Capitol City Lumber Company

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Capitol City Lumber Company and Local No. 580, International Brotherhood of Teamsters, Chauf- feurs, Warehousemen and Helpers of America. Case 7-CA- 18029 August 30, 1982 DECISION AND ORDER BY CHAIRMAN VAN DE WATER AND MEMBERS JENKINS AND HUNTER On August 5, 1981, Administrative Law Judge Marvin Roth issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief and, later, filed a motion to reopen the record.' 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 only to the extent consistent herewith. Although we agree with the Administrative Law Judge that Respondent violated Section 8(a)(5) and (1) of the Act by refusing to make welfare and pension plan contributions as required by its collec- tive-bargaining agreement with the Union, we do so only for the reasons that follow. The facts of the case are basically undisputed. In spring of 1979,2 Respondent and the Union began negotiating for a successor collective-bar- gaining agreement. The Union was represented by its recording secretary, James Cooper, and two shop stewards. Respondent was represented by its president, James Olson, its vice president, and its attorney. Soon after negotiations began, Olson left on a trip to Georgia, where he suffered the first of a series of heart attacks. Contract negotiations con- tinued while Olson was hospitalized in Georgia, and he was kept informed regarding the progress of the negotiations. On May 7, the unit employees began an economic strike in support of the Union's contract demands. On May 25, Respondent and the Union reached complete agreement on the terms of a new contract. Since Respondent was unwilling to enter into a contract of more than 1 year in duration, the con- tract was effective from May 1, 1979, through April 30, 1980, and then "from year to year there- after unless written notice of desire to cancel or l We hereby deny Respondent's motion, as the evidence that it seeks to adduce is not newly discovered or previously unavailable, nor would it require a different result. See Sec. 102.48(dXl), National Labor Rela- tions Board Rules and Regulations, Series 8, as amended. ' All dates herein are in 1979, unless otherwise indicated. 263 NLRB No. 102 terminate the agreement is served by either party upon the other at least sixty (60) days prior to date of expiration." Cooper explained to Respondent's negotiators that participation in the Michigan Con- ference of Teamsters Welfare Fund and the Central States, Southeast and Southwest Areas Pension Fund required a 3-year commitment with those funds. Article XIX of the contract, consequently, provided for Respondent to make weekly contribu- tions per employee to the welfare fund as follows: $25 effective May 1, 1979 $28 effective April 1, 1980 $31 effective April 1, 1981 It similarly provided for Respondent to make weekly contributions per employee to the pension fund as follows: $21 effective May 1, 1979 $24 effective May 1, 1980 $31 effective May 1, 1981 The unit employees ratified the contract and re- turned to work on May 26. Although Olson had returned from Georgia on May 14, the Union de- layed in obtaining his signature on the contract be- cause he was still very ill. On December 14, Cooper finally met with Olson in order to sign the contract. Cooper and Olson each testified that Olson indicated misgivings about the 3-year com- mitment to the two funds. Cooper testified that Olson expressed concern about whether the em- ployees would realize that Respondent would be incurring costs in the future regarding fund contri- butions. Cooper also testified that he drafted a letter of understanding in response to Olson's con- cern. Olson, in contrast, testified that he could not recall ever indicating to Cooper that he was inter- ested in informing the employees of the costs of the fund contributions. Olson maintained that he was concerned instead about a 3-year commitment in a contract which he thought would be for only 1 year. He further testified that he believed that the letter of understanding "clarified the situation." The Administrative Law Judge credited Cooper's testimony over that of Olson concerning what tran- spired during their conversation. We have exam- ined the record and find that his credibility resolu- tions are supported by a preponderance of the evi- dence. Standard Dry Wall Products, Inc., 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). The letter of understanding, prepared by Cooper, read as follows: In the May 1, 1979 contract negotiations in order to remain with the Michigan Conference of Teamsters Welfare Fund UE Plan, and Cen- tral States Southeast and Southwest Areas 784 CAPITOL CITY LUMBER COMPANY Pension Plan, a thirty-six (36) month commit- ment was required due to plan regulations. The money package negotiated was sixty- seven and one half cents (67-1/2) per hour providing forty-five cents (45¢) per hour ap- plied to wages and the remaining twenty-two and one half cents (22-1/2) per hour applied as contributions to maintain the Health and Wel- fare and Pension Plans from May 1, 1979 through April 30, 1980. In order to maintain the Health and Welfare and Pension plans from May 1, 1980 it will be necessary to deduct the costs from the money package negotiated in future negotiations. On December 28, Cooper and Olson signed the letter of understanding, the contract, and the agree- ments for participation in the two funds. The fol- lowing was typed onto each participation agree- ment: "The letter of understanding between Cap- itol City Lumber Company and Teamsters Chauf- feurs of