Royal Packing Co.

1060 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Royal ;Packing Company ; Schneider Packing Company; Union Packing Company; Wuestling Packing Comp- any; Tarpoff Packing Company; Volz Packing Company;; and Local No. 545, Amalgamated Meat Cutters andlButcher^ Workmen of North America, AFL-CIO. Cases 14-CA-5923, 14-CA-5924, 14-CA-5925, 14-CA-5926, 14-CA-5927, and 14-CA-5928 August 25, 1972 DECISION AND ORDER BY CHAIRMAN MILLER AND MEMBERS KENNEDY AND PENELLO On December 21, 1971, Trial Examiner Owsley Vose issued the attached Decision in this proceeding. Thereafter, the General Counsel, the Charging Party, and the Respondents filed exceptions and supporting briefs. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record and the Trial Examiner's Decision in light of the exceptions and briefs 1 and has decided to affirm the Trial Examin- er's rulings, findings,2 and conclusions, only to the extent consistent herewith. The complaint alleges that Respondents violated Section 8(a)(1) and (3) as well as Section 8(d)(4) and 8(a)(5) by locking out employees in the course of negotiations for a new collective-bargaining agree- ment. Respondents operate packing plants and are engaged in the slaughtering, processing, sale, and distribution of beef and beef products. For about 20 years, the production employees of these packing houses have been represented by the Union. Respon- dents were signatories to a collective-bargaining agreement covering these employees which was scheduled to expire on October 27, 1970. Shortly before expiration of that contract, and during negotiations for a successor agreement, Respondents began laying off employees and, by October 27, completely shut down operations. It is these layoffs and the complete shutdown which gave rise to the instant complaint. ' As the record and the briefs adequately present the positions of the parties, Respondents ' request for oral argument is hereby denied 2 The Charging Party and Respondents have excepted to certain credibility findings made by the Trial Examiner it is the Board's established policy not to overrule a Trial Examiner's resolutions with respect to The Trial Examiner found, and we agree for the reasons stated by him, that Respondents did not violate Section 8(a)(3) and (1) of the Act by the lockout of unit employees as of October 27, 1970, the expiration date of the contract. However, the Trial Examiner further found that 'Respondents violated Section 8(d)(4) and 8(a)(5) by furloughing employees prior to the contract's expira- ition. Respondents except, contending that their action in this regard was not a lockout within the meaning of Section 8(d)(4), but merely an economic layoff. We find merit in Respondents' position. The violation found by the Trial Examiner is based ,on the termination of employees, which was stag- igered among Respondents but first occurred in the certain plants on October 16, 1970, just 11 days before the contract was to expire. As indicated above, Respondents had a legitimate right to completely shut down their operations on October 27. It is plain, however, that the timing and circumstances under which that right could be asserted were dictated by special business considera- tions. The nature of Respondents' operation is such that a complete shutdown can only be effectuated over a period of time, and inventories cannot be liquidated in a single day. The killing, processing, and distribution activities must be staged out through a process which takes several days between the purchase of livestock for killing and delivery of beef to customers. Thus, following slaughtering it takes a day or two to process the meat for sale, and more time is needed depending on the needs' of customers to eliminate inventories. The elimination of inventories is the key to a loss free shutdown and, as this in turn depends on customer demands which cannot be forecast, the exact amount of time needed to eliminate inventories as of a specified date in the future cannot be predicted with any degree of certainty. From the foregoing it is obvious that Respondents could not continue to operate at normal levels to the date of contract termination and then shut down totally on that date, with storage lockers free of inventories. Moreover, this fact assumes heightened significance when considered with the Trial Examin- er's finding that Respondents had good reason to believe that the Union would strike upon contract expiration. The fear of a strike, coupled with the time required to liquidate inventories, precluded Respon- credibility unless the clear preponderance of all of the relevant evidence convinces us that the resolutions were incorrect . Standard Dry Wall Products, Inc, 91 NLRB 544, enfd 188 F 2d 362 (C A 3) We have carefully examined the record and find no basis for reversing his findings 198 NLRB No. 148 ROYAL PACKING COMPANY 1061 dents from deferring the shutdown to that date, without risking serious financial loss. The extent of this,risk is evidenced by the approximate aggregate value of livestock and perishable beef on hand shortly before expiration of the contract, which totaled $1,290,000. It is apparent therefore that if Respondents had deferred any shutdown operations until October 27, and had the threatened strike materialized before completion of phase out opera- tions, Respondents would have sustained considera- ble losses in inventories. In these circumstances, we are persuaded that Respondents' effort to cut back operations in advance of the contract's scheduled expiration was not unlawful. Furthermore, the earlier layoffs, which the Trial Examiner found unlawful were attributable to the reduction or elimination of work through this phasing out process. Thus, it is apparent that layoffs commenced after all the livestock on hand had been slaughtered, thus eliminating the work of those engaged in killing. After the slaughtered beef had been processed and placed in coolers, there was no work for the remainder of the unit employees.3 Accordingly, and as we are satisfied that Respon- dents had a lawful right to completely shut down their operations on October 27, 1970, and that the assertion of this right required a cutback in opera- tions prior to that date, we are satisfied that the earlier layoffs did not constitute a lockout within the meaning of Section 8(d)(4). Rather they were legitimate economic layoffs resulting from an una- vailability of work. To view this case otherwise, would require Respondents to either bear the risk of inventory loss or retain employees on payroll status even after the phase out of operations eliminated work available to them. Neither Section 8(d)(4) nor any other statutory prohibition requires an employer to choose between such alternatives as the price for asserting a lawful right to lock out employees during contract negotiations.4 Accordingly, we find, contra- ry to the Trial Examiner, that Respondents did not violate 8(d)(4) and 8(a)(5) by laying off employees prior to October 27, 1970,5 and as we agree with the Trial Examiner in all other respects, we shall dismiss the complaint in its entirety. ORDER It is hereby ordered that the complaint herein be, and it hereby is, dismissed. 