Progressive Medical Group, Inc., t/a Walnut Hill Convalescent Center

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Progressive Medical Group, Inc., t/a Walnut Hill Convalescent Center and United Food and Com- mercial Workers Union, Local 157, AFL-CIO. Case 5-CA-12126 February 17, 1982 DECISION AND ORDER By MEMBIFRS FANNING, JENKINS, AND ZIMMERMAN On August 25, 1981, Administrative Law Judge Bernard Ries issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and brief and has decided to affirm the rulings, findings,' and conclusions of the Administrative Law Judge and to adopt his recommended Order.2 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board adopts as its Order the recommended Order of the Administrative Law Judge and hereby orders that the Respondent, Progressive Medical Group, Inc., t/a Walnut Hill Convalescent Center, Petersburg, Virginia, its officers, agents, successors, and assigns, shall take the action set forth in the said recommended Order, except that the attached notice is substituted for that of the Administrative Law Judge. i In that portion of his Decisilon entitled "I Preliminary ()hser atiotns." par. 5. the Administrative I aw Judge inadvertently stated that Ihe par- lies' second bargaininig session took place on June 2), 1979. Hiowever. as reflected in the record and elsewhere in the Adminitratilce I a Judge's Decision, the second bargaining session. in fact, occurred oil June 27, 1981. 2 In accordance with his dissent in Olympic Medicul( Corporuinon, 250 NL RB 146 (198)). Member Jenkins would award inlerest on the hackpay due based on Ihe formula set forth therein. have violated the National Labor Relations Act, as amended, and has ordered us to post this notice. WE WILL NOT refuse to bargain in good faith with, and to execute and honor collec- tive-bargaining agreements concluded with, the Union or any other exclusive representa- tive of employees in an appropriate unit with respect to rates of pay, wages, hours, and other terms and conditions of employment. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employ- ees in the exercise of rights guaranteed them by the National Labor Relations Act. WE WILL forthwith sign and honor the col- lective-bargaining agreement with United Food and Commercial Workers Union, Local 157, AFL-CIO, which was agreed upon on February 13, 1980, and which covers our em- ployees in the following appropriate unit: All full-time and regular part-time service and maintenance employees employed at Walnut Hill Convalescent Center, Peters- burg, Virginia, but excluding all office cleri- cal employees, administrator, director of nursing, executive housekeeper, food service supervisor, licensed practical nurses, regis- tered nurses, guards, and supervisors as de- fined in the Act. WE Wl.l give effect retroactively to the terms and provisions of the collective-bargain- ing agreement referred to above, as required by the Board. WE wtll. make whole, with interest, our employees in the bargaining unit described above for any loss of wages and other benefits they may have suffered by reason of our fail- ure to sign and effectuate all terms of the above agreement. PROGRIrSSIVE MEDICAL GROUP, INC., T/A WAILNU r HiI.L CONVALESCENT CENTI ER APPENDIX DECISION DECISION NoTrCE TO EMPIOYL tIS PoSTED BY ORDER OF THE NATIONAI. LABOR REI AIIONS BOARD An Agency of the United States Government After a hearing at which all sides had an opportu- nity to present evidence and state their positions, the National Labor Relations Board found that we SIAITIMENi' OF IHI- CASE BEiRNARI) Ri .s, Administrative Law Judge: This matter was heard in Petersburg. Virginia, on February 23 and 24, 1981. At issue is whether as the complaint al- leges, Respondent violated Section 8(a)(5) of the Act by refusing, since or about February 14, 1980, to embody in writing a collectlive-bargaining agreement assertedly con- summated on that date. 260 NLRB No. 39 258 WALNUT HI.L CONVALESCENT CENTER Briefs have been received from the parties. Having considered the entire record' and the briefs, as well as my recollection of the demeanor of the witnesses, I make the following: FINI)INGS OF FACI I. PRF I.IMINARN OBSF.RVA t IONS 2 Respondent Progressive Medical Group, Inc., head- quartered in Virginia Beach, Virginia, operates 32 nurs- ing homes in several States. The home involved in the present proceeding is located in Petersburg. Virginia, and is known as Walnut Hill Convalescent Center. In 1978, when the home was owned by another corpo- ration called Guardian Care, its 70-75 maintenance and service employees voted to be represented by the Union for purposes of collective bargaining. No bargaining ensued and, in January 1979, the Board held that Guardi- an Care had violated Section 8(a)(5) by refusing to honor its statutory obligations. In April 1979, Respondent acquired a lease on the fa- cility and agreed to recognize and bargain with the Union. Thereafter, beginning in June, Respondent and the Union held a series of negotiating sessions and, by December 1979, a complete bargaining agreement had been hammered out by the negotiators. On February 13, 1980, the unit employees ratified the agreement. Since then, Respondent has failed to execute a written version of the contract. The issue presented, as expressly limited by counsel for the General Counsel at the hearing, is whether, once the employees had adopted the agreement on February 13, Respondent was bound to its terms and further bound, by virtue of the principle espoused in H. J. Heinz Company v. NV.L.R.B.. 311 U.S. 514. 523-526 (1941), to commit itself in writing to those terms. Respondent's justification for its failure to sign the agreement presented, and its defense to the present com- plaint, is that the parties had agreed at the outset that Respondent's negotiators had no independent authority to bind the company and that only Respondent's board of directors could finally approve any agreement; that being the case, Respondent contends, no contract came into being on February 13, 1980, when the employees ratified the agreement, and no contract has yet come into being, for the simple reason that the board of directors has never acted upon the negotiated terms. There is no question that early in the negotiations, the Union was informed that Respondent's directors had to play a role in the bargaining process. Indeed, at the com- mencement of the hearing, The General Counsel stipulat- ed that at the second bargaining session, on June 29,:1 1979, Respondent's counsel Lawrence R. Siegel told the union negotiators, including Walter R. Lewis, the union I Errors in the transcript hare been noted and corrected 2 rhe pleadings and e record the re srd lablih, and I find. that I its Ippropri- ate for the Board lo asscrt llrlsdicion o,,cr Repondcnl, and Ihatl .United :Food and Commercial W'orkers ulnion, I ocal 157. Atl. -CO (the Union), is a lhabor organl7ati on ilh in the meaning of Sec 2(51 of the Act. ' See Rearp Fxh 2 president, that "the employer had a board of directors which had to ratify a final proposal." 