Local Union No. 580 dated December 14, 1979 (attached) shall become a part of this agree- ment." Respondent apparently contributed the proper amounts to each fund, pursuant to the first step of article XIX and the fund participation agreements, for the period from May 1, 1979, through March 30, 1980. The essence of the dispute in this case in- volves Respondent's obligation for contributions after that date. By letter dated February 29, 1980, the Union sought to reopen the contract for negotiations. The Union's notice was untimely, however, since it was sent less than 60 days prior to the expiration date of the contract. The Union requested negotiations, but Respondent refused to waive its rights and con- sequently there were no negotiations. By its own terms, therefore, the contract continued in effect for another year, until May 1, 1981. During this second year of the contract, however, Respondent continued to make the same contributions to funds; i.e., those required by the first step of the contract and the participation agreements.3 The record indi- cates that the contract subsequently terminated, presumably on April 30, 1981. Respondent ceased making contributions as of that date. Respondent contends that it fulfilled its obliga- tion, as set forth in the collective-bargaining agree- ment, to make welfare fund and pension fund con- tributions. Respondent maintains that it signed a collective-bargaining agreement which was effec- ' Actually, Respondent had not paid a portion of the amount that it owed to the pension fund due to a billing error by that fund. Prior to the hearing, Respondent and the Union entered into an agreement whereby Respondent agreed to remit the amount that it owed upon receiving a correct billing from the fund. tive for 1 year. It claims that Olson objected to the 3-year commitment contained in article XIX when he first saw the contract, and that the letter of un- derstanding was drafted to resolve the "ambiguity" created by article XIX. Respondent also claims that article XIX was left unchanged as an accom- modation to the Union. Consequently, Respondent argues that the letter of understanding nullifies the three-step progression of contributions contained in article XIX and the funds' participation agree- ments. In particular, Respondent relies upon the second paragraph of the letter which states that the total cost of the contract's "money package" to Respondent is 67-1/2 cents per hour, per employee. Additionally, Respondent relies upon the last para- graph of the letter, which states: In order to maintain the health and welfare, and pension funds from May 1, 1980, it will be necessary to deduct the cost from the money package negotiated in future negotiations. Since the contract automatically renewed itself for an additional year when the Union did not file a timely notice to reopen it, Respondent concludes that it was obligated to make fund contributions for that additional year only, and at the same first-step rate. We disagree with Respondent's contentions. In article XIX, Respondent clearly assumed a 3-year commitment to the funds which survived the expi- ration of the contract. The evidence indicates that this commitment was negotiated to meet the re- quirements of the funds, and, indeed, Respondent even acknowledges this. The letter of understand- ing, as part of the contract, must be construed in a manner that is consistent with the rest of the con- tract. On its face, the letter does not purport to nullify article XIX. In fact, the first paragraph of the letter appears to reiterate article XIX, 4 stating that: In the May 1, 1979 contract negotiations in order to remain with the Michigan Conference of Teamsters Welfare Fund UE Plan, and Cen- tral States Southeast and Southwest Areas Pension Plan, a thirty-six (36) month commit- ment was required due to plan regulations. Further, Respondent's reliance upon the other two paragraphs of the letter is misplaced. These para- graphs set forth certain hourly per employee costs to Respondent, and mention that fund contributions 4 We note that the letter and the contract were signed simultaneously. This too tends to indicate that the first paragraph of the letter affirms the obligations set forth in art. XIX. Respondent's contentions that the letter of understanding modifies artn. XIX would be more persuasive if the letter had been drafted and signed after the parties had entered into the con. tract. 785 DECISIONS OF NATIONAL LABOR RELATIONS BOARD will be taken into account in future negotiations. As indicated by Cooper's credited testimony, the letter of understanding was drafted in response to Olson's concern about informing the employees of the entire cost of the collective-bargaining agree- ment. This is entirely consistent with the plain wording of article XIX. In conclusion, Respondent is contractually obli- gated to continue contributing to the funds in ac- cordance with the second and third steps of article XIX, notwithstanding the expiration of the rest of the contract, and the letter of understanding reiter- ates this 36-month obligation. By failing and refus- ing to make these contributions, Respondent invad- ed the Union's "statutory right as a collective-bar- gaining representative of employees in the unit to bargain about any change in the terms and condi- tions of employment for such employees" in viola- tion of Section 8(a)(5) and (1) of the Act. 5 CONCLUSIONS OF LAW 1. Respondent is an employer engaged in com- merce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the meaning of Section 2(5) of the Act. 3. All full-time and regular part-time truck driv- ers, and yard employees employed by Capitol City Lumber Company at or out of its facility located at 700 E. Kalamazoo St., Lansing, Michigan, but ex- cluding all sales employees, office clerical employ- ees, and casual employees, guards, and supervisors, as defined in the Act, constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act.6 4. At all times material herein, the Union has been and is the exclusive collective-bargaining rep- resentative of the employees in the unit described above. 