Intl. Union, United Mine Workers

INTL. UNION, UNITED MINE WORKERS International Union, United Mine Workers of America and Bituminous Coal Operators Association and Dixie Mining Company United Mine Workers of America and its District 17 and Dan S. Davison United Mine Workers of America, Its District 17, its District 28, its Local 6937, R. R. Humphrey and Carson Hibbitts and Ames Coal Company and Bu- chanan County Coal Corporation. Cases 5-CE-8, 5-CE-9-1 thru 2, 5-CC-282-1 thru 2, (formerly Cases 9-CE-12-1 thru 2), and 5-CC-294 (formerly Cases 9-CC-347-1 thru 7) February 26, 1971 SUPPLEMENTAL DECISION AND ORDER On June 16, 1967, the National Labor Relations Board issued its Decision and Order in the above- entitled proceeding, concluding, inter alia, that the 80-cent provision in the 1964 amendments to the Na- tional Bituminous Coal Wage Agreement of 1950 is an agreement prohibited by Section 8(e), and ordering Respondents to cease and desist from (a) maintaining, enforcing, or giving effect to the clause and (b) enter- ing into, maintaining, giving effect to, or enforcing any other contract or agreement, expressed or im- plied, whereby an signatory operator ceases or re- frains, or agrees to cease or refrain, from handling, using, selling, transporting, or otherwise dealing in any of the products of any other employer, or from doing business with any other person, in violation of Section 8(e) of the Act.' On July 2, 1968, the United States Court of Appeals for the District of Columbia Circuit remanded the case to the Board for further consideration.' Subse- quently the Board, pursuant to the court's remand, remanded the case to the Regional Director for Re- gion 5 with instructions that a hearing be held before a Trial Examiner, for the purposes of entering find- ings and conclusions, and to recommend an appropri- ate order, after hearing evidence on three issues which are set forth in the attached Trial Examiner's Supple- mental Decision. On November 27, 1970, Trial Examiner Samuel M. Singer issued his Decision in the above-entitled pro- ceeding, finding that Respondents had engaged in the unfair labor practices alleged in the complaint and recommending that the Board reaffirm its conclusions and order as set forth in the original proceeding, 165 NLRB 467. Thereafter, the General Counsel, Respon- dent United Mine Workers, Charging Party Dixie Mining Company, and Charging Party Dan S. Davi- ' 165 NLRB 467 2399 F.2d 977 753 son filed exceptions to the Trial Examiner's Decision and supporting briefs.3 The Board has reviewed the rulings of the Trial Examiner at the hearing and finds that no prejudicial error was committed. The rulings and hereby af- firmed.4 The Board has considered the Trial Examiner's Decision, the exceptions and briefs, its earlier Decision, the court's remand order, and the entire record in this case, and hereby adopts the find- ings, conclusions, and recommendations of the Trial Examiner as modified hereinafter. The court of appeals remanded this case to the Board for further consideration as to the intent of the parties in agreeing to the 80-cent clause and for a determination as to the validity of the 80-cent clause as a substitute for the Protective Wage Clause (PWC), the union standards clause which it re- placed.' In agreement with the Trial Examiner we find that the evidence in this case establishes: (1) that the intent of the parties in adopting the 80-cent clause was to equalize the differences in the costs of wage and fringe benefits generally existing between mines sig- natory to the National Bituminous Coal Wage Agree- ment and those which are not in order to protect the work opportunities and standards provided UMW members employed by signatory operators; (2) that wage, fringe, and working condition standards of em- ployees in nonsignatory mines are generally lower than those established in the National Bituminous Coal Wage Agreement; and (3) that the 80-cent pay- ment to which signatories are obligated on nonsigna- tory coal purchases bears a reasonable relationship to the wage and fringe benefit differentials between em- ployees of signatory and nonsignatory operators. In making this third finding we find in agreement with the Trial Examiner that this relationship is to be de- termined by the hourly wages and the fringe benefits received by the employees and not by the unit costs, or per ton costs, of production as urged by the Gener- al Counsel and the Charging Parties 6 On the basis of 3 Thereafter, several steel producting companies (United States Steel Cor- poration , Bethlehem Steel Corporation; Jones & Laughlin Steel Corpora- tion, Republic Steel Corporation, C F & I Steel Corporation; Inland Steel Corporation, and Youngstown Sheet and Tube Corporation) filed a request for leave to file exceptions, the time for filing having expired, together with exception and a supporting brief. The request for leave to file these excep- tions is hereby denied as these companies are not parties to the proceeding before the Board. However, the Board has deternuned that the brief is in the nature of an anucus curiae brief and has considered it on that basis The remanded hearing was opened by Trial Examiner Paul E. Weil. After 2 days of hearings Trial Examiner Weil disqualified himself. The evidence received by him on August 25 and 26 was stipulated into the record when the hearing was resumed on September 16, 1970. Our review and affirmance of the rulings of the Trial Examiner include the rulings of both Trial Examin- er Weil and Trial Examiner Singer 5 In essence the PWC provided that operators agreed that all bituminous coal mined, produced, or prepared by them, or any of them, be acquired by them, or any of them, under a subcontract arrangement shall be or shall have been mined or produced under terms and conditions which are as favorable to the employees as those provided for in the contract. 6 However, even if we were to resolve the issue on the basis of the per ton (Continued) 188 NLRB No. 121 754 DECISIONS OF NATIONAL LABOR RELATIONS BOARD these findings, we conclude that the 80-cent clause functions as a union standards clause in protecting and preserving the work of employees working under the UMW agreement and the standards under which such work is performed by removing the economic incentive to subcontract such work stemming from the lower wage and fringe benefit costs of nonsignato- ry mines. In the light of that conclusion we do not agree with, and therefore do not adopt, the Trial Examiner's conclusion that because there exists a multiplicity of bargaining units under the UMW agreement "the 80-cent clause was neither intended to function, nor functioned, to protect work `fairly claimable' by a particular bargaining unit." The validity of a union standards clause lies in the fact that it removes the economic incentive to subcon- tract unit work to employers maintaining substandard conditions of employment which enable such employ- ers to perform the work at cheaper labor costs. By removal of the economic incentive, a union standards clause protects and preserves unit work precisely to the extent that the economic incentive to subcontract- ing is the compelling consideration. Under any union standards clause, the signatory employer is not re- strained from subcontracting work to employers in another bargaining unit covered by similar wage con- tractual provisions. Such subcontracts may of course be made for other than economic reasons; however, the fact that such subcontracting is permitted does not detract from the fact that the object of such clause is to preserve and protect unit work. This was as true of the PWC as it is of the 80-cent clause. Accordingly, we find that the existence of a multiplicity of bargain- ing units does not preclude the 80-cent clause from functioning as a union standards clause as it was in- tended to do.7 Nor do we find the other considerations relied upon by the Trial Examiner as militating against our con- clusion. The fact that some signatories have ceased buying coal from nonsignatories in order to avoid the labor cost we would still find that the differential between signatory and nonsignatory operators bears a reasonable relationship to the wage and fringe benefit differential in terms of the "broad equation" suggested by the court of appeals. In doing so we agree with the Trial Examiner that Dixie witness Abraham's analysis is defective , for the reasons stated by the Trial Examiner, and with the General Counsel and Charging Parties that the Trial Examiner's analysis is defective in that he fails to take into account the fact that nonsignatory mines are, in general, less efficient than signatory mines However, while both Abraham's analysis and the Trial Examiner's analysis are defective, the extent of the defects in each analysis cannot be determined and therefore the precise per ton costs cannot be ascertained Despite this difficulty, the two differing results tend to establish the possible range within which the actual cost would be found We note that the figure agreed to by the parties to the national agreement is very near the midpoint of the range Thus, although the data available is imprecise , we conclude that even on the basis of per ton costs the differential agreed to by the parties bears a reasona- ble relationship to the actual difference in costs. 7 Member Jenkins does not adopt any inference that, so far as the clause and the Welfare Fund are concerned, there is a "multiplicity of bargaining units." 80-cent payment imposed by the contract merely bears out the fact the clause does in fact remove the economic incentive to purchase coal mined under substandard conditions of employment. This is, of course, a valid function of a union standards clause. Nor, as we noted in Galligan, does the fact that some nonsignatory operators may have been encouraged to become signatories to improve the marketability of their coal detract from the validity of the clause.$ Sim- ilarly, the fact that the clause as written would appear to impose an 80-cent payment on coal purchased from Mid-Continent Coal Company, shown on the record to maintain roughly comparable standards, is not a sufficient basis for finding the clause to be unlawful. The record shows that the contracting parties decided upon the imposition of the 80-cent payment on coal on which the 40-cent-per-ton royalty has not been paid as a means of equalizing the costs of production of coal whether or not it was produced under the contract and that the 80-cent payment does in general equalize such costs. It is to be expected that a broad equation designed to equalize costs in an industry of diverse production units will not bear exactly equally upon every one in the industry. Moreover, insofar as this record shows, only one nonsignatory operator, Mid-Continent, can be said to maintain standards roughly comparable to the standards established in the UMW agreement. And while it is true that the clause can be read as imposing an 80-cent payment on coal purchased from Mid-Continent, the record also shows that Mid-Continent does not sell coal to signa- tories to the instant agreement as it sells all of its coal to steel companies.9 Accordingly, we are unwilling to find that the evidence concerning Mid-Continent and possible application of the 80-cent clause to purchase from it requires a finding that the clause, which in other respects functions as a union standards clause for the ostensible purpose of preserving and protect- ing unit work, is invalid. Finally, there remains the question of whether the failure of the clause to distinguish between "supple- mental" (coal of a type or quality which could not be produced by the purchasing signatory or by a signato- ry in his bargaining unit) and "substitute" (coal which could be produced from the properties of the purchas- ing signatory or from those controlled by other signa- tories in his bargaining unit) coal requires a finding that it is not limited to preserving work germane to the 8If such operators after becoming signatories failed , with either UMW approval or acquiescence, to establish or maintain union standards the clause might be viewed as a union signatory clause as applied to them. However, as the Trial Examiner found, the record does not support Dixie Mining Company's contention that the UMW authorized any signatory operator to do less than comply with the terms of the agreement 9 The steel company contracts with the UMW do contain a clause provid- ing that if during the life of the agreement the 80-cent clause is found lawful by the court of last resort the steel companies will bargain with the UMW as to what action may be appropriate under the then existing contract. INTL. UNION, UNITED MINE WORKERS economic integrity of the unit.10 The record does not contain any evidence which would show that the inci- dence of the purchase of supplemental coal is other than de minimis. Accordingly, for the reasons stated in Galligan, we conclude that the possible application of the 80-cent clause to supplemental coal is insufficient to establish that the parties entered into the clause for a secondary object or that the failure to distinguish between substitute coal and supplemental coal gives the clause wider application than necessary to pre- serve and protect unit work and standards." Accordingly, we find that the 80-cent clause does not contravene Section 8(e), and we shall dismiss the complaint." ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, and upon the entire record in this case, the National Labor Relations Board hereby orders that the complaint herein be, and it hereby is, dismissed in its entirety. CHAIRMAN MILLER and MEMBER BROWN , dissenting: We cannot agree with our colleagues that the clause in dispute is lawful. We are dealing here with Section 8(e), which requires that we construe contractual lan- guage adopted by the parties. The lawfulness of the clause does not depend upon the parties' subjective intent in executing the clause or upon their conduct in enforcing it, although the latter is properly our concern under Section 8(b)(4)(i)(ii)(A). Thus, where the practical effect of contractual language compre- hends a prohibited objective which is not merely inci- dental to protection of the employees of the contracting employer,13 it is unlawful even though not enforced in an illegal fashion. Conversely, a clause may be lawful on its face but the conduct of the parties may reveal an understanding and interpreta- tion which is outside the statutory protection.14 We are persuaded that the 80-cent clause is an im- plied union signatory clause, and not a union stand- ards clause as found by our colleagues. Clearly, as the Mid-Continent example demonstrates, signatories are required to make the 80-cent payment on coal pur- chased from nonsignatories even though the wage and fringe benefit standards of the nonsignatory may be comparable to or even better than those established in the UMW contract," while no such payment is im- posed on coal purchased from signatories. This view is strengthened by the fact that the clause operates to prohibit the contracting employers from purchasing even supplementary coal; that is, coal of a type or quantity which could not be produced by their own employees. At least to that extent the clause has a secondary thrust extending beyond the protection of 755 area standards, or the preservation of unit work or of work fairly claimable by the employees covered by the contract. Accordingly, even though we accept the Trial Examiner's findings that the parties adopted the clause in order to equalize the wage and fringe benefit costs of signatories and nonsignatories, we must find that the parties have failed to embody their purpose in language that operates in a lwaful manner.16 There- fore, notwithstanding the holding of the Galligan deci- sion and other related prior holdings, we would find the clause herein to be violative of Section 8(e). 10 As the decisions in Galligan make clear, it is only with respect to this issue that the scope of the bargaining unit or units becomes relevant to a determination of whether a union standards clause may be said to protect work beyond or outside of a particular bargaining unit 11 While Member Kennedy views the conclusions reached in this case warranted on the facts adduced under the hauted scope of the record, he would limit the decision to the peculiar facts of this case. 12 As the allegations of Sec. 8(bx4)(i) and (sXA) and (b) violations are dependent on our finding that the 80-cent clause violates Sec. 8(e), we shall also dismiss these allegations of the complaint. 13 "The touchstone is whether the agreement or its maintenance is ad- dressed to the labor relations of the contracting employer vis-a-vis his own employees " National Woodwork Manufacturers Association, eta!, v. N. LR.B , 386 U.S 612. 14 See the general discussion of principles in Local Union No. 26, Sheet Metal Workers (Reno Employers Council), 168 NLRB 893, 898-899. 15 The 80-cent payment is imposed on coal on which the normal 40-cent- per-ton royalty has not been paid into the UMW welfare fund. Of course, such 40-cent payment is made only on coal mined under UMW contracts. Were the clause to require the 80-cent payment on all coal purchased from producers who maintain conditions of employment less favorable to employ- ees than those established in the UMW contract, a different answer might be required. Accordingly, it is clear that notwithstanding Mid-Continent's working conditions , the 80-cent payment would have to be made if the signatory employers made purchases from that firm, and since it is used merely as an example of the application of the clause it is immaterial that in fact Mid-Continent sells only to steel companies 16 We agree with the Trial Examiner that: The evidence adduced in the remand proceeding does not detract from the findings and conclusions of the Board in the earlier proceeding, premised upon the Board's undisturbed determination that the various bargaining units (and not a single industry-wide unit) are the sole units for which the Union may seek to preserve work opportunities and stand- ards. The record developed in the instant hearing was devoted to an inquiry on the wage and fringe benefit differentials between signatory and nonsignatory mines and also the intent of the parties in adopting the 80-cent clause, rather than to the secondary impact of the clause. TRIAL EXAMINER'S SUPPLEMENTAL DECISION STATEMENT OF THE CASE SAMUEL M. SINGER, Trial Examiner: This proceeding was tried before me in Washington, D.C., on various dates between August 25 and September 29, 1970, pursuant to an order of the Board, issued April 24, 1970, reopening the record for the purpose of receiving evidence on issues enu- merated in its order.' All parties appeared and were afforded full opportunity to be heard and to examine and cross-examine witnesses. Their briefs were received on October 23, 1970.2 1 The remanded hearing, originally opened by another Trial Examiner on August 25, was closed on August 27, 1970, after that Trial Examiner disqual- ified himself. The evidence received by him on August 25 and 26 was stipulat- ed into the record when the hearing resumed on September 16, 1970. 756 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Upon the entire record,3 the briefs, and my observation of the testimonial demeanor of the witnesses , I make the following: SUPPLEMENTAL FINDINGS OF FACT A. Background and History of the Proceeding; the Issues Involved 1. Introduction The basic issue in this proceedin4 concerns the legality, under Section 8(e) of the Act, of the `80-cent clause" incor- porated into the National Bituminous Coal Wage Agree- ment of 1950 (as amended in 1964), successor to the Protective Wage Clause established in that agreement.4 The 80-cent clause in essence requires a signatory to the Nation- al Agreement to pay 80-cents-a-ton royalty into the United Mine Workers ("UMW") Welfare and Retirement Fund on all bituminous coal "purchased or acquired" for use or sale from nonsignatory operators; the welfare-retirement royal- ty is only 40 cents per ton for coal produced by or acquired from signatories.5 The Protective Wage Clause ("PWC"), incorporated into the National Agreement in 1958, required that all coal mined or procured by signatories through subcontracts "be mined or produced under terms and conditions which are as favorable to the employees as those provided for in this contract "6 Both clauses have been the subject of long and intensive litigation before the Board, the United States Court of Appeals for the District of Columbia Circuit, and in civil actions before United States district courts. As pres- ently indicated, the Board considered PWC in three pro- ceedings, concluding in the first two that it was not lawful and in the third that it was. The 80-cent clause was twice considered by the Board and both times found unlawful. 2 The posthearing motion of Mid-Continent Coal and Coke Company to file a brief amicus is hereby granted . Evidence relating to Mid-Continent's operation was received at the remanded hearing Transcript corrected by my orders dated November 9 and 19, 1970 4 Section 10(e), the so-called hot-cargo provision, makes it an unfair labor practice for a labor organization and employer "to enter into any contract or agreement, express or implied, whereby such employer ceases or refrains or agrees to cease or refrain from handling , using, selling, transporting or otherwise dealing in any of the products of any other employer, or to cease doing business with any other person " 5 Insofar as here pertinent, the SOcent clause, effective April 2, 1964, provides: During the life of this agreement there shall be paid into such Fund by each Operator signatory hereto the sum of forty cents (40 cents) per ton of two thousand (2000) pounds on each ton of bituminous coal produced by such Operator for use or for sale. On all bituminous coal procured or acquired by any signatory Operator for use or for sale (i e , all bitumi- nous coal other than that produced by such signatory Operator) there shall, during the life of this Agreement , be paid into such Fund by each such Operator signatory hereto or by any subsidiary or affiliate of such Operator signatory hereto the sum of eighty cents (80 cents) per ton of two thousand (2000) pounds on each ton of such bituminous coal so procured or acquired on which the aforesaid sum of forty cents (40 cents) per ton had not been paid into said Fund prior to such procure- ment or acquisition. e Insofar as pertinent, the Protective Wage Clause read' "It is recognized that when signatory operators mine , prepare, or procure or acquire under subcontract arrangements , bituminous coal mined under terms and condi- tions less favorable than those provided for in this contract, they deprive employees of employment opportunities, employment conditions and other benefits which these employees are entitled to have safeguarded, stabilized and protected Accordingly, the Operators agree that all bituminous coal mined, produced, or prepared by them, or any of them under a subcon- tract arrangement , shall be or shall have been mined or produced under terms and conditions which are as favorable to the employees as those provided for in this Contract" The court of appeals has reviewed each of the clauses once, each time remanding the proceeding for the receipt of addi- tional evidence and for further consideration.7 The consid- erable litigation involved and the division of the Board itself on the posed issues attest to the complexity and closeness of the questions involved.8 2. History of the Proceedings In its first decision on PWC, issued August 27, 1963, a 3-member panel of the Board (one member dissenting) held that PWC contravened Section 8(e) of the Act. Raymond O. Lewis (Arthur J. Galligan), 144 NLRB 228 ." On September 20, 1963, the Board denied a motion to reconsider that decision en banc, indicating it had been "unable to arrive at a majority decision disposing of the matter."10 Thereafter, another motion was filed by UMW, requesting the Board to declare valid and lawful the then recently negotiated 80- cent clause, which, it was alleged, "fully and completely supplants and supersedes" PWC. On August 7, 1964, the Board (one member dissenting) held, on the basis of a stip- ulated record, that the 80-cent clause was likewise illegal and, accordingly, denied the Union's request that it be ad- judged in compliance with the Order entered in 144 NLRB 228. See Galligan, 148 NLRB 249. Rejecting the Union's contention that the 80-cent clause was "lawful because its purpose is to preserve and protect the work of employees in the industry-wide unit" (148 NLRB at 253), the majority stated that on the basis of the "statements of the negotiating parties as to the purpose and impact of the clause, and, in view of the economic and industrial realities obtaining in the coal mining industry as set forth in the stipulated record, we find that the clause imposes a substantial hardship upon signatory operators who procure or acquire coal from non- signatory sources, a penalty which is not imposed if the procure or acquire coal from other signatory Operators. ' (Id. at 252-53.) Accordingly, the Board concluded that "re- alistically appraised [the 80-cent clause] is nothing more than an implied union signatory agreement restricting sub- contracting of work to operators under contract with the UMW, without regard to unit considerations." Id at 255). The dissenting member (Member Jenkins) would have held the 80-cent clause valid as a lawful work-preservation and union-standards clause since, in his view, the object of the clause was to restrict purchases from and subcontracting to operators "who can produce more cheaply because of lower wages and lower standards of benefits" and since the clause "does assure that a welfare fund royalty will be paid on all coal the production of which is subcontracted by any Signa- ' For non-Board cases in which PWC and the 80-cent clauses were in- volved or commented on see e.g, Lewis v. Pennington , 257 F.Supp. 815, 821-825 (E D Tenn), Lewis v. Pennington, 400 F 2d 806 (C.A 6); Ramsey v U M W, 265 F Supp 388 (E D Tenn) See also U M W. v. Pennington, 381 U S 657 In Riverton Coal Company v U M W, Civil Action Nos. 5805 and 6730, the United States District Court for the Southern District of Ohio (W D ), recently determined that Riverton (an affiliate of Charging Party Davison) was not entitled to damages sustained from the 80-cent clause; Judge Hogan concluded that that clause did not run "afoul" of Section 8(e) of the Act The district court's findings and conclusions are not binding in this proceeding W W Wallwork Fargo, Inc, 123 NLRB 91, 113, fn.33. S Counsel for all parties are to be commended for the comprehensive and helpful briefs submitted, particularly in view of the limited time afforded to prepare them in order to help meet the deadline set by the court of appeals for completion of these proceedings. In addition to the over 2,000 pages of testimony adduced in the original and remanded hearings, the record in- cludes voluminous exhibits-much of it economic and statistical data. 9 Hereafter referred to as Galligan 10 See Trial Examiner A Bruce Hunt's Decision in the original hearing in this case, 165 NLRB 467, 471, fn 6 INTL. UNION, UNITED MINE WORKERS tory Employer as well as upon coal produced by that Em- ployer itself." (Id. at 257.) The Board again reviewed the legality of the 80-cent clause in the instant proceeding, after a hearing conducted by Trial Examiner A. Bruce Hunt. t t As Trial Examiner Hunt noted in his decision, he and the parties had been "advised" that the Board did not "regard" the decision in 148 NLRB 249, supra, based on a stipulated record, "as finally disposing of" the issue. (165 NLRB 467, 470.) On March 17, 196d,' the Board, affirming the Trial Examiner, reaffirmed its previous determination in 148 NLRB 249 that the 80-cent clause was unlawful under Setion 8(e) of the Act, stating that: "construed in the light of the economic realities of the bituminous coal industry, the clause constitutes an implied agreement between the Union and signatory opera- tors that the signatory operators will purchase coal only from other signatory operators." (165 NLRB at 467.) The Board also said (Id at 468): under the clause in this case, a producer could purchase coal from any signatory operator, regardless of whether the latter is within the producer's own employer associ- ation (bargaining unit), without being required to make the 80-cent payment. Therefore, since the operators from whom he might obtain additional coal-be it sup- plemental or substitute-without the penalty are not limited to those within the unit, the clause cannot be said to preserve work opportunities for employees in that unit. Nor does the 80-cent penalty clause qualify as a wage-standards provision designed to prevent the undermining of established working conditions in the principal work unit ... because a penalty is imposed whenever unit work is subcontracted to nonsignatory operators without regard to the wage standards of such employers.12 Member Jenkins again dissented for the reasons he previ- ously stated in Galfigan, emphasizing that in his view there exists a single industrywide bargaining unit for welfare fund matters," that the majority 's conclusion does not comport with prior Board holdings that "the disruption of long-es- tablished business relationships was a circumstance suffi- cient to establish an unlawfulPsecondary object within the intent of Section 8(e)," and that the Board's decision "can stand only if in determining the legalit of the clause we substitute ourjudgment for that of the Union as to what the amount of compensation to the welfare fund should be to equalize the wage standards throughout the industry and 11 The main charging parties in this case are Dixie Mining Company ("Dixie"), a nonsignatory, and Dan S Davison ("Davison"), a signatory to the national agreement . The latter signed the national agreement negotiated between UMW and the Bituminous Coal Operators Association ("BCOA") after separate "negotiations " The unfair labor practice charges filed by Davison with Region 9 of the Board were consolidated with others filed with Report 5. The instant proceeding will sometimes be referred to as Dixie The Board in the instant case (Dixie), as previously in Galligan, found the appropriate units to be a multiemployer association unit (e.g , BCOA) or a single employer unit (e.g., Davison, supra, In 11) "for which separate nego- tiations are conducted with UMW" (Dixie, 165 NLRB at 468), rejecting the Union's contention that all signatories to the national agreements (BCOA, other associations, such as Southern Coal Producers Association, and inde- pendent operators) constitute a single unit, simply because the agreements they signed (national agreements) contained uniform terms. See also Galh- gan, 148 NLRB 249, 254, and 179 NLRB No. 80, infra) The issue of validity of the Board's unit determination is not presented in this remand proceeding. 