Kingwood Mining Co.

844 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Kingwood Mining Company and United Mine Work- ers of America. Case 6-CA-6335 May 23, 1974 DECISION AND ORDER BY MEMBERS JENKINS, KENNEDY, AND PENELLO On October 30, 1973, Administrative Law Judge Thomas S. Wilson issued the attached Decision in this proceeding. Thereafter, the Respondent filed exceptions and a supporting brief, and the General Counsel filed "cross-exceptions" which is more in the nature of an answering brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record' and the attached Decision in light of the exceptions and brief and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge to the extent consistent herein. The Administrative Law Judge found that Respon- dent's shutdown of its coal mining operations and the subcontracting of such work was discriminatorily motivated and unilaterally implemented, in violation of Section 8(a)(5) and (1) of the Act. We are unwilling to rely upon the Administrative Law Judge's finding of a discriminatory motivation for Respondent's conduct, because that is not the theory of the complaint herein and, even though Respondent produced some evidence at the hearing to explain that the basis for its action was economic in nature, we are not satisfied that Respondent was sufficiently put on notice that the motivation for its shutdown and subcontracting, as well as the unilater- al aspect thereof, was an issue to be litigated in the case. While we find that Respondent acted unilaterally in terminating its mining operation and subcontract- ing such work, we believe that it did not violate the Act thereby, nor that it unlawfully failed and refused to discuss with the Union the impact of its closing on the unit employees. Since 1964, the Respondent has operated a coal tipple near Kingwood, West Virginia, where it processes and sells coal mined by its own employees on land owned or leased by Respondent, as well as coal purchased from various independent mining 1 In view of our disposition of the proceeding, we need not pass upon the Respondent's motion for rehearing and reopening of the record. 2 Three of the companies are Rockville Mining Co , Alexander Brothers, and Garbart Mining Co. 3 It is not alleged that this conduct was unlawful companies. About eight or nine of these companies mine coal on Respondent's properties and are under contract with Respondent to sell their coal to it; 2 other companies sell coal to Respondent which is mined at locations in which Respondent has no financial interest, which companies have no contrac- tual obligation to sell to Respondent. Prior to October 12, 1972, at which time it ceased mining coal with its own employees, Respondent produced about 30 percent of its total coal sales with its own employees, the remaining 70 percent being produced by the independent companies. The Union represents all production and mainte- nance employees, including those engaged in mining and tipple operations, and it met several times with the Respondent for collective-bargaining purposes since January 1971, but no contract resulted. As found by the Administrative Law Judge, from December 1971, when Respondent sold 85,000 tons of coal, its monthly sales decreased to about 30,000 tons a month by September 1972. As of April 1, 1972, Respondent lost its biggest single customer, Monon- gahela Power Company. That company's purchases averaged about 29,000 tons of coal per month and it canceled its orders from Respondent because of the high sulphur content of the coal. In May, Respon- dent reduced the work hours of its employees from 48 to 40 per week.3 At a meeting of employees in August, Respondent's president, Fry, advised of the necessity of a cutback in operations and the possibility of a complete shutdown in the future due to the decrease in production.4 On October 11, Fry decided to shut down operations and arranged for a meeting with employees to be held on the following day. At an October 12 meeting with employees, which was attended by union representatives, Fry announced that he was shutting down and was not sure when, if ever, the operations would reopen. Within 10 days of the shutdown, Respondent recalled a crew of 8 to 12 employees to work at the tipple to load a previously ordered coal train. This crew continued to work thereafter, processing the coal purchased from the various independent mining companies; but Respondent's own employees have not been used to mine coal since October 12. After the shutdown, Respondent sold the machin- ery that was used by its employees, including a large Manitowoc 4600 high front shovel for which it received about $250,000. By November 7, Rockville Mining Co., an independent company that was already mining coal in the area, requested and 4 A meeting between Respondent and union representatives was held later that day According to the testimony of Steve Nikses , the Union's district representative, Plant Superintendent Wilkinson proposed a layoff of eight employees, but the Union was able to negotiate a layoff of only two or three. 210 NLRB No. 139 KINGWOOD MINING CO. received permission from Respondent, because of the high content of sulphur in the coal Rockville had been mining, to move its operations to Respondent's "job I" location which had been strip-mined by Respondent's own employees prior to the shutdown.5 Since the shutdown, Respondent has continued its tipple operation only and, as of the hearing, was engaged in erecting a new, modern tipple which will process coal so as to eliminate excess sulphur content and make the coal saleable under present environ- mental standards. In our view, the practical effect of Respondent's shutdown and subcontracting, and its sale of equipment and machinery, was to take Respondent out of the business of mining coal. The tipple operation which has continued involves work of a different type and was maintained independently of the coal mining business; as already noted, about 70 percent of the coal which Respondent processed at the tipple before it ceased mining coal was produced by other mining companies. The decision of Respon- dent to close out its mining operations was manifest- ly a major one and entailed a substantial withdrawal of capital investment. To require Respondent to bargain about such a basic management decision would significantly abridge its freedom to manage its own affairs and is not contemplated by the Act.6 We accordingly find that Respondent's decision to terminate its mining operations was a management determination which was exercisable without union negotiation and not violative of Section 8(a)(5). Respondent was, of course, required to afford the Union an opportunity to discuss the impact of the shutdown on the unit employees, but we do not find that it breached its obligation in this regard. In reaching this conclusion, we are not unaware of the fact, as reported in the Decision of the Administra- tive Law Judge, that at Respondent's October 12 meeting with