at the plant gate that morning at the customary reporting hour but did not enter the plant premises. Respondent's records disclose that substantially less than a majority of the em- ployees in the bargaining unit worked that day. The Union and Respondent met again on June 30 at approximately 5:30 p.m. McClung informed the employer representatives that the Union had rejected manage- ment's latest proposal.' Greenwell and Baldwin agree, and I find, that Baldwin asked McClung if the Union was on strike. McClung replied that there was not a strike as of that day, but that Respondent could consider it a strike if the men were not back on the following morning.2 Later that night McClung and Naiwi decided to hold another union meeting on July 1. As McClung testified, at approximately 5:30 a.m. on July 1, he and Naiwi instructed the union-shop stewards to notify employees at the plant gate to attend a union meeting. At 6 a.m., Naiwi sent a wire to Vice President Greenwell stating that "MEETING WITH YOU YESTERDAY HAS NECESSITATED CALLING A STOP WORK MEETING TODAY TO EXPLAIN STATUS OF NEGOTIA- TIONS TO OUR MEMBERS." This wire was received at 9:30 a in. The meet- ing was held at approximately 8 a.m. on July 1 and the membership was brought up to date on the failure of negotiations with Respondent at the June 30 meeting. As on the previous day, substantially less than a majority of the complement reported for work. Later that morning, Baldwin telephoned McClung at his office. According to the latter, Baldwin asked if the strike was on; McClung replied that it was a stop work meeting and Baldwin stated that if the men were not back by noon or 2 p.m. Respondent would consider it a strike. According to Baldwin, it was McClung who stated that it would be a strike if the men were not back after lunch. Green- well was promptly notified by Baldwin that, according to McClung, it would be a strike if the men were not back that afternoon. It is clear in any event, and I find, inasmuch as the absentees were not back to work by 2 p.m. on July 1, that at the very latest, as of that time, Respondent's employees had commenced an economic strike against Respondent .3 Sometime during the morning of July 1, Vice President Greenwell asked Baldwin to arrange a meeting of Respondent's officials with its industrial relations adviser that afternoon. Baldwin did so and present at the Hawaii Employers Council at 2 or 2 : 30 p.m. were Greenwell, Baldwin , Respondent's counsel, and other representa- tives of Respondent and the Council. 'It appears that as of this date one of the chief items separating the parties was the Union's proposal that most if not all of the 15 persons designated as supervisors be in- cluded in the unit on the basis that their tasks were actually not supervisory in nature 2 McClung conceded that he might have told Baldwin, in response to the latter's query, that if the men were not back on the following day Respondent could assume that they were on strike 3 While it can well be argued that the strike had commenced on the morning of July 1, if not on the morning of June 30 , such a conclusion would not affect the results that follow herein. 978 DECISIONS OF NATIONAL LABOR RELATIONS BOARD As Baldwin testified, he initially reported to the assemblage about his talk earlier that day with McClung, i.e., as to the existence or nonexistence of a strike. Re- spondent stresses in its brief that the group then concluded that they were con- fronted with a strike situation and, as indicated hereinabove, I have already so found. They concluded that one, Fukumoto, should be immediately retained to handle Respondent's meat deliveries to its customers in the Honolulu area. I shall hereinafter set forth the history of negotiations with Fukumoto which had been under way for some weeks. Fukumoto, who had been alerted by Greenwell at approximately 8:30 that morning, was then telephoned and appeared at the meeting at approximately 3 p.m. He was asked if he would take on a contract to handle Respondent's deliveries and agreed to do so. As also indicated below, he had previously made such an agree- ment with Greenwell. Fukumoto then discussed details of his contract with Re- spondent's counsel, and, after approximately one-half hour, left the premises. Dur- ing the same period, Baldwin began to draft a letter for mailing to the employees of Respondent. The letter was prepared, signed by Greenwell, and, at approxi- mately 6 p.m., Baldwin proceeded to mail the letter to Respondent 's entire com- plement of employees. The letter stated as follows: AN IMPORTANT MESSAGE To All Employees of Hawaii Meat Company: Because many of our employees went on strike, we intend to begin hiring replacements immediately. Unless you return to work immediately, you will be permanently replaced. Since we are dealing with a very perishable commodity, we must keep op- erating. We know that you value your job, and that your family values your job. You should think very carefully-and think for yourself-about just what you are going to do. Talk this problem over with your family. Do you really want to keep on working for Hawaii Meat, or don't you? Employees who return to work will be accepted on a first-come-first served basis. In other words, if your old job is still open, you will get it. If it is filled by a new employee you may be offered other work that you can do. We cannot promise that you will get your old job back, however, or any job. For example, as of Tuesday, July 5, all of our delivery will be done by a trucking company we have made a contract with . There are no longer any delivery truck driver or driver helper jobs. [Emphasis supplied.] From the beginning it has seemed to us that McClung, the union spokes- man, had orders from his boss in Chicago (Max Osslo) about the kind of contract he had to negotiate. We have, nevertheless, tried very hard to offer a contract that would meet the needs of our employees and the needs of the company. If some of you had attended the negotiation meetings, we know you would have a clearer picture of the two sides of the question. You certainly can understand that a number of ranchers depend on us for income, and that many merchants depend on us for meat to sell. So you can see the need