3 It is noted that all unit work would have to be eliminated some time before inventories could be completely depleted by the demands of customers 4 Although the Trial Examiner finds that the overall shutdown was, in part, for an object of pressuring the Union into contract concessions, we specifically note that there is absolutely no evidence or basis for inferring that the layoffs prior to October 27, were for any objective other than that specified in the text of this Decision 5 American Ship Building Co v N LR B„ 380 U S. 300, 319 (concurring opinion), American Brake Shoe Co v N LR B, 244 F 2d 489 (C.A 7), Betts Cadillac Olds, Inc, 96 NLRB 268 TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE OWSLEY VOSE, Trial Examiner : These cases 1 were heard at St. Louis, Missouri , on August 16 and 17, 1971, pursuant to charges filed on November 4, 1970, and a consolidated complaint issued on June 18, 1971, alleging that the Respondents on various dates in October 1970 locked out members of the Charging Party, Local No. 545, Amalga- mated Meat Cutters and Butcher Workmen of North America, AFL-CIO, hereinafter called Local 545, in violation of Section 8(a)(5), (3 ), and (1) and 8(d) of the Act. Subsequently the parties filed helpful briefs which have been carefully considered.2 Upon the entire record and my observation of the witnesses, I make the following: FINDINGS AND CONCLUSIONS 1. JURISDICTIONAL FINDINGS The six Respondents at the time of the events involved in this case all operated packing plants in the St. Louis, Missouri , area where they were engaged in the slaughter- ing, processing, and distribution of beef and beef bypro- ducts. Each of the Respondents received at their packing plants more than $50,000 worth of beef cattle from out-of- state sources and each shipped more than $50,000 worth of processed beef and beef byproducts directly to out-of-state destinations. Upon these facts, I find as the Respondents admit, that they are engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED Local No. 545, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICE A. The Lockout of the Packinghouse Employees in Alleged Violation of Section 8(a)(5), (3), (1), and 8(d) of the Act 1. Background All six Respondents have dealt with Local 545 as the exclusive representative of their production employees for many years . The relationships between Royal, Schneider, and Volz and Local 545 goes back to the 1930's and the i In the caption of these cases, Royal Packing Company was originally, incorrectly named as Royal Sokolik Packing Company However, pursuant to a motion to amend the complaint made by the General Counsel and granted by the Trial Examiner, Royal Packing Company is here designated by its correct corporate name 2 The Respondents Royal, Schneider, Union, Wuestling and Volz filed along with their briefs a motion to correct record which is unopposed This motion is hereby granted and it is incorporated at the back of the folder of G C Exhs as T X Exh. I 1062 DECISIONS OF NATIONAL LABOR RELATIONS BOARD relationship between the remaining Respondents and Local 545, while not so long lasting, dates back at least 20 years. In the early years of the relationship there was little real bargaining over the terms of the contracts signed. As Dave Sokolik, the president of Royal, credibly testified, at that time it was customary for Local 545 first to negotiate with the Pork Packers Association and then, after settling with the Pork Packers, to come around and present to the beef packing plants the Pork Packers contract and the beef packing plants would sign the contract. On one occasion in the 1940's when Royal failed immediately to sign the contract presented to it, Local 545 called Royal's employ- ees out on strike the next morning. In 1964 and again in 1967 the contracts entered into between all the Respondents except Tarpoff were entered into on a multiemployer basis through an employer's association known as the Association of St. Louis Meat Packers, of which Royal, Schneider, Umon, Wuesthng, Volz, and a few other packers were members. Tarpoff has not been a member of any such association. However, when presented with the printed booklet containing the contract agreed to by the Association, Tarpoff's practice has been to look it over and sign it. Prior to the negotiations for the 1967 contract there had been very little genuine bargaining between the Associa- tion members and Local 545-in the sense of the parties exchanging proposals and counterproposals, listening to the arguments of the other party, and making reasonable adjustments. In 1967 the Association brought in Burton LaRue, a specialist in meat packing negotiations, to assist the employer members of the Association bargaining committee, David Sokolik and Harold Schneider, the presidents of Royal and Schneider. The parties negotiated without agreement until the expiration of the contract, which was Friday, October 27, 1967. Through the Federal Mediation and Conciliation Service the parties agreed to hold a meeting on the Thursday following the expiration of the contract and the Union orally agreed not to strike until after that meeting. During that week of October 30, 1967, the Respondents phased out their operations. Royal stopped killing operations on Wednesday and on Friday all employees were laid off. An agreement was reached Saturday, November 4, 1967, and the employees were called over the weekend to come back to work on Monday. The new agreement ran until midnight, October 27, 1970. It contained no-strike and no-lockout clauses and provided for a grievance procedure culminating in binding arbitra- tion. Following the 1967 negotiations, two members of the Association discontinued slaughtering operations and the Association was dissolved. In December 1967, Teamsters Local 700, representing Royal's drivers, called the drivers out on strike and placed pickets in front of Royal's two establishments (Royal has a processing plant in St. Louis, Missouri, and a slaughterhouse in East St. Louis, Illinois). Those members of Local 545 who had not yet reported for work refused to enter the plants and those already inside ceased working. The work stoppage lasted from 1 to 3 hours, until Royal adjusted matters to Local 700's satisfaction. About a year before the expiration of the 1967-70 agreement a new employer's association was formed which included the present Respondents except Tarpoff. This association was known as the St. Louis Beef Packers Association. The Association authorized David Sokolik and Harold Schneider to negotiate on their behalf, but each member reserved the right to reject or accept the contract. 