13 In addition to finding that the Union and BCOA violated Section 8(e) by entering into the 80-cent clause, the majority found that the Union violat- ed the secondary boycott prohibitions of Section 8(bX4)(i) and (iiXA) and (B) of the Act by inducing and encouraging employees to strike and by threaten- ing, coercing, and restraining employers with objects of forcing or requiring said employers to become signatories to the 80-cent clause 757 protect the integrity of the industrywide welfare fund." (165 NLRB at 469.)_3 In the meantime, the Galligan case, involving legality of PWC, came up for review before the Court of Appeals for the District of Columbia (350 F.2d 801). In a decision issued August 4, 1965, the court (per Chief Judge Bazelon) remand- ed the case to the Board for further consideration "in light of [other] recent cases" by that court upholding the legality of union-standards clauses so long as they were "germane to the economic integrity of the principal work unit" or sought "to protect andpreserve the work and standards [the union] has bargained for." (350 F.2d at 802.) After a supple- mental hearing on the question, Trial Examiner Frederick U. Reel on June 20, 1967, issued his Decision finding PWC lawful and recommending dismissal of the complaint. (179 NLRB No. 80) Based on the record before him, Trial Exam- iner Reel concluded that "The avowed purpose of ... the Protective Wage Clause is directed at restoring employment opportunities to employees covered by the contract which they were losing because cheaper labor was making it more profitable to signatory operators to buy cheaper labor to buy cheap coal than to produce their own.... [T]he Protec- tive Wage Clause bears more than an incidental relationship to protecting the work standards set in the basic agreement. . [I]t operates to encourage, but not to compel, the unor- ganized segment of the industry to become signatory to the agreement." Thereafter, on June 2, 1968, the District of Columbia Circuit remanded to the Board the instant (Dixie) case in- volving the 80-cent clause which had come for review before it. The court (per Chief Judge Bazelon), taking cognizance of Trial Examiner Reel's decision in Galkgan (referred to in the court's opinion as Boyle), which was then pending be- fore the Board, and Member Jenkins' dissenting opinion in Galli an 148 NLRB at 256), stated (399 F.2d at 980-81): since the 80-cent clause is by everyone's admission and our characterization a substitute for the union stand- ards clause, it is the Board's responsibility to carefully consider whether, in fact, it functions as one. If it is a union standards clause and the Board affirms Boyle, the 80-cent union standards clause would seem to be a valid provision. Conceivably the parties could have agreed on a money figure which in their judgment rep- resents a broad equation for the difference in standards throughout an industry of diverse production units. It is true that the Board found that this was not a union standards clause "because a penalty is imposed whenever unit work is subcontracted to nonsignatory employers." But the Board's conclusion is not back- stopped by the type of factual support developed by the Examiner in Boy_ le. It also appears contrary to the result in Boyle, which suggests that most nonsignatories have subunion wage, fringe and working condition stand- ards. R In view of these facts, and the history of the Union's efforts to deal with the problem of substitute coal through a union standards clause and its substitute 80-cent clause, the Board should have made a full in- quiry into (1) the intent of the parties making this agreement, and (2) its validity as a surrogate union standards clause. 758 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On November 4, 1969, a majority of the Board affirmed Trial Examiner Reel's decision in Galligan, upholding his finding that PWC was valid and lawful. 179 NLRB No. 80. 14 The Board stated: The Court of Appeals remanded this case to the Board for consideration of certain issues in the light of the Board's characterization of the Protective Wage Clause as "a union standards clause " and the Court's holding in certain decisions that "such a clause would not ordinarily violate 8(e) so long as it was germane to the economic integrity of the principal work unit; or sought to protect and preserve the work and standards [the Union] has bargained for." [citation omitted] In view of the Trial Examiner's findings and conclusions on the issues remanded to him which we find are su pp -ported by the record in this case , we find that the Protective Wage Clause was adopted by the contract- ing parties in order to protect and preserve the "unit work" of employees covered by the contract by pre- cluding the subcontracting of "unit work" to operators who did not maintain union standards. In conformity with the court's decision in the instant (Dixie) case, the Board on April 24, 1970, ordered that the record be reopened and a hearing be held by a Trial Exam- iner to receive evidence on the following three issues: (1) the intent of the parties in adopting the 80-cent clause; (2) whether the wage, fringe and working condition standards of employees of nonsignatory coal operators are generally lower than those established under the National Bituminous Coal Wage Agreement; and (3) whether the 80-cent payment bears a reasonable relationship to such differential as may exist. The Board further directed that, unless the parties waived their rights thereto, the Trial Examiner enter findings and conclusions, and make appropriate recommendations, based on the evidence received in the remanded hearing, the record previously made, and the opinion of the court of appeals. B. The Remanded Issues 1. Introduction In accordance with the Board's remand order, evidence was adduced in the reopened hearing bearing on (1) intent of the parties in adoptinthe 80-cent clause; (2) the differ- P, entials, if any, in wages, nge benefits, and working stand- ards "generally" prevailing among signatory and nonsignatory employees ; and (3) reasonableness of the 80- cent payment (to the UMW Welfare Fund) to such differen- tial as may exist. All three issues appear to be interrelated- all bearing on the objective of the 80 -cent clause . Thus, as to (2) and (3), if the differentials in wages and benefits approximate 80 cents, then a reasonable relationship is es- tablished warranting the inference that the object of the 80-cent clause was to preserve work and protect work stand- ards by equalizing labor costs and benefits in the two sectors 14 The lead opinion was signed by Members Fanning and Brown, Member Jenkins concurred , relying on his earlier (then dissenting) opinion in Galligan 148 NLRB 249) that PWC (predecessor of the 80-cent clause) "had a work protection object and did not violate the Act" The then Chairman Mc- Culloch dissented, being of the view that the General Counsel had adduced sufficient evidence to show a prima facie case that PWC had prohibited objectives and that it was up to Respondents to rebut this by establishing work-preservation and work-standards functions. An appeal from Board's decision is pending before the District of Columbia circuit, sub nom, Dixie Mining Company v. N L R B, No. 23,947. of the coal industry (signatory and nonsignatory mines). On the other hand, if the differentials are significantly lower, it may properly be inferred that a penalty was contemplated to compel nonsignatories to sign the national agreement or else cease doing business with the signatories. As indicated below (sec. B. 2) the evidence on "intent" is largely confined to the testimony of a UMW official (John Owens) concerning the negotiations leading to inclusion of the 80-cent clause in the April 1964 UMW-BCOA collective agreement. As also indicated, based on that testimony (to the extent credited) and the generally well-known economic facts of the coal industry when the clause was adopted, it is found that the 80-cent clause was intended to offset differ- ences in wages and fringe benefits generally existing be- tween signatory and nonsignatory operators in order to preserve the work opportunities and standards of UMW members and employees covered by the national agreement with BCOA and other operators in the coal industry. As further indicated (sec. B. 3 and 4), the evidence on the differentials involved and their relationship to the 80-cent payments consists largely of economic and statistical data and, to some extent, of testimony of witnesses. While all parties agree that there are demonstrable differentials, they differ as to the magnitude thereof and as to whether the 80-cent clause is a reasonable equalizer . For reasons to be indicated, it is found that although no precise figures are ascertainable, the differentials between signatory and non- signatory wages and benefits, particularly during the most relevant period here in question (1962-1963)--just prior to adoption of the clause involved-closely approximated 80 cents. In my considered opinion, these findings on the remand- ed issues are not, however , dispositive of the ultimate issue in this case; namely, whether the 80-cent clause is a valid work-preservation and union-standards clause or an invalid signatory clause, aimed at eliminating or restricting signato- V subcontracting to, and purchases from, nonsignatories. he Board's order directs me to make findings and conclu- sions based on the records developed in both this and in the original hearing, in the light of applicable legal principles. As I see it, the record developed in the reopened hearing relates primarily to only one of the findings of Trial Exam- iner Hunt (approved by the Board), viz, that there was no evidence in the original record that "the Union' s initial proposal, or the contract figure of 80 cents, or any other figure could be reasonable compensation" to the Union for differences between signatory and nonsignatory wages and benefits to support UMW's "contention that the 80-cent provision is intended to protect employees' job opportuni- ties." (165 NLRB at 476-477.) Since it is here now found that "reasonable compensation" did exist to justify a find- ing that work preservation (as well as union standards pro- tection) was an objective, I must still pass on the question whether the 80-cent clause fails to meet the test of validity on other grounds. Trial Examiner Hunt and the Board found the clause illegal on the g' ounds: (1) even if qualify- ing as a work-preservation and union-standards provision, the 80-cent clause was aimed at protecting UMW- pmembers generally rather than members of particular bargaining units; (2) the 80-cent "penalty" was imposed "whenever unit work is subcontracted to nonsignatory operators with- out regard to the wage standards of such employers" (165 NLRB at 468); and (3) that, viewed in the light of "the economics of the bituminous coal industry," the clause has forseeable and serious secondary effects "causing nonsigna- tones to become signatories or to lose signatories as a mar- ket for their coal." (165 NLRB at 477.) The court of appeals did not reach any of these questions; nor would it have had INTL. UNION, UNITED MINE WORKERS to if it were found that the 80 -cent payment had no reasona- ble relationship to the wage and benefit differentials be- tween signatory and nonsignatory mines . For reasons to be shown sec. C), the evidence introduced in the renewed hearing fortifies the correctness of the original Board deci- sion that the 80-cent clause does not meet the test of validi- ty, principally because it was designed to function, and functions, to protect work opprotunities and standards be- yond the established bargaining units. Under Board law, the units for which a union may lawfully seek such protection are confined to the appropriate units for collective bargain- ing established under Section 9 of the Act. 2. Intent of the parties in adopting the 80-cent clause As Trial Examiner Hunt found (165 NLRB at 471-472), the UMW-BCOA negotiations on the 1964 collective agree- ment began in December 1963, about 4 months after the Board initially found PWC invalid, and terminated on March 23,1964 . Only UMW Secretary-Treasurer John Ow- ens testified on the genesis of the 80-cent clause in the original hearing. According to Owens, the three union neggo- tiators first discussed