employees, Union Representative Zivkovich asked a question concerning the employ- ees' pension benefits and was asked by Fry "who invited him there to begin with," and that Fry then ordered Zivkovich to leave.? But this was a meeting of employees called by Respondent and was not intended to serve also as a bargaining session with the Union. While we are finding in effect that Respondent's decision to shut down was announced as a fait accompli on this occasion, it also appears to S Prior to the shutdown , Respondent's employees mined at three locations known as jobs 1, 3, and 4 After Rockville moved its operation to job 1, Alexander Brothers began mine-strapping a new plot adjacent to job 3, which Respondent's employees had uncovered prior to the shutdown. Contrary to the finding of the Administrative Law Judge that Garbart Mining Co also began mining on property which prior to October 12 Respondent's employees had been working , the General Counsel stated on the record that such property was a new operation on land not previously mined by Respondent's employees 6 Summit Tooling Company and Ace Tool Engineering Co, Inc, 195 845 us that Respondent's conduct at the meeting and subsequent thereto did not reflect a purpose to foreclose bargaining negotiations regarding the consequences of the shutdown. Nor did the Union ever test Respondent's willingness to satisfy its bargaining obligation in this respect. Until about May 1973, the Union, although on notice since October 1972 of Respondent's intentions, never requested bargaining relating to any aspect of the mining operation's termination. When the parties finally met in July, no question was raised by the union men then about the effect of the decision which resulted in the mining employees' separation. Under all the circumstances, we do not believe that the General Counsel has sustained the burden of establishing a violation on this aspect of the case. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the complaint herein be, and it hereby is, dismissed in its entirety. MEMBER JENKINS, dissenting in part: I cannot agree with my colleagues' conclusion that Respondent's unilateral subcontracting out of unit work was a basic management decision which alleviated any necessity or requirement for consulta- tion and bargaining with the Union. Respondent did not go out of business, but only temporarily ceased operations to permit a changeover in the employees performing mining operations. Thus, the record shows that soon after the announced temporary shutdown on October 12, the Respondent reopened its tipple and, under subcontracts with various employers, permitted employees of those subcontrac- tors to mine coal on land owned or leased by Respondent, including work locations where coal was being mined by unit employees at the time of the announced temporary shutdown. Nor does the sale of certain equipment and machinery evidence a withdrawal of capital investment. Respondent "loaned," "rented," or "sold" one machine to a contractor who used it in mining operations on property owned by Respondent, and other machines were purchased by PBS Coal Company of which Respondent is a wholly owned subsidiary; and NLRB 479, 480, and cases cited therein . Therefore, even if the issue of motivation for the shutdown had been fully litigated and shown to have been discriminatory, it would not warrant a different disposition than we are making herein. r Union Representative Nikses and other employees who were members of the Union's negotiating team remained at the meeting. Sherbine, Respondent's vice president, also present, discussed certain fringe benefits relating to vacation pay, insurance, and pensions , and thereafter met with employees to answer questions regarding these matters 846 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Leonard S. Fry is president of both Respondent and PBS.8 In point of fact, there is little difference in the nature of Respondent's operations prior to and after the subcontracting. The only distinction of any importance is that the unit work has been transferred from the unit employees to employees of subcontrac- tors who are now working Respondent's mines. Such an action may not be lawfully taken without prior notification and bargaining with the employees' bargaining representative.9 I likewise cannot agree that the Union, in effect, waived its right to bargain over the effects of the subcontracting. Certainly, Union Representative Zivkovich's question concerning employees' pension benefits at the October 12 meeting demonstrates an attempt to raise this matter. That effort by the Union was met with more than a mere refusal; Respon- dent's President Fry asked "who invited him there to begin with" and ordered Zivkovich to leave. Under these circumstances, and in view of Respondent's past refusals to bargain, there can be no justification for requiring the Union to perform an act which would be futile. In all other respects, I join in the determination made by my colleagues. 8 It might be added that there was testimony to suggest that an underlying motive for the sale of the Manitowoc 4600 high level shovel to a Pennsylvania purchaser was that the machine was having trouble manuver- ing in rugged West Virginia terrain and with meeting West Virginia strip mine regulations 9 Fibreboard Paper Products Corp. v. N LR B, 379 U.S 203 (1964) DECISION STATEMENT OF THE CASE THOMAS S. WILSON, Administrative Law Judge: Upon charges duly filed on September 25, 1972, and amended on October 11, 1972, and April 30, 1973, by United Mine Workers of America, herein referred to as the Party or the Union, the General Counsel of the National Labor Relations Board, herein referred to as the General Counsels and the Board respectively, the Regional Direc- tor for Region 6 (Pittsburgh, Pennsylvania), issued its complaint dated April 30, 1973, against Kingwood Mining Company, herein referred to as the Respondent. The complaint alleged that Respondent had engaged in and was engaging in unfair labor practices affecting commerce within the meaning of Section 8(a)(1) and (5) and Section 2(6) and (7) of the Labor Management Relations Act, 1947, as amended herein referred to as the Act. Respondent duly filed its answer admitting certain allegations of the complaint but denying the commission of any unfair labor practices. Pursuant to notice a hearing thereon was held before me in Fairmont, West Virginia, on August 2, 1973. All parties appeared at the hearing, were represented by counsel, and were afforded full opportunity to be heard, to produce and cross-examine witnesses, and to introduce evidence materi- al and pertinent to the issues. At the conclusion of the hearing oral argument was waived. Briefs have been received from General Counsel and Respondent on August 30, 1973. Upon the entire record in the case and from my observation of the witnesses, I make the following: FINDINGS OF FACT I. BUSINESS OF RESPONDENT Kingwood Mining Company is a West Virginia corpora- tion