Palomar Corp.

592 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Palomar Corporation andPublic Service, Production & Maintenance Employees' Local Union No. 1057 Gateway Service Co. andPublic Service, Production & Maintenance Employees' Local Union No. 1057. Cases 23-CA-3781 and 23-CA-3780 August 11, 1971 DECISION AND ORDER On March 29, 1971, trial Examiner John P. von Rohr issued his Decision in the above-entitled proceedings, finding that Respondents had engaged in and were engaging in certain unfair labor practices and recommending that they cease and desist there- from and take certain affirmative action, as set forth in the attached Trial Examiner's Decision. Thereafter, Respondents and General Counsel filed exceptions to the Trial Examiner's Decision and supporting briefs. The Board has reviewed the rulings of the Trial Examiner made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Trial Examiner's Decision, the exceptions and briefs, and the entire record in these cases, and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the recommend- ed Order of the Trial Examiner and hereby orders that Respondents, Palomar Corporation and Gateway Service Co., their officers, agents, successors, and assigns, shall take the action set forth in the Trial Examiner's recommended Order. TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE JOHN P. voN ROHR, Trial Examiner: Upon charges duly filed, the General Counsel of the National Labor Relations Board, by the Regional Director for 23 (Houston, Texas), issued a consolidated complaint against Palomar Corpora- tion and Gateway Service Co., herein called the Respon- dents or the Companys, alleging they had engaged in certain unfair labor practices within the meaning of Section 8(aXI) and (5) of the National Labor Relations Act, as amended, herein called the Act.' The Respondents filed timely answers denying the allegations of unlawful conduct as alleged in the complaints. Pursuant to notice, a hearing was held before Trial Examiner John P. von Rohr in Laredo, Texas, on January 1 The charge in Case 23-CA-3780 was filed October 14, 1970, and the complaint in this case issued on November 19, 1970. The charge in Case 23-CA-3781 was filed on October 14, 1970, and the complaint in this case 13, 15, and 20; 1971. All parties were represented by counsel and were afforded opportunity to adduce evidence, to examine and cross-examine witnesses , and to file briefs. The General Counsel, the Respondents, and the Charging Party filed briefs on February 16, 1971, and they have been carefully considered. On the entire record in this case, and from my observation of the witnesses, I hereby make the following: FINDINGS OF FACT I. RESPONDENT Palomar is a Texas corporation having its principal office and place of business in Corpus Christi, Texas, where, as a service contractor operating under a National Defense Work Contract, it conducts operations at various United States military installations. The operation conducted by it at Laredo Air Force Base, Texas, is the only operation involved in this proceeding. During the period from approximately April 1 to March 31, 1971, Palomar held a motor pool and vehical maintenance contract with the Base Procurement Office at Laredo Air Force Base, Texas, valued in excess of $600,000. As of the date of the hearing herein, Palomar received gross revenue from the United States Air Force in excess of $50,000. Gateway Service Co. is a California corporation having an office and place of business in Corpus Christi, Texas, where, as a service contractor operating under a National Defense Work Contract, it conducts operations at various United States military installations. Its operation at the Laredo Air Force Base Texas is the only operation involved in this proceeding. During the period from approximately April 1 to March 31, 1971 Gateway held an aircraft refueling contract with the Base Procurement office at the Laredo Air Force Base, Texas, calling for goods and services valued in excess of $160,000. From the period of April 1, 1970, to the date of the hearing herein, Gateway received from the Base Procurement Office gross revenue in excess of $50,000. I find that Respondents Palomar Corporation and Gateway Services Co. are engaged in commerce within the meaning of the Act. U. THE LABOR ORGANIZATION INVOLVED Public Service Production & Maintenance Employees' Local Union No. 1057, is a labor organization within the meaning of Section 2(5) of the Act. A. Chronology of Background Events Despite a rather contentious record, and except for the rather minor exceptions herein noted, the principal facts in this case are not in dispute. The situs of the instant dispute is the U.S. Air Force Base at Laredo, Texas, where six employers, including Respon- dents Palomar and Gateway, have contracts with the U.S. Air Force to perform various services at the Base. The factors involved in the letting of the Air Force contracts are issued on November 18, 1970. An order consolidating these cases issued on November 20, 1970. 192 NLRB No. 98 PALOMAR CORPORATION materially involved in Respondent's defense and are best set forth at this-point. Thus, (and I borrow freely from Respondent's brief in summing up these undisputed facts) the contracts are for "management, labor and supervision only"' (i.e., no material or equipment, these being furnished by the government) and the prices are fixed unit prices per man hour, of labor requested-and performed. Pursuant to the Service Contract Act of 1965 and the regulations of the Secretary of Labor, the Air Force contracting officer is required by law to obtain from the Secretary of Labor, and include in the contract bid document, a so-called Prevailing Wage Determination setting forth the scale of wages and fringe benefits found to be prevailing in the community for nongovernment - work of 'a similar character where the Government work is to be performed, and a contract clause requiring that the Employer Contractor pay, his employees not less than the Prevailing Wage Determination so attached to the bid documents.2 Normally these contracts are for 1 year and run from April 1 to March 31 of the following year. The aforesaid Wage Determination is the minimum rate the