H. P. Hood & Sons, Inc.

194 DECISIONS OF NATIONAL LABOR RELATIONS BOARD H. P. Hood & Sons, Inc. and Milk Wagon Drivers and Creamery Workers, Local 380 , International Brother- hood of Teamsters , Chauffeurs , Warehousemen and Helpers of America , Petitioner. Case 1-RC-10,106 April 28,1970 SUPPLEMENTAL DECISION AND CERTIFICATION OF REPRESENTATIVE By CHAIRMAN MCCULLOCH AND MEMBERS FANNING AND BROWN Pursuant to a Decision and Direction of Election issued on September 19, 1968, and amended on Septem- ber 26, 1968, the Regional Director for Region I conduct- ed an election on October 22, 1968, among certain employees of H. P. Hood & Sons, Inc. (herein called the Employer or Hood). The tally of ballots showed that there were approximately 156 eligible voters, 87 of whom cast ballots for Petitioner and 56 cast ballots against Petitioner. There were also one void ballot and six challenged ballots. The challenges were not determi- native of the results. Thereafter, on October 28, 1968, the Employer timely filed objections to the election,' contending that the Petitioner (sometimes referred to as the Union or Local 380) was not qualified to represent the employees in question, by reason of certain loans made by Teamsters Central States, Southeast and Southwest Areas Pension Fund (herein called the Fund) to a competitor of the Employer-Whiting Milk Company, Inc.' Hearings on the Employer's objections were held before Hearing Officer Robert C. Rosemere between November 26, 1968, and April 16, 1969.3 The Employer, the Union, the Regional Director, and, to a limited extent, Whiting appeared and participated in the hearing. On July 22, 1969, the Hearing Officer issued his report in which he found no disqualifying conflict of interest in the Union, and accordingly recommended that the objections be overruled and that the Union be certified as the employees' bargaining representative.4 Thereafter, ' The petition was filed on May 27, 1968, and an initial set of hearings was held June 24 and July 2 and I I On August 28, 1968, following the court's opinion in N L R B v David Buttrick Company, 399 F 2d 505 (C A I), the Employer moved to reopen the record to develop additional facts made relevant by that decision The Regional Director denied the motion, but permitted the Employer to raise the same matters in the form of an election objection 2 The original loans were made to Whiting Milk Company, but were assumed by Whiting Milk Company, Inc , as part of the May 1966 sale agreement We shall use "Whiting" to refer to both companies The Fund's debt interest in Whiting has been the subject of other litigation See David Buttrick Co , 154 NLRB 1468, remanded 361 F 2d 300 (C A 1), Supplemental Decision, 167 NLRB 438, enfd 399 F.2d 505 (C.A I) See also H P Hood & Sons, Inc, 167 NLRB 437, H P Hood & Sons, Inc , Case 1-RC-8251 The parties stipulated that the records in these cases be incorporated into the present record 3 The amended notice of hearing limited the introduction of evidence to matters subsequent to March 8, 1965, the close of the hearing in David Buttock Company, 154 NLRB 1468 He also recommended that the Board entertain a motion to rescind Local 380's certification in the event the Fund or the International acquired control of Whiting or intervened in bargaining "in order to the Employer filed exceptions to the Hearing Officer's report and a brief in support thereof. The Union filed an answering brief. Pursuant to the provisions, of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its powers in con- nection with this case to a three-member panel. The Board has reviewed the Hearing Officer's rulings made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the objections, the Hearing Officer's report, the exceptions and briefs, and the entire record in this case, and hereby adopts the Hearing Officer's findings and recommendations as modified here-, in - We are faced once again with the task of determining whether there is a proximate danger that the Fund's loans to Whiting will "poison [Local 380 ' s] collective bargaining process by subjecting every issue to the questioning of ulterior motives,"5 and whether the Employer here has met its "considerable burden" of showing that the "danger of a conflict of interest interfer- ing with the collective bargaining process is clear and present "" As we read the opinions of the Court of Appeals for the First Circuit in the Buttrick cases,' the Board is to inquire into two interrelated areas: (1) the power of the International or its general president to control the conduct of Local 380 ' s bargaining with Whiting and the Employer , and (2) the temptation , likelihood, or incentive for exercising that power in order to protect the Fund's debt interest in Whiting . The Employer and the Union have devoted much argument as to whether these two factors should be read in the disjunctive (whereby the existence of either one disqualifies the Union) or in the conjunctive (so that there is no disquali- fication unless both are shown). In our opinion, the court did not prescribe any such discrete classification and quantitative measurement of each of these two aspects of the conflict