5. By failing and refusing to make welfare and pension fund contributions as required by its collec- tive-bargaining agreement with the Union, Re- spondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 6. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2(6) and (7) of the Act. B C & C Plywood Corporation, 148 NLRB 414, 415 (1964), affd. 385 U.S. 421 (1967), reversing 351 F.2d 224 (9th Cir. 1965). Member Hunter finds it unnecessary to address the concerns raised by the concurrence, since all members agree that there is a violation of the Act in the instant case. 6 The unit description that appears in the Administrative Law Judge's Decision is incorrect. THE REMEDY Having found that Respondent has engaged in unfair labor practices, we shall order Respondent to cease and desist therefrom, and to take certain affirmative action designed to effectuate the poli- cies of the Act. We shall order that Respondent make its employees whole by paying all welfare and pension fund contributions, as set forth in arti- cle XIX of the collective-bargaining agreement, which have not been paid and which would have been paid absent Respondent's unlawful unilateral discontinuance of such payments.7 Additionally, in the event that either fund has canceled coverage, we shall order Respondent to reimburse the unit employees, with interest, for any loss of claims and benefits they may have suffered as a result of such cancellation. s ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board hereby orders that the Respondent, Capitol City Lumber Company, Lansing, Michi- gan, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Failing or refusing to make contributions to the Michigan Conference of Teamsters Welfare Fund and the Central States Southeast and South- west Areas Pension Fund for the 3-year period as set forth in article XIX of its collective-bargaining agreement with Local No. 580, International Brotherhood of Teamsters, Chauffeurs, Warehouse- men and Helpers of America, which contract covers employees in the following unit: All full-time and regular part-time truck driv- ers, and yard employees employed by Capitol City Lumber Company at or out of its facility located at 700 E. Kalamazoo St., Lansing, 7 Because the provisions of employee benefit fund agreements are vari- able and complex, the Board does not provide for interest at a fixed rate on fund payments due as part of a "make-whole" remedy. We therefore leave to further proceedings the question of how much interest Respond- ent must pay into the benefit fund in order to satisfy our "make-whole" remedy. These additional amounts may be determined, depending upon the circumstances of each case, by reference to provisions in the docu- ments governing the fund at issue and, where there are no governing pro- visions, to evidence of any loss directly attributable to the unlawful action, which might include the loss of return on investment of the por- tion of funds withheld, additional administrative costs, etc., but not col- lateral losses. See Merryweather Optical Company, 240 NLRB 1213, 1216 at fn. 7 (1979). 8 Any and all issues regarding the cancellation of coverage are re- served to the compliance stage. Any interest which is payable shall be computed in the manner and amount prescribed in Florida Steel Corpora- tion, 231 NLRB 651 (1977). See, generally, Isis Plumbing & Heating Ca, 138 NLRB 716 (1962). Member Jenkins would require any interest payable to employees to be computed in the manner set forth in his partial dissent in Olympic Medical Corporation, 250 NLRB 146 (1980). 786 CAPITOL CITY LUMBER COMPANY Michigan, but excluding all sales employees, office clerical employees, and casual employ- ees, guards, and supervisors as defined in the Act. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of their rights under Section 7 of the Act. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act: (a) Make the contributions which it failed to remit to the Michigan Conference of Teamsters Welfare Fund and the Central States Southeast and Southwest Areas Pension Fund for the 3-year period as set forth in article XIX of its collective- bargaining agreement with Local No. 580, Interna- tional Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, for the employees in the above-described unit. (b) In the event that either fund has canceled coverage, reimburse the unit employees, with inter- est, for any loss of claims and benefits they may have suffered as a result of such cancellation, as set forth in the section of this Decision entitled "The Remedy." (c) Preserve and, upon request, make available to the Board or its agents, for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of reimbursement due. (d) Post at its Lansing, Michigan, place of busi- ness copies of the attached notice marked "Appen- dix."9 Copies of said notice, on forms provided by the Regional Director for Region 7, after being duly signed by Respondent's representative, shall be posted by Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by Re- spondent to ensure that said notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director