for getting replacements if we are going to stay in business. We repeat, if you want to continue as one of our employees you should return to work. We must hire permanent replacements as soon as we can because of the perishable nature of our product. It is to be noted that Respondent had handled its own deliveries prior to the strike with a total of eight trucks, six in normal usage plus two others for use when business demanded. There were approximately seven drivers and eight driver- helpers assigned thereto. Some of the trucks did not require the services of a helper. At least some of the driver-helpers, in addition to working on the trucks, had warehouse duties involving primarily the handling of merchandise destined to and from the meat cooler or chiller. One other employee in this group, classified as an auto mechanic helper, assisted the mechanic, ran errands, and washed trucks. It is clear and I find that: (1) the reference in the letter was to this group of drivers and driver-helpers; (2) Fukumoto did not commence his actual work in be- half of Respondent until 7 a.m. on July 5, after the long holiday weekend; and (3) Respondent had not utilized the services of an outside hauler or trucker during 1960. The record does disclose that such haulers had been used occasionally not later than the latter half of 1959 and only when deliveries were unusually heavy. They were used, it is clear, only as supplements to Respondent's regular delivery crew. I further find that as of 6 p.m. on July 1, 1960, Respondent had discharged its drivers and driver-helpers, the majority of whom were on strike, and that this action was taken prior to the actual utilization of Fukumoto personnel on July 5. HAWAII MEAT COMPANY, LIMITED 979 As for the history surrounding the appearance of Fukumoto on the scene, the record discloses the following. Baldwin of the Hawaii Employers Council testified, and I find, that Greenwell asked him if he knew of any outside truckers who could handle Respondent's deliveries and that, pursuant to this query, he, Baldwin, sub- sequent to a negotiating meeting with the Union on or about May 26 , 1960, put another representative of the Council in touch with Greenwell.4 Greenwell testified that he contacted Fukumoto between May 31 and June 3 by telephone and on June 1 and 2 also contacted another hauler. He met with both men on June 4 and explained the possibility of a hauling contract. It may be noted that Greenwell was contemporaneously holding bargaining meetings with the Union on June 3 and 8, 1960. Greenwell notified the other hauler on or about June 10 that Fukumoto's bid was preferable and, on June 14 or 10 as he variously testified, Fukumoto having lowered his price in the interim , told Fukumoto that if a strike resulted, Respondent would concern itself only with his bid. The topic was not mentioned in any of the negotiations with the Union for the reason, as Greenwell put it, that the subject did not arise and he saw no need to bring it up. Greenwell further testified that all but minor details had been worked out with Fukumoto prior to the strike and that these were worked out after the commencement of the strike. A meeting of Respondent's board of directors was addressed by Baldwin on June 24 and he informed them that a strike could be expected. The Board was informed by company officials that they had been negotiating with an outside truck- ing firm "and that it had reached tentative agreement with regard to the future delivery of all products(s) to customers on a contract basis.. . . Authorization to contract all delivery service at a time and on conditions to be worked out by Management was . . . approved." According to Greenwell , he held a telephone conversation with Fukumoto on Tuesday, June 28, and discussed the substantial provisions of the contract to be entered into if a strike occurred On the same date he sent Fukumoto a six-page document, prepared on the previous day by Respondent's attorney, but bearing the June 28 date , and stating as follows: We are writing to confirm our agreement with you with regard to the trans- portation by you of our products from our plant to our customers. Hawaii Meat Company Limited (hereinafter called the "Company") hereby engages you (hereinafter called the "Contractor"), or your permitted assigns, to haul our products from our plant to our various customers in the City and County of Honolulu. The Contractor, or any assignee who meets with our approval will be required to perform the following: 1. To supply all the necessary personnel and equipment necessary to assist in the loading of the trucks at the Company's plant, and to deliver merchandise to all of the Company's customers in the City and County of Honolulu 2. To obtain receipts from all customers to whom merchandise is delivered 3. To make collections on c.o.d. orders and such other orders as requested by the Company. 4 You will designate one of your employees to act as foreman who will confer daily with our dispatcher in order to facilitate deliveries. The Company will lease to Contractor four van type and two panel type trucks (more specifically described in Schedule "A" attached to this letter), at a lease rental of $500.00 per month for the six vehicles. Contractor will man these vehicles with sufficient competent nersonnel and supervise their work. It is understood that the lease rental of $500 00 per month represents the Company's carrying charges and that in the event such charge increases or decreases by reason of the purchase of new equipment or the writing down of old equipment, the amount of compensation paid to the Contractor hereunder will be adjusted to reflect such increase or decrease in cost to the Contractor. The Contractor shall be entitled during the term of this agreement, or any extended term, to the possession of the trucks. The Contractor agrees to pay all operating costs and the cost of all repairs and maintenance during said periods The Contractor shall be responsible for the garaging and the care and maintenance of these vehicles when not in use. In addition to the trucks listed on Schedule "A," if in the Company's judgment the vehicles under lease to the Contractor are insufficient in the Company's opinion to meet the requirements of delivering the Company's products during 'Greenwell testified that the idea had originated with the Council. 