among themselves a proposal to de- mand a $1-a-ton royalty on nonsignatory coal. Owens testified that the "purpose" of the proposal was "to preserve as far as possible the job opportunities of our members under the terms of the contract and to prevent as far as possible ... contracting or subcontracting out of work by coal operators that signed the agreement." Further, accord- ing to Owens, the three BCOA representatives "absolutely" opposed the Union's demand. Ultimately, the operators agreed to the Union's reduced 80-cent proposal in lieu of PWC. According to Owens , the Union believed that this figure would "reasonably compensate [the members] for work lost and protect their equity in the Welfare Fund." Trial Examiner Hunt found that Owens' testimony "shed[s] little, if any, light on the details of the negotiations which resulted in adoption of the 80-cent provision ." (165 NLRB at 471-472.)ts At the remand hearing, Owens again was the only witness to testify on the 80-cent clause.16 This time, Owens supplied more details, including the economic considerations which led to the Union's initial $ 1 proposal and the manner in which the $ 1 figure was computed. As before, Owens stressed the work-opportunity objective of the clause, stat- ing that "the primary purpose of it was to protect the wage standard of the coal miners who were signatory coal opera- tors and the work opportunity that provided for [sic] under the contract; and to protect the fringe benefits ; and to build up an equity when these men are superannuated and they become so they can no longer labor in the coal mines...... He explained that when (in August 1963) the Board declared PWC "illegal" it was decided "to negotiate a new section that would protect our people " from signatory operators' practices of "leasing, subleasing and buying coal from nonsignatory operators' and, to this extent, "keeping their mines idle." According to Owens , the "sub-leasing and sub-contracting" signatories were paying $7 to $10 a day less wages than called for in the previous (1958) collective 15 Trial Examiner Hunt believed that Owens had "withheld information concerning the negotiations" and characterized him as "not a candid wit- ness." (165 NLRB at 472 ) 16 Although, as indicated, at least two other union and several BCOA representatives participated in the negotiations , unexplamedly none was called to testify , Respondent BCOA and Charging Parties called no one to contradict Owens. 759 agreement and were avoiding the 40-cent-per-ton royalty provided therein. He also testified that these arrangements 'destroyed the work time" of the union miners and so idled them that their work days in 1963 dropped to less than 200 days. As to the $1 royalty initially proposed by the Union, Owens testified that the figure was computed as follows: (1) the average wage cost differential between signatory and nonsignatory coal was $7 to $10 per day; (2) the average welfare payment differential, determined by multiplying 40 cents by 14 (the average tons per man day mine output), was $5.60; (3) adding a $9 a day wage differential (a figure between $7 and $10) to the $5.60 welfare differential amounted to approximately $14 per day; and (4) the result- ing $14 difference in cost was the equivalent of $1 per ton. Contending that Owens in the original hearing was strangely silent about the mathematical computation which allegedly led the Union to propose the $1 figure, although ample opportunity to describe this had been afforded him, Dixie characterizes Owens' explanation (br. p. 39) as an "ad hoc rationalization." General Counsel and Davison likewise attack Owens' credibility, contending that his testimony was `just as incredible" at this hearing as in the first. On the other hand, the Union contends that Owens was not specfii- cally asked how the $1 or 80-cent figure was derived in the original hearing. I am of the view that Owens had more than ample opportunity to expound the mathematical basis for the $1 figure in answer to the many questions propounded him on the origin of the Union's royalty sal.17 Be that as it may-whether or not the mathematical formula Owens explicated is an afterthought-one thing is clear: Owens, who had been associated with UMW since 1901 (the past 2 decades as its secretary-treasurer), was sufficiently famili- ar with wages generally being paid in the coal industry to make a realistic estimate of labor cost without resorting to statistical sources or elaborate economic analysis. He has been one of the Union's three chief negotiators and has participated in all except' one national wage conference since 1921. His year-round duties include consulting with all types of coal operators and familiarizing himself with trade publications and governmental data dealing with the indus- try. He receives from UMW district representatives periodic reports on working conditions at nonsignatory as well as signatory mines. I am convinced that, whether or not Owens actually went through the process of devising the formula about which he testified prior to proposing the $1 (and later 80-cent) proposal, it is immaterial. I am equally convinced, as Owens testified, that in mak- ing its $1 proposal in the negotiations (it was first made in January 1964), the Union was very much concerned with the problem of preventing signatory producers from sub- contracting work to nonsignatories, including producers to whom signatories sublease their lands. The problem was by no means new. As Trial Examiner Hunt noted in his deci- sion, "The practice of operators who are signatories to agreements with the Union in purchasing coal, called 'sub- contracting' or `contracting out,' has long been a matter of concern to the Union." (165 NLRB at 471.) Trial Examiner Hunt detailed the various clauses incorporated in contracts since 1941 to meet the problem-ranging from outright bans against subcontracting to the Protective Wage Clause restricting subcontracting to operators meeting union standards-the latter invalidated by the Board in August 17 However, contrary to Dixie's (br. 39) and Davison's (br 13) suggestion that the mathematical formula was first advanced at the instant hearing, years after the first, it appears, as General Counsel in his brief (p 15) con- cedes, that the formula was described in the Union's exceptions to Trial Examiner Hunt's Decision, filed in April 1966 760 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 1963. The economic facts which could reasonably prompt the Union to propose a clause protecting the work opportu- nities of its members, as a substitute for PWC, were well known to Union and industry. The Board itself took notice of some in its 1963 Galligan decision, supra, 144 NLRB 228 -including the fact that employment in the industry "has very significantly declined,' that there is ever-increasin idleness, that interproducer purchases are common, and that "labor constitutes the principal cost item." (144 NLRB at 228) As shown below (sec. B, 3, a, (i)), shortly before the 1964 negotiations here involved, a published industry wage survey 1 showed an existin $1.13 per hour wage differen- tial ($9.04 for an 8-hourday) between union and nonunion underground employees: and a $1.25 per hour (or $10 per day) differential for those in surface mines. The same survey also showed significant differentials in regard to fringe ben- efits such as vacations. Owens testified that he was aware of these wage and fringe spreads. Whether or not he was, his proposal (as an industrywide cost-differential equalizer) appeared to be reasonable from the Union's point of view and was substantiated, at least in hindsight, by the facts. Under these circumstances, it is not surprising, as Owens indicated, that the Union's $1 or 80-cent proposal was not the subject of debate in the UMW-BCOA 1964 negotia- tions. At the outset, the operators opposed it, expressing the view that "it was illegal because the National Labor Rela- tions Board had said the Protective Wage Clause was ille- gal." Nor did they apparently request the Union to "ex- plain" its reason or basis for the proposal. Owens testified that the Union and BCOA officials had been discussing the economic problems (including existing labor cost differen- tials) prompting the union proposal on many prior occa- sions and that there was no need to detail them during the negotiations. I believe him. Furthermore, Owens indicated that BCOA was not too concerned about the 80-cent clause as such, its primary interest being the cost of the "entire package" (including the 80-cent clause) to be contained in the negotiated contract, as to which BCOA addressed itself (as always in the past) in the final stages of the negotiations: and that it was not until then that BCOA finally accepted the 80-cent figure (reduced from $1) as a compromise. It is reasonable to assume that in acquiescing to the Union's proposal, the industry representatives were as acquainted with the economic facts, including industrywide labor cost differentials, as were the union representatives. I so find. Based on all of the foregoing, including Owens' testimony as to the genesis of the 80-cent clause and the generally well-known economic facts of the bituminous coal industry at the time of adoption of the clause, I find and conclude that the 80-cent clause was intended (1) to offset the differ- ences in wages and fringe benefits generally existing be- tween signatory and nonsignatory operators in the industry-thereby equalizing existing work standards be- tween these groups; (2) to preserve the jobs and thereby protect work opportunities and standards of UMW mem- bers employed by all signatory operators; and (3) to substi- tute (or serve as a "surrogate") for the PWC in the predecessor collective agreement, which at the time of sub- stitution had been declared illegal by the Board. 3. Differentials in wage, fringe benefit, and working condition standards between employees of signatory and nonsignatory operators is industry Wage Survey, Bituminous Coal Mining, infra, fn. 20, issued Sep- tember 1963. a. The evidence (i) Wages: It is undisputed that during the period here involved differentials in average earnings and benefits exist- ed generally as between signatory and nonsignatory mines; only the extent of these differentials is in question. While some testimony was adduced on the prevailing industry- wide differentials, this testimony is unreliable since it is vague, ggeneral, and inconsistent; furthermore, it is unsup- ported by documentary evidence. 19 The record does include official Government-published data which permit a fair comparison of the average wage rates in unionized (signato- ry) and nonunionized (nonsignatory) mines during the years 1962-1963 and 1967. Thus, a wage survey on the bituminous coal industry covering industrywide wages (union and non- union), issued by the Bureau of Labor Statistics of the United States Department of Labor (G. C. Exh. 4R) 20 shows the following industrywide wages and wage differen- tials in November [962 (and it is fair to assume in all of 1962 and 1963).21 [See Table 1, p. 768.] A later wage survey (G. C. Exh. 5R) shows that, while both union and nonunion industrywide wages had risen in January 1967, the differential for underground mines ($1. 13) remained the same, although it increased somewhat for surface mines from $1.25 to $1.44 per hour) 22 The 1967 survey shows: ((See Table 2, p. 768.] It would appear that the wage differentials between union (signatory) and nonunion (nonsignatory) mines were even greater since the reported wage figures are average straight 19 Thus, Dixie witness Ratliff only testified that he was "aware" that some differentials existed during the years 1962-1967, at the same time he insisted that the wages in the company with which he was associated were "very similar" to the union wage level. Dixie partner Holcomb testified that during 1964-1965, a $10 differential existed between his own wages ($16) and the union scale ($26), his further testimony that current union and nonunion wages "are approximately the same" due to the competitive labor market is unsupported by objective evidence, including economic studies, and I do not credit it. 20 Industry Wage survey, Bituminous Coal Mining, November 1962, Bureau of Labor Statistics, United States Department of Labor (United States Gov- ernment Printing Office, September 1963, Tables 3 and 26). The survey is based on a sample consisting of 27 percent of the bituminous coal mines in the country employing 10 or more workers. It covers mines employing 52 percent of all workers in the industry. (See G. G. Exh. 4R, pp. 57-58.) Over 80 percent of the workers covered by the study were employed in mines covered by collective agreements. About 98 percent of the unionized miners were employed in signatory mines (i.e., mines under contract with UMW). (See p. 3 of G. C. Exh. 4R; see also G. C. br. p 5 and Dixie be p 27, fn. 35.) 1 In the absence of testimony or evidence to the contrary, it is fair to assume that nonunion earnings in 1963 were not notably different than in November 1962 Owens testified that union wage increases came only with the 1964 agreement and this is supported by data in G. C. Exh. 3R, p. 10. In any event, there was no narrowing of the wage differentials by January 1967. See table 2 above. 