for Region 7, in writing, within 20 days from the date of this Order, what steps Respondent has taken to comply here- with. CHAIRMAN VAN DE WATER, concurring: While I concur, albeit reluctantly, in my col- leagues' finding that Respondent did make a 3-year commitment to make payments into health, wel- 9 In the event that this Order is enforced by a Judgment of a United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursu- ant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " fare, and pension funds, I am increasingly con- cerned that the Board's already overtaxed process- es are being utilized to interpret and enforce con- tracts when other forums are available to the par- ties. Both state and Federal courts are available to interpret and enforce existing contracts. As long ago as 1955, the Board took the position in United Telephone Company of the West and United Utilities Incorporated, 112 NLRB 779 at 781, that it was not in the business of interpreting contracts. Some of the comments in that decision are still relevant today. In that decision the Board noted (112 NLRB at 781): The complaint alleges no violation of the Act other than the one arising out of the par- ties' conflicting contract interpretations. Further on, the Board went on to state: Regarding the question of which party cor- rectly interpreted the contract, the Board does not ordinarily exercise its jurisdiction to settle such conflicts. As the Board has held for many years with the approval of the courts: ". . . it will not effectuate the statutory policy . . . for the Board to assume the role of policing col- lective contracts between employers and labor organizations by attempting to decide whether disputes as to the meaning and administration of such contracts constitute unfair labor prac- tices under the Act."2 2 Consolidated Aircraft Corporation, 47 NLRB 694, enfd 141 F.2d 364 (C.A. 9). See also Crown Zellerbach Corporation. 45 NLRB 753. The Board went on to dismiss the 8(a)(5) allega- tion noting at page 782 that the "Board is not the proper forum for parties seeking to remedy an al- leged breach of contract or to obtain specific en- forcement of its terms." Obviously such a policy approach has been seri- ously eroded in the years since then. In view of the Board's increasing backlog due in part to inflation and frozen jurisdictional standards since 1959, 1 be- lieve it more important for this Agency to prompt- ly resolve cases involving more serious policy questions and important representation issues. Therefore, it is time for this Board to revert to the principles earlier announced and to decline jurisdic- tion over cases involving purely contract interpre- tation unless a serious statutory issue is involved. 787 DECISIONS OF NATIONAL LABOR RELATIONS BOARD APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Act gives em- ployees the following rights: To engage in self-organization To form, join, or assist any union To bargain collectively through repre- sentatives of their own choice To engage in activities together for the purpose of collective bargaining or other mutual aid or protection To refrain from the exercise of any or all such activities. WE WILL NOT fail or refuse to make contri- butions to the Michigan Conference of Team- sters Welfare Fund and the Central States Southeast and Southwest Areas Pension Fund for the 3-year period as set forth in article XIX of our collective-bargaining agreement with Local No. 580, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, which contract covers the employees in the following appropriate unit: All full-time and regular part-time truck drivers, and yard employees employed by Capitol City Lumber Company at or out of our facility located at 700 E. Kalamazoo St., Lansing, Michigan, but excluding all sales employees, office clerical employees, and casual employees, guards, and supervisors as defined in the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employ- ees in the exercise of the rights guaranteed them in Section 7 of the Act. WE WILL make the contributions which we failed to remit to the Michigan Conference of Teamsters Welfare Fund and the Central States Southeast and Southwest Areas Pension Fund for the 3-year period as set forth in arti- cle XIX of our collective-bargaining agree- ment with Local No. 580, International Broth- erhood of Teamsters, Chauffeurs, Warehouse- men and Helpers of America, for the employ- ees in the above-mentioned unit. WE WILL, in the event that either fund has canceled coverage, reimburse unit employees, with interest, for any loss of claims and bene- fits they may have suffered as a result of such cancellation. CAPITOL CITY LUMBER COMPANY DECISION STATEMENT OF THE CASE MARVIN ROTH, Administrative Law Judge: This case was heard in Charlotte, Michigan, on May 12, 1981. The charge was filed on July 21, 1980, by Local No. 580, In- ternational Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America (herein called the Union). The complaint, which issued on August 26, 1980, and was amended at the hearing, alleges that Capitol City Lumber Company (herein called Respondent or the Company) violated Section 8(aXl) and (5) of the Nation- al Labor Relations Act, as amended. The gravamen of the complaint is that the Company has allegedly failed and refused to make welfare and pension fund contribu- tions as required by its collective-bargaining agreement with the Union. The Company's answer, as amended, denies the commission of the alleged unfair labor prac- tices. All parties were afforded full opportunity to par- ticipate, to present relevant evidence, to argue