Hudson Transit Lines, Inc.

HUDSON TRANSIT LINES, INC. 133 Hudson Transit Lines, Inc. and Independent Bus Transit Union Hudson Transit Lines, Inc. and Transport Workers Union of America , Local 225, AFL-CIO. Cases 22-CA-3009 and 22-CA-3067 2 In adopting the Trial Examiner's conclusion that the Respondent's announcement and institution of reductions in various employee benefits violated the Act, we rely on Section 8(a)(1), and do not deem it necessary to determine whether the conduct in question also violated Section 8(a)(3). October 9, 1968 DECISION AND ORDER BY MEMBERS BROWN, JENKINS, AND ZAGORIA On May 10, 1968, Trial Examiner A. Norman Somers issued his Decision in the above-entitled proceeding, finding that the Respondent had engaged in and was engaging in certain unfair labor practices alleged in the complaint and recommending that it cease and desist therefrom and take certain affirma- tive action, as set forth in the attached Trial Exam- iner's Decision. Thereafter, the Respondent filed exceptions to the Trial Examiner's Decision and a supporting 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 connection with this case to a three- member panel. The Board has reviewed the rulings of the Trial Examiner made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Trial Examiner's Decision,' the exceptions and brief, and the entire record in this case, and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner.' ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby adopts as its Order the Recommended Order of the Trial Examiner, as modified herein, and orders that the Respondent, Hudson Transit Lines, Inc., Mahwah, New Jersey, its officers, agents, successors, and assigns, shall take the action set forth in the Trial Examiner's Recom- mended Order, as so modified: 1. Paragraph 1(b) of the Trial Examiner's Recom- mended Order is hereby deleted, and paragraph 1(c) is renumbered 1(b). 2. The last sentence in the first indented paragraph of the notice, beginning "Nor WILL WE otherwise discriminate .. " is hereby deleted. The Trial Examiner at the hearing was Arthur Christopher, Jr., now deceased . A. Norman Somers was duly designated by the Chief Trial Examiner to prepare the Trial Examiner 's Decision in this case. See footnote 2 of the Trial Examiner 's Decision. TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE A. NORMAN SOMERS, Trial Examiner- On July 18, 1967, the General Counsel issued a complaint alleging that Respondent engaged in unfair labor practices in violation of Section 8(a)(1) and (3) of the Act.' The case was heard before Trial Examiner Arthur Christopher, Jr , on September 21 and 22, 1967, in Newark, New Jersey, and briefs were thereafter filed with him by the General Counsel and the Respondent On December 9, 1967, Trial Examiner Christopher died before completing his decision. The parties waived a hearing de novo and agreed that a decision be made and issued by a newly designated Trial Exanuner on the basis of the record made before the original Trial Examiner. Thereupon I was duly designated as the Trial Examiner in the case 2 On the entire record and on consideration of the briefs, I hereby make the following FINDINGS OF FACT 1. THE BUSINESS OF THE EMPLOYER Respondent is a Delaware corporation, with its principal office and place of business in Mahwah, New Jersey It is engaged there and in other terminals in the States of New York and Pennsylvania in the transportation of passengers and the performance of related services Its gross annual revenue exceeds $50 ,000. The parties agree and it is hereby found that Respondent is engaged in commerce within the meaning of the Act. II. THE LABOR ORGANIZATIONS INVOLVED TWU and IBTU (supra fn. 1, and infra, fn. 4) are labor organizations within the meaning of the Act. 1 The complaint is based on charges filed on February 6, 1967, by Independent Bus Transit Union (hereafter IBTU), and on April 11, 1967, by Transit Workers Union of America, Local 225, AFL-CIO (hereafter TWU). The caption in the proceedings did not include the designation "AFL-CIO" in the references to TWU . The parties have since indicated that the caption can be deemed corrected to include the designation. 2 The correspondence between the Office of the Chief Trial Examiner and the parties from the time of the notification of the death of Trial Examiner Christopher to the designation of the instant Trial Examiner has been included in the official record, as follows : (a) Letter of December 27, 1967, by the Chief Trial Examiner to all parties, (b) Letter of January 3 , 1968 , by James E . Fagan, counsel for Respondent, to the Chief Trial Examiner , with copies to counsel for all parties, (c) Letter of February 12, 1968, by the Regional Attorney for Region 22 of the NLRB to counsel for Respondent , with a copy to Associate Chief Trial Examiner Lindner , (d) Letter of February 15, 1968, by the Chief Trial Examiner to counsel for Respondent , with copies to counsel for all the other parties, (e) Letter of February 28 , 1968, by counsel for Respondent to the Chief Trial Examiner , with copies to all parties, (f) Letter of February 29 , 1968, by the Chief Trial Examiner to counsel for Respondent , with copies to all parties. 173 NLRB No. 13 134 DECISIONS OF NATIONAL LABOR RELATIONS BOARD III. THE ALLEGED. UNFAIR LABOR PRACTICES 2. The election proceeding A. Issue The issue in essence is the significance of Respondent's announcing and then instituting certain economic reductions (a cut in pay rate and elimination of various fringe benefits) at a time when a representation proceeding under Section 9 was still undetermined. B. The Facts 1. Background The rivals were TWU, the incumbent, and IBTU, which filed the election petition Respondent has had contractual relations with TWU for many years. The series of contracts between Respondent and TWU, including the one that was current when IBTU filed the representation proceeding here involved, were all for terms whose starting and expiration dates were in mid-January. Accounting for the importance Respondent attaches to the January date is the seasonal character of its operations Its passengers, in the main, are summer vacationers. Accordingly, Respondent operates at a profit only during June, July, and August, and at a loss the remaining months of the year Under its certificate of convenience from the Interstate Commerce Commission, Respondent must furnish reasonably adequate service to the public throughout the year, and also keep itself in sound economic condition to be sure it can render that service. The advantage served by a contract ending in January is the leverage afforded by the fact that negotiations begin well before the summer season. Negotiations in the winter assure Respondent