22 See Industry Wage Survey, Bituminous Coal Mining, January 1967, Bu- reau of Labor Statistics, United States Department of Labor, (United States Government Punting Office, February 1968), Tables 3 and 36. The two industry wage surveys (tables I and 2 herein) show earnings in two sectors of the bituminous coal mining industry: (1) underground mines and (2) surface mines Although both sets of data are presented in this Decision, it is clear that the earnings (and labor costs) in underground mines are far more representative of the industry as a whole than those in surface mines. Under- ground mines employed 85 percent of the workers covered by the 1962 survey and slightly over 80 percent of those covered by the 1967 survey. (See G C. Exh 4R, p. 2, and G. C. Exh. SR, p. 2 )1 am accordingly relying primarily on wage data of underground mines in forming conclusions concerning industry labor cost differentials INTL. UNION, UNITED MINE WORKERS time hourly earnings, exclusive of premium pay for such items as overtime and late shift work, which normally are higher in union than nonunion mines . The record indicates that UMW collective agreements provide significant bene- fits in these respects. (See G. C. Exh. 3R, Wage Chronology, Bituminous Coal Mines, 1933-1968, Bulletin No. 1558, Bu- reau of Labor Statistics, United States Department of La- bor, United States Government Printing Office, July 1967, 15-16.) (ii) Fringe benefits: Although the evidence adduced on fringe benefits (testimonial and documentary) does not per- mit a finding as to precise differences between union (signa- tory) and nonunion (nonsignatory) benefits, and certainly not as to the monetary value of the differences, it is clear that the benefits provided by the national agreement are significantly higher, particularly with respect to retirement and pensions, the benefits most directly involved here. The 40-cent-per-ton royalty, to which signatories are obligated, pays for such benefits as health and hospitalization, life insurance, funeral benefits, and pensions. (See G. C. Exh. 3R, pp. 18-20.) To be eligible, an employee must have worked 20 years in the coal industry for signatories or non- signatories , as long as his last year of employment was with a signatory.23 UMW retirees are paid a flat sum (currently $150 a month), without regard to length of service. The table below, based on available published data, sets forth in com- parative fashion the extent to which certain benefits were provided by operators covered by UMW contracts and those not so covered in November 1962 Generally prevail- ing in 1962-1963) and in January 1967:2 [See Table 3, p. 769.] As to vacations, the 1967 industry wage survey (p. 1) reveals that the large majority of all employees, signatory and non- signatory, were provided 8 paid holidays a year and 2 weeks pid vacation. According to the 1962 industry wage survey (pa. 10), "Most of the workers not eligible for vacation pay- ments were in mines not having labor-management contract agreements." While the published data do not give cost breakdown or value of the various benefits, there is some testimony as to cost experience by three nonsignatories. Dixie Partner Hol- comb testified that he provided hospitalization, medical benefits, and life insurance which, in 1964 and 1967, cost him 5 cents a ton. He also testified that the cost of $200- per-month pension starting at age 60 would be 10 cents per ton, but he did not substantiate this figure by documentary or other credible evidence; Dixie does not provide a retire- ment plan. Dixie witness Ratliff testified that the company he operated in 1962-1967 provided its 20 employees hospi talization, accident insurance, and life insurance, but he did not indicate their cost. He now operates a company (Land- mark Mining) whose collective agreement with the South- ern Labor Union calls for 10-cents-per ton "royalty" payment for health and medical coverage. At the time of the hearing he was negotiating a "pension and retirement plan which will mean an increase in the welfare royalty pay- ments" to 25 cents a ton, but this agreement "hasn t been consummated yet"; nor did Ratliff describe the extent of coverage and retirement benefits involved. The record does contain reliable evidence that Mid-Con- tinent Coal and Coke Co., a nonsignatory producer sup- plying coal to signatories, maintains a welfare-retirement 23 The "signatory last employment" provision was recently held by the District of Columbia Circuit not to provide a rational basis for denying benefits to applicants. Roark v. Boyle, Case No 23138, decided August 14, 1970 (74 LRRM 3025) 24 Source Industry Wage Surveys, supra, fns 20 and 21. 761 plan, comparable to the UMW plan, under a collective agreement with a labor organization known as Redstone Workers Association 25 In 1963-1965, the plan was funded by a royalty payment of 12 to 14 cents a ton ; but eligible employees also contributed between 5 and 10 percent of the employer's contribution. In addition to retirement, the plan provides for health and medical benefits and life and acci- dent insurance , as also does the UMW plan. Unlike the latter, however, Mid-Continent employee pension benefits vest after 5 years employment . Several retirees presently draw benefits--one, $140 a month after 10 years of service. From all of the foregoing, it appears, and I find, that although there are undoubtedly notable exceptions (as in the case of Mid-Continent), the fringe benefits (as well as wages) afforded employees of signatories to the national agreement were generally higher than those afforded non- signatory employees. Signatory benefits were far broader in proportion of employees covered as well as benefits extend- ed. However, cost differences of the fringe benefits are not really measurable in monetary terms . Dixie concedes (br. p. 33) that "if a difference must be determined" the cost of at least one of them, pensions, "which usually was not provid- ed" by nonsignatories , ranged between 10 and 15 cents a ton. Its witness Ratliff indicated that it is at least 15 cents. As to wages, the record does show significant differentials as between the signatory and nonsignatory sectors, meas- urable in dollars and cents . These differentials were $1.13 and $1.25 an hour for underground and surface mines, re- spectively, in 1962-1963; and $ 1.13 and $ 1.44 an hour, re- spectively , in 1967 . Converted to a per ton basis , Dixie, as hereafter noted (sec. B, 3, b. (iii)), contends that the differen- tials did not exceed 18 cents a ton . However, as hereafter found (ibid), the per ton wage differentials could have been as much as 56 cents for underground and 28 cents for sur- face mines in 1962-1963; and as much as 42 and 24 cents, respectively, in 1967. b. Contentions (i) Although conceding that "some differential probably exists in wage and working condition standards between signatory and nonsignatory operators," Dixie contends (br. p. 20) that the "precise amount is not ascertainable." At the same time it admits (br. p. 26) that "certain evidence and statistical techniques can be, and have in fact been, em- ployed to obtain an approximation of the wage and fringe benefit differences on which a judicial determination can be derived," but claims that those differences are much smaller than is "suggested" by the 80-cent clause. Dixie also con- tends that it is difficult to compare signatory and nonsigna- tory wages and fringe benefits because, among other things: (1) "contrary to the assumption of both the Board in its remand order and the court of appeals, there is no solitary wage figure for UMW members" since each of the 27 UMW districts prescribe their own wage scales (br. pp. 20-21) while the wage rates in most small mines are "unitary" (br. 21); (2) that even the official published Government reports and statistical studies (such as those previously referred to) show "a variety of wage scales found in [both signatory and nonsignatory] mines with the wage paid very clearly related to the output per man hours" (hr. 24); that testimony ad- duced at the instant and prior hearings demonstrates that the Union had offered some of the smaller independent 25 The wage rates provided in that agreement are also comparable to, if not higher than , those provided in the UMW (national) agreement Additionally, Mid-Continent gives its employees a production bonus which in 1963 ranged between $250 and $350 762 DECISIONS OF NATIONAL LABOR RELATIONS BOARD operators entirely different (lower) wage rates and less cost- ly pension benefits than those provided in the national agreement (br. pp. 21-22); and that the latter circumstance, together with the alleged claim that many signatories do not, in fact, pay the lull 40-cent royalty called for in the national agreement, demonstrate that the contract wages and benefits fail to reflect the true level of contract wages and work standards in signatory mines. (ii) To begin with, it is indeed difficult to determine the precise wage and fringe benefit differentials as between indi- vidual operators in the bituminous coal industry, signatory and nonsignatory. The multiplicity and variety of estab- lishments, the competitive nature of the industry, and the differences in methods of operation add to this problem 26 However, the inquiry directed by the Board and court in this case relates to the differentials "generally" in existence be- tween signatory and nonsignatory operators-"a broad equation for the difference [if any] in standards throughout an industry of diverse production units" (U. M. W. [Dixie , supra, 399 F.2d at 980). The Board and court presumab y were of the view that in seeking to equalize wages and work standards, UMW was not obliged to look beyond the gener- al industry picutre, knowing well that separate area-by-area and employer-by-employer examination was impracticable and beyond the Union's reasonable capacity27 Contrary to Dixie's claim, it is therefore not critical to this inquiry that the wage scales in one UMW district vary from those of another district,28 that the particular pay rates of one opera- tor differ from those of another, or even that the Union had allowed some independent operators to operate at lower than contract wage rates. 29 Furthermore, Dixie's claim that most small mines-have "unitary" wage rates is not substanti- ated even by testimony it relies on. Dixie Partner Holcomb only testified that "our average wages in 1964 were about $16 a day," implying that there was a variable range.30 He further testified that current (1970) wages "would average from $30 to $50 per day" (tr. 294), a generalized statement he did not support by records; it is not given any weight. (iii) Dixie contends (br. p F. 28, 40, 52) that in any event the hourly wage differentials shown in the industry wage surveys (G. C. Exh. 4R and 5R, supra) when converted into tonnage rates for comparison with the 40-cent per ton wel- fare royalty (the portion of the 80-cent payment designed to compensate for lower nonsignatory wages) do not exceed 18 w In 1963, the year preceding inclusion of the 80-cent clause, there were over 6,000 establishments with a total of 132,000 employees, of which two- thirds were employed in large mines (employing 50 or more men) and one- third in small mines. (G. C. Exh 2R, 4A) It is clear that the large mines enjoy significant economic advantages over the small mines due to their mecha- nization, closeness to coal preparation plants , and railroad loading points Increasing mechanization since World War II has resulted in the develop- ment of small "truck" mines, which haul and sell their coal to a "ramp" (also known as a "tipple" or preparation plant) The ramp operator cleans and grades the coal and ships it directly to the consumer (e g., utilities) by railroad car or barge , some also produce their own coal (See Trial Examiner Reel's Decision in 179 NLRB No 80) According to UMW witness Blizzard, assist- ant comptroller of the UMW Welfare and Retirement Fund, many of the ramp operators are signatories 27 The above-stated considerations constrain me to reject Charging Party Davison's basic objection to the entire approach in this inquiry According to Davison (br. p. 14) the "validity of the 80-cent clause in Riverton's contract depends upon whether the clause was addressed solely to labor relations of Riverton vis-a-vis its own employees " (Riverton, a wholly owned subsidiary of Davison, buys and sells the coal; Davison acts as its exclusive agent) This means, according to Davison, that in order to establish validity of the clause it must appear that Riverton's nonsignatory suppliers had had wage, fringe benefit, and working condition standards generally lower than those provid- ed in its collective agreement (also the national agreement) with UMW. Since, according to Davison, the evidence introduced by General Counsel and Dixie "relating to working conditions in the mining industry . obvious- cents a ton. It accordingly claims that the 40-cent figure, intended to offset differences in wages between signatory and nonsignatory coal, is punitive rather than compensato- ry. Dixie relies on an analysis (Dixie Exh. 7R) prepared by an economist (Dixie witness Abraham) pruportedly show- ing that large mines (employing 50 or more employees, which he equates with union or signatory mines) in 1963 mines aid an average of $1.27 per ton in wages while small (employing less than 50 employees, which he equates with nonunion or nonsignatory mines) paid $1.09 per ton - a difference of only 18 cents. The key data in Abraham's computation are shown in the following table: [See Table 4, p. 769.] Abraham's analysis appears to be defective in at least one crucial respect. He assigns a single $4.48 average selling price for the small (union or signatory) producer and the Large (nonunion or nonsignatory) roducer. However, the assumption that both types of producers obtained identical prices for their output is contrary to record testimony. Dixie's own witness Holcomb (a nonsignatory) testified that "it was a well know fact that they [purchasing agents] paid more money for union coal than they did nonunion coal"; according to Holcomb, Dixie's average 1964 market price was $4.10 a ton. (See Dixie Exh. 10 and original hearing tr. p. 660.) Dixie witness Rathff (also a nonsignatory) testified that there was a difference in prices obtained by truck oper- ators (small operators, see supra, fn. 25) and large operators (see original hearing tr. p. 339); according to Ratliff, his average selling price between January and April 1964 was $3.35 (original hearing tr. p. 332). The $4.48 average price used by Abraham in his caluclations appears to be more representative of prices received by large producers who, according to Abraham's own figures (Dixie Exh. 7R), ac- count for almost two-thirds of coal shipments. Substituting, as the price of coal received by small mines, Holcomb s (Dixie) $4.10 and Ratliff's $3.35 per ton average selling price for the $4.48 figure used by Abraham would result in average per ton differentials of 27 and 45 cents rather than the 18 cents computed by Abraham - i.e., assuming validi- ty of his method of calculations. Another inaccuracy in the approach adopted by Ab- raham is his equating "small" mines with nonunion mines. The industry wage survey of 1967 (G. C. Exh. 5R, p.3) shows that 33 percent of the "small" underground mines (less than 50 employees) and a little more than 25 percent of the ly do not establish the wage rates paid by Riverton's suppliers" (br. p. 25), it concludes that the validity of the 80-cent clause has not been established Davison itself offered no data on these matters , Riverton President Louis A. Davison, who testified in this hearing , stated that he had "no idea" of the wage scales and welfare benefits at the mines operated on his lands from which (among others) Riverton purchases coal 28 The record shows that basic rates (uniform annual increases ranging from $1 to $3 a day, added to previously established contract rates) are in the first instance negotiated at the national level. District representatives and local coal operators in the various UMW districts then get together and publish in bulletins the specific dollar-and -cent rates for particularjob classi- fications reflecting the uniform nationwide wage increases . Wage rates for new classifications (as for operations with new machinery) are worked out jointly by district representatives and local operators, subject to ultimate approval at the national level. 