4 Despite the agreement by the parties to stipulate to the foregoing fact, testimony on the point was nonetheless adduced which to some extent-in an area where the precise words used are often of the utmost importance- clouded the stipulation. Thus, Union President Lewis said that on June 27, when the Union presented a lengthy proposal and Respondent negotiator Dana Brown essayed a joke about signing the document then and there (and presumably escaping to the sands of Vir- ginia Beach, where the meeting was being held), attor- ney Siegel commented, "Well, we have a board of direc- tors that may like to hear that." Lewis' reaction was pur- portedly to ask "Am I negotiating with someone that can complete a contract or ratify a contract or accept a con- tract," to which Siegel replied that he "personally cannot accept a contract or sign a contract but our side of the table can sign a contract." When Lewis asked what Siegel meant, the latter replied, "I cannot personal- ly sign the contract but Mr. Brown is on the board of directors and our side of the table can sign a contract." Contrary to the stipulation, Lewis did not recall that Siegel said that the board had to "ratify" the agreement. Dana Brown, who was present for Respondent at all bargaining sessions but one, and who became Respond- ent's chief spokesman on August 27,6 testified that Siegel adverted to the role of the board of directors not only at the second meeting, but also at the first (which Lewis did not attend). Brown said that at the initial meeting, Siegel made it clear that "we were there to negotiate the contract and that we had to have board approval; the union would have to get their employees to ratify it, so did we have to have our board to approve our contract." At the second meeting, Brown said, Siegel repeated for Lewis' benefit, after Brown made his joke, that "we were there to negotiate a contract but as the union had to have their contract ratified we did too with the board of directors of PMG had to have anything approved that was done at the bargaining table, in words thereabouts." Siegel testified that he pointed out at the first session that "we are dealing with a corporation, the corporation has a board of directors," and that Brown was only one of a number of such directors. He said that at the second session, after Brown's jocular remark, he prudently cau- tioned that "there is a board of directors that will have final say over what is negotiated, just as what I believe was said, the union indicated they had to take it back to their membership to get approval, we had to take it back to our board of directors to get approval, ratification of that which had been done at the table." I4 Le is did not attend the first negotiating session on June 8 in his stead, he sent Mike Earman. president of Union District Council 25, and Dorman i'altts. then organizing director of the Union. Earman there- after took ito part in the negotiations until August 27 Levis took oaser as principal uniionl spokesman beginning on June 27 and until the meeting of August 27, "when he dropped out of the picture and turned the subsc- quent hargaining ioser to Earman (as chief negoillator) and WV'atts '" rIrovin held a Sariety of positions with Progressive Medical (;roup aird Its arfillates, tie was "direclor of operations for the corporatilon director of thc corpioratiotn. I'MCi, Incorpiorated; secretar) to the board, presidcnl of P'rlogrcssie Care., Rest anld Medical Management senior .ice-prcsidcnt scretlaris if all suhsiditary corporatlins" 259 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Contrary to the testimony of Brown and Siegel, Re- spondent's detailed bargaining session notes do not re- flect that Siegel said anything on the subject of board ap- proval at the first meeting. Those notes show, however, that Herbert Larrabee, who served as Respondent's prin- cipal negotiator until the August 27 meeting, when Brown took over, stated at the first meeting, "I have full authority to sign with one exception. I have key person here except board of directors. Here we have full author- ity to negotiate this agreement." Respondent's notes for the second session are supportive of Siegel's testimony. They show that after Brown's sally, Siegel said, "Also have Board of Directors that have to ratify it"; Lewis re- marked, "I take it Board that has to ratify it is not here"; and Brown said, "I am only one here on the Board." 6 The foregoing evidence plainly indicates that the Union was notified early on that Respondent's directors were to play a role of some sort before Respondent could be considered bound to any agreement. What that function was, and how and when it was to be exercised, was not defined by Respondent, and the record indicates that there could have been no clear understanding. Thus, while the parties stipulated that Siegel told Lewis that the directors "had to ratify a final proposal," Lewis' tes- timonial version was a far cry from that flat statement, and Siegel himself gave varying accounts which could have different connotations: the board "will have final say over what is negotiated": "we had to take it back to our board of directors to get approval, ratification of that which had been done at the table." The Board has held that "when an agent is appointed to negotiate a collective-bargaining agreement, that agent is deemed to have apparent authority to bind his princi- pal in the absence of clear notice to the contrary." Uni- versity of Bridgeport, 229 NLRB 1074 (1977). 7 There was, in this case, "clear notice" that Respondent's agents had no independent authority to bind the Company: there was not, in my view, "clear notice" that Respondent's 6 These notes were received after authentication by James Paxton. a corporate personnel official in attendance at the meetings. 