employer must pay; it does not restrict him from paying a higher rate if he so chooses. Respondent Palomar has recognized the Union as the bargaining agent for its services, production, and mainte- nance employees since approximately 1965 and has had contracts with the Union for the greater part of this period. The last contract was effective from June 1, 1969, to September 30; 1970. It is noteworthy that at the time of the contract execution on June 1, 1969, Palomar had two contracts with the Air Force, these covering two categories of operations, one being the maintenance of motor pool vehicles and the ' otherfor aircraft refueling. The employees engaged in both, of these operations were covered by the aforesaid collective-bargaining agreement. Further, it is to be noted that Palomafs foregoing Air Force contracts were effective from April 1, 1969, to April 1, 1970. Thus, as is manifest, the 16-month collective-bargaining agreement overlapped the 12-month'government contracts by a period of 4 months. The record is clear that in negotiating for the above collective-bargaining agreement, the Union did not wish to have the employees bound to a 16-month contract providing only for the prevailing minimum wage scales as proscribed in the then existing Wage Determination. While willing to agree to the said minimum rates for the first 10 months of the contract, Business Agent David L. Jacobs, the Union's chief spokesman and negotiator throughout the period material hereto, urged that Palomar give the employees an approximately 30 cent an hour increase beginning on April 1, 1970.3 Although Clyde W. Smith, Vice-President, and a principal negotiator for Palomar, indicated concern as to what effect his agreeing to this demand would have in bidding for future Air Force contracts, Jacobs indicated that he would take steps to see that the 30=cent wage increase, if granted, would become the, minimum rate -in the next Wage Determination. 2 This is similar in concept to the Davis-Bacon Act which applies similar principles to the Public Work Contracts, i.e. government construction contracts. 3 Although Palomar's contracts with the Air Force expired on April 1, 1970, it is clear that the parties at this time anticipated that Palomar would 593 Specifically, Jacobs testimony concerning this aspect of the negotiations in June 1969 is as follows: I explained to Mr. Smith that we needed an increase in wages for 1970 because we were spacing any increases every two years. We felt that in 1970 we would need an increase of thirty cents . Mr. Smith was concerned as to whether this would appear in the wage determination or not. I told Mr. Smith that I could not promise him that this would appear in the wage determination. He told me the reason - why he was concerned was because if he was bound by this agreement he would have to bid higher than others who would bid by the wage determination, if this increase did not appear in the wage determina- tion. ^ I told Mr. Smith- we thought it would appear, because we had had protective rates once before, in 1968, the Labor Department had adopted this. So I told Mr. Smith that if this didn't appear, then we would 'take any non-legal means to enforce our contracts upon any sucessor of any contractor and that we would so notify any prospective bidders on these jobs. Suffice it to note here that Respondent Palomar accepted the Union's wage proposal and that the aforementioned 16 month collective-bargaining agreement adopted the rates of the then existing Wage Determination, but further provided that the unit employees would receive an approximately 30- cent hourly wage increase effective as of April 1, 1970. It is undisputed that the Union subsequently-submitted the above collective-bargaining agreement to the Labor Department and at the same time advised the Labor Department that it felt the wage increase of April 1, 1970, should be reflected in the next Prevailing W zge Determina- tion which the Labor Department was bound to make under the Service Contract Act. Such, however, did not turn out to be the case. In December 1969 the Wage Determination for bid documents to be utilized for the 1970-71 contracts was issued by the Labor Department. It did not include the increased rate as the parties had anticipated, but instead remained at the rate of the preceding .year. This Wage Determination, accordingly, was set forth in the contract bid document which the, Air Force made available to prospective bidding contractors in December 1969.4 In or about January 1970, Palomar submitted its bid for the new Air Force contracts, covering both the motor pool and refueling operations, which were to be effective from April 1, 1970, to April 1, 1971. Smith testified without contradiction that this bid was submitted on the basis of wage costs computed at the higher scale for the first 6 months (i.e. this incorporating the 30-cent increase for the last 6 months as provided in the collective-bargaining agreements) and at the ,lower scale (i.e. the latest Prevailing Wage Determination which did not include the 30-cent increase) for the second 6 months. ' When the competitive bids for the new contracts were opened, it was ascertained that Respondent Gateway was the low bidder on the aircraft refueling operation. have a good chance to be the successful bidder for the next yearly contracts. 4, The customary annual Air Force practice is that competitive bids are invited in December and received in January, contracts are awarded in February, and contracts start on April 1. 