Authorized Air Conditioning Co.

AUTHORIZED AIR CONDITIONING CO. Authorized Air Conditioning Co. and Sheet Metal Workers' International Association. Local Union No. 509. Case 21-CA-15160 May 16. 1978 DECISION AND ORDER BY MEMBERS JENKINS. P:N:.I()to. AND) MNt RPIIs On July 29, 1977, Administrative Law Judge Ftarl- dean V. S. Robbins issued the attached Decision in this proceeding. Thereafter, Respondent filed excelp- tions and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act. as amended. the Nia- tional Labor Relations Board has delegated its aiu- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and brief and has decided to affirm the rulings. findings. and conclusions of the Administrative Larw Judge. to modify her remedy,' and to adopt her recommended Order.2 ORDER Pursuant to Section 10(c) of the National Labor Relations Act. as amended, the National Labor Re- lations Board adopts as its Order the recommended Order of the Administrative Law Judge and hereh! orders that the Respondent. Authorized Air Condi- tioning Co., Pomona, California. its officers, agents. successors, and assigns, shall take the action set forth in the said recommended Order. The Administrative Law Judge inadvertentls .milittcd fro-ll her reinlicd the manner in which hackpay shall he computed \Xccordingl. Ic hiAll modify her remedy so that backpas is computed a, set forth it I i It . worth Company. 90 NLRB 289 (19501. and interest thereon as presrihbcel i Florida Steel Corporation. 231 NLRB 651i 1977). Sec. gencralls 1i I t'lrib ingm& hearing Co., 138 NLRB 716 (1962) ' Respondent's reliance on David F I/rinl and J Plitln.r B H si AV, Kl i. /IiIrurn dab a The Inin-MMcKel, C(omparn, 194 NL.RB 52 (1971), and olheit i.,c involving bargaining relationships under Sec. 6Sf) is misplaced N.o qullestiln of majority has been raised in the appropriate multiemploer uaiiil, and the representative status of the Union among Respondent's emplorcc, ims s1m., terial as those employees constitute only a small sengment of the approprlalc unit. DECISION STA.TEMENT or THE CASI: EARLDEAN V S ROBBINS. Administrative Law Judge: This case was heard before me in Los Angeles. California. on May 17 and 18. 1977. The charge was filed bh Sheet Metal Workers' International Association. Local Union No 5s()9. herein called the Union or Local 509. on October 26. 1976. and a copy thereof was served on Respondent on Noeniber 8. 1976. [he complaint which issued on l)ecem- ber 15,. 1976. alleges that Respondent violated Section 8(a)l I) and (5) of the National Labor Relations Act, as amended. Post-hearing briefs were filed b' the General Counsel and bh Respondent. 'll basic issue herein is whether Respondent is hound bx a collective-bargaining agreement entered into bh the Inland \ir Conditioning and Refrigeration Contractors A.ssociation, Inc.. herein called the Association. on behalf of its membhers. l pon the entire record. including mN observation of the witnesses and after due consideration of the briefs filed b, the parties. I make the following: Fii\)i,(iS oi F.(\i I ( (MM'1, R tI Respondent, a (California corporation. is a heating. cool- ing. and air-conditioning contractor in the building and construction industry. with an office located in Pomona. ('illfornit. I he complaint alleges. and I find as more fulls set forth below. that at all times material herein Respon- dent has, been an emplo:er-member of the Inland Air ('on- ditioning and Refrigeration Contractors Association. Inc.. and has delegated authorit' to the Association to represent it for purposes of collective bargaining with labor organiza- tions. I he complaint alleges. and I find, the Association is a voluntlar association of emplovers with its headquarters located in Rixerside. ('alifornia. which admits to member- ship emplo 'oers engaged in Southern California in the sheet metal. air-conditioning, and refrigeration industr,, and ex- ists. in parit. for the purpose of bargaining with labor orga- niatilotln concerning wages, hours. and working conditions of cmploees employed by its employer-members, includ- ing \\right's Manufacturing, Incorporated. Most of its members are in the building and construction industr., 'Wright's is a California corporation engaged in the man- ufacture of sheet metal flashings. duct work, and plenum curbs at 'arioLus facilities located in the State of California. from which it annualls ships and sells goods and products valued in excess of $0()000 directly to customers located outside the State of (alifornia. IUpon the pleading and the evidence. I find that the As- sociation and its emplo'er-members, including Respon- dent. are now. and have been at all times material herein. employers sAithin the meaning of Section 2(2) of the Act. engaged in cotimnerce and in a business affecting com- merce w-ithin the meaning of Section 2(6) and (7) of the Act. 11 I \BO(R O)RG(ANIZAFION I'he compl.aint alleges the answer admits. and I find that the I 'nion is. and at all times material herein his been. a ltabor rtrganization .ithin the nmeaning of Section 2(5) of the Act. 236 NLRB No. 24 131 DECISIONS OF NATIONAL LABOR RELATIONS BOARD II1. THE ALLEGED UNFAIR LABOR PRACTICES A. Facts Prior to Jul)' 1974, Respondent had been engaged in the heating and air-conditioning industry in the Greater Los Angeles Area and as a consequence thereof had some deal- ing with Sheet Metal Workers' International Association. Local Union No. 108, herein called Local 108. Around July 1974, Respondent's president, Paul Osborne, contact- ed Paul Healy, business manager for Local 509, and in- formed him that Respondent planned to open a shop in Pomona and wished to sign a collective-bargaining agree- ment with Local 509. On September 9, 1974, Osborne, on behalf of Respon- dent, signed the Standard Form of Union Agreement for the sheet metal, roofing, ventilating, and air-conditioning contracting divisions of the construction industry.' and also signed the Local 509 Addenda to Standard Form of Union Agreement.2 The standard agreement and the ad- denda are both effective by their terms until Jul 31. 