672010-63-von 139-63 980 DECISIONS OF NATIONAL LABOR RELATIONS BOARD any period, the Company will make available to the Contractor two additional trucks (specifically described in Schedule "B" attached) as supplemental units. No rental charge will be made for the supplemental units at this time but if their use, or the use of either, is more than anticipated at this time by the Company, the Company may make a charge for rental. The Contractor agrees at his expense to insure the six trucks against damage or destruction for such coverages as are available with a deductible provision of $250.00, such policy or policies to name the Company as the loss payee. In the event of loss or destruction of any truck, the proceeds of said policy shall be paid to the Company to be used to defray the cost of repairs to such vehicle. If insurance coverage is not available, or if the insurance proceeds are insuffi- cient to cover the loss or the cost of repairs, then in such event the Contractor will upon demand pay over to the Company the amount of the loss or the deficiency. In the case of a total loss or where in the Company's judgment repairs are not desirable, the Company shall have the option of furnishing you with a substitute vehicle or vehicles and adjusting the rental as herembefore provided. Nothing contained in this paragraph shall relieve the Contractor of the duty of making repairs and if repairs satisfactory to the Company are made by the Con- tractor, the Company will release to the Contractor the proceeds of any appli- cable insurance policy which has been taken out by the Contractor The Contractor agrees to carry Workmen's Compensation Insurance to insure against injury or death to his employees while engaged in the performance of the work required by this contract. The Contractor further agrees to indemnify the Company and save it harmless from all claims, demands, costs, expense, actions or judgments, which may at any time be brought, made, incurred or entered against it by the Contractor's employees, or any third party, as a result or or arising out of the Contractor's operations. At the end of the term of this agreement or a sooner determination thereof, the Contractor will deliver to the Company all of the equipment under lease in as good condition, reasonable wear and tear excepted. The Company will permit the Contractor's employees to make a daily wash- down of the leased vehicles on the Company's premises. The Company will at its expense provide edible white oil for the wipe down. In addition, the Com- pany will provide the Contractor's truckers with wraparound frocks and beef carrying clothes. The Contractor will, if requested by the Company, make in addition to out- side deliveries to the Company's customers, internal deliveries to the Company's cut meat department. It is understood that such deliveries will be made at a rate mutually to be agreed upon and that the rate hereinafter specified for de- livery to the Company's customers is not applicable. The Company agrees to pay to the Contractor for services rendered here- under (save and except internal deliveries) the sum of 11/a cents per pound for all goods of the Company delivered to its customers. Determination of the amount of goods delivered is to be made daily on the day following delivery on the basis of the previous day's delivery invoices. Payment of the compen- sation will be made to the Contractor weekly, not later than the third business day of the following week. The Company may withhold from all such pay- ments a proportionate share of the monthly truck rental. This agreement shall be for a term of six months subject to cancellation by either party upon giving thirty (30) days prior written notice to the other. Unless at least thirty (30) days prior to the expiration of said six month period one party shall notify the other in writing of his or its intention not to con- tinue, this agreement shall automatically continue for an additional six months upon the same terms and conditions.5 [Emphasis supplied.] The Contractor will during the term of this agreement, or any extensions or renewals of the same, keep the equipment in a strictly clean and sanitary con- dition and observe and perform all laws, ordinances, rules, regulations, whether now or hereafter made by any Governmental or other authority for the time being applicable to the Contractor's operations hereunder and will indemnify and save the Company from all actions, suits, claims, damages, fines and penal- ties by whomsoever brought, made or imposed by reason of the non-observance or non-performance of said ordinances, laws, rules and regulations or of this covenant. During the term of this agreement the Company will not, so long as the Con- tractor satisfactorily performs and is able to perform his obligations, contract 5 As appears below, this clause was changed on July 1. HAWAII MEAT COMPANY, LIMITED 981 with third parties for the carriage of its products from its plant to its customers, provided, however, that this provision shall not interfere with or prevent customers from receiving merchandise directly from the Company and trans- porting to their own establishments. The Contractor may, subject to the Company's approval, assign this agree- ment to a third party or corporation who will receive all of the benefits and assume all of the obligations and liabilities imposed hereunder. In the event that by reason of a labor dispute or disputes, or other causes beyond your control, you are temporarily prevented from performing the haul- ing required by this agreement, the Company, so often as this situation shall occur, shall have the right to require the Contractor to surrender the trucks and upon receipt of such equipment to hire or lease them to third parties at pre- vailing rates for such length of time as the Contractor is unable to perform, provided, however, that if in the judgment of the Company your inability to perform on any given occasion is more than temporary, then the Company may cancel this agreement. [Emphasis supplied.] In the event that the Company shall decide to dispose of any of the trucks