19 As hereafter shown (sec B , 3, B. (iv)), this claim is based on testimony of Dixie witnesses Holcomb and Ratliff that a UMW district official (Hib- bitts) had offered them "side agreements" (a "sweetheart" arrangement) un- der which they would be permitted to pay substantially lower welfare royalities, as well as wages , even though they signed the national agreement. Dixie's contention is not supported by credited evidence 30 Holcomb testified that Dixie "contracts" its labor to "foremen" who operate its lands, with Dixie furnishing all equipment and bearing all costs, except labor (e g , engineering, repair, insurance, workmen's compensation); the foremen "usually split equally" with the men the labor fee received from Dixie "because" the men are members of the foremen's families INTL UNION, UNITED MINE WORKERS "small" surface mines were in fact operating under collec- tive-bargaining agreements at that time. While there is no similar published data for the 1963-64 period, it is reasona- ble to assume that a proportion of these "small" mines were also unionized at that time. A more reliable method of determining the average per ton wage differentials as between signatory and nonsignato- ry mines would appear to be the more simple procedure of dividing the average per man day wage by the average per man da output, separately for union (signatory) and non- union (onsignatory) mines, using the official published November 1962 and January 1967 industry wage surveys (supra, G. C. Exh. 4R and 5R). The following table, showing these calculations, demonstrates that the average per ton wage differentials between signatory and nonsignatory mines in November 1962 (and it is fair to assume 1962- 1963) were 56 cents for underground mines (the dominant segment of the coal industry) and 28 cents for surface mines; and that the comparable differentials in January 1967 were 42 and 24 cents, respectively 31 [See Table 5, p. 770.] (iv) Relyin on the testimony of its witnesses Holcomb (a Dixie partner) and Ratliff, both nonsignatories operating in Pike County, Kentucky, Dixie contends that some signatory operators are paying less than the wages and 40-cents-a-ton royalty required by the national agreement. (Dixie br. pp. 30-31, 21-22) Dixie thereby apparently seeks to show that the levels of signatory wages and benefits were not the true levels for purposes of comparison with nonsignatory levels. According to Holcomb and Ratliff, a UMW district presi- dent (Hibbitts) in 1959 and 1963 in effect offered them "sweetheart" agreements, suggesting creation of a "sham" organization, whereby they could pay less wages to employ- ees and royalty to the UMW Welfare Fund, if they signed the national agreement. Holcomb testified that Hibbitts in 1959 offered to sign a "side agreement" that would require him to pay a 15-cent royalty. Ratliff testified that in addi- tion to the reduced (15-cent) royalty, Hibbitts told him he would have to pay only $15 per day wages. According to Ratliff, Hibbitts again approached him in 1963, this time urging that he and other operators in Pike County form a sham organization of the type then operating in nearby Floyd County (Coal Associates, Inc.), which would sign the national agreement, but its members would pay only the reduced royalty. Hibbitts denied the "sweethearting" offers attributed to him. He testified that he met with the Pike County operators (including Rathff and Holcomb) in 1959, but only to urge them to sign the 1958 National Agreement; claiming they were truck operators unable to compete with larger rail operators, they wanted to sign separate and more favorable agreements,32 and that he (Hibbitts) agreed only to give the operators a letter to the effect that as signatories they would be held responsible solely for royalty payments on coal they actually mined, as distinguished from coal shipped, for han- dling to their ramps or tipples. As to the 1963 encounter, Hibbitts admitted discussing the Coal Associates organiza- tion, but indicated that it was Ratliff who wanted to know how that organization operated and the kind of agreement it had with UMW. Hibbitts testified that Coal Associates was formed as a result of a meeting called by the Kentucky 31 None of the parties adduced any documentary evidence from which more recent wage differentials (and also fringe benefit differentials) may be calculated As previously indicated, the evidence as to post-1967 wages and fringe benefits is confined to general and uncorroborated testimony, which I consider too unreliable for predicating findings thereon 32 Ratliff corroborated Hibbitts on this point, he conceded seeking a "more favorable" contract 763 Commissioner of Labor and the truck operators to take steps to avoid repetition of a strike tri ered by the welfare fund's cancellation of hospital benefits to employees of truck operators for nonpayment of royalty funds; that the association was organized to insure that these small opera- tors made full royalty payments; and that members of the association either signed the national agreement separately or gave the association authority to signor them-the usual procedure where associations are involved. I credit Hibbitts' testimony in preference to Holcomb's and Ratliff's for the following reasons: Hibbitts impressed me as a candid and forthright witness; his testimony is in part corroborated by that of Blizzard, an official of the fund, and by records of the fund, showing royalty collec- tions and payments by Coal Associates on behalf of mem- ber-operators; Hibbitts, as district president, had no authority to negotiate a collective-bargaining agreement other than the national agreement;33 and Dixie called no officials or members of Coal Associates to contradict Hib- bitts' testimony concerning the origin, purpose, and opera- tion of that association. Accordingly, I find that the record does not support Dixie's contention that UMW had engaged in the practice of "sweethearting," whereby UMW would verbally author- ize signatory operators to pay less than the contract royalty or wages. In this connection, it is significant that Dixie did not attempt to adduce evidence more recent than the alleg- ed 7- and 11-year-old episodes relied on. (v.) Finally, Dixie adduced considerable evidence pur- porting to show that many signatories did not pay the full 40-cent welfare royalty based on the tonnage production reported by those signatories to state agencies. According to Dixie (br. p. 30), a random study of 20 percent of the opera- tors signing the 1964 national agreement (348 or 20 percent of the 1,800 signatories) showed that about 22 percent of the signatories paid substantially (25 percent or more) less roy- alties than required of them (Dixie Exh. 30R and 31R). However, the testimony of Blizzard, assistant comptroller of the UMW Welfare Fund, a forthright and credible witness, establishes that discrepancies between tonnage reports to state agencies and to the welfare fund are accountable by a variety of reasons-including: (1) the state reports are compiled on a calendar-year basis while the fund s reports to the U.S. Department of Labor (Dixie's source for com- panng state tonnage reports) are made on a fiscal-year basis; (2) large signatories frequently make lump sum royal- ty payments in their own names on behalf of small signato- nes (such as truck mines producing on their lands) and the latter often duplicate tonnage reports to the States; (3) some tonnage reports to the state are based on raw tonnage pro- duction while payments to the fund are made on `clean" coal; (4) state tonnage reports normally cover all of an operator's production while reports to the fund exclude the operator's mines not covered by the UMW contract; (5) some operators are simply in arrears or delinquent and have executed notes to make up delinquencies, or, if contesting the payments, are litigatin gave (6) some operators reporting tonnage to States have failed to report production to the fund because they ceased to be signatories during the reporting year; and, finally (7), payments to the fund some- times even exceed amounts due on the basis of state tonnage 33 See also Trial Examiner Reel's Decision, 179 NLRB No 80, and Trial Examiner Hunt's Decision, 165 NLRB at p 474 (One or both incidents were raised in the two prior proceedings.) Although attributing to Hibbitts an offer to enter into an agreement different from the national agreement, Ratliff at this hearing conceded he was under the "assumption" that Hibbitts had no authority to make such offer 764 DECISIONS OF NATIONAL LABOR RELATIONS BOARD reports because the payments cover prior unreported pro- duction or past delinquency, In any event, even assuming, arguendo, the accuracy of the state tonnage reports, Dixie now only claims (br. p. 30, fn. 38) that 13 of the 348 companies sampled were "seriously delinquent" in the total amount of their delinquency during this 4-year period was $296,559 (Dixie Exh. 30R), but the record establishes (hearing tr. p. 1009 that in this same period the fund collected $86,369,620 from the 348 compa- nies. The claimed delinquency therefore constitutes only .3 percent of the total obligation (86,606,179) to the fund- hardly sufficient to establish an appreciable departure from the 40-cent payment requirement. Accordingly, I reject Dixie's contention with respect to the alleged underpayments to the UMW Welfare Fund, as well as its other contentions directed to the claim that the signatory wage rates and fringe benefits did not reflect the true level of rates, benefits, and standards prevailing in signatory mines. For reasons stated, I also reject its conten- ti on that the differentials respecting these matters (as be- tween signatory and nonsignatory mines) were slight and insignificant. 4. The reasonable relationship between the wage, fringe benefit, and working condition standards and the 80-cent clause (a) As already found (supra, sec. B, 3, a.), the average hourly wage differentials between signatory and nonsigna- tory operators ranged from $1.13 to $1.25 in 1962-1963 and from $1.13 to $1.44 in 1967, depending on whether under- ground or surface mines were involved. If converted into cost per ton, the 1962-1963 differentials were 56 cents for the predominant underground type mines (employing over 80 percent of the industry workforce) and 28 cents for the surface mines; in 1967, the per ton cost differentials were 42 and 24 cents, respectively. As also found, the fringe benefit differentials between signatories and nonsignatories, al- though substantial, are not measurable in monetary terms, let alone in centsr ton, although it appears that the superi- or pension benefits provided by signatories cost at least 15 cents a ton. To these must be added the differentials for special benefits such as premium pay for items like overtime and late shifts provided in signatory contracts, which, too, however, cannot be evaluated in monetary terms. All fac- tors considered, I am convinced that the 80-cent clause does substantially equalize, and therefore bears a reasonable re- lation to, the differentials in labor costs (wage, fringe bene- fit, and work standards) as between signatory and nonsigna- tory operators. I so find. (b) Dixie contends (br. p. 35) that "although on an indus- try-average basis one might argue that there is some rela- tionship between the 80-cent and wage and benefit difference[s]," those differences are not meaningful because they fail to take into account differences in productivity rates as between signatory and nonsignatory producers, equating the two with large and small producers (br. p. 40). According to Dixie, "The higher the output per man hour achieved by a companyy, the greater is the per hour cost of the 80-cent penalty' (br. p. 35). Dixie would argue (br. p. 45) that to the extent nonsignatory productivity was less than that of the signatory, the labor cost differential is re- duced. (c) To begin with, I find merit in UMW's position (br. p. 24) that insofar as here relevant, the remand in this case calls for a determination only (1) of the differentials in wage and fringe benefits received by employees of nonsignatories and "those established under the National Bituminous Coal Wage Agreement"; and (2) whether the 80-cent clause "bears a reasonable relationship" to those differentials. It is common knowledge that one of the main goals of labor organizations is to attempt to enhance the wages and work standards of employees in the units they represent. In seeking to achieve this objective it is not improper for a labor organization to strive for industrywide uniformity in work standards, so long as this does not, "by intent or effect, compel the unor- ganized segment of the industry to sign" the union's collec- tive agreement. Galligan, supra, 179 NLRB No. 80. In negotiating its bargaining contract with an employer or group of employers it is too much to expect the union to go through the kind of intricate economic analysis that Dixie, for example, went through in this case, infra, to determine the varying productivity and efficiency figures of the nu- merous mines in the industry3a Nor, as UMW Secretary- Treasurer Owens testified, did it occur to UMW to do so here in seeking to achieve its long-standing objective to obtain uniform industrywide wages and work standards through the 80-cent royalty clause. As I construe the re- mand, if the Union sought only to equalize the wage and fringe differentials between the signatories in the bargaining unit with those of nonsignatones outside it, the Union's intent was primary and lawful. (d) In any event, this record does not permit an accurate evaluation of the true comparative productivity of signato- ries and nonsignatories. To be sure, there is testimony to the effect that large mines enjoy significant economic advan- tages over small mines because of mechanization and close- ness to coal preparation and railroad loading points. While these factors tend to show that there are differences in effi- ciency and productivity, the extent of these differences is not satisfactorily established. In this connection it should be noted that a substantial number of "small" mines (which Dixie characterizes as relatively inefficient "nonunion" mines) are, in fact, signatories to the national agreement and presumably can and do pay the wages and fringe benefits prescribed in it. As already noted (supra, sec. B, 3, b. ((ii)).about one-third of the employees in small underground mines and one-fourth in small surface mines are employed by signatories; and many of the small mines regularly con- tribute the required 40-cent royalty to the UMW Welfare Fund either in their own names or in the names of larger signatory purchasers. (supra, sec. B, 3, b. (v)) Dixie relies on an analysis of its expert witness, Econo- mist Abraham, to show that there was a 22.6 percent greater roductivit -in larger mines (characterized as "union" or 'signatory'^mines employing 50 or more employees) than in the smaller ("nonunion" mines employing less than 50 employees). But the vice in Abraham's productivity compu- tation is, as was also previously shown in connection with our discussion on conversions of hourly wage rate differen- tials to tonnage rate differentials ( sec. B,3,b.