594 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Accordingly, it was awarded the contract for performance of this operation. With respect to the motor pool maintenance operation, a company not identified by name was the low bidder for this contract. However, this company was disqualified by the Air Force and Respon- dent Palomar, who was the second lowest bidder, was awarded the contract to perform the motor pool operation.5 According to the credited and unrefuted testimony of Jacobs, one Hank Schreiber came to his office on March 28, 1970, and stated that he represented Gateway.6 Although Schreiber indicated that Gateway was willing to recognize the Union, he asked that the wage rates for Gateway's employees be reduced-by "approximately 14 cents per hour from those covering the same group of employees in the Palomar collective-bargaining agreement. It is- undisputed that Jacobs and Schreiber met again on March 31, 1970, and at this time reached an oral agreement that (1) Palomar would recognize the Union and would abide by the terms of the Palomar's collective-bargaining agreement for the remaining 6 months thereof, except that (2) the wage rates for Gateway's aircraft . refueling employees would be reduced by 14 cents per hour, as Schreiber had requested.? It is also undisputed that at this time Respondent Gateway gave Palomar's Clyde W. Smith full authority to act as its collective-bargaining representa- tive in all its future dealings with the UniOn.s B. The 1970 Collective-Bargaining Negotiations: Respondent's Reduction of the Wage Rates It is undisputed that in April 1970 Company Representa- tive Smith bad a telephone conversation with Union Representative Jacobs concerning Respondents' wage obligations under the Palomar contract in light of `the latest Wage Determination -9 Jacobs credibly testified that at this time Smith told him that he was thinking about joining the "bad guys" (referring to two other contractors at the Laredo base), that he might not honor the wage provisions in the contract but instead would pay the employees the wage rates as specified in the latest Wage Determination. Since this would result in an approximate 30 cent `hourly wage cut, Jacobs told Smith that he had "enough problems with the other contractors" and that he "would regret having to sue" Palomar if it did not abide by the terms of the contract. It is undisputed that Smith did not follow through with this proposed action and that Respondent Palomar in fact continued to abide by all the terms of the S These facts are set forth in accordance with the uncontroverted testimony of Smith. Smith testified that he did not know the reason for the disqualification of the low bidding company. 6 The Articles of Incorporation of Gateway reflect that Schreiber was treasurer and director of Gateway as late as May 31, 1966. r Specifically, these wages were reduced from $3.05 per hour, as provided in Palomar's contract, to $2.91 per hour. As Respondent's brief points out, the Prevailing Wage Determination in effect at this time for this classification was for a rate of $2.91 per hour. 8 This appears to be based on the fact that Gateway is headquartered in California, whereas Palomar is a Texas corporation. Smith resides in Corpus Christi, Texas, and of course has had considerable experience in dealing with the Union as well as with officials of the Laredo Air Force This is in reference to the Wage Determination issued in December 1969. Respondent's brief asserts that Smith discussed this matter with Jacobs in about January 1970. H,wever, there is no specific testimony to contract, including its wage provisions, until the date of its expiration. However, Jacobs credibly testified that during a telephone conversation held about August 19, 1970, Smith told him that Palomar's board of directors was; unhappy with him because the Union was makinghim look foolish, that Palomar was paying '.higher wages than other contractors, and that they had decided to cut wages back ;to the wage determination when the contract expired-110 On July 6 and 7, 1970, the Union served notice to Palomar and Gateway, respectively, of its intent to negotiate changes in wages, fringe benefits, and other terms of employment. The first collective-bargaining, meeting between the parties took,place ,at La Quinta motel on September 3, 1970.11 Smith and Jacobs acted as principal spokesmen for their respective sides, with other Company representatives and the Union's bargaining . committee also present. Preliminarily, it should be noted that at this meeting and the ones that followed Smith concededly acted as representative for both of the Respondents herein. Further, the record is clear that in these meetings the Company and Union proposals and counterproposals were'applicable to both Palomar and Gateway. There, was no attempt by either party to distinguish between the companies, it being understood that-what went,for one also went for, the other. Returning to, the September, 9 -meeting, Jacobs, credibly testified that at the outset, of the meeting Smith stated that Respondents would have to revert to the Wage Determina- tion. He said that, when he questioned this proposal Smith replied, "Well, were losing money. I don't mind telling you that in refueling we're not doing bad. But we're losing money" Jacobs testified, that he then told Smith that he (Smith) had bid $75,000, over the 'last year's contract and that he could not, see where Respondents would be" losing money. When Smith thereupon stated that he would be willing to show his books, the conversation proceeded in a jocular vein as to_ whether this would be a second or third set of books. However, according to Jacobs' credited testimony, at this point he did tell Smith that if the Respondents actually were losing money, the Union would be willing to consider any proposal even if it meant a wage cut. Jacobs then handed Smith a collective-bargaining agreement which contained' the ' Union's entire contract proposal, except that it did not include wage rates. Jacobs told Smith that the Union ''was not asking for 'a - wage increase, but that it did seek a 2-1/2 cent increase for health and welfare'payments. The parties proceeded to go over the this effect. 10 I have no doubt, as Smith testified,, that there also were other occasions when he told Jacobs that Respondents would revert to the latest Wage Determination when the contract expired. 