leased to the Contractor under the terms of this agreement, it will give the Contractor the first right to purchase such truck or trucks at the highest price and upon the same terms which have been offered to the Company by a bona fide buyer. The Contractor will procure and keep in force during the term of this agreement or any extended term hereof, a fidelity bond or an insurance policy guaranteeing or insuring as the case may be the Company against all losses of its money or products caused by any fraudulent, dishonest or criminal act of Contractor's employees whether committed alone or in collusion with others. The Contractor will, if requested by the Company, carry liability insurance insuring the Contractor and the Company against legal liability for injuries or death to persons other than employees of the parties hereto, arising out of the operation of the trucks referred to in this agreement, and also out of any and all other operations of the Contractor pursuant to the terms of this agreement, with limits of not less than $100,000.00 applicable to the injury or death of one person as the result of any one accident, and $300,000.00 with respect to the injury or death of two or more persons as the result of any one accident. The term "Company" shall include Hawaii Meat Company, Limited, its successors and assigns, and the term "Contractor" shall include said Richard Fukumoto, his heirs, administrators and permitted assigns. Whenever the word "term" is used herein with respect to this agreement it shall include the original six months term and any subsequent extension or renewal thereof. Your approval of the terms and conditions set forth in this letter on a copy hereof shall constitute acceptance of the same. Fukumoto was called in on July 1, and a contract was signed at approximately 5:30 p.m. The agreement was identical with that previously sent to Fukumoto on June 28, except that it bore the date of July 1, changed the term of the contract,6 and listed the contracting hauler as R.H. & R., Inc. This reflects the fact that Fukumoto, an established hauler in the area, had formed a new corporation expressly for the purpose of carrying on this hauling for Respondent. The articles of incor- poration for the organization were received by the State treasurer at 4:23 pm. on July 1, manifestly after Fukumoto had left the office of the Council, and prior to the execution of the new contract at approximately 5:30 p in that day. It may be noted that although the agreement states that it became effective on July 1, it does not provide precisely when Fukumoto was to commence operations. The record does disclose that R H. & R. hired new employees who started work at 7 a in. on July 5. In addition, according to Greenwell, Fukumoto disclosed dur- ing negotiations that he had run an advertisement for another purpose and had ap- proximately 150 applications on file; a copy of his advertisement of June 23, 24, 25, and 26 is in evidence. There is no evidence that Fukumoto had actually hired anyone for this job prior to signing the contract with Respondent on July 1 at approximately 5:30 p.m. Late on July 1, and on July 2 as well, a number of employees who had received the July 1 letter from Respondent, set forth above, contacted Business Agent Naiwi who conferred with Union Counsel McClung and then decided to convene a special e The original 6-month term clause was replaced by one reading: "This agreement shall take effect as of July 1, 1960, and shall continue thereafter until terminated by either party giving to the other thirty (30) days written notice of his intention to so terminate" 982 DECISIONS OF NATIONAL LABOR RELATIONS BOARD union meeting on July 4. Naiwi also contacted Vice President Osslo of the parent International Union and obtained strike sanction, although, as found, a strike had already commenced at the local level. The special meeting was held on Monday, July 4, and approximately 21 em- ployees attended. Naiwi, who impressed me as a straightforward and honest witness testified, and I find, that the employees expressed concern over the letter from Re- spondent. Naiwi explained to them that, according to the letter, there were no longer any jobs available in the delivery department; as noted, the agreement with Fukumoto had never been mentioned by Respondent during the contract negotiations. Naiwi expressed concern over the entire situation and advised the employees to return to work on Tuesday, July 5. Then Shop Steward Ben Keliikuli, one of the ousted drivers, arose and stated: "What do you mean, `go back to work'? We don't have any jobs. And I'm one of the leaders who started this union and I want to- let's go out on strike." He said, "Let's take a vote." So they did take a vote. Two women among those present, Mattos and Enos, also called for a strike vote. A vote was taken and it was unanimous in favor of a strike. Naiwi then instructed the employees to report for picket duty at 6 a.m. on July 5 and, later in the day, proceeded to fashion picket signs. Picketing commenced on July 5 and is still being carried on. Approximately one-half of those in the unit reported for work on July 5 and Respondent commenced hiring new employees after 9:30 a.m. on that date. These recruits were obtained by means of an advertisement placed by Respondent in the morning newspaper of July 2. As noted, the drivers for R.H. & R. commenced their duties on the morning of July 5 at approximately 7 a in. On July 8, Vice President Greenwell sent the letter appearing below to Naiwi and, on the following day, also sent copies to all the employees. It stated as follows: In view of the impasse which exists in our negotiations on a collective bar- gaining agreement covering our employees whom you represent, we intend, as stated to you in our last meeting on June 30, 1960, to put into effect the wage increases and changes in benefit provisions as contained in our final contract proposal. The effective dates will be: Wages-----------------------------------------------July 10, 1960 Holidays --------------------------------------------- July 10, 1960 Sick Leave-------------------------------------------July 10, 1960 Medical Plan ---------------------------------------- August 1, 1960 We note that