(iii)), that he erroneously assigns a single $4.48 selling price for both small and large producers. The key element in Abraham's pro- ductivity and conversion computations is the price of coal. As shown, Dixie and Ratliff, `small" (nonsignatory) opera- tors, sold their coal at $4.10 and $3.35 a ton, respectively. Employing Abraham's method of calculation, it appears, as the table below shows, that large mine productivity was onl2' 12.2 percent greater than small mine productivity if Dixie s $4.10 price is substituted for Abraham's $4.48 figure; and that large mine productivity was less (9.75 percent) than 34 It is to be noted that Dwe's economic analysis was based on data appearing in G C Exh 2R, a publication of the U.S. Department of Com- merce which was issued in October 1966, almost 3 years after the 80-cent clause was executed INTL UNION, UNITED MINE WORKERS small mine productivity if the $3.35 Ratliff puce is substitut- ed. [See Table 6, p. 771.] It should be emphasized that the Dixie and Ratliff prices are used in table 6 only to demonstrate the error in Abraham's 22.6 productivity differential. They do not necessarily re- flect the prices received by small producers generally in the industry; ; the record is silent as to the specific average indus- try coal price obtained by small producers. Accordingly, I conclude the Dixie's contention that there was a 22.6 percent productivity differential between large (signatory) and small (nonsi atory) producers is unsup- ported by credible and reliable evidence. For reasons al- ready stated, I find and conclude that the 80-cent clause bears a reasonable relation to the differential in per ton labor cost as between these two sectors of the industry. C. Conclusions 1. Introduction As to the questions propounded by the Board's remand order, I have found (1) that the intent of the parties in adopting the 80-cent clause was to equalize the differences in wages and fringe benefits generally existing between sig- natory and nonsatory mines in order to protect the work opportunities ants tandards provided UMW members em- ployed by signatory operators ; (2) that the wage, fringe benefit, and working condition standards of employees in nonsignatory mines are generally lower^an those estab- lished under the National Bituminous Coal Wage Agree- ment ; and (3) that the 80-cent payment to which signatories are obligated on nonsignatory coal purchases bears a rea- sonable relationship to the wage and fringe benefit differ- entials between employees of signatory and nonsignato rryy o^erators. However, as previously indicated (supra, sec. if, these findings are not dispositive of the ultimate issue of whether the 80-cent clause is a valid work-preservation and union-standards clause and not an invalid union-signatory clause. As noted, the record developed in the reopened hear- ing in the main relates to only one of the Board 's findings in the original hearing-the finding that there was no record evidence that "the Union's initial proposal , or contract fig- ure of 80 cents, or any other figure would be reasonable compensation" for differences between signatory and non- signatory wages and benefits to support UMW's contention that the clause was "intended to protect employees' job opportunities" (165 NLRB at 476-477). Having now found that "reasonable compensation " did exist, it must still be determined (in accordance with the Board's direction that findings and conclusions be made in the light of the prior record and applicable law) whether the 80 -cent clause fails to meet the test of validity on other grounds, including those previously adverted to in the Board's prior decision, but which the court of appeals did not reach. It is apparent from the court's opinion that if it appeared that the 80-cent pay- ment provision did not represent "a broad equation for the difference in standards," the clause could not qualify as "a surrogate union standards clause" (399 F.2d at 980-981);35 it was accordingly unnecessary for the court to pass on the grounds previously relied on by the Board to invalidate the 35 The court stressed that, "Conceivably the parties could have agreed on a money figure which in their judgment represents a broad equation for the difference in standards" and took note of dissenting Member Jenkins' view that "it would appear that , in the absence of additional evidence , the clause should be regarded as no less than an effort to protect work standards by equalizing the labor costs between employees of signatories and nonsignato- nes." (399 F 2d at 980 ) 765 clause before deciding whether the 80-cent clause was a reasonable equalizer, the major issue posed by the remand. In reaching my conclusions, I deem myself bound by the Board's findings of fact in the earlier proceeding, except to the extent they may require qualification or modification in light of the additional evidence adduced in the remand hearing. I also deem myself bound by the legal guidelines and principles enunciated by the Board in its earlier deci- sion, since, insofar as appears, the court of appeals dis- turbed none. 2. Qualification of the 80-cent clause as a work- protection and union-standards provision In National Woodwork Manufacturers Assn. v. N.L.R.B., 386 U.S. 612, 645, the Supreme Court stated that in de- termining whether a contractual clause has a lawful primary work-protection objective "[t]he touchstone is whether the agreement or its maintenance is addressed to the labor rela- tions of the contracting employer vis-a-vis his own employ- ees." In Meat & Highway Drivers, Local 710 [Wilson & Co.] v. N.L.R.B., 335 F.2d 709, 713 (C.A.D.C.), the Court stated "[r]esolution of the difficult issue of primary versus second- ary activity ... involves consideration of two factors: (1) jobs fairly claimable by the bargaining unit, and (2) preser- vation of those jobs for the bargaining unit. If the jobs are fairly claimable by the unit, they may ... be protected by provision for, and implementation of, no-subcontracting or union standards clauses in the bargaining agreements." On the other hand, if the jobs are not "fairly claimable by the bargaining unit," the contractual provision is unlawful since it is deemed to be "tactically calculated to satisfy objectives elsewhere." National Woodwork, supra, 386 U.S. at 644. See also District No. 9, I.A.M. [Greater St. Louis Automotive Trimmers, etc.] v. N.L.R.B., 315 F.2d 33, 36 (C.A.D.C.); Orange Belt District Council of Painters [Calhoun Drywall Co.] v. N.L.R.B., 328 F.2d 5 .14, 538 (C.A.D.C.). Of para- mount consideration, therefore, is the scope of the bargain- ing unit and whether the contractual provision was designed to benefit only employees in the primary unit. See Lewis (Galligan), supra, 350 F.2d at 802. It is clear that the key factor in the Board's previous (June 1967) determination that the 80-cent clause was an unlawful secondary provision is its finding that the bargaining units here consist of various multiemployer groups (BCOA, Southern Coal Producers Association, etc.) and individual operators (Riverton, etc.) with which UMW executed sep- arate collective agreements. As the Board stated (165 NLR at 468, fn. 8), "It is ... apparent that our holding that the 80-cent clause is unlawful is founded specifically upon the finding that there exists in the bituminous coal industry a multiplicity of collective-bargaining units." The Board spe- cifically rejected the contention that a single industrywide unit, encompassing all employees of all signatories to the national agreement, was appropriate (165 NLRB at 467, 468, 475)--a finding not disturbed by the court of appeals and not reopened on remand 36 The critical inquiry, then, is whether the 80-cent clause was intended to "function" and "functions" (U.M. W. [Dixie], supra, 399 F.2d at 980) as a work-protection and union-standards clause to protect groups broader than the established bargaining units. If the clause was designed to operate, or operates, 'to aid union 36Addressing itself to the contention that "the contract is coextensive with the work unit, because the same contract, although negotiated with different bargaining units, covers the entire industry," the Court said, "[w]e need not reach the question of unit size at this time." U M W. (Dixie), supra, 399 F 2d at 980. 766 DECISIONS OF NATIONAL LABOR RELATIONS BOARD [UMW] members generally, rather than members of the unit," it is an unlawful secondary clause. Meat & Highway Drivers [Wilson & Co.], supra, 335 F.2d at 716. Specifically, the Board found that the 80-cent clause was not a lawful work-protection clause because it was not in- tended to preserve, and did not operate to preserve, the work opportunities of the employees in particular units. Thus, the Board pointed out that a signatory was free under the collective agreement (i.e., he is not required to make the 80-cent payment) to fulfill his requirements for coal by pur- chasing from other signatories, including those outside his bargaining unit, thereby prejudicing rather than enhancing the work opportunities of his unit employees (165 NLRB at 468, 477). rt also found that the 80-cent clause, by its express terms, app hes to all coal purchases including ` supplemen- tal" coal(i.e., coal qualitatively or quantitatively beyond the signatory purchaser's capacity to produce) which is not "fairly claimable" by the unit; thus, for example, it was found that Riverton, an individual signatory whose employ- ees comprise a separate unit, was required to make the 80-cent payment on coal purchases needed to fulfill con- tractual commitments even though employees in the River- ton unit could not possibly produce the coal since Riverton had operated to the limit of its capacity. (165 NLRB at 477.) As to the contention that the 80-cent clause was a valid wage-standards or union-standards provision, the Board held that it "does not qualify as [such] because a penalty is imposed whenever unit work is subcontracted to nonsigna- tory operators without regard to the wage standards of such employers." (165 NLRB at 468)37 Finally, the Board held that the 80-cent provision was "really aimed at nonsignatory sellers," finding that "the clause has caused some nonsignatory operators to sign the UMW agreement in order to continue selling their coal to signatories, and caused some signatory operators to cease purchasing coal from nonsignatories in order to avoid the $0 cent penalty which would be imposed under the contract if they continued to make such purchases." (165 NLRB at 467, 477). Thus, the Board found id. at 473-474) (1) that Riverton, an individual signatory which had been purchas- ing nonsignatory coal before the 80-cent clause went into effect, ceased such purchases thereafter because it could not afford to make the 80-cent payment, and that Riverton cancelled all leases with nonsignatory suppliers (to whom it had leased its mining properties), negotiating new leases only with operators w o became signatories; (2) that Davi- son Fuel and Dock Company, Riverton's parent company and as such bound by the national agreement as an affil- iate" of a signatory, ceased purchasing coal from a nonsig- natory (Ford Coal Company), settling the latter's breach of contract claim for $15,000; (3) that Dixie, a nonsignatory, which had sold 40 percent of its coal to signatories prior to the advent of the 80-cent clause, since ceased selling coal to signatories, one such purchaser (Republic Coal & Coke Co.) cancelling its contract with Dixie because it claimed its profit margin was insufficient to absorb any part of the 80-cent payment; (4) that United Colliers, Inc., a nonsigna- tory, was informed by its only signatory purchaser that the latter would no loner purchase nonsignatory coal "because of the 80-cent provision"; (5) that 13 of the 15 members of Harlan County Coal Operators Association, who refused to 37 It is this feature that readily distinguishes PWC, now ruled valid by the Board (see Galligan, 179 NLRB No. 80, sec. A, 2) PWC only requires that all coal procured by a signatory "be mined or produced under terms and conditions which areas favorable to the employees as those provided for" in the national agreement, no monetary penalty or other restrictions are placed on coal produced under terms equal to, or better than, those of the purchas- ing operator sign the 1964 agreement because they could not meet the 80-cent payment, continues to sell only about half their coal to signatories; and (6) that union official Hibbitts, in his 1959 and 1963 attempts to persuade Dixie Partner Holcomb and coal operator Ratliff to sign the national agreement (see supra, sec. B, 3. b. (iv)), admitted telling the two operators that he was "well aware" of the small mines' financial ina- bih to comply with the 80-cent payment, but that he (Hib- bitts) stated that he could not negotiate any agreement other than the national. The evidence adduced in the remand