11 Although Smith testified that this meeting was held on September 9, I credit Jacobs' testimony that it was "held on September '3. From my observation of the witnesses, my impression was that Jacobs gave far more reliable testimony than did Smith. while U do not suggest that Smith was a dishonest witness, he concededly could not recall details of certain relevant events concerning which he was queried. Moreover, as a reading of the record will amply demonstrate, much of his testimony was elicited by unduly leading questions. Jacobs, on the other hand, impressed me as a forthright witness and one who, on cross-examination as well as on direct, displayed an accurate memory for relevant detail. As has been noted at the outset of this Decision, however, the basic facts in this case are not in dispute. PALOMAR CORPORATION 595 Union's contract proposal, with Smith indicating disagree- ment- over a number of the Union's proposed provisions.12 Jacobs finally stated that in view of the Company's wage cut proposal, he would not pursue the 2-1/2 cent increase for health and welfare. -The meeting ended on the note that the Respondents would prepare a company proposal and submit it toAbe Union. - - On September 15, 1970, Respondents sent their,written contract proposal to the Union. With respect to wages, it included a proposal that the wages be set in accordance with the latest Wage Determination rate. On September 30, 1970, the parties held a second bargaining meeting at the. Hamilton Hotel in Laredo. It is undisputed that the parties went through the various proposals and counterproposals with the result being that, except to matters pertaining to wages and economic fringe benefits, Smith agreed to all of the Union proposals. However, Smith advised the Union that Respondents were adhering to their position that the wages would have to be cut back to the wage determination. Jacobs thereupon pointed out that wage increases recently had been granted to other civil service employees (so-called "blue collar" employees) employed in similar capacities, at^ the Laredo Air Force Base, and that, as he testified, "it was unbelievable that they were asking us to give 30 cents an hour of our wages, especially in the light of this increase, and it was practically unheard of when you went to a bargaining session for the Union to bargain downwards." It is undisputed-that at this meeting Jacobs requested to inspect the Respondents' books and that the request was rejected by Smith. According to the credited testimony of Jacobs, this came about when he finally advised Smith "that if. they.were losing money we would consider it, and certainly take on a wage cut if we determined by the records that it was necessary because they were losing money out of pocket." According -to, Jacobs, Smith "at this time changed his position slightly" stating that "they were not making profits- they were entitled to." Jacobs said that he thereupon told Smith "that they had bid their job for twelve months, not for six, and that according to our figures that they did have the money to continue paying the wages contained in our collective bargaining agreement for, the entire year, and that we, were not-asking for any increases whatsoever, we just wanted to continue with the same wages for another year." Jacobs further testified that although Smith first stated that his board of directors would not let the Union inspect the books, he (Smith) later stated that he would take the matter up with the board of directors, and would let him know of their decision. With respect to all the foregoing Smith testified that he; did not say anything to Jacobs about operating at a profit or a loss. I credit Jacobs' testimony in this regard, as set forth above. Conceding that at this meeting he declined to produce Respondent's records, Smith's testimony was as follows: Q. (By the Trial Examiner)-Incidentally, when Mr. Jacobs asked for your books and records, I take it you declined to show them? ` A. Yes. Q. Did you give him any reason for declining the request? A. I really didn't see what right he had at the time, I couldn't-why should he look at our books without-I just didn't understand why he should see our books. (Underlining supplied) Q. And that is about what you told him? A. Right. Right. While it is undisputed that the September 30 meeting ended with no agreement -being reached as to wages, there is one aspect of the testimony concerning this meeting which is not of easy resolution. This concerns testimony by Smith to the effect that he told Jacobs that he might be willing to consider a wage reduction of somewhat less than 30 cents. Unfortunately, much of Smith's testimony concerning this meeting (as well as other meetings and other matters) was not given in orderly or narrative form as to what was said and transpired. In any event, Smith's testimony concerning this matter was as follows: Q. [By Mir. Brown] Did you express any willingness on your part to arrive at any in between position? A. Yes, sir. Palomar and Gateway was open for- Q. (By the Trial Examiner) What did you say? A. We were open for wage increase or to talk about any amount in between the two, what the Union had asked for and what we had offered. And the Unions position was that we will not accept anything lower than is in our present contract. - * * * Q. (By the Trial Examiner) Did you ever propose anything specifically with respect to wages other than the wage determination? A. Yes, sir. I threw it on the table, not in written form, but I threw it on the table orally. But the- Q. What did you put on the table in that respect? A. Five, ten, fifteen cents=what do you want to bargain for? You tell me, and we'll start bargaining, Q. In what meetings did you say this? A. This was in the September 30 meeting. This was in the earlier meetings, too, the 9th or the 3rd-whenever it was-but it was in both of thesemeetings, There seems to be a discrepancy on the 3rd or the 9th. Q., Now where is that wage scale here? [referring to contract proposal] A. The Union wage or what? Q. The one that was used. A. This is the Department of Labor wage. Q. Let's take, for example, automotive mechanic foremen, $3.60. Was that your proposal in the contract? A. Yes. I mean, our proposal to the Union. Q. What did the Union want? A. $3.90 Q. Now, do I gather by your latest testimony that you told the Union that you would be willing to consider raising this from $3.60`by tenor fifteen cents? In other words, that you would be willing to consider raising it from $3.60 to $3.75 or $3.70? Is that what you told the Union? iz Although Jacobs testified in considerable detail as to Respondent's position with respect to the various clauses, I do not deem it necessary to set forth this testimony. 