orally, and to file briefs. The General Counsel and the Company each filed a brief. Upon the entire record in this case and from my obser- vation of the demeanor of the witnesses, and having con- sidered the arguments of counsel and the briefs submitted by the General Counsel and Respondent, I make the fol- lowing: FINDINGS OF FACT 1. THE BUSINESS OF RESPONDENT Respondent, a Michigan corporation with its principal office and yard in Lansing, Michigan, is engaged in the sale and distribution of lumber and related building prod- ucts. In the operation of its business, Respondent has annual gross revenues in excess of S500,000, and annually purchases goods and materials valued in excess of $50,000 directly from points outside Michigan. I find, as Respondent admits, that it is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 1. THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE BARGAINING UNIT INVOLVED It is undisputed, and I so find, that at all times material the Union has been and is the exclusive collective-bar- gaining representative of the employees in the following appropriate unit: All full time and regular part time employees em- ployed by the Company at or out of its facility lo- cated at 700 E. Kalamazoo Street, Lansing, Michi- 788 CAPITOL CITY LUMBER COMPANY gan; but excluding all sales, office clerical and casual employees, guards and supervisors as defined in the Act. IV. THE ALLEGED UNFAIR LABOR PRACTICES A. Background. The 1979 Contract The issue of whether the Company unlawfully refused to make fund contributions essentially turns on the mean- ing of agreements entered into between the Company and the Union in 1979. In the spring of 1979 the Company and the Union en- gaged in negotiations for a new contract covering the unit employees.' Union Recording Secretary James Cooper and two employee stewards comprised the Union's negotiating team. Initially the Company was rep- resented by its president, James Olson, Vice President Clarence Hargrave, and attorney Thomas Bengston. An- other official, Phillips (who was no longer with the Company at the time of this hearing), also served on the Company's team. However, after the first or second bar- gaining session President Olson left on a trip to Georgia where he soon suffered the first of a series of heart at- tacks. Olson returned to Lansing on May 14 and re- sumed his full-time duties as president in July. In the meantime the remainder of the team continued with the negotiations. On May 7 the unit employees commenced a lawful economic strike in support of the Union's de- mands, and the strike continued until May 26. On May 25 the negotiators reached complete agreement on the terms of a new contract. The next day (May 26) the em- ployees voted to ratify the contract and return to work.2 However, the contract was not signed, and the employ- ees did not receive a wage increase as provided in the contract. Olson testified that the Company's negotiating team was not authorized to enter into a binding contract. However, at one point Olson admitted that "we had ne- gotiated and agreed upon a one-year contract." Cooper testified without contradiction that the Union was never informed that the Company's negotiators lacked authori- ty to bind the Company. (Cooper and Olson were the only witnesses presented in this proceeding.) Olson testi- fied that he did not see the negotiated contract until late November. His assertion is incredible. Olson admitted that he was kept informed of the progress of negotiations and of the strike even when he was hospitalized in Geor- gia. As indicated, he returned to Lansing 11 days before agreement was reached, and he was back on the job by July. I find that the Company and the Union reached final agreement on a contract on May 25, and that they anticipated that Olson would sign the contract when he recovered from his illness. Instead, Olson took advafitage of the Union's good will and concern over his illness by delaying his signing of the contract until the onset of winter, when he knew that the Company could easily All dates herein are in 1979 unless otherwise indicated. I Union Secretary Cooper testified that six or seven of seven or eight unit employees participated in the ratification vote. Company President Olson testified that there were 11 employees in the unit. Regardless of the number of employees in the unit, it is undisputed that the employees voted to ratify the contract. Indeed the evidence fails to indicate that the parties agreed that employee ratification was a condition of a contract. withstand a strike. Olson then sought to back away from the agreed-upon contract. The agreed-upon contract purported to be effective from May 1, 1979, through April 30, 1980, and "from year to year thereafter unless written notice of desire to cancel or terminate the agreement is served by either party upon the other at least sixty (60) days prior to date of expiration." However the contract provided for em- ployer contributions to the Michigan Conference of Teamsters Welfare Fund and the Central States South- east and Southwest Areas Pension Fund (herein, respec- tively, the welfare fund and the pension fund and collec- tively funds) in accordance with a time schedule which ran beyond April 30, 1980. Specifically, the contract (ar- ticle XIX) required the Company to make contributions per week per employee as follows: Welfare Fund (UE plan) $25 effective May 1, 1979 $28 effective April 1, 1980 S31 effective April 1, 1981 Pension Fund $21 effective May 1, 1979 $24 effective May 1, 1981 $31 effective May 1, 1981 Cooper testified that the Company was unwilling