against the likelihood of a strike in the crucial summer season Also, negotiations during the winter strength- en Respondent's power to resist the employees' demands and by the same token, weaken the effectiveness of the bargaining power in making these demands The employees would have a corresponding negotiating leverage under a contract that started (and ended) nearer to the summer. But though the employees sought such a date in the past, the contracts up to the time here involved had a starting date beginning and ending in mid-January. Respondent's and TWU's bargaining relations over the years have been relatively stable. Before each contract expired, they came to terms on a new one. In only two instances had there been a "hiatus," and in each instance for no more than a week or less 3 During both of them, Respondent continued the old terms in effect until the new terms were mutually agreed upon and signed. a Respondent's expressed anxiety about an early completion of the election proceeding in order that negotiations for a succeeding contract begin early In the last week of October 1966, Respondent and TWU had exchanged letters looking toward negotiation of a new contract to succeed the present one expiring January 15, 1967 On October 27, IBTU (an independent organization comprised of Respondent's employees (infra, fn 4)), wrote Respondent claiming it represented a majority of the employees, and on October 28, it filed the Section 9 election proceeding From the outset of that proceeding Respondent urged expedition so as to obviate the "serious economic problems" that would otherwise confront it. Thus, at the "informal conference" in the Board's Regional Office on November 10, John F. X. O'Brien, attorney for Respondent, offered to consent to an election, saying that unless the election issue was speedily resolved, "the Company has serious economic prob- lems," for it "counted on the summer revenues to offset these losses [of the remainder of the year]." The two rival organizations failed to agree, and the matter was set for formal hearing on November 15 At that hearing, during off-the- record discussions, Attorney O'Brien repeated that the Com- pany was anxious that the representation issue be brought to a head as soon as possible, because the labor contract with TWU was expiring January 15, and the Company needed assurance for its summer operations. The Regional Director issued his Decision and Direction of Election on December 5.4 On December 9, there was another "informal conference," this time to discuss the election date and whether the ballots were to be by mail As had O'Brien at the previous meetings, Irwin Flateman, president of Respond- ent, urged at this meeting that there be a speedy resolution of the election issue, since time was running out and the Company had its "economic problems " b Respondent 's announcement, at the end of the initial (but as yet inconclusive) tally of the ballots, that it would institute "economies" On January 9, all parties were at the Regional Office to learn the result of the count on the ballots The tally showed TWU, the incumbent, to be in the lead but not by enough to dispense with the need for passing on the challenged ballots.5 Also, IBTU, the petitioner, was contemplating filing objections to the conduct of the election (which it did shortly after- wards). When informed that it would take at least a month before the post-election steps would be concluded, President 3 The first was a work stoppage , and the parties came to terms on a new contract in less than a week. In the other instance, the parties, toward expiration of the contract, agreed to an extension, which had been specifically requested by the mediation authorities. The parties came to terms in just a few days. 4 Official notice is taken of the formal proceedings in Case 22-RC-3486. The Decision and Direction of Election indicates that the parties turned out to be in basic agreement , on the bargaining unit, as follows: All full-time and regular part -time motor coach operators and maintenance employees of the Employer, including supplementary or seasonal operators and the stock room clerks, but excluding all office clerical employees, professional employees , managerial em- ployees, dispatchers , all other employees, guards and supervisors as defined in the Act. That Decision also indicates that TWU had challenged IBTU's status as a labor organization , because there was no evidence that IBTU had officers or had dealt with employers. IBTU's status as a labor organization was upheld, because it satisfied the requirements of Section 2 (5) of the Act . (It exists "for the purpose , in whole or in part," of dealing with employers concerning working terms, and employees participate in it, whether or not it has officers ) 5 The tally was as follows. 104 for TWU, 99 for IBTU, 2 for neither, and 9 undetermined challenged ballots HUDSON TRANSIT LINES, INC Flateman, as he testified, "was just besides [himself] frankly He added I told them that unless somethings (sic) were done, unless the company had the assurance that we were going to be operating in the summer that we would have to make certain economic adjustments I don't know exactly what words I used, but certainly indicating that we would have to start to curtail some of our operations over the winter months when we constantly lose money. On January 13, the Company, because of rumors that employees thought "adjustments" were going into effect the day after the contract would expire, issued the following NOTICE TO ALL EMPLOYEES In view of the uncertainties of the present situation the Company has been placed in a position making economies necessary. However, to avoid, if possible, any hardships on our employees, the Company will postpone such economies until Sunday, February 5, 1967. It is our hope that by that time the present uncertainty will be resolved and a new contract mutually agreed upon On February 2, Respondent issued a letter to all officers and employees. The letter specified the "economies" the Company was putting into effect February 5 for all members of the personnel, whether management personnel or employees in or outside the bargaining unit The "economies" as specified in the letter were as follows 1 Elimination of Company contributions to Blue Cross, Blue Shield, Major Medical and Life Insurance Programs Those interested in continuing such coverage must author- ize the company on the enclosed form to deduct from wages the amount of such premiums 2 A reduction of 10% of gross wages of all employees whose gross weekly wages exceed $100 00 This reduction will not reduce such gross wages to an amount less than $100 00, for a full week's work 3. Elimination of all accruals for vacations and paid