Federal Cartridge Corp.

FEDERAL CARTRIDGE CORPORATION 121 Federal Cartridge Corporation and Office Employes International Union, Local No. 12, AFL-CIO. Case 18-CA-2418 Upon the basis of the stipulation, the briefs, and the entire record in this case, the Board makes the following: June 21, 1968 DECISION AND ORDER By CHAIRMAN MCCULLOCH AND MEMBERS JENKINS AND ZAGORIA Upon charges filed on May 16, 1967, by Office Employes International Union , Local No. 12, AFL-CIO, herein called the Union, the General Counsel of the National Labor Relations Board, by the Regional Director for Region 18, issued a com- plaint dated November 17, 1967 , against Federal Cartridge Corporation , herein called the Respon- dent, alleging that the Respondent had engaged in and was engaging in unfair labor practices within the meaning of Sections 8(a)(1) and ( 5) and 2(6) and (7) of the National Labor Relations Act, as amended. Copies of the charge , complaint, and notice of hearing were served on Respondent and the Union.' The complaint alleges in substance that the Union has for many years been the exclusive bar- gaining representative of an appropriate unit of of- fice and clerical employees of the Respondent, and that, since on or about April 18, 1967 , the Respon- dent has refused and continues to refuse to recog- nize or bargain with the Union as such exclusive bargaining representative concerning pensions for the employees represented by said Union in viola- tion of Section 8(a)(5) and (1) of the Act. On November 27, 1967, Respondent filed an answer admitting certain allegations in the complaint , affir- matively pleading certain facts, and denying the commission of any unfair labor practices alleged in the complaint. On December 20, 1967, all parties to this proceeding entered into a stipulation by which they waived a hearing before a Trial Examiner and the issuance by him of a Trial Examiner's Decision and Recommended Order and agreed to submit the case to the Board for findings of fact, conclusions of law, and an order, based upon a record consist- ing of the charge, the complaint, the answer, the stipulation of facts, and the exhibits. On January 5, 1968, the Board approved the stipulation and or- dered the proceedings transferred to the Board. Thereafter, the General Counsel, the Charging Par- ty, and the Respondent filed briefs. ' Copies of the complaint and notice of hearing were also served on Local No 459 of District Lodge No 77 , International Association of FINDINGS OF FACT I. THE BUSINESS OF THE RESPONDENT Respondent Federal Cartridge Company is a Minnesota Corporation with its principal place of business located in New Brighton, Minnesota, where it is engaged in the manufacture of small arms ammunition and electrical products. During the 12-month period ending December 31, 1966, which period is representative of all times material herein, Respondent manufactured, sold, and shipped from its location in New Brighton, Min- nesota, finished products valued in excess of $1 million to points outside the State of Minnesota. During the same 12-month period Respondent purchased, transferred, and caused to be delivered to its plant atNew Brighton , Minnesota, brass, steel, and other raw material valued in excess of $1 million directly from States of the United States other than the State of Minnesota . We find, as stipulated by the parties, that the Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act, and that it will effectuate the policies of the Act to assert jurisdic- tion herein. II. THE LABOR ORGANIZATION INVOLVED We find, as stipulated by the parties, that Office Employes International Union, Local No. 12, AFL-CIO, is, and at all times material herein has been , a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES In their stipulation, the parties stated that: Since April 23, 1952, the Union has been the certified bargaining representative of the Respon- dent's office and clerical employees. Presently, this unit consists of some 400 persons , but at the time of the execution of the November 17, 1965, collec- tive-bargaining agreement, wherein the Union waived its right to bargain regarding pensions, the unit consisted of only 18 employees. In the 1965 negotiations between the Respondent and the Union, three separate pension plans to cover the office employees were discussed. Machinists and Aerospace Workers, AFL-CIO, and the I.A M Labor- Management Pension Fund. 172 NLRB No. 14 122 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Although the Employer had agreed to participate in the Western States Office Employees International Union Pension Trust Fund , the trustees of this fund declined to accept the application of these em- ployees because of adverse census data. The proposed employee -participants were substantially older and had more past service to be credited than the other employees covered by the fund. Thereafter, the Respondent offered to include the office employees represented by the Union in a plan it maintained for its guards and firemen. The Union refused this offer and instead proposed that the employees it represented be covered by the In- ternational Association of Machinists Labor- Management Pension Fund , hereinafter the IAM Pension Plan. Since September 1, 1963, the Com- pany had been contributing to the IAM Pension Plan on behalf of its production and machinists em- ployees, pursuant to the terms of an agreement made with their representative , District Lodge No. 77, IAM. The Respondent and the Union reached an agreement to include the