to enter into a contract of more than a 1-year duration. However, Cooper explained to the Company's negotia- tors, and specifically to attorney Bengston, that the funds each required a 3-year package. Therefore the parties ne- gotiated a 3-year package, and the Company agreed to participate in both the health and welfare and the pen- sion plans for 3 years. Cooper delayed taking action over the Company's fail- ure to honor its contract out of consideration of Olson's illness. However, the employees were becoming restive over their failure to receive a wage increase as provided in the contract. On December 14 Cooper met with Olson, who was accompanied by Vice President Har- grave. Olson expressed concern about the 3-year pack- age. According to Cooper, Olson wanted a means whereby in future negotiations he could show the em- ployees that the welfare and pension plans constituted a cost to the Company, and should be recognized as part of the cost of any future negotiated raises. Cooper sug- gested a letter of understanding, and he undertook to prepare such a letter. On December 28 Cooper and Olson signed the letter, the text of which read as follows: Letter of Understanding between Teamsters Local Union No. 580 and Capitol City Lumber Company. In the May 1, 1979 contract negotiations in order to remain with the Michigan Conference of Teamsters Welfare Fund UE Plan, and Central States South- east and Southwest Areas Pension Plan, a thirty-six (36) month commitment was required due to plan regulations. The money package negotiated was sixty-seven and one-half cents (67-1/2) per hour providing forty-five cents (45¢) per hour applied to wages and the re- 789 DECISIONS OF NATIONAL LABOR RELATIONS BOARD maining twenty-two and one-half cents (22-1/2) per hour applied as contributions to maintain the Health and Welfare and Pension Plans from May 1, 1979 through April 30, 1980. In order to maintain the Health and Welfare and Pension plans from May 1, 1980 it will be necessary to deduct the cost from the money package negoti- ated in future negotiations. At the same time, Cooper and Olson signed the agreed- upon contract and participation agreements for each fund, with the insertion of the following proviso in each document: "Note: The letter of understanding between [the Company] and [the Union] dated December 14, 1979 (attached) shall become a part of this contract [or agree- ment]." A copy of the letter of understanding was at- tached to each of the other documents. In May, the par- ties did not negotiate a money package as such, and the original contract did not contain any reference to a money package. However, the figure of 67-1/2 cents per hour, as indicated in the letter of understanding, reflected the combined cost of the negotiated hourly wage in- crease and the first-year cost of the welfare and pension plans. Cooper testified that he informed the employees of the letter of understanding. Thereafter the employees re- ceived their wage increase as provided in the contract, retroactive to May 1, 1979. Company President Olson testified that, when he met with Cooper, he objected to any second- and third-year commitment for the welfare and pension plans. Cooper explained that he could put together a package only on a 3-year basis. According to Olson, he responded that this was the Union's problem, and he insisted that he did not want anything more than "the one-year contract we agreed to." Olson testified that Cooper said he would check with McKim (the Union's secretary-treasurer), and thereafter Cooper prepared the letter of understanding. Olson further testified that he had "no recollection" of telling Cooper that he wanted to inform the employees that any negotiated money package would include the fringe benefits. I credit Cooper. As indicated Olson was somewhat equivocal in his denial of the position attributed to him by Cooper. Additionally, although Cooper was alone when he met with Olson, the company president was ac- companied by Vice President Hargrave, who was also a principal figure in the 1979 contract negotiations. Never- theless the Company did not present Hargrave as a wit- ness. The inference is warranted, and I so find, that, had Hargrave been presented as a witness, his testimony would have been unfavorable to the Company's interest. Martin Luther King, Sr., Nursing Center, 231 NLRB 15, fn. 1 (1977). More fundamentally, Cooper's testimony is consistent with the language of the letter of understand- ing, as well as the circumstances of the negotiations. Al- though Cooper could have lawfully insisted that Olson sign the contract agreed on in May, he chose not to do so. Instead he agreed to add the letter of understanding to the contract. Therefore, regardless of the outcome of the prior negotiations, the letter became a part of the contract. See American National Insurance Company, 89 NLRB 185, 187-188 (1950), modified on other grounds 343 U.S. 395 (1952). However, the letter cannot be viewed in isolation. Rather it must be construed, if possi- ble, in a manner which is consistent with the rest of the contract. On its face the letter does not purport to nullify the 3-year benefits provision spelled out in article XIX of the contract. Rather, the letter simply purports to relate to the conduct of "future negotiations." Assuming ar- guendo, as contended by Olson, that the letter effectively nullified the second and third steps of the benefit pro- grams, then such an agreement, if covert, would consti- tute a fraud upon the funds, because the funds required a 3-year package as a condition for participation in the funds. If the letter