proceeding does not detract from the findings and conclusions of the Board in the earlier proceeding, premised on the Board's undisturbed determination that the various bargaining units (and not a single industrywide unit) are the sole units for which the Union may seek to preserve work opportunities and stand- ards. The record developed in the instant hearing was devot- ed to an inquiry on the wage and fringe benefit differentials between signatory and nonsignatory mines and also the intent of the parties in adopting the 80-cent clause, rather than to the secondary impact of the clause. Nonetheless, some of the evidence adduced tends to fortify the conclu- sions previously reached in this case. Thus, it was demon- strated that if the 80-cent clause were applied to signatories who have been purchasing a unique type of coal `supple- mental" coal) produced by Mid-Continent Coal & Coke Co. (a nonsignatory whose employees are affiliated with an in- dependent union), those signatory purchasers would be sub- ject to 80-cent payments even though their employees did not, and could not, produce that special coal. Furthermore, it was established that Mid-Continent's wages and fringe benefits, including its pension plan (supra sec. B, 3,-a--(ii)) were at least comparable, if not superior, to those provided in the national agreement. Under the circumstances, it is clear, and I find, that the Mid-Continent production was not "fairly claimable" by the signatory bargaining units; nor could the 80-cent provision serve to enhance union standards as against Mid-Continent. Additionally, UMW Secretary-Treasurer Owens' testimony in the reopened hearing establishes that the intent of the 80-cent clause was to aid UMW members generally (i.e., employees of all sig- natories to the national agreement) rather than members of a particular bargaining unit. As already found (supra, sec. B, 1), his testimony makes it clear that in embarking upon the negotiations leading to the 80-cent clause, the union was intent on protecting and preserving uniform industry- wide wages and standards, in line with UMW's historic objective to secure uniform wages and standards among all operators. According to Owens, the integnty of the welfare fund, administered on a nationwide basis, was another pri- mary objective. Based on the guidelines and principles set forth in the Board's earlier decision, which were left intact by the court of appeals, I conclude that the 80-cent clause was neither intended to function, nor functioned, to protect work "fairly claimable" by a particular bargaining unit. Accordingly, under established Board law the clause was not "germane to the economic integrity of the principal work unit" (Or- ange Belt District Council Calhoun Drywall Co. v. N.L.R.B., 328 F.2d 534, 538 (C.A.D.C.)) and must be regarded as an unlawful secondary clause within the intendment of Section 8(e) of the Act. I so find. 3. Respondents' contention regarding the app ropnate unit governing application of Section 8((e) of the Act As pointed out in the Board's earlier decision in this case (165 NLRB at 475-476), both UMW and BCOA challenged INTL UNION, UNITED MINE WORKERS the Board's determination, first made in August 1963 (Galb- gan, supra, 148 NLRB 249, 253-255), that the units for which the Union could lawfully seek work protection are those appropriate for collective bargaining as established under Section 9 of the Act. In the cited Galligan case, the Board rejected the contention that the 80-cent clause was "lawful because its purpose is to preserve and protect the work of employees in the industrywide contract unit." (148 NLRB at 253). Noting that UMW negotiates separately with various signatory operators and multiemployer associ- ations, it concluded that "the UMW national contract cov- ers a multiplicity of bargaining units rather than a single industrywide unit," and that `under the normal tests ap- plied by the Board in making bargaining-unit determina- tions ... an industrywide unit has not been established by the parties." (id at 254). The Board reaffirmed its determina- tion in its June 1967 decision in the instant proceeding, where it also rejected a union contention (reflected in Mem- ber Jenkins' dissenting view in Galligan and reiterated in this case) that at the very least "there exists a single indus- trywide bargaining unit for welfare fund purposes." (165 RB at 476). This view is bottomed on the claim that the employees of all signatorites share in the fund's benefits and that they have a common and primary interest in assuring that royalty payments are made on all coal obtained or used by signatories. A majority of the Board rejected this view, adhering to its previous conclusion that `the units which control the determination of the primary or secondary na- ture of subcontracting clauses are those units found. by the Board under its customary standards to be appropate for collective-bargaining purposes." (165 NLRB at 468). The court of appeals took note of Member Jenkins' views, but, as previously noted, stated that it "need not reach the ques- tion of unit size at this time." (399 F.2d at 980). While the lawfulness of subcontracting restrictions under Section 8(e) should, and does, ordinarily turn on appropn- ate bargaining unit issues under Section 9 of the Act, equat- ing work and bargaining units for all 8(e) purposes could in some circumstances be viewed as unrealistic . The record in this case, particularly as developed in the remand hearing, demonstrates that the separate agreements executed by UMW with associations (like BCOA) and independent op- erators (like Riverton), engaged in the commercial field, contain uniform terms and conditions of employment. Trial Examiner Hunt had noted in his Decision (165 NLRB at 470) that the contract negotiations in the bituminous coal industry have followed the same pattern for at least two decades: UMW first negotiates the "National Bituminous Coal Wage Agreement with BCOA, then presents the terms of that agreement to other associations, and later "seek[s] the signatures of as many operators as possible to that contract and no other written agreement." Trial Exam- iner Hunt had found that "there are [in this industry] nu- merous bargaining units ... some so small as to consist of few employees." (165 NLRB at 475). It is now apparent that the Union seeks and obtains what is in effect a uniform nationwide agreement, although signed separately unit by unit. It is now also apparent from the history of the 1964 negotiations, as detailed by Union Official Owens, that in pressing for its 80-cent clause, the Union, as well as BCOA, looked beyond the immediate BCOA bargaining unit. Both 767 subcontracting to nonunion mines, the desirability of equal- izing labor costs as between signatories and nonsignatones, and the need to protect the integrity of the welfare fund. It may thus now, upon the supplemental record, reasonably be argued that the Union in its meetings with BCOA was bar- gaining for terms and work conditions (including the wel- fare standard and payment) to be applicable to all signatories (BCOA and those who would later sign uniform contracts). As we have seen, the 80-cent clause was designed to protect the standards thus negotiated against threat of loss and undermining by signatories purchasing nonsigna- tory coal. As it turned out, the 80-cent payment on which the parties compromised bears a reasonable relationship to the wage and fringe differentials that existed between the signatory and nonsignatory sectors. (supra, sec. B, 3 and 4). And it is noteworthy that in its remand order the Board itself expressly directed that the differentials be ascertained on an industrywide rather than unit-by-unit basis. Despite the above-stated considerations, it would appear that no choice is left to the Trial Examiner but to find that Respondent UMW and BCOA, by entering into the agree- ment containing the 80-cent clause, have engaged in unfair labor practices, in violation of Section 8(e) of the Act, based on the Board's existing determination (binding on me) that the primary units governing appplication of Section 8(e) are the bargaining units established under Section 9 of the Act 38 In other words, under existing Board law the work unit for which UMW could seek job and standard protec- tion cannot be a unit wider than an appropriate bargainin g unit. Since the 80-cent clause was intended to preserve, and operates to preserve, work opportunities and standards be- yond such bargaining units (ii.e., on an industrywide basis), it is an unlawful secondary agreement, violative of Section 8(e) of the Act. This is not to say that the Union is devoid of means lawfully to realize its objective of uniform industrywide union standards and to preserve work opportunities for its members. Since the Board has now held-PWC lawful, the Union may now flatly bar signatory subcontracting to (or purchasing from) nonsignatones whose coal has not been mined or produced under terms and conditions which are as favorable to the employees as those provided for in this [national] contract., (supra, fn. 37). With PWC in operation, economic hardship and adverse secondary effects on inno- cent nonsignatory neutrals like Mid-Continent in this case, which maintains equivalent union standards, will be mini- mized if not eliminated. Furthermore, retention of a mone- tary equalizer, such as the 80 cents provided by the 1964 agreement, may require periodic reexamination as to validi- ty. Thus, the 80-cent figure, while a reasonable compensa- tion for wage and fringe benefit differentials between signatory and nonsignatory mines in 1963 and 1967, may not be so continually. RECOMMENDED ORDER For the reasons stated, it is recommended that the Board reaffirm its conclusions and order as set forth in the original proceeding, 165 NLRB 1325. the Union and BCOA were very much mindful of the eco- 38 The Board very recently reaffirmed this principle in the related Galligan nomic facts facing the industry, including diminution of case involving PWC (179 NLRB No 80), presently on review before the employment in signatory mines, the practice of signatory Court of Appeals (supra, fn. 14) 768 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Table 1---Wages and Wage Differentials (November 1962) Union Nonunion Differential Type of Mine Hourly Hourly (Hourly) Underground $3.11 $1.98 $1.13 Surface 3.37 2. 12 1.25 Table 2---Wastes and Wage Differentials (January 1967) Union Nonunion Differential Type of Mine Hourly Hourly (Hourly) Underground $3.52 $2.39 $1.13 Surface 3 .80 2.36 1.44 INTL UNION, UNITED MINE WORKERS Table 3 --pension and Other Fringe Benefits 769 Type of Benefit Percentage of Employees Covered November 1962 January 1967 Sig, Nonsig : _.1t/ Sig. Nonsig.*J Life Insurance , Death or Funeral Accidental Health and 100 29-36 I I 100 47-38 21 0 37 35 Dismember Insurance -3 - Sickness & Accident Insurance Sick Leave 100 14-18 100 16-17 Hospitalization Insurance 100 29--48 100 47-58 Surgical Insurance 100 29-48 100 47--54 Medical Insurance 100 21-25 100 47-48 Catastrophe Insurance 100 7-6 100 11--19 Retirement Pension 100 0--9 100 5-12 N B fi Pl 64--43 42--40 o ene t ans *j First figure under nonsignatory (non-UMW) applies to underground and second figure to surface mines; signatory (UMW) figure covers both types. The data were derived from tables 25 and 44 of General Counsel's Exhibit 4R ; and tables 35 and 60 of General Counsel's Exhibit 5R. The nonsignatory percentages of employee coverage were recomputed to a 100 percent nonsignatory base. Table 4---Dixie Exh. 7 Wage Costs Differential Calculation lation (1963) Item No. Dixie Exhibit 7R Items Small Mine (Nonunion) 0-49 employees Large mine (Union) 50 or more employees 8 Value of shipments and receipts ($000) * $650,460 $1,707,876 ** Price of coal per ton $4.48 $4.48 17 Est. tons shipped & rec'd. (000) 145,192 381,222 4 Total wages of workers (000) $158,352 $483,986 18 Wage cost per ton (4,,17) Amount of differential $1.09 $1.27 ($1.27--$1.09) .18 This term is defined in General Counsel's Exhibit 2R, pp. 61--62. From the manner of its use by witness Abraham, it is apparently the dollar value of all coal produced in 1963 . Thus , he computed his estimate of the number of tons "shipped and received" (Line 17 ) by dividing the "value of shipments and receipts " by the price of coal. See footnote 2 of Dixie Exhibit 7R. 770 DECISIONS OF NATIONAL LABOR RELATIONS BOARD TABLE 5 : CONVERSION OF EARNINGS PER DAY TO EARNINGS PER TON , 1962 AND 1967 1962 (NOV.) T 1967 (JAN.) SIG. NONSIG .- DIFF. SIG. NONSIG. DIFF. UNDERGROUND MINES */ (1) Wage Per Man-Day $22.55 $15.84 $25.52 $19.12 (2) Tons Prod. Per Man-Day ** 11.97 11.97 15.07 15.07 Wage Per Ton (11.2) 1.88 1.32 .56 1.69 1.27 .42 SURFACE MINES *f (1) Wage Per Man-Day 24.43 16.96 27.55 18.88 (2) Tons Prod. Per Man-Day 26.76 26.76 35.17 35.17 Wage Per Ton (11.2) .91 .63 .28 .78 .54 .24 Signatory hourly earnings (General Counsel's Exhibit 4R and 5R) converted to wages per day by multiplying those earnings by 7-1/4 hours. Nonsignatory multiplier was 8 hours; hourly earnings from same source. Average production data from Dixie Exhibit 1R, p. 77. NOTE: As previously noted (fn. 21), in November 1962, underground mines employed 85 percent of the workers included in the Industry Wage Survey; slightly over 80 percent were covered by the 1967 survey. TABLE 6: PRODUCTIVITY IN ACCORDANCE WITH METHOD OF DIXIE EXH. 7R BUT WITH VARYING PRICE ASSUMPTIONS I. ABRAHAM II. DIXIE COAL III. RATLIFF COAL DIXIE EXHIBIT 7R BASIS PRICE ASSUMPTION PRICE ASSUMPTION Small Producer Large Producer Small Producer Large Producer Small Producer Large Producer 1. Man-hours of workers (000) 68 ,265 146,156 2. Value of shipments & receipts (000) $650,460 $1,707,876 $650,460 $1,707,876 $650,460 $1,707,876 3. Price of coal per ton $4.48 $4.48 $4.10 $4.48 $3.35 $4.48 4. Est. tons shipped & received (000) 145,192 381,222 158,649 381,222 194,167 381,222 5. Productivity; est. tons shipped per man-hour 2.127 2.608 2.324 2.844 2.844 2.608 6. per man-day (8.1hours) 17.228 21.125 18.824 21.125 23.036 21.125 7. % productivity greater in large than small mines 22.6 12.2 9.75 NOTES: ( 1) Data in Lines 1 & 2 derived from Dixie Exh. 7R (2) Data in col . I derived from Dixie Exh. 7R (3) Line 4 is computed ; line 2 line 3 (4) Line 5 is computed ; line 4 = line 1 (5) Line 6 " " ; lines 5 X 8.1 hours (6) Line 7 " " ; (Productivity Per Man-Day , Larger Producer Minus Ditto Small Producer ) 1 lowest of the two figures.