Schedule "A" of our written contract proposal inadvertently omits the classification of Washer. In our last negotiation meeting with you, we offer a hiring rate of $1.66 and a base rate of $1.91 for that job, and we intend to put these rates into effect at the same time as the other wage in- creases. Inasmuch as the company has subcontracted all of its outside deliveries, we no longer have any jobs in the classifications of Auto Mechanic Helper, Truck Driver, and Truck Helper. However, all men required to do loading work and/or cooler storage work will be classified as "Cooler and Platform Men," with a hiring rate of $1.66 and a base rate of $1.91. [Emphasis supplied.] On July 13, the Union wrote to Respondent and protested the latter's plan to put into effect the wage increases and changes in benefit provisions. There was subsequent communication between the parties in the form of letters, but this was unfruitful. It is clear that at a mediation meeting on August 24, Philip Maxwell of the Hawaii Employers Council announced that Respondent would not take back any strikers and would not release any of the replacements. I find that Max- well's statement on August 24 amounted to a refusal to reinstate the strikers be- cause he made it clear that applications would be futile. In fact, in a leaflet cir- culated to its customers on August 1, 1960, Respondent advised them, in part, as follows: And right now it doesn't look like there are any jobs left for the employees who went on strike. All of them have been replaced or their jobs have been eliminated. Shortly after the strike began we informed all employees that their jobs were available if they returned to work immediately. We told them that if they did not return, we would have to hire permanent replacements. We deal in a perishable commodity and operations have to keep going. Some employees returned to their jobs, and we have now permanently replaced those who did not. [Emphasis supplied.] HAWAII MEAT COMPANY, LIMITED 983 D. Analysis and conclusions To sum up, the newly certified Union and Respondent carried on negotiations for an initial contract for several months and there was no agreement. In anticipa- tion of the strike, Respondent made secret arrangements with an established hauler in the area, one Fukumoto, to take over Respondent's delivery operations in the event of a strike. These operations had normally been carried on by seven drivers and eight driver-helpers in the unit, in part assisted by the auto mechanic helper. The negotiations with Fukumoto had been carried on during June, he had been advised no later than June 20 that his bid was acceptable; and Respondent sent a full-scale contract to Fukumoto on June 28. The Union commenced its strike against Respondent no later than 2 p.m. on July 1. As a direct result thereof, Respondent called in Fukumoto and, at approxi- mately 5:30 p.m. on July 1, executed the contract which was unchanged from the June 28 document, except that it deleted the reference to the 6-month term and made the agreement an indefinite one terminable on 30 days' notice. It also reflected the fact that a new corporation, R.H. & R., Inc., apparently controlled by Fukumoto, had been formed to handle the hauling. At no time prior to the execu- tion of this contract, did Respondent even intimate to the Union that such a move was under consideration. Immediately upon the execution of this contract, Respondent sent a letter pre- pared earlier that afternoon to its entire complement of employees. The letter stated that Respondent intended to hire replacements for the stnkers and that em- ployees who did not return immediately would be permanently replaced. It also stated that "We cannot promise that you will get your old job back, however, or any job. For example, as of Tuesday, July 5, all of our delivery will be done by a trucking company we have made a contract with. There are no longer any delivery truck driver or driver helper jobs." At the end of the letter Respondent also stated, "We must hire permanent replacements as soon as we can because of the perishable nature of our product." On July 4, the Union held a meeting at which there was talk of abandoning the strike but, after a protest had been made by one of the ousted drivers that he had no job to return to and consequently advocated striking, this motion supported by two female employees of Respondent who apparently were not drivers or driver- helpers, the union members unanimously voted to continue the strike on a full- fledged basis. They did so, preparing picket signs and commencing actual picket- ing on July 5. R.H. & R. employees started work at 7 a.m. on July 5 and Respondent commenced the hiring of replacements for the strikers in nondelivery categories after 9:30 a.m. on July 5. It has consistently been the position of Respondent that the arrangement with R.H. & R. is not a temporary one. Thus, Greenwell admitted on the witness stand that he had contracted out his delivery service on a permanent basis and that all replacements were hired on a permanent basis. On August 1, Respondent sent a circular to its customers and noted that some jobs "have been eliminated." As noted, Maxwell, of the Hawaii Employers Council, speaking in behalf of Respond- ent, flatly informed the Union at a mediation meeting on August 24 during the strike, that Respondent would not take back any of the strikers and would not release any of the permanent replacements, a statement which I find included the drivers and helpers in its scope. And, on August 25, Respondent sent a circular to all of its employees reporting on the foregoing meeting and stating, in part, "We want you to know that the Company made one fact quite clear to both the Mediator and the Union. The fact is that, so far as we are concerned, the employees hired since the strike are permanent employees." On November 16, 41/2 months after the start of the strike, Respondent adhered to this position at a meeting attended by Greenwell, Irving Baldwin of the Hawaii Employers Council, and by Naiwi and McClung of the Union, with Baldwin and McClung as the chief spokesmen. As Baldwin testified, and I so find, "Mr. McClung asked us if we had any change in our position about hiring back the strikers. We