engaged in coal mining with its principal office in Mercersburg, Pennsylvania. Solely involved herein are Respondent's mining operations located at Kingwood, Preston County, West Virginia. During the 12-month period immediately preceding the issuance of the instant complaint, Respondent sold and shipped from its King- wood, West Virginia, location coal valued in excess of $50,000 directly to points located outside the State of West Virginia. Accordingly, I find that Respondent is now, and has been at all times material herein, an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED United Mine Workers of America is a labor organization admitting to membership employees of Respondent. III. THE UNFAIR LABOR PRACTICES A. Prologue The instant case by the General Counsel is not Respondent's initial experience in testing its labor relations policies before the Board or the courts. In fact there exists a prologue of some length before the Board and the courts to the instant case. This prologue began back in early 1967 soon after the union organizing campaign began in late 1966 in Preston County, West Virginia, where Respondent has its operations. On July 31, 1967, following a hearing, the Board issued its first Decision and Order, 166 NLRB 957, against Respondent for various and sundry violations of Section 8(a)(1) of the Act including, among others, "expressly or impliedly threatening its employees with loss of employ- ment or discontinuation of its operations because of their choice of a collective bargaining representative." Then on April 30, 1968, after another hearing before another trial examiner, the Board issued another Decision and Order against Respondent, 171 NLRB 125. This time the Board found that Respondent had interfered with, restrained, and coerced its employees in numerous ways including that of "threatening the employees with cessation of operations if they selected the Union as their bargaining representative" in Preston County. More importantly for r This term specifically includes the attorney appearing on behalf of the General Counsel at the heanng. KINGWOOD MINING CO. 847 the instant case, in this Decsion and Order the Board also found that the Union had been selected as the exclusive representative for collective bargaining of Respondent's then 75-80 employees and that the Respondent had refused to bargain with the Union as such representative and, therefore, ordered Respondent to bargain, upon request, in good faith with the Union as such representa- tive. This Decision and Order of the Board was enforced by the Circuit Court of Appeals for the Fourth Circuit in a decision dated December 2, 1968, 404 F.2d 483.2 Thereafter, on February 17, 1970, the Board issued another Decision and Order, 181 NLRB 181, against this Respondent, after sua sponte reconsidering its prior Decision and Order in the light of the Supreme Court's decision in the Gissel case, 395 U.S. 575 (1969). In this Decision the Board reaffirmed its prior decision ordering Respondent to bargain with the Union because of Respondent's "excessive" prior unfair labor practices. This decision was enforced by the Circuit Court of Appeals for the Fourth Circuit in a per curiam decision dated December 14, 1970. That constitutes the prologue to the instant case. Since that time to date Respondent and the Union have met several times at .. anous times and locations but, as yet, have reached no collective-bargaining agreement.3 B. Other Facts At all times since its purchase in 1964 Respondent has operated a coal tipple near Kingwood, West Virginia, where it processes not only the coal which it has produced from its own operations with its own employees in the appropriate unit in Preston County but also coal purchased by it from various and sundry small independent, family strip mining companies operating either on Respondent's properties or on their own properties. These independent companies above mentioned are all small family concerns which strip coal on properties to which they own the rights or else on Respondent's properties under contract with Respondent and with Respondent's permission. Among these independent fami- ly stripping operators are the Rockville Mining Co., Alexander Brothers, and Garbart Coal Company. At the time material herein Respondent was step mining with its own employees at three different locations known in this record as jobs 1, 3, and 4. In addition to these three strip mines, in September 1972 Respondent had also just uncovered a new plot near job 3 in preparation for further strip mining there. Prior to October 13, 1972, Respondent produced about 30 percent of the coal it was selling on its own operations with its own then 60-70 employees whereas the remaining 70 percent of the coal sold by Respondent was being produced by these family independents and purchased from them at the tipple by Respondent for resale. Admittedly Respondent was making money on its tipple operations as well as in the buying and selling of coal at the tipple.4 During 1971, Fry estimated, without company records, that Respondent was losing money on jobs 1, 3, and 4. Vice President Wilkinson, however, testified that Respondent was making money on job I which had Respondent's best coal. In September 1971, Respondent sold 81 ,000 tons of coal. But it sold only 19,000 tons in October and 43,000 tons in November due to a union strike in the neighborhood. In late 1971 Fry testified that he nearly closed down the Respondent's operations in Preston County for good. At this point of time, according to Fry, "plus additional cost of union welfare, by additional cost, we were running a border line, a very marginal operation, between the tipple and competing with other coal." 5 At this time he told Respondent's employees, with Union Representatives Pnakovich, Nikses, and Zivokovich present, that " either we have a better working attitude, better work habits, or I am shutting it [Respondent] down." According to Fry, "that seemed to help a little for about 4 to 6 months here. We made a little money. Then we got back in the same old rut, back in 1972." In December 1971 Respondent sold 85, 000 tons of coal, in January 1972 69,000 tons, in February 54,000 tons, and March 65,000 tons. In March 1972, Monongahela Power Company, Respon- dent's biggest single customer which averaged about 29,000 tons of coal purchased per month, cancelled its orders as of April 1 because of the high sulphur content of Respon- dent's coal and because Respondent refused to reduce its price. Thereafter through the month of September 1972 Respondent's monthly sales of coal dropped from about 60,000 to around 30,000 tons per month. About August I I Fry held a meeting with Respondent's employees at Kingwood as, in Fry's words, "a matter of courtesy to the employees, the Union involved, they might as well know the cold, hard facts of life." On this occasion Fry bemoaned his sad duty to have to notify the employees of the economics of the situation, of the necessity