office employees as par- ticipants in the IAM Pension Plan in September 1965. This agreement was reflected in certain provisions of their collective-bargaining agreement entered into on November 17, 1965: It is mutually agreed that the Office Em- ployees covered by this Agreement shall be covered as participants in the I.A.M. LABOR- MANAGEMENT PENSION FUND. Contribu- tions to the Fund for Office Employees shall continue so long as Federal Cartridge Corpora- tion has employees for whom it is obliged to contribute to the I.A.M. LABOR-MANAGE- MENT PENSION FUND in accordance with collective bargaining agreements with the In- ternational Association of Machinists. Any change in the contribution rate , amount or level of benefits or the length of time which the I.A.M. LABOR-MANAGEMENT PENSION FUND shall cover employees represented by the Office Employees International Union, Local 12, shall be governed exclusively by agreements negotiated from time to time by the International Association of Machinists and Federal Cartridge Corporation without regard to employees represented by O.E.I.U., Local 12. In consideration of the aforementioned agreement and because of the FUND require- ments, the UNION releases, relinquishes and waives any and all rights to collective bargain- ing with respect to all matters pertaining to pension only, for as long as there is an em- ployee of the EMPLOYER who is represented by the International Association of Machinists and for whom contributions are made to the I.A.M. LABOR-MANAGEMENT PENSION FUND by the EMPLOYER. The collective-bargaining agreement itself was to be effective for 1 year from May 9 , 1965, and from year to year thereafter unless written notice to ter- minate or amend should be given at least 60 days prior to the expiration date or until such time as the Employer, with or without notice , should cease to operate its plant at New Brighton, Minnesota. At the same time that the November 17 collec- tive-bargaining agreement was executed, the Respondent and the Union entered into two other agreements , a participation agreement and a pen- sion fund agreement and declaration of trust. The participation agreement details the amount of the contributions to be made by the Respondent to the IAM Pension Plan on behalf of its office employees and provides , among other things, that the Respon- dent will continue making contributions to the fund for the benefit of the office employees as long as the Company has employees for whom it is obligated to contribute to the pension fund in ac- cordance with a collective-bargaining agreement with a District Lodge of the IAM. This participation agreement was incorporated by reference into the November 17, 1965, collective-bargaining agree- ment . The pension fund agreement and declaration of trust, granting broad but typical fiduicary powers to the trustees, provides, among other things, that the Company and the Union assent to be bound by said agreement and declaration of trust and by the designation of trustees thereunder , and agree to be bound by all actions taken by the trustees ursuant to said agreement and declaration of trust. Article VIII , section 4 of the Rules and Regula- tions of the IAM Pension Plan adopted by the trustees, regarding the termination of the trust, pro- vides as follows: In the event that a Contributing Employer ceases to be obligated to make contributions to the Fund at any time after the period ending 48 months after its Contribution Date, and should that Employer or its successor thereafter continue in business , all years of Past Service credit based on employment with such Employer shall be cancelled retroactively, notwithstanding any contrary provisions con- tained elsewhere in this Plan. This Section shall not apply to any Pensioner whose benefits first became payable prior to the time the Con- tributing Employer ceased to be obligated to make contributions to the Fund , nor shall this Section apply to the Past Service credit of any Covered Employee whose employment with such Employer had terminated at least 24 FEDERAL CARTRIDGE CORPORATION 123 months prior to the time the Contributing Em- ployer ceased to be obligated to make con- tributions to the Fund. In addition, each employee represented by the Union signed an individual waiver agreement wherein he agreed that matters concerning pen- sions would be governed exclusively by agreements negotiated by the International Association of Machinists and the Respondent and that all rights to collective bargaining with respect to all matters pertaining to pensions were waived as long as any employee of the Respondent is represented by the International Association of Machinists for whom contributions are made to the IAM Pension Plan. Beneficiary rights become vested under the IAM Pension Plan after an employee attains the age of 50 with 15 years of credited service. If an employee changes employment prior to meeting these vesting requirements , his beneficiary rights under the Plan are portable only if he is employed by a firm which is also a participant in the plan . In September 1965, at the time the Respondent and the Union first reached agreement on the IAM Pension Plan, there were 18 office employees in the unit in question, all but two of whom were hired between 1950 and 1953. The other two were hired in the spring of 1965. The terms of the participation agreement required that the Respondent contribute on behalf of the office employees back to the date it first began to contribute on behalf of its production and