1976. As of September 9, 1974, none of Respondent's employ- ees were members of the Union or had otherwise author- ized the Union to represent them in collective bargaining. However, the standard agreement provides: ARTICLE V SECTION 1. The Employer agrees to require mem- bership in the Union, as a condition of continued em- ployment of all employees performing any of the work specified in Article I of this Agreement, within eight (8) days following the beginning of such employment or the effective date of this Agreement, whichever is the later, provided the Employer has reasonable ground for believing that membership is available to such employees on the same terms and conditions generally applicable to other members and that mem- bership is not denied or terminated for reasons other than the failure of the employee to tender the periodic dues and initiation fee uniformly required as a condi- tion of acquiring or retaining membership. At the time of the signing of the agreement, Osborne signed a Notice of New Shop Contract which lists five per- sons as the employees of Respondent as of September 9. 1974. Healy told Osborne that Respondent's employees would have 30 days to sign applications for membership. On October 9, 1974, four of the five persons listed on the Notice of New Shop Contract signed applications for membership in the Union.3 On September 29, 1975, Respondent applied for mem- bership in the Association and in its parent organization, Sheet Metal and Air Conditioning Contractors' National Association, Inc., herein called SMACNA. The Associa- tion application provides: [he undersigned hereby applies for membership in the IN SNI) AIR (ONDITIONING( AND REFRIGERATION CONIRA('- i This gtreemnenl is negoliated hb Ihe Sheet Meta:l Workers. Interluiltital. Asso)citiloI and the Sheet Metal and Air ( 'odlionirlg ( ontia.totiil \I tional Associaltion. The addenda is negotiated by I ocal 509 and Inlnnd Air ('onidiiitmnllll &A Refrigeration ( ontracti.trs A\socialr.on, Inc t Ihe fifth person waui .tn a pprentice TORS ASSOCIATION IN.. and in connection therewith hereby states and agrees: 1. That the undersigned is a licensed contractor en- gaged in the air conditioning, refrigeration and/or sheet metal industry within the San Bernardino and Riverside Counties and the Pomona Trading Area. 2. That if admitted to membership the undersigned will abide and be bound by all the provisions of the Articles of Incorporation and By-laws of the Corpora- tion as they now exist and as they may be amended, and will thereby, and also by virtue of this application. become a party to and be bound by the existing la- bor agreements between Sheet Metal Workers Inter- national Association Local Union 509 AFL-CIO and/or United Association of Journeymen and Ap- prentices of the Plumbing and Pipe Fitting Industry, Local Unions 364 and 398 AFL-CIO and the Inland Air Conditioning and Refrigeration Contractors Asso- ciation Inc. Receipt of copies of the Articles, By-laws and labor agreements now in force is hereby acknowl- edged. 3. The INLAND AIR CONDITIONING AND REFRIGERATION (ON'IRAC(rORS ASSOC<IATION INC. is hereby designated as the sole and exclusive collective bargaining represen- tative for and on behalf of the undersigned, and the Corporation and its Officers and other designated rep- resentatives are authorized to execute any and all la- bor agreements and documents which are to be bind- ing upon the members of the Corporation in accordance with the By-laws. By letter dated December 18, Respondent was notified that it had been accepted into membership both in the Association and in SMACNA. The letter further stated that the bylaws of both organizations were enclosed. 4 The Association bylaws provide inter alia. ARTICLE X Section I.' Collective bargaining. Each regular member herewith appoints the Corporation and its Board of Directors or its nominee as exclusive collective bar- gaining agent in dealing with any labor organization affecting the air conditioning, refrigeration or sheet metal industry. Each regular member grants complete and exclusive authority to the Corporation aforesaid to do any of the following: A. Negotiate, conclude and execute contracts which bind the Corporation and its members, jointly and severally. B. Administer collective bargaining and trust agree- ments and make settlements, decisions and agree- ments interpreting and applying any agreement which action shall be binding upon the Corporation and its members. C. Obtain rulings before any court or agency con- cerning an 5 tax or other aspects of any contract, agreement or trust fund to which the Corporation or any member is a party, and to comply with the filing or reporting requirements of any State or Federal Law with reference thereto. 4 ()shrnc des not dens that the bhlaws "ere enclosed but claims he uieCc s.i\ t themll 132 AUTHORIZED AIR CONDITIONING CO. On February 26, 1976, 5 the Union gave the Association timely notice of intent to reopen the agreement. The first of 11 negotiating sessions was held on May 26, Some time in late June, the Association provided the Union with a list of its members, including Respondent. By letter dated July 14, Respondent notified the Associa- tion that it wished to withdraw its membership effective as of June i.6 No notice was given to the Union. Donald Boyer, executive secretary of the Association, creditably testified the letter was presented to the Association's board of directors at the next meeting following July 14 but it was not acted upon because it was untimely. The association bylaws provide under article VI, "Mem- bership": Section 4: Termination of Maemberlship. Any member of the Corporation, whose dues are currently paid and is otherwise in good standing maN resign at any time. except as hereinafter stated. Timely resignations must be presented in writing to the Board of Directors who shall act upon them on or before their second meeting following their receipt. However, such resignations shall become effective only upon acceptance b), the Board of Directors. No