2. The 1970 negotiations between Local 545 and the Association After reaching a settlement on April 6 with the so-called Big Four Packers-Armour, Swift, Wilson and Cudahy -Local 545 arranged for a meeting with the bargaining committee of the new St. Louis Beef Packers Association, hereinafter called the Association. The committee, consist- ing of David Sokolik, Richard Sokolik, Harold Schneider and Bert LaRue met with Edward Mecalo, the president of Local 545, and Fred Waelter, its secretary-treasurer, at the offices of Local 545 on April 29. Local 545 presented the employers with a list of proposed changes in the existing contract provisions with respect to wages, health, welfare, and pension benefits, among other items, which if agreed to, would very substantially increase the employers' cost of doing business. The Union took the position that the Big Four settlement set the pattern and insisted that any wage settlement arrived at with the Association be made retroactive to April 6, the date of the Big Four settlement. As President Mecalo admitted, Local 545 adhered to this latter position throughout the negotiations. LaRue, speak- ing for the Association, disputed Local 545's interpretation of the provisions in the 1967-70 agreement (art. XV) upon which Local 545 predicated its claim for retroactive pay. At the next meeting between the parties, which was held on May 15, David Sokolik explained that he and Schneider were representing the other members of the Association as well as themselves. Local 545 presented the Association representatives with a document stating the Umon's demands in greater detail. David Sokolik explained the problems the packers faced in trying to compete with the .,new breed" packers from rural and out-of-state areas who operate with labor rates from 25 cents to a dollar less than do the Respondent's. Sokolik also stated that the employ- ers did not want to be tied to the Krey Packing Company contract pattern to which they had always been tied in the past, or to any other package deal, and wanted the Union to negotiate with them as "beef packers." Krey was a considerably larger packer than any of the Respondents and at the time of the 1970 negotiations was not engaged in slaughtering any beef. It did process some beef, however. After a discussion of Local 545's contract demands the meeting concluded with the understanding that the Association would submit to the Union its counterde- mands for a contract. Early in June the Association mailed to Local 545 a list of proposed changes in the current agreement. No proposals concerning wages and health, welfare, or pension benefits were included. The parties met again on June 18 and discussed the Association's counterdemands. David Sokolik again point- ed out the fact that even though there had been attempts by the Meat Cutters International to bring the "new breed" ROYAL PACKING COMPANY packers's wages in line with the industry rates, after the last negotiation between the Meat Cutters International and the packers, the packers in the St. Joseph, Missouri, area increased their advantage 28 cents per hour over what it had been previously. Sokolik emphasized that the beef business in the area was going down and that the Union must give consideration to the disadvantage the St. Louis packers were working under because of the lower union wages paid by their competitors. Local 545 requested that the Association make a specific money offer. The meeting was recessed and the Association prepared its offer and returned and presented it to the Union committee. On July 9, 1970, the parties held a short meeting. A general discussion about the problem of the St. Louis packers again ensued. David Sokolik stated that he could not see how the Association could meet the Union's current demands. Neither party changed its position and no further meetings were scheduled. It was left that either party would contact the other if either had any changes to propose in their offers or demands. There was no further communication between either of the parties until August 21 when Local 545 sent the five Association members, and Tarpoff also, 60-day notices of its desire to reopen the contract. The requisite notices to the Federal and state mediation agencies were also sent by the Union at this time. These notices recite that no agreement has been reached between the parties. The parties next met on October 7. Local 545 notified the Association that it had reached a settlement with Krey providing for a 32-cent wage increase for the first period of the contract, 25 cents effective September 1, 1971, and 22 cents effective September 1, 1972, plus the full increases in health, welfare, and pension benefits sought by the Union. Local 545 requested the same settlement from the Association. The Association said it could not agree to such changes and countered with an offer of lesser increases in wages than Local 545 was seeking and proposing a delay in the effective dates of the health, welfare, and pension benefits Local 545 was requesting. This offer was not accepted by the Local 545 negotiators who stated that they would take it back to their contract committee without a recommendation. At this meeting on October 7 the Association informed Local 545 that if they were unable to reach agreement before the contract expired the Association members would have to phase out their killing operations and clean out their coolers. President Mecalo replied that in the past Local 545 had never let any meat spoil during the negotiations, and that in the 1967 negotiations Local 545 had given the employers a week's extension and had promised that there would be no meat left in the coolers to Spoil .3 On Monday, October 12, Mecalo informed David Sokolik that the Association's counterproposals of October 7 had been rejected and that Local 545 was insisting upon the Krey settlement. Sokolik made no reply. 3 This is Mecalo's testimony David Sokolik testified that all that Mecalo replied was, "I understand " Although LaRue, Richard Sokolik and Schneider were present at the October 7 meeting and were called to the stand after Mecalo testified as stated above, none of them denied Mecalo's 1063 3. The Memorandum of Agreement submitted to Association members and to Tarpoff on October 12 That same day, October 12, Clyde Barrett, recording secretary and business representative of Local 545 and Charles Coyne, another business representative of the Union, went to various packing plants with which Local 545 had bargaining contracts and asked the employers to sign the following document: MEMORANDUM OF AGREEMENT This Agreement was entered into by and between the [name of Employer] of St. Louis, Missouri, hereinafter designated as the Employer, and the Butcher, Sausage Makers and Packing House Workers, Local Union No. 545, hereinafter designated as the Union. 1. The Employer agrees to pay any and all pay that is negotiated with Royal-Sokolik and Company for the ensuing contract starting October 27, 1970 through October 27, 1973. 2. The Employer agrees to pay full Health and Welfare payments that are agreed to by Royal-Sokolik and Company. 3. The Employer agrees to pay full Pension Payments that are agreed to by Royal-Sokolik and Company. 4. The Employer also agrees to any other terms, provisions, and changes negotiated in the contract with Royal-Sokolik and Company. This agreement is subject to ratification by the membership. Accepted and signed for the Employer [Employer] Accepted and signed for the Union AMALGAMATED MEAT CUTTERS & BUTCHER WORKMEN OF NORTH AMERICA, AFL-CIO LOCAL NO. 545 There is a conflict in the testimony as to what took place when Barrett and Coyne went to two of the packinghouses- -Tarpoff and Wuestling. Alex Tarpoff testified that he and his brother Jon were in the office when Barrett brought the Memorandum in and asked them to sign it. Vasil Tarpoff, the president of Tarpoff, was not present at the time. Alex, after stating that they would like to look the document over, inquired why the Union had brought this document in at this stage of the negotiations, stating that Tarpoff had never previously been involved until after agreement had been reached with the Associatibn.4 The Tarpoffs were told, according to Alex, that Local 545 was "having difficulty reaching an agreement with the other packers and a strike vote had been taken, and this would