on its face purported to nullify the second and third steps, or even raised a question in this regard, then it is unlikely that the funds (which were given copies of the letter) would have accepted the con- tract as a basis for unit participation in the funds. How- ever, they did accept such participation. Therefore it is evident that all parties, including the funds, interpreted the contract, including the letter of understanding, as in- cluding the three-step benefit program. Assuming alter- natively that the letter of understanding committed the Company and the Union to a total money package of 67- 1/2 cents per hour for at least 3 years, then this would mean that the Union, in order to obtain the benefit pro- gram, impliedly agreed to progressive wage decreases after April 1, 1980. This is highly unlikely. I find, as indi- cated by the contract in its entirety, including the letter of understanding, that the parties agreed to a three-step benefit package, and further agreed that the cost of such package would be taken into consideration in future wage negotiations. "The Board has held that health and welfare and pension plans which are part of an expired contract, constitute an aspect of employee wages and a term and condition of employment which survives the expiration of the contract." Henry Cauthorne, an Individ- ual, t/a Cauthorne Trucking, 256 NLRB 721 (1981). A fortiori, the parties may negotiate such provisions for a term which extends beyond that of other contract provi- sions. Cauthorne Trucking supra. B. The Alleged Refusal To Make Contributions as Provided in the Contract In the present proceeding, the parties stipulated that the Company made contributions to the funds in accord- ance with the first step of article XIX ($25 per week per employee to the welfare fund and $21 per week to the pension fund) through April 30, 1981. Technically the stipulation is inaccurate. Due to an error in billing by the pension fund, the Company contributed $14 per week per employee to that fund. However, prior to the com- mencement of the hearing the Company and the Union entered into an agreement (without prejudice to their po- sitions in this litigation) whereby the Company agreed that, on receipt of a correct billing, it would increase its pension fund contribution to $21 per week per employee for the period from May 1, 1979, to April 30, 1981. There is no contention in this proceeding that the Com- pany failed to make the proper contributions for the period from May 1, 1979, through March 30, 1980. 790 CAPITOL CITY LUMBER COMPANY In 1980 the Union sent letters to the Company pur- porting to reopen the contract for negotiations. Howev- er, the purported 60-day notice was untimely; i.e, it was sent less than 60 days prior the expiration date of the contract. The Union requested negotiations, but the Company stood on its rights and the Union acquiesced in the Company's position. Therefore by its own terms the contract continued in effect for an additional year; i.e., until May 1, 1981. The Company contends in essence (br., p. 3) that the contract provided for a money pack- age of 67-1/2 cents per hour, and therefore it was obli- gated to continue contributing only the amounts set forth in the first step of article XIX. For the reasons hereto- fore discussed, the Company's contention is erroneous. The Company lawfully refused to reopen the contract for negotiations. However, by exercising this right, the Company precluded for another year the "future negoti- ations" contemplated in the letter of understanding. Therefore, by operation of the terms of the contract, the wage rate remained in effect, and the second step of the welfare and pension plan contributions also became oper- ative. Indeed the second step of the pension plan became operative as of April 1, 1980 (1 month prior to the auto- matic renewal of the contract), and the third step became operative as of April 1, 1981, 1 month prior to the next expiration date. Therefore the Company breached its contract by failing to make the contributions as set forth in article XIX, at least through April 30, 1981. No evidence was introduced concerning 1981 negotia- tions. However, union counsel admitted on the record that the contract was terminated; i.e., presumably as of April 30, 1981. Therefore the question is presented as to whether the Company was obligated to make contribu- tions to the funds after that date. The pension fund par- ticipation agreement, signed by Olson and Cooper, con- tains the following provision: This Participation Agreement shall continue in full force and effect during the life of the current col- lective bargaining agreement between the parties and during all renewals and extensions thereof; sub- ject only to increases in the rate of contributions as required by such renewals or extensions. The obli- gation to make contributions to the Fund shall be terminated when and if such contributions are no longer required by a collective bargaining agree- ment between the parties. The welfare fund contribution agreement contains in per- tinent part the following language: The parties herein specifically acknowledge and agree, however, irrespective of contract expiration dates, if benefits are desired beyond the below des- ignated dates [scheduled contribution] the then cur- rent rates for the plan desired will be automatically billed and must be paid. As heretofore found, the Company and the Union, in order to comply with the requirements of the funds, ne- gotiated and agreed on a 3-year benefit program. There- fore the Company remained contractually obligated to continue