of a "severe" cutback in Respondent's operations, and the "distinct possibility" of a complete shutdown of Respon- dent's operations in the future. According to Fry's testimony, the trouble at this point of time was due "to the controversy, low morale of labor, some for the Union, some against." For this reason, according to Fry, Respon- dent's "production kept right on dwindling on a month to month basis." In May 1972, with the loss of the Monongahela order Respondent reduced the work hours of its employees from 48 to 40 per week. Sometime in August or September, the exact date not having been given in this record, a decertification petition involving Respondent's employees was filed with the Board. The decertification election was scheduled to be held on September 29. On September 23 Fry, Vice President Sherbine, and Attorney Rice for the Respondent met with high union 2 The Court did restrict the Board's Order that Respondent cease and in surface bargaining desist from engaging in unfair labor practices ' in arv other manner" to the 4 A profit of over $300,000 was mentioned during the hearing more restrictive phrase "in any like or related manner " 5 Like his other financial "estimates," Fry's testimony here can only be 3 However fortunately, the issue here posed i , m ,t whether Respondent characterized as nebulous and self-serving rather than factual has been bargaining in good faith during these meetings or merely engaging 848 DECISIONS OF NATIONAL LABOR RELATIONS BOARD officials of the United Mine Workers in Washington, D.C., for a negotiation session . At this time Fry reiterated the same economic forebodings which he had expressed to the employees on August 11. No agreement on a collective- bargaining contract was reached at this session. At the end of the meeting it was agreed that the parties would meet again at the call of the Union which, according to Fry, had become the "customary procedure" for the calling of such meetings. It was mutually agreed that this call would be made after the four then pending elections had been held.6 By this time in September, however, despite the cutback in hours, Respondent had built up an inventory of some 30,000 tons of high sulphur coal around the tipple which was "hot" and unsold. On September 25, the Union filed an unfair labor practice charge with the Board that Respondent was refusing to bargain in good faith with the Union. This effectively blocked the decertification election which was not held as scheduled on September 29 or thereafter. On October I1 Fry and Respondent's treasurer, Phillip Michaels, took a "cursory" look at Respondent's prelimi- nary financial figures for Respondent's operations for the month of September. Upon determining from these preliminary figures that Respondent had "another loser," as Fry phrased it, Fry from his Mercersburg, Pennsylvania, headquarters telephoned Respondent's vice president, James Wilkinson, at Kingwood and "shocked," Fry's phrase, Wilkinson by informing him that it had been determined "to close it [the Kingwood operation] down" the following day, that Fry would helicopter up to Kingwood for a 3:30 p.m. meeting the next day with all Respondent's employees to explain the situation to them. Fry testified that he ordered Wilkinson to notify all the employees-and the union officials in Fairmont, West Virginia-of the 3:30 p.m. meeting at Kingwood. Despite Fry's comment at the hearing that "people have a way of carrying out my instructions" Wilkinson did have all Respondent employees notified of the scheduled meeting but admittedly made no effort to notify the union officials at Fairmont. Among the employees of Respondent notified of the meeting on October 12 was employee and union commit- teeman, Dwight Liston. Upon receipt of this intelligence Liston promptly telephoned his wife and instructed her to notify union headquarters in Fairmont of the meeting. Thus did Union Official Zivokovich in Fairmont learn of the meeting. He in turn notified union Official Nikses. As Fry was about to enter the meeting room on October 12, he saw and spoke to Zivkovich stating that he "was glad the union people were there, as there was a meeting scheduled here today" In the meeting Fry announced, after mentioning the economic situation, that he was sorry that he had to bring the employees the bad news that he was shutting the job down "temporarily." He was not sure when, if ever, the operations would reopen. He also told them that Vice President Sherbine would spend a couple of days at Kingwood in the near future to answer any questions the employees might have. Before the meeting closed Zivko- vich asked Fry a question concerning the union pensions of the employees. Fry became irritated and inquired "who invited him there to begin with" and then ordered him off Respondent's property. Fry did not answer the question but Zivkovich left. During the meeting it was arranged that Respondent would give each of the employees a weekly temporary layoff notice which the employees would collect each week at Respondent's office in Kingwood.? This procedure of the weekly distribution of temporary layoff slips continued until January 1973. Since October 13, with the possible exception of a few hundred tons of coal produced by supervisors, Respondent has not stripped a single ton of coal from its properties in West Virginia with its own employees. Within 10 days of the Fry announcement of the shutdown on October 12, Respondent, without announce- ment to the Union, recalled to work its crew of 8 to 12 employees who worked Respondent's tipple at Kingwood. This tipple crew worked on a coal train which Respondent had previously ordered for departure late in the month of October. The train left on schedule. So far as this record shows this tipple crew has continued to work at all times after their recall. By November 7 the independent contractor strippers, Rockville Mining Co., had requested and received permis- sion from Respondent to move its then operations from its own location in Preston County to Respondent's job 1 which contained the best coal of any of Respondent's jobsites and which up to that time Respondent had stripped with its own unit employees. Rockville Mining has been operating in that location every since. A little later another independent contractor, Alexander Brothers, began strapping a new plot adjacent to job 3 which Respondent's unit employees had uncovered prepar- atory to mining immediately prior to October 12. In its operations there Alexander Brothers used a shovel "loaned," "rented," or "bought" from Respondent .8 Also a third independent contractor, Garbart, began mining on another of Respondent's mines which prior to October 12 unit employees had been working. According to Respondent's testimony, promptly after the October 12 shutdown it advertised its large Manitowoc 4600 high front shovel for sale. It was sold "fortunately" to unnamed people in Clearfield County for almost a quarter of a million dollars cash. This money was said to have been used to take care of some pressing, but unspecified, bills and payments which were due from Respondent. It also developed that this machine was having trouble maneuver- ing in the rugged West Virginia terrain as well as having some trouble with West Virginia strip mine regulations. 