596 DECISIONS OF NATIONAL LABOR RELATIONS BOARD A. Yes, sir. And I think you'll find from the record that I told them on the 9th or the 3rd meeting-whatever date we agreed to. -Q. And what was the Union's response? A. The-,Union's response is that we will not accept anything below what we're getting now. A Union never-I hate to repeat-but a Union never lowers the price. Called on rebuttal, (Jacobs was asked by the General Counsel if Smith had ever had occasion "to mention to you the, subject matter of five, ten or fifteen cents." Jacobs responded that he, recalled a conversation with Smith during a subsequent strike (hereinafter noted) in which Smith-suggested,that off-the-record they might get together. Jacobs,testified the following' colloquy then ensued: I -said,- "Wes, I' am sure there is a way we - can get together. He said, "Well, what would it take for us to "settle -this?" And I said, "What ... are you talking about?" He'said, "Well, would you take a little money on the wages,' a ' little increase on the wages?" I said, "Well, what are you'talking about, how much are you talking about?" He said, "Like ten cents." I' said, "I'm afr'aid'not: We couldn't go along with ten cents." 'Other,'-than the `above, Jacobs testified that he did not recall any conversations with Smith wherein Smith proposed'to raise his wage offer by any specific amount. Jacobs did not; however, specifically deny Smith's testimo- ny that he (Smith) might be willing to arrive at some in between position, or that he- would consider 5, 10 or 15 cents. Upon a consideration of all the testimony, I am persuaded and find that at the September 30 meeting, and probably also at the September 3 meeting, Smith no doubt did make some remark to the effect that he would consider a wage cut in a somewhat lesser, amount than the 30 cents which he-proposed. However, this remark was not in` the form of any firm counterproposal for.any specific amount and it is clear that the parties did not treat it as such,i3 October 9,1-1970, was payday for the employees of Respondent Palomar and their checks on this date reflected a wage reduction of .approximately 30 cents per hour, such reduction effective as of-October 1,' 1970?Y Later on the same-day Jacobs telephoned Smith and advised him that a Union meeting would be held on October 11 and that a strike vote :would be taken at; that time unless the wages were restored. Pursuant to arrangements made by the Federal Media- tion and Conciliation Service, a further' meeting between the Union and-the Respondents was held at the Hamilton Hotel on October 11, 1970. In addition to ' a Federal Mediator and the, same,representatives of the parties as aforenoted, also present at this meeting were Respondent 13 As Respondent, with reference to the September 30 meeting, states in its brief: "Smith was insistent on cutting back to the Wage Determination unless a modest increase above that level' were agreed 'to, but Jacobs was adamant, saying Unions never reduce,wages." 14 A - few days ,later Respondent Gateway instituted a similar cut, effective as of October 1. Jacobs testified that although Respondent announced' at the September 30 meeting that it would revert to the Wage Determination, he did not learn of the actual ' cut until the employees complained to him after receipt of their paychecks. Smith testified that Jacobs was advised of the prospective cut at the September 30 meeting and at that time stated that the Union would notify the employees that the reduction would be forthcoming. However, whatever the case as to the attorney, William A., Brown and Union attorney Marvin Menaker. At At this- ;meeting Brown reviewed , Respondents,' position in some detail and stated that Respondents would be willing to pay the Union's wage demands , if the Air Force would agree .to pay Respondents:the difference for the added costs. On behalf ,of Respondents Brown further offered to put the difference (i.e. the'approximate30,cents per hour , wage reduction),- in escrow, pending litigation which would ultimately result in - determination of the matter. The Union rejected this proposal . Menaker-asked to see Respondents' books, stating-that the Union would be willing to consider any proposal upon inspection of the books. Brown refused this- request, stating that, Respon- dents were under no obligation to show the Union, their books 15 The -meeting ended without any agreement -being reached. - Shortly after the conclusion of the October I 1 collective- bargaining -meeting, the Union held , a ,meeting with, the employees and the, employees voted to go on strike. It is undisputed that on the following -day, October 12, the employees of Respondent Palomar went out on strike. The strike terminated , on, or about October 20, 1970, at which time all the employees. were reinstated to ,their former, jobs without any loss to their former rights and privileges.ts C. Conclusions It is elemental, of course, that an employer may unilaterally alter existing -'wages or other terms - or condi- tions of -employment in situations where, after having bargained with the, collective-bargaining agent in good faith, an impasse has been reached. The unilateral change becomes- unlawful only if instituted prior to the time a bona fide impasse has been reached. The basic issue in this case, then, is whether the parties reached a bona fide impasse at the time when Respondents reduced the-employees 'wages by approximately 30 cents without ' having reached an agreement with the Union over the flatter. In my view, a resolution `of this issue turns on the question' as to whether Respondents were-lawfully justified, under all the circum- stances of this case, in refusing the `Union's request, to produce its books and'records.17-It is Respondents' position that their refusal was not predicated on any inability' to pay or that they were operating•at a loss and that hence, under their interpretation of the decision in N.,L.RB. v. Truitt. Manufacturing Co. 351 U.S. 149, they were not required to produce their records. However, even if it be'assumed that Respondent did not here plead an inability to pay, Truitt does not hold that the absence of such a plea in itself 'will justify a refusal to show its books where their 'is a request Union's first knowledge of the actual cut in the paychecks, this would have no effect on my ultimate decision herein. ''Credited and unrefuted testimony of Jacobs. 