told them that we were fully staffed, that those employees whom we had hired during the strike or taken back were permanent, and that we would consider any applicant as the job opened up. He then asked us if we had any plan for restyling the delivery service. I told him that it was working well, and the Company did not contemplate any change at that time." On November 17, in a notice to employees, Greenwell stated that Respondent had notified the Union at a meeting on the previous day that it would not return to the former delivery system. And, on March 7, 1961, Respondent sent a notice to employees wherein it com- mented upon the approaching hearing and repeated that this delivery contract had 984 DECISIONS OF NATIONAL LABOR RELATIONS BOARD been made on a permanent basis. Indeed , as of the date of this hearing, Respondent still continues to operate under its contract with R.H. & R. In view thereof, I must reject the contention of Respondent , advanced in its brief, in reliance on the 30-day cancellation clause in the contract , that the contract for hauling was purely a tem- porary adjustment to meet the strike. The fact is that Respondent , in anticipation of a strike, made arrangements to go out of the delivery end of its business and to discharge its delivery employees and has proceeded to do precisely that. Turning directly to the issue at hand, it is not whether an employer may enter into a hauling subcontract in order to save perishable materials . Because, on this record, this is a false premise. And Respondent's right to enter into a hauling sub- contract in order to move goods tied up by a strike is not in dispute . By the same token, there is no evidence that its goods were tied up. It is undisputed that on July 2, 3, and 4, Saturday through Monday of the holiday weekend, Respondent anticipated no hauling and actually did none. It did have a problem with respect to some live cattle on hand whose condition was such that it was desirable to slaughter them forthwith . This was done by bringing in three or four employees from Respondent's ranch operation. It is true, as Respondent's evidence discloses, that its chill or cooler room was approaching capacity and that if chilled beef is retained for more than 2 weeks, mold will set in. This, of course, is no different from a situation confronting any dealer or manufacturer in perishables who is confronted with a concerted activity and, more particularly , the record demonstrates that the problem of Respondent was not immediate, but rather one that might come to a head in the days and weeks to follow. Against this background , one is not presented with the picture of an employer making a temporary adjustment in its delivery service in order to cope with a problem, but rather with a totally different set of facts . Initially, this was not a temporary or hasty move, but rather a planned move dating back over 1 month to permanently discharge the drivers and helpers if they struck , obviously a retalia- tory measure for engaging in a protected concerted activity. Stated otherwise, Re- spondent unilaterally wiped out 15 or 16 jobs upon hearing that the men were on strike and did this several days before any of the subcontractor 's employees com- menced their duties and before any crisis arose concerning perishable meat. This is highlighted by the fact that Respondent at no time advised the certified bargaining agent that it not only had such a move under consideration , but in fact had already made the flat decision , and had so notified the contractor to take this course of action. If I follow Board law correctly , this was a matter concerning which Respondent was obligated to bargain with the Union , but to the contrary, Respondent proceeded unilaterally on a long-planned course of action? The picture thus is that the Union had a right under the Act to be heard on the issue of the employees represented by it who were ousted from their jobs by the subcontract This Respondent did not do. To the contrary, it covertly arranged for the subcontract long before any strike threat was imminent. And, assuming 9 Respondent stresses the Board decision in Fibreboard Paper Products Corporation, 130 NLRB 1558. The Board there held that an employer had not violated Section 8(a) (3) and (5) of the Act by unilaterally contracting out its maintenance work There are, however, a number of significant distinctions between that case and the present one Firstly, as the majority pointed out, the entire unit was contracted out and "no em- ployees remained in the unit to be represented by the Union, and thus there necessarily could be no impact on the employment conditions of employees remaining in the unit " Secondly, the Board majority conceded, in distinguishing the Timken, Shamrock, and Railroad Telegraphers cases (The Timken Roller Bearing Company, 70 NLRB 500: Shamrock Dairy, Inc, at at, 124 NLRB 494; and Railroad Telegraphers v Chicago and Northwestern Railroad, 302 U S. 330), that had employees remained in the bargaining unit, the employer decision "might have an impact on the conditions of employment of employees remaining in the unit. For that reason the employees' representative was entitled to bargain with respect to such decisions " In the present case, such was indeed the fact because some of the driver-helpers per- formed cooler room tasks Indeed, after the subcontractor commenced operations, Re- spondent unilaterally set up a new i lassification of "cooler and platform man," a topic not raised by it in negotiations. There is also the uncontroverted testimony by Union Repiesentative McClung that during negotiations the Union proposed the establishment of the classification of "freezerman and platform man" which Respondent opposed because the drivers and helpers performed these duties. Thirdly, it will be noted that a Board majority did not pass upon this issue in Fibre- board because, although it was a 3-to-1 decision (Member Fanning dissenting), Member Rodgers concurred in the result on different grounds. HAWAII MEAT COMPANY, LIMITED 985 for the purposes of this discussion that one may equate the replacement of strikers by subcontract with a replacement of strikers by new hires, here there is much more. Respondent made