resignation shall be accepted if the member resigning is indebted to the Corporation. A. Any person, firm, or corporation becoming a member of the Corporation shall continue his mem- bership during the four (4) months periods prior to and continuing through four (4) months after the tr- mination date of any collective bargaining contract to which this Corporation is a party and which covers employees of said member. By the August 4 negotiation session the only item re- maining in dispute was wages. Failing to resolve this dis- puted item, the Union and the Association referred the dispute to the National Joint Adjustment Board pursuant to article X, section 8, of the 1973'-76 contract, which by its terms remain in effect after notice of reopening has been served until all conferences relating thereto have been ter- minated by either party. That section provides that "should the negotiations for renewal of this Agreement become deadlocked" notice is to be given to SMACNA and the president of the Interna- tional. Thereafter, certain conciliation steps are to be taken at the national level in an attempt to resolve the dispute. Should conciliation fail, the dispute shall be submitted to the National Joint Adjustment Board. "The unanimous de- cision of said Board shall be final and binding upon the parties . . . There shall be no cessation of work bh strike All dates heleinafter xill be 1976 unless olhcr,lie indilcl td According to Oshborne. he told Bter) in l:hrai;x that, c-,rlnm l.c. Respondent could not afford nmembership in the A. 1.llatl .ld \,Uld have to ,ithdraw Bo'er said he Could ha;c ( irl .hIlhri,, i ,ntt.I (',bhrilt c Upon speaking to Johnson Oshorne v ax dissl;dcd from reienine upon iiiC representation tilhal aluable nev wllAil.l s BslI Aoo1 he dlsollihl .'U1 I members In April. alcirdiig to Oisbrnc. lie a.ien told 1 e!CI RLeup cnlt uas going tli resign from i-,soci.tilon menlheishilp Boner a1 he iuiltd ltae Jorhnson iontac Oshorne. s hich Johnson did I Iaie Ma, i I ; hes hid b- sicalls the same Onlle lall,.ll.n hut ()sholn.e inlsicld Ihi[ Repoludcit [ .,a going to hase It resign tlr Ilcnthership. o rucier 1li furthci r t lcp As It aili until the .hisni 14 letler tilfoii did i, ol te,Iif\x oe teiifid ihitt h. e i no su h consers'amion or lockout unless and until said Board fails to reach a unanimous decision and the parties have received written notification of its failure." It further provides that: Unless a different date is agreed upon mutually be- tween the parties or is directed by the unanimous deci- sion of the National Joint Adjustment Board, all effec- tive dates in the new agreement shall be retroactive to the date immediately following the expiration date of the expiring agreement. On August 11. the National Joint Adjustment Board is- sued a unanimous decision setting forth the wage increase to be included in the contract and providing that the con- tract term shall be from August 1. 1976, through July 31. 1978. Within 2 or 3 davs thereafter the Association and the Union signed the new standard agreement and addenda. The Union then proceeded to secure the signature of the indiv idual association members on the new agreement. According to Union Business Manager Gordon Jones, when he asked Osborne to sign, Osborne said his partner in Iong Beach had advised him not to sign. Jones explained the agreement had been reached with the Association, Re- spondent was a member of the Association, and the agree- ment had been negotiated in good faith on behalf of the emplo er-members. Osborne said Respondent had re- signed from the Association. Jones said he had not been so notified and he would check with the Association. After contacting the Association and learning that Re- spondent's letter of resignation was untimely, Gordon again requested that Osborne sign the agreement. Osborne again refused. Osborne admits that he refused to sign the agreement. He testified that in August or September Jones telephoned him and requested that Respondent sign a new agreement. Osborne said he was concerned that there had been some wage increases. Jones said there had been. Os- borne said he would not sign the agreement if there had been wage increases. Jones said Respondent was bound by the agreement because of the Association. About a week latei Jones again telephoned Osborne. According to Os- borne. Jones expressed concern because "he wanted me as a membnher of Local 509." Osborne said his position had not Lhanged, lie felt the wages were too high and he did not want to sign. Jones said that as a member of SMACNA Osbhorne had to sign, he had no choice. Jones then said, 'I'Tn reall, sorry that you don't want to be a member. can I ask whs." O)sborne rcplied. "It's because the wages are too high.;' Jones then said he would have to check but it was his understanding that Respondent had no choie., that Respondent was a member of the Association and would ha've to sign. Osborne further testified that in May 1976 he asked Jones what he thought the new contract temi ins would be. Jones said he did not expect much change, that he would tr aind get the memberi-hip to accept a contract much the same as the expiring contract. Osborne said he did not think the market would bear higher wages. that he knew Respondent could not. Jones said he was certain wages would not be increased significantly. Osborne denies men- tionirg a partner in L.ona Beach or emen having a partner in Long Be.ch. Resprndenlt ceased mii.kil pa.nients to the health .and 133 DECISIONS OF NATIONAL LABOR RELATIONS BOARD welfare and pension funds in April 1976. allegedly because of clerical problems. He made no payments under the 1976-78 contract. B. Conclusion It is clear that the Association is a multiemployer bar- gaining association. Its bylaws indicate mutual assent of its members to be bound by a collective-bargaining agreement resulting from multiemployer bargaining. The record es- tablishes a history of bargaining in a multiemployer bar- gaining unit since at least 1965, and there have been suc- cessive collective-bargaining agreements