holidays. The letter included a recital of the reasons for the reductions It stated that the Company had "economic problems" that required solution. It pointed to the fact, earlier mentioned, that the Company derives the bulk of its revenues in the summer months and if deprived of them, it could not meet expenses over a 12-month period. It indicated that the Company had assumed the present pay scale on the basis of 6 In his testimony , President Flateman acknowledged that neither of the labor organizations had indicated that it would strike , nor had he asked either or both whether they would do so He further acknowl- edged that he did not fear a strike , but explained that "without knowledge that we would have a bona fide contract with one of the unions, that there was a possibility that the Company would not be operating in the summer months when they make the profits to offset the severe winter losses." He acknowledged that a delay in the representation proceeding was a factor contributing to its action. (It should be added that the expired contract had included a no-strike clause.) 7 Of the challenges, three were overruled and counted . The final tally showed TWU to be the winner by the vote of 106 , against 100 for IBTU. All of IBTU 's objections to the conduct of the election were overruled See Supplemental Decision and Order in Case No. 22-RC-3486 (supra, fn 4). This included an objection that Respond- 135 the assurance of its summer operations, and that under the current situation it had no such assurance. It stated Present uncertain conditions relating to certification by the National Labor Relations Board of the Company's union employees and the question of who will be certified and with what union the Company can negotiate, have left the Company in a position where it has no assurance that it will be in operation during those critical summer months and able to obtain those needed revenues Therefore the Company must cut the suit to the cloth it has and reduce its operating expenses to the point where they can be met by current revenues. The letter advised that the Company had asked its auditor to make a study of all items in which expenses could be reduced, and that "pending such report and the action that will necessarily follow the Company is required in the interest of self preservation to make the following economies dealing with salaries and wages of officers and employees in all categories " The letter then specified the reductions (which have been quoted at the outset of the treatment of this letter), and added that as soon as the Company received and analyzed the auditor's study, it "will further advise you all." It concluded with the exhortation that all of us "would like to see an end to uncertainty in order to get on with the vital business of planning sound continued operation."6 3. Negotiations (after conclusion of certification proceeding) culminating in new contract and less than total restoration of the "economies" On February 5, Respondent put into effect the reductions described in its letter of February 2 The election proceeding was concluded on March 31, when TWU, the incumbent, having been declared the winner, it was formally certified 7 Negotiations between TWU and Respondent began April 7 The negotiators for TWU stated "they would not bargain with this cloud over their head," and demanded that Respondent restore all of the reductions from the date they were instituted The Company said it "still did not know whether we were going to operate during the summer months " However, it offered to restore all the reductions from the date they were made, provided the effective date of the new contract was retroactive to January, as in the past 8 TWU refused, saying that the men had waited "too long" for a starting date corresponding to the present, and that they would even like to make it effective as of the date negotiations would be completed. The effective starting date as finally ent had stated it would reduce wages (referring to then existing announcement that "economies " would be made) The Supplemental Decision notes that since this statement was made "after the Tally of Ballots issued , [ it] could not raise substantial and material issues with respect to conduct affecting the results of the election " IBTU filed a request for review , which the Board denied as not raising substantial issues The Supplemental Decision noted, however, that IBTU had interveningly , filed a charge of unfair labor practices on February 6 (supra, fn 1) (That was the day after Respondent made the wage and fringe reductions described in its February 2 letter ) The Supplemental Decision (at its footnote 21) noted that the unfair labor practice charge was under investigation , with the implication that this was a separate issue from the objection concerning the results affecting the election. 8 The retroactivity was to be comprehensive. All terms, when agreed upon, were to be retroactive to the effective starting date of the new contract , i e., the increases in hourly rates would be retroactive to the effective starting date , and so would the fringe benefits. 136 DECISIONS OF NATIONAL LABOR RELATIONS BOARD agreed on was March 31, the date of the certification, and this was embodied in the memorandum of agreement executed by both parties on April 22, and in the formal contract executed May 2. The negotiations regarding the reductions were completed on the following basis: Respondent restored the vacations and paid holidays in full from February 5, the date they had been eliminated However, the other reductions (i e the 10 percent cut in pay and the elimination of the contribution for health and life insurance) were restored only for the period beginning March 31, but not restored for the period between February 5, when it was put into effect, to March 31, the effective starting date of the new contract. TWU indicated, however, that it was not waiving its position that the reductions were illegal from their inception 9 C Conclusionary Discussion (1) Paradoxically, the basis on which the General Counsel condemns the conduct is relied on by Respondent as providing its exoneration. The General Counsel's position is that by announcing and then instituting the reductions while the representation proceeding was not yet concluded, Respondent interfered with the rights of the employee to determine their own bargaining representative in violation of Section 8(a)(1). The General Counsel further views the reductions as discrim- inatory and as having the intent or necessary effect of discouraging membership in either or both labor organizations in violation of Section 8(a)(3) Respondent on the other hand, avows it did not act with any antiunion motive, and if its conduct could nevertheless be deemed to have in some way interfered with the employees' rights-which it disputes in any events-this is overbalanced by justifiable action in protection of its legitimate economic interests.' 