of interest issue . That issue simply cannot be reduced to a formula of (1) and/ or (2) equals "clear and present" danger . A very minimal amount of power over local bargaining may suffice if the temptation is great ; and complete bargaining control may be insufficient where the temptation is nonexistent or slight . In short , our task is to carefully scrutinize and weigh elements of both power and temptation, and, from this overall appraisal , determine the proximity of the danger that a remote financial interest will infect the bargaining process.' favor the security of the loan " N L R B v David Buttrick Company , 361 F 2d 300 , 307 (C A I) N L R B N Daiid Battruk Compani 399 F 2d 505 507 (C A For the sake of brevity, we shall refer to the two court decisions as "Buttrick I"and "Buttrick II " I But , as will appear, even under the Employer's "disjunctive" approach, we Ind insufficient evidence of a disqualifying conflict of interest on the present record 182 NLRB No. 28 H. P. HOOD & SONS One other aspect of the general principles to be applied requires some further clarification. The Hearing Officer at times implied that a "clear and present" danger could only be found where there is actual intervention by the Fund or the International to bend Local 380's conduct towards loan protection. While such intervention would, of course, constitute a clear manifestation of a disabling conflict of interest, we do not think the court made overt abuse of the representative function the critical test. Rather, the court held that"it is the innate danger to be guarded against [and] the existence of this danger does not require proof of abuse of trust, so long as there is sufficient, power and temptation to commit such abuse."B Applying these principles to the facts presented here, we find, in agreement with the Hearing Officer, that the Employer has not estab- lished a "clear and present" or "proximate danger of infection of the bargaining process."10 In its Supplemental Decision in Buttrick (167 NLRB 438), the Board analyzed the constitutional powers which the International and its general president" could bring to bear on Local 380 bargaining conduct. The Board there found that these powers "permit[ted] only a limited entry into Local bargaining activity," and that there was no evidence that the limited powers had ever been utilized to shape or alter the course of Local 380 bargain- ing.12 { ., In the present case, the Employer sought to show that International power has in fact been exercised over Local 380's negotiations, especially in respect to the 1966-67 dispute with Whiting over the elimination or reduction of its retail delivery routes. The record shows that, in response to Whiting's proposed abandonment of the retail routes,13 Local 380 inititated a series of meetings which were presided over by John Hartigan, " Buttrtck 1, 361 F 2d at 307 1° Buttrtck 11, 399 F 2d at 507-508 The parties stipulated that Frank E Fitzsimmons is presently general vice president acting for the president. and that he is now, and has been, a trustee of the Fund 12 The court affirmed these findings Buttrtck 11, 399 F 2d 505, 507 (C A I) 13 In November 1966, Whiting sought to reopen the contract in order to change from 7- to 6-day delivery for retail routes The Union did not accede and, in December 1966, Whiting announced its intention to discontinue the retail delivery routes In October 1967 the Union, in return for certain concessions, agreed to a 6-day schedule for retail deliveries, omitting Sunday. The Employer reads much significance into certain statements Whiting made to the Union in announcing the "discontinuance" of retail routes Whiting's December 9, 1966, letters pointed out that the retail routes and their goodwill and customer lists were part of the security pledged for the Fund's loans, and stated that "every effort must be made by the company and the union to protect and enhance the value of these assets so that the most advantageous disposition of them can be made " However, it is clear that these statements were not directed at influencing Local 380's bargaining conduct They merely asked for union assistance in preserving assets pending sale-a sale which never took place Such a request would seem to be a reasonable one for any employer contemplating a disposition of assets In addition, there is no evidence that the Union endorsed Whiting's request or took any action because of it. Rather, Local 380 went to considerable effort to prevent the sale of retail routes and exacted a heavy "price" for agreeing to the reduced 6-day delivery schedule In short, we are unable to infer any conflict of interest overtones from Whiting's unheeded call for union aid in protecting asset values 195 director of the dairy division of the Eastern Conference of Teamsters. Under the Teamsters constitution of the Eastern Conference is "at all times subject to the unqual- ified supervision, direction and control of the General President." (Art. XVI, sec. 1.) However, we agree with the Hearing Officer that these meetings and Harti- gan's limited role in them do not rise to the level of International control over Local 380's course of