between the Union and the Association, on behalf of its members, since at least 1965. These agreements cover all employees of the employers who perform work within the jurisdiction of Lo- cal 509, which is specifically set forth in the standard agreement and clarified in the addenda. They contain union-security provisions requiring employees to join the Union and provisions requiring the employers to use the hiring hall administered by the Union. Thus employees may work for various employers within the bargaining group. The agreements provide common coverage for em- ployees under health, welfare, and pension plans to which the employers make contributions and provide for uniform wage scales and working conditions. There is no evidence that majority has ever been questioned and no evidence to overcome a presumption of majority. In these circumstances, I find that all employees em- ployed by the employer-members of Inland Air Condition- ing and Refrigeration Contractors Association, Inc., in the manufacture, fabrication, assembling, handling, erection, installation, dismantling, conditioning, adjustment. altera- tion, repairing, servicing, and maintenance of all types of material and equipment used in the heating, cooling. and air-conditioning industry, kitchen equipment and cafeteria equipment industry, metal building industry, and all other sheet metal divisions, including all detailing used for shop fabricating, field erection and air-balancing, constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act. I further find that, since at least 1965, Local 509 has been the exclu- sive majority representative for the purposes of collective bargaining of the employees in the above-described unit. W'ayne Electric Inc.,; and Electric Installation and Serv icc.. 226 Nl.RB 409 (1976). Respondent argues, however, that it never became part of the multiemployer bargaining unit and thus no pre- sumption of majority status flows from the collective-bar- gaining agreement between the Association and Local 509. Specifically, Respondent argues that it did not know that by joining the Association. it was becoming a part of a multiemployer unit. I find this argument unpersuasive. The application for membership clearly states that Respondent agrees to become a party to and be bound by existing labor agreements between the Association and the Union, desig- nates the Association as Respondent's bargaining represen- tative and authorizes the Association to execute any labor agreements which are to be binding upon the members of the Association in accordance with the Association bylaws. The bylaws specifically state that the Association has authority to negotiate and execute agreements which bind its members jointly and severally, that members are ex- pressly bound to take joint and united action in dealing with any labor organization, and that members shall not negotiate or deal separately with, or sign any agreement individually with any union with which the Association bargains in behalf of its members. This evinces an unequiv- ocal intention to be bound in collective bargaining by group rather than individual action. Council of Bagel and Bialy Bakeries and its Employer Members, 175 NLRB 902, 903 (1969). I do not credit Osborne's testimony that he did not read the application before signing it. It is a one-page document and the significant portion is contained in the top half page just above Osborne's signature. Nor do I credit Osborne's testimony that he did not read the bylaws. The application gave clear notice that the bylaws contained something af- fecting Respondent's collective-bargaining obligations. Furthermore, it is irrelevant if he chose not to read the bylaws; he is bound by the agreement he signed. There is no evidence of any circumstances that might relieve him of this obligation. I have carefully considered the cases cited by Respondent as to intent and find them inapposite. Those cases involved situations where there was no actual expression of intent and the Board looked to a course of conduct to determine whether the employer had evinced an intent to be bound by multiemployer bargaining. Respondent also argues that it only joined the Associa- tion to obtain certain specification manuals. This is refuted by' the evidence. Thus, by letter dated October 22, 1975, Osborne sought counsel from the Association concerning a potential grievance with Local 108. Respondent also argues that its contract with the Union was an 8(f) contract and that the Union did not represent a majority of its employees at the time of signing the con- tract, at the time of joining the Association, nor at the time of the refusal to sign the 1976 agreement. It is true that the Union represented none of Respondent's employees on September 9, 1974, when Respondent signed a collective- bargaining agreement with the Union. However, such a contract in the building and construction industry is valid under Section 8(f) of the Act. Although it is well estab- lished that a contract entered into pursuant to Section 8(f) does not of itself raise a presumption of majority status, R. J. Smith Construction Co., Inc., 191 NLRB 693 (1971), once a majority is in fact achieved, the normal presump- tion of majority that flows from a collective-bargaining agreement applies thereto. David F. Irvin and James B. Mc- Kelvy, Partners, d/b/a The Irvin-McKelvy Company, 194 NLRB 52 (1971); Fenix & Scisson, Inc., et al., 207 NLRB 752 (1973): Williams Enterprises, Inc., 212 NLRB 880 (1974). The record establishes that in November 1974 a majority of the employees employed by Respondent were members of the Union. Thereafter, a presumption of ma- jority flowed from the union contract which has not been rebutted. Mere lack of membership, turnover, or expansion of unit is not sufficient to rebut the presumption. This contract was still in force at the time Respondent joined the Association. Since the Union was then the ma- jority representative of Respondent's employees, Respon- 134 AUTHORIZED AIR CONDITIONING CO. dent was free to merge them into a