'rior It their receipt, Paxton testified that the typewritten minutes represented Iran- scriplions "from my hanidwrittenl notes,' and that he had reviewed the minutes for accuracy shortly after they were transcribed. Cases such as V.L.R.B. v. lex-lin., Im.. 318 F2d 472, 483-484 (Sth Cir. 1963), author- ize receipt of such es idence Subsequently, howsever, counsel for the General Counsel produced a set of handwritten notes of the second session which Paxtoln thought were probably made by one Karen Sherman, whho also took notes at the meetings. Paxton then recalled that after each of the sessions he and Sherman would consult by telephone and, from their separate sets of notes, compose a finished, mutually agreed-upon, set. Hle said, howevser, that "largely swhat "was transcribed here were Jim P axilon's notes." A review of the transcription of the second meeting shows, however, that it is identical to the Sherman notes, right down to blank spaces, un- derscoring, and misspelling F or that reason, the notes are probabl iltad- missible Furthermore, since Paxton at first flatly misrepresented the process which resulted in the transcription. and also displayed an open partisanship. I swould not find reliable his uncorroboralcd testiminoly on any subject Sec. 8(a)(5) does not demand that an employer be represented at the bargaining table by a negotiator with independent authority to bind the principal; however, the "lack of such authority is a factor to be consid- ered in evaluating the emplocer's good faith," ,N L.R B s Coletti Color Prnls. Inc., 387 F2d 298, 304 (2d Cir. 1967) Accord: ;N' RB sv itz- gerald Millt Corporation, 313 F. 2d 260, 27 (2d Cir 1963) T he present complaint, as explained by counsel for the General Counsel at the hear- ing, raises no issue of Respondent's bona fide or lack thereof board reserved the right to act upon the agreement only after it had been accepted by the bargaining unit, or at any other specific time, or that it reserved the right to formally consider the negotiated agreement in any partic- ular fashion. It is further my view that there are two dis- tinct grounds for holding Respondent to the negotiated contract: one is that it may properly be inferred that actual approval of the terms was given by Respondent's board; the other is that the Union was, on the evidence, justifiably led by Respondent's agents to believe that such approval had been given, and that, in the circum- stances, the Union was entitled to rely on that belief. II. ACTUAL. APPROVAL. The record is not clear as to the number of bargaining sessions held during the summer and fall of 1979, but it does show that the parties made substantial progress, ini- tialling their tentative agreement to various proposed noneconomic clauses at meetings on September 17 and November 9. Respondent displayed a cooperative atti- tude during this phase of the negotiations, even displac- ing its former spokesman when it appeared to negotiator Dana Brown that he was hindering progress. On December 7, Brown, who had become Respond- ent's principal negotiator, presented the Company's first wage proposal to Mike Earman, then serving as the Union's chief spokesman. According to Earman's uncon- tradicted testimony, Brown "stated that he was author- ized to offer a five-year wage package." When Earman replied that the Union would consider a contract of that length only if it could obtain a dues-checkoff clause, Brown "said that he would have to check on that." At the next meeting, on Decenber II, Brown "indicated that the board would not go for checkoff under any circum- stances," and he offered a 3-year package, which the Union accepted. The record shows that this sort of interplay occurred frequently, with the Union making proposals or taking positions and Brown saying that he would check with higher authority and then reporting back. Earman so tes- tified, and Brown referred to numerous occasions on which Earman asked him if he "thought your board would agree to this," and Brown answered, "I don't know but we will try." Brown further testified that he checked with other board members "probably after every session," "usually Mr. Cunningham [the board chairman who appears to be the principal owner of Re- spondent] and Mr. Wagner, the treasurer of the compa- ny." As to the 5-year-contract (including checkoff) pack- age discussed on December 7, Brown stated that after Earman asked him to present the checkoff proposal to the board, Brown replied, "Yes, I will present it, but I think our chances are very slim in getting a checkoff." Brown testified that he thereafter "checked with some members on the board, enough that I thought that I had a feel for what the Board would do." Earman testified that after the negotiators reached agreement on December 11, he told Brown that the Union would arrange a ratification meeting with the em- 260 WAI NUT HII.[. CONVALESCENT CENTER ployees on December 1,8' and "we set a date of Decem- ber 31 to meet and sign the agreement with it to be ef- fective January 1, 1980" Brown denied such an arrange- ment, saying rather that he told Earman that if the em- ployees accepted the proposal he would present it to Re- spondent's lawyers and then to the board to approve it, and, if accepted by the board. "we have got a contract that will be effective January Ist." Having to choose be- tween the two witnesses, I would credit Earman. Al- though both men were personally impressive, Earman's testimony here sounds real and Brown's does not. More- over, there are serious lapses in Brown's testimon\y which are alluded to hereafter, Accordingly, I find that, on December II, Brown agreed to sign the agreement on December 31 in the event that the employees ratified its terms on December 16. The employees, however, rejected the proposed agree- ment. On December 20, Earman and Watts met with Brown in Petersburg to discuss the contract areas which seemed to trouble the employees. After that discussion, Brown agreed "to recommend" four specific changes in the existing agreement "when he returned to Virginia Beach," where the corporate headquarters are located. Earman told Brown that he had scheduled another ratifi- cation meeting for that evening, and that he did not wish to present the modifications to the employees unless they were "firm." Brown thereupon left the room for the pur- pose, Earman