guarantee us to continue to work if there were a strike." Later Alex testified that it was on the occasion of a second visit by Barrett to Tarpoff a day or two after the first visit when Alex refused to sign the Memorandum that the statement about the strike vote and possible strike was testimony in question Under all the circumstances I credit Mecalo's testimony 9 This is Alex's testimony Barrett was unable to recall this portion of the conversation I credit Alex Tarpoff's testimony 1064 DECISIONS OF NATIONAL LABOR RELATIONS BOARD made by Barrett. Barrett testified that, when he brought the Memorandum to the Tarpoffs, Alex and Jon said that they did not see any problem with the Memorandum, but wanted to show it to Vasil. Barrett further testified that he did not visit the Tarpoffs twice but called Jon on the telephone the next day, and was told that the Tarpoffs would not sign the Memorandum. Barrett denied saying that a strike vote had been taken. Coyne was not called as a witness.5 Richard Wuestling, Jr., president of Wuestling, testified that Barrett told him on October 12, 1970, that if he didn't sign the Memorandum that when October 27 came, Local 545 was going to strike and put up a picket line. Walter Wuestling, Jr., nephew of Richard Wuestling, Jr., testified that he and his brother, Monroe, were present when Barrett came to the plant on October 12, 1970, and that after Richard Wuesthng refused to sign the Memorandum, Barrett, looking up at the calendar, stated, "We are going to strike you . . . . On the 27th." When Richard commented, "Oh" Barrett added, according to Walter, "there will be pickets out in front of your plant at the same time we put them out in front of Royal." Monroe's testimony is in accord. Harold Schneider, president of Schneider, Hams Kram- er, senior partner of the partnership at Union, and John Volz, vice president of Volz, testified that Barrett visited their plants on October 12, 1970, concerning signing the Memorandum of Agreement. These witnesses testified (or it was stipulated) that Barrett did not mention strikes or pickets in the conversations that Barrett had with them. The evidence indicates that at no time during any of the negotiation sessions did Local 545 mention anything about a strike or picketing. In resolving the conflict between the testimony of the Tarpoffs and the Wuestlings, on the one hand, and Barrett, on the other, the fact that Local 545 sought the signatures of the smaller area packers on such a "blank check" agreements at this stage of the negotiations with the Association is of considerable significance, in my opinion. This was an unprecedented step for Local 545 to take. The only advantage accruing to any employer signing the Memorandum of Agreement which I can perceive is the implied assurance that his operations could continue without interruption due to a strike of Local 545 members. The implication almost inevitably flowing from a refusal to sign the Memorandum of Agreement is that such assur- ance of unhampered continued operations would not be available in such cases. In other words, the continued operations of any employers refusing to sign the Memoran- dum of Agreement would be vulnerable to strike action on the part of Local 545. In my opinion, in the cases of Tarpoff and Wuestling, Barrett and Coyne merely made explicit the threat which was implicit in Local 545's action in seeking signatures on the Memorandum of Agreement at this time. While I recognize, as the General Counsel and the Charging Party point out, that the testimony of Richard Wuestling is not without confusion, I conclude, after having observed the conflicting witnesses on the stand and having taken into consideration the various circumstances relied upon by the General Counsel and the Charging Party, that the mutually corroborative testimony of the Tarpoffs and the Wuestlings is entitled to credit in preference to the uncorroborated version of Barrett. About a half hour after Barrett and Coyne left the Wuestling plant, Walter Wuestling called Richard Sokolik, the personnel manager of Royal with whom he had been in close contact in connection with the negotiations, and informed him of the visit of Barrett and Coyne to the Wuestling plant and their request that Richard Wuestling sign the Memorandum of Agreement. After reading the contents of the document to Richard Sokolik and inform- ing him that Richard Wuestling had refused to sign, Walter Wuestling further reported that the two Local 545 business agents had stated that there would be a strike at the Wuestling plant if Wuestling failed to sign the Memoran- dum of Agreement and that the same thing would happen to Royal if it did not sign the Agreement. Before the end of the day Richard Sokolik spoke to all of the other members of the Association and ascertained that they had each been asked to sign the Memorandum of Agreement. 4. The shutdown of the Respondents' operations As found above, the Association members had previous- ly decided that rather than operate without a contract with Local 545-with all the uncertainty as to labor costs which would prevail in such a situation-they would phase out their operations if agreement could not be reached with Local 545 on the terms of a successor contract. They faced a tremendous financial loss if confronted with a sudden strike. The value of Royal's live cattle and killed beef on hand at any one time is approximately $500,000. Wuestling's livestock and meat on hand normally is worth $120,000. Schneider's livestock on hand is valued as high as $250,000 and its meat in coolers approaches $200,000 in value. The approximate value of Union's livestock, processed meat, and byproducts on hand in the middle of October was $170,000. The value at this time of the perishable inventory in the hands of the two smaller packers, Volz and Tarpoff, was approximately $50,000. It takes a day or two after the killing of the cattle to process the meat and byproducts for sale, and more time is required to dispose of all the meat products. This depends on the requirements of the customers. While beef can be stored in the processor's coolers for approximately 10 days, it starts to depreciate in value after 3 or 4 days. Having been informed on October 21 that their coun- terdemands had been rejected by Local 545, having been requested that day by Local 545 to sign the Memorandum of Agreement, and having learned of the threat of a strike to two of their number, the Association members started preparing for a shutdown of their operations. Tarpoff, although not a member of the Association, was bound by an identical contract with Local 545, and it decided to follow the same course of action. Consequently, beginning on October 16, the Respon- 5 There is no evidence that a strike vote had been taken by Local 545 as 1971, after Tarpoff had partially resumed operations, of October 12, 1970 It appears that the only strike vote taken by Local 545 6 Alex Tarpoff in his testimony states that signing the Memorandum against any of the Respondent was a vote taken on Saturday, January 9, Agreement "was like signing a blank check " ROYAL PACKING COMPANY 1065 dents started laying off employees, notwithstanding the ,provisions of Section 8(d) of the Act and the fact that their contracts with Local 545, which contained no-strike and no-lockout clauses, did not expire until midnight on October 27. The actual sequence of the layoffs