contributing to the funds in accordance with the second and third steps of article XIX, notwithstand- ing the expiration of the contract. In sum, by reasons of article XIX, the Company's obligation survived and con- tinued after the termination of the contract. Therefore, as the Company was "required by a collective-bargaining agreement" to contribute to both funds for a period of 3 years, the contract met the conditions of section 7 of the pension participation agreement, as well as the less strin- gent conditions of the welfare contribution agreement. Compare Cauthorne, supra. I find that the Company, by failing and refusing to make welfare and pension contributions as required by its contract with the Union, invaded the Union's "statu- tory right as collective-bargaining representative of em- ployees in the unit to bargain about any change in the terms and conditions of employment for such employ- ees." Therefore the Company violated and is violating Section 8(aXl) and (5) of the Act. C & C Plywood Corpo- ration, 148 NLRB 414, 415 (1964), affd. 385 U.S. 421 (1967); see also Cauthorne, supra. 4 CONCLUSIONS OF LAW 1. The Company is an employer engaged in commerce within the meaning of Section 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. All full-time and regular part-time employees em- ployed by the Company at or out of its facility located at 700 E. Kalamazoo Street, Lansing, Michigan; but exclud- ing all sales employees, office clerical employees, casual employees, guards and supervisors as defined in the Act, constitute a unit appropriate for collective bargaining within the meaning of Section 9(b) of the Act. 4. At all times material the Union has been and is the exclusive collective-bargaining representative of the em- ployees in the unit described above. 5. By failing and refusing to make welfare and pension plan contributions as required by its collective-bargaining contract with the Union, the Company has engaged, and is engaging, in unfair labor practices within the meaning of Section 8(a)(1) and (5) of the Act. 6. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Sec- tion 2(6) and (7) of the Act. I Company President Olson testified that the third-step pension contri- bution should be $27 per week per employee instead of S31. His assertion was unexplained, and is contrary to the express provisions of art. XIX of the contract and of the participation agreement. I find that the Company was obligated to make contributions as set forth in art. XIX. This is not an appropriate case for deferral to contractual grievance and arbitration. First, no timely grievance was filed, and the Company has refused to waive its right to object to any grievance on that ground. See Union Electric Company, 214 NLRB 320, fn. 2 (1974). Second, as the contract expired on May I, 1981, a substantial portion of this case, con- sisting of the Company's failure to make contributions after that date, would not in any event be subject to binding arbitration. See The Hilton- Davit Chemical Company, Division of Sterling Drug, Inc., 185 NLRB 241 (1970). Whether or not the Company has any obligation beyond April 30. 1982, is a matter which is dependent on factors which were not fully liti- gated and indeed could not be fully litigated in the present proceeding. 791 DECISIONS OF NATIONAL LABOR RELATIONS BOARD THE REMEDY Having found that the Company has committed viola- tions of Section 8(aXl) and (5) of the Act, I shall recom- mend that it be required to cease and desist therefrom and from like or related unlawful conduct, and to take certain affirmative action designed to effectuate the poli- cies of the Act. I shall specifically recommend that the Company be ordered to make contributions to the wel- fare and pension funds in accordance with the 3-year schedule set forth in article XIX of the expired contract, and to reimburse the funds for its failure to do so. The welfare fund contribution agreement provides for em- ployer liability "for the liquidated damages set forth in the Trust Agreement" in the event of employer delin- quency. However, the trust agreement is not in evidence in this proceeding. The pension participation agreement provides only for cancellation of the agreement and ter- mination of any obligation of the trustees in the event of persistent delinquencies. In accordance with Board policy, I shall reserve to the compliance stage of this proceeding the question of whether the Company should be directed to pay interest or alternative additional con- tributions to the Funds. Cauthorne, supra. In the event that either fund has canceled unit coverage, I shall rec- ommend that the Company be ordered to reimburse the employees, with interest, for any loss of claims and bene- fits as a result of such cancellation, unless such cancella- tion was caused by reasons other than the conduct herein found unlawful.5 s Therefore it is unnecessary for me to pass upon the Company's post- hearing proffer of the purported letter which I have designated Resp. Exh. I. The questions of whether and if so when and why coverage was canceled are reserved to the compliance stage. Interest as provided in the recommended Order herein shall be computed in the manner and amount prescribed in Florida Steel Corporation, 231 NLRB 651 (1977). See, gener- ally, Isis Plumbing & Heating Co., 138 NLRB 716, 717-721 (1962). As- suming that the letter (Resp. Exh. 1) is authentic. I find that such letter does not constitute an admission on the part of the Union, because the Company has failed to prove that the person signing the letter was an agent of the Union acting on its behalf. 792