assumed, of making a telephone call. When he returned, Brown said, "Okay, that is our proposal as presented." Before the meeting ended on December 20, Brown initialled the changes in the four clauses, provid- ing for a 2-cent increase in the starting rate and a 7-cent increase in the top rate; deletion of the $100 deductible for hospitalization insurance; an additional holiday for senior employees; and vacations for part-time employees. Although Watts corroborated Earman's testimony that Brown had left the room on December 20 (saying that he would "have to check with somebody"), Brown denied having done so. I do not accept his testimony. Brown conceded that he had first told the union agents at that meeting that he would "have to go back to Nor- folk or to Tidewater to check this out with certain mem- bers of the board," but said that he ultimately did no such checking because the changes were "very minor"; he testified that he "assumed the Board would go along with me and which I told Mr. Earman that I assumed they would." It is difficult to understand what would have so quickly turned Brown around from admittedly thinking that he could give no answer on the proposed modifications without personally returning to Virginia Beach, to a belief that the changes were so negligible that no consultations were necessary. I think it quite probable that he did leave the room to use the telephone. The employees again refused to ratify the agreement on December 20. Earman so informed Brown, who said that the existing proposal was "all that he was author- ized, or all that the company was prepared to offer, "9 8 It had been understood from the outsel of negotiations that the firnal agreement would have to he voted on by the bargaining unit 9 Brown was not asked about this teslimon Earman told Brown that some employees had not attend- ed the December 20 meeting because of a conflict with Respondent's Christmas party, and that another vote would he taken on December 26 That vote, too. ended in rejection of the proposal, The Union thereupon embarked upon a "home call" program to attempt to secure ratification. After thus ex- plaining the contract to the employees. a fourth ratifica- tion meeting, on February 13, yielded a positive result for the Union. Earman tried to telephone the good news to Brown; unable to reach him, Earman sent a telegram stating that the contract had been accepted and suggesting that they "meet as soon as possible to sign and implement the con- tract." Receiving no response, Earman made more unre- turned calls to Brown and eventually spoke to him. Earman asked when they could "sit down to sign the agreement," and Brown said he would send his notes to Van Thiel. another company negotiator and also the ad- ministrator of one of Respondent's nursing homes in Newport News, so that Van Thiel could prepare a draft agreement which could then be compared to the Union's draft. It was around this time that Earman first heard rumors of a decertification effort at the Petersburg home. On March 6, according to Earman, he received a draft agreement from Van Thiel. Apparently Earman had not prepared his own draft, but he reviewed Van Thiel's draft against his own set of initialled clauses, found two errors and, on March 11, sent the draft back to Van Thiel with the errors corrected and a cover letter ex- plaining the changes." "' Respondenit's counsel. Lawrence Siegel. who onil atlended Ihe first three bargaining sessions. indicated in hil testimntlls that the firsl he sas iof any contract ,'as In "the middle or the latter part of March 1980." s hen he received a copy of the agreement from Brow in, covered by Ear- man's March II letter. together with a hand% riten note from Brow in commenting ,on one clause in the contract and an oral solicitation froim Brown for an opinion "on the acceptability or the ambiguity of ihe con- tractl" Siegel further testified that he did not belihee that Van Thiel would have drafted such a lengthy document without coming it him. and that he himself had not drafted the contract, by implication. he con- tradicted Earman's testimony that Van Thiel had sent a draft contract to Earman When asked about the opening sentence of Earman's March 1I letter to Van Thiel ("We are in receipt of your copy of the collectie-bargain- ing agreement between Local 157 and PMG. Inc (Walnut Hill)"). Siegel speculated that Earman may have earlier sent Van Thiel a copy of a draft bs Farman w hich Van Thiel had then returned That speculation seems clearly errtneous. since. in his March II letter. Earman stated that he had changed the copy received from Van Thiel in two respects Io corre- sponid to the lnion's "notes of negotiations " Obsiousl). if Earman had prepared the draft originally, it would already have reflected his notes Moreover, the type face of the two pages on which appear the changes cited by Farman differs from that appearing on all the other pages, thus indicating that Farman had retyped two of the pages received from Van thil, as he testified It thus appears either that Van Thiel did independently prepare a con- tract w hich he thereafter sent to Earman. or that some other attornes prepared the document for Van Thiel, or that Siegel did so No resolu- tion of the s, urce is necessary. since the ionl. relesant point is that t arman was telling the truth in saying that he recesled a contract fruom Van Thiel Siegel iestifted, as earlier noted, that w hen he receicd the draft "in the nliddle or the latter part ,of March 19g80." he also receietd ;an urndat-d note. in Btrtwn's handw riting, w hich read, as fotllw,.: Ctnlltnut'd 261 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Earman's letter, a copy of which went to Brown, also asked Van Thiel and the other management representa- tives to choose a suitable time and place to "sign the agreement." Hearing nothing from Brown, Earman began trying to contact him. When he eventually did so, Brown told Earman that he would be out of town for a week, but would call when he returned. After more than an appropriate period had elapsed, Earman called Brown and finally caught him on March 31. Brown said that a decertification petition had been filed"' and that he did not "think that we should meet to sign an agreement until after that is decided." On that day, Brown wrote a letter to Earman which repeated the information given over the phone and which ends, "I believe it would be