is as follows: No. of unit employees Date Employer laid off Oct. 16, 1970 Union 17 Volz 7 Oct. 21, 1970 Wuestling 3 Oct. 23, 1970 Union 5 Wuestling 7 Schneider 38 Royal 98 Tarpoff 8 Oct. 28, 1970 Schneider 1 iIn addition to the unit employees a number of nonunit employees, such as office clericals and drivers, were subsequently laid off. Some unit employees who were !related to the owners of the various businesses here involved and who were members of Local 545 were not laid off. However, after the layoffs these employees did not perform unit work other than that which was necessary to clean out the coolers. By the close of business on October 123 all of the Respondents had completely discontinued (normal operations. Contemporaneously with making the layoffs, the Associ- 'ation members and Tarpoff sent letters to Local 545 !notifying it that the layoffs were being made. 5. The meetings between the Association and Local 545 after the shutdowns - The first meeting between the parties after the shutdowns commenced was on October 22. Mecalo stated that Local 545 would have to have the Krey settlement.? In addition he asked for the elimination of the so-called emergency clause which had been inserted in the 1967-70 agreement at the request of the employers. The Association adhered to its previous position. The Association informed Local 545 that because an impasse had apparently been reached its members would have to continue phasing out their operations unless a satisfactory agreement could be reached. Mecalo replied, according to his testimony which I credit, that Local 545 was not "going to close anybody down," that the membership would vote on the Associa- tions's offer on the following Saturday and that he would call David Sokolik and advise him of the outcome. On the morning of October 23, in a telegram to each of the Respondents, Local 545 notified them that they were in violation of article XIV, section II, of the agreement requiring 30 days notice of departmental shutdowns and requested an immediate meeting to discuss this grievance. On Saturday, October 24, Mecalo called David Sokolik and advised him that the membership had voted to reject the Association's offer, but that the men desired to continue working. When Sokolik inquired as to the basis on which the men would continue working, Mecalo indicated that he had to have the Krey settlement. Sokolik informed Mecalo that this was not acceptable to the Association. Sokolik acknowledged receipt of Local 545's telegram at this time and asked Mecalo when he wanted to meet. Subsequently a meeting was arranged for October 28. David Sokolik and Harold Schneider met with President Mecalo and Business Representative Barrett on that date. The latter two stated that they were making the depart- mental shutdown grievance part of the negotiations. The former took the position that the contract clause in question did not apply to complete shutdowns such as were, involved in this case. As far as the record shows, this grievance was not seriously pursued. I I The parties met again on October 30. Local 545 advised' the Association representatives that it was filing unfair labor practice charges against the Respondents and stated that it was making grievances concerning the discharges ofd Itwo employees, one by Union Packing Company and one :by Wuestling Packing Company, part of the negotiations. The Association representatives took the position that these were not proper matters for contract negotiations. !Local 545 reiterated its position that the Krey settlement was the only package which was acceptable to it.8 On November 4 Local 545 filed with the Board's Regional' Office charges alleging that the Respondents had violated; Section 8(1), (3), and (5) of the Act by laying off and! 'locking out their employees without conforming to the, notice provisions of Section (d)(4). The parties next met on November 21 at which time' Local 545 renewed its insistence upon the Krey settlement., The employers demurred. The parties agreed to meet again ,on December 14, but on December 8, this meeting was! cancelled by mutual agreement when both sides indicated; that there was no change in their positions. The next meeting was held on December 20 in the offices of the Federal Mediation and Conciliation Service. At this' meeting the employers substantially increased their wage, offer. After consulting with Local 545 representatives, Federal Mediator O'Keefe advised the Association com- mittee that the parties were too far apart, that Local 545 "would not negotiate any wages other than the pattern of 32-25 and 22." 9 The final meeting of the parties in January 1971 at which an agreement was reached is discussed, below, after consideration is given to events at the Tarpoff' Packing Company. I This is the testimony of David Sokolik and Burton LaRue Mecalo Although Mecalo denied that Local 545 took this position at this meeting, tentatively denied making this statement In view of the fact that Mecalo for reasons indicated above, I accept Sokolik's testimony was still seeking the Krey settlement months later , I find the testimony of 9 Local 545's original wage proposal at the start of the negotiations was Sokolik and LaRue wholly credible for a 32-25-25 succession of wage increases 8 This finding is based on the credited testimony of David Sokolik 1066 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 6. Events at Tarpoff Packing Company As found above, in previous years there had been no separate negotiations between Tarpoff and Local 545 before agreement was reached between the Association and Local 545. The practice had been for Local 545 to submit to Tarpoff the agreement reached with members of the Association and Tarpoff, after reading the agreement, would sign it. After the 1967-70 contract with the Association expired on October 27 without agreement having been reached on a successor contract, Local 545 adopted a different approach with respect to Tarpoff. In November Local 545 mailed a set of proposals for a new contract to Tarpoff. Thereafter, Local 545 representatives met with the Tarpoff brothers on three occasions. On the first occasion Tarpoff offered to agree to the provisions of the old agreement plus the health and welfare package sought by Local 545. Later Tarpoff offered to meet Local 545's increased health and welfare demands plus a 10-cent hourly increase. Still later Tarpoff raised its hourly increase offer to 15 cents. About .two weeks after this third meeting Alex Tarpoff called iMecalo and asked about the disposition of this offer. Mecalo responded that the membership had turned the offer down. Alex Tarpoff then told the union representa- tive that Tarpoff Packing Company would have to discontinue slaughtering beef if they had to pay an increase of more than 15 cents per hour and would purchase and sell dressed beef. Since a majority of the members of Local ,545 employed by Tarpoff worked on the killing floor such a change would have serious adverse effects on Local 545's membership at Tarpoff. Finally, on Friday, January 8, 1971, Tarpoff commenced purchasing carcass beef by the truckload and the Tarpoff !brothers themselves handled the operation. Over the weekend the membership of Local 545 took a strike vote and on Monday, January 11, pickets appeared outside the ,Tarpoff plant. Mecalo explained at the hearing that the pickers were posted because Tarpoff was operating without a union contract. 