0 (2) As I read General Counsel 's position , it is that Respondent's drastic reduction in the employees ' earnings stemmed from the fact that the representation case was still pending, and that this, whether Respondent intended it or as the employees would naturally view it, was a reprisal for employees engaging in protected activity Respondent , to be sure, imposed these reductions upon all the personnel , but it was in response to the protected activity of the employees in the bargaining unit (supra, fn. 4) that Respondent made these reductions It was discriminatory , since the representation proceedings and the consequent suspension of negotiations pending its completion accounted for the wage reductions that would otherwise not have been made. Visiting the loss on those outside the bargaining unit as well did not make it nondiscriminatory toward those within the bargaining unit . It simply extended 9 As appears (supra, fn. 1), IBTU filed its charges of unfair labor practices on February 6, which is the day after Respondent made the reductions (supra, fn. 7) TWU filed its charges on April 11. This was after it was certified in the representation proceeding and shortly after the negotiations with Respondent for a new contract began. The charges of IBTU claimed violations of 8(a)( 1) and (3). TWU, in its charges , claimed that Respondent violated Section 8(a)(1), (3) and (5) of the Act. The claim of an 8(a)(5) violation was disallowed by the the discriminatory conduct to those outside as well as those in the unit. The General Counsel invokes to employees engaged in a representation proceeding, principles comparable to those applied where employees have engaged in lawful strike activity " In substance, under the rationale articulated in Great Dane (supra, fn 11 at 34), which the General Counsel quotes, there are two principles which the General Counsel deems applicable here. The first is that the Respondent's conduct in imposing the reductions was "inherently destruc- tive of important rights," from which an antiunion motive may be inferred without need for the General Counsel to prove it. The second is that even if the "adverse effects" on the employees' rights were "comparatively slight," there was nevertheless a violation, unless Respondent has come forward with "legitimate substantial business justifications" for its conduct, in which event, the General Counsel would have had to establish that Respondent was wrongfully motivated. The General Counsel asserts that Respondent has not met the "substantial business justification" requirement, because Re- spondent was not warranted in reducing the employees' earnings beginning in the winter as an offset against a strike in the summer, which was neither imminent, nor threatened, nor portended. The General Counsel further asserts that Respond- ent, in making these reductions, was not truly motivated by a concern about a summer strike, so much as by a desire to have negotiations start in the winter as before, or that failing, to reacquire in the new contract a winter starting date, as in the past The result, as the General Counsel contends, is that there was a violation of the Act, whether its "adverse effects" were "destructive" or "comparatively slight " (3) If we telescope events to the ultimate-i e., the stage when the representation proceeding was concluded and the new contract negotiated, it can be said to have hardly had a tearful ending As a consequence of the representation proceeding, the negotiations which used to begin in the late fall or early winter, now began in the spring. As stated before, the employees had sought to accomplish this in the past by a contract which would expire in the spring instead of the winter, but until then to no avail. Now they achieved it as a result of the suspension of the negotiations which had been brought about by the representation proceeding. To be sure, the employees did not plan it that way, but the result favored them nevertheless President Flateman testified that the increases the employees received under the new contract exceeded those of prior contracts. This is not denied. He also testified that the higher increases they received this time were the result of the fact that negotiations began so much nearer to the summer than in the past. The Trial Examiner excluded this last, but Respondent in its brief urges this as a rational inferen'ce Since, as is not disputed, each side (Respondent, on General Counsel . (See the Regional Director's letter to the TWU, dated July it, 1967 General Counsel Exh. 2.) The General Counsel's complaint alleged violations only of Section 8(a)(1) and (3). 10 Respondent further avers that its contract negotiations with TWU after conclusion of the representation proceeding constituted an accord which wiped out such offense as might otherwise be imputable to Respondent. i 1 N.L R.B. v. Ene Resistor Corp, 373 U.S. 221, N L R.B. v Great Dane Trailers, 388 U S. 26 HUDSON TRANSIT LINES, INC 137 the one hand, the employees on the other) has the advantage in the negotiations, depending on the remoteness or proximity of the negotiations to the summer months, Respondent's inference is hardly implausible That is to say, we may assume that the greater increases the employees obtained under the new contract over those in prior contracts reflected the increased bargaining power of the employees because negotia- tions in this instance began nearer to the summer than negotiations of prior contracts Whether that was the whole reason for the increase or had still other reasons (such as the not altogether inconceivable one that the prospects of the vacation trade the forthcoming summer were thought to be greater than in past summers) one does not know. But whatever the increase and its reason, Respondent's additional contention that because of this increase, the employees really had received restitution for the portion of the reductions made in February that Respondent refused specifically to restore to the employees (unless they agreed to an effective January date for the new contract) strikes one as a non-sequitur. As indicated (supra, fn. 8), each was a separate item of negotia- tions The rates under the new contract were one item The restoration of the reductions made in February and the condition imposed upon full restoration (that the contract be made retroactive to a winter date as before) was another item. This in any event, is a matter to be deferred pending discussion of whether Respondent's conduct in January and February constituted violations