inappropriate at this time to arrange a meeting to sign the negotiated contract until a decision has been rendered by the National Labor Relations Board." (Emphasis sup- plied.) As earlier discussed, Respondent's caveat that the con- tract had to be approved by its board of directors was unspecific-it did not, for example, indicate that the terms had to be accepted by the directors only at a formal board meeting held after the unit employees had agreed to the proposal, as opposed to piecemeal informal acceptance as the bargaining progressed.'2 I think it may be fairly inferred from this record that whatever internal process Respondent believed to be necessary to consti- tute board approval was in fact had. Respondent's board normally is comprised of eight members. Until November 1, 1979, the board consisted, Board Directors Reject Part of Sick Leave Full time employees shiould only receive 10 sick days per year rather than the 12 and should be accumulated on the employeei anniversary date rather than calendar year Problem with the accumulated days per calendar year is if an employee is hired in December and gets sick in Jan-He would be enlltitled to 24 sick days. The sick-pay clause in the contract prepared by Van Thiel shows that the negotiators had agreed upotl allowance of 12 days of sick leave per year for full-time employees. Siegel's assertion is. therefore, that, some- time in March. long after Brown had signed off on such a provision (which, according to Brown's testimony, meant that "management and the Union negotiators were in agreement about what we should present" to their respective principals "once we agreed upon the wordage or the verbiage of a contract or a particular point then they would presett it to their people for acceptance and 1 would also do the same with my bhoard of directors") and long after Brown had permitted the Union to present such a clause at four separate ratification meetings, Brown was recom- mending to his fellow directors that the) reject the contract and thus presumably start anew the whole bargaining and ratification process This would be, of course, a most gross breach of faith. Two possibilities suggest themselves one is that Siegel, who was "at a loss" at the hearing to explain wh5 Brown would be recomnmending re- jection of a term he earlier had deemed acceptable, may have had a memory lapse in recalling that in March he received from Brownli a nrote he actually had received earlier: the other is that Brown gave Siegel the undated note in preparation for this case, willing to risk the inescapable inference of bad faith in an attempt to demonstrate that the contract, as far as he was concerned, remained in flux after the Union's ratification Neither circumstance favors Respondent's case. I I However, although Brown wrote a letter making the same state- ment, according to a stipulation by the parties, the petition was lmit filed until April 3 12 See Univeirsity of Bridgepcort, upra, 229 NLRB at 1084, fn 27. "['Ihe Union] need not necessarily have been charged with kntowledge that the Respondent's trustees must in all circumstances enter the picture only after full agreement apparently had been reached, as subsequent ratifica- tion is only one option open to the trustees." in attorney Siegel's words, of four "inside" directors- Homer Cunningham, chairman of the board and, so Earman thought, the "principal owner"; Paul Karseras, the president of Respondent, who resigned as president and director on November 1; George Wagner, the trea- surer; and Dana Brown-and four "outside" directors-a minister, a physician, a banker, and one of Siegel's law partners, whose firm is counsel to Respondent. The record shows that on January 2, the banker tendered his resignation effective January 15, leaving, at that point, only six directors. Siegel testified that the board is a "very active" one which meets quarterly in Virginia Beach. One does not garner the same impression from the testimony of Brown, a member of the board. Asked how often the board meets, Brown replied, "Sporadic occasions. Last year [1980] it was very rarely. The year before that we tried to meet on a quarterly basis and sometimes we missed that. But, always on an annual basis." It is obvious that a large corporation such as Respond- ent cannot be effectively operated by a board of direc- tors which meets "sporadically," especially in view of the many pressing issues that must require timely action. For this reason, Respondent maintains an executive com- mittee. Siegel testified that the committee normally con- sisted of the four "inside" directors, but that since no new director was appointed after Karseras' November 1 resignation, the executive committee, at least until March, consisted of Cunningham, Wagner, and Brown. ' 3 The authority of the executive committee is unclear. Its powers are perhaps spelled out in the corporate bylaws, but Siegel was not sure about that, and the bylaws were not introduced. In Siegel's opinion, howev- er, apparently shaped by his own prior legal advice, al- though there is "some area in which the executive com- mittee has authority on its own to commit the corpora- tion," that would not include "material matters that in- volved contracts, long-term duration or financial com- mitments." Siegel testified, however, that, if asked, he would advise the company that as to a day-to-day man- agement function such as "whether to bargain with this union," the executive committee was empowered on its own to undertake such an action. There are two other organized nursing homes in Re- spondent's control which have a collective-bargaining history. One is in Columbus, Ohio. According to Brown, after he negotiated a 3-year renewal contract with that union in 1977 or 1978, he presented the agreement to the board for ratification. The minutes of the board meeting at which such purported ratification was made were not put in evidence. Brown also testified twice on direct ex- amination that an annual "wage and health benefits" re- opener which he negotiated in early 1980 at the other unionized home in Newport News was submitted to the board for approval. On cross-examination, his further tes- timony on the subject went as follows: : I The January 2, 1980, board minutes showa noi appoinmentsl of a di- rector or all executive conlmittee member 262 WAL.NUT Hill. CONVALESCENT CENTER Q. Do you recall what your instructions were from