7. Events involving Weyhaupt and Strect Packing Companies The Weyhaupt and Strect Companies were two packing- houses which, like certain other nonmembers of the Association, had not yet reached agreement on a successor contract to the 1967-70 agreement and which had continued in operation while the negotiations continued.10 Weyhaupt and Strect were custom packers and among their products were hams which are in demand during the holiday season. In negotiations with Local 545 in Decem- ber Weyhaupt and Strect offered a proposal about which they said, according to Mecalo, "this is it, take it or leave it." Local 545 immediately called its members out on strike at both the Weyhaupt and Strect plants. After two hours the employers acceded to Local 545's demands and the Local 545 members went back to work. No spoilage of meat occurred. 10 Most of the nonmembers of the Association which continued in ,operation had signed the Memorandum of Agreement obligating themselves 8. The Association reaches agreement with Local 545 on January 18, 1971 The parties held a final negotiating meeting on January 18. Agreement was reached concerning the changes to be made in the previous contract. The Association yielded to Local 545's demand that the wage increases be made retroactive to April 6, the date on which agreement was reached with the Big Four packers. The total cost to the employers of the package to which they agreed was the same as the Krey package and varied from the cost of the Big Four agreement only in that Local 545 took 3 cents off the last year's wage increase in recognition of the fact that the Local 545's pension plan was costing that much more than the plan of the Big Four packers. In the last week in January the Respondents commenced recalling the laid off employees. None of the Association members made any attempt to operate during the shutdown. 9. The settlement with Tarpoff Around January 19 Alex Tarpoff called Mecalo and told shim that he had heard that Local 545 had reached' agreement with the Association and that Tarpoff would also like to get the matter settled. A meeting was set for ,January 23, 1971. The four union representatives, Mecalo,^ Barrett, Waelter, and Coyne, the three Tarpoff brothers, their attorney, Lawrence Kaplan, and Federal Mediators !Gumsrod attended. At that time Tarpoff informed Local 545 that it would no longer slaughter beef and requested, language to the effect that by signing the contract they would not be required to open their slaughtering operation.' Local 545 representatives said that such language would, not be approved by the membership and consequently; Tarpoff accepted language to the effect that by signing the; agreement it would not be required to reopen its entire! plant. With this additional provision Tarpoff signed a new, 3-year agreement containing the same provisions to which the Association members agreed. Tarpoff recalled the two, ,of its three drivers who were available, both of whom were Local 545 members, on January 25. B. The Respondents' Contentions; Conclusions 1. As to the 8(a)(5) and (1) and 8(d)(4) violations a. The nature of the shutdowns Contrary to the contention of the Respondents Royal,, :Schneider, Union, Wuestling and Volz, I conclude that the' shutdown of the -operations of these employers and Tarpoff, as well, were lockouts and not layoffs due to economic conditions. Work which the laid-off employees could have performed was potentially available and would have been available had not the Respondents decided to ,phase out their operations. The Respondents had a threefold objective, in my opinion, in locking out their employees. Their first objective was to curtail financial losses resulting from their inability to dispose of the many thousands of dollars worth of perishable meat and to agree to the terms of the contract ultimately agreed to by Royal. ROYAL PACKING COMPANY byproducts in their plants in the event of a strike suddenly called by Local 545. Although Local 545 had not previously called strikes at contract renewal times and gave oral assurances in the 1970 negotiations that it would not allow any meat to spoil, the employers had reason to question these assurances at this time . The posture of the negotiations in 1970 was different. For the first time the beef packers were seeking to stand on their own feet and resist Local 545's demands . In the past the beef packers had merely followed the pattern of the larger packers' settlements. In the 1970 negotiations Local 545 for the first time sought signatures on the "blank-check" Memoran- dum of Agreements, an action which I have found implicitly threatened a strike against the nonsigners. In addition, Local 545 explicitly threatened strikes against Wuestling and Tarpoff if they failed to sign. The Respondents' second goal in locking out their employees was to protect themselves against financial loss resulting from operating with open-ended labor costs. The Respondent had had the experience in the 1967 negotia- tions of having to pay substantial sums in retroactive pay, and in the contract finally negotiated with Local 545 in January 1971 the Respondents had to pay retroactive pay back to April 6, 1970. The Respondents third objective in locking out their employees, in my view, was to bring economic pressure upon Local 545 to agree to more favorable terms in the collective bargaining contract to succeed the 1967-70 agreement . There is no evidence that the Respondents in pursuing this objective were motivated by animus against Local 545 or hostility to the bargaining process. The five Association members did not make any effort to operate, until after agreement was reached, and Tarpoff, when it resumed operations on a limited basis on January 8, 1971, did not use any nonunion employees. The three Tarpoff brothers did all the work and two of them were Local 545 members. Much of the argument in this case revolves around whether the lockouts were defensive or offensive in character, and the assumption seems to be that, apart from the requirements of Section 8(d)(4), defensive lockouts are lawful, and that offensive lockouts, i.e., those intended to arrive at a more advantageous bargaining contract, are unlawful. I have found that the Respondents' lockout of their employees had both defensive and offensive charac- teristics, the first two objectives being defensive in nature, and the third, offensive. However, as I read American Ship Building Co. v. N L.R.B., 380 U.S. 300, offensive lockouts of the type involved in this case, i.e., those made without animus against Local 545 and without any intention to "destroy or frustrate the process of collective bargaining" and "intended to resist the demands made upon [the employer ] in the negotiations and to secure modification of these demands" (380 U.S. AT 309) are not inconsistent with the free exercise by employees of the right to organize and to bargain collectively , and hence are not unlawful. Hence, much of the argument made in this case is beside the point, for even if the General Counsel and Local 545 were to prevail in their arguments that the lockouts may not properly be regarded as defensive lockouts, they nevertheless were offensive lockouts of the type sanctioned 1067 in the American Ship Building case, and there was nothing inherently unlawful about them, except as they failed to meet the requirements of Section 