multiemployer unit.' I have found above that Respondent, by joining the Associa- tion, evinced an intent to pursue a course of group bargain- ing. By the action of the Association Board of Directors, the employer-members accepted Respondent as part of the multiemployer bargaining unit. Further, the list of mem- bers provided by the Association to the Union in June during the course of negotiations listed Respondent as a member to be bound by the multiemployer bargaining. The Union raised no objections. Accordingly, I reject Re- spondent's argument that Local 509 did not consent to Re- spondent's inclusion in the multiemployer unit. Upon the above, I find that Respondent's employees were effectively merged into the multiemployer bargaining unit. I further find that Respondent did not timely with- draw from such unit. The association bylaws preclude res- ignation during a period commencing 4 months prior to and ending 4 months after the anniversary date of the col- lective-bargaining agreement. Respondent attempted to re- sign during this period. Further, it is established Board law that an employer may not withdraw from a multiemployer bargaining unit, except on mutual consent, once negotia- tions have commenced. R"tail Associates, Inc., 120 NLRB 388, 393-395 (1958). Here no mutual consent is involved and Respondent's letter of resignation is dated JulI 14, after negotiations had commenced. Respondent alternatively argues that it was privileged to withdraw from the multiemployer bargaining unit because an impasse had been reached during the negotiations and there was a strike threat prior thereto. '.L.R.B v. v. i-Way Billboards, Inc., 500 F.2d 181 (C.A. 5, 1974); Fairmont Foods Company v. N.L.R.B., 471 F.2d 1170 (C.A. 8. 1972). Neither Board law nor the facts support this argument. There was no impasse. The parties had agreed upon a binding method of resolving negotiation disputes-submis- sion to the National Joint Adjustment Board. An impasse would develop only if the National Joint Adjustment Board deadlocked, which did not occur. As to the strike threat, the Union merely gave notice to the employers that its membership had voted to strike in the event of a Na- tional Joint Adjustment Board deadlock. The record re- veals no special circumstances which would justify an otherwise untimely withdrawal. Upon the above, I conclude that Respondent is bound by the outcome of the multiemployer bargaining. Accord- ingly, I find that Respondent violated Section 8(a)(1) and (5) of the Act by its refusal to execute and abide by the terms and conditions of the 1976 agreement negotiated be- tween the Association and the Union. CO)N(Ii SIONS o( LAW 1. The Association, and its employer-members, includ ing Respondent. are employers engaged in commerce with in the meaning of Section 2(2), (6). and (7) of the Act. 2. Local 509 is a labor organization within the meaning of Section 2(5) of the Act. I hae considercd. andr re)ect. ais unsuppllpoted h, the record. Repoln- dent's argumenl that Ihe Septrember . 1974. agreemenilt ua a nmembehrs only" Cloliractt 3. All employees employed by the employer-members of the Association in the manufacture, fabrication, assem- bling. handling, erection, installation, dismantling, condi- tioning, adjustment, alteration, repairing, servicing, and maintenance of all types of material and equipment used in the heating, cooling, and air-conditioning industry, kitchen equipment and cafeteria equipment industry, metal build- ing industry. and all other sheet metal divisions, including all detailing used for shop fabricating, field erection and air-balancing, constitute a unit appropriate for the pur- poses of collective bargaining within the meaning of Sec- tion 9(b) of the Act. 4. At all times material herein, Local 509 has been, and, is now, the exclusive representative of all employees in the aforesaid appropriate unit for the purpose of collective bar- gaining within the meaning of Section 9(a) of the Act. 5. By failing and refusing to sign 8 the 1976 collective- bargaining agreement between the Association on behalf of its members and Local 509 covering employees of Re- spondent in the above-described multiemployer bargaining unit: and by failing and refusing to abide by the terms and conditions of said collective-bargaining agreement, Re- spondent has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 6. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that Respondent has engaged in certain unfair labor practices in violation of Section 8(a)(1) and (5) of the Act. I shall recommend that Respondent be ordered to cease and desist therefrom and from any like or related unfair labor practices and take certain affirmative action designed to effectuate the policies of the Act. I have found that Respondent has violated Section 8(a)( I) and (5) of the Act by refusing to sign the 1976 col- lective-bargaining agreement negotiated between the Asso- ciation on behalf of its members and Local 509. and bv failing and refusing to abide by the terms and conditions of said agreement. I shall therefore recommend that Respon- dent sign such agreement and that it comply with the terms and conditions of said agreement, both retroactively and for the balance of its term, including payments to the ap- propriate source of the health and welfare and pension fund payments provided for therein, and making employ- ees whole for any loss of wages or benefits suffered as a result of Respondent's refusal to abide by the terms of such agreement. The General Counsel requests that the Board's rate of interest on backpay and other monetary remedies herein should be increased from the present 6 percent per annum rate to 9 percent per annum. I he 6-percent rate was adopted by the Board in 1962 in r AllthaUeh the Ass . ciation signs the agreement on behalf of its meniher., iI h:a, been the praltice for each member ,to also sign Ihe agreemrent I ui- tner allltmuc h uncleai. ii appears that sec 48 of Ihe addenda mas contem- plllc that h i , l idtlail employer- members sign the contraclt 1hill section prl- 'idc 1 - icr dl '' "1 his contract is signed bh the Inland Air ( ondniioning & Refrv eralltri ( , crallc r.s Assoclationll I, oin hehall of it, nrleriber, as per the lit slhrum te t0 he I nloll. and h, the mplo.er 135 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Isis Plumbing & Heating Co., 138 NLRB 716, without any expressed rationale as to why that figure was selected. It appears from the Board's adoption by inference of the dis- cussion on interest by the Administrative Law Judge in 77le National Cash Regi.ster Company. 