the board of directors before you entered those [Newport News] negotiations concerning your authority? A. Before we presented it back to the union, you mean? Q. Yes. A. Yes. I would informed [sic] the board of what we negotiated and they either approved it or reject- ed it. Q. Do you recall when they approved it or re- jected it? A. No, sir, but it was prior to going into effect April the 15th. Q. And it would have been at a board meeting. is that correct? A. It could be an executive meeting too. Q. Explain that to me. A. Well, there are four members of the executive committee. They would present that to the board for ratification. It would be ratified by the board, certainly for ratification. It would be ratified by the board, certainly. Q. So if it was done it would be recorded in the board minutes? A. It would be. It may not be then but it would be at the next board meeting. The following day, Corporate Personnel Director Paxton was asked by Respondent to contradict the testi- mony of a director-executive committee member-ne- gotiator, Brown, that the Newport News wage and health benefits reopener had been submitted to the board, and he did so. So much, apparently. for Brown's recall that, prior to the Newport News negotiations, he had re- ceived "instructions . . . from the board" that he would "inform the board of what we negotiated and they either approved it or rejected it," and for his further testimony that, however it was done, the wage reopener would "certainly" have been ratified by the board. So much, also, it would appear, for Siegel's testimony that the ex- ecutive committee cannot bind the board to "financial commitments." If the two sets of minutes in evidence are any indica- tion, what the board does mostly is to listen to reports. That is essentially all that happened at the January 2, 1980, meeting, at which 13 reports were given and one regional vice president appointed. At the September 11, 1979, meeting, however, two votes were taken. In one, the board voted "to radify [sic] the actions of the Board of Directors of Hospitality Health Care, Inc.." apparent- ly a subsidiary, which had voted on August 27 to dis- solve the corporation. Why Respondent's board had to ratify the action of another board is not disclosed. The second vote on September 11 followed a state- ment by the chairman that "Progressive Medical Group, Inc. had just renewed the leases for the Medic Home Health Center" at 12 locations in Virginia and Florida. The minutes state: "On motion by Director Karseras and seconded by Director Farano the action of the Board of Directors of Progressive Medical Group, Inc. was radi- flied [sic] and approved." This is puzzling. Respondent is named in the complaint as "Progressive Medical Group, Inc." While the minutes are self-styled as the minutes of "PMG, Inc. Board Meet- ing," there is no indication in the record that there are two separate corporations operating under those two names. Yet, assuming they are one and the same, how could it be that the board of directors of "PMG, Inc." would be ratifying the action taken by "the Board of Di- rectors of Progressive Medical Group, Inc.?" If the min- utes are in error, and intend to say that the action of the "executive committee" was approved, then it would seem that, according to Siegel, the committee acted beyond its authority in "renewing" leases for 12 homes. Siegel stated that that function of the committee would be to seek out the most desirable properties to operate, "but the actual determination of do we go forward, do we commit the corporation to a five or ten-year lease agreement with certain financial commitments, that would be submitted to the board of directors."' 4 The foregoing discussion leaves the distinct impression that Respondent is run by the executive committee (Siegel said that he attended perhaps 50 executive com- mittee meetings in 1979, and there were others that he missed) and that, in many areas, approval of a corporate action by the executive committee is binding upon, and equivalent to sanction by, the board of directors. If the executive committee is authorized independently to agree to a wage and health benefits increase at Newport News, or to "recognize this union," it seems reasonable to infer that it is empowered, on behalf of the board, to approve a collective-bargaining agreement.15 Wages and health benefits undoubtedly are among the most significant ele- ments of a collective-bargaining agreement, and it seems reasonable to say that an executive committee authorized to make commitments in those areas is equally author- ized to act upon a comprehensive bargaining agreement. This makes particularly important Brown's testimony that "probably after every session" at the bargaining table, he checked with members of the board, "usually' Mr. Cunningham and Mr. Wagner. In November, De- cember, and January, Brown, Cunningham, and Wagner constituted the entire executive committee. Other evidence tends to show that Brown received, right along, approval of his every action from those whose approval he believed to be critical. He told Earman on December 7 that he was "authorized" to offer a 5-year package. After Brown had "check[ed]" on Earman's counterrequest for a checkoff clause, Brown returned on December II to say that "the board would not go for checkoff under any circumstances." When the negotiators then agreed to the 3-year contract, Earman and Brown, as I find, "set a date of December 31 to 14 A further complication is added by the fact Ihat the answer to the complaint in this case denied the allegation that Respondent "operates a nursing home at its Petersburg, Virginia location.," asserting instead that "the operator of the said nursing home is Walnut Hills Consalescent Center, Inc. a Virginia corporation" Nothing came info the hearing record about hat c(orporation 's In view (of Brown's demonstrated unreliability. and in the absence- I should call it a meaningful absence of board minutes shos.ing that the board ratified the Columhu,. Ohio. bargaining agreement. I cannot accept Brolun's assertiln Ihlat it did so 263 DECISIONS OF NATIONAL LABOR RELATIONS BO()ARD meet and sign the agreement with it to be effective Janu- ary 1, 1980." 