machinist employees ; namely September 1, 1963. The Respondent advised the Union that since it had only first agreed to make contributions to some pension fund on behalf of the office employees in May 1964, it expected the members of the Union to pay the contributions between September 1963 and May 1964. It was agreed and, in fact, contributions were made by the Respondent for this 9-month period by reducing the amount of a wage increase granted to the employees that year. In addition, by virtue of a "special benefit level" clause of the agreement, 5 of the 18 employees, 55 years of age or more on the date the Respondent first began to contribute were to receive reduced benefits. Some- time subsequent to September 1965, 2 of the 18 of- fice employees retired and received , and are still receiving, pensions as provided by the IAM Pen- sion Plan. Five others are eligible to receive pen- sions immediately under the Plan should they choose to retire at this time. During 1966 employment in all departments of the Respondent increased substantially due to a sharp increase in procurement by the United States of small arms ammunition. Correspondingly, the number of employees in the bargaining unit represented by the Union increased from 18 to ap- proximately 400. After this increase, which resulted in large unforeseen contributions to the IAM Pen- sion Plan, the trustees of the Plan agreed to rescind the special benefit level provision regarding em- ployees 55 years of age or older when the Plan commenced and to pay full benefits effective June 1, 1966, for all persons already retired or who would retire in the future. During the negotiations for the 1967 collective- bargaining agreement the Union informed the Respondent that it had determined that the chances of the newly hired employees achieving 15 years service for eligibility benefits under the IAM Pen- sion Plan were remote and that it wished to discuss the entire pension section of the collective-bargain- ing agreement. The Respondent refused to bargain on pensions, and on May 10, 1967, the parties en- tered into a collective-bargaining agreement which provided that pensions would remain as negotiated in 1965, subject to the following provision: "The parties agree that the signing of this agreement does not in any way constitute a waiver of the Union's right to further proceed with the Unfair Labor practice charge, Case No. 18-CA-2418." The General Counsel and the Union contend that the Union's waiver of its right to bargain for an in- definite period of time regarding the mandatory subject of pensions, even though entered into in good faith and for consideration, is unenforceable beyond the term of the contract in which it was in- corporated, and that, consequently, the Respon- dent's admitted refusal to bargain on pensions is violative of Section 8(a)(5) and (1) of the Act. They argue, among other things, that because of the dramatic increase in the size of the unit and because of the restrictive portability features of the plan, which carries over only to firms under con- tract with the IAM, the IAM Pension Plan gains a large windfall, as a far higher percentage of office workers than were anticipated by the actuarial as- sumptions of the plan are likely to leave without ever qualifying for benefits. They also argue that Board policy has been to avoid recognizing waivers of the right to bargain; that such waivers are not en- forced unless clear and unmistakable;2 and that the waiver of the right to bargain for an indefinite period of time regarding a mandatory subject such 2 The General Counsel cites the following cases C & C Plywood Corpora- tion , 148 NLRB 414 , approved 385 U.S. 411, reversing 351 F 2d 224, rehearing denied 386 U.S. 939; Proctor Manufacturing Corporation. 131 NLRB 1166, The Press Company, Incorporated, 12I NLRB 976, 978, Tide Water Associated Oil Company , 85 NLRB 1096, 1098. 124 DECISIONS OF NATIONAL LABOR RELATIONS BOARD as pensions is unenforcable beyond the term of the contract in which it was incorporated.3 The Respondent contends that the agreement as to pensions is separate and distinct from the 1965 collective-bargaining agreement and that it will ex- pire upon the occurrence of a specified event described therein , namely the cessation of its em- ployment of members of the IAM for whom it has made contributions to the IAM Pension Plan; that as such it is a contract for a fixed term as opposed to a contract with an automatic renewal clause or a contract of indefinite duration ; that under Section 8(d) of the Act it is not obliged to agree to modify or terminate the terms thereof until the expiration date ; and that, inasmuch as the expiration date has not yet occurred, the Respondent has no duty to bargain on this subject. In addition, the Respondent points out that if it enters into any other pension ar- rangement, the contributions it has already made might never inure to the benefit of the office em- ployees and those contributions made by the 18 employees in the original unit for the period between September 1, 1963, and May 1964 might also be irrevocably lost. Finally , the Respondent ar- gues that it is unlikely that the trustees of the IAM Pension Plan would agree to any modification of the present arrangement inasmuch as a good part of the contributions made on behalf of the office em- ployees could well inure to the benefit of the em- ployees represented by the IAM. The view we take of this matter makes it un- necessary to determine whether the pension waiver is an agreement