190 NLRB 581, 585 586 (1971), that the 6-percent rate is based on the "legal rate" 9 in most States. In that decision, the Administrative Law Judge stated: In 1962 when the Board, in Isis Plumbing & Heating Co., 138 NLRB 716, initiated the requirement that in- terest at the rate of 6 percent be allowed on backpay awards, it did not spell out its reasons for fixing that rate. At that time and now 6 percent was and is "clear- ly one hallowed by time." (United States v. Philmlac Manufacturing Co., 192 F.2d 517, 519 (C'.A. 3) ). It is now and has been for many years the "legal" rate (that rate applicable in the absence of a contract fixing a different rate) in the District of Columbia, where the Board sits, as well as in a substantial majority of the 50 States.l, It is the rate fixed by statute for underpay- ments as well as overpayments of taxes to the United States Government (26 U.S.C., Sec. 6601a and 661 1). A federal statute also provides that Federal District Courts may allow interest on their judgments at the rate permitted by the law of the State in which the judgment is rendered, which. in most instances, would be at 6 percent per annum (28 U.S.C.. Sec. 19611. '"The 1970 edition of the Martindale-liubbell I.a. 1)ireltors shows 6 percent to he the legal rate in all but II of the 50) SIales including ()hio. here te tunllfair lalbor praictices here invll ed iarse. Iii none is the legal rate ;is high ias the S pelcent requested h; thI (lChai rging Palt i Although the legal rate of interest remains at 6 percent in a large majority of States,iO in eight jurisdictions the legal rate is today 8 percent or higher." General Counsel argues that the legal rate of interest does not reflect today's economic realities and points to specific changes in statutes relating to interest that have occurred in response to the inflationary pressures of the last decade.' State judgment rates'i reflect a definite trend to increase interest rates on judgments. '4 Congress has raised the interest rate on the underpayment or overpay- I his i the raite plcscribed h Sta!tiut which prenailS in tite ahstcie of ,ontlracl hctweell the ipaliee s fixinig i;l peciic rate. Sec AppeIdix. lablet I I\lpe Ilx oitteJd rrin pubhlcationll rlaska i8 pcrc.clo ('ohlIado (8 pcicenmt. Idaho (18 percent L hldtiani ( petltnt). Neu lrses (X percent). Ncw York (8-1l percent). ermonilt ( 1 '2 tercentL. nd the ViIaln Iilllid, (9 piertcelt) A ulnnil is if th rise in ineles raltres i,,',,-i; [ cain he founid iin Ih Ieder.al R scerve I3, mt's i, lntitrl S'rlliiot il I)i~sil /i'g / />9 I iables 24 ' 27 48. 5': Ii'idil K B' rl B/Ierill. ()ctbher 1'76 1 ables A26, A454 t, IlderaRs( R, Lc tulifor f ehrei.s 1977. lable 1 t34. I s t . 153. 13 Rlat o in terest thait pplies when a Inonetlar claimn or court.n of action has resulted in a mone) judgment 14 The following chart is hastd on annotator's notes in pocket supplement: to the vsarious co mpil;ltiotls of state statutes. i' 1his Il i;ic Ill the Irilerest rate toi 9 percent per llUllu (26 S ( S6i',6 ) I tpplclp l [ i t'id t I e si iion Ulderplyinienit notlpi\nient or extelision io tiltle f, i t;l111tcill I :ls' lili\ ImposCd hb the Internal Revenue (Code (2t IS ( it (l) 111i , woild appeair ti incliude eiiplolser social securiti tal -ps, ism i n ll s fi h ic ie dcrial Insulrane contrihbutions Act 2 L S %(' ment of taxes due to and from the United States from 6 percent to 9 percent,is and delegated authority to the Sec- retary of the Treasury to increase or decrease the interest rate no more than once every 2 years based on changes in the prime rate.t 6 In accordance with this authority the rate JUDGMENT RATE alANGE JURIS- (Percent) YEAR DICTION FROM TO MADE Alaska 6 8 1979 Ark. 6 10 1975 Colo. 6 8 1975 Del. 6 9 1970 Idaho 6 8 1974 Iowa 5 7 1973 Kans. 6 8 1969 Ky. 6 8 1976 La. 5 7 1970 or Maine Mass. Mich. Miss. Nebr. N.J. Okla. S.D. Tex. Tenn. V.I. Va. Wash. Wis. Wyo. 6 6 5 6 6 6 6 6 8 6 6 6 6 6 5 7 10 8 6 8 8 8 10 8 10 9 8 9 8 8 7 10 1972 1971 1974 1972 1975 1972 1972 1972 1972 1975 1975 1976 1975 1974 or 1975 1969 1971 1973 3 1 I I: intelrsl ln oierpa.snlentt (26 .S ( §661hh I ): nltcresl to be paid h the (islvernlentit ln judgments for oserpasmnint (2h St.. §241 11: Inl er- est ion .alls personat lihailits of a laixpaer c who faiils r refuses Il sirrenide lin properts otn which ales had heen made (26h 1 S ( §6332): and nterest on crt ailIn rolnglul Ile les h the (io.'elTnnernt ,ill nimnes or other pruoperts ,f I person other than the tlxpaser (26 I S..( . §7426I I Specifi.alls,. (C nliress auithorized the SecrtetarN of the ' rea;lsir, !I et- talhbih a; flexible rate h O()ctober 15 of ans ,sear hbi s i upon "the dllslted priic rate tihagled hs baniks iwhlch is defined as "90 percent *of the aiecraig predoiLinlllt prilTle rate quoted hs coninlercial h.ank iit large husinesses. ;l detecrilined hb tihe Board of (o ernors of the I edcrtl Reser e Ss teclr iillrllg Septenihcl of that sear. rounded to the nLcireqi till percenl. 