1 note that, as of December II, the board was presumably not scheduled to meet until January 2, when it did routinely convene. On December 30, Brown agreed to four modifications of the package only after, as I find, being told by Earman that he needed "firm" commitments and leaving the room for the obvious reason of soliciting approval from the home office. In his March 31 letter, Brown made a telling statement indicating that there had been all the approval necessary for Respondent's purposes, by declining to "arrange a meeting to sign the negotiated contract" until the Board had acted. The implications of Brown's tacit assumption that there was no need for fur- ther board consideration are manifest. It seems fair to say that, as of February 1980, there had been effective adoption of the negotiated agreement by the entire executive committee (Brown, Cunningham, and Wagner), which would appear to have been suffi- cient to bind the board of directors. There had also been, I infer, such adoption by at least half of the (after Janu- ary 15) six-member board (Brown, Cunningham, and Wagner). It would be whimsical, I think, to argue that all three of the remaining directors (a minister, a physi- cian, and a counsel to the board) would have voted in disagreement with the three "inside" directors on this matter.I s In my view, Brown was correct in implying on March 31 that all that needed to be done, other than settle the decertification problem, was to "arrange a meeting to sign the negotiated contract."'7 Cf. N.L.R.B. v. Coletti Color Prints, Inc., supra, 387 F.2d 298; N.L.R.B. v. Marcus Trucking Company, Inc., 286 F.2d 583 (2d Cir. 1961). II. APPARENI' APPROVAl Based on much the same evidence, I believe, in addi- tion, that Brown had apparent authority to, and did, convey to the Union that the precondition of higher ap- proval had been satisfied. Collective-bargaining agreements are not "ordinary contracts" and are not "governed by the same old common-law concepts which control . . . private con- tracts." Transportation-Communication Employees Union v. Union Pacific Railroad Co., 385 U.S. 157, 160, 161 (1966). While the differences between commercial con- tracts and bargaining agreements are manifest, the cases have not clarified the extent to which the "national labor policy" may require that common law principles yield to i6 Compare Darlington Manufacturing Compuny. et al. V. NL. R.., 3B. 97 F.2d 760, 770 (1978), where the Court of Appeals for the Fourth Circuit, sitting en hanc (Judge Bryan dissenting), seemed willing to impute the motive of one individual, whose family interests controlled the company. to the remaining corporate direclors The court noted. "The Board did not have to shut its eyes to the fact that corporate directors are frequent- ly responsive to interests that control the majority of a corporation's stock." I See James F Stanford. Inc d/b/a Ace Machine Co. 249 NL RB 623, 636-638 (1980), where the negotiator had cautioned at the outset that his decisions would be subject to the approval of the board of directors The Board. inferring from the record before it that "it is hardly conceivable that the board of directors was not fully aware of the progress of the negotiations as they proceeded over a period of approximately I year." construed the "apparent knowledge" of the board of directors as satisfy- ing the requirement of approval the imperatives of that policy. See John R. Lewis et al. v. Mears Coal Company, 297 F.2d 101 (3d Cir. 1961); John R. Lewis, et al. v. Lowry Coal Company, 295 F.2d 197 (4th Cir. 1961). One authority, recognizing bargaining agreements as something "beyond the ordinary commercial covenants entered into by businessmen," nonetheless states, "Basi- cally . . . mutuality of assent is essential and the usual requisites of a contract must be met." Williston on Con- tracts, 3d ed., sec. 1020 A. That proposition seems sound, with the addendum, however, that the "crucial inquiry" here "is whether the two sides have reached an 'agree- ment' even though that 'agreement' might fall short of the technical requirements of an accepted contract." .V:L.R.B. v. Donkin's Inn. Inc., 532 F.2d 138, 141 (9th Cir. 1976). In this case, it seems to me that the normal rules of agency compel a conclusion that an agreement was, indeed, reached once the proposed contract had been ratified by the employees on February 13. An agent whose authority depends on a contingency may have ap- parent authority to convey to a third party the satisfac- tion of that contingency. Restatement (Second), Agency § 170. Clearly, when Respondent's negotiators were au- thorized by Respondent to bargain, to announce to the Union that the board of directors had to approve the terms, and to sign an approved agreement, they were also implicitly clothed with the authority to communi- cate the fact that the approval had indeed been given. Brown did not announce such approval in formal lan- guage, but everything he did delivered that message. I hesitate to use the word "universal," but I would un- hesitatingly say that the commonplace practice in these matters is that once the negotiators have reached agree- ment at the bargaining table, the subsequent ratification by unit employees makes a contract. It is inconceivable to me that either Brown or Earman even remotely con- sidered that employee ratification would not put an end to the approval process. I have no doubt that when Earman and the other union staff went four times to Pe- tersburg to discuss the proposed contract with the em- ployees on two shifts and to allow each shift to vote (ap- parently in rented hotel space for the first two meetings), and conducted a "home call" program prior to the last vote, they fully believed that nothing was left but to convince the employees to accept the contract."8 I also have no doubt that Brown knew that Earman so be- lieved, and that Brown was of the same opinion. Bearing in mind the several indications given by Brown to Earman that he was receiving the ongoing guidance and approval of the board,i9 and Brown's as- surance to Earman that the December 20 modifications were "firm," I conclude that Brown effectively commu- nicated to Earman on that day that the required approval 11 Earman testified, "I would never have presented it to the employees at the first or second meeting had I been led to believe that after they approved it. then the board had to. That would make us look stupid." -o For example, Brown conceded that he told Earman on December 7 that he would "present" the checkoff proposal to the board, and Earman testified that Brown came back on December I I and "indicated that the board would not go for checkoff under any circumstances." 