as of the time they occurred (4) As matters stood when Respondent, in January and February, respectively announced and then put these "econ- oimes" into effect, the employees found their earnings drastically curtailed and their fringe benefits of highest importance taken from them in consequence of a proceeding in which the drivers and maintenance men (supra, in 4) were engaged, and which the Act protects. The fact that these reductions were visited upon all the employees hardly light- ened the impact upon the employees who were engaged in the representation proceeding. Since it was out of this proceeding that Respondent's conduct flowed, the employees would tend to think twice before again engaging in a representation proceeding In any event, as the General Counsel puts it, that kind of a loss in earnings and benefits because of a representa- tion proceeding that was still pending "could effectively inhibit any change by employees of their bargaining represen- tative .s1 2 Unexplained, the conduct as of the time it occurred offended the employees' rights, protected by the Act, to engage in a representation proceeding, thereby violating Section 8(a)(1), and to the extent that this meant losses in their earnings which otherwise would not have happened, it would tend, as stated (supra, fn. 12), to alienate the employees from the labor organization that accounted for the proceeding that brought on the travail-the petitioning IBTU Also, insofar as such action would tend to hinder the bargaining process that was then reasonably in prospect, it would discourage member- ship in the exclusive bargaining representation, as ultimately determined, in violation of Section 8(a)(3) All of this last, however, would be derivative of the underlying offense-the toll Respondent levied in the employees for engaging in a representation proceeding We come to Respondent's justifica- tion for its having made the levy. (5) Respondent's justification has the anomolous aspect, as earlier stated, of being based on the very representation proceeding itself The proceeding had reached the stage where the contract had now expired, and there was still no bargaining representative selected with which to conduct negotiations, and so as Respondent put it in its letter of February 2, Respondent "has no assurance that it will be in operation during these critical summer months," with the result that "it must cut the suit to the cloth it has and reduce its operating expenses to the point they can be met by current revenues." However, the very nature of Respondent's operations is such that until June, the revenues are less than the expenses Yet not until the events here involved had Respondent ever before curtailed employees' earnings to overcome the custom- ary and traditional operating losses that precede the summer months. Further, the expression Respondent employed to describe the current situation, that "it must cut the suit to the cloth it has" is hardly accurate Respondent's own records show a consistent net operating profit at the end of each calendar year, including 1966. And Respondent's auditor, who according to the letter of February 2, was asked "to make a study" which Respondent was then awaiting, testified that Respondent as of February 1967 "definitely" had a surplus, though he could not yet state how much. So the "cloth it ha [d] " in early 1967 amply met the "suit."' 3 And in cutting these employees earnings nevertheless, Respondent was pro- jecting itself into a situation envisaged for nearly a half year later And it projected it on the basis of nothing that was 12 The Board has held that where an employer changes working conditions even after an election and during the postelection stage of a representation proceeding , it could still be a violation depending on the circumstances. The basic test , as stated, is whether the change was "because of economic circumstances unrelated to union organization," in which case the employer is exonerated or because "of the union's presence," in which case there is a violation . See McCormick Long- meadow Stone Co., 158 NLRB 1237, 1242. Compare Champion Pneumatic Machinery, 152 NLRB 300. See also Ambox, Inc., 146 NLRB 1520, enfd. as modified 357 F.2d 138 (C.A. 5). These cases involved the validity of the employer 's grant or promise of benefits during the postelection stage, based on whether the purpose or necessary effect of the employer 's conduct was to alienate employees from the union. This is not the precise kind of situation before us. The relevance in the cited cases is not in their precise content but in their implications. The case before us is one concerned not with Respond- ent's acting to help or harm either of the rivals or the two in combination , so much as to infringe, whether in intent or as a necessary consequence , on the protected right of the employees to engage in a concerted activity (a representation proceeding), which is concerned with the employees ' freedom of choice in the selection of their bargaining representative . Insofar as the depravations visited on the employees in that situation could be said to discourage membership, it would naturally be the organization which brought the proceeding and continued it by its postelection challenges and objections-the peti- tioning IBTU . Also, as later appears, the conduct insofar as it was naturally calculated to obstruct the bargaining process would discourage membership in the exclusive bargaining representative whoever the ultimate winner. 13 This is quite unlike Jordan Bus Co., 107 NLRB 717, on which Respondent relies, where the employers "found themselves in a hazardous financial situation at the time the reduction was announced and effectuated. " (Emphasis supplied.) 138 DECISIONS OF NATIONAL LABOR RELATIONS BOARD either imminent or impending or even probable. President Flateman in his testimony (supra, fn 6), based the reductions that Respondent made at the beginning of the year solely on the mere "possibility" that Respondent would not be oper- ating in the middle of the year Indeed, its letter of February 2 states that it was now reducing the employees' pay to correspond to the current revenues solely because it "has no assurance" that it will operate in the summer, which is, in effect, to say that it was not certain in January or February that there would not be a strike in June or July. But a strike presupposes negotiations in which the parties have fallen apart It is not an event which is self-creating because summer is coming or has arrived There was every reason to expect, in view of the nature of initial tally on January 9 (supra, fn 5), that there would be a collective-bar- gaining representative determined and that negotiations would begin reasonably before