1,ihlih 1t; le. i ; lfull irclentlatl e poilnl mo.re or leIss thir the inerest rate w.ich iP 136 AUTHORIZED AIR CONDllTONINGi CO. was adjusted to 7 percent, effective February 1, 1976.'7 The legislative history clearly shows that Congress took this action in 1974 because the 6-percent statutory interest rate no longer served the purposes for which it was origi- nally intended," The Senate Finance Committee Report (Senate Report No. 93 1357) pointed out that in 1935 the average rate of interest on grade AAA corporate bonds was 3.6 percent or roughly 60 percent of the tax interest rate. The purpose for this differential was to provide an incentive for the taxpayer to pay his tax promptly and for the Government to credit or refund overpayments prompt- lv. The Senate report noted that money market rates are currently at significantly higher levels than 6 percent. TIhe average interest rate on grade AAA corporate bonds in 1973 was 7.44 percent and in the latter part of 1974. it was in the neighborhood of 9 percent. The Senate report fur- ther noted: An increasing number of taxpayers are finding it more profitable to "borrow" tax funds at the present 6 per- cent rate rather than paying their taxes when due, and rather than using their own funds or borrowing funds at prevailing commercial rates. The present rate man also encourage taxpayers to claim more questionable deductions or other tax reducing items than then otherwise might, on the theory that a later disallow- ance will only "cost" 6 percent. Congress has shown similar concern, and action. as to the mortgage interest rates under the Federally insured or guaranteed home loan programs. The 4-1 /2-percent rates for F:HA loans and the 4-percent rate for VA loans prosed unrealistic, so Congress delegated to the appropriate F ed- eral agencies authority to set maximum interest rates, as necessary. to meet the mortgage market." As a result, the yield on FHA-insured loans in private secondary markets in 1975 ranged from 8.69 percent to 9.74 percent. and in 1976 averaged 8.82 percent.20 Clearly. 6 percent is no lon- ger a "hallowed" figure. More specifically. General Counsel argues that the Board's 6-percent interest rate does not fully remedy unfair labor practices and does not effectively discourage. and may even encourage. the commission of unfair labor prac- tices. A full remedy would require that the Board's interest rate should be fixed at a rate which will both compensate the employee for his loss and discourage unfair labor prac- tices by removing the opportunity for a respondent to profit from such practices. then in effect . (and tol beconme effetln\e 11 F chruar, I of the Innledi- alelt succeeding dear " | See Rev Rui 75 487, 1975 2 (B 488: T'echnical Informatn.l Rcle.- No 1407. (ctoher 14. 1975 i' See lIegislatite Ih lorN,r P.. 93 625. uprai. 1974 l S ( .ode ( one r& Adn News 7478, 7494 98 19 Pub 1 90 301, Sectioin 3(a). Mta 7. 1968. 82 Slat 113: Pub. 1 9i 448 Title Iii. Section 315. August I. 1968, 82 Sial 12 and 12 .S( Sctilll 170)9 I 38 t Se( SCetion 1803(c1t((I :" See Appendi. I. able, 4 al d 5 IAppendlxs ,nittcd frlm pubhlc.lil, In this regard. the General Counsel suggests that the fol- lowing interest rates are germane: (I) The interest rate that a discriminatee would ha, c to pay to borrow money for daily necessities (13 to 21 pet- cent); 21 (2) For those discriminatees who have money in savings accounts, savings certificates. or other readily liquidable assets to tide them over and who do not have to borrow money for daily necessities, the amount of interest lost bh virtue of having to withdraw or cash in such savings (5 to 9 percent). t3) The interest rate that an employer or union could earn from the monex that swas saved or extracted bh virtue of the commission of the unlawful act (5 to 9 percent). (4) For those employers and unions who can use the money gained bh their unlawful conduct and therebx save themselves the expense of borrowing in the private money market. the amount of interest that they would pax to bor- ros in the market (7-1 2 to 9 percent).22 I he General Counsel concedes that all of the above fac- tors will not be relevant in eserv case but urges that, inas- much as '-the effective administration of the Act is best served by remedies which . . are uniformly applicable ... ."- the Board considers all of these factors in fixing a uniform rate of interest applicable to all cases. In sum, the General Counsel urges that an interest rate of 9 percent per annum is just and proper in that it repre- sents an appropriate balancing of all the foregoing factors. Such a rate is not unreasonably high and can be justified as remedial rather than punitive. Although recognizing that a Board Order cannot be justified solely because it would hase the effect of deterring parties from siolating the Act, Repuhlic Steel Corp. v. . I R B.. 31 1 L.S. 7, 12 13 (1940). the General Counsel suggests that a 9 percent rate would serve several purposes: It would encourage compliance with Board Orders. would tend to deter parties from coin- mitting unfair labor practices designed to take advantage of the Board's low interest rate, and would more closely reflect the cost to employees of borrowing monec during the period of the Board's decisional process. Furthermore. in terms of the amounts actually involved. the additional burden imposed upon the wrongdoer by requiring the pa- ment of interest at the rate of 9 percent per annum, rather than 6 percent, "'is in all but the unusual case, a relatively minimal burden." l.s. Plumbing & Hearing (eo., supra at 720. I find this argument persuasive and, accordingly, I rec- ommend that the backpaN and other monetary remedies provided for herein shall include interest at the rate of 9 percent per annum. Upon the basis of the foregoing findings of fact, conclu- sions of law and the entire record in this proceeding. and pursuant to Section 10(c) of the National L abor Relations Act, as amended. I hereby recommend the following: See Appcm.,l I.hic, 2 ,red x { ppcnmtid oiited frm il puhimnli : See -\App'ndlx I .lhlc, .lnl [ x\ppen ,nl onlitlted from puhll,.lllon ] : Rucid '*l,,.,t I '8 ". RB k " 11'}2 137 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ORDER 24 The Respondent. Authorized Air Conditioning Co.. Po- mona, California. its officers, agents, successors, and as- signs, shall: I. Cease and desist from refusing to sign and abide by the terms and conditions of the collective-bargaining agreement entered into by Inland Air Conditioning and Refrigeration Contractors Association Inc. and the Union in August 1976, effective by its terms from August 1, 1976, through July 31. 