8(d)(4) of the Act. b. The illegality of the lockouts Section 8(d) of the Act provides as follows: (d) For the purposes of this section, to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employ- ees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession: Provided, That where there is in effect a collective- bargaining contract covering employees in an industry affecting commerce, the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract, unless the party desiring such termination or modification- (1) serves a written notice upon the other party to the contract of the proposed termination or modification sixty days prior to the expiration date thereof, or in the event such contract contains no expiration date , sixty days prior to the time it is proposed to make such termination or modification; (2) offers to meet and confer with the other party for the purpose of negotiating a new contract or a contract containing the proposed modifications; (3) notifies the Federal Mediation and Concili- ation Service within thirty days after such notice of the existence of a dispute, and simultaneously therewith notifies any State or Te-ritorial agency established to mediate and conciliate disputes within the State of Territory where the dispute occurred, provided no agreement has been reached by that time; and (4) continues in full force and effect, without resorting to strike or lockout, all the terms and conditions of the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, whichever occurs later. Each of the Respondents, having locked out their employees at least 4 days before the expiration of the 1967-70 agreement, has clearly violated Section 8(d)(4) of the Act. The fact that the lockouts were partly defensive measures taken to protect the employers from feared economic losses due to a suddenly called strike does not render the Respondents' conduct any less unlawful. The courts have long recognized that "economic interests of the employer are not valid reasons for violation of the Act." N.L.R.B. v. Gluek Brewing Company, 144 F.2d 847, 853 1068 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (C.A. 8) and cases therein cited; N.L.R.B. v. Pinkerton's National Detective Agency, 202 F.2d 230, 232 (C.A. 9). However, the fact that the lockouts were in part defensive steps may properly be, and will be, taken into considera- tion in fashioning the remedy in this case. Local 545 contends that all of the Respondents also violated Section 8(d)(1) and (3) of the Act by not serving notice upon it and upon the Federal Mediation and Conciliation Service and the appropriate state agency of their intention to cease operations unless a successor agreement was reached. The Board, with court approval however, has held the notices served by the party first seeking termination or a modification of a collective- bargaining contract are sufficient and that no notices are required of the other party who may subsequently decide also to seek the termination or modification of a collective- bargaining contract. In the original Fibreboard case (Fibreboard Paper Products Corporation, 130 NLRB 1558), in its decision dismissing the complaint on the merits, the Board so held (130 at 1561, 1573).ii The Board and court. decisions in Fort Smith Chair Company, 143 NLRB 514, dismissal of the complaint affirmed, 336 F.2d 738 '(C.A.D.C.), cert. denied 379 U.S. 838, also support this interpretation of Section 8(d) of the Act. In this case the Board held that it was incumbent upon the party first serving upon the other party the 60-day notice of a desire to terminate or modify the collective- bargaining contract to follow through and send the required notices to Federal and state mediation agencies, no matter what turn the negotiations took. In the Fort Smith case after the union, on the eve of the expiration of the contract, agreed to a one-year extension of the contract with the modifications previously agreed to by the employer, the employer then in effect reneged on the modifications previously agreed to and pressed for further changes. The employees then voted to and did go out on strike without giving the 30 day's notice to Federal and state mediation agencies required by Section 8(d)(4). No 8(d) notices whatever had been sent by the employer in this case . The Board and the court held that the union had violated Section 8(d)(3) of the Act, that the strike was unlawful, and the employees could lawfully be discharged for engaging in such a strike under the loss-of-status provision of Section 8(d). The court in its opinion affirming the Board stated as follows: ... And, in any event, the Board read Section 8(d), correctly we think, as expressly putting the responsibility for giving the required notices, under §8(d)(3) as well as under §8(d)(1), upon the party to the contract who raises the possibility of industrial conflict by moving to open up the existing contractual 11 In the Fibreboard case the union involved had sent the notices required by Sec 8(d) of the Act A few days before the expiration of the 60 day's notice, the employer informed the union that it had decided to contract out its maintenance operations and at the end of the 60-day period terminated the employees engaged in maintenance operations The employer had not sent any of the notices required by Sec 8(d) Although the Board, upon reconsideration, subsequently reversed itself upon the merits, finding that the employer had violated Sec 8(a)(5) of the Act, it did not find any violation of the notice provisions of Sec 8(d) of the Act (138 NLRB 550) This subsequent decision upon reconsideration was approved by the arrangements . Once the contract is thrown out on the table for re-bargaining at the instance of one party, counter-proposals are normally forthcoming ; and the course of bargaining frequently tends to become a dim and tangled thicket in which it is easier to sense the lurking threat of industrial strife than to see from what quarter it comes. Because this is the likely course of events once an initiative is taken to change a contract, and because Congress believed that it was imperative in the public interest for disinterested and expert third parties to have an opportunity to bring the parties together, the burden of giving the notices was, not unreasonably, placed on the party who voluntarily elects to put these events in train . . . . [336 F.2d at 741.] Under the interpretation given Section 8(d) in the decisions discussed above the obligation to give the notices required in Section 8(d)(1), (3), and (4) remains throughout on the party who first moves to open up the existing contractual arrangements , and does not shift to the other party to the contract regardless of positions taken by him in the negotiations. Applying this construction of Section 8(d) of the Act to this case it is clear, in view of the fact that it was Local 545 which first sought to open up the contract, that no duty devolved upon Respondents to give the 60-day notice to Local 545 of their intention to cease operations if no agreement could be reached or to give the 30 -day notice to the Federal or state mediation agencies, and no violation of Section 8(d)(1), (3), and (4) of the Act is involved in the Respondents' omission to give such notices.12 2. As to the 8(a)(3) and (1) violations The General Counsel and Local 545 both contend that the Respondents' lockouts of their employees was so inherently