16 The employees of Respondent Gateway did not-go out ' on strike. Jacobs,'testified that this action was not taken because the Union'did not wish , to impede the particular Air Force operations which would be affected if the Gateway employees went on strike. 17 I reject Respondent's assertion that the Union's request for financial data applied only to Respondent Palomar . As previously indicated, Smith acted as the authorized bargaining agent for both Respondents: There, is nothing in the testimony to indicate that Jacobs' request for the books and records was limited to'Palomar. - PALOMAR CORPORATION 597 that the plea be substantiated. Thus, the Supreme Court held as follows: 'We think that in determining whether the obligation of good-faith bargaining has been met the Board has a right to consider the employer's refusal to give information about its financial status. However, it later added: We -do not hold, however, that in every case in which economic inability is raised as an argument against increased wages it automatically follows that the employees are entitled to substantiating evidence. Such case must turn upon its particular facts. The inquiry must always be'whether or not under the circumstances of the particular case the statutory obligation to bargain in good faith hasbeen met. While the underlying principle remains the same, it seems nonetheless well to bear in mind that here the refusal to produce information did not come about under the context of a union demand for a wage increase, but rather took place under the circumstance of Respondents' insistence that the existing wage rates be reduced and substantially so. What, then, was Respondents' asserted reason for the necessity- of a wage reduction? While this is somewhat apparent from the facts hereinabove set forth, this is more explicitly set forth in a letter dated October 10, 1970, which Smith sent to the Union just prior to the last bargaining meeting of "October" .11. In this' letter Smith stated as follows: To -clarify-our position, we propose that the rate to be paid our employees conform to the prevailing rate of pay as determined by the Department of Labor and required to-be paid under the Service Contract Act and the terms of our contract with the Government. Our now expired agreement with you provided for a higher rate to be effective from I April 1970 to September 30, 1970, which we agreed to anticipating that the Service Contract Act Wage Determination for the Government Contract starting April 1 would require such rates for all contractors or bidders for contracts. This did not occur and we have been penalized for six months by a higher rate than competition would allow us to recover. Our proposal, to the Government- in competition with bidders bound only by the Service Contract Act determination, and not bound by agreement with you for a higher rate, was based on our absorbing the rate discrepancy for six months, before reverting to prevailing wage conditions. It is, as we explained to you, necessary for us to adhere to this wage determination in order for us to operate on a competitive basis, and we cannot earn the profit to which we are entitled while paying non-competitive wage rates. Thus, as the letter -reflects, Respondents clain (1) that in view of the wage determination it was being penalized for 6 months by a higher rate than competition would allow it to recover, (2) that the wage reduction (i.e., adhering to the wage determination) was necessary in order for it to operate at a competitive basis, and (3) that absent the 30-cent reduction in wages it could not earn the profit to which it was entitled. In view of the above-asserted basis for Respondents' insistence that it could not continue to pay the wages then in effect, I believe this case to be governed by the Board and Court decision in Stanley Building Specialties Co., 166 NLRB 984; enfd. 401 F.2nd 434 (C.A.D.C.); cert. denied 395 U.S. 946, June 9, 1969. In that case, as -here, the employer refused to supply financial - data requested by. the union during contract negotiations on the ground that it could not pay more than- it was offering and remain competitive. Rejecting this defense, the Board found that the employer's' refusal to furnish the information requested contributed to the stalemate in negotiations and that the employer thereby violated Section 8(a) (5) of the Act. In so holding, the Board commented on the decision of the Supreme Count in the Truitt case as follows: While we need not decide whether Respondent's refusal on -or about December -10 to supply the financial data requested by the Union constituted a violation of the Act, we do not ready the Supreme Court's holding in NLRB. v. Truitt Mfg. Co., 351 U.S. 149, as precluding an inquiry into Respondent's conduct before negotia- tions have commenced or before the Union has laid its complete economic proposals on the bargaining table, where the question presented to us is whether Respon- dent acted in good faith -in calling attention to its financial plight in order to forestall the Union's request for increased wages and other economic benefits but, at the same time, refusing to furnish requested supporting data. The ordinary case, of course, is one where the Union makes a demand for increased wages and the employer resists the demand on the ground of its inability to pay, but refuses the union's request to substantiate its claim. However, we do not believe that the Court in Truitt intended to restrict its holding to these simple facts; we read that case rather as announcing principles that are generally applicable to a wide variety of bargaining situations in which good-faith obligations under the Act require that a party to bargaining negotiations be willing to substantiate on request aposition it has taken during the course of the negotiations. Further, in footnote 4 of the Stanley decision the Board additionally stated "We find under the circumstances of this case such a claim is, in effect, a plea of inability to pay." Significantly, in upholding the Board on this point, the