deliberate plans to replace a portion of the unit duly certified by the Board within the certification year and thereby ousted the Union from its status as representative of that portion of the unit. On this record, I must conclude this was planned as a retaliatory move to punish the Union in the event of a strike, particularly so because of the lack of substance to Respondent's claim with respect to perishable goods. This is highlighted by the fact that Respondent discharged its drivers and driver- helpers by means of a previously prepared letter but one-half hour after Fukumoto signed a subcontract and 4 days before his employees started upon their duties. As is readily apparent, it was indeed futile for the discharged drivers and helpers to apply for their jobs on July 2 subsequent to receipt of the discharge letter. Actually, Respondent went so far as to deprive the striking drivers and driver- helpers of their right to vote in future Board elections. An economic striker not entitled to reinstatement is, under Section 9(c)(3) of the Act, given the right to vote in Board elections for 12 months after the commencement of a strike. Pre- sumably, under such a subcontract as this, with an employer having permanently abandoned the delivery portion of its business and having unilaterally reduced the certified unit, the strikers would be bereft of all tenable employee status and of the right to vote. This is consistent with Respondent's contention that the certified unit herein is not the only appropriate unit; it would follow that Respondent must then contend that the new appropriate unit is one from which all drivers and driver- helpers have been permanently excluded. In essence then, I find that Respondent failed in its obligation to bargain in good faith concerning the subcontracting of a portion of its operations. I further find that the record warrants the conclusion that the decision to subcontract was carried out as a retaliatory measure against its employees for engaging in a protected con- certed activity. This conclusion is supported by the fact that the move was not under consideration for economic reasons prior to the threat of the strike; was not under- taken for efficiency purposes or for economic savings; and was carried out solely because of the advent of a strike. Indeed, there is no evidence to demonstrate that this has resulted in any economic savings to Respondent. Respondent's unilateral action in reducing the size of the unit could only serve to undermine the authority and legal position of the Union. It constituted an assault on the Union's bargaining position thereafter, because Respondent refused to recognize the Union's representative status with respect to the ousted delivery employees.8 I find, in view of the foregoing, that Respondent has refused to bargain in good faith with the Union as the representative of its employees in the above-described appropriate unit by unilaterally subcontracting out its delivery operations on July 1, 1960, and that by terminating its drivers, driver-helpers, and the auto mechanic helper on July 1, 1961, Respondent has discriminated with respect to the hire and tenure of employees, thereby discouraging membership in a labor organization. I further find that by the foregoing, Respondent has interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed by Section 7 of the Act, thereby engaging in unfair labor practices within the meaning of Section 8(a) (1) of the Act. Turning to the strikers, it has been demonstrated that a discussion arose at the special union meeting of July 4 concerning a recommended return to work. One of the discharged drivers, Keliikuli, arose and pointed out that he was one of those who had started the Union, that he had been discharged and had no job; and that the strike should be carried on. He was supported in this motion by two women, apparently not among the drivers and driver-helpers. A unanimous vote was then cast in favor of a strike. The conclusion is warranted that Respondent's unilateral discharge of the drivers and driver-helpers because they had engaged in a concerted activity thus served to prolong the strike and therefore converted the strike to an unfair labor practice strike at that point. Indeed, the reinstatement of this group was a major point of difference in subsequent negotiations between the parties. By its subsequent refusal to reinstate the strikers, to the extent not previously reinstated, as described below, I find that Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(3) and (1) of the Act. s Respondent has cited Packard Bell Electronics Corporation , 130 NLRB 1122. That case is not in point because, as the Board there pointed out, the employer's conduct was but a temporary expedient to protect its customers' interests in the event of a strike. Here, by contrast, the intention was not to protect customers' interests nor to protect perishables in an emergency , as is shown by the permanent nature of the action 986 DECISIONS OF NATIONAL LABOR RELATIONS BOARD IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section III, above, occurring in con- nection with its operations described 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 thereof. V. THE REMEDY Having found that Respondent has engaged in unfair labor practices, I shall recommend that it cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. It has been found that Respondent Company has discriminated with respect to the hire and tenure of employment of the employees of its delivery department including drivers, driver-helpers, and the auto mechanic helper. The problem arises as to the appropriate affirmative relief for the discriminatorily discharged employees. The delivery operation is still being carried on with Re- spondent's own vehicles which are leased to the outside contractor at a monthly rental, with the agreement terminable upon 30 days' notice. Under these circum- stances, equity dictates the normal reinstatement order with backpay. Hence, it will be recommended that Respondent resume direct operation of its delivery service with its own employees and offer its drivers, driver-helpers, and the auto mechanic helper who were unlawfully discharged immediate and full reinstatement to