the summer-as indeed happened. Respondent, in making the reductions on the basis of the "possibility" of a strike in the summer, was thus projecting itself into the following sequence (a) the bargaining represen- tative would present its demands, (b) Respondent would deem them unacceptable, (c) the bargaining representative instead of yielding and trying to reach an accommodation will strike-and there would go our summer revenues on which we depend for making out during the calendar year. was over the date to which an expired contract was to be extended. The union there insisted on 6 months, which would have meant that negotiations would begin at the peak of the employer's business season (likewise seasonal as here) The employer insisted that the extension be for a longer period, so as to avoid being confronted with negotiations that began at the peak of the employer's business The differences there are at least twofold the expiration date of the extension of the contract had been fully negotiated and reached the point of impasse, secondly, the negotiations, throughout the years of the bargaining relationship had consistently culminated in a strike Here they had (with a very brief exception, supra, fn. 3), invariably ended in agreement Respondent finally falls back on the fact that when it made the reductions here, the bargaining representative had not yet been determined so that there was no one to negotiate with. That, however, does not do away with the fact that Respond- ent was not here acting to meet a present economic exigency but one predicated, as stated, upon the outcome of negotiating that would take place Respondent was assuming the culnuna- tion of a sequence that had not even had a beginning, and on no other basis than that it had "no assurance" that there would be not such a culmnation-a summer strike (7) (6) Assuring that Respondent genuinely intended these wage reductions it made in February as an economic hedge against a possible strike in June or July, the tenuous nature of that possibility is not commensurate with the drastic character of the action and the overwhelming probability of its effects on employees' protected rights when the action was taken. Even if the disproportion between the action taken and the apprehen- sions claimed had a more rational basis, Respondent would not now have been justified in exerting that kind of economic pressure to meet the ultimate in a negotiating sequence, to wit a strike, before even the first step in that sequence had started. Respondent relies heavily on the doctrine in American Shi,i Budding. 14 The employer there, after an impasse in negotia- tions with the bargaining representative, engaged in a lockout for the sole purpose of achieving the economic objective which the union resisted during the negotiations However, these steps had already taken place there had been negotiations between the employer and the bargaining representative, the bargainers were hopelessly apart, and the employer locked out the employees with the conveyed understanding that they would all go back with full seniority once that economic issue was resolved in the employer's favor. The inference Respond- ent seeks to draw from American Ship is that the employer may validly exert economic pressure to realize any bargaining advantage so long as it is not motivated by an antiumon purpose and the employer has not otherwise violated a protected right The parallel at once falls because the depriva- tions visited upon the employees here stemmed from the protected activity in which they were engaged-the choice of a bargaining representative The subject on which the parties in American Ship fell apart (and on which Respondent relies heavily as an analogy here) is that the dispute in American Ship, which the employer sought to resolve by the lockout, The discussion until now has assumed that the reductions Respondent made were in fact intended by it as an offset against a summer strike And, as stated, that furnished no justification for its actions even if that had been the true reason for its action. The record rather seems to militate against that as Respondent's actual reason. When Respondent, as far back as the start of the representation case in early November, urged an early end of the representation proceeding because of "serious econorruc problems" otherwise encoun- tered, it could hardly have meant problems encountered by an actual strike so much as problems encountered by a more effective bargaining power by employees nearer the summer than that in the winter. That explains why Respondent was anxious to have the representation proceeding (which by its very filing held up negotiations that had just gotten under way with the incumbent TWU) end quickly so as to reduce to a minimum the customary start of negotiations in relation to the summer Consistent with it was the very use that Respondent made of the earnings' reductions in the ensuing contract negotiations after the representation proceeding ended. Re- spondent was now again dealing with the incumbent TWU with which it had enjoyed stable relations over nearly a score of years. So Respondent now had every reasonable assurance that its operations would continue this summer as in the past Yet though Respondent has professed that these reductions were made as an offset to a putative summer strike, Respondent did not restore these reductions as TWU requested at the outset, but used these reductions to trade for a contract with a January starting date as before And, as appears, though it restored the vacations and paid holiday accruals from their inception, and restored the other reductions retroactively only from the period of the effective date of the new contract, it did not restore them for the intervening period from February 5, when they were put into effect, to the date of the new contract. 