discouraging of membership in Local 545 that the conclusion automatically follows that the lockouts were violative of Section 8(a)(3) and (1) of the Act. I cannot agree. As found above, the lockouts were in substantial part motivated by the Respondents' desire to protect themselves from the serious financial loss resulting from a sudden strike and from operating without any precise knowledge of what their labor costs would be determined to be. Lockouts for such objectives by employers who have been operating exclusively under union contracts for over 20 years, in my opinion, are not so inherently discouraging of union membership as to warrant the conclusion that Section 8(a)(3) has been violated without evidence of an intent to discourage union membership. The fact that the lockouts here were effected in the course of negotiations in which the employers made known their desires to continue operating under union contracts and in which the Court of Appeals for the District of Columbia Circuit, 332 F 2d 411, and by the Supreme Court, 379 U S 203 12 By a parity of reasoning no violation of Sec 8(d)(2) of the Act is involved in the Respondent Tarpoff's failure to offer to meet with Local 545 before the expiration of the 1967-70 agreement for the purpose of negotiating a new contract Local 545 itself did not comply with Sec 8(d)(2) with respect to Tarpoff, but merely followed its old practice of dealing with Tarpoff after negotiating with the other packers Accordingly, Local 545's contention that Taropoff violated Sec 8(d)(2) of the Act is rejected ROYAL PACKING COMPANY 1069 employers made offers of increased wages and additional, health, welfare, and pension benefits is,convmcing 'evidencei that the employers did not have , any intent :to discourage ,union membership. Even though one of the objectives of the lockouts was toi bring pressure upon Local 545 to modify its demands, this, fact does not bring the lockouts here in the category of cases involving conduct "so inherently prejudicial to union interests and so significantly devoid of significant econom- ic justification that no specific evidence of intent to discourage union membership or other antiumon animus is' required." American Ship Building Co. v. N. LR.B., 380 U.S. 300, 311. Rejecting precisely the contentions made by ,the General Counsel and Local 545 in this case, the Supreme Court held in a case involving a lockout strictly analogous to the lockouts involved in this case , that such a , lockout did "not carry with it any necessary implication that the employer acted to discourage union membership or otherwise discriminate against union members as such." The Supreme Court's opinion in the American Ship, Building case, in my opinion, is controlling here and ,requires rejection of the contentions of the General; Counsel and Local 545 that the Respondents' lockout of their employees violated Section 8(a)(3) and (1) of the Act CONCLUSIONS OF LAW 1. The Respondents by locking out their employees prior to the expiration of their collective-bargaining agreement with Local 545 have engaged in unfair labor practices within the meaning of Section 8(d)(4) and 8(a)(5) and (1) of the Act. 2. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. 3. The Respondents have not engaged in unfair labor .practices within the meaning of Section 8(a)(3) of the Act. THE REMEDY Having found that the Respondents violated their collective-bargaining obligations under Section 8(a)(5) and 8(d)(4) of the Act, my recommended Order will provide that they cease and desist from such conduct and take: certain affirmative action designed to effectuate the policies of the Act. In order to remedy the Respondents' violations of: Section 8(a)(5) and 8(d)(4) of the Act, my recommended. Order will provide that the Respondents, if they have not, already done so, offer to all employees, unit employees and nonunit employees alike, who may have been laid off as a result of the Respondents' lockout of the unit employees, immediate and full reinstatement to their formerjobs or, ifi these jobs no longer exist, to substantially equivalent fobs,' without prejudice to their seniority and other rights and privileges . This requirement, however, shall not be con- strued as requiring the Respondent Tarpoff to resume its slaughtering operations. My recommended Order will, further direct that the Respondents make each of they employees laid off whole for their losses, if any , resulting from their layoffs by payment to each of them the sum of money he would have earned from the date of his layoff to midnight on October 27, 1970, the expiration date of their current agreement with Local 545. Net interim earnings, if any, shall be deducted from backpay . In the event that the Respondents fail to offer reinstatement to any employee entitled thereto under the terms of the Trial Examiner's recommended Order, such employee shall be entitled to further backpay commencing 5 days after the date of such order and continuing until an offer of reinstatement is made. Backpay shall be computed on a quarterly basis and shall include interest at 6 percent per annum , as provided in F. W. Woolworth Company, 90 NLRB 289, and Isis Plumbing & Heating Co., 138 NLRB 716. While the General Counsel and Local 545 contend that the Respondents should be required to pay backpay for the full period of the lockouts to all employees laid off as a result of the lockouts, this contention is apparently premised largely on the 8(a)(3) allegations of the complaint which are being dismissed. It may well be that it is within the Trial Examiner's discretion to order backpay for the full period of the lockouts as a remedy for the Respon- dents' violations of Section 8(d)(4) and 8(a)(5). However, in view of the substantial defensive justifications for the lockouts and the fact that under the circumstances of this case the employees could lawfully have been locked out after October 27, 1970, in my opinion it would be inequitable and contrary to the policies of the Act to order backpay for the whole period of the lockouts. Compare Fox Midwest Theatres, Inc., 158 NLRB 1096, 1099-1100.13 In view of the fact that the parties ultimately reached a new 3-year collective-bargaining contract no affirmative 'bargaining order appears to be necessary , notwithstanding my finding that the Respondents have violated Section 8(a)(5) of the Act. [Recommended Order omitted from publication.] 13 Fibreboard Paper Products Corp v N L R B, 379 U S 203, relied upon by the General Counsel as supporting his contention that backpay should be awarded for the entire period of the lockouts is distinguishable upon the facts, in my opinion In Fibreboard the employer terminated his entire maintenance force without bargaining about the matter at all, although this was a mandatory subject of collective bargaining, as the Supreme Court held Here , the employers had been bargaining for months about the various matters raised by Local 545 and desired to keep operating under terms which they thought they could live with The Respondents' violation in this case was not a substantive refusal to bargain but a "jumping of the gun," so to speak by a week or so with respect to one of the four requirements of Sec 8(d) under a threat of strike action which caused the employers to fear very serious financial losses The situation in Fibreboard, in my view, is not at all comparable to the situation in this case