264 WALNUT HILL CONVALESCENT CENTER had been received and that such communication was within Brown's apparent authority to make. 20 Accordingly, I find that by failing and refusing to ex- ecute the negotiated agreement within a reasonable time after February 13, 1980, Respondent violated Section 8(a)(5) and (1) of the Act 21 CONCI IUSIONS O- L Aw 1. Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6). and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. By, on or about February 14, 1980, refusing to ex- ecute and honor a written agreement embodying terms and conditions of employment agreed to with the Union on February 13, 1980. Respondent violated Section 8(a)(5) and (1) of the Act. 4. The foregoing unfair labor practice affects com- merce within the meaning of Section 2(6) of the Act. THi Ril MwI)) Having found that Respondent has engaged in unfair labor practices in violation of Section 8(a)(1) and (5) of the Act, I shall recommend that it be ordered to cease and desist therefrom and that it take certain affirmative action to effectuate the policies of the Act. Having found that Respondent, on or about February 14, 1980, repudiated and, since on or about that date, has refused to execute the contract which was agreed upon on February 13, 1980, by Respondent and the Union, I shall recommend that Respondent be required to execute that agreement forthwith and to give effect to all terms and provisions of that agreement retroactively to Febru- ary 13, 1980.22 The loss of earnings. if any., under the Order recommended herein shall be computed in the manner set forth in I- W Woolworth Company, 90 NLRB 289 (1950), plus interest as set forth in Florida Steel Cor- poration, 231 NLRB 651 (1977), 2:` Finally, I shall recommend that, upon request, Re- spondent bargain with the Union as the exclusive repre- sentative of the employees in the appropriate unit, and be required to post customary notices. Upon the foregoing findings of fact, conclusions of law, and the entire record, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: 20 Cf. ,\iagora Theratpy, .tunufacturing ('Corpvorrti, 237 NL.RI 1. 4 (1978). where Ihe Admini'tratiie L[a% Judge, in1 a porihli of hi. Decinii not appealed to the tBoard. held "W'hile L.undgren Mated al the oulset the concurrence of h-. superior or superior,r at the compatiny" home office to any angreement he reached ioiul.d he neces.sar!. his conduil during the course ,of negotiallons led the Uniton's repreSentiall,, (aind would lead any reasonable person) to iconclude that I uldgrcn had re- ceived such concurrence or authorization" 21 It may also he that the principle of estoppel operate,' here to icommil Respondent to the contract See Resltemenl (SecondL. 4g eth §§ 811, 141 h 22 Earman's testimony indicates that he agreed with RVan Ihhil around the end of February that the effecti'e date of the wage pro,)li, lon should he March 1 1981) Accordingly, the reltroachiit. requiremenl. if an,. with respect Io wages shall he effeci'tc 1a of Malrl-h 1, 91)) 21 See. generally. o, Plumhing & Iheairrng Coi 118 NI. RB 71h (I h,2) ORDER2 4 The Respondent, Progressive Medical Group, Inc., t/a Walnut Hill Convalescent Center. Virginia Beach, Vir- ginia, shall: I Cease and desist from: (a) Refusing to bargain in good faith with, and to ex- ecute and honor collective-bargaining agreements con- cluded by it with, United Food and Commercial Work- ers Union, Local 157, AFL-CIO. or any other labor or- ganization. (b) In any like or related manner coercing, restraining, or interfering with the rights accorded employees by Section 7 of the Act. 2. Take the following action which is deemed neces- sary to effectuate the policies of the Act: (a) Forthwith execute the collective-bargaining agree- ment consummated by Respondent and the Union on February 13, 1980, with respect to the following bargain- ing unit: All full-time and regular part-time service and maintenance employees employed at Walnut Hill Convalescent Center, Petersburg. Virginia, but ex- cluding all office clerical employees, administrator, director of nursing. executive housekeeper, food serv ice supervisor, licensed practical nurses, regis- tered nurses. guards. and supervisors as defined in the Act. (b) Upon execution of the aforesaid agreement, give retroactive effect to the provisions thereof and. in the manner set forth in the section herein entitled "The Remedy," make whole the employees, with interest, for any loss they may have suffered by reason of Respond- ent's failure to sign and effectuate all terms of the agree- meit. (c) Preserve and. upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, time- cards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this recommended Order. (d) Post at its facility in Petersburg, Virginia, copies of the attached notice marked "Appendix. "2 Copies of said notice, on forms prow ided by the Regional Director for Region 5. after being signed by Respondent's representa- tive, shall be posted by the Respondent immediately upon receipt thereof. and be maintained by it for 60 con- secutive days thereafter. in conspicuous places, including all places 'where notices to employees are customarily posted. Reasonable steps shall be taken by Respondent to 24 In the Peenlt no exceptions are filed a', pr. ided h' Sec 1(12 4,h if the Rule. ;and Regulatlion'. if the National I ahbor Relatolls IBoard. Ihe tinlldiligs. con l lis,,rls, alln d rTconlnilmelded Order hereill 1.hall. as prlo, ided iII Set 10)2 48 of Ihe Rule, and RKeguili iioni he aidopted h5 the .3lrd anid h..corl e it, filltilligs o..lusion. ,ilns d O rder .aind all ohlectlioi,' thereto shall be deemen ed '.a'. ed ftir all pulrp,.ses I2- Ih. e(he l1Icni lh i%. ()rldcr i terrleforce h .di Judgment of L' ntled Slale', (Courlt if Appea,.l the 'io.rds in Ihe notice rcldilng ''Toited h) Order if the NlmIo1ail I .hbor RHl.tlli t111toaril'" haill read;l 'o'-.ted l'urs, l1t to I Ju igmn'il of Ihe L Ilied l i Siitc' Ciirl i f Appeal, It iflrcllng ail ()rder of h. NialilOal I ihir Relios .,1 Boardl 265 DECISIONS OF NATIONAL LABOR RELATIONS BOARD insure that said notices are not altered. defaced, or cov- ered by any other material. (e) Notify the Regional Director for Region 5, in writ- ing, within 20 days from the date of this Order, what steps Respondent has taken to comply herewith. 266