6 The four elections referred to were (1) the decertification election scheduled for September 29, (2) the 1972 presidential election in November, (3) the November West Virginia gubernatorial election between Moore and Rockefeller which was of considerable importance to these parties because Moore favored strip mining whereas Rockefeller had opposed it, and, of course, (4) the UMW presidential election between Boyle and Miller Each of these elections could have some effect upon the situation between the parties 7 Respondent's testimony indicates that Respondent "thought " that the employees could collect their unemployment benefits faster with such weekly layoff slips 8 Sherbine used all three terms in describing the transaction , whatever it might have been. KINGWOOD MINING CO. Other machines of Respondent were repaired and purchased by PBS Coal Company which moved them to Somerset County, Pennsylvania, for its operations in that county .9 Since October 12, 1972, Fry testified that Respondent has not stripped one ton of coal with its own employees. However the record also shows that, after a bad month in November when only 10,000 tons of coal were sold due to a union work stoppage, Respondent has sold from its Kingwood operations 30,000 tons in December 1972; 30,000 tons in January 1973; 31,000 tons in February; 33,000 tons in March; 39,000 tons in April; 41,000 tons in May, and 41,000 tons in June. All of this coal sold by Respondent was purchased by Respondent from contrac- tors for resale at Respondent's tipple in Kingwood. As noted at least three of these stripping companies were mining with Respondent's consent on Respondent's property mined by Respondent's own unit employees prior to October 12. As also noted, the only employees Respondent has had in Preston County since October 12, 1972, have been the employees of the tipple crew. As of the time of the hearing Respondent was engaged in erecting a new, modem tipple at Kingwood with a capacity of 120,000 tons per month. The new tipple will be able to process Preston County coal so as to eliminate excess sulphur content and make the coal saleable under present environmental standards. The new tipple, according to Fry, "will contribute greatly to the economy of the County." When asked if any of the subcontractors used by Respondent to mine its coal were unionized, Fry answered "There are none of them unionized, absolutely none of them." At some indefinite time in November or December Union Representative Nikses suddenly discovered, while wandering on Respondent's property, thatjob 1 was being mined by contractor Rockville Mining Co. On April 30, 1973, the Union amended its previously filed Section 8(a)(5) charge of September 25, 1972, and the instant complaint issued. C. Conclusions When the plethora of facts occurring over a multitude of years last past between these parties are properly correlat- ed, this becomes a relatively simple case. As Respondent President Fry acknowledged in his testimony, "of course, naturally, we have been under bargaining orders since 1971, ...." 10 Following this Court decision Respondent for the first time met with the Union as the exclusive representative of Respondent's employees at Kingwood and, according to Fry, "explained to them our economic conditions , made it very clear to them. Due to the controversy, low moral of labor, some for the Union, some against." These meetings have been 9 Respondent is a wholly owned subsidiary of PBS Coals. The same Leonard S Fry, who is president of Respondent, is also president of PBS 10 The actual date of the Court's per curiam decision was December 14, 1970 11 On August 11 Fry had announced to the employees a "severe" cutback in Respondent s operations, the closing ofjob 4, and the possibility of a shutdown in the near future Actually three employees were laid off at $49 universally unsuccessful in that no mutually acceptable collective-bargaining agreement has resulted to date. The last such meeting was on September 23, 1972, at which time it was mutually agreed not to meet again until after the four then pending elections which could possibly affect the situation had been held. This meeting of September 23 was held while a decertification election was scheduled but this election was blocked by a filing of another refusal-to- bargain charge by the Union against the Respondent a few days after the meeting. With matters in this posture Fry called a meeting of all of Respondent's employees in Kingwood on October 12. After a review of the economic situation i i Fry announced the complete, but temporary, shutdown of Respondent's operations at Kingwood and the "temporary" layoff of all Respondent's employees. He provided that thereafter these employees would be given "temporary" layoff slips at Respondent's office in Kingwood each week. Contrary to Fry's testimony, Respondent's brief admits that Respondent gave the Union no notice or notification of this meeting or of the decision to shut down operations at Kingwood.12 The decision to shut down operations was the unilateral act of Respondent. There was no bargaining with the Union in regard to that decision. The Union was presented with a fait accompli. With that business as usual ceased for Respondent's unit employees. As the facts would have it, these employees never again worked one hour for Respondent. They joined the Appalachian unemployed. It was, however, business as usual for Respondent 10 days later. At that time Respondent recalled its tipple crew of 8-12 employees. Their services were required to prepare for a coal train scheduled for departure from Kingwood in late October. This train departed Kingwood on schedule with the coal required to fill the orders of Respondent's customers. Nor does this record contain evidence of any subsequent coal train filled with orders for Respondent's customers ever being cancelled or delayed. Admittedly Respondent gave the Union no notice or notification of this resumption of Respondent' s business at Kingwood. Prior to October 12 Respondent admits that 30 percent of its coal requirements had been mined by its own employees from Respondent's own strip mines known as jobs 1, 3, and 4. The remaining 70 percent of Respondent's coal requirements was purchased at its tipple by Respon- dent from small independent family companies mining either on their own properties or on Respondent's properties with Respondent's knowledge and consent.13 Among such companies, apparently operating prior to October 12 on their own properties, were Rockville Mining Co., Alexander Brothers, and Garbart Mining Co. In Fry's words, "absolutely none or, these subcontractors is unionized in Preston County. By