14 American Ship Building Co. v. N.L.R.B, 380 U.S. 300. HUDSON TRANSIT LINES, INC. Respondent estimated the amount of the unrestored sum (presumably of the employees involved in the bargaining unit) at about $15,000, and indicated that that too was good money But it was money that Respondent nevertheless offered to restore to the employees if they would but agree to make the contract retroactive to the winter as before. And it offered the employees even more money in the form of having all the new terms, including the increase in hourly rates, retroactive to January if they would agree to make that the beginning date of the new contract. This brings us to the view expressed by President Flateman at the hearing and by Respondent in the brief, (described earlier in our conclusionary discussion-item (3)) that the increases the employees obtained under the new contract exceeded those obtained under all the prior contracts, and that that overcame, and thereby restored in all but the legal or technical sense, the totality of the reductions from their inception, including those for the period from February 5 to March 31 that Respondent refused specifically to restore. In essence, Respondent views the employees' increases in 1967 under the leverage of negotiations that began in the spring, as losses that Respondent incurred because this time it had not been able to bargain through strength as before, when negotiations had begun at a period far remote from the summer It was the "economic problems" arising from the loss of its prior bargaining leverage that the fair sense of the record shows Respondent sought to overcome by the reductions it instituted in February, and it was the reacquisition of that advantage for the future that Respondent sought to achieve by the reductions made.' 5 So the sense of the record indicates that what Respondent was seeking to achieve by these reductions was its use in later negotiations to induce the employees to agree to a January starting date for the new contract. Had Respondent made these reductions when the bargaining representative had already been selected but before any negotiations had yet taken place, it would have been a violation of Section 8(a)(5)-the reason for its not being alleged as 8(a)(5) was (supra, fn. 9) that the representation case had not yet been concluded when Respondent made these cuts But the selec- tion of the representative was in the offing and the reductions contemplated the use of that money to affect the subject matter of future negotiations-whether it be the summer strike of whose avoidance Respondent said it had "no assurance," or the reacquisition in the new contract of a winter starting date as in the past In either instance it provided no valid justification for the invasion of the employees' protected right to engage in a representation proceeding without reprisal or threat for engaging in it. 15 Further tending to support the inference that the reductions were aimed at an effort to reacquire the January starting date for its contract rather than to provide an economic hedge against the possibility of a summer strike is, first, that Respondent made no "economies" other than wages taken from the employees Secondly, though Respondent, in its letter of February 2, claimed no other "economies" were feasible except through reduction of its labor costs, the record shows that it increased labor costs by taking on 16 new employees in the bargaining unit for the period from February 5 to May 1. The figure was based on TWU's own seniority roster of employees in the bargaining unit, and though Respondent sought to undermine that figure by indicating that TWU had no evidence concerning how many replacements they repre- sented , Respondent did not itself supply any figures of its own, though (8) 139 The basic violation here as stated was an interference with the employees' protected right to determine and freely choose their bargaining representative Calculated as it was to obstruct the bargaining process, it was an act of discrimination which inherently discouraged membership in the exclusive bargaining representative, whichever of the rivals it might turn out to be. This is so whether the reductions were made as an economic nest egg to meet a possible strike in the summer, as Respondent claims, or as the facts would seem more pre- ponderantly to indicate, to use these moneys as inducements to the employees to return to the January starting date as before In either instance, there was no "substantial business justification" for the action taken, with the result that Respondent's actions offended Section 8(a)(1) and (3) without regard to whether Respondent was subjectively motivated to bring about the interference and discouragements that flowed from its actions. On the issue of actual motivation, Respond- ent's attributing the reductions to an intended offset to a possible strike-even if not providing a valid justification if genuinely entertained-turns out on the facts to have been a cloak for its actual objective, which was to use the moneys taken from the employees to buy back a January starting date as before. This bears on the genuineness of its motivation, for Respondent must have known and actually intended the normal consequences of its actions and thereby have acted with an antiunion motive. These involved inroads on the employees' right under the Act in a representation proceeding to determine their choice of representative without being threatened or penalized for doing so I accordingly find and conclude that Respondent in making these reductions inter- fered with, restrained and coerced its employees in the exercise of their rights under Section 8(a)(1) and discouraged member- ship in a labor organization in violation of Section 8(a)(3).i 6 IV THE REMEDY The cease and desist requirement should be confined to the specific violation found In essence, it will be a recommenda- tion that Respondent refrain from interfering with the rights of employees to engage in a representation proceeding by threatening to and changing their working terms in order to discourage them from engaging in such a proceeding. As to the affirmative remedy, there is the matter of whether the employees should be made whole for the reductions of their earnings to the extent that they were not fully restored. As stated, Respondent thinks the employees really got all that money back because of the wage increase they received in it was itself in a peculiar position to do so Additionally, Respondent attributes the new hirings to its continuous passenger service require- ment under the certificate of convenience. Nothing apparently reflects the pessimism toward summer operations except the premise asserted for the drastic wage reductions. 16 During the hearing, the Trial Examiner struck certain additional testimony of Company President Flateman and Attorney O'Brien to the effect that with the expiration of the contract expiring on January 15, 1967, Respondent faced a genuine economic problem. This was basically repetitive of what had been fully testified to and does not add to what is already in the record . The answers as proposed would not have changed the results and Respondent was not prejudiced by the ruling. 