bar- gaining. The notes and testimony on the meetings show that the topics discussed ranged far beyond Local 380's immediate dispute with Whiting, extending to the general problems facing the retail dairy industry. And, while Hartigan appears to have acted as "spokesman" for the locals" during several joint meetings with employer representatives, he was clearly not functioning in any negotiating capacity. At most, Hartigan was promoting harmony among the locals and furthering a broad exchange of information between union and manage- ment . In our opinion, this does not evidence any signi- ficant involvement by the International in Local 380's negotiations with Whiting. The record firmly shows that it was Local 380, not the Eastern Conference, the International, or the Fund, that handled the 1966-67 bargaining with Whiting. The Union's own bargaining committee, headed by Business Agent Luke Kramer, met with Whiting and hammered out the ultimate October 1967 accord. Kramer testified that no representative of the International or the Fund participated, directly or indirectly, in these or any other negotiations with Whiting. We find nothing in the course of the 1966-67 negotiations themselves or in the final agreement on retail routes which indicates pressure or influence toward loan protection.15 In short, we conclude that the evidence as to actual conduct of negotiations does not amplify the power of the International and the general president.'6 Rather, the record serves to confirm our earlier Buttrick ruling that the International's powers are limited, that Local 380 has the dominant voice in its dealings with employers. The record contains much evidence pertaining to the subject of temptation for intervention into Local 380 bargaining in order to protect the Fund's interest in Whiting. In the Buttrick proceeding, the Board found no evidence of such temptation.17 And, the court in Buttrick II noted that the nature of the Fund's interest reduced the likelihood of any bargaining intervention. For, unlike the holder of an "equity-like interest," the 14 Apparently the Teamsters locals dealing with Dairyman's League (Whiting's parent) were represented in these meetings '$ In January 1966, Whiting had presented its case for 6-day delivery on a no-Wednesday basis to General President Hoffa However, the facts show that Whiting's plea received "very little encouragement" during the short meeting with Hoffa, who "was sympathetic but [not] helpful " And, there is no evidence that Hoffa subsequently did encour- age, help, or intervene in the negotiations leading to the October 1967 agreement on the matter 19 We agree with the Hearing Officer that President Hoffa's May or June 1966 statement that he would "take care of" Local 380 Business Agent Kramer if he (Kramer) gave Whiting's president, Friedlander, "too hard a time," was unrelated to collective bargaining and constituted "mock-serious joviality " 17 167 NLRB 438 at 442 196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Fund has no incentive to improve Whiting 's day-by- day competitive position through favorable adjustments of labor costs. The only concern of the Fund is the monthly receipt of principal and interest on its loans- an objective which is assured and protected "So long as Whiting does not go out of business or its assets fail to cover its liabilities . " 1B On the record there present- ed, the court felt there was adequate security for the loans and no evidence of a "danger of default ." 19 The Employer here contends that Whiting 's default is now imminent (if not already accomplished), and that its assets are insufficient to cover the loan obligation to the Fund In many respects it is true that Whiting's financial situation leaves much to be desired , and its operations since 1965 would not attract a cautious or "reasonable, prudent " investor. Thus, between January 1, 1965, and March 31, 1968 , Whiting had an operating loss of some $110,000 . As a result , the principal payments on the Fund ' s loans have largely been financed out of deprecia- tion charges and sale of assets , a practice which, if continued , could result in ultimate liquidation of the business. In addition , Whiting has encountered a persist- ent deficit in "working capital ";10 and, under the standard interpretive ratios used by security analysts, Whiting appears in far poorer position than the industry in general or the eight dairy companies selected for comparison, although admittedly not all of these are good compari- sons. Whiting 's difficulties have to some extent affected the Fund 's debt interest , since , in April 1966 , the original schedule of payments on principal was scaled down from about $60,000 a month to $10 ,000 a month (for the first 24 months) and then to $37,000 a month.21 This revised schedule means that Whiting must make a final "ballon " payment of $1,796 ,000 in April 1973. However , there is another , brighter side of the Whiting financial picture . First and most important is the fact that Whiting has faithfully met each and every payment of interest and principal (as per the revised schedule). There is no indication that the Fund ever expressed