for a fixed period , as urged by the Respondent, or one of indefinite duration extending beyond the term of the collective-bargaining agree- ment, as contended by the General Counsel and the Charging Party. Clearly, if the waiver is an agree- ment for a fixed period the expiration date of which has not yet occurred , Section 8 (d) would oblige us to dismiss the Section 8(a)(5) and ( 1) violations al- leged in the complaint . Just as clearly, on the other hand , if it were determined that the waiver was an agreement of indefinite duration , under the princi- ples of Lion Oil Company4 and Boeing Airplane Co. v. N.L.R.B.s it would be subject to amendment or termination after the lapse of a reasonable period upon the giving of the statutory 60 days' notice. Under such circumstances, of course, we could find the alleged violation in the Respondent's admitted failure to bargain regarding pensions . However, as- suming for the moment, but without so finding, that the waiver agreement is one of indefinite duration within the meaning of Lion Oil Company, we do not believe, under all the circumstances present here, that this waiver agreement has yet existed for a reasonable period to make it vulnerable to- amend- ment or termination by the action of either party in giving notice of a desire to terminate or modify. The agreement that the office employees could be covered by the IAM Pension Plan was made in good faith by the Respondent in response to a request by the Union. In fact, Respondent was willing to participate in any one of three pension plans, including one affiliated with various locals of the International Union to which the Charging Party belongs. After the trustees of the latter plan declined to accept the application of the employees involved, the Respondent then agreed to participate in the other plan chosen by the Union. Indeed, the pension plan thus agreed upon was not in any sense "fixed," for as the IAM negotiated any changes, modifications, or amendments to the existing plan, the benefits would of course inure to the office em- ployees as well. In this context, the situation was for practical purposes a limited delegation of the bar- gaining function to the IAM 's negotiations . Signifi- cantly, at the time the charges were filed in this case the Respondent 's participation in the plan had been of less than 2 years' duration. In all these cir- cumstances, and in view of the fact that the waiver in question was, for all practical purposes , the con- sideration given by the Union to obtain for the em- ployees it represented coverage under the very pen- sion plan it urged the employer to participate in and which it now seeks to renegotiate , we believe that sufficient time has not yet elapsed to justify the Union unilaterally terminating the waiver agree- ment. Nor do we find the change in the size and composition of the unit in question, requires a con- trary conclusion. Assuredly, the unit could contract as quickly as it has expanded . The expansion of the unit, therefore, does not persuade us that the waiver agreement to which the parties bound them- selves has been in existence beyond a reasonable period of time . Accordingly, we find that Respon- dent did not violate Section 8(a)(5) and (1) in refusing to bargain with the Union regarding pen- sions whether the waiver agreement be considered ' Both the General Counsel and the Charging Party rely on J . 1. Case Company, 71 NLRB 1 145 The Charging Party also cites Pacific Coast As- sociation of Pulp and Paper Manufacturers , 133 NLRB 690, enfd 304 F.2d 760 (C A 9), and Interborough News Company, 78 NLRB 1089 4 109 NLRB 680, approved N.L.R.B. v Lion Oil Company , 352 U S 282 reversing and remanding 221 F 2d 231 (C.A. 8). " 174 F 2d 988 (C A.D.C.) FEDERAL CARTRIDGE CORPORATION 125 either an agreement for a fixed period or one of in- definite duration . We shall , therefore , dismiss the complaint in its entirety. ORDER It is hereby ordered that the complaint herein be, and it hereby is, dismissed in its entirety. MEMBER BROWN, dissenting: My colleagues assume, and I conclude , that the waiver agreement in this case is of "indefinite dura- tion."' I also agree with my colleagues that an agreement of indefinite duration is subject to amendment after a reasonable period of time. My disagreement, then , is only with their conclu- sion that a reasonable period of time had not elapsed when the Union requested bargaining about the pension plan. In my view, the approaching ex- piration date of the basic agreement between the Office Employes Union and the Employer, opening up all terms and conditions of employment (other than the pension plan) for renegotiations, is the touchstone for determining whether the pension plan itself is similarly open for renegotiations. The parties, in short, have established a "reasonable period of time" by their contract covering other terms and conditions of employment. It would be anomalous to exclude only this one item from the general bargaining . Moreover, I think a drastic change in the composition of the unit (in this case from 18 to 400) must be taken into account in determining what a "reasonable period of time" is in any situation. I would, therefore, find the 8(a)(5) violation al- leged and issue an appropriate bargaining order. It is obviously so, for its expiration is contingent upon an event, the IAM ceasing to represent a single employee of the Employer , which may or may not occur , and which , it it does occur, may happen at any time from its execution to infinity