November 7 contractor Rockville had moved on to this time. 12 Actually two union representatives were in attendance but they were notified of the meeting through the union grapevine-not the Respondent. Fry had one of these union representatives expelled 13 Respondent's Vice President Wilkinson testified that Respondent always made money in buying and selling coal at its tipple 850 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and was mining coal from Respondent's best mine, job 1, which prior to October 12 had always been mined by Respondent's own employees. At or about the same time Alexander Brothers moved on to and began mining another of Respondent's properties which Respondent had uncovered preparatory to mining with its own employees just prior to the October shutdown. In this operation Alexander was using at least one piece of Respondent's equipment which, according to Vice Presi- dent Sherbine, Respondent had "loaned," "rented, " or "sold" to Alexander for the purpose. Also at or about this same time contractor Garbart moved on to and began mining adjacent to another of Respondent's jobs previously mined by Responden"s own employees . All these changes above noted were admittedly with Respondent's approval and consent. Again admittedly Respondent gave the Union, the exclusive representative of Respondent's unit employees no notice or notification of Respondent's resumption of operations with contractors on properties previously operated by those unit employees. Thus Respondent succeeded in continuing its previous operations of mining its own coal from its own properties and selling the same to customers . Fry admits that since October 12 Respondent "has not stripped one ton of coal" from its own operations , or any other, with its own employees and further testified that in January 1973 he vowed that Respondent would never again strip a single ton of coal. Fry's decision was arrived at because of in Fry's words, "the bad labor situation, the very poor management itself job foreman. A combination of some of the people, some of the men union, anti-union, contention all over the place. My health was not going to permit that at all." So in January, after discovering that the contractors could fill Respondent's requirements for coal , Respondent notified its unit employees-but not the Union-that their layoffs were permanent. Thus finally Fry made good on his often repeated threats of a cessation of Respondent's operations if the employees supported the Union or selected it as their bargaining representative. This threat had been repeated many times since 1967. It was also a threat which the aforementioned Court order had ordered Fry to cease and desist from making. So Respondent's business of mining and selling coal at Kingwood goes on as usual. The only change in Respon- dent's operations there is that since October 13 the coal has been mined by a new crew of miners, the nonunion employees of the nonunion contractors, instead of by Respondent's own unit employees represented by the Union. The 30 percent of Respondent's requirements of coal previously produced by its own unit employees has thus been totally eliminated . The unit employees have been replaced by the contractors' nonunion employees. This is the sole difference in Respondent's operations before and after October 12, 1972. That Respondent intends to continue these same operations in the same location for a long time in the future is clear from the fact that it is presently building a new tipple having a 120,000 ton capacity at Kingwood which, according to Fry, "will contribute greatly to the economy of Preston County"-and to Respondent with its 45,000 acres of coal located therein. Why the change? Fry and the other Respondent officials at first said that it was due to the fact that production was diminishing month by month due to "labor problems ," the "controversy, some [employees] for the Union and some against" and the "constant [Union] agitation." Respondent's production records disprove this claim. In August 1971 Respondent had a production of 94,000 tons. By March 1972 Respondent' s coal requirements were down to 65,000 tons due to the high sulphur content of the coal and then Respondent lost the Monongahela 29,000 ton per month order so that sales were further diminished by that amount. Therefore in May 1972 Respondent had to reduce the hours of work from 48 to 40 due to poor sales-not poor production. Even with this reduction in hours of work, by September 1972 Respondent had built up a 30,000 ton unsold inventory around its tipple, thus effectively disproving Fry's contention of "diminishing production." Hence Respondent's unilateral change in operations was not caused by "diminishing production." But then Fry, being a versatile witness, complained about the building up of the inventory. The trouble was lack of sales-not of production. Next Fry and Respondent's brief claim that Respon- dent's "serious financial situation" at the time required not only a "basic organizational change," i.e., subcontracting unit work, but also a change in its capital structure due to its many "pressing" debts. According to Fry's testimony, Respondent was laboring under a debt of 2-1/2 million dollars on a property originally purchased in 1964 for 740,000 dollars with an "estimated" loss of about 15,000 dollars per month from its mining operations. Fry's testimony was no more specific than that. Nor did Respondent see fit to prove Fry's generalizations with facts, figures or company records. Fry also testified that Respondent had always been a "cat and dog" since its purchase-but he has operated it steadily ever since the purchase and the new tipple Respondent is building indicates that he intends to continue Respondent's opera- tions there for some time in the future . After all Respondent has 45,000 acres of coal in the county. And Fry, as president of four other companies operating in his words "quite profitable operations," testified he "lays off when you have a losing operation because we have other companies." But Respondent' s Kingwood operation con- tinues business as usual. Fry was a glib and versatile witness but hardly a consistent one. Despite his above financial estimates, Fry disclaimed having sufficient knowledge of Respondent's finances to know whether Respondent made a tipple profit of over 300,000 dollars in fiscal 1972. Wilkinson acknowledged, however, that Respondent always made a profit on tipple sales. Nor is there any indication as to whether that tipple profit was included in Fry's financial estimates and other financial generalizations With only this sort of nebulous testimony to rely upon I KINGWOOD MINING CO. 851 cannot make a finding that Respondent was in financial trouble as claimed. Fry and Respondent's brief point to the sale of Respondent's Manitowoc 480014 in November 1972, for 250,000 dollars as proof of the claimed change in Respondent's capital structure caused by this "severe financial