1978. 2. Take the following affirmative action which will ef- fectuate the policies of the Act: (a) Recognize and bargain with the Union for its em- ployees in the following appropriate unit, as required b, the above-described contract: All employees employed by the employer-members of Inland Air Conditioning and Refrigeration Contrac- tors Association Inc., in the manufacture, fabrication. assembling, handling, erection, installation, disman- tling, conditioning, adjustment, alteration. repairing, servicings and maintenance of all types of material and equipment used in the heating, cooling and air conditioning industry, kitchen equipment and cafeic- ria equipment industry, metal building industry. and all other sheet metal divisions, including all detailing used for shop fabricating, field erection, and air ba- lancing. (b) Forthwith sign the collective-bargaining agreement entered into by Inland Air Conditioning and Refrigeration Contractors Association Inc. and the Union in August 1976. effective by its terms from August 1. 1976, through July 31. 1978. (c) Make whole all its employees in the appropriate unit defined above, for any loss of wages and benefits they in- curred because of Respondent's failure and refusal to abide by the terms and conditions of the above-described contract in the manner set forth in the remedy section. (d) Comply with the terms and conditions of the above- described agreement both retroactively and for the balance of its term, including making to the appropriate sources the health and welfare and pension fund payments provided for therein, with interest thereon as provided in the remedy section. (e) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all pay- roll and other records necessary to analyze and compute the amounts of backpay due under the terms of this Order. (f) Post at its facilities in Pomona, California, copies of the attached notice marked "Appendix." 25 Copies of said notice, on forms provided by the Regional Director for Region 21, after being duly signed by Respondent's repre- sentative, shall be posted by' Respondent immediatel) upon receipt thereof, and be maintained by it for 60 con- secutive days thereafter, in conspicuous places, including all places where notices to employees are customarily post- ed. Reasonable steps shall be taken by Respondent to in- sure that said notices are not altered, defaced, or covered by any other material. (g) Notify the Regional Director for Region 21 in writ- ing, within 20 days from the date of this Order, what steps have been taken to comply herewith. in4 I the eient no-, eception, are filed as prolided h Sec 102 46 of the Rules and Regul;tirns of the Naonal i.abohr Relationsll Board. he findins. conclusions.. and recommended Order herein shall. :r priorided in Set 111248 of the Rules and Regulaiiro.s, he adopted h( thle Board and hbecome its findine?. conlusliin, and Order. and all hlet, lon therelo. halil he deenmed A..aied for all purposes. In the exenl that thi, Order is enforced h , a Judgment of .t Itiled States (Court If Appeals, the wo rds Il the nortice reading "Posted ho O(rder of the Naltional L.bor Relaltionsl Boa;lrd" hal read Imsted Pursuan to a.1 Jutidllilet [if the I nited States (Court of A\ppeals I ntfrcing an Order of the N.ilu llal. I.hor Rel.tionls Bo;ard APPENDIX Nolti: To EMPLOr ES POSI lD Bi Y ORDI)R 01 I 1i NAIIONAI LABOR RELIArioNs BOARD An Agency of the United States Government After a hearing in which all parties swere afforded the op- portunity to present evidence in support of their respective positions, it has been found that we have violated the Na- tional Labor Relations Act in certain respects and we have been ordered to post this notice and to carry out its terms. The National l.abor Relations Act gives you certain rights. including the right: To engage in self-organization To form, join, or help a union To bargain collectively through a representative of your own choosing To act together for purposes of collective bargain- ing or other mutual aid or protection To refrain from any or all of these things. W i wii.l Noi refuse to sign and abide by the terms and conditions of the collective-bargaining agreement entered into by Inland Air Conditioning and Refriger- ation Contractors Association Inc. and the Sheet Metal Workers' International Association. Local Union No. 509, in August 1976, effective by its terms from August 1. 1976. through July 31. 1978. Wi Wi.t. recognize and bargain with Sheet Metal Workers' International Association, Local Union No. 509, for our employees in the following appropriate unit as required by the above-described contract: All employees employed by the employer-members of Inland Air Conditioning and Refrigeration Con- tractors Association Inc., in the manufacture. fabri- cation, assembling, handling, erection, installation. dismantling, conditioning, adjustment, alteration, repairing, servicings and maintenance of all types of material and equipment used in the heating. cooling and air conditioning industry, kitchen equipment and cafeteria equipment industry, metal building in- dustry, and all other sheet metal divisions. including all detailing used for shop fabricating, field erection, and air balancing. Wi w n l forthwith sign the collective-bargaining 138 AUTHORIZED AIR CONDITIONING CO. agreement entered into by Inland Air Conditioning and Refrigeration Contractors Association Inc. and Sheet Metal Workers' International Association, Lo- cal Union No. 509, in August 1976, effective by its terms from August 1, 1976, through July 31, 1978. WE WILL make whole all our employees in the above-described appropriate unit, for any loss of wag- es and benefits they incurred because of our failure and refusal to abide by the above-described contract. WE WILL comply with all the terms and conditions of the above-described agreement both retroactively and for the balance of its term, including making to the appropriate sources the health and welfare and pen- sion fund payments provided for therein. AUTHORIZED AIR CONDITIONING CO 139