U.S. Circuit Court of Appeals noted, with appropriate citations, that "claims of the need to remain `competitive have been equated to claims of inability to pay for the purpose of creating an obligation to provide supporting economic data." It is noteworthy that in this case the Union's request for appropriate financial data was not made with the intent of engaging in a fishing expedition. Thus, this request was not made until after it had placed its economic demands on the table and not until after the Respondents'',assertion that it was, economically necessary for, them to reduce the employees' hourly wages by 30 cents.18 Accordingly, and in view of the precedent enunciated in the Stanley case, I find that under the circumstances of this case Respondents `were u Although the Union was aware of the latest wage, determination and involved in Respondent's bid in procuring their contracts with the Air although it also appeared to have knowledge of the figures and factors Force, it is clear that there were other factors (such as operating expenses, (Coruinuea) 598 DECISIONS OF NATIONAL LABOR RELATIONS BOARD legally obligated to-. furnish the Union the financial data requested, , that.. its 4ailure to do so contributed to the stalemate in negotiations that occured on October 1,1, 1,970, and that-Respondent thereby failed to bargain in good faith in violation of Section 8(a)(5) of the Act 19 Further, in view of Respondents' unlawful refusal, I find, that a bona fide impasse;did not- exist when the Respondents- unilaterally instituted -the wage reductions and that by such conduct Respondent further violated Section 8(ax5),and (1) of the ,Act. The, complaint 'further alleges that the strike by the Palomar , employees on October .12, 1970, was an unfair ,labor practice strike., Although this question appears moot since at- the end of the, strike these employees, were reinstated to their former positions without prejudice, to their former rights and privileges, the record amply demonstrates that the strike was caused by Respondents' unlawful conduct in unilaterally reducing the wages and I would, accordingly, hold,that.,the evidence, supports this allegation of the, complaint. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE, The activities of the Respondents set forth in Section III, above,' occurring, in connection with their operations as ;described in' Section I, above,'have a close, intimate, and substantial relation' to trade, traffic, and commerce among the several States and tend to lead to labor" disputes burdening and obstructing commerce and the free'` flow of commerce. V. THE REMEDY Having found that the Respondents have engaged in unfair labor practices, I shalt recommend that they cease and desist therefrom and "take certain' affirmative action designed' to effectuate 'the purposes of the Act.'A provision has been included in the Recommended Order `which revokes the wage decreases instituted on October 1,` 1970. In accordance' with well-settled precedent,' I shall also recommend that Respondents make whole their employees for any losses they may have suffered by reason of their unilateral action.21 Upon the basis-of the foregoing findings of fact and on the entire -record in this case; I make the following: CONCLUSIONS OF LAW - L' Palomar-Corporation-'and Gateway Service Co. are engaged in commerce within the meaning of Section 2(6) and (7) of the Act. - - 2. Public- Service, Production and Maintenance Em- administrative expenses, managerial salaries, and the like which were beyond its knowledge., It is quite, possible that, these factors could play a relevant part in the Union's assessment of Respondents' wage offer. 29 Cf. General'Elect r-Company, 188 NLRB No. 107. At the hearing and in its brief - the^Respondents have pointed to the,Trial Examiner's Decision in Emerald Maintenance,, Inc., somehow claiming that the ultimate decision therein will have a bearing on, the issue in this case . In the meantime, the Board has issued its decision in the Emerald case at ' 188 NLRB No. 107. While it is true that some facts in the Emerald case are also present here, I think it clear that otherwise the cases are factually and legally inapposite. ployees' Local' Union, No. 1057, is a labor organization as defined in Section 2(5) of the Act. •t 3. The following unit of Respondent Palomar's employ- ees is an appropriate unit for the purposes, of collective bargaining within the meaning of Section 9(b) of the Act. All of Palomar's employees- employed at, Laredo Air Force Base, Laredo, Texas, engaged in the performance of the, motor pool- operations contract and the, motor.. pool vehicle maintenance contract,-excluding guards, watchmen and supervisors as defined in,theAct. 4 The., following ; unit of Respondent .Gateway's em- ployees is an appropriate. unit for the purposes, of collective bargaining within the meaning of Section 9(b) of the Act: A11 of Gateway's employees employed at the Laredo Air Force Base, Laredo Texas, engaged in the performance of the, aircraft refueling contract, excluding, guards, watchmen and supervisors as defined in'theAct. , 5. At, all times relevant hereto„ Public, Service, Pro- duction & Maintenance, Employees Local Union No1057, has been, and continues to, be, ' the ,exclusive bargaining representative of all the employees in the above-mentioned units for the"purposes of collective bargaining within the meaning of Section 9(a) of the Act. 6. The Respondents, by unilaterally changing wage rates. without consulting-with Public Service,_Production & Maintenance Employees Local Union No.` ,1057'as''the exclusive representative of their employees in the above units, have violated Section 8(a)(5) and (1) of the Act.` 7. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the. meanmg'of Section 2(6) and (7) of the Act. Upon the foregoing findings of fact, and -conclusions of law the entire record, and pursuant to Section ' 10(c) of the Act,.I;hereby issue the following recommended: 22 ORDER Palomar ' Corporation and - Gateway' Service Co, the Respondents herein, their officers; agents,-successors, and assigns, shall: 1. Cease and"desist from: (a) Unilaterally changing wage rates without consultation with Public Service Production'& Maintenance Employees Local' -Union No. 1057, as the':duly certified exclusive representative of their employees in the following respective appropriate units: All Palomar's employees employed at the Laredo Air Force Base, Laredo, Texas, engaged in the performance of the-motor pool operations contract'and"the motor pool vehicle maintenance contract, excluding guards, watchmen and supervisors as defined in the Act. All of Gateway's employees employed at the -Laredo Air Force Base` Laredo Texas,=engaged in the perform- 20 N.L7LB. V. Katz, 369 U.S. 736. 1 , , 21 Baltimore Luggage Company,,,,, 17 NLRB 1576, and cases cited therein. 22 In the event no exceptions are filed as provided by Section 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings; conclusions and recommended Order herein shall, `as provided in Section 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions and Order, and all objections thereto shall be deemed waived for alt,purposes.' PALOMAR CORPORATION 599 ance of the aircraft refueling contract, excluding guards, watchmen and supervisors as defined in the Act. (b,-.In any like or related manner, interfering with, restraining, or coercing employees in the exercise of rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action which is found to effectuate the policies of the Act: (a) Revoke the unilateral wage rate reductions instituted on October 1, 1970, and revert to the wage scale existing immediately prior to October 1, 1970. (b) Make whole the employees in the above appropriate units for any loss of pay they may have suffered by reason of the unilateral reductions in wage rates. Interest at the rate of 6 percent per annum shall be added to the backpay to be computed in the manner set forth in Isis Plumbing & Heating Co., 138 NLRB 716 (c) Preserve and, upon request, make available to the Board's agents for examining and copying, all records necessary for the determination of the amount of backpay due under this Order. (d) Post at their respective offices and places of business at the Laredo Air Force Base, and all other places where notices to employees are customarily posted, copies of the applicable notice attached hereto marked "Appendix." 23 Copies of said notice, on forms provided by Regional Director for Region 23, shall be posted by the respective Respondents after being signed by the respective Respon dents' representatives immediately upon receipt thereof and be maintained by them for 60 consecutive days thereafter in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to insure that said notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director for Region 23, in writing, within 20 days from the date of the receipt of this Decision, what steps the Respondents have taken to comply herewith.24 23 In the event that the Board's Order is enforced by a Judgment of a United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall be changed to read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board" u In the event that this Recommended Order is adopted by the Board after exceptions have been filed, this provision shall be modified to read: "Notify the Regional Director for Region 23, in writing, within 20 days from the date of this Order, what steps the Respondent has taken to comply herewith." APPENDIX A NOTICE TO EMPLOYEES POSTED BY ORDER OF TILE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT unilaterally change wage rates without prior consultation with Public Service Production & Maintenance Employees Local Union No. 1057 as the exclusive bargaining representative of all our employees in the following appropriate unit: All of Palomar's employees employed at the Laredo Air Force Base, Laredo, Texas, engaged in the performance of the motor pool operations contract and motor pool vehicle maintenance contract held by us, excluding guards, watchmen and supervisors as defined in the Act. WE WILL revoke the' unilateral wage rate reduction instituted on October 1, 1970, and revert to the wage scale existing immediately prior to October' 1, 1970. WE WILL make whole the employees in the above appropriate unit for any loss of pay they may have suffered by reason of the unilateral reduction in wage rates. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of the rights guaranteed them by Section 7 of the Act. Dated By PALOMAR CORPORATION (Employer) (Representative) (Title) This is an official notice and must not be defaced by anyone. This Notice must remain posted for 60 consecutive days from the date of posting and must not be altered, defaced, or covered by any other material. Any questions concerning this Notice or compliance with its provisions, may be directed to the Board's Office, 6617 Federal Office Building, 515 Rusk Avenue, Houston, Texas 77002, Telephone 713-226-4296. APPENDIX B NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT unilaterally change wage rates without prior consultation with Public Service Production & Maintenance Employees Local Union No. 1057 as the exclusive bargaining representative of all of our employees in the following appropriate unit: All of Gateway's employees employed at the Laredo Air Force Base, Laredo, Texas, engaged in the performance of the aircraft refueling contract, held by us, excluding guards, watchmen and supervisors as defined in the Act. WE WILL revoke the unilateral wage rate reduction instituted on October 1, 1970, and revert to the wage scale existing immediately prior to October 1, 1970. WE WILL make whole the employees in the above appropriate unit for any loss of pay they may have suffered by reason of the unilateral reduction in wage rates. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of the rights guaranteed them by Section 7 of the Act. GATEWAY SERVICE Co. (Employer) Dated By (Representative) (Title) 600 DECISIONS OF NATIONAL LABOR RELATIONS BOARD This is an official notice and must not be defaced by Any questions concerning this Noticeor compliance with anyone--- its provisions, may be directed to the Board's Office, 6617 This Notice must remain posted for 60 consecutive days federal Office Building, 515 Rusk Avenue, Houston, Texas from the date of posting and must not be'altered, defaced, 77002, Telephone 713-226-4296. or covered by any other material.