140 DECISIONS OF NATIONAL LABOR RELATIONS BOARD comparison with the less generous ones of the previous years Respondent can hardly claim to have made these wage increases in order to achieve a restoration of the earnings' reductions The wage reductions, as President Flateman claimed at the hearing and Respondent urges in the brief, reflected the bargaining effectiveness of the employees. There is no specific evidence as to what altogether accounted for them Whether it was due to Respondent's anticipating an increase in the size of forthcoming vacation trade over prior summers, or to the fact that the employees had greater bargaining effectiveness in the spring than they would have had in the winter, or a combination of the two, the increases were one thing, and the reductions visited on them on February 5, were something else again When Respondent proposed that the new contract be retroactive to January the retroactivity as stated (supra, fn. 8), was comprehensive. It included two things, (a) the newly agreed upon working terms whatever the increases, and (b) separately, the restoration of the reductions made on February 5. Since, as has been found, these cuts had been illegally imposed from their inception, there would seem to be no valid basis for withholding full restoration of the reductions to the extent that they have not been restored.' 7 Upon the foregoing facts and on the entire record, I hereby make the following CONCLUSIONS OF LAW 1. By threatening to reduce the wages and eliminate the fringe benefits of its employees because the representation proceeding in which these employees had engaged had not yet been completed, and by so doing, Respondent interfered with, restrained and coerced employees in the exercise of their rights under Section 7 of the Act thereby engaging in unfair labor practices within the meaning of Section 8(a)(1) of the Act. 2. By discriminating in respect to terms and conditions of employment to discourage membership in a labor organization, Respondent engaged in unfair labor practices within the meaning of Section 8(a)(3) of the Act. 3 Said unfair labor practices affect commerce within the meaning of Section 2(6) and 2(7) of the Act. Upon the foregoing findings and conclusions and on the whole record and pursuant to Section 10(c) of the Act, the Trial Examiner hereby issues the following: the cut in wage and elimination of fringe benefits made on February 5, 1967, by restoring these to the extent that Respondent has not done so. (b) Post at its place of business in Mahwah, New Jersey, copies of the attached notice marked "Appendix "' 8 Copies of said notice, on forms provided by the Regional Director for Region 22, after being duly signed by the Respondent's representative, shall be posted by it 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. Reasonable steps shall be taken by the Respondent to insure that said notices are not altered, defaced, or covered by any other material. (c) Notify said Regional Director, in writing, within 20 days from the receipt of this Decision, what steps Respondent 9 has taken to comply herewith." 17 There are two additional items to be considered. (a) Respondent contends (supra, fn . 10) that the negotiations concerning the extent of the restoration of the reductions were an accord, which wiped out its liabilities under the Act This overlooks the public character of the obligation which is not controlled by settlements of the private parties. See Local Union No. 2, Plumbers (Astrove), 152 NLRB 1093 , 1112 , and cases cited , enfd. as modified 360 F.2d 428, 435 (C.A. 2). (b) Though the reductions flowed from and were the result of the representation proceeding in which the drivers and maintenance employees were involved (supra, fn. 4), Respondent imposed these reductions on all employees The result , as stated, was not that this thereby removed the impact upon those in the bargaining unit, but that it extended its impact to all employees for what it specifically sought to achieve in respect to the employees involved in the bargaining unit. The record does not inform us concerning whether and to what extent Respondent restored the reductions made on February 5 to employees outside the unit. However , the policies of the Act call for restoring the reductions made upon all the employees to the extent that Respondent has failed to do so. 18 In the event that this Recommended Order is adopted by the Board, the words "a Decision and Order " shall be substituted for the words "the Recommended Order of a Trial Examiner " in the notice In the further event that the Board's Order is enforced by a decree of a United States Court of Appeals , the words "a Decree of the United States Court of Appeals Enforcing an Order" shall be substituted for the words "a Decision and Order." 19 In the event that this Recommended Order be adopted by the Board, this provision shall be modified to read "Notify said Regional Director, in writing , within 10 days from the date of this Order, what steps the Respondent has taken to comply herewith." RECOMMENDED ORDER Hudson Transit Lines, Inc., its officers, agents, successors and assigns, shall 1. Cease and desist from: (a) Threatening to reduce or reducing employees' wages or to eliminate or eliminating fringe benefits for engaging in a representation proceeding relating to the selection of the employees' collective-bargaining representative. (b) Otherwise discriminating or threatening to discriminate in respect to the terms and conditions of employment to discourage membership in either or both labor organizations that are involved in a representation proceeding. (c) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of their rights protected under Section 7 of the Act. 2. Take the following affirmative action to effectuate the policies of the Act (a) Make whole the losses sustained by all employees for APPENDIX NOTICE TO ALL EMPLOYEES Pursuant to the Recommended Order of a Trial Examiner 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 NOT reduce or threaten to reduce wages or eliminate or threaten to eliminate fringe benefits of our employees for engaging in representation proceedings to determine their free choice of labor organizations to represent them as their collective-bargaining agent. Nor WILL WE otherwise discriminate in respect to the terms or conditions of employment of employees to discourage member-clip in any labor organization involved in such representati,.i proceeding. HUDSON TRANSIT LINES, INC. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of their rights guaranteed them under the Act. WE WILL make whole the losses sustained by all em- ployees for the cut in wage and eliminations of fringe benefits made on February 5, 1967, by, restoring them to all of our employees to the extent that we have not already done so. HUDSON TRANSIT LINES, INC. (Employer) Dated By 141 (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. If employees have any question concerning this Notice or compliance with its provisions, they may communicate di- rectly with the Board's Regional Office, 614 National Newark Building, 744 Broad Street, Newark, New Jersey 07102 Telephone 645-3088.