doubt or concern over the continuation of these timely payments . While it is true that Whiting has not had an especially profitable operation since 1965 , neither has it been entirely adverse In fact, between June 30, 1966, and October 31, 1968, stockholders equity has increased by about $96,000 and long-term debt has been reduced by $1,320,000. Monthly profit-and-loss figures for 1967 and 1968-although not establishing any trend upwards-do provide some basis for Whiting's avowed hopes of future improvement . Those hopes are also supported by the backing of Whiting ' s parent- Dairyman's League , which is a large milk producers' cooperative having a big stake in keeping Whiting healthy in order to provide an outlet for its members' milk products . And finally, even if we were to overlook these indications of a better future , we find in agreement with the Hearing Officer, that Whiting' s assets are ade- quate to cover its liabilities in the event of liquidation.22 It should be emphasized here that our task is not to decide whether Whiting is now a sound investment, suitable for a reasonable , prudent investor . Rather, we are inquiring into Whiting's financial condition only as it relates to the ability to make good on the Fund's loans, either from continued operation or from sale of assets . The question is whether Whiting ' s ability to repay is so doubtful as to induce the Fund or the International into taking action impinging on Local 380's bargaining so as to protect the loan . There may be, to be sure, some danger that in the future Whiting's condition will worsen , that the Fund might step in and run the Company , or that the International will exercise its limited powers to induce Local 380 to improve Whit- ing's competitive position . But, on the record thus far compiled , such danger of infection of the bargaining process is surely not a clear and present one. Whiting is still a going concern , danger of default is not imminent, and assets are still sufficient to cover the loan in the event of Whiting's collapse . The Fund continues to be the holder of an ordinary secured debt , without any "equity-like" concern for the " . . . everyday fluc- tuations in Whiting's business. "23 In conclusion , from our overall appraisal of both the power and temptation to abuse the bargaining proc- ess, we find on the record before us no "proximate" or "clear and present " danger of such abuse.24 Accord- ingly, we affirm the Hearing Officer's findings and recom- mendations.25 11 Buttnck II, 399 F 2d 505 , 507 (C A I) 10 Ibid 10 The current assets less current liabilities 21 Unlike the Hearing Officer , we find it unnecessary to determine whether , under applicable State law , these revisions constitute a "default " on Whiting' s obligations under the original loan agreement or an effective amendment of that agreement through "waiver" or "estoppel " There has been no court ruling that default exists and both Whiting and the Fund have conformed their conduct to the revised terms over a period of several years Our task here is to ascertain the likelihood of Fund-International intervention into Local 380 bargain- ing, not to resolve questions of creditors rights In our view, the fact that the Fund has accepted the revision and has never suggested that Whiting was in default diminishes the likelihood of a technical default being seized upon as ground for intervention In other words, it is too conjectural to infer that the Fund, despite its past acceptance, might someday seize upon the revision as a "default" justifying an assumption of control over Whiting 22 This finding is based upon the estimates provided by the Employer's witness , Carl Blanchard 20 Buttnck II, 399 F 2d at 507 " Thus we do not reach Petitioner 's argument that Whiting, with its single ice cream employee in a complement of 1,000, is only peripheral- ly engaged in the ice cream business and there is therefore nothing that Local 380 can do to place Hood, whose bargaining unit in the instant case is comprised of 160 ice cream employees (production, maintenance, loaders, and drivers at one location), at any kind of competitive disadvantage 25 On December 15 and 29 , 1969, the Employer filed motions to supplement the record . Petitioner opposes the proposed supplementation. The motions to supplement seek to introduce a statement of assets and liabilities for Whiting's fiscal year ending March 31, 1969 Whiting's financial statements have same relevance, of course , to its continuing ability to repay the Fund 's loans In our view of the case, however, this document , standing by itself , does not persuade us that any different result is warranted The motions to supplement are accordingly denied H P HOOD & SONS 197 CERTIFICATION OF REPRESENTATIVE Teamsters, Chauffeurs, Warehousemen and Helpers of America, and that said organization is the exclusive It is hereby certified that a majority of the valid representative of all the employees in the unit herein ballots has been cast for Milk Wagon Drivers and Cream- involved, within the meaning of Section 9(a) of the ery Workers, Local 380, International Brotherhood of National Labor Relations Act, as amended