their former positions without prejudice to seniority or other rights and privileges. See The Chase National Bank of the City of New York, San Juan, Puerto Rico, Branch, 65 NLRB 827. I shall further recommend that Respondent make them whole for any loss of pay suffered by reason of the discrimination against them. Said loss of pay, based upon earnings normally earned from the date of the discrimination to the date of the offer of reinstatement, less net earnings, shall be computed in the manner established by the Board in F. W. Woolworth Company, 90 NLRB 289. See N.L.R.B. v. Seven-Up Bottling Company of Miami, Inc., 344 U.S. 344. The record does not disclose to what extent the unfair labor practice strikers, other than those persons in the delivery department treated above, have been reinstated subsequent to the conversion of the strike to an unfair labor practice strike on July 4, 1960. At the August 24, 1960, meeting conducted by a Federal mediator, Maxwell did state, as McClung and Baldwin testified, that even if agreement were reached on a contract, Respondent would not reinstate any of the 37 or 38 unreinstated strikers. This position was reaffirmed by representatives of Respondent at meetings on October 21 and November 16, 1960. I find, accordingly, that it was quite futile for any strikers to apply for reinstatement subsequent to August 24, 1960. The record does not develop whether applications for reinstatement may have been made by the strikers prior to August 24, 1960. It will be recommended that Respondent forthwith reinstate all strikers, dismissing, if necessary, any persons hired on or after July 4, 1960, and that Respondent make them whole for any loss of pay dating from August 24, 1960, or from the earlier respective dates of applications for reinstatement, as the case may be, in the manner provided above. See N.L.R.B. v. Hugh Major, d/b/a Hugh Major Truck Service, 296 F. 2d 466 (CA. 7); and N.L R B v. Giustina Bros. Lumber Co., 253 F. 2d 371 (C.A. 9). The discharges as well as the refusal to reinstate the unfair labor practice strikers warrant the conclusion that Respondent maintains an attitude of opposition to the purposes of the Act with respect to the protection of employee rights in eeneral. It will accordingly be recommended that Respondent cease and desist from infringing in any other manner upon the rights guaranteed by Section 7 of the Act. Upon the basis of the foregoing findings of fact, and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. Hawaii Meat Company, Limited, is an employer within the meaning of Section 2(2) of the Act and is engaged in operations affecting commerce within the meaning of Section 2(6) and (7) of the Act. 2. Meat Cutters Union, Local 594 (AFL-CIO), is a labor organization within the meaning of Section 2(5) of the Act. 3. All employees of Respondent at its Middle Street Plant, excluding office clerical employees, guards and/or watchmen, professional employees, and supervisors consti- tute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act. P-M PARKING SYSTEM 987 4. Meat Cutters Union, Local 594 (AFL-CIO), was on February 17, 1960, and at all times thereafter has been and now is the exclusive representative of the em- ployees in the above-described appropriate unit for the purposes of collective bar- gaining within the meaning of Section 9(a) of the Act. 5. By terminating its drivers, driver-helpers, and the auto mechanic helper on July 1, 1960, Respondent has discriminated with respect to the hire and tenure of employees, thereby discouraging membership in a labor organization , and has engaged in unfair labor practices within the meaning of Section 8(a) (3) of the Act. 6. By contracting out its delivery operations and by the foregoing conduct, Re- spondent has refused to bargain with Meat Cutters Union, Local 594 (AFL-CIO), as the representative of its employees in the above -described appropriate unit and has engaged in unfair labor practices within the meaning of Section 8(a)(5) of the Act. 7. By the aforesaid discrimination and refusal to bargain , Respondent has inter- fered with, restrained, and coerced its employees in the exercise of the Tights guaran- teed by Section 7 of the Act, thereby engaging in unfair labor practices within the meaning of Section 8 (a) (1) of the Act. 8. By its unfair labor practices as herein found, Respondent prolonged the strike of its employees and converted it as of July 4, 1960, to an unfair labor practice strike. 9. By its refusal to reinstate unfair labor practice strikers on or before August 24, 1960, Respondent has discriminated with respect to their hire and tenure of employ- ment, has interfered with, restrained, and coerced employees in the exercise of the right to engage in concerted activities protected by Section 7 of the Act, and has thereby engaged in unfair labor practices within the meaning of Section 8(a)(3) and (1 ) of the Act. 10. The unfair labor practices found above are unfair labor practices affecting commerce within the meaning of Section 2(6) and (7) of the Act. [Recommendations omitted from publication.] P-M Garages, Inc.; Charmar Management Company, a corpora- tion ; Jack Burton Management Company, a corporation ; Speed- way Realty Company, a corporation ; Scruggs-Vandervoort- Barney Garage Company, Inc.; Park-N-Shop, Inc.; Jefferson Parking Company, Inc.; Charlotte Mandel and Marluel Pohrer, a joint venture doing business as Chestnut Speedway ; Burton Mandel, individually and as trustee for Stuart Mandel, M. H. Mandel and Charlotte Mandel, as trustees for Alan Mandel, and Harry J. Pohrer as trustee for Jack Pohrer , Gary Pohrer, Patti Pohrer and Joy McNulty, a joint venture doing business as Ten Ten Olive Company ; all doing business as P-M Park- ing System and Automotive, Petroleum and Allied Industries Employees Union , Local 618, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Case No. 14-CA-2741. November 15, 1962 DECISION AND ORDER On August 16, 1962, Trial Examiner Abraham H. Mailer issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had not engaged in unfair labor practices as alleged in the complaint and recommending that the complaint be dismissed in its entirety, as set forth in the attached Intermediate Report. 139 NLRB No. 84.