situation." Fry, however, convemently forgot to mention the fact, as testified to by Vice President Sherbine, that the Manitowoc was having trouble both in maneuver- ing in the rugged West Virginia terrain as well as with the West Virginia mining laws . Thus the sale of this machine in November to a Pennsylvania purchaser appears to have been the liquidation of a bad buy rather than a change in Respondent's capital structure. The same is true of the "loan," "rental," or "sale" of the machine to contractor Alexander Brothers for use in doing unit work and the alleged "sale" of other equipment to PBS, of which Respondent just happens to be the wholly owned subsidi- ary. And further the alleged financial crisis of Respondent proved insufficient to require Respondent to dispose of its helicopter in which Fry was transported to Kingwood to bring the bad news to the employees on October 12. These facts, in addition to the failure of proof by Respondent, make it all too obvious that this claimed financial crisis allegedly causing the shutdown of October 12 was at the very least grossly exaggerated, if not the pure figment of somebody's imagination. I so find. So there having been no diminution of production by Respondent's employees month by month nor any eco- nomic crisis requiring a change in Respondent's capital structure as claimed, the shutdown of October 12 of unit work was not caused by either of the reasons advanced by Respondent. I so find. So we have to look for another reason for the October 12 shutdown. We do not have far to look. As noted the union campaign among Respondent's unit employees began in late 1966. As also noted, by early 1967 and ever since Respondent through Fry and Wilkinson, at least, has been continuously threatening a cessation of Respondent's business in Kingwood if its unit employees continued their interest in union representative and/or selected the Union as their bargaining representative. Even Board and Court orders failed to stop the making of these threats which Respondent continued even as late as August and September 1972. By 1971 the unit employees had selected the Union as their bargaining representative and Respondent was under orders to bargain with the Union as their exclusive bargaining representative. Every Respondent official who testified in the instant case succinctly blamed all of Respondent's alleged troubles on the Union because of the union "controversy," the continual "agitation," diminishing production because .,some [employees] were for, some against," the Union, etc. Admittedly Rockville was given Respondent's best mine, job I to operate after October 13 because it had no "labor problems, no fighting going on." Also the other contractors who replaced Respondent's employees, in Fry's words, "are none of them unionized, absolutely none of them." Hence the loss of the Monogahela order gave the Respondent the chance, which it took on October 12, 1972, of carrying out Fry's repeated threat by substituting nonunion contractors' nonunion employees for its own set of union employees. Thus the facts prove, and I therefore conclude and find, that Respondent's decision to subcontract its mining operations at Kingwood was made for the discriminatory purpose of eliminating both its union employees and, with them, their exclusive bargaining representative by substi- tuting therefor the nonunion contractors with their nonunion employees to do the unit work. In an analogous case , Town and Manufacturing Co., Inc., 136 NLRB 1022 at 1027, the Board said: In our opinion, the precedents cited and discussed by the majority and minority decisions in that case [the early Fibreboard case ] support the conclusion that the elimination of unit jobs, albeit for economic reasons, is a matter within the statutory phrase "other terms and conditions of employment" and is a mandatory subject of collective bargaining within the meaning of Section 8(a)(5) of the Act. Moreover the duty of bargain about a decision to subcontract work does not impose an undue or unfair burden upon the employer involved. This obligation to bargain in nowise restrains an employer from formulating or effectuating an econom- ic decision to terminate a phase of his business operations. Nor does it obligate him to yield to a union's demand that a subcontract not be let , or that it be let on terms inconsistent with management's business judgment. Experience has shown, however, that candid discussion of mutual problems of labor and management frequently results in their resolution with attendant benefit to both sides . Business operations may profitably continue and jobs may be preserved. Such prior discussion with a duly designated bargain- ing representative is all that the Act contemplates. But it commands no less . [Footnote omitted] Accordingly, even if Respondent's subcontract was impelled by economic or I.C.C. considerations, we would nevertheless find that Respondent violated Section 8(a)(5) by failing to fulfill its mandatory obligation to consult with the Union regarding its decision to subcontract . To the extent that the majority opinion in Fibreboard holds otherwise, it is hereby overruled. In Fibreboard Paper Products Corp. v. N.L.R. B., 379 U.S. 203 (1964), the 55 majority opinion states, in pertinent part, as follows: The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company's decision to contract out the maintenance work did not alter the Company's basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment. There- 14 Its purchase price a couple of years before had been 375,000 dollars 852 DECISIONS OF NATIONAL LABOR R ELATIOrqS BOARD fore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business. We are thus not expanding the scope of mandatory bargaining to hold as we do now that the type of "contracting out" involved in this case-the replace- ment of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment-is a statutory subject of collective bargaining under Section 8(d). The concurring opinion of Justice Stewart therein contains the following which is applicable here: Analytically, this case is not far from that which would be presented if the employer had merely discharged all his employees and replaced them with other workers willing to work on the same job in the same plant without the fringe benefits so costly to the Company. While such a situation might well be considered a Section 8(a)(3) upon a finding that the employer discriminated against the discharged employ- ees because of their union affiliation, it would be equally possible to regard the employer's action as a unilateral act frustrating negotiation on the underlying questions of work scheduling and renumeration, and so an evasion of his duty to bargain on these questions, which are concededly subject to compulsory collective bargaining. [Footnote omitted.] Similarly, had the employer in this case chosen to bargain with the union about the proposed subcontract, negotiations would have inevitably turned to the underlying questions of cost, which prompted the subcontracting. In so far as the employer frustrated collective bargaining with respect to these concededly bargaining issues by its unilateral act of subcontracting this work, it can properly be found to have violated its statutory duty under Section 8(a)(5). This kind of subcontracting falls short of such larger entrepreneurial questions as what shall be produced, how capital shall be invested in fixed assests or what the basis scope of the enterprise shall be. In my view the Court's decision in this case has nothing to do with whether any aspects of those larger issues could under any circumstances be considered subjects of compulso- ry collective bargaining under the present law. As this case presents no question of "such larger entrepreneurial questions" or of required capital structure changes, this case falls within the purview of the Fibreboard case rather than the Adams Dairy 15 case which Respondent claimed to be applicable here. The present is an exact replica of the "substitution of one group of employees for another to perform the same task in the same plant under the ultimate controls of the same employer" as described by Justice Stewart in Fibreboard. The instant case presents no "decisions which lie at the core of entrepreneurial control" or "the investment of investment capital" or change in capital structure as found by the Circuit Court of Appeals for the Eighth Circuit in the Adams Dairy case. In fact, financial matters get into the instant case only because Respondent here estimated that it would make greater profits for itself by subcontracting unit work to small nonunion contractors without bargaining power than it would if it had to bargain with the Union over the wages, hours, and working conditions of its own unit employees. Although possibly Respondent was right in this regard, this is not the type of financial problem which would excuse Respondent from its obligation to notify and bargain with the Union in regard to unilaterally subcontracting even under the Adams decision. I say above that possibly Respondent was right about its own greater profits under subcontracting for the reason that under subcontracting Respondent enjoyed two advan- tages over the subcontractors: (1) due to the cost of transportation Respondent enjoyed a monopoly on pur- chasing coal from contractors within a 25-mile radius of its tipple as Fry acknowledged, and (2) Respondent set the tipple price! With these twin advantages no doubt Respondent's profits would assuredly rise contingent, of course, on the assumption that Respondent would keep the tipple price of coal at a level which would allow the contractors to continue to eat. Also from Respondent's angle the new system was much to be preferred to having to bargain with a union over a living wage for Respondent's unit employees. The facts prove that these are the considera- tions which induced Respondent to take the unilateral actions it took here. The facts require and I, therefore, find that Respondent for discriminatory reasons subcontracted its unit work in mining its coal properties in Preston County, West Virginia, to nonunion contractors without notice or notification thereof to the Union as the exclusive bargain- ing representative of Respondent's unit employees who had been performing Respondent's mining operations on the same properties theretofor and without bargaining with said collective-bargaining agent about either the decision to subcontract unit work or the effect of that decision upon the unit employees thereby refusing to bargain with the Union as the exclusive representative of its unit employees in violation of Section 8(a)(1) and (5) of the Act. IV. THE EFFECT OF UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent, set forth in section III, above, occurring in connection with the operations of Respondent described in section I, above, have a close, intimate, and substantial relationship 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 Respondent has engaged in and is '5 350 F 2d 108, (C.A. 8, 1965). KINGWOOD MINING CO. 853 engaging in certain unfair labor practices, I will order them to cease and desist therefrom and take affirmative action designed to effectuate the policies of the Act. To remedy Respondent's violation of Section 8(a)(5) by its unilateral action in subcontracting of the unit work, I will order that the Respondent cease and desist from unilaterally subcontracting unit work or otherwise making unilateral changes in its employees' terms and conditions of employment without consultation and bargaining with their designated representative, the Union. I have found that the termination of Respondent's mining operations was motivated by a desire to avoid dealing with the designated bargaining agent of its employees and thereby violated Section 8(a)(5) of the Act. I will also order the Respondent to restore the status quo ante by resuming its mining operations as conducted prior to October 12, 1972, and reinstating its then employees to the positions which they held prior to their unlawful termination on and after October 12, 1972, together with their seniority and other rights and privileges and I will award backpay to these employees based upon the earnings which they normally would have received from the date of their layoff and/or discharge to the date of their reinstatement 16 in the manner set forth in F. W. Woolworth Company, 90 NLRB 289, together with 6-percent interest thereon in accordance with Isis Plumbing & Heating Co., 138 NLRB 716. Because of the type of unfair labor practices engaged in by Respondent, I sense an opposition by Respondent to the policies of the Act in general and I deem it necessary to order Respondent to cease and desist from in any manner interfering with the rights guaranteed its employees in Section 7 of the Act. Upon the basis of the foregoing findings of fact and upon the entire record herein I make the following: CONCLUSIONS OF LAW 1. By unilaterally subcontracting its mining operations in Preston County, West Virginia, without notice to and bargaining with the exclusive bargaining representative of Respondent's employees in the appropriate unit and without giving said exclusive bargaining representative any notice or notification of or bargaining with said representa- tive about the decision to subcontract unit mining work, Respondent has engaged in and is engaging in unfair labor practices in violation of Section 8(a)(1) and (5) of the Act. 2. By interfering with, restraining, and coercing its employees in the rights guaranteed them in Section 7 of the Act, Respondent has interfered with , restrained, and coerced its employees in violation of Section 8(a)(l) of the Act. 3. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.] 18 See Fibreboard Paper Products Corporation v. N.L.R.B., 379 U S. 203 (1964), Town & County Manufacturing